Comment on Pollard

Abstract

The new institutional economics examines the affect that institutions have on economic behaviour, and hence on economic performance. Differences in political and legal structures, and in political actions in different countries, help to explain differences in economic growth in those countries, because some institutions and some policies are more favourable for growth than others. In the case of England in the eighteenth century, both institutions and policies provided a more favourable context for growth than in other European countries.⁵⁰² In explaining differences, however, it is importart to distinguish between the development of institutions, usually over a long period of time, and policies, usually the result of political enterprise in the short run to promote the interests of the state. England had unique structures, both of government and law, which clearly differentiated her from her European rivals, and policies which, although they had much in common with European mercantilist policies, were sufficiently different in content and execution to cause differences in performance. The unique institutions were parliamentary government and the common law; the policies were mercantilist in spirit and concentrated national resources on “security, trade and empire”. The result was, as Patrick O’Brien has pointed out, that “The Hanoverian state can be perceived ex post to have supported the industrial revolution. It may even be held up as the closest approximation to a businessman’s government among the anciens regimes of Europe”.⁵⁰³

“Commerce and manufacturers can seldom flourish in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith in contracts is not supported by law” (Adam Smith).⁵⁰¹