16 - Economic Liberalism and Rights in the Nineteenth Century

Summary

Advocates of institutional economics in history have pointed to the adoption of systems of rights inspired by economic liberalism as a major factor behind inequalities of development. This chapter assesses the claim’s validity in the nineteenth century, when legal reforms grounded in liberal economic theory – most importantly the securing of exclusive private property rights – swept first Europe and its colonial offshoots and then the rest of the world. It considers the intellectual origins of such legal changes, their revolutionary implementation in the European world, their enforcement often by means of empire elsewhere, and the retreat from economic liberalism at the end of the century. Theories of development based on institutional economics are right to stress the extent of legal changes ushered in by economic liberalism. But adopting a social and political perspective on the new economic rights of the nineteenth century imposes several nuances. First, outside the anglophone world, liberal economic rights were neither the product nor the precursor of liberal political institutions: the adoption of free market rules was more often the result of revolutions from above or imperial rule. Second, liberal economic rights were granted selectively. Even in the European world, those of women remained significantly restricted, while in colonial worlds a very large share of Indigenous populations was excluded. Third, when faced with some adverse effects of unfettered competition and under the influence of new nationalist and socialist ideas, lawmakers in the last decades of the century began to temper liberal economic rights to protect national producers, small business owners, and industrial or agricultural workers. Contrary to the sanguine interpretation derived from institutional economics, the triumph of liberal economic rights did not entail that of political liberty, it chiefly benefited wealthy European males, and it lasted only a few decades. Private property may not have been theft, but nor was it the infallible elixir of economic development.