THE STATE AND EARLY INDUSTRY
PURPOSE OF LECTURE:
TO EXAMINE THE CONTRIBUTION OF GOVERNMENT TO INDUSTRIAL DEVELOPMENT IN THE CENTURY BEFORE 1914.
A MODEL OF THE ROLE OF GOVERNMENT
TWO CATERGORIES OF ACTION:-
(1)REGULATION(2)DIRECT PARTICIPATION
(1)REGULATION
(a)RESPONSIBILITY FOR ESTABLISHING/OPERATING A GENERAL ENVIRONMENT CONDUCIVE TO BUSINESS DEVELOPMENT.
(b)RESPONSIBILITY FOR INTRODUCING AND MAINTAINING THE RULES AND REGULATIONS WITHIN WHICH BUSINESS ACTIVITY IS CONDUCTED
(a)(i)STABLE GOVERNMENT
(ii)LEGAL SYSTEM
(iii)REGULATION OF BANKING AND CREDIT
(b)(i)COMPANY LAW
(ii)REGULATION OF MARKETS
(iii)WORKING CONDITIONS/WORKERS’ COMBINATIONS
(2)DIRECT PARTICIPATION
THE USE OF PUBLIC INSTITUTIONS, PERSONNEL, AND/OR FUNDING, TO ESTABLISH AND OPERATE BUSINESS ENTERPRISES
ABRITAIN
BARRY SUPPLE:-
COMPARED WITH THE CONTINENTAL EXPERIENCE…THE BRITISH INDUSTRIAL REVOLUTION WAS A TRIUMPH OF INDIVIDUALISM-NOT MERELY IN THE SENSE THAT ITS INNOVATIONS AND ENTREPRENEURSWERE CHAARACTERISED BY A STRIVING PROFIT-ORIENTED INDIVIDUALISM, BUT ALSO BECAUSE ITS MECHANISMS OF SUPPL AND DEMAND WERE GEARED TO THE DECISIONS OF INDIVIDUAL ECONOMIC AGENTS. TO THIS EXTENT, STARTING FROM A POSITION OF INTERNATIONAL DOMINANCE AND ECONOMIC SOPHISTICATION, THERE WAS LITTLE JUSTIFICATION FOR STATE ACTION ON GROUNDS EITHER OF NATIONALISM OR BACKWARDS TO INDUCE INDUSTRIAL GROWTH.
THE REGULATORY FUNCTION
(1)UNMATCHED POLITICAL STABILITY
(2)COMPACT, UNIFIED MARKET
(3)STANDARDISED CURRENCY, TAX & TARIFF SYSTEMS
(4)GOVERNMENT SYMPATHETIC TO NDUSTRIAL PROGRESS
(5)EMPIRE TRADE & DEFENCE
POST-1850 DEVELOPMENTS
(1)REMOVAL OF RESTRICTIONS IN FORMATION OF LIMITED LIABILITY JOINT-STOCK COMPANIES 1825, 1856, 1862.
(2)RAILWAY COMPANIES’ REGULATION RAILWAY & CANAL TRAFFIC ACT, 1888.
BRITAIN: REGULATORY FUNCTION PARAMOUT
BUSA
ROBERT LIVELY:
THE PREVIOUS ASSUMPTION THAT EARLY C19 AMERICA WAS A LND OF LAISSEZ-FAIRE IS ALL WRONG… FROM THE BEGINNING OF THE C19 TO THE END, FROM MISSOURI TO MAINE, GOVERNMENTS WERE DEEPLY INVOLVED IN LENDING, BORROWING, BUILDING, AND REGULATING.
TRANSPORT
1815-1860 $188M > CANALS GOVT. = 73% ) FINANCE
1840-1860 > RAILROADS “ = 30% ) CAPITAL
LAND: 180 MILLION ACRES BEFORE 1900
POST-1880 DEVELOPMENTS
1887:INTERSTATE COMMERCE COMMISION
1890:SHERMAN ANTITRUST ACT
USA:-REGULATION AND SELECTIVE DIRECT PARTICIPATION
JAPAN & GERMANY
FRANK TIPTON: DEFINING THE ORTHODOX VIEW:-
DIRECT GOVERNMENT PARTICIPATION IN DEVELOPMENT, IN PARTICULAR THE FOUNDATION OF GOVERNMENT INDUSTRIAL ENTERPRISES, INTRODUCED NEW TECHNOLOGIES AND PROVIDED MODELS FOR PRIVATE ENTREPRENEURS.
GOVERNMENT SPONSERSHIP OF INSTITUTIONAL CHANGE, ESPECIALLY IN THE AREAS OF MONEY & BANKING, WORKED INDIRECTLY TO PROVIDE A CLIMATE IN WHICH PRIVATE ENTREPENEURS COULD EXPLOIT NEW TECHNOLOGIES MORE EFFECTIVELY.
CJAPAN
- GOVERNMENT-FOUNDED/OPERATED ENTERPRISES A FINANCIAL FAILURE
- BACKING OF ‘WRONG’ TECHNOLOGIES c.f. COTTON
- GROWTH MOST IMPRESSIVE WHERE GOVERNMENT INVOLVEMENT WAS LOW: IMPORTANCE OF ‘NATURAL’ COMPARATIVE ADVANTAGE
DGERMANY
TIPTION:
THE PRUSSIAN GOVERNMENT SIGNIFICANTLY SLOWED THE INTRODUCTION OF THE RAILWAY AND NEW MINING AND SMELTING TECHNIQUES IN THE 1830s AND 1840s. WHEN RAILWAYS WERE FINALLY AUTHORISED THEY WERE SUBJECTED TO EXTREMELY RESTRICTIVE REGULATIONS. THE GOVERNMENT INITIALLY OPPOSED THEIR USE OF THE TELEGRAPH, FEARING ITS USE FOR UNAUTHORISED POLITICAL MESSAGES ETC. ETC.
POST-1871
ARMAMENTS/DEFENCE
SHARE OF DEFENCE EXPENDITURE IN GERMAN N.I. :-
3.3%-3.8%, 1891-1913
TREBILCOCK
OF THE INCREASE IN IMPERIAL EXPENDITURE, 1871-1913, OVER ONE-THIRD WENT TO SOCIAL SERVICES, ONE-SIXTH TO URBANISATION, AND MERELY ONE-FIFTH TO DEFENCE.
FINAL CONCLUSION
UK:INDIRECT ROLE CRITICAL BEFORE 1914
USA: “ “ “ “ “
+ DIRECT ROLE IN TRANSPORT
JAPAN/INDIRECT ROLE CRITICAL 1870-1914
GERMANY:DIRECT ROLE PROBLEMATICAL
BUT NOTE DIFFERENCE BETWEEN UK AND THE REST IN HUMAN CAPITAL FORMATION.