Globalization, round one, ended in 1914:
What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could despatch his servant to the neighboring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.
John Maynard Kenyes, The Economic Consequences of the Peace (1919)
(Quoted at the beginning of Deepak Lal’s new book, Reviving the Invisible Hand : The Case for Classical Liberalism in the Twenty-first Century . I mentioned Lal in this post.)
The Keynes quote is, of course, reminiscent of the famous opening paragraph of A.J.P. Taylor’s English History, 1914-1945:
Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman. He could live where he liked and as he liked. He had no official number or identity card. He could travel abroad or leave his country for ever without a passport or any sort of official permission. He could exchange his money for any other currency without restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at home. For that matter, a foreigner could spend his life in this country without permit and without informing the police. Unlike the countries of the European continent, the state did not require its citizens to perform military service. An Englishman could enlist, if he chose, in the regular army, the navy, or the territorials. He could also ignore, if he chose, the demands of national defence. Substantial householders were occasionally called on for jury service. Otherwise, only those helped the state who wished to do so. The Englishman paid taxes on a modest scale: nearly £200 million in 1913-14, or rather less than 8 per cent. of the national income. The state intervened to prevent the citizen from eating adulterated food or contracting certain infectious diseases. It imposed safety rules in factories, and prevented women, and adult males in some industries, from working excessive hours. The state saw to it that children received education up to the age of 13. Since 1 January 1909, it provided a meagre pension for the needy over the age of 70. Since 1911, it helped to insure certain classes of workers against sickness and unemployment. This tendency towards more state action was increasing. Expenditure on the social services had roughly doubled since the Liberals took office in 1905. Still, broadly speaking, the state acted only to help those who could not help themselves. It left the adult citizen alone.
When I quoted this here, Helen corrected me noting that by 1914 “Even by [Taylor’s] own admission the state was interfering in ever more aspects of everybody’s life.” (BTW, see this good post about Taylor, from the Conservative History Blog.)
It is true that Taylor overstated the case, a type of exaggeration meant to make his larger point. Still, he was more right than not when comparing pre-1914 with post-1918. And he was right to make clear that the freedom to participate in international trade and travel was considered a seamless part of the general liberties enjoyed by all Englishmen.
Nonetheless, by 1889 F.W. Maitland, in his Constitutional History of England, was writing that the great change came with the Reform Bill of 1832, and that by his day, circa 1889, it was clear:
We are becomng a much governed nation, governed by all mannder of councils and boards and officers, central and local, high and low, exercising the powers which have been committed to them by statute.
Maitland was looking back to the then still living memory of true laissez faire, and the trends were clear. But if Taylor overstated the smallness of the State’s role before the war, he did not exaggerate the vast expansion it experienced during the war. Compared to 1889, 1919 was a very different world.
Similarly, Keynes was right about the extraordinary level of freedom to buy and sell, trade and travel, that existed prior to the 1914 outbreak of war. In many ways, we have never gotten back to that level of freedom.
World War I really was the moment when the wheels came off, when things really started going to Hell in a big way.
(I’ve been obsessing about World War I lately.)
John Yoo has made the excellent point that, in America, FDR was responsible for the immense growth of government. This growth both ensured a large administrative state, and helped us win WW2.
Still, it seems to me that government has become increasingly fond of telling citizens what’s best for them.
The immense growth of government was underway all over the world, FDR may have moved things along faster. Hooever, after all, was in no way a “small government” man. He was a Progressive Republican. There was no serious constituency for old-time liberalism during the Great Depression. In fact, most people took the Depression to be absolute proof that liberal ideas of spontaneously organizing markets had been totally repudiated. Milton Friedman himself talks about being a graduate student at the University of Chicago, in economics, and no one in the Department was able to explain how it could be that you had men on the street who wanted to work, people who wanted what they could make, factories closed — this was not supposed to happen. Even the Chicago Boys were stumped.
The miracle is that we didn’t nationalize everything. People were literally starving and the old way appeared to have totally failed, and the intellectual currents were running in favor of government control — that was the sophisticated, progressive way of thinking. Fortunately, Americans were not that interested in what the intellectuals had to say, and mostly hung onto their notions of private property until things began to turn around. But it was a close run thing.
I have always believed that FDR, in the context of his times, was a conservative force. He tended to use strong rhetoric, then do a lot less than he threatened. Other people were advocating much more aggressive action. When Alf Landon ran in 1936 on a program only a little less statist than Hoover’s and been, and not much less than FDR’s was, he got annihilated in the election.
The growth of government occured in America in response to crises, and it usually did not shrink back to its original level. The progressives pre-World War I wanted a big growth of government, but the public support was not there for a massive expansion. World War I was their moment. Then the Depression. Then World War II. The book to read on this subject is Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs.
Lex, if you’re obsessing over WW1, pay a visit in a few months when this opens up — it promises to be, by a wide margin, the most comprehensive museum devoted to the topic in the US. As promised earlier, visit to include side trip for BBQ as payment for turning me on to Albion’s Seed.
Jay, that looks very cool. Not clear when I am going to be able to get down there, though … .