1688 and all that: Property rights, the Glorious Revolution and the rise of British capitalism

G M Hodgson

doi:10.32609/0042-8736-2017-11-63-92

Abstract

In a seminal 1989 article, Douglass North and Barry Weingast argued that by making the monarch more answerable to Parliament, the Glorious Revolution of 1688 helped to secure property rights in England and stimulate the rise of capitalism. Similarly, Daron Acemoglu, Simon Johnson, and James Robinson later wrote that in the English Middle Ages there was a “lack of property rights for landowners, merchants and proto-industrialists” and the “strengthening” of property rights in the late 17th century “spurred a process of financial and commercial expansion”. There are several problems with these arguments. Property rights in England were relatively secure from the 13th century. A major developmental problem was not the security of rights but their feudal nature, including widespread “entails” and “strict settlements”. 1688 had no obvious direct effect on property rights. Given these criticisms, what changes promoted the rise of capitalism? A more plausible answer is found by addressing the post-1688 Financial and Administrative Revolutions, which were pressured by the enhanced needs of war and Britain’s expanding global role. Guided by a more powerful Parliament, this new financial system stimulated reforms to landed property rights, the growth of collateralizable property and saleable debt, and thus enabled the Industrial Revolution.

Highlights

A key problem for economic historians is to explain the innovations, rises in productivity and increases in the average standard of living that became evident in Great Britain by the 19th century and spread to other countries in the world.1 Sometime after 1700, gross domestic product (GDP) per capita began to take off in Europe and accelerated further upwards
What changes promoted the rise of capitalism? A more plausible answer is found by addressing the post-1688 Financial and Administrative Revolutions, which were pressured by the enhanced needs of war and Britain’s expanding global role
The clear conclusion from these data is that legislative reform of landed property rights was sluggish from 1700 until about 1750 and took off dramatically, with the strongest growth trends coming from enclosure and statutory authority acts

Summary

Introduction

A key problem for economic historians is to explain the innovations, rises in productivity and increases in the average standard of living that became evident in Great Britain by the 19th century and spread to other countries in the world. Sometime after 1700, gross domestic product (GDP) per capita began to take off in Europe and accelerated further upwards. The nature of those rights changed, enlarging possibilities for the use of land and other property as collateral to finance business ventures This does not necessarily diminish the politico-economic importance of the Glorious Revolution, but it shifts the analytical emphasis. The establishment of the Bank of England in 1694 was prompted by the need to finance a major war that broke out in 1688, as a result of the Glorious Revolution and England’s new foreign alliances It was part of a chain of institutional events that led to the development of a modern financial system in Britain, with the crucial role of the state in gathering taxes, issuing bonds and loans, buttressing private banks, and acting as lender of last resort. The central argument here must be considered as a hypothesis, awaiting further detailed empirical confirmation

Bad timing: the evolution of property rights in England

Economic growth and the balance of class power

The financial and administrative revolutions

Findings

Conclusion: from critique to reconstruction