Laissez-faire and State Intervention in Nineteenth-century Britain

THE consideration of a subject so contentious as laissez-faire should properly begin with a definition of the term itself. Unlike mercantilism, with which it has frequently been contrasted, laissez-faire was a term current in the period to which it has been most commonly applied. Its French origins lie deep in the eighteenth century and it was mentioned by Lord Liverpool in the House of Commons as early as 1812.¹ Before the middle of the nineteenth century, however, references to laissez-faire in literature or debate are relatively infrequent. Like many terms familiar to the historian — Medievalism, Renaissance and the Industrial Revolution are obvious examples — laissez-faire was a term more honoured by use in later generations than in the period to which it has closest reference.

THIRTY years ago the place of the state in the nineteenth-century British economy was a subject presenting few problems to the student of economic history. The few textbooks available to the undergraduate offered interpretations notable for their unanimity, and the learned journals were largely empty of controversy. The nineteenth century was viewed as an age dominated, as least until its final quarter, by the principle and practice of laissez-faire expressed in terms both of economic ideas and of social policy. ‘The less government intervention there was in any sphere the better.’⁴

‘LAISSEZ-FAIRE has never been preached as an absolute dogma by any English economist.’¹² Though few, if any, historians of economic thought can be found to disagree with this view, the tendency of the more widely read commentators in the interwar years was to establish a broad identity between the Classical School and the propagation of laissez-faire doctrine. Alexander Gray, for example, described Adam Smith as — the great apostle of laissez-faire’¹³ and Charles Rist similarly spoke of ‘the laissez-faire doctrine preached by the school of Adam Smith’¹⁴ (though he made clear the limits which Smith set to the application of the doctrine).

THE Classical economists were in no sense academic recluses — though Smith, McCulloch, Senior and Cairnes were all at some point in their lives holders of university chairs Through the Political Economy Club and similar institutions they mixed freely with men of affairs — politicians, civil servants and others — and took part in vigorous discussion of the major issues of the day. Ricardo and John Stuart Mill were Members of Parliament, and Senior, as a member of the Royal Commission, was one of the two principal architects of the new Poor Law. All the major members of the Classical School were active in publication, and all wrote systematic general treatises on the new science of political economy. In their authors’ lifetimes Smith’s The Wealth of Nations went through five and Mill’s Principles of Political Economy through seven editions, and a People’ s Edition of the Principles had no fewer than nine printings between 1865 and 1873. Ricardo and James Mill were less widely read — in Ricardo’ s case no doubt because his style was as daunting as was his argument — but McCulloch was a clear, lively and much read expositor of Classical ideas.

BENTHAM and his Utilitarian disciples are close to the centre of much of the current controversy about laissez-faire and state intervention in nineteenth-century England. To the economic historian this preoccupation with Bentham may seem somewhat excessive. It derives in part from the influential writing of A. V. Dicey, who identified Benthamism firmly with individualism and therefore was led to refer to the period of so-called Benthamite dominance between 1825 and 1875 as the age of laissez- faire.⁴⁰ For the economic historian, however, the idea of an age of laissez-faire does not finally rest upon a judgement of the validity of Dicey’s analysis, nor upon an assessment of Bentham himself and of the contribution which he and his followers made to the development of economic and social policy in mid-nineteenthcentury England.

THE chronology of the so-called period of laissez-faire presents issues which are essentially subsidiary to and derivative from the main arguments about policy. Cunningham began his volume on laissez-faire with the publication of The Wealth of Nations in 1776, and ended it at 1850 when ‘the reaction against laissez-faire had begun to make itself clearly felt, so far as the regulation of industry and of internal transport are concerned’.⁷⁷ Dicey, Cunningham’s contemporary, identified the years between 1825 and 1870 as the ‘period of Benthamism or Individualism’ — the age of laissez-faire. Miss Deane, writing half a century later than either Cunningham or Dicey, saw laissez-faire as already in retreat by the 1830s.

WHAT continuing validity is there, therefore, in the notion of an age of laissez-faire? The answer must turn at least in part on the particular meaning which is attached to the term. The more rigid the definition and the wider the field of reference, the less plausible is the idea of an age of laissez-faire; the looser the definition and the narrower the area of application, the more justifiable does the use of the concept become. To give fuller content to this generalisation it is necessary to approach the concept of an age of laissez-faire through the eyes of four different types of historian — the historian of ideas, the historian of institutions, the social historian and the economic historian.