Hidden away in a sunlit mountain valley …

The Wall Street Journal carries a review by Trevor Butterworth of The Enlightened Economy by Joel Mokyr, former editor of the Oxford Encyclopedia of Economic History. This is a book which aims to explain why the industrial revolution happened in Britain before it happened anywhere else. Thoughts on the book itself will follow, perhaps. Right now, I’m more worried about the review:

The reason for Britain’s exceptionalism, Mr. Mokyr says, lies in the increasing hostility to rent-seeking—the use of political power to redistribute rather than create wealth—among the country’s most important intellectuals in the second half of the 18th century. Indeed, a host of liberal ideas, in the classic sense, took hold: the rejection of mercantilism’s closed markets, the weakening of guilds and the expansion of internal free trade, and robust physical and intellectual property rights all put Britain far ahead of France, where violent revolution was needed to disrupt the privileges of the old regime.

This is the first time I’ve seen ‘rent-seeking’ defined as ‘the use of political power to redistribute rather than create wealth’. It’s a bad definition, since we naturally tend to think of ‘political power’ as something wielded by government; this particular definition, then, will lead us to think of ‘rent-seeking’ as primarily an activity of government. Which it ain’t. Things like ‘robust physical and intellectual property rights’ may privilege any suitably placed individual or private company: Sky TV, for example. But let’s take the main point as given: at one time, Britain was comparatively liberal, France was comparatively regressive. And France did indeed experience revolution. Of course, you’d think that revolution might allow France a bit of a catch-up opportunity. Apparently not:

Such political upheaval in Europe, notes Mr. Mokyr, disrupted trade, fostered uncertainty, and may well have created all kinds of knock-on social disincentives for technological and scientific innovation and collaboration with business. Much as we might deplore too many of our brightest students going into law rather than chemistry or engineering, it is not unreasonable to think that many of France’s brightest thinkers were diverted by brute events into political rather than scientific activism (or chastened by poor Lavoisier’s beheading during the Revolution).

Admit it, people, the real thesis here is: heads the Anglos win, tails the Euro-weenies lose. I note also that ‘France’ and ‘Europe’ are treated as synonyms, but hey.

I suppose it’s mostly fairly difficult to untangle the prejudices of the reviewer from the subject, where the subject itself is a representation in writing of someone’s thoughts, but I suspect this particular review gets close to the limiting case: i.e. the case where everything you see is the prejudice of the reviewer. Stock tropes only; nothing substantial or falsifiable to be given away.

Incidentally, I think there’s a way to understand the Murdoch publications paywall: it’s journalism going Galt. They’ll come out as they went in; how else could it be? I think it’s a shame Rand had the first-handers hide themselves away in the Rockies, though; I’m imagining a South American tepui, Conan Doyle Lost World style.

Update: I’ve realised that there is a reading of ‘the use of political power …’ which brings it more into line with how rent-seeking is usually understood. This is the reading in which political power (of government) is held ready for someone outside government to make use of: government as a utility, if you like. Even on this reading, I still think it’s a poor definition. It’s understood that it costs a petitioner something to engage with government – hence there’s an efficiency argument to be made in connection with rent-seeking – but terms like ‘use’ and ‘manipulate’ suggest that policy can be flipped on and off like a light. So, how would I define ‘rent-seeking’, you might ask. Perhaps like this: rent-seeking is the attempt to influence public policy in search of policy privilege.

And a welcome to readers from University of North Carolina at Chapel Hill, also.

6 thoughts on “Hidden away in a sunlit mountain valley …

  1. “This is the first time I’ve seen ‘rent-seeking’ defined as ‘the use of political power to redistribute rather than create wealth’. It’s a bad definition, since we naturally tend to think of ‘political power’ as something wielded by the state; this particular definition, then, will tend to lead us to think of ‘rent-seeking’ as primarily a privilege of government. Which it ain’t. For example, ‘robust physical and intellectual property rights’ will create rent opportunities for any suitably placed individual or private company.”

    Yes, but you need the exercise of political power to create that robust IPR regime. That’s what is being got at. Not that govt or the State are the rent seekers, but that Govt or the State will be manipulated to provide rent seekers with the opportunity to collect rents. Or even taken over by rent seekers.

    Marcos’ drinking buddy having the coconut monopoly in the Philippines, the UAW coming out of the GM/Chrysler bankruptcies smelling of roses while the bond holders got crammed down (in gross violtation of what everyone thought the bankruptcy laws were up to that point), the East India Company’s monopoly of Far East trade….all of these and myriad others are the (mis?) use of political power to create rent collection possibilities.

  2. I think what you’re saying is right, more or less; it might even be what Mokyr is getting at, but the WSJ reviewer doesn’t make the connection and his phrasing is heavily loaded. Given that we’re likely to want some governed system of rights, and given that most of us don’t live under an out and out kleptocracy, there’s no constructive purpose in identifying the state, per se, with rent-seeking.

  3. Per se, the State, perhaps not.

    But the reason that people like me get very touchy about a large State, especially a large regulatory state, is that it increases the opporunity for rent capture by those interested in rent seeking being able to get the regulations written to their benefit….so called regulatory capture.

    As an example I’d point to occupational licencing in the US…many states require you to be examined and licenced to do all sorts of things: John Stossel once tried to see if he could get arrested for flower arranging without a licence. No, really that is a requirement in many places.

    This is quite clearly those businessmen of Smith’s getting together in a conspiracy against the public….almost a recreation of the guilds (and in some places it is a recreation: the licencing authority is required to ask currently extant businesses whether there is a need for another in their pace before granting the licence) and similarly clearly a use of State power and regulation writing to provide rent capture.

  4. The Dutch province of Holland was industrialized before 1700. There were over 1000 windmills at the Zaanstreek alone, used mostly as saw mills and paper mills to process timber from the Baltic.

    What made the English industrial revolution go was (1) coal, and (2) relative high wages (=relative low cost of machinery) compared to other countries with coal. Just as Holland had windmills and high wages a century earlier. Voila.

  5. That is a good point. Even if you accept this slanted tale about France and England why wasn’t there a industrial in the states general, ruled by capitalist after all?

    The intellectual elite in France had exactly the same opinions about rent-seeking like their fellow intellectuals in Great Britain. That is not a good explanation. The classical theory is that the attitude of the english aristocracy was different but even here the differences seem to be overblown. Great Britain, even England was a primarily agricultural country in 1789 and the lives of the gentry did revolve around landowning, church and military careers, just like elsewhere.

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