Enforcing laissez-faire

Karl Polanyi ( The Great Transformation ) notes, “There was nothing natural about laissez-faire ; free markets could never have come into being merely by allowing things to take their course.  Just as the cotton manufactures – the leading free trade industry – were created by the help of protective tariffs, export bounties, and indirect wage subsidies, laissez-faire itself was enforced by the state.  The thirties and forties [of the 19th century] saw not only an outburst of legislation repealing restrictive regulations, but also an enormous increase in the administrative functions of the state, which was not being endowed with a central bureaucracy able to fulfill the tasks set by the adherents of liberalism.”

Liberals believed “legislation could do nothing directly, except by repealing harmful restrictions,” but government could do a lot: “the utilitarian liberal saw in government the great agency for achieving happiness.  In respect to material welfare, Bentham believed, the influence of legislation ‘is as nothing’ in comparison with the unconscious contribution of the ‘minister of the police.’”  Economic success depended on inclination, knowledge, and power, and the latter two would be provided by the state: “It was the task of the executive to collect statistics and information, to foster science and experiment, as well as to supply the innumerable instruments of final realization in the field of government.”  In short, “Bethanmite liberalism  meant the replacing of Parliamentary action by action through the administrative organs.”

And more broadly, “The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism.”