English Glorious Revolution of 1688-89 as Institutional Phase Transition
* Article: What Really Happened During the Glorious Revolution? Steven C.A. Pincus (Yale) and James A. Robinson (Harvard)
"The English Glorious Revolution of 1688-89 is one of the most famous instances of ‘institutional’ change in world history which has fascinated scholars because of the role it may have played in creating an environment conducive to making Britain the first industrial nation. This claim was most forcefully advanced by North and Weingast yet the existing literature in history and economic history dismisses their arguments. In this paper we argue that North and Weingast were entirely correct in arguing that the Glorious Revolution represented a critical change in institutions. In addition, and contrary to the claims of many historians, most of the things they claimed happened, for example parliamentary sovereignty, did happen. However, we argue that they happened for reasons different from those put forward by North and Weingast. We show that rather than being an instance of a de jure ‘re-writing the rules’, as North and Weingast argued, the Glorious Revolution was predominantly a de facto change in the balance of power and part of a broader reorientation in the political equilibrium. Moreover, it was significant for the economy not because it solved a problem of credible commitment, but for two other reasons. First, because it led to the implementation of the economic program of the Whigs; Second, because party political ministries, rather than the king’s private advisors, now initiated policy. After 1688 party politicians rather than the king set the economic agenda." (http://cniss.wustl.edu/files/cniss/pincuspaper.pdf)
"The Glorious Revolution was not significant because it was a change in the de jure rules, but it was important in helping to cement a change in the distribution of de facto power in the country.
That change was from landed property towards finance and manufacturing. This led to several policy changes that promoted economic growth. Turnpike Acts helped build new roads which facilitated trade; the abolition of the hearth tax enriched the middle classes; and the establishment of the Bank of England boosted the availability of credit for manufacturing. But, say Pincus and Robinson, there was another effect. In empowering parliament, the revolution allowed the Whigs to tax land in order to pay for the expensive Nine Years’ War - a war which boosted demand for English manufactures. In this way, the revolution helped accelerate a shift in economic power from land to commerce and manufacturing.
There are, I suspect, three broad lessons here:
1. Institutional change is not exogenous. It is the product of incentives and interests - the growing power of commerce, in this case. It is for this reason that, as Boettke says, attempts to impose institutions from outside often fail.
2. Institutions are not neutral. They favour some interests over others. As luck would have it, the interests favoured by the Glorious Revolution happened to be interests that promoted economic growth generally.
3. Institutional change has long-run, unforeseeable effects. Neither William III nor his supporters thought they were laying the foundations for one of the greatest transformations in human history." (http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2011/07/institutions-revolutions-and-growth.html)