John Nye’s new War, Wine, and Taxes: The Political Economy of Anglo-French Trade, 1689-1900 argues that 19th century Britain was not nearly as free trade as is commonly supposed. Here is one summary of that argument.
Nye also argues that an odd industrial policy, as applied to alcohol, drove the rise of the British nation-state (and thus modernity as we know it). As a result of the wars of 1689-1713, the British placed very high taxes on French spirits. British domestic production grew, and to make up for the lost revenue, the British applied heavy domestic taxes to alcoholic production. The British spirits industry became oligopolistic — in large part by governmental design — and the resulting monopolies were a cash cow for their owners and for the government alike. The taxes on alcohol helped finance the British state on the backs of consumers, without requiring higher taxes on capital or land.
Here is a sample chapter of the book, which promises to be one of the most important works in economic history in recent times. I am pleased that John will be joining us as a colleague at George Mason this coming year.