were the result of intense conflict as different groups
competed for power, contesting the authority of others and
attempting to structure institutions in their own favor. The
culmination of the institutional struggles of the sixteenth and
seventeenth centuries were two landmark events: the
English Civil War between 1642 and 1651, and particularly
the Glorious Revolution of 1688.
The Glorious Revolution limited the power of the king and
the executive, and relocated to Parliament the power to
determine economic institutions. At the same time, it
opened up the political system to a broad cross section of
society, who were able to exert considerable influence over
the way the state functioned. The Glorious Revolution was
the foundation for creating a pluralistic society, and it built
on and accelerated a process of political centralization. It
created the world’s first set of inclusive political institutions.
As a consequence, economic institutions also started
becoming more inclusive. Neither slavery nor the severe
economic restrictions of the feudal medieval period, such
as serfdom, existed in England at the beginning of the
seventeenth century. Nevertheless, there were many
restrictions on economic activities people could engage in.
Both the domestic and international economy were choked
by monopolies. The state engaged in arbitrary taxation and
manipulated the legal system. Most land was caught in
archaic forms of property rights that made it impossible to
sell and risky to invest in.
This changed after the Glorious Revolution. The
government adopted a set of economic institutions that
provided incentives for investment, trade, and innovation. It
steadfastly enforced property rights, including patents
granting property rights for ideas, thereby providing a major
stimulus to innovation. It protected law and order.
Historically unprecedented was the application of English
law to all citizens. Arbitrary taxation ceased, and
monopolies were abolished almost completely. The English
state aggressively promoted mercantile activities and
worked to promote domestic industry, not only by removing
barriers to the expansion of industrial activity but also by
lending the full power of the English navy to defend
mercantile interests. By rationalizing property rights, it
facilitated the construction of infrastructure, particularly