This interesting and well-informed book aims to explain how and why Britain moved away from the model of individual liberty and free-market capitalism (laissez-faire) espoused by Adam Smith and other luminaries of the eighteenth-century Enlightenment. Walker Hanlon’s account ends in 1914, and to be sure, there had already been a lot of change by then, but there was still much further to go: for example, conscription was highly contentious after the outbreak of war in August 1914 and wasn’t introduced until January 1916.

Hanlon’s method is to examine various changes in the functions of government in Britain between the early 19th century and 1914 which represented in some way a compromise of laissez-faire. Thus there are chapters on factory labour regulation, mine regulation, policing, urban public health, gas supply, pollution, vaccination, consumer protection, regulation of seaborne trade, the telegraph, education, unemployment insurance and the Liberal welfare reforms of 1906 – 1911.

Some of the chapters are based on Hanlon’s own research, and all are detailed and interesting in themselves. Hanlon describes not only the conditions which led to the changes but also discusses the arguments which were decisive in bringing the changes about. He assesses the changes against the principles of laissez faire and considers whether they could have happened without government intervention. He comments as follows: ‘…government intervention in the nineteenth century was not the work of a group of ideological collectivists. Rather, many interventions were the work of laissez-faire adherents who nevertheless believed that intolerable or inefficient conditions existed and were open to the possibility of experimenting with various forms of government intervention to see whether better outcomes could be achieved’ (pp 420 – 421).

The conclusion is justified by the evidence that the book presents, but the use of the word ‘intolerable’ begs the question ‘intolerable to whom?’. Working conditions in factories during the Industrial Revolution were evidently not intolerable to the many thousands of people who migrated from the countryside to work in them. The pressure for factory regulation ‘was due largely to middle-class and upper-class action’ (p 109): the workers were not then allowed to vote. Some of the changes were motivated not by the desire to improve intolerable or inefficient conditions but by a concern for what might be called the welfare of the nation. The introduction of universal education, financed where necessary by the state, was motivated partly by the concern that technological advances demanded a better-educated labour force, and the welfare reforms of the early 20th century by the concern that poverty was making children physically smaller and weaker, and thus less able to fight a future war, than their welfare-supported counterparts in Germany. Others arose as an indirect consequence of the Industrial Revolution – for example, the problems of economic depression were much harder to deal with when large numbers of people working in a single industry were concentrated in a limited area; purely local schemes for unemployment relief failed because they soon ran out of money; likewise public health was a much bigger problem in an urban society. The tension between local and central administration is a large part of Hanlon’s story. Typically, local efforts to solve problems were supplanted by the central government, because the local solutions were not uniformly effective.

Of course, governments today are far more active and interventionist than anyone living before 1914 could have imagined: even the most ardent reformers of Victorian times saw no need for a football regulator. At the same time, the public finance issues that were already present in the 19th century are now much more menacing, despite much higher taxation. Supporters of laissez-faire, then and now, concede that free markets cannot solve some problems, notably those arising from externalities and other imperfections, and externalities were a powerful consideration in several of the changes that Hanlon describes, e.g. pollution and vaccination.

Why has the trend towards more intervention persisted? Democracy must be one reason. The public evidently likes social insurance, if it can be provided at no apparent cost, and has demanded, and got, more and more of it: for example, consider the difference between the government’s (non-)reaction to the influenza pandemic of 1918 – 1920 and its hyperactive response to Covid. And perhaps, since the 19th century, the thinking classes have become increasingly sensitive to externalities and other market imperfections, whose existence it is impossible to deny, even if their significance cannot be readily measured. Correcting market imperfections may be costly in many ways, , e.g. because it incurs moral hazard, but the costs are hard to measure and accordingly easy to ignore. No market can be truly perfect, and it cannot be a good idea to try to make them all so.

In his famous book Capitalism, Socialism and Democracy (1942), Joseph Schumpeter predicted that capitalism would destroy itself by producing sufficient surpluses to support a growing class of intellectuals whose criticisms would undermine its political support and force governments into ever more costly compromises. Perhaps he had a point. Hanlon evidently approves of the behaviour of successive governments in the period he discusses, but he does not try to impose a pattern on events which the evidence would not support; he lays out the facts in detail and reaches modest conclusions. His book is consistently interesting and well worth reading.