Edmund Burke’s Path to Free Markets
Burke's way of thinking about free markets and trade provides a model for us today
Before economics became mathematized, it was based on qualitative observation. As Matthew Hennessey wrote in his recent book Visible Hand, Adam Smith “wrote the plain truth about how humans live, work, play, and interact with each other as he observed it. . . . Smith is an explorer, a discoverer, not an inventor or a revolutionary.”
A contemporary of Smith’s, Edmund Burke wasn’t into revolutions either. He is best known for his writing against the French Revolution and the totalizing ideology the French revolutionaries espoused.
As a member of Parliament for nearly three decades, he dealt with numerous other issues as well. For example, even in the 18th century, MPs had plenty of economic issues to worry about. Burke took economic matters seriously, and, like Smith, he used an approach based on observation and careful study to understand how systems really work. In fact, he was doing so even before Smith penned Wealth of Nations. Through that approach, Burke came to be a proponent of free markets.
A World Large Enough for Two
In 1778, Burke voted for the removal of restrictions on trade with Ireland. At that time, Ireland was technically a separate kingdom from Great Britain, but it was ruled by the British monarch as a client state. As such, it was governed by different trade rules than England and Scotland.
Burke’s vote caused outrage among his constituency, in Bristol, and some interest groups demanded an explanation from him as to why he voted for free trade, since this could lead to increased competition for them. He replied with two public letters, and from his responses we can glean insight into his thought process.
Burke’s first letter was to Samuel Span, leader of a trade group in Bristol. Burke told Span he supported the trade bills even though he did not think them perfect. He wrote that he considered the changes “merely as preparatory to better things, and as a means of shewing experimentally, that justice to others is not always folly to ourselves.” In this passage, Burke demonstrates similar thinking to that expressed in a famous line of his about example being the school of mankind. In other words, Burke wanted to gather evidence on how the policy worked, so that people could see its correctness for themselves.
Burke elaborates (italics original):
I hope that in Great Britain we shall always pursue, without exception, every means of prosperity; and of course, that Ireland will interfere with us in something or other; for either, in order to limit her, we must restrain ourselves, or we must fall into that shocking conclusion, that we are to keep our yet remaining dependency, under a general and indiscriminate restraint, for the mere purpose of oppression. Indeed, Sir, England and Ireland may flourish together. The world is large enough for us both. Let it be our care, not to make ourselves too little for it.
Pursuing prosperity is a common notion in Burke’s economic thought. By that, he meant a general increase in the standard of living of ordinary people. By emphasizing “every” in this passage, Burke reminded Span that a policy that may not be beneficial to Span’s group could still be beneficial for the whole. He viewed free trade as one such policy, and he rejected the mercantilist view, dominant in his day, of zero-sum trade.
He asked Span whether England’s 1707 union with Scotland, which abolished trade barriers between the two, had ruined his business. It hadn’t, Burke wrote, noting that the union had allowed for far more trade that had made both sides better off, even though Scotland was much poorer than England. “Such virtue there is in liberality of sentiment, that you have grown richer even by the partnership of poverty,” he wrote.
Based on that experience, expanding free trade to Ireland didn’t seem that big of a stretch. That’s Burke’s gradualism, and it reflects how his conservative commitment to prudence shaped his approach to how trade liberalization should occur. His principles guided him in the direction where he should go, and he was very intentional about getting there one step at a time.
Trade as God’s Will
Burke’s second letter, addressed to an iron manufacturing company in Bristol, gives more details on these general principles:
Trade is not a limited thing; as if the objects of mutual demand and consumption, could not stretch beyond the bounds of our jealousies. God has given the earth to the children of men, and he has undoubtedly, in giving it to them, given them what is abundantly sufficient for all their exigencies; not a scanty, but a most liberal provision for them all…
To protect men is to forward, and not to restrain their improvement… This fundamental nature of protection does not belong to free, but to all governments; and is as valid in Turkey as in Great Britain. No government ought to own that it exists for the purpose of checking the prosperity of its people, or that there is such a principle involved in its policy.
The invocation of Providence to support trade echoes of Hugo Grotius, who, writing in The Free Sea over 150 years earlier, argued that God has so ordered the world that every need cannot be met in every place, so trade between places must occur and this must be in accordance with natural law and God’s will. Burke similarly saw trade as natural and beneficial, and he turned the idea of protectionism on its head by noting that policies that restrict trade upset this natural process. A government is properly fulfilling its duty to protect its people by allowing them to pursue prosperity, Burke argued.
Unfortunately, policy in Ireland was not geared towards prosperity at this time. Burke pointed to the wool industry, which he thought was harmed by restrictive British and Irish laws alike, causing woolen garments to become unaffordable. “It is very unfortunate, that we should consider those as rivals, whom we ought to regard as fellow-labourers in a common cause,” he wrote of the Irish.
It was as a member of Parliament from Bristol that Burke wrote his famous line about the job of politicians: “Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.” We may look on this as a wise saying today, but this philosophy didn’t make him popular with voters, and they threw him out in 1780, in part because of his votes on trade with Ireland.
Burke had no regrets about his vote, though, and he didn’t intend for free trade only with Ireland. In a private letter after his votes, he explained his reasoning:
I was in hopes that we might obtain, gradually, and by parts, what we might attempt at once and in the whole without success; that one concession would lead to another; and that the people of England, discovering, by progressive experience, that none of the concessions actually made were followed by the consequences they had dreaded, their fears from what they were yet to yield would considerably diminish. But that, to which I attached myself the most particularly, was to fix the principle of a free trade in all the ports of these Islands, as founded in justice, and beneficial to the whole; but principally to this, the seat of the supreme power.
A Champion of Free Markets
Did Burke ever change his mind on free markets? He was certainly sensitive, as Adam Smith was, to the geopolitical realities of his time, especially Britain’s ongoing struggles with France. But if anything, he became more supportive of economic liberalization by the end of his life.
“Thoughts and Details on Scarcity” was published in 1800, after Burke’s death in 1797. He wrote it in 1795 as a memo to Prime Minister William Pitt the Younger. Burke’s expertise on economic matters was often sought by prime ministers throughout his career. The subject of the memo was a government subsidy for farmers to make up for poor harvests, but it ended up becoming the closest thing we have to an economic treatise from Burke. Throughout the memo, he stands back from the specific issue of the subsidy and offers general remarks on markets and government.
There are table-pounding remarks in favor of liberty in the memo: “The moment Government appears at market, all the principles of market will be subverted,” Burke wrote. Tampering with trade is based on “ill-founded popular prejudices,” he said.
To provide for us in our necessities is not in the power of Government. It would be a vain presumption in statesmen to think they can do it. The people maintain them, and not they the people. It is in the power of Government to prevent much evil; it can do very little positive good in this, or perhaps in any thing else.
Burke echoed Adam Smith’s famous line about the butcher, baker, and brewer when he wrote, “with thankfulness to the benign and wise disposer of all things, who obliges men, whether they will or not, in pursuing their own selfish interests, to connect the general good with their own individual success.”
Later on, Burke writes:
The balance between consumption and production makes price. The market settles, and alone can settle, that price. Market is the meeting and conference of the consumer and producer, when they mutually discover each other’s wants. Nobody, I believe, has observed with any reflection what market is, without being astonished at the truth, the correctness, the celerity, the general equity, with which the balance of wants is settled. They who wish the destruction of that balance, and would fain by arbitrary regulation decree, that defective production should not be compensated by encreased price, directly lay their axe to the root of production itself.
When he writes of market participants discovering each other’s wants, Burke foreshadows economist James Buchanan, who would write in 1982 about how “the ‘order’ of the market emerges only from the process of voluntary exchange among the participating individuals.”
Burke argued against price controls, even and especially in times of shortages, because they discourage the amelioration of that shortage by removing the incentive to produce. “We, the people, ought to be made sensible, that it is not in breaking the laws of commerce, which are the laws of nature, and consequently the laws of God, that we are to place our hope of softening the Divine displeasure to remove any calamity under which we suffer, or which hangs over us,” he says.
Burke then launched into an incredibly detailed study of agricultural markets. We learn that the turnips of 1795 were “generally good” and that “Uxbridge is a great corn market.” Burke mentions that a different member of Parliament had “insinuated a suspicion of some unfair practice” that was causing a shortage of some goods. Burke, based on his careful study, disagreed, saying that nothing nefarious was going on, explaining the connection between crops and livestock that led to the shortages. “All the productions of the earth link in with each other,” he reminds us. Burke was so renowned for his knowledge of agriculture that the executors of his estate, who wrote a preface to “Thoughts and Details,” tell us that Adam Smith consulted Burke on the subject when writing Wealth of Nations.
Burke finishes the memo with this concluding sentence: “My opinion is against an over-doing of any sort of administration, and more especially against this most momentous of all meddling on the part of authority; the meddling with the subsistence of the people.”
Conclusion
Burke’s path to supporting free markets was not paved with equations or complicated graphs. He carefully studied how people act according to his everyday experience, and he observed the actual results of government policy as a member of Parliament. Based on those concrete observations, he developed principles about the proper role of government, and that role was quite limited.
As Samuel Gregg wrote in a 2021 paper, Burke “combined awareness of political facts, a commitment to what might be called the regime of the Empire, a belief that mercantilism was flawed, a confidence in the generally positive effects of free trade, and a willingness to invest time and energy in shifting political and commercial opinion in an economic direction that he thought would serve the interests of the Empire as a whole.”
That last part is key. Above all, Burke loved Britain — he was no proto-globalist — and he thought the British people capable of great things if only they were allowed to pursue prosperity. Economic liberty was indispensable to such prosperity — a point worth emphasizing today.
Edmund Burke’s Path to Free Markets
Found this concomitantly interesting from a political pov (the title may be a bit polarizing):
https://aeon.co/essays/conservatives-cant-claim-edmund-burke-as-one-of-their-own