Domestic Distortions and the Early Emergence of the International Trade in Fire Insurance from the UK

摘要

British success in the late nineteenth century in positioning itself as the hub of the world economy is often interpreted as a triumph for liberalisation and free markets. Of course, there is a sense in which this was true. Britain's commitment to free trade and its willingness to specialise intensively in industry and services, whatever the cost for its agricultural sector, was a central element in enabling development in many primary economies across the world - and holds an important lesson for those concerned with trade negotiations at the beginning of the twenty-first century. But this commitment only took place after a prolonged domestic political battle and when Britain's first-mover advantages in industry and services had created such a strong comparative advantage that free trade was increasingly evidently a matter of national self-interest. The subsequent reinforcement of Britain's pre-eminence, especially in the role of the City of London as merchant and financier to the world, relied similarly on complex institutional and market issues that should never be simplistically interpreted through ex post rationalisation as the triumph of the market. This paper has offered an interpretation of the success of British insurance overseas that gives a central role to the highly collusive character of the business. This seems at least as convincing an argument as those that rely on dynamic entrepreneurship or on detailed institutional aspects of the firms involved. And it is certainly more convincing than arguments that rely on the highly competitive nature of British insurance markets. It seems highly likely this interpretation could be paralleled in other important sectors of Britain's overseas endeavours, especially, but not exclusively, banking. It seems that domestic distortions may not be simply problems to be accommodated by policy in the growth of trade. They may be important sources of change that shape the process itself.