Market Disciplines in Victorian Britain

One of the many miracles of Victorian Britain’s market economy was that it worked most efficiently when it was left to regulate itself – or at least, this is what the great majority of Victorians believed. The prevailing economic orthodoxy throughout the nineteenth century assumed, following Adam Smith, that the market was naturally self-governing, and that economic intervention was generally unnecessary and usually unproductive. This was a policy regime under which the Victorian economy thrived. Yet even as this orthodoxy seemed to become embedded in a public policy of free trade and minimal government in the 1840s, there emerged a recognition that in some circumstances the discipline of the market could not be relied on to produce optimal outcomes. J. S. Mill identified a number of economic 'problems' - natural monopolies, public goods, externalities - for which the unregulated market could produce sub-optimal outcomes, and this analysis provided an intellectual rationale for limited government intervention. However, belief in the autonomy of the market was such that, even as economic policy became increasingly interventionist, most refused to acknowledge that the market in Victorian Britain was a constructed, not a natural phenomenon. The idea that the market was a legal and ideological construct, value laden and structured to promote certain interests, was inconceivable to most Victorians, and remains so today. This paper explores how the ideological environment into which facts arrive can be the most important criterion upon which their acceptance or rejection depends. This paper looks at a number of the dilemmas regarding the market system that exercised the thoughts of Victorians. In three separate sections the paper looks in turn at cases of market discipline, of market indiscipline, and at ways in which the market itself was disciplined from outside.