How Does Government Foster Markets During Industrialization?—The Underlying Logic of British Industrial Revolution

A nation’s poverty stems from its inability to mass-produce consumer goods and the means to produce them. However, mass production requires a mass market to be profitable. Nevertheless, the market is the most fundamental public good that requires state capacity to establish. Political stability, social trust, and infrastructure—the three cornerstones upon which markets emerge—are all products of state capacity. Where bandits roam, fraud is rife and neighbors live in isolation, markets cannot flourish. Infrastructure determines the spatial and temporal structure of markets, dictating the volume, direction, and speed of transactions and logistics.