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Play Penn for Law Market

November 20, 2010

On a tip from Peter Boettke I’ve been thumbing through Jonathan Hughes’ The Vital Few, a history of entrepreneurial activity in America. He focuses not just on obvious inventors like Thomas Edison or on expert managers like Andrew Carnegie, but he also writes about the lives of institutional entrepreneurs who proposed innovative rule sets to order economic and social activity in a new ways. The one worth reading about is William Penn, architect of the first constitution to establish religious freedom. His foray into governance is a remarkable story that speaks to the power of rule innovation. (And before you raise your own status by saying, “Yeah, but Penn mistreated natives,” think again and dig into history because it turns out he was denigrated by his contemporaries for treating New Worlders as equals. He was a pacifist Quaker. I’m not saying he was perfect, but…)

Penn first proposed religious freedom in Pennsylvania in 1682:

That all persons living in this province, who confess and acknowledge the one Almighty and eternal God, to be the Creator, Upholder and Ruler of the world; and that hold themselves obliged in conscience to live peaceably and justly in civil society, shall in no ways, be molested or prejudiced, for their religious persuasion, or practice, in matters of faith and worship, nor shall they be compelled at any time, to frequent or maintain any religious worship, place or ministry whatever.

Of this rule innovation, Hughes remarks:

These laws were written by an Englishman, ascribed to by Englishmen, at a time when the English King was ruling without Parliament, when England was still trembling from the terrors of the Popish Plot, when religious prosecution was raging, the prisons filled and when, in the fight between the Tories and the Whigs, religious nonconformism was again to be linked by association with treason…

Life was harsh in the new world colony, but for the persecuted, it was worse in the homeland. But, thanks to Penn, the times were a changin’. The costs of opting out of religious totalitarianism were decreasing.  And the benefits of opting into a rule set that offered freedom were on the rise. Hughes again:

After years of indifferent success in their colonization schemes, the Stuarts had granted a charter which would not only soon attract thousands from Britain and Europe, but would absorb settlers from other colonies as well. Virginia and New York during the late 1680s were losing young men of military age to Pennsylvania; army garrisons were threatened by desertions to the Quaker settlements, and Maryland’s border had to be patrolled to intercept deserters from the British fleet. Moreover, Pennsylvania attracted men of wealth as well as those of poverty. Her institutions were free, her land rich, and the new colony was soon a success in the New World.

Through competitive governance Penn established a beachhead for freedom of the mind. Its success later spread around the world. Innovative rule proposal led to widespread adoption of a newly found best practice. This is the innovation we’re lacking in our supposed age of accelerating technological change. Penn was an entrepreneur in a law market and he proposed a rule set his contemporaries thought ridiculous. What’s incredible is that he accomplished this stroke of genius in an age of burn your eyes out and then light your body on fire extreme intolerance. Even members of the Objectivist fan club aren’t treated so poorly nowadays. I would say his closest modern equivalent would be John James Cowperthwaite.


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