Open societies before market economies: Historical analysis

Abstract

It is often assumed that the market economy and the open society reinforce each other and have risen together. Even those who are more skeptical about their long-run compatibility will usually agree that the rise of the two was part of a process of modernization, starting in early modern England and unfolding in the modern West. This article builds on the latest historical research to reject this assumption. It shows that several market economies existed much earlier in history. These were all preceded by social movements generating a more open society. In each of these cases, the functioning of the market economy slowly eroded social and, next, political openness, and later shriveled itself again. This endogenous, cycle-like process, in which the interaction of the market economy and the open society developed from positive to negative, may also be seen in modern cases, including the present USA.