By Ryan McMaken
Mises.org
June 28, 2023

It is not uncommon to encounter political theorists and pundits who insist that political centralization is a boon to economic growth. In both cases, it is claimed the presence of a unifying central regime—whether in Brussels or in Washington, DC, for example—is essential in ensuring the efficient and free flow of goods throughout a large jurisdiction. This, we are told, will greatly accelerate economic growth.

In many ways, the model is the United States, inside of which there are virtually no barriers to trade or migration at all between member states. In the EU, barriers have been falling in recent decades.

The historical evidence, however, suggests that political unity is not actually a catalyst to economic growth or innovation over the long term. In fact, the European experience suggests that the opposite is true.

Why Did Europe Surpass China in Wealth and Growth?

A thousand years ago, a visitor from another planet might have easily overlooked Europe as a poor backwater. Instead, China and the Islamic world may have looked far more likely to be the world leaders in wealth and innovation indefinitely.

Why is it, then, that Europe became the wealthiest and most technologically advanced civilization in the world?

Across the spectrum of historians, theories about Europe’s economic development have been varied, to say the least.2 But one of the most important characteristics of European civilization—ever since the collapse of the Western Roman Empire—has been Europe’s political decentralization.

Raico continues:

Although geographical factors played a role, the key to western development is to be found in the fact that, while Europe constituted a single civilization—Latin Christendom—it was at the same time radically decentralized. In contrast to other cultures—especially China, India, and the Islamic world—Europe comprised a system of divided and, hence, competing powers and jurisdictions.3

Although modern EU centralizers are attempting it, at no point has European civilization ever fallen under the dominion of a single state as has been the case in China. Even during the early modern period, as some polities managed to form absolutist states, much of Europe—such as the highly dynamic areas in the Low Countries, Northern Italy, and the German cities—remained in flux and highly decentralized. The rise of the merchant classes, banking, and an urban middle class—which began as early as the Middle Ages and were so essential in building industrial Europe—thrived without large states.

After all, while a large polity with few internal borders can indeed lead to large markets with fewer transaction costs, concentrating power in one place brings big risks; a state that can facilitate trade across a large empire is also a state that can stifle trade through regulation, taxation, and even expropriation.

The former vast kingdoms and empires of Asia may have once been well positioned to foster the creation of a wealthy merchant class and middle class. But the fact is this didn’t happen. Those states instead focused on stifling threats to state power, centralizing political control of markets, and extorting the public through the imposition of fines and penalties on those who were disfavored by the ruling classes.

More on link:

https://www.lewrockwell.com/2023/06/ryan-mcmaken/radical-decentralization-was-the-key-to-the-wests-rise-to-wealth-and-freedom/