Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330496 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Essays in Economic & Business History (EEBH) [ISSN:] 2376-9459 [Volume:] 42 [Issue:] 2 [Year:] 2024 [Pages:] 55-74
Publisher: 
Economic and Business History Society (EBHS), Rockford, MI
Abstract: 
The theory of interventionism argues that government interventions are inherently destabilizing, which in turn helps explain the growth of government. I argue that the theory of interventionism is also useful for explaining the process of economic growth. At first, an intervention reduces living standards as a level change. However, because the intervention alters entrepreneurial incentives, there is a second effect that decelerates economic growth (Czeglédi 2014). The theory argues that any additional intervention to deal with the distortions generated by initial interventions merely accentuates these two effects. Thus, the dynamics of interventionism entail a cumulative process of divergence. To illustrate this argument, I use the example of milling regulations in colonial Quebec. Directly, these regulations reduced the quantity and quality of milling services. However, indirectly, they altered long-run specialization patterns, notably in dairy production. As dairy exports later boomed due to exogenous factors, this alteration eventually led to greater divergence.
Subjects: 
Quebec
Canada
Dynamics of Interventionism
Austrian economics
Dairy Sector
Milling
Agricultural economic history
JEL: 
N51
N41
B53
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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