Ask citizen of our G7 countries to visualize ‘government’ and what would probably spring to their mind is an image of the national Parliament or Congress or the Whitehouse, Élysée Palace or No.10 Downing Street. These are always impressive buildings – although there is no practical reason why they should be. They are intended to exude and symbolize ‘authority’, and in this context the Parliament, Assembly or Congress is primarily associated with lawmaking. Indeed Americans refer to their representatives as “lawmakers”.

Most analysts agree that the 19thC saw a huge expansion in law and rule making across the industrialized world to cope with the massive changes brought about by the emergence of capitalism, industrialization and urbanization. Indeed lawmaking was the very basis of capitalist expansion in the 19thC and before (Hodgson).  This stage might be called the ‘regulation of capitalism’ phase in which the basic rules of the new economy were laid down: property rights; contract law; limited liability and later joint-stock companies; rules about money, banking, etc. Alongside this grew some (limited) regulation of social, environmental and labour conditions.

The next phase saw increasing use of authority and regulation in both the economic and social spheres – especially the latter with the emergence gradually through the 20thC of the welfare state. Contrary to much myth, the welfare state was as much, if not more, about the use of authority and regulation as it was about simply spending more money or organizing more services. For example the post WWII welfare state reforms in Britain – often taken as the ‘ideal type’ – included the 1944 Butler Act which reformed schooling; the Family Allowance Act of 1945; the 1946 National Insurance Act; and the 1948 National Health Act.

Some have more recently argued that the reforms in G7 and other countries attempted since 1980 (Thatcher and Reagan) amounted to a switch from a (spend and organize) Welfare State to a (authorize and steer) Regulatory State. We will show that this both misrepresents the past and misunderstands the present reality of the G7 countries.