We quote Emperor Leopold here because his touching concern for his subjects’ welfare (and their ability to pay their taxes) communicates a clear message: the government needs to play a big role in expanding his country’s economy. Instead of issuing a proclamation encouraging local entrepreneurs to innovate, he instituted an active policy, backed by state funds, to create important new industries. The idea of depending solely on local entrepreneurs to build such industries would not have entered his head.

Leopold was neither the first nor, certainly, the last head of state to hold such views. Rulers of his era were well aware that building a country’s economic prosperity had the desirable side-effect of increasing its power in international affairs, and many acted on that realization. In the late 1600s Sir Walter Raleigh observed, “Whosoever commands the sea, commands the trade, whosoever commands the trade of the world commands the riches of the world and consequently the world itself.” As a result, the competitive race to industrialize and sustain national trade advantages was a constant source of international friction, sometimes leading to war.