As soon as this drastic step was taken, the mechanism of the self-regulating market sprang into gear. Its impact on society was so violent that almost instantly, and without any prior change in opinion, powerful protective reactions set in. Social democracy can be thought of as the synthesis through which the market, while remaining an important institution, re-acquired its social context. While the backlash was one inevitable consequence of a system as unnatural as laissez-faire, another inevitable consequence was the deceleration of British productivity growth in the second half of the nineteenth century. By making labour into a cheap commodity, incentives to innovate as a means of saving on labour diminished.
Cheap labour can only take a nation's economy so far.
The torch of economic creativity moved away from Britain in the middle part of the century, to the European continent and to North America. When science gave the Industrial Revolution its second wind, Britain fell behind. Tertiary education in Britain was grossly sub-standard compared to Europe. As Adam Smith had foreseen, the great transformation had been a social transformation, the creation of a people subservient to the machine. Benthamite liberalism meant the replacing of Parliamentary action by action through administrative organs.