His majesty's blue domain.

To Rule the Waves: How the British Navy Shaped the Modern World, by Arthur Herman (HarperCollins, 672 pp., $26.95)

IN his book The Constitution of Liberty, Friedrich Hayek called it the "liberal tide." It was a largely British tide, one that brought in its wake ideas that Hayek believed changed the world for the better--liberty under law, safeguards for individual freedom, open markets. No argument there. Nevertheless, in the 1860s and '70s, the liberal tide began to ebb. The British school of political economy became, in spite of its vast success, unfashionable; knowledgeable people argued that socialism was the wave of the future. The Commune was proclaimed in Paris; Bismarck repudiated the Rechtsstaat (rights-state) in Germany; the industrial nations began to develop elaborate welfare and administrative states. In 1933 Franklin Roosevelt abandoned one of the last shreds of British-based liberal order when he took the U.S. off the gold standard.

With the decline of British liberalism the writing of history, too, underwent a change. Earlier historians, such as Hume and Macaulay, had devoted themselves to trying to understand the British miracle: They praised innovations that contributed to British prosperity and censured practices that undermined it. When, however, the liberal tide began to go out, a new generation of historians emerged to repudiate the liberal or "Whig" historians. In his 1931 book The Whig Interpretation of History, Sir Herbert Butterfield condemned the thinking that had prompted Macaulay, in his History of England, to declare that "the history of our country during the last hundred and sixty years is eminently the history of physical, of moral, and of intellectual improvement." For much of the 20th century, liberal history--Whig history--was a dead letter.

In the last few years the tide has again begun to turn. We are now as eager as Macaulay's and Hume's readers once were for works of history that teach us how free states evolve and explain why they prosper. No historian has been more ingenious in meeting this demand than Arthur Herman. In his last book, How the Scots Invented the Modern World, Herman brought to life the Scottish Enlightenment, a movement whose importance was previously obscured by the opaque monographs of the academic specialists who make it their study. Although the Scottish Enlightenment has never enjoyed the eclat of the French Enlightenment, Herman showed that the Scottish sages--Hume, Smith, Lord Kames, Dugald Stewart--made the more beneficent contribution to the cause of human freedom. They explained, in a fresh and captivating way, why the British system of political economy worked.

In his new book, To Rule the Waves, Herman turns to another institution that contributed no less vitally to the spread of liberal order: the British navy. The book begins with a series of vivid pictures of the exploits of the Elizabethan seadogs--John Hawkins, Francis Drake, Walter Raleigh--who together shaped the sailing culture out of which the British navy emerged. All three men came from Devon in southwest England; none was an altogether amiable specimen. Hawkins trafficked in slaves; Drake was a cruel and vindictive sailor who once ordered the summary beheading of a rebellious underling. But the daring seamanship and enterprising spirit of the Devon mariners hastened the collapse of Spain's transmarine empire and prepared the way for Britain's dominion over the seas. While the seadogs preyed upon Spanish silver ships and established, with the edge of the sword, the principle of "unity of command"--the absolute authority of a captain on his ship--Tudor bureaucrats laid the foundation for a modern system of administrative control. The Navy Board, with its pool of expertise and principle of collective responsibility for strategic decisions, was a Tudor innovation, and represented as important a development in the management of naval affairs as the advent, in 19th-century Prussia, of the staff system of army organization.

The Navy Board would never possess the intellectual glamour of the Prussian General Staff. It never boasted minds that, like Clausewitz's or Helmuth von Moltke's, combined strategic brilliance with literary flair, nor did it ever develop a manual of strategy comparable to Clausewitz's On War. But although the Navy Board never attained the fame of the Prussian General Staff--a reflection, perhaps, of man's tendency to overvalue the intellect--its more prosaic approach to military matters was in the end more successful. The great Prussian Staff officers were anxious and melancholy Junkers with a bent for metaphysical speculation; the spirit of the Navy Board, by contrast, was exemplified by the stout good sense of Samuel Pepys, who under Charles II was appointed the board's surveyor general. Pepys's diary became a classic of English literature precisely because of its candor, its homeliness, its lack of literary self-consciousness. The same blunt realism that animated Pepys's diary inspired his naval reforms, among them the creation of the Royal Hospital for seamen at Greenwich. The German economist Werner Sombart once said that there are two kinds of empires: those founded in the common-sense calculations of mercantile peoples (the Handler), and those that flower in the heroic dreams of warrior castes (the Helden). What Herman calls "Mr. Pepys's Navy" was eminently suited to the sensibility of a commercial nation.

Great though the Elizabethan and Caroline contributions to the British navy were, the most important naval triumph of the period, the defeat of the Spanish armada in 1588, was brought about not by superior English seamanship, but by the weather. "Bad luck, bad planning, and bad weather," Herman writes, "doomed the enterprise, not the Royal Navy." It would be different the next time around. When, in the 18th century, the British navy confronted a new imperial power--France--it would decisively win epochal sea-battles. Advances in shipbuilding and seaborne supply methods helped make these victories possible. A first-rate 18th-century battleship like the Royal George carried 100 guns and a crew of more than 800 men. Improved methods of provisioning ships allowed the Admiralty to keep thousands of sailors at sea for months at a time. A naval culture that emphasized audacity ensured that the new technology was put to good use. "Lay a Frenchman close," an 18th-century British captain liked to say, "and you will beat him." When, in 1756, Admiral John Byng failed to engage the French fleet off Minorca, he was ordered home, tried, and executed.

But the struggle between Britain and France was more than a contest of fleets and armies: It was, writes Herman, a war "for the soul of the global system." The French system of political economy continued, in the 18th century, to be dominated by the ideas of Colbert, who in the previous century had served as Louis XIV's finance minister. Under Colbert France developed a command economy with a complicated apparatus of government monopolies and subsidized industrial activity. The system initially produced impressive results; but like other command economies it could not match, over an extended stretch of time, the wealth-producing capacity of less regulated economies.

The British navy's contests with France from the beginning of the Seven Years' War to the close of the Napoleonic Wars will always form the most romantic chapter in its history. It was at this time that the British naval officer assumed his characteristic dress and style, the dark blue coat and buff waistcoat that figure in the novels of C. S. Forester and Patrick O'Brian. It was during this time, too, that the greatest of Britain's naval heroes emerged: Horatio Nelson. The man who finally broke the French navy was not without his flaws: He was an arrogant and ambitious officer who as a young post-captain was in the habit of dismissing his superiors as "ninnies." But taken all in all Nelson was the greatest seagoing commander in the history of the British service. His personal courage was remarkable even in a profession where bravery was the rule rather than the exception. He was a natural warrior, unperturbed by violence. "Even in the frenzy of action," Herman writes, "he could analyze and exploit his opponent's weakness with the detachment of a stone-cold killer." His flag officers were devoted to him. "I had the happiness to command," Nelson said, "a Band of Brothers."

Nelson twice thwarted Napoleon in his ambition to bring England to her knees. When Bonaparte conquered Egypt and dreamed of achieving global dominion through the subjugation of India, Nelson destroyed the French Levantine fleet at the Battle of the Nile. ("Victory," Nelson said, "is not a name strong enough for such a scene.") The crippling of the French fleet left Bonaparte stranded in Egypt; only his famous luck enabled him to sneak back to France aboard the frigate Muiron. Later, when the French emperor projected an invasion of England--the English Channel, Napoleon was heard to say, "is a ditch which one can jump whenever one is bold enough to try"--Nelson again checked the Corsican's ambitious designs by destroying a second French fleet off Cape Trafalgar, south of Cadiz, a battle that cost Nelson his life and immortalized him as the great father of the British navy.

The Napoleonic sea-battles saw the British fleet at the height of her glory. When, in the next century, Germany and Russia rose up with their own visions of global empire, Britain's sailors demonstrated the same fortitude they had in the past; but Britain herself was no longer the decisive guarantor of free trade and open seas that she had been before. "That responsibility," Herman writes, passed into "other hands." Yet the record of Her Majesty's navy will continue to inspire as long as men take it into their heads to go to sea, and is recounted with style and mastery in this excellent book.

Mr. Beran is the author most recently of Jefferson's Demons: Portrait of a Restless Mind.