You know the story. In 1057 Lady Godiva asked her husband Leofric, the Earl of Mercia, to reduce the heavy taxes he had laid on the people of Coventry. Leofric refused, but Godiva (the Old English name means "gift from God)" refused to take no for an answer. The Earl ended the discussion by telling his wife he would reduce taxes when she rode naked through the town of Coventry. Clearly he did not expect she would.

Lady Godiva thanked him, and asked all the people of Coventry to remain indoors. Loosening her hair to cover her as a cloak, she rode through the city, seen only by a fellow known ever afterwards as Peeping Tom. Her husband slashed taxes. As late as the 13th century, when Edward I enquired, the people of Coventry paid no taxes except on their horses.

Letting down her long, golden hair, Lady Godiva became the first recorded tax protester. The story of a vulnerable, naked woman confronting unjust taxes and achieving a victory, is emblematic. In subsequent centuries the history of freedom in Britain will be a relentless confrontation between the tax collector and the taxpayer. In case you are interested in the modern parallels, we’ve sketched a few details.

The people who largely created the creative, free and prosperous economy that Adam Smith described in The Wealth of Nations lived in Britain’s medieval cities and big towns. They had been fighting for their liberties and representative government since at least the 12th century. If they had not swung their powerful and rowdy support behind the knights and against John, there never would have been Magna Carta.

On the Great Wheel of Fortune that the English saw as a metaphor for life, a freeman who could not pay his rent or taxes might sink to the status of a serf, while a serf could rise and become free. More precipitously, a serf who escaped his lord and was caught could be mutilated, but if he managed to live in a charter borough for a year and a day without being caught he became a free man. The towns wanted craftsmen, and in places like London hid and protected skilled serfs.

In the towns the free man, whether English or foreign, had certain duties as well as rights. The medieval Londoner would have looked with wide-eyed amazement at modern foreigners paid to dwell in British housing by hard-working Brits. Medieval Londoners, and the Lombards, Danes, and French who lived among them, paid taxes to the city, took their turn standing armed watch at night, and joined in defending the city from attack. They had the notion that shared responsibilities created a shared sense of community, an idea too obvious to have much standing in 21st century London.

Because they had developed a form of representative government in their parishes, wards and great council, Londoners knew how their money was being spent. Nationally it was a different story.

One of the first things that the English paid for with their hard work was the danegeld, gold which English kings sent to the Vikings in an unsuccessful effort to keep them from attacking. Danegeld bears a resemblance to the British pounds that have been sent to the EU - there was no visible benefit. Well, except to the Irish, so that's alright, then.

When the Danegeld failed, the English paid for the navy built by Alfred the Great to protect them from attack. This was far more successful, and for a thousand years was money well spent, resisting invasions by the armies of the French, Spanish, and Germans. They've all turned over a new leaf, though, and the rest of the world is swaddled in peace, so no point in worrying about the Navy today.

One hundred years after Alfred, in the 970s, the English paid for Edgar's 'golden' rule, and were pretty happy to do so since his reorganization of the shire, hundred, and borough courts and sheriffs maintained just law and order. The difficulty occurred when the sheriffs became greedy, the judges became corrupt, and the king became an extortionist. This is why London demanded that its ancient liberties be restored in Magna Carta, and why the Great Charter established four principles of economic freedom -

1) The right to own property. Lands, houses, and franchises seized by the King without the legal judgment of the person's peers were to be restored. No freeman's property could be unlawfully taken.

2) No freeman could be fined so heavily as to have his livelihood destroyed.

3) In a move toward taxation with representation, the king could tax (assign aids) only when he had the agreement of 'the common counsel of the realm'. Knights, unlike Chancellor Brown, could assess only reasonable taxes on their free tenants.

4) The people's ancient rights to the common lands of forest and riverbanks were restored. Later, public parks and national forests such as Hampstead Heath and Epping Forest will spring from this right, as will the idea that access to the airwaves is held in common for productive use.

Excellent ideas, but how do you make them stick? The ever-practical English arrived at a solution, though not without forays to the battlefield, and not without placing their lives on the line. Naturally they avoided both expedients to the utmost degree possible, but when their backs were to the wall and the writing on the wall was written in their blood, they rose to the occasion.

Simon de Montfort (half French and half English) died to establish Parliament and the right of Parliament to approve or reject the king's taxes. Catching the ball he threw as he fell (if you don’t mind a sports metaphor), the knights of Parliament boldly refused to sail to France with Edward I in 1298. Instead they rode into London, demanded that the King respect Magna Carta, recognize the liberties of clergy and people, and lower taxes. Edward was forced to agree at the Parliament held in Lincoln that -

1) The King has no right to demand that the English fight whenever and wherever he demanded. They will support him only when they choose to.
2) The King can no longer plead 'urgent necessity' as a reason for imposing taxation without consent. In future, Parliament will have to agree to taxes.

We may forget they lived on knife’s edge. In the 1320s torrential summer rains wiped out harvests. Thousands starved. High taxes would have pushed many others over the edge, so despite and because of hard times, economic freedom was a priority.

And one that had to be relentlessly defended. In 1381 farmers and artisans rose in what they called the Great Revolt and historians erroneously call 'the Peasants’ Revolt'. Sending "messengers carrying letters and instructions from village to village," the free farmers and craftsmen marched on London, full of "confidence and hope."

They wanted an end to the poll tax (20th century Brits would also hate it); an end to serfdom; and the repeal of the law that unfairly froze their wages to pre-Black Death rates. As they marched they famously sang an old Labour hymn, 'When Adam delved, and Eve span, who was then the gentleman?'

In London the Revolt turned violent. The young Richard II dispersed them with false promises, and hanged a number of them. The survivors returned to their homes with one success – they had forced the Crown to end the poll tax. The movement to end serfdom went underground, where it gained strength.

A great step forward for economic freedom, serfdom in Britain ended in the 15th century not through legislation but through a change in thinking. A majority of English had come to believe that a person should be free to work where he liked for a living wage that he freely negotiated. (In contrast the majority of French and Germans working on the land remained serfs until the end of the 18th century; in Russia, serfdom lasted until 1861.) British women were also exploring opportunities, and working in businesses as manager-owners.

Meanwhile, Parliament was quarreling with Henry IV. In addition to freedom of speech, members of Parliament insisted on accountability in exchange for their tax money. It seems little enough to ask.

Accountability is an essential tool for checking the power of a ruler, and keeping government honest. It is necessary because corruption is a cancer that destroys the freedom and prosperity of all citizens, and their hopes for their children.

Funny, then, that five hundred years later we’re back to square one - European Union's auditors refuse to sign off on the Union's books, and millions of euros missing in expense frauds have apparently been pocketed by MEPs.

It is certainly cold comfort to the British taxpayer that her hard-earned money is being enjoyed by assorted MEPs. Centuries earlier the English had grappled with corruption. As long ago as the 16th century Thomas Cromwell, who has justifiably received bad press for trampling on property rights, managed to reform the major government departments of Signet, Chancery, and Privy Seal.

Not handsome or titled, a poor boy who had made good by dint of his administrative and financial talents, Cromwell reorganized these disheveled departments, made them accountable, and made them independent of the King's interventions. He established officers who would be cabinet ministers in our age, fully supported by professional civil servants.

In the areas of independence and accountability Cromwell established a standard and contributed inadvertently to the history of freedom, for it is in the very practical area of accountability that governments so often fail, and liberty and democracy are lost.

There are many other stories – the northerners who fought for their property rights in 1549, and died by the thousands; the five knights who went to prison rather than give Charles I the forced loans he demanded; the settlements after the Civil War and the Glorious Revolution that established Parliament’s role in deciding taxes and spending; the achievement early in the 18th century of copyright protections for intellectual property, without which intellectual property could scarcely be created; the arrogance of the Crown in laying taxes on British subjects in America without also giving them a voice in assigning those taxes and the revolution that resulted; the decades-long effort to repeal the Corn Laws and establish free trade; and speeding forward, as you, dear reader, must be longing to do, the current state of affairs where the European Union imposes heavy taxes, such as VAT, on Britain, imposes high tariffs on the computers and cars sold in the EU, establishes high trade barriers against the starving farmers of Third World countries, and in exchange provides no accountability, no return, and massive fraud.

The willingness of the British taxpayer to endure VAT, council taxes, income taxes, and even stealth taxes would boggle the old English mind. Convinced by their government that they are ‘doing good’, unwilling to look unflinchingly at knavery, preferring to believe the best about their government, or more preferably not to think about their government at all, the British people now face a Parliament unwilling to give them a voice in their taxes or their future.

When he published The Wealth of Nations in 1776, Adam Smith described the creative entrepreneurial developments of the British people. For Smith, and those people, freedom meant freedom to earn a living, freedom from burdensome taxes and trade restrictions, freedom from excessive government regulations, and the freedom to own and use property. Smith understood how the natural forces of self-interest, imagination and freedom could combine to create a tide lifting all boats.

Today we can see that the poor in Africa desperately need property rights, rights for women, just laws and free trade. They need economies based on the wisdom and energy of millions of free people. They need honest governments. These were the ideas that the British people put into effect over the centuries. There were injustices. They tried to right them. Even if that meant stripping down to their skin.