I admit to not being clear what the claim is myself. I'm responding to to something that is routinely implied-- and implicit in a lot of reactionary rhetoric-- but for which I have never seen an extended defense. Steel-manning would recommend the second choice-- but then, people in this thread are defending the former interpretation (at least in limited circumstances).

There might be good ways of evaluating the counterfactual claim. For example, we might examine measures we wouldn't expect technological changes to alter-- and see if monarchies performed better by those measures. Though of course-- the extent to which a government encourages or discourages innovation and economic growth is central to the question.