The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815

"This is the closest we have to a book by two Dutch authors because Van der Woude was Dutch and De Vries was also born in the Netherlands, but migrated with his parents to the US at the age of four. One of the interesting anecdotes about this book is that it was written in Dutch and English simultaneously. Van der Woude wrote his chapters in Dutch, and De Vries then translated those into English, while De Vries wrote his in English, which Van der Woude then translated into Dutch. As a result, the Dutch edition was published two years before the English edition, actually. Still, we need to read the English language edition because it has references and the Dutch does not. There is a big debate about the economic origins of the Dutch Golden Age. The debate is about whether it was the result of Antwerp merchants moving to Amsterdam, and taking Antwerp’s ‘golden age’ with them in their bags, or whether things had been happening already in the Dutch economy before 1600 that helped launch the Dutch Golden Age. This book comes down on the side of the latter opinion. Get the weekly Five Books newsletter Interestingly, these two authors started their work as agrarian historians. So, whereas traditionally the Golden Age was seen as the product of international trade, these two authors look at agriculture and industry as sources of growth as well. I think it’s fair to say that this is now the standard opinion among economic historians. The Golden Age was not the result of trade only, but of much broader processes that integrated developments in agriculture, industry, as well as trade into a very successful economy. And a ‘modern’ economy, because this book has a polemical title, claiming that the Netherlands in the 17th century was the first modern economy and not Britain in the 18th. They are also making the point that the first modern economy was launched not as a result of the invention of the steam engine, but by a combination of institutions, markets, and an integrated approach to economic processes. To prove this, they go into a lot of detail. It takes them 722 pages, 106 tables and 38 graphs to make their points. They dig deep. But at the core of their argument is the centrality of free markets, high agricultural productivity, technology in organizations and a state conducive to growth. They claim that all of those together helped to produce this outcome in a unique way. The Dutch Golden Age was the outcome of an endogenous process and not imported from abroad. Parker doesn’t have much to say about the economy and in this book the authors don’t have that much to say about the political context. The basic background to all of this is that in the western parts of the Netherlands, the soil became increasingly unsuited for grain production. So, already in the 15th and 16th century—and increasingly so—the Dutch were importing basic foodstuff, initially from France, and then increasingly also from the Baltic. To do so, they had to develop their transport because transporting bulk goods across long distances was expensive. So what you get is a shipbuilding industry that builds increasingly efficient ships. The pinnacle of that development is the first so-called fluyt -type boats, built at the very end of the 16th century in Holland. That allows Dutch skippers to become the transporters of Europe, which in turn brings a lot of trade to the Netherlands. Already in the 16th century, the Netherlands has the largest merchant navy in Europe and in the 17th century, the merchant navy of the Netherlands is larger than those of England and France combined, even though those countries are much larger, not only in terms of territory, but also in terms of population. This obviously had an impact on the shipbuilding industry and wood technology becomes much more sophisticated as a result. You get the development of the sawmill, which replaces hand-cut timber. There’s a whole mechanisation process going on there. The international trade brings all kinds of new products to the Netherlands, which boosts commerce, but also industry because there are new industries established—sugar and tobacco are exported to the rest of Europe. It’s a self-feeding process during much of the 17th century and, because of the federal state structure, ‘the state’ is not standing in the way of all these economic initiatives. Rather, they are stimulated by the local governments, who benefit from trade and industry."