Pioneers of Capitalism: The Netherlands 1000–1800

The Princeton Economic History of the Western World #132

by Maarten Prak, Ian Cressie (Translator), Jan Luiten van Zanden

How medieval Dutch society laid the foundations for modern capitalism

The Netherlands was one of the pioneers of capitalism in the Middle Ages, giving rise to the spectacular Dutch Golden Age while ushering in an era of unprecedented, long-term economic growth. Pioneers of Capitalism examines the formal and informal institutions in the Netherlands that made this economic miracle possible, providing a groundbreaking new history of the emergence and early development of capitalism.

Drawing on the latest quantitative theories in economic research, Maarten Prak and Jan Luiten van Zanden show how Dutch cities, corporations, guilds, commons, and other private and semipublic organizations provided safeguards for market transactions in the state’s absence. Informal institutions developed in the Netherlands long before the state created public safeguards for economic activity. Prak and van Zanden argue that, in the Netherlands itself, capitalism emerged within a robust civil society that constrained and counterbalanced its centrifugal forces, but that an unrestrained capitalism ruled in the overseas territories. Rather than collapsing under unrestricted greed, the Dutch economy flourished, but prosperity at home came at the price of slavery and other dire consequences for people outside Europe.

Pioneers of Capitalism offers a panoramic account of the early history of capitalism, revealing how a small region of medieval Europe transformed itself into a powerhouse of sustained economic growth, and changed the world in the process.

Genres: History, Economics, European History, Medieval History, Nonfiction

280 pages, Paperback

Published June 11, 2024

About the author

Professor of Social and Economic History at Utrecht University.

Reviews

[David]

Some moron I follow on Twitter likes to say that when people discover Marxism out of a deep sense of dissatisfaction with the world they inhabit, they must dedicate energy and time to study and understand what is by no means a simple or accessible world view; Marxism, for him, traps the revolutionary energy of bright young men and forces it down a tube of economic, philosophic, and historical study. It’s not clear what he advocates. Maybe instead of reading we should just throw bricks at police stations?
Anyways, I gained sentience 15 years ago and realized our family was Das Kapitalist, so now I need to read hundreds of pages about medieval water management and early modern futures markets. I’ve managed to convince myself that this is all very interesting and absolutely indispensable to the creation of a fairer world. The book isn’t bad, and it's nice to return to early modern Europe after a long hiatus. I don’t think this book is saying anything crazy.

[Kyle · Rating 5 out of 5]

This is a fascinating read for anyone interested in Dutch history, covering a long period of important economic history. The prose is on the more academic end, but it provides a fairly comprehensive look at how the Low Countries became a capitalist society after the era of "feudalism," a world and colonial power, and an important capitalist hub. The book covers the many positives of the Netherlands rise, but also the negative aspects (esp. for the areas put under Dutch colonial rule) created throughout this era while also commenting on some of the unique qualities of what became the Netherlands, esp. for the province of Holland (such as being at the border between the more "free" north and more "feudal" south of the Low Countries and the relatively [compared to European peers] economically and politically equal population making up the Republic).

[melancholinary · Rating 4 out of 5]

Honestly, there's not much that surprises me about this book. In the sense that, of course, the Dutch conducted many experiments with capitalist systems during that period (1000-1800), but so did other European kingdoms, nations, and states. As a community, the Dutch didn’t do much differently than other Western states, except perhaps the establishment of the Wesselbank. However, some aspects related to geography are quite interesting to note. One of them is the division between the south and the north, and how the differences between these regions played out. Additionally, the efforts to reclaim peatland during the early 12th-13th centuries, which, in my opinion, somewhat remind me of the lands in Borneo, are parts that are interesting to examine. Unfortunately, the book doesn't delve much into the financial capitalist relationship with colonialism. There is a specific chapter that discusses the relationship between the Wesselbank and the VOC, but I find it lacking in depth. Even so, as someone born and raised in Indonesia, I sense a certain bias when reading this book, especially in the context of colonial legacies. Reading this book seems to reinforce the various theses that argue colonialism is a form of capitalism (the writers argue at the beginning of the book that feudalism not necessarily organised as a capitalist system). There's one interesting idea in this book that I find quite memorable, which is the notion that most mainland Dutch didn’t want to engage in slavery because it wasn't in line with Christian principles. But when they came to the East Indies, all those beliefs were shattered by the argument that Asians had already practised slavery beforehand. A very intriguing argument to consider.

[Franco]

A bit rough if you don't have a good history background. The authors assume you already know a fair amount about different empires, eg: Carolingian, Holy Roman. It's also not a history of the Netherlands. Still quite interesting to read about capitalism before the industrial revolution.

[Dan Sexton · Rating 3 out of 5]

Three stars is below what I’d give the contents of this book for its discussion of the province of Holland’s economic development from the start of the second millennium AD until the French invasion of The Netherlands. I think the story the book tells in that regard is worthy of a four-star review. Unfortunately, I do not hail from the land of hard G’s and polders. My homeland is Brabant, North-Brabant to be precise, severed arbitrarily along a military boundary during the Dutch revolt against the Spanish monarchy’s absolutism. This land, my land, where we beat Rio and Cologne for the world’s best “Carnaval” celebrations, where the most successful team over the past 50 or so years of Dutch football hails from and where Guus Meeuwis dominates Top2000 voting charts, is hardly mentioned in a book supposedly about the development of The Netherlands from 1000-1800 into a capitalist society. How so? How come a region, notably exploited without the representation or local institutions they praise so highly, which was once on the periphery (some towns in fact more or less in the centre) of the most economically advanced society Europe had ever seen in 1500? A cultural hub which dominated the west of the continent?

It would have, to me, as a fervent Brabant nationalist at least, been a more interesting story to learn about what happened to the Dutch province which today stands only second to the two Hollands in terms of wealth and population in The Netherlands. Did the Dutch republic really have inclusive institutions? At least in Europe, as the authors claim? A brief look at the official name gives us an indication: the Republiek der Zeven Verenigde Nederlanden (Republic of the Seven United Netherlands) counts its seven provinces united in something of a federal system. The Netherlands now counts 12 provinces. What happened? Well, following the Napoleonic wars Dutch provinces were reoriented in a much more centralised, absolutist state. Holland was split into north and south, making 8, Drenthe had no seat in the States-General, but existed as a partner nonetheless, making 9 and Flevoland has the unique honour of being the largest body of manmade land in the world, having been established as a province in the 20th century. The final two new provinces are North-Brabant and Limburg. Limburg was never fully controlled by the republic, whereas North-Brabant was. For two centuries, the region was known as Staats-Brabant, “Staats” indicating the fact that the territory was ruled directly by the Raad van State, the Council of State.

This region was, together with the other regions ruled directly from The Hague, essentially treated as an “internal colony”, with catholics, dominant in most of these areas, treated as second-rung citizens by the central government until the 1848 constitution established religious freedom. They were also subjected to heavy taxation, something which plays no role in any of the discussions on the republic’s finances in this book. Topically, historian Joost Rosendaal once compared these areas with the Palestinian West Bank, and called Brabanders “our Palestinians”. So much for all those super inclusive institutions set up by the Hollanders this book tries to sell, and rightly compares to the extractive institutions in the colonies run by the VOC and WIC.

Luckily, Brabant today is one of the richest places on earth, with one of the most important companies worldwide in the technology sector, ASML. Nevertheless, the authors felt even the Frisians deserved more mention. The poor Limburgers, owing to the scattered borders in their province at the time, hardly get a mention at all.

Despite all of this, the book does give an excellent overview of Holland’s development in particular, and explains succinctly how the province and the fledgling Dutch state formed a crucial cog in the development of capitalism, and how the Hollanders were treated by that development. It fairly points out the differences in economic development in the 17th and 18th centuries, the latter being much more focused on, among other things, the development of plantation economies, a shameful part of our history. To anyone willing to learn more about that, this is a worthwhile book to read, which compiles heaps of excellent historical economic data. If you’re like me, and you think the rest of the country matters too, then this book will interest you, but also work well as rage bait. Houdoe! ❤️🤍

[Christopher · Rating 4 out of 5]

Florence stagnates, Portugal and Spain burst and diminish. The Netherlands takes their place. This small country in a northern, historically sparse, and water-bogged landscape manage to declare their independence from the global Spanish empire, but over the course of "the 80 year's war" beat them at home and Portugal in Indonesia to take over the monopoly of the Indian spice trade.

Why? Modernity.

1. More inclusive governments. City councils were filled with the business merchants. Jewish refugees from the Iberian pencinsula were welcomed. The protestant division in the lower countries also spurred relatively more religious tolerance. (though, for a time Catholic churches could only be built in "secret" - the outside looked like regular apartments.

2. Geographical limitations. Because of the low quality of land, over the centuries the lower countries imported grain from the Baltics by way of the North Sea. This gave this small country the know-how and experience to compete on the global seas by the 17th century.

The constant threat of flooding and demand for more land spurred the creation of local water management councils as early as the 13th century. Windmills started in the 15th century.

3. To finance these projects, the Dutch created bonds that could be divided into smaller portions. Women and middle class folks could place their savings in them. This raised more capital, creating more water management infrastructure. Eventually these practices lead to the first permanent joint-stock company, the VOC, the Dutch East India company. Because of the superior financial backing it had more resources than the haphazard funding of the Portuguese trade imperial forces.

One of the main reasons why the Dutch Republic could successfully rebel against the far larger Spanish empire was because of this financing. They had a functioning government that could consistently raise taxes and pay their soldiers and mercenaries regularly. Spain could not.

So why did their "Golden Age" only last during the 1600's? The authors argue it wasn't necessarily a fall. Rather, it was England catching up. Other nations adopted the taxation, banks, and the financial tools. This increased global competition meant the monopoly profits from trade declined. While the Netherlands lost it's relative global position, the standard of living at home remained constant.

This is a very good book. Even though it is 200 pages, it has enough of a dense slow pace to feel like more. (It covers 8 centuries of economic history, after all). Like all history, nothing is clean. After rejecting the Spanish Hapsburg Monarchy, they go without a King for centuries. Until Napoleon comes in and crowns his brother. Then we get on-again-off-again monarchs. Today they still have one.

After the fall of the Roman Empire, slavery slowly disappeared on the European continent. The relatively better system of serfdom replaced it. The Catholic Church strongly discouraged it. Yet, once the Dutch merchants arrived in the Indies, rather than bringing their beliefs with them, they adopted the surrounding economic ethic. Indeed, they came to embrace what the 19th century American Republican Party's Lincoln platform was established to abolish; the twin relics of barbarism - slavery and polygamy. Abroad they practiced one rule, while at home maintained their historical notions of "freedom." Initially the reformed Calvinist church condemned both, but eventually recognized their foreign legitimacy.

Oh - and they made good art. Speaking of, there is an economic debate about the role of guilds. Were they inhibitors to innovation, investment, and dynamism? Simply monopolizing an industry to earn economic rents? Or were they an organ for cooperation and sharing? They cite literature showing the Southern provinces had fewer and more monopolistic guilds. In the North, where there were many guilds and entry was easy, they helped spur innovation. And the Golden Dutch art movement that adorns museums across the globe still today? All guild artists.

[Nikhil · Rating 4 out of 5]

This book tells the story of the rise of a market-driven society in what is now the Netherlands. Many others have told the story from the perspective of the peak of Dutch capitalism and the famous Golden Age which produced iconic artists and Amsterdam's beautiful ways. What makes this effort from Prak and van Zanden different is concision and the use of newer information and research on the medieval economy and living standards. Their narrative is of a market society which emerges from balances of power and influence: between the heart of feudalism and uncontrollable free lands, between city and country, between church and lord, and between cities and other cities. A special mix of competition and cooperation enabled first the growth of population via drainage and land improvement and then the true flourishing of cities. This was no doubt aided by the geographic characteristics of the area, well-placed for maritime commerce as well as being relatively defensible (a key reason the Dutch win their independence and part ways from Belgium in this telling). The role of religion in initially ordering society and promoting literacy is discussed as is the relatively early emergence of a kind of religious tolerance. A notable and useful contribution.

[M.süheyl Karakaya · Rating 3 out of 5]

The book is well-researched and fairly well-presented. By the end, you gain a rough understanding of the development of capitalism in the Netherlands, which is not something you would typically expect from an academic piece. One amusing aspect of the book is how colonial history is largely skipped. The authors refrain from tackling colonial aspects in the relevant chapters, instead directing readers to a separate chapter that deals with colonial history and capitalism. However, when you reach that chapter, you find that there is nothing substantial to read. I remember only one argument: "They were practicing slavery long before we arrived, so we didn't invent it." Okay, haha, fair enough. Excluding this aspect, it is a good academic piece. However, I don't know if this would be the definitive book if you only have time for one book on this topic.