The latest History of Capitalism event hosted Maarten Prak
, Chair of Economic and Social History at the University of Utrecht (Netherlands
), for a lecture on why the Dutch Republic flourished in the 17th century.
In his lecture, titled 'Economy and Society: The Dutch Republic in the 17th Century', Prak examined the root causes of the Dutch Golden Age. A booming cultural sector; a highly commercialised agricultural sector; large urban populations with migrants who had cash to invest; religious tolerance; and the complex balance of a collaborative and progressive federal government, all played a part in the Dutch Republic’s flourishing.
Prak analysed three major theories about the Dutch Golden Age: Weber’s argument that the rise of the Dutch Republic is coterminous with the rise of Protestantism in Northern Europe; Israel’s assertion that the migration of merchants from Antwerp—cut off from the sea by the political conflict—was most important; and Ostrom’s claim that economic success came from strong institutions grounded in civic roots, rather than being imposed from above. Prak put these arguments into context, noting that all of these factors were in place before 1585, and that a ‘golden age’ could only come about when all parts of society were working well and in harmony with each other.
Prak noted that the seven provinces of the Dutch Republic shared a ‘common enemy'—in Catholic Europe. They were forced to cooperate in order to retain their autonomy and culture as part of a national identity. This collaboration was cemented by the complex institutional framework set out in the Union of Utrecht. Domestic policy remained in the hands of the provinces, and only foreign policy was decided by the State General. In this decentralised system, a multitude of urban groups were responsible for running their communities through guilds, charities and civic militias.
European leaders, following the path of absolutism in the same period, could have learnt much about the importance of good relations between local elites and centralised power from the Dutch Republic. Prak cited the success of local government in winning trust from their citizens, resulting in their willingness to pay high taxes—which were effectively voluntary—as a major reason why the republic enjoyed unrivalled prosperity during the period. By the 17th century the Dutch had the highest taxation per capita in Europe and possibly the world.
In the Netherlands the balance of power lay in favour of urban autonomy. By the end of the 17th century a third of the population of the Netherlands lived in cities. Despite having a population of just one million people there were 12 towns with a population of more than 20,000, including a significant proportion of migrants. Dutch prosperity at the time was based on a synergy of native and immigrant wealth and initiatives. Prak re-interpreted the impact of Protestantism on economic growth: “The Protestant work ethic” may have prompted different aspirations but a religion that required its members to read the bible in their own language required a literate population and an education system that produced this. Consequently, this growth in educated and literate human capital promoted economic growth.
The audience discussion included an assessment of what we can learn about historic power sharing institutions, particularly in comparison with the European Union. Prak claimed that the key lesson central powers can learn is to not impose uniform rules across a diverse region. The 16th century was dominated by the Reformation, but the 17th century, Prak argued, was concerned with the question of “who rules?” He highlighted the significance of William of Orange, later William III, on English governance in an age of absolutism, who introduced the idea that England would be more powerful if the nobility gave more powers to parliament.
The discussion was moderated by Hywel Williams, Senior Adviser at the Legatum Institute.
Podcast with Maarten Prak and Hywel Williams
About the Speaker
Maarten Prak is Chair of Economic and Social History at the University of Utrecht in the Netherlands. He specialises in the early modern period and has focused on the history of the Dutch Republic and European social history. His academic interests include the Dutch Golden Age, cultural industries, guilds and economic history. He has edited a number of books, including The Dutch Republic in the Seventeenth Century: The Golden Age; Guilds, Innovation and the European Economy, 1400–1800, and Early Modern Capitalism: Economic and Social Change in Europe, 1400-1800.
About the History of Capitalism Series
This series of lectures, which forms part of the Legatum Institute's 'The Culture of Prosperity' programme, investigates the origins and development of a movement of thought and endeavour which has transformed the human condition. Capitalism's characteristic emphasis on freedom of trade and market expansion has encouraged social mobility, global exploration and intellectual curiosity. Wherever and whenever it has appeared across the world's continents capitalism has undermined monopolies, economic protectionism and restrictive practices. Our lecturers will therefore be assessing case studies in business history and the individual biographies of thinkers, writers and inventors as well as describing particular periods in the histories of cities, states and nations. Further information available here.