As Hegel tell us in the Intro to the Philo of Right "The owl of Minerva only spreads it wings with the falling of dusk." Philosophy can never tell us what should be, only what is. History can only be understood when it is cut and dried. Why no consciousness of economics among the Dutch? because economics was only emerging as a distinct institution/special activity. The pursuit of wealth was still integrated into other activities whether religious, political or social and not understood as a distinct and singular task. We have to wait 2 centuries, until Adam Smith, for the pursuit of wealth for the sake of wealth itself to be viewed as a special, distinct and singular activity and then we find the development of a consciousness of economics.
-----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of michael perelman Sent: Monday, May 11, 2009 6:49 PM To: Progressive Economics Subject: Re: [Pen-l] Excellent article on Jared Diamond and the New Yorker I have been thinking a lot about the success of the Dutch, who had few resources vis-a-vis Diamond's article, in my new book about 17th C. & early 18th C. economics. Here is the opening sentence to give you a flavor of the book. Here is a short section from the second chapter on the Dutch economy. This chapter contains none of the crimes & scandals that occupy the rest of the book: Comments would be very much appreciated: Despite the overwhelming importance of Holland as a model for the rest of the world in the 17th century, continuing the story of economics by turning to Holland might seem curious, if not jarring. After all, the country produced virtually no economic thinking of importance at the time. A few Dutch writers -- Bernard Mandeville, Jacob Vanderlint, and Matthew Decker -- did make interesting contributions, but only after they left Holland (Davids 2001, p. 250). Some might think that the absence of economic thinking might be surprising in light of the Dutch success, but this lack of interest in questions of economics is quite understandable. Just as most people do not give much thought to their spleen, unless it is malfunctioning, people generally turn to thinking about economics only after economic performance has become unsatisfactory. And, the Dutch economy in the early 17th century certainly was performing magnificently -- at least for the likely candidates to step forward as burgeoning economists. After all, the Dutch managed to take a tiny, soggy piece of land and turn it into the superpower of the day. An absence of natural wealth pushed the Dutch to innovate. While the Dutch lacked natural resources, they were blessed by an ideal location. First of all, the country had access to the natural wealth of the sea. Nature cooperated in the development of the Dutch fisheries, when a mysterious shift in the Gulf Stream in the early fifteenth century somehow moved the great herring schools from the Baltic down to a more convenient location in the North Sea. The Dutch took good advantage of this stroke of good fortune: ".. the Dutch were ready to exploit a new source of riches. New methods of preserving, salting, and smoking were devised, and the catch was exported to northern and southern Europe against return cargoes of corn, timber, salt, and many other commodities. From the fisheries sprang other secondary industries -- shipbuilding, barrel-making, net and sail manufactures. And as fishing was a seasonal occupation, ships were released for the carrying trade during the close season. [Wilson 1957, p. 2]" Charles Wilson, an impressive scholar of the Dutch economy, argued that this mastery of the fishing industry and its associated businesses was the foundation of the country's extraordinary economic success: "the fisheries ... were universally described as "The Dutch Gold Mine." A vast trading fleet, a powerful navy and colonial settlements followed. [Wilson 1966, p. 3]" "In addition, the Dutch sat strategically in an ideal place to operate as a hub of international trade. As Wilson explained, Holland found itself "lying midway between north and south Europe. The Dutch carriers were indispensable while the rest of the world was still in the early stages of commercial development" (Wilson 1966, p. 3)." As noted in the last chapter, the Dutch shipbuilding industry adopted the most modern technologies available at the time. Besides their efficiency in holding construction costs down, the Dutch designed their ships to save labor. Their ships could operate with only 18 sailors, while other nations required 26 or 30. As a result, Dutch shipping rates were far below anywhere else (Wilson 1966, pp. 5-6). Wilson observed: "In every branch of world trade, Dutch shipping held the monopoly at the beginning of the eighteenth century .... The only exceptions to this rule were a few ships from Sweden, Denmark and the Hanse towns. [Wilson 1966, p. 6]" This monopoly allowed the Dutch to profitably redirect much of the world's trade through Holland. Goods still moved through Holland even when the Dutch were neither the producer nor the intended consumer (Wilson 1966, p. 20). This practice allowed the Dutch to develop an extensive system of storage and warehousing. Much to the chagrin of their rivals, the Dutch merchants "refashioned Amsterdam from a regional seat of routine and prosaic bulk trades into the fabulous emporium of the world" (de Vries and van der Woude 1997, p. 668). The English commonly complained about how the Dutch were able to pile up much of the worlds' resources in their gigantic warehouses: "The abundance of Corne groweth in the East Kingdoms: but the great Store-houses for Grain, to serve Christendome, and the Heathen Countries (in times of Dearth) are in the Low-Countries ..... [T]he great Vintage, and Staple of Salt, is in the Low-Countries .... The exceeding Groves of Wood are in the East-Kingdomes: But the huge Piles of Wainscot, Clapboards, Fir-deale, Masts, and Timber are in the Low-Countries. [Keymer 1650, p. 8]" Even in agriculture, the Dutch led the world, coaxing maximum yields from their soggy fields through pioneering improvements in crop rotation and fertilization. Here again, resource poverty pushed the people to innovate (Slicher van Bath 1963, p. 242; de Vries and van der Woude 1997, p. 232). What is more, the Dutch seemed to put their success to good use rather than squandering their wealth of ostentatious consumption. Daniel Defoe, most famous as the author of "Robinson Crusoe., gave voice to the British admiration of the Dutch model: "'Tis generally said, the English get estates and the Dutch save them; and this observation I have made between foreigners and Englishmen, that where an Englishman earns 20 s. per week and but just lives, as they call it, a Dutchman grows rich and leaves his children in a very good condition. [Defoe 1704, p. 547]" According to one distinguished economic historian, "Englishmen of the 17th C. were always discussing, with a mixture of admiration, envy and hatred, the efficiency of Dutch agriculture, Dutch shipbuilding, Dutch industry, commercial methods, and banking" (Clapham 1941, p. x). Like Petty, virtually all of the major economists, until well into the 18th century, had some experience in Holland. Those who did not actually spend time in Holland still paid close attention to the Dutch success. In fact, economists commonly designed their policy proposals with an eye to imitating the Dutch achievements. In short, Holland was leading the way in making the transition from a market economy to a market society in which "the matters they [the merchants] valued most, whether material goods, social manners, cultural symbols, or intellectual pursuits, also came to dominate the lives of other people" (Cook 2007, p. 2). -- Michael Perelman Economics Department California State University Chico, CA 95929 530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
