Van Zanden J. L. (2002) The revolt of the early modernists and the first modern economy

Van Zanden, Jan Luiten (2002) “The ‘revolt of the early modernists’ and the ‘first modern economy’: an assessment”, Economic History Review, 55/4, 619-641.

Introduction

The vision the historians (Abel, Le Roy Ladurie) of the 1950-60s had of the early modern European economy was particularly pessimistic. They emphasized increase of poverty and production ceilings. In their view this agrarian stagnation was abruptly ended by the Industrial Revolution (I.R.). Later the consensus shifted toward a more gradual improvement of productivity and the very term ‘revolution’ was kept only out of convenience (Craft) (p.619). Developments such as international trade, proto-industry, enhanced agricultural productivity were seen as necessary for the structural changes of the 19th century to take place. De Vries branded this revisionist pattern the ‘revolt of the early modernists’ (Persson).

Bold claims
De Vries and Van der Woude (DVVW) qualify the Dutch pre-industrial economy as the first modern one based on the following characteristics:
– markets were reasonably free and pervasive;
– strong agricultural productivity supporting a far-reaching division of labour;
– state-guarantied property rights, freedom of movement and decent the conditions of life of most;
– technology and organization capable of development and market-oriented consumer behaviour (p.620).

The existence of growth according to these authors is made clear by the much higher real wages the Dutch population enjoyed around 1600 compared to the rest of Europe and by the fact that by the mid-17th century only England had managed to close the gap (the upward trend having started around 1570). They also estimate that the halt in the Dutch economic growth around 1670 was caused by weak demand and not as usual in agrarian economies by weak supply (see Malthus). Thus the Low-Countries would have enjoyed the type of economic expansion other nations would know during the I.R., but two centuries earlier (p.621)!

The author’s aim in this article is to evaluate these claims: were the Netherlands so specific and what was the genesis of the characteristics De Vries saw in the Dutch economy (p.622)?

Real wages
The rising standard of the Dutch population living conditions is at the core of De Vries’ argument. The author strengths De Vries’ indexes with new data that are consistent with De Vries’ findings (p.624-626).

Differences
Nominal prices of consumer goods have increased tenfold between 1450/74 and the 1630s and have remained roughly unchanged after that (while De Vries’ index indicated a decline). Nominal wages lagged behind, between 1500 and 1650 (the so-called price revolution) a construction worker’s daily salary only increased fivefold. Real wages may have declined by as much as 40% between 1450 and 1550 (the double of DVVW’s rate), similarly the author finds no trace of the increase in real wages DVVW claim took place after 1570 (p.627). After 1680, the author finds real wages roughly stable at around 60% of the 1450’s rate. The purchasing power in London and Southern England and its variations are consistent with the ones of Holland during the 16th and 17th centuries (p.630). There is thus no such thing as a Dutch exception as far as real wages are concerned.

Former researches on the pre-modern European GDP per capita have shown that just a few regions enjoyed growth and where it did occur it was slow. Even in the most dynamic regions, it is unlikely that it doubled from 1500 to 1800 (p.631). Being the most urbanized economy in Europe, it is likely that Holland enjoyed a 10 to 20% advantage around 1500 over England, this advantage grew to 30 to 40% around 1650, then the gap was gradually closed. England being the second European economy it confirms DVVW’s claim that the Netherlands were special, the English economy was still very agriculture-based which ensured good living conditions but limited the value of its output (p.632).

Where did the Dutch riches come from?
DVVW did not provide any explanation from the Dutch advantage. Two set of reasons are usually given 1) the Dutch Golden Age is rooted in the Medieval riches and industriousness of the Flanders (DVVW), or 2) it has been mainly caused by the rise of Amsterdam as the world’s entrepôt after 1560 (Israel). DVVW argue that it is Holland’s qualities (low transaction costs, efficient market, good supplies of shipping) that allowed it to take the lead, not the fall of Antwerp (p.633). The author confirms those qualities by showing that around 1500 already a significant part of the workforce was outside of the agrarian sector and that most of the GDP was produced by the industrial and service sectors (p.634).

But if the structural transformations (division of labour) that fuelled the Dutch growth were already present at the beginning of the 16th century, what did cause growth during the next two centuries? Specialization went forward (agriculture only represented 20% of the workforce by 1800) but it may not be sufficient to account for the Dutch Golden Age (p.635). De Vries assumes that the unique Dutch structure was due to the absence of feudal past which triggered the rise of an individualistic culture. But this interpretation is not supported by recent research (p.636).

Van Zanden concludes that paradoxically the revolt of the early modernist only proved that the conditions for growth were present before 1500, and there should be a revolt of the medievists sooner or later (p.639).

Bibliography
The bibliography provided with this article is excellent and extensive so here are the main books and articles mentioned and important for the debate
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Boulton, J., ‘Food prices and the standard of living in London in the “century of revolution”, 1580-1700’, Econ. Hist. Rev., LIII (2000), pp. 455-92.
Crafts, N. F. R., British economic growth during the industrial revolution (Oxford, 1985).
Davids, C. A., ‘Maritime labour in the Netherlands, 1570-1870’, in P. C. van Royen et al., eds., ‘Those emblems of hell’? European sailors and the maritime labour market, 1570-1870 (St John’s, 1997), pp. 41-72.
Furubotn, E. G. and Richter, R., Institutions and economic theory (Ann Arbor, 1998).
Goy, J. and Ladurie, E. Le Roy, eds., Prestations paysannes, dîmes, rente foncière et mouvement de la production agricole à l’époque préindustrielle (Paris, 1982).
Greif, A., ‘The fundamental problem of exchange: a research agenda in historical institutional analysis’, Eur. Rev. Econ. Hist. , IV (2000), pp. 251-85.
Hatcher, J. and Bailey, M., Modelling the middle ages: the history and theory of England’s economic development (Oxford, 2001).
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Israel, J., Dutch primacy in world trade, 1585-1740 (Oxford, 1989).
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Ladurie, E. Le Roy, ‘L’histoire immobile’, Annales E.S.C. , 29 (1974), pp. 673-92.
Malanima, P., ‘Italian economic performance, 1600-1800’, in A. Maddison and H. van der Wee, eds., Economic growth and structural change: comparative approaches over the long run on the basis of reconstructed national accounts (Eleventh International Economic History Congress Milan 1994, session B 13) (Milan, 1994).
Mendels, F., ‘Proto-industrialization: the first phase of the industrialization process’, J. Econ. Hist., 32 (1972), pp. 241-61.
North, D. C., Structure and change in economic history (New York and London, 1981).
North, D. C., Institutions, institutional change and economic performance (Cambridge, 1990).
North, D. C. and Weingast, B. W., ‘The evolution of institutions governing public choice in seventeenth-century England’, J. Econ. Hist., 49 (1989), pp. 803-32.
Persson, K. G., Pre-industrial economic growth: social organization and technological progress in Europe (Oxford, 1988).
Rappaport, S., Worlds within worlds: structures of life in sixteenth-century London (Cambridge, 1989).
Rogers, J. E. Thorold, A history of agriculture and prices in England (repr. Oxford, 1963).
Slicher van Bath, B. H., ‘The economic and social conditions in the Frisian districts from 900 to1500’, AAG Bijdragen, 13 (1965), pp. 97-133.
Snooks, G. D., ‘Great waves of economic change’, in idem, ed., Was the industrial revolution necessary? (1994), pp. 43-79.
de Vries, J., ‘On the modernity of the Dutch Republic’, J. Econ. Hist., 33 (1973), pp. 191-202.
de Vries, J., The Dutch rural economy in the golden age, 1500-1700 (New Haven and London, 1974).
de Vries, J., European urbanization, 1500-1800 (1984).
de Vries, J., ‘How did pre-industrial labour markets function?’, in G. Grantham and M. MacKinnon, eds., Labour market evolution (London and New York, 1994), pp. 39-63.
de Vries, J., ‘The industrial revolution and the industrious revolution’, J. Econ. Hist., 54 (1994), pp. 249-70.
de Vries, J., ‘Dutch economic growth in comparative-historical perspective’, [/i]De Economist[/i], 148 (2000), pp. 443-67.
de Vries, J., and van der Woude, A., The first modern economy: success, failure, and perseverance of the Dutch economy, 1500-1815 (Cambridge, 1997).
van Zanden, J. L., The rise and decline of Holland’s economy (Manchester, 1993).
van Zanden, J. L., ‘Tracing the beginning of the Kuznets curve: western Europe during the early modern period’, Econ. Hist. Rev., XLVIII (1995), pp. 643-66.
van Zanden, J. L., ‘Wages and the standard of living in Europe, 1500-1800’, Eur. Rev. Econ. Hist., 3 (1999), pp. 175-98.
van Zanden, J. L., ‘Early modern economic growth, a survey of the European economy, 1500-1800’, in M. Prak, ed., Early modern capitalism (2001), pp. 69-87.
van Zanden, J. L., ‘Taking the measure of the early modern economy: historical national accounts for Holland in 1510/14’, Eur. Rev. Econ. Hist., 6 (2002), pp. 3-36.

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