“The Industrial Revolution and the
Netherlands: Why did it not happen?”
J. Mokyr (2000)
Summary: What’s the paper
about?
 Why was the Dutch Republic (DR) not a leader in the
Industrial Revolution (IR)?
 Lack of close co-operation between learned individuals
and innovators, and entrepreneurs.
 Cultural relics from the DR’s golden age and political
turmoil delayed this tech. development
 In 1860 these obstacles were overcome and the DR joined
the Western industrial process.
General Layout
 1. Introduction (very general)
 2. Knowledge and Technology
 3. Knowledge and the Industrial Revolution (IR)
 4. The Industrial Revolution and the Netherlands (DR)
 5. An Assessment
 6. Concluding Comments
1. Introduction (very general)
 The DR was indeed a sophisticated urban economy, but was a
latecomer to the IR.
 Mokyr takes a Kuznetsian viewpoint and states that DR
experienced an average 0.5% increase in real GDP p/a between
1760-1830, as oppose to the incremental and sustained growth that
characterizes the IR.
 1765-90, years of +ve feedback (systems theory – multiplier effect,
output becomes input which becomes even more output)
 Ideas of constraint on the DR, Malthusian (more growth = more
population = scarcer resources) and Smithian (commercial
expansion leads to rent-seeking)
1. Introduction (very general)
 Specifically in DR, new techniques (shipbuildng) warrant
investment in human capital, the gains of which once
entrenched will resist further innovation (Guild system)
 The IR brought +ve feedback growth, gathering speed between
Waterloo (1815) and the Crystal Palace exhibition (1851)
 1860, tech breakthroughs = increases in mass consumption and
income
 But how and why? Institutional partially, with rent-seeking in
DR being weakened by the French Revolution (rev.)
 But the key factor was new tech knowledge
2. Knowledge and
Technology

Mokyr emphasises that tech is a physical form of knowledge

2 key types: Ω(natural phenomena and regularities) and λ(how to do things – production)

The relationship between these two types of knowledge is key in the development story

Ω: The union of codified knowledge possessed by society, humanities and social sciences
omitted as they do not affect tech, knowledge means beliefs that are not necessarily true, it
is what we call science today but then it was merely “useful” (e.g. the direction of the trade
winds)

λ: The union of all feasible techniques (isoquant), comes from some prior knowledge
about nature.

Epistemic base can be any width, which governs the effectiveness of tech change. E.g.
medical advances were epistemically narrow and chance discoveries which rarely led to
new applications.
3. Knowledge and the
Industrial Revolution
 Knowledge had everything to do with IR
 Widening of techniques base allowed sustained improvement
 Not that things were invented in 1760s, but that they were developed
in 1820s, a change in the way useful knowledge was transferred
 “Scientific revolution” (SR) gave rise to a free, communicative ideaframework based on trust and authority. Knowledge became more
diffuse and available between 1720-80
 SR confirmed that science subdued natural forces to improve living
standards.
3. Knowledge and the
Industrial Revolution
 Learned societies in provincial towns aided idea sharing
and knowledge codification (Encyclopedia)
 The economically active confer with the intellectually
informed, starting +ve feedback growth. Known as
enlightenment (1820s)
 This was a Euro area process, didn’t happen in Asia (no
monopoly on science/engineering)
4. The Industrial Revolution
and the Netherlands (DR)
 Didn’t follow the UK, was among the last to have IR
 Slow to adopt and emulate new tech, slowed down by
1825 when UK accelerated.
 Prior to IR, DR was advanced, K and L markets,
commercialized agriculture, monetization, high degrees of
education
 Mokyr claims decay was based on: BAD LUCK &
GOLDEN AGE HERITAGE
4. The Industrial Revolution
and the Netherlands (DR)
 Bad Luck: War with England (from 1780) and France
(from 1795) coupled with political turmoil.
 Had to support a 25k French army and 230 million
guilders disbanded. Inflation and unemployment
following war hurt the maritime economy.
 Couldn’t really compete with Euro-protectionism and UK
manufacturing post-1814 due to weak economic position.
4. The Industrial Revolution
and the Netherlands (DR)
 Golden Age Heritage: The 17th century where DR trade,
science, military were among the best
 Due to cheap energy, trade monopoly with Japan (DR
East India Company), and commercial finance
 But under the economic regime of the time, gains from
trade and Smithian growth subject to socio-political
disruptions and diminishing returns.
 Manufacturing, productive agriculture and shipping were
key in this period for DR
4. The Industrial Revolution
and the Netherlands (DR)
 But the Dutch tech advantage was short lived (Cardwell’s
Law)
 Guilds and employee networks (rent-seeking), prevented
innovations whose adoption would affect the livelihood
of its members, -ve effects of old institutions
 Relics of an old commerical economy such as large debt,
decentralized politics, antiquated fiscal policy were
removed by the French rev.
4. The Industrial Revolution
and the Netherlands (DR)
 These painful changes caused DR to fall behind UK, who
could instigate these changes without violence, and avoid
French occupation.
 High wages in DR prevent higher profits and low rate of
K formation.
 DR didn’t match UK who were expanding Ω andλ, DR
wasn’t expanding λso further expansion was prevented.
 Jacob (1997): “Dutch commercial elite simply lost interest
in mechanical arts”
4. The Industrial Revolution
and the Netherlands (DR)
 Jacob claims two stances: UK where private sector undertakes innovation
(micro), and France where state does.
 DR had little or none of either (few links between innovators and
entrepreneurs after 1740) No change in tech before French conquest.
 General lack of societal interest in science and tech advancement (Camper
on facial geometry)
 Societies tried to bridge science gap (Bavatic society for experimental
philosophy and Felix Meritis), but this did not translate into tech gains.
 The commercial elite saw no profit in innovating. What may have seemed
an obvious investment move in hindsight may have seemed risk-laiden exante.
5. An Assessment
Mokyr: “What is amazing, in retrospect, is not that the Netherlands
failed to undergo this transition but that Britain did.”
5. An Assessment
 Not a failure that the Dutch Republic did not undergo
this transition
 British key to success was the ease by which the ‘savons’
(knowers) interacted with the ‘fabricans’ (makers).
 The British were first to incorporate newly acquired
“useful information” into their production techniques.
 Knock-on effect: Large investment in entrepreneurs and
inventors. British businessmen realised there were huge
gains to be found from new technologies
5. An Assessment
 Britain was first to “break the tyranny of negative
feedback” and led the way for modern economic growth
 Belgium’s economy followed on a similar trajectory
 Other followed different “trails” and did not experience
sustained economic growth until later (e.g. Switzerland,
France and eventually the Netherlands)
5. An Assessment
 Mokyr makes two counterfactual questions to conclude:
1. Would there have been a Continental Industrial
Revolution in the absence of a British one?
5. An Assessment
 Yes, however it would have taken place later and probably
slower.
 Dutch and other Continental engineers had considerable
capabilities to absorb the new technologies by the middle
of the nineteenth century.
 Technological advances after 1865 were even more a joint
North Atlantic effort. British leadership has faded.
5. An Assessment
2. What would the economic history of the Netherlands have
been in the absence of a French Revolution?
5. An Assessment
 Events in France could have transpired without such
violence
 The subsequent invasion of the Netherlands incurred
huge costs on the Dutch between 1795 and 1830
 Dutch institutions and government needed drastic reform
before 1795, however
 Mokyr argues that eventually the Netherlands would have
peacefully re-examined their institutional setup in light of
British success
6. Concluding Comments
 The Dutch economy’s actual path was determined by:
1.
The heritage of the golden age
2.
The political difficulties between 1780 and 1815
 These obstacles slowed Dutch progress down; surrendering
their former position as the most modernised nation
 Nonetheless the Netherland’s position as an integral part of the
western world ensured that they did follow Britain’s lead and
industrialised