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The Dutch Golden age and the price of progress (65)

History is the best teacher

This weekend, I spent my time doing something I truly enjoy: reading history. I couldn't help but reflect on how little we have learned as a species. But could we perhaps do any better? Could we build complex systems that manage our resources optimally and work for the good of all?

Since we are taking a look at history, perhaps the best case to study would be the Dutch Empire - arguably the first modern state. It introduced a proto-constitution (Union of Utrecht), the stock exchange and early ideas of freedom of religion and freedom of speech, along with many more aspects of modern life. 

Protestant David vs Catholic Goliath

All right, to the Dutch Golden Age we go then! But first, let's make a mental picture of the setting... Imagine a society that has little resources to speak of, surviving constant floods only through collaboration. This society is in danger: because the Catholic Spanish want to subjugate the Protestant Dutch.

So, what can you do to gain your independence against the superpower of your time? The Dutch did what they did best: collaborate and innovate.

Trade becomes empire

The tolerant society managed to use its resources wisely. It provided safe haven to the educated Jews that were fleeing from other places in Europe. It awarded important positions to people based on merit and not bloodline. But it was not enough.

It turns out inventing the world's first multinational company was the answer. The Dutch East Indies Company (or VOC in Dutch) was an organization established to secure the welfare of the newborn Dutch republic. Lots of money was the key to fighting a war, and the new global trading system was the best way to get it.

Profit, progress and plunder!

So, how did the VOC make money? Two main methods: raid the Spanish ships coming from the new world full of silver and gold and establish colonies in the east indies to secure the lucrative spices trade. But to be a pirate and a colonist, lots of good quality ships are needed.
 
The Dutch were very good naval engineers and could already build sturdy ships with efficient use of wood. Still, the poor republic could not afford the salaries of all these naval engineers. It couldn't take a loan either: seafaring is a risky business, so any ship building loan would have bad terms.
 
The solution instead, was to sell stocks to citizens! This way, they could raise huge sums, spread the risk, and most critically give everyone a stake. Now many had a vested interest in the company’s success. That helped keep corruption somewhat in check, unlike in monarchies, where power was concentrated. Sharing profits also meant sharing responsibility. It made resources more efficient and motivated people to succeed.
 
However, the pressure to keep returning profits also led to quite dark outcomes. The VOC was also responsible for committing horrible atrocities to the colonized populations. The company was instrumental in the slave trade and also managed its own plantations in South-East Asia. When ‘discipline’ was deemed necessary, the VOC went as far as massacring entire populations, as in the Banda Islands. Brutality was not a side effect or a poor decision of some officers. It was the company's way to fulfill its role: maximize returns and secure infinite growth.

Breaking free from the growth trap

What we should do today is remember the Dutch Golden Age and what was behind its rise. The road to success for any organization is to share the gains. Yet many companies have forgotten this, as shown by productivity gains since the 80s that haven’t translated into higher wages. What we should also remember is that demanding infinite growth will inevitably lead people to commit horrible acts. The alternative is not collapse, but redefining progress in terms of shared well-being.
 
Canonvenster: De Verenigde Oostindische Compagnie 1602-1799 - Maand van de Geschiedenis 
 

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