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What to do in corona times? In early March 2020, when the corona pandemic reached the Netherlands, the government told us to stay home and do our work on-line. It felt a bit like having to leave Florence for a less risky place in the countryside, as happened to a legendary group of young ones during the Black Death pandemic of 1348. To make the most of it, and to discipline myself, I decided to tell a story every day (except on Sundays). In the 21st century such stories are called blogs, so I became a blogger and started my days writing ‘something’. After some experiments, three streams of blogs emerged.

Firstly, a few blogs, often in Dutch, were comments on the way in which the Dutch government handled the crisis (I tried to limit blogs about this topic, as the media were already extremely preoccupied with the subject; a few blogs were published via other media).

Secondly, there is a stream of blogs about nature – about the birds in my garden, and the stories they tell, and sometimes about wolves, or elephants. Some blogs are a spin-off of the history of Dutch nature I am writing together with Joop Schaminée, Rob Snelders, and Thomas van Goethem, but often they were based on what I as an amateur birdwatcher think I have learned about nature. Don’t take it too seriously.

Thirdly, by far the largest stream is about economic history, quantitative research, national and international differences in institutions and mentalities, lessons learned from research, and related topics. The book Maarten Prak and I are putting together about the Netherlands between 1000 and 1800 is a great source of inspiration for this stream, but I use ideas from work I have done during my entire academic career. There is often a personal touch, and I speculate about topics in ways that are beyond strict academic reasoning – and would certainly not have been approved by decent referees.

The challenge is to find out if I have 100 stories to tell, during the – I am afraid – 100 days of our solitude, our exile. I would rather be a Boccaccio and write about love and friendship, about fate and fortune, but I am an academic, so I write academic stuff. 

 

The solitude of the organ (29-4-2020)

The organ is a very special musical instrument, with a singular development path. As a kid and adolescent, I played the organ for many years with only modest talent, but it was the instrument of choice in the protestant family I grew up in. It has an interesting ‘einzelgang’ as an instrument, which is embedded in economic, technological, and musical developments over the centuries. The instrument was already born in classical antiquity. Its basic idea was to produce sounds via the blowing of air through a large number of pipes, each representing a separate tone, which could be regulated by a keyboard. One skilled operator, assisted by somebody who would keep the pressure of the air in the bellows at level, could produce complex music as well as a lot of noise. Circuses, where they could contribute to the drama, were the primary place where they were used in ancient times. In the Middle Ages the instrument – still relatively small – was (as many other things) christianized, a process that started when Pepin, the father of Charlemagne, in 757 received an organ from the Emperor of Byzantium. During the Middle Ages, they grew in complexity and quality, but most of them remained of the relatively small size that can be seen on many late Medieval paintings – on one of the right panels of the Adoration of the Mystic Lamb (Lam Gods) by Jan van Eyk for example. There it occupied its natural position in the centre of a group of singing angels (on one of the left panels).

At the same time, between about 1360 and 1520, the organ started to expand: voices were added to its repertoire (instead of the single voice of the simple organ on the Lam Gods), and to manipulate these voices, the ‘stop’ was invented, which made it possible to select one type of pipe with a certain sound (from loud trumpet to solid prestant) and ‘stop’ the others. The foot pedal was added, as were manuals, to add to the variety of music that could be played. The organ became a multidimensional instrument that could produce a large variety of notes over a vast range – a world in itself. This ‘sudden’ rise of the complexity of the instrument can perhaps be explained economically: the organ was a capital good that replaced labour (a full choir) in a period that capital was becoming increasingly cheap and labour – after 1348 – expensive. It required highly skilled labour – the trained organist – but skills were also becoming much cheaper in late Medieval Europe. There was also a technological dimension to this: the organ was one of the high-tech gadgets of the late Medieval period – together with clocks and carillons – that were linked to the big churches of the period, often symbols of pride of religious and civil (urban) authorities, and in a way anticipating, via complex mechanical innovation, the big engines of the Industrial Revolution (there is a brilliant book about one of the pioneers of this obsession with engineering in England, Richard of Wallingford, by John North, ‘God’s Clockmaker’, an abbot linked to St. Albans abbey). Precision manufacture of metals was key to the success of the new machines, which was based on the possibility to acquire high-quality steel, lead, and copper (and timber) to make the pipes and the delicate parts that formed the complex machinery. It is therefore perhaps no surprise that this transition to the large-scale organ was pioneered in Germany (in upper Rhineland). This was one of the most innovative regions of the European economy at the time (the printing press was another famous innovation of the 15th century pioneered here), and still has this tradition of craft-driven ‘maakindustrie’ that other countries lack. Summing up, the big organ was not an isolated innovation but part of a much larger process in which Western Europe developed more capital and skill intensive machines, making use of sophisticated engineering, and driven, to some extent, by changes in relative factor costs.

By growing so big in scale and scope, the organ could no longer be accommodated on the ground floor of the church. It moved up, to the north or the south transept or, most often, above the front entrance, but at a distance from the main action in the choir. This move away from the choir – the eastern part of the church and the group of singers – had enormous consequences. In a way, it split the musical development of European music in two: out of the singing in the choir, supported by a small group of instrumentalists, developed – in a nutshell – the complex musical tradition of Europe, leading up to the symphony orchestra of the 19th  century. The organ became a separate world, albeit following the same musical fashions and innovations that occurred in the other arena, but the organ only rarely was the source of innovation itself. This was a slow process, and at times – in the music of Bach for example, who directed his small choir that was positioned on the balcony near the organ – the two seemed to coalesce again, but after the music went to the concert hall the organ disappeared from mainstream musical tradition. It became a separate subculture, appreciated by a small group consisting mainly of organists and former organists. Nobody did more for organ music than Bach, but when I at some point suggested to brighten up the monthly Bach cantatas in Utrecht with organ music, it was pointed out that this was the surest way to lose part of our audience.

So this high tech product of the Late Middle Ages was and remained an instrument to support community singing, in particular in protestant services. Composers continued to compose specialized music for it, but the audience for this kind of music remained small. It followed a very different trajectory than its ‘brother’, the mechanical clock, which became increasingly popular, smaller, cheaper, and accessible for a larger audience. Perhaps we should not make too much out of it, but the solitude of the organ – or rather the organist – can be seen as a symbol of western (wo)man, focused on his/her sophisticated machine, but that is indeed probably making too much out of it. The ways of the Lord are mysterious and seldom pleasant.

 

 

Cumulative history or debate without an end? (28-4-2020)

My supervisor Ad van der Woude saw the writing of history as a ‘gezelschapsspel voor fijne luiden’, an intellectual pastime without much pretensions. He had studied history in Utrecht in the 1960s and was influenced by the Utrecht school, in particular, Pieter Geijl, who considered history to be a ‘debate without an end’, in which, almost at random, interpretations of the past changed, disappeared and came back again. Why intellectuals would want to invest their time in such a game, was not entirely clear, perhaps. This view, of course, contrasted sharply with left-wing ideas that the study of the past was serving a purpose – to understand the laws of societal evolution, making it possible to ‘assist’ these laws and steer society in the right direction.

A few blogs ago I raised the question if we understand the economy of the 16th century better than, for example, Charles V, who had access to almost all information that was available at the time. It is probably impossible to answer this question, but we perhaps try to address a more simple one: do we know more than economic historians in the 1960s or the 1980s? Have we made ‘progress’,  or has our paradigm simply shifted from the kind of Braudelian cum Marxian perspective that was fashionable in the 1970s, to the Douglass Northian – Daron Acemogluan Institutional approach that we have adopted in the last 20 years or so? It is difficult to argue that one theory is superior to another, and for sure, at some point, we will conclude that North is passé, so it is not entirely clear how to defend the case for progress at the level of theory.

However, there is at least one argument in favour of the idea that we know more than 40 years ago, and that is the development of quantitative economic historical research. When I present the results of the Maddison project to an audience, I show how much we knew about economic growth in for example the UK the 1960s (a few observations between 1870 and 1960), the 1980s (a time series from 1700 to 1980) and now (a time series that covers the better part of the millennium, with the first observation in 1086, and annual observations since 1250). And this thousand-years-graph can be enriched with similar estimates for Japan, China, Spain, Italy, Holland, and half a dozen other countries. I do not think anybody in the 1960s or 1970s, when Maddison started this kind of international comparative research in a systematic way, could have anticipated such an amazing result. The key to this success story was the fact that he was able to organize some kind of cooperation of the scholars who were separately working on their country and their period, and that he at the end of his career handed this collaboratory over to the next generation. This is, I think, the key to making such a project really cumulative: the research of all scholars has to be included, and at the same time the consistency of the results has to be maintained. Underlying ‘success factors’ were, of course, that conceptual problems had to a large extent been solved already, thanks to the international standardization of the national accounts, on which the historical research could build. And that GDP was seen as the key variable of economic development. This is to say that all estimates are perfect and reflecting the historical ‘truth’. There are large differences in the quality of the estimates and margins of error obviously become larger when going back in time. Maddison sometimes made impressionistic ‘guestimates’ to challenge scholars to disagree with him and make better estimates that were based on large-scale empirical research. This often worked and resulted in much improved (or real) estimates. So the Maddison dataset is work in constant progress, gradually covering more countries, longer time periods (also because each year another year can be added), and replacing low-quality estimates by higher quality data. Truly cumulative.

The Maddison dataset is, for us as economic historians, probably the mother of all collabs, but there are similar international comparative projects that have produced very valuable datasets. The work by Bob Allen and many others on real wages springs to mind first, but another good example is the database on the slave trade in the Atlantic. The oldest initiative in the field dates already from the 1930s, when the International Scientific Committee for the Study of Prices and Wages was set up; Posthumus was the Dutch member of this ‘global’ initiative. The historians of heights have done similar, international comparative work on the biological standard of living, and international datasets of educational attainment, demographic and gender-related variables and even the activity index of Parliaments have been constructed.

Quantification – the mystery of the number, which makes things comparable in time and space – is making it possible to write the economic and social and demographic history of countries and the world in a much more detailed international comparative way. Perhaps from the Geijl perspective, this is just another story, another interpretation that will at someday be replaced by another. And perhaps it is possible to agree that what really matters are not the numbers – which have no meaning in themselves – but the stories we tell on that basis. Quantification is a tool, like many others, but the last 60 years or so have shown that it is a very powerful one indeed.

 

De vrijmarkt en de opmars van het neo-liberalisme (27-4-2020)

Als Nederlanders hun nationale feestdag vieren – Koningsdag op 27 april – dan dansen ze niet in de straten of drinken zich allemaal een stuk in hun kraag, of dineren urenlang met la familia – maar dan spelen ze koopman en ondernemer. Dat heet de vrijmarkt, en het werkt zo: elk gezin verzamelt de spullen die ze over hebben, bijvoorbeeld omdat de kinderen er te groot voor zijn geworden of de boeken gelezen zijn. Deze handelswaar wordt ergens in het centrum van stad of dorp uitgestald en daarmee ter verkoop aangeboden. Daartoe worden deze binnensteden autovrij verklaard voor de duur van het feest, en zit iedereen of op de grond of op meegebrachte stoelen bij zijn of haar waar deze aan te prijzen. De Nederlanders die geen zin hebben om hun oude spullen te verkopen, zijn de potentiele kopers. Jong en oud viert feest door zich te vermommen als koopman die zijn/haar koopjes aanprijst, onderhandelt over de prijs en probeert een extra zakcentje te verdienen. Het verdiende geld wordt vaak gebruikt om op dezelfde vrijmarkt dingen aan te schaffen die volgend jaar weer te klein, uitgelezen of te kinderachtig zullen zijn. De meer creatieve kinderen beuren geld met het spelen van blokfluit of viool, of verkopen zelfgebakken koekjes – de vrijmarkt is daarmee ook een broeinest van aanstormend ondernemerschap. De overige Nederlanders, die niet urenlang bij een kraampje willen zitten, sjokken in grote kuddes langs de stalletjes op zoek naar echte koopjes. Er circuleren heroïsche verhalen over het kopen van een ets van Rembrandt of authentiek Chinees porselein voor een ‘habbekrats’. Maar er is altijd de dreiging van het ongebonden wild-west kapitalisme: professionals proberen echt geld te verdienen aan de mensenmassa’s die de vrijmarkt op de been brengt door bier, saté, of andere waar op commerciele schaal aan te bieden. De overheid reguleert dit gebeuren door toezicht te houden op deze commerciële partijen, en speciale, aantrekkelijk stukjes binnenstad af te  grenzen voor kinderen met hun ouders.

Deze vrijmarkt als ultiem Nederlandse feest zegt iets over hoe diep commercie, kopen en verkopen, in de cultuur geworteld is. Zoals de naam vrijmarkt al aangeeft, is het Nederlandse ‘paradijs’ een vrije markt waar iedereen zijn gang kan gaan. Een beetje geld overhouden aan de vrijmarkt is belangrijk, maar minstens zo belangrijk is de ‘gezelligheid’ van het elkaar zo ontmoeten en met Jan en Alleman onderhandelen over de koopjes. Maar om de zwakken – met name de kinderen – te beschermen is de vrijmarkt toch gereguleerd door de gemeentelijke overheid, die ook toeziet op naleving ervan. En, minstens zo belangrijk, de negatieve ‘externalities’ bestrijdt door na afloop de enorme berg afval die wordt geproduceerd op te ruimen.

Deze gewoonte om van de nationale feestdag een ‘vrije markt’ te maken waar jong en oud handel kan drijven, is een tamelijk recent fenomeen, begonnen in Amsterdam rond 1970. Daarvoor was de nationale feestdag er een van parades en optochten. Het defilé langs Paleis Soestdijk waar de koninklijke familie toekeek hoe het volk zich uitgedost had, was de ‘top-parade’. Maar in elk dorp en in elke stad werd dit nog eens dunnetjes overgedaan. Ik herinner me dat we ons verzamelden, verkleed in de meest creatieve uitrustingen want er waren ook prijzen mee te winnen, op het schoolplein, en na de prijsuitreiking kwamen dan alle scholen op een strategisch kruispunt bij elkaar, waar we een lange optocht vormden die door hele dorp werd trok, gade geslagen door ouders en dorpsgenoten. Omdat we per school geordend waren, hadden de protestanten, de katholieken en de neutralen ieder een aparte deel van de optocht, en was elke zuil voor een ieder makkelijke herkenbaar. Maar vanaf 1970 kwam het vrijmarkt-model op – Amsterdam besloot in 1971 de in  de buurten gegroeide vrijmarkten te accommoderen door deze naar het centrum te verplaatsen en te gaan reguleren, wat het begin van de ‘officiele’ vrijmarkt was. Dat idee was zo aantrekkelijk dat het parademodel, dat al niet meer zo goed in de ‘revolutionaire’, post-verzuilde tijdgeest paste, snel verdrongen werd. En het Amsterdamse idee verspreidde zich vervolgens naar de rest van het land. Het punt is, de ‘neo-liberale’ viering van Koninginnedag, en later Koningsdag, is niet het gevolg van een keuze van de autoriteiten om de bakens eens te verzetten, maar, vrees ik, het gevolg van de populariteit van de vrije markt op grassroots niveau. En deze verschuiving deed zich al voor ver voordat de omslag naar neo-liberalisme onder Thatcher en Reagan plaatsvond – de opmars van het neoliberalisme begon eigenlijk in Amsterdam in 1971.

Blijft over de vraag waarom een natie zich op zijn meest feestelijke dag vooral als koopman en ondernemer wil verkleden, en aan de kinderen wil laten zien hoe leuk dat is om met waar en geld te sjacheren. Heeft dat iets met eeuwenoude tradities van marktverkeer te maken, die in de genen zijn gaan zitten? Vinden we de markt stiekem leuk?

 

In Maddison’s footsteps (24-4-2020)

Jutta Bolt and I finished a new, 2020 update of the Maddison project yesterday, after more than 3 years of hard work. It is, as you may know, a true ‘collaboratory’, in which 15 to 20 scholars work together to continue the great work by Maddison to quantify the evolution of the world economy in the past 2000 years. The goal is to publish a dataset of GDP, GDP per capita, and population estimates covering all countries in the world, going back in time as much as is possible – in a few cases, Maddison even included estimates of the Roman Empire. It is a highly delicate operation because 20 specialists have different, sometimes conflicting ideas about the optimal strategy, and there are always tensions between the consistency of the entire system, and what individual scholars think and believe has happened in their country. They have often invested heavily in their series, and their approach, which is often the best that can be done for the country and period concerned. One scholar, who was confronted with an alternative, somewhat corrected series for his country, mailed that we were ‘robbing’ the history of his country from him. That was the right moment to reconsider.

One of the debates within the group is between economists, who prefer systematic, theoretically grounded solutions to, for example, de problem of deflation or the linking of various benchmarks, and the economic historians who have strong ideas about what is plausible and consistent with the historical evidence. To illustrate this, I have to tell you a bit more about the purpose of this update. The Maddison dataset basically consists of an anchor, a year for which we have good estimates about the relative levels of GDP, and a large set of country series, sometimes going back to the Middle Ages, that is linked to this anchor. Maddison had created an anchor for 1990, which has however been criticized in the past. The WorldBank every so many year creates a new anchor (an ICP round resulting in PPP estimates). There was consensus that the 2005 anchor had not been good enough, but the 2011 anchor was considered state of the art. So the most important aim of the update was to relocate the anchor from 1990 to 2011 (and also to include the many new historical series that had been estimated by economic historians since the previous, 2014 update). But when we started to use the 2011 anchor, odd things happened. Linking the anchor with the historical time series resulted in estimates that economic historians could not accept. For example, Iraq became, in 1914, the richest country in the world, and many other oil-producing countries became almost as wealthy. At the other extreme, a country like Peru had, if we were to believe these results, a GDP per capita which was during long periods below the ‘subsistence level’; this may happen occasionally – in times of civil war or famine – but no country can survive below this minimum for long (as Michalis can confirm).

The explanation of these strange results is interesting, we think (but we do not do a lot with this in the working paper). The fact is that Iraq, and other oil-producing countries, have become rich without much economic growth – they simply profited from the rising price of oil. And when you do not grow a lot, and the anchor is in 2011, you become, paradoxically, increasingly wealthy going back in time (relative to other countries which do grow). The opposite happened with Peru (or many other relatively poor countries, but Peru is such a good example because thanks to painstaking research by the Peruvian economic historian Bruno Seminario there are really good series for this country available). Peru did grow but did not achieve a comparable increase in GDP per capita, most likely because it saw the relative prices of its output and exports decline. And rapid growth, in combination with a 2011 anchor, in this case, leads to below subsistence levels before 1950.

This outcome of this comparison is, on the one hand, a statistical problem, making it more difficult to create a consistent Maddison-type dataset, but also sheds light on the dynamics of global inequality. In the 1960s and 1970s, similar changes in relative prices were studied by the members of the Dependencia-school in economics. One of them, Raúl Prebisch, argued that developing countries specializing in raw materials were confronted by long term declines of their relative prices, as they imported industrial goods from developed countries of which prices were less affected by business cycles and maintained at a high level by monopolistic firms. What we found was somewhat different but does point to a comparable hidden redistribution of income in the world economy. It was the oil-producing countries that profited most from trends in relative prices (until recently, I should perhaps add, because oil prices are even negative these days!), and oil-importing, raw materials exporting countries that fared worst.

So moving the anchor to 2011 did not improve the quality of historical estimates – at least that is how the economic historians saw it. We moved back to Maddison’s good-old 1990 anchor, after developing a number of tests to find out more systematically which anchor and anchoring-approach were doing best. In a way, Maddison’s approach was quite accurate, we can now confirm, and more accurate than the alternative approaches. We also think we managed to keep the group together, although not everybody is happy with all estimates. We were even thinking about organizing a workshop to celebrate the 10th anniversary of the Maddison-project (in Madrid) until a virus intervened.

 

The Calimero Effect and Original Sin (21-4-2020)

In the 1960s and 1970s, there were two hot debates in Dutch economic and social history. The first and perhaps most classic one was about the late, tardy, delayed industrialization in the Netherlands during the 19th century. The second one focused on the causes of the long duration of the depression of the 1930s. The first one was in a way initiated by the first overview of the economic and social history of the Netherlands by the poet and social-democratic author Henriette Roland Holst, who published her ‘Kapitaal en Arbeid in Nederland’ in 1902. The central question she addressed was why the labour movement was so weak in the Netherlands, compared with almost all other Western European countries. The obvious Marxist answer was that modern, large-scale industry had been very slow to emerge and remained underdeveloped, which nicely explained the fact that the trade unions were still small and powerless and that the social democratic party was equally weak. The explanation for this underdevelopment of industry was that the bourgeoisie had grown fat on the proceeds of colonial exploitation, and was not sufficiently dynamic to compete with big enterprises elsewhere.

It is significant, I think, that this book by Roland-Holst remained an isolated voice until the 1950s when the real debate began. I am not going to review it here, but the discussion centred about the question whether it was the ‘lethargic’ mentality of the elite – social-psychological factors as stressed by Roland Holts – or ‘economic circumstances’ (such as the need to import coal), that explained the slow industrialization during the 19th century. The dominant view was that mentality mattered, which became increasingly challenged by authors stressing economic factors.

The debate about the 1930s developed differently. The consensus had been, starting with the classic analysis by Keesing published in 1947, that policy mistakes, and in particular, the fact that the Netherlands stuck to the gold standard, were the main explanation for the long duration of the depression of the 1930s. The debate in a way only started in 1973, when Peter Klein in a famous lecture presented an alternative interpretation according to which structural weaknesses of the Dutch economy – its reliance on agriculture – and the limited possibilities for politicians to influence the economy, were mentioned as the causes of the deep crisis. The revision was initially accepted widely and dominated the debate for quite some time.

What these debates had in common is that they received a lot of attention from outside the academic community. The dissertation by J.A. de Jonge about the industrialization of the Netherlands between 1850 and 1914 – who was the first to use a lot of statistics to answer the question about the timing of the industrialization process, which was not an easy read at all – became a  blockbuster after being published by the ‘Socialistische Uitgeverij Nijmegen’. Even more striking was the fact that both debates focused on economic failure, on backwardness, on remaining behind. The Netherlands had been and still is one of the most successful economies in the world, and instead of explaining this, economic and social historians focused on failure, delayed industrialization, and a long depression. To some extent, I think, these debates were so popular because they were linked to a kind of minority complex, a Calimero feeling, which resulted from Occupation by the Germans during the Second World War, and the Independence of Indonesia that followed. The Dutch learned in the hard way that they were insignificant and trying to cope with this, to understand it, and to get some kind of absolution, was the point of the two (or in fact one single) debate(s). Klein offered this absolution: we/they could not help it that the crisis of the 1930s was so huge, was his message. The scholars who argued in favor of the ‘economic circumstances’ also pointed out that we/they could not help it that the modernization of the economy was so slow during the 19th century. Small, open economies are the ‘toys’ of international forces, was the consensus conclusion, and people in the 1970s could relate to that idea.

And then the econometricians, the ‘modern economic historians’ came in and in a way spoilt the party. What happened subsequently is that scholars such as Joel Mokyr, Richard Griffiths, and Jan de Vries started to study Dutch economy history in a fresh way, without being bothered by the idea that this was a story of failure and backwardness. By contrast, they pointed out, in the words of Griffiths, that Dutch economic performance in the 19the century, was not a story of being behind or being backward, but that the Dutch economy had simply taken its own, ‘different’, development path. And people working in the tradition of Angus Maddison made the same point: in the 19th century, the Netherlands had grown almost continuously and had belonged to the most successful economies of Europe. Similarly, the explanation offered by Klein that the problems of the 1930s were related to the backward structure of the economy, simply did not fit the facts.

And then the two debates collapsed. In the 1980s interest in the 1930s flared up for a brief moment, but nobody really cared anymore about the slow industrialization of the 19th century, and also the 1930s disappeared from the agenda. Perhaps both debates lost their appeal because the tension between ‘original sin’ (the initial failure during the 19th century or the 1930s) and ‘absolution’ (we could not help it) disappeared as the ‘modern economic historians’ had shown there was no failure. Perhaps, a more likely interpretation, we had overcome the Calimero complex and found with new confidence our ‘poldermodel’ identity, and therefore did not need to explain failure anymore. But whereas in the 1950s, 1960s, and 1970s the Dutch felt the need to reflect on failure, they clearly did not care about this anymore in the 1980s and 1990s. The story of backwardness was replaced by happy stories of almost continuous growth and rising prosperity, of being the ‘first modern economy’. The debates disappeared because society did not need them anymore.

What can we learn from this for the big stories we want to tell? Only recently have the twin debates about capitalism and about slavery been able to attract the kind of public attention that is comparable with the debates from the after-war period. They are good candidates for playing such a role in the future: there is plenty of original sin (the emergence of capitalism, the introduction of slavery) and absolution is not within sight.

 

Madrid and the resource curse (18-4-2020)

Bianca asked me this week why the huge wealth the Spanish Habsburgs extracted from their American colonies does not show up more clearly in buildings and monuments of Madrid, the capital city. This raises a number of issues, I think.

First of all, there are other places in Spain where you do see some of this wealth, for example in the towns of Extramadura (Caceres, Trujillo) where you can find the wealthy palaces of the families of the Conquistadores who conquered the Americas. And Madrid may be not particularly charming and impressive (but was a bit the ‘Brasilia’ of the 16th century), but Salamanca, which had its golden age in the 16th century, definitely is, and it has the most beautiful square of the world.

The other part of the answer is that the silver and gold of the Americas did not make Spain wealthy. There was hardly any economic growth (the long term trend was in fact downward), and income levels remained much below those of Italy and the Low Countries (according to the Maddison project, but this is entirely based on estimates made by Spanish colleagues). The Spanish state, which received most of the wealth, used it to fight expensive wars – against the Turks and the Dutch, amongst others – for conspicuous consumption (such as building the El Escorial), and to strengthen its already quite powerful position (it did not have to bargain so hard anymore with the estates and the cities of Spain). Most of the silver was indirectly used to import commodities from the more industrial parts of Europe – in particular the Low Countries – who in fact may have profited much more from the inflow. Nuno Palma is his dissertation has shown that if you test econometrically the link between silver mining in the Americas and economic growth in Europe, you get a significant positive impact of silver on GDP growth in Holland and England, but no effect at all for Spain and Portugal!

This phenomenon that it is often not very helpful to have access to free resources – such as silver in the 16th century, and oil in the 20th/21st centuries – has been called the ‘resource curse’ (also known as the Dutch disease, as it was first established for the Netherlands in the 1970s when we ‘profited’ a lot from the Groningen natural gas reserves). There are two mechanisms. Firstly, free resources that are an easy source of income for a small (state)elite, are bad for institutions, for democracy, and for investments in education. Corrupt regimes are often based on such a source of income (think of Putin, Madura, many states in the Middle East), and the inflow of silver made it possible for Filip II to become an absolutist ruler. The second mechanism is that the easy exports of these free resources ‘crowd out’ other exports. This was the effect noticed in the 1970s in the Netherlands: industrial exports were being replaced by exports of natural gas, which meant a loss of employment and of long-term growth potential. Therefore, easy money resulting from easy resources are bad for the long term prospects of an economy.

This ‘curse’ also works in other ways. We have, for example, huge savings in the form of our pension funds. You would expect that this would give the Netherlands more flexibility in years of crisis – a rainy day fund – but the effect is quite the opposite. During a crisis, such as after 2008, we do not spend these savings to stabilize our consumption, but we are forced to save more, as the ‘dekkingsgraad’ (cover ratio, the ratio between actual savings and future commitments) has collapsed during the downturn (the stock market has gone down and interest rates have fallen). So we deepen the crisis because we want to stabilize the value of our savings – instead of using these savings to stabilize consumption. It is a rather ironic way to punish the kind of frugal behaviour we are so proud of.

There is another aspect of this discussion that brings us back to the sights of Salamanca, and of Venice, Florence, and Rome. These wonderful cities of art and beauty can also be seen as free resources, that attract huge crowds of tourists (or at least used to attract them), crowding out all other activities. But as all other free resources, it creates a lazy, uninnovative economy, as with the Uffizi in your back garden you simply can count on the flocks of tourists increasing every year, spending their high incomes on the ice cream and café latte that you serve. The good thing about the present crisis, perhaps, is that this trend of Europe becoming the open-air museum of the world has now abruptly come to an end. And it will take quite some time before in particular mass tourism will return to normal, I assume. A good time-out to reconsider?

 

 

The Olympics  and the Zoetemelk syndrome (17-4-2020)

How much killer instinct do athletes have? Or are they already happy because they ‘participate’? There are clearly large cultural differences involved. The American political system is based on the ‘the winner takes it all’ principle, and sports are organized likewise – no match of an American sports ends in a draw, for example, as there simply has to be a winner, a hero at the end of the day. European sports, soccer most famously, often end in draws, which slightly disappoints us when it happens but still, is accepted. We perhaps suffer a bit from the Zoetemelk syndrome, named after a cyclist from the 1970s and 1980s who always became second in the Tour de France – his exceptional first place in 1980 was due to the fact that his main rival had to withdraw (if I remember correctly). His kind personality fitted the second place he so often occupied – he clearly missed the ‘killer instinct’ of the ‘real champion’. The Dutch national soccer team has a similar tradition of becoming second at world championships – the trauma of 1974 is still fresh!

The Olympics medals dataset allows us to answer the question if there is systematic evidence that such different cultures concerning winning and participating are reflected in the medals athletes win. The expectation is that American athletes, once they participate, are overrepresented among the gold medallists because they are better trained to win, more eager, more ruthless, whereas Dutch athletes are already quite happy with a silver or a bronze medal. As the numbers of gold, silver, and bronze medals are equal (there are tiny differences – certain sports, such as boxing, award two bronze medals for each gold and silver one), we expect that one-third of medals won by countries are gold. If the share of gold medals is much below one-third, we are in Zoetemelk territory, if it is much above one-third, the country has a killer instinct.

Let’s start with the Netherlands: on average, 28% of the medals won were gold, which is clearly below 33,3%  (but not a tragedy yet). Men are entirely to blame: they score 24%, women nearly 33%. By contrast, the US is with 47% gold medals substantially overrepresented among the winners. No country has such an uneven distribution of medals biased towards first places. Moreover, men and women score the same. Other big countries that are used to dominate, are also usually on the golden side of the medal distribution: USSR/Russia scores 40% golden medals, and even 42% for women; China, which recently joined the club of the big countries, has 36% golden medals, 32% for women. The UK breaks even (33% of all medals, 25% of women), and Germany is marginally above the mark (34% and 35%). Italy behaves like a big country (35%, 28% for women only), as does Cuba (40% for both sexes), but Japan in a way underperforms (27% and 24%)

Most small European countries are at or even below the Dutch level: Belgium scores a disappointing 21% gold medals for both men and women, Sweden 30% (women 20%), Denmark 29% (women 49%!), Finland 23% (women 14%), Poland 21%, Spain 22% and Switzerland 25%.

It may well be that this pattern is not only caused by the cultural determination to win but that size as such matters as well. The USA can draw upon a much larger potential of active athletes, which means that the average quality of their representatives will be higher than that of small countries. But then you would expect them to win all medals, many silver and bronze medals as well. The dominance of speed skating by the Dutch in recent years illustrates what might happen in such a case. In 2014, for example, 44% of medals at the Winter Olympics were gold; in 2016, at the next summer Olympics, it was only 19%. In particular, when the number of athletes per country is limited, this may help to explain the high killer instinct of the big countries.

It is also interesting to see how teams fare compared to individual athletes. For most countries, the scores are very similar – or teams score worse. Male Dutch teams do not do well, with a share of 20% for golden medals, but female teams score an amazing 42%, only surpassed by the USA (50% for female teams), Cuba (70%), and Canada (54%). The ‘real men’ in the Netherlands are female team players! What about this as the take-home message?

 

Are we smarter than Colijn, or Charles V? (15-4-2020)

In one of the blogs last week I suggested that we perhaps now understand what was happening in, for example, the economy and society of the Netherlands during the 19th century better than the people who actually lived in that age. The arguments for this bold hypothesis might include that we have ‘better’ concepts to understand the changes that were happening (such as economic growth, and Industrial Revolution), that we have measured them, and that – but this is a bit cheating perhaps – we know what happened during the entire period – we know what for people in the 19th century themselves was the unknown future. Is this correct? Do we possibly, better than Colijn, understand what went wrong in the 1930s, or better than Charles V,  know what the impact of the flow of silver from Latin America was on his empire? This is such a big, philosophical question that it cannot be answered in a blog (nor in another form for that matter). Does the social science package of theories, concepts, and tools really lead to a much deeper understanding of the reasons why around the year 1000 people all over Western Europe began to build ever bigger churches and cathedrals, or are we simply telling interesting stories about the past to ourselves and our colleagues which are entirely disconnected from the historical reality as it was experienced at the time?  Nobody (as far as we know) in the 16tth century used the concept of economic growth; does this disqualify the concept for being used in the study of that period?

This question is too big for me, but there must be ways to find out if there are links between our understanding of changes in the past, and the experiences of people on the shop floor at the time. For example, how and when, did they experience the ‘price revolution’ of the 16th century – the well-known increase in the price level due to the influx of silver and gold from the Americas? This phenomenon has been extensively studied, and people (including the present author) have, on the basis of historical data on prices of foodstuffs, textiles, and other necessities, constructed consumer price indices (CPIs) to quantify the inflation. As a result, we now know ‘exactly’ (if the sources used are unbiased and the sample of prices is okay) when the price level increased, and by how much (see the graph below). For contemporaries this was not easy to find out: there was no financial press which documented prices, prices fluctuated wildly due to all kinds of exogenous shocks (famines, wars), and increased from one year to the next, to fall again by half in the following year. Of course, they knew the prices they paid for their bread and their butter, and therefore had a rough idea about yearly (and weekly, and daily) changes, but when did they realize that the trend was changing and that the average price level had gone up? And how does this relate to the CPIs we have constructed? I agree, this is perhaps not the best test for the big questions raised, but it does tell you something, perhaps, about the links between our and their knowledge.

The issue of the price level was particularly relevant for the setting of the wage level. In the 16th century, labour markets were organized on a small scale and wage negotiations between a master and a journeyman did not leave many traces in the historical records. There is however one example of collective bargaining – between the shearmen (vollers) active in the Leiden textile industry and the city government which set their wages – which is well documented, and of which all the details have been published thanks to N.W. Posthumus’ masterpiece on the Leiden textile industry before 1570 ( wonderful book from 1908; I was reading it again in preparation for this blog, and I am again impressed by the modernity and depth of this study, his dissertation). The shearmen at times submit petitions to the city government to demand a wage increase or other changes in labor conditions. The alternation of years of low and of high prices due to famines and wars was seen as a fact of life, which did not result in requests for wage increases; the high prices of the 1480s – linked to political unrest – do not lead, for example, to wage demands. The first complaints about high prices date from 1514 (when the CPI, in a year of peace, hits 176, so 76% higher than the ‘base level’ in 1450/74), but this is still seen as incidental and does not lead to higher wages. In 1528 prices peak again (CPI 197), and the shearmen complain about it, also pointing to the fact that the intrinsic value of the coin has declined, which drove up prices. Now their story is effective, and the nominal wages are increased by 10% (for the first time since the 1470s). The most interesting petition dates from 1541 when the masters and journeymen state that the livelihood (‘lijfcost’) has increased more than half compared with sixty years ago (p. 344). So in 1541, they acknowledge that the trend level has increased by 50%. 1541 is in itself not a year with extreme prices (the CPI is 151, almost exactly 50% higher than before the political troubles that began in 1477). 1535 was much worse, and as the graph shows, the really big inflation was still ahead (started in 1544/45). Wages were increased a bit in the early 1540s, but insufficient to compensate for the 50% price increase. In later years the complaints about high prices return, but never in such a detailed form.

So shearmen in Leiden were at least once able to make some kind of implicit CPI, knew, in 1541, that the general price level had changed by 50%, and speculated about its causes, pointing for example to the devaluation of the currency as one cause. Within the political context of collective wage bargaining, this was highly relevant information, and it helped to strengthen their case for wage increases. There is thus a link between our sophisticated concepts and the wage negotiations going on in Leiden in the 16th century. They probably would have profited enormously from the information that we now have at our disposal. The decline of real wages that did occur as a result of the price revolution, was probably also linked to the limited knowledge people had about the changes in the price level. In that respect, we live in happier days. Think about a world where the graph and the table do not yet exist…..

 

Economic History at the frontier (11-4-2020)

This morning Johan Fourie, ‘our man in Stellenbosch’, mailed me the report he and his team has written, at the request of the South African Presidency, about the Spanish flu epidemic of 1918-19 and its impact on the country. South Africa was badly hit by it, an estimated 6% of the population died, which is much more – perhaps more than double – the global average. Tragically, the virus was probably brought to South Africa by black soldiers who had fought in the trenches of the First World War, and blacks were over-represented among the victims. Fourie and his team have now collected microdata of those affected – actually of all deceased – in six different towns and is able to shed new light on the spread and the incidence of the virus. Whites, for example, are over-represented in the first wave, but this is probably related to the fact that nobody was expecting such a pandemic and therefore all were unprepared for it. The white population, however, seems to have been able to isolate themselves successfully, or get access to better health care, as in the second wave they largely disappear. A parallel with the current epidemic is that men are overrepresented among the deceased. What is really different is that the main victims are between 20 and 40 years of age – the backbone of the working population – and that the elderly are much less affected (a stark contrast with corona). They also give an overview of the policies implemented by cities – the state government was severely criticized because it did next to nothing

What is striking is that the differences in the impact of the flu between various cities and regions were so large. Sometimes there is a convincing explanation – some cities were hubs in the railway network, for example, and therefore saw large numbers of people move in and out. Being isolated helps a lot – and in the ‘empty’ South African countryside many were in a natural state of self-isolation. But that makes the puzzle of the strong impact of the Spanish fly even bigger. Not unexpectedly, the report argues that much additional research has to be done to answer all relevant questions. It would be interesting to find out if the South-African experience fits the American case, where it was found that cities and states that intervened early and decisively – introducing strict limits on the mobility of people, for example – fared much better than cities and states who did not do so.

It is good to see economic historical research contributing to such highly relevant societal debates!

 

J.S.Bach, Jack Goldstone, and numbers (10-4-2020)

Perhaps the real mystery about Bach is his relationship with numbers. This is a topic that perhaps divides the Bach scholarly community even more than the tempo at which the opening chorus of the Mattheus Passion should be performed. In Bach’s days, it was common to give letters a number: A was 1, B 2, C 3, and by implication H 8, so the numerical equivalent of the name Bach was 1+2+3+8=14. J.S. Bach sums up to 41, Johann Sebastian Bach to 158. The idea is that Bach was aware of this kind of ‘kabbalistic’ thinking, and therefore the number 14 is much more used in his music than 13 or 15. There are, for example, 14 chorals in the Mattheus Passion, and 41 ‘free’ items (apart from the literal quotes from the bible). In 1985 two Dutch authors, Kees van Houten and Marinus Kasbergen published a book, ‘Bach en het Getal’, based on 13 years of counting and calculating notes, bars, themes, pieces, and other dimensions of his work. They presented overwhelming evidence that in their view Bach was when composing his music, constantly taking all kinds of ‘special’ and ‘holy’ numbers into account. 3, 7, 10, 12 are, for example, also special numbers, but the letters of Christus or Credo also count up to such numbers. So the fact that the Credo of his last masterpiece the Mass in B minor, has 784 (7 X 112) bars, is no coincidence, as 112 is the number of Christus, and 7 is the number of perfection and completeness. The book gives so many examples, that you almost start believing that they are correct, but at one point when they ‘demonstrate’ that Bach predicted the day he would die 20 years before the actual date, they clearly go over the top.

The problem with this book is that the authors were making thousands and thousands of calculations of the many special numbers that they ‘identified’, and only reported about the cases that they found ‘something’ (such as the 784 bars of the Credo). They did not report all the calculations they did and showed that the number of ‘significant’ outcomes was much larger than might be expected on the basis of chance, and they assumed that all significant outcomes were the result of conscious design by the great man himself – and not random. They were so eager and enthusiastic about their revolutionary message, that they did only focus on the evidence that supported it, and ignored the rest. It is highly likely that some of the things they found, were indeed part of the design of the music by Bach, but many other results, and perhaps most, are random.

This is obviously a very general problem: we all have our ideas, pet theories, and serious hypotheses, and we tend to be mainly looking at the kind of evidence that confirms them. The same problem recently came up in a discussion with Jack Goldstone about his theory that all pre-1800 growth was cyclical and can best be described as efflorescences – the blooming of economies, always followed by decline. Bas van Leeuwen and I had in our paper in EEH  in which we presented the estimates of GDP per capita of Holland in the period 1348-1807 stressed the sustained character of growth, which was underpinned by a regression analysis showing the near stability of per capita growth. In a paper with Sandra de Pleijt we did this in more detail, distinguishing various subperiods – also showing that growth was remarkably stable. But this was not picked up by Goldstone, who had compared estimates from a number of decades, finding more growth before 1700, and decline afterward. Two things are probably wrong with this. Firstly, this procedure does not take into account the fact that these estimates of GDP per capita are subject to large measurement errors; given this fact, it is likely that sometimes our estimates overstate GDP, and underestimate it in other years. The problem with the Goldstone procedure is that the cyclical character he finds may well be caused by these random fluctuations, especially as he focuses (as a result of his hypothesis) on peak and through years. Secondly, by comparing peak and through years only, a large part of the historical information contained in the estimates is not used. The years in between are simply ignored; estimating trends via regression analysis has the advantage that it does make use of all the annual estimates, all the historical information that is available. In short, Goldstone was in search of evidence for efflorescence and found it, but more careful use of the same data, taking into account the large margins of error, leads to a different result (Jutta Bolt and I concluded in our contribution to this discussion dossier).

The takeaway message is perhaps: how often are we trying to find confirmation for our own ideas, and how often are we really prepared to be surprised by the research that we are doing? There are limits to what we are willing to believe – I am not convinced that Bach knew the day he would die in advance, and good intuition about what is plausible is probably important for academic success. Yet, we aim to develop new insights, new ideas, which go beyond established views. How can we free ourselves from too many prejudices? Perhaps Charles Darwin can help a bit. I once read that he had a special notebook for all the arguments against his theory. The reason was that he had learned that he tended to forget these objections, and in order to be sure that he would discuss them in a new version of his book, he carefully made notes of all critical comments. Perhaps this is not such a bad idea.

And what about Bach? I think he played with numbers occasionally, and when he grew older, and his music became more esoteric and abstract, there was more room for such experimentation and kabbalistic entertainment. But what really counted for him was not the number, but the sound, the structure, the beauty, the emotion it conveyed – fortunately!

 

The growing pains of the digital economy 2.0 (10-4-2020)

A few days ago I introduced the project we have will JLI about the transition towards a digital economy. The current corona crisis adds a lot of weight to the debate referred to as it is speeding up this transition in a spectacular way. Perhaps the big issue from our perspective is the European response, the possible European strategy It is clear that the process is dominated by US-based tech companies such as Google, Microsoft, Facebook, Apple, and Amazon – the ‘big five’ – who are primarily driven by commercial interests. The other big player is China, where the state leads a coalition of basically also profit-driven large firms (such as Ali-Baba, Huawei, Baidu). Europe does not have anything similar. On a recent list of the 20 largest tech companies in the world, 9 were Chinese firms and 11 American. If we are indeed moving towards a world economy in which power and wealth is based on data, then Europe is rapidly becoming marginal.

The problems this leads to, are many; let me just mention an important one. Even in the most neo-liberals days of the 1990s, we agreed that the infrastructures of an economy – the railway network, the electricity grid, etc. – had to remain in public hands. These infrastructures were considered essential for the functioning of the economy, and, as they were ‘natural monopolies’ (there is only one railway network or electricity grid), they have to be controlled by the state. But the internet grid is largely in private hands; its governance structure is quite complicated and based on a so-far very robust form of cooperation between a number of big companies. In times that all forms of cooperation are subject to increased international tensions, this may become problematic, however. Suppose, just for a moment, that an American President will try to use the fact that these companies are all US-based, for his own political agenda. A very unlikely scenario, of course, as American Presidents are rational politicians who will not consider such a move, but nevertheless, you cannot predict the future, and we are clearly enormously dependent on the internet. Moreover, many of the services the platform economy supplies have a similar ‘infrastructural’ character. Think of the crucial role Google Maps plays in society – what would happen if Google terminates this service? China was able to cope with the withdrawal of Google from the country, and build up an independent powerhouse of technology and enterprise that now rivals the US. Europe seems almost defenseless.

There has been some talk in the last few years about a European ‘Third Road’ to the digital economy – between the state-led Chinese model and the commercial model of the US. The problem is, what do we have to work with? Does Europe have certain assets, advantages, to base a strategy on? The problem is that – as I explained in the previous blog about this topic – we do not have a clear idea about the landscape of the digital economy. We do not know what to count and how to count, as there are no clear units of measurement which would make it possible to make a detailed international comparison of the digital economies concerned. There are lists of big tech companies, but they reflect only the commercial part of the picture. A historical parallel might be: in the 19th-century people in the west knew that there was a process of economic growth going on, but nobody estimated GDP so the real contours were clouded in darkness.

The next step in our project is to try to find the necessary information about the size and structure of the Dutch digital economy. What we think we need, is a kind of national bookkeeping of the production, ‘exports’ and ‘imports’ and the storage of big data. We know for example that Google or Facebook are collecting huge amounts of data here, which ‘leak’ abroad. How does this compare with the production of data for domestic users, such as the government, banks, pension funds, care institutions, etc? We think that the relative strength of the Dutch data economy might well be found in the (semi)public sector, which covers almost the entire population of the country and has data about aspects of our lives (income, health, transactions) which are even more important than the data generated by Youtube or Spotify. Dutch banks know (certainly now we have abolished cash money) almost everything about our commercial transactions, and are much more digitized and centralized than banks in the US (for example). Care institutions, including insurance companies, similarly know everything about our health ‘transactions’ (whereas in the US large part of the population does not have access to the care system). Potentially, the Dutch and perhaps the European digital economy can draw strength from this semi-public sector. However, the constraints here, in terms of privacy considerations, are huge. Strangely, people seem to worry much more about the use of their data by (semi)public institutions, than by the big tech companies – who really study the details of the ‘general conditions’ which specify the rights and duties of users of new internet toys like Facebook?  And we need to discuss the purpose of this all – if that is not profit (as in the US model) or control (China). Quality of life and citizenship can be the alternative ‘European’ goals and are also the raison d’etre of the semi-public sector that would feed the data economy. A Dutch or European tracing app, to deal with the problems of the continued threat of the coronavirus, might be a good start.

I am not sure what we can contribute to this, but the idea that we should measure the digital economy, that some kind of new data bookkeeping system is required to study this systematically, is new (as far as we know), and connects with our (historical) expertise. It is necessary to try to do now what in a way Kuznets began doing for national accounts in the 1930s. Thanks to our student Johan van Hall, who is a member of the Raad van Advies of CBS, I could make an appointment with Bert Kroese, Director General of CBS, to explain the idea. I’ll keep you posted about the progress of the project.

 

Joop Goudsblom and the rewildering of society (7-4-2020)

Two weeks ago, Johan Goudsblom, an eminent sociologist of the Amsterdam school, passed away. He was one of the representatives of the approach to sociology that was close to economic and social history, as historical, long-run changes in society were the primary object of study. His main source of inspiration was Norbert Elias’ concept of the civilization process, and he inspired colleagues to work on ‘big history’ with an even larger time frame than the 12 centuries of European history Elias wrote about. I met him on various occasions – mostly at KNAW events – and he once invited me to his home in the elegant 19 century Amsterdam Zuid neighbourhood, where the reception was equally elegant (for starters, his wife kindly asked me if I cared for coffee or tea). He was a very gentle soul and concerned with the future of the Amsterdam-school-type of sociology within an academic climate where only papers in top journals mattered (he and his colleagues preferred to write books, in Dutch). We also briefly discussed our sources of inspiration, and compared Elias – for whom the disciplining of behaviour was an end in itself, as it led to ‘civilization’, the ultimate aim perhaps being the stiff upper lip expressing irony and understatement – with North, for whom constraining behaviour was a means to economic development as it enhanced predictability and trust.

When Arjen Lubach last Sunday presented an overview of the bunch of loonies that are now governing our planet (I do not have to give names now), I inadvertently had to think about Joop’s civilization process. Why is there in politics such an obvious ‘de-civilization’ process going on? It is so odd and unexpected that we do not have a word for the reversal of civilization, not in English (I think, and Google seems to agree with me), nor in Dutch (ont-beschaven? Ont-schaven? As the opposite of Beschaven). Perhaps ‘rewildering’ – the return of wild, unpredictable, uncivilized behaviour – is most appropriate, and the likes of Trump and Bolsonaro embody the process.

Now we have a word for it, the question remains why it is occurring on such a large scale – from the Philippines to – even – the UK, and from Brazil to Hungary. And so suddenly, and almost everywhere, in the last 10 years or so. One explanation may be that it is related to the rise of the internet. It created a free space in which the usual rules of engagement between people did not apply. In daily life, for example, when you abuse your neighbour, you will have to deal with the consequences for quite some time (until he moves, or you move); the same applies in most other situations in real life (the traffic jam may be an exception, but that is also a place of extreme impolite behaviour). On the many blogs, twitters, and other platforms people could and can express their opinions in the most unpolished forms and strongest terms, often anonymously, and without being afraid of repercussions. And they did, as you probably know, and, to some extent, another culture of unrestrained self-expression arose. The rewildering started there, and then people learned that this behaviour often was rewarded, that politeness and good manners were pretty useless in this new space, and the new norms started to show up in ‘real life’. Trump, who tries to rule the world via his Twitter account, is the example par excellence of this link.

So the behaviour that became the norm in the unregulated ‘wild west’ of the internet, changed attitudes and norms in the ‘real world’. Usually, the ‘core’ brings law and order to the ‘wild west’ and enforces civilized behaviour; however, the opposite has happened in this case: the cowboys of the wild west are now setting the tone in the ‘core’. It seems, however, that political systems that concentrate power into the hands of one person only – presidential systems like the US – are much more affected than systems that are  based on a much wider sharing of the power of the executive. The ‘winner takes it all’ kind of political systems create the right incentives for playing it hard, and be unmerciful with your opponents. But you still cannot lie in Dutch politics (as Thierry Baudet found out recently), you cannot threaten to put your opponent in prison (as Trump did: ‘Lock her up’), as you probably have to sit down and work together after the elections. This robustness of our political culture is a small ray of hope in this bewildering process of rewilding, which must have been so unexpected for Joop Goudsblom.

 

The growing pains of the digital economy (6-4-2020)

This week ESB (a Dutch journal for economists and policymakers) will publish a paper by Onno Schellekens, Ellen Croes, Arthur van Riel and me about the ongoing transition to a digital economy. This is the result of the cooperation that we have established with the Joep Lange Institute in recent years. After a long experimental phase, we have now finally found a formula for our working together – on a theme, the transition to a digital economy that is new to them, and to us. Most of the intellectual input is supplied by Onno Schellekens, who has visionary ideas about how the digital economy is developing or perhaps should be developing. However, he finds it difficult to put this in writing, so I find myself in the position of ‘ghostwriter’, discussing his intuitions and speculations, and trying, together with the other members of the team, to ground this in theory and relevant literature. For me, this project meant that I had to dig into the debates about the ‘platform society’ (José van Dijck who is doing a lot of interesting work on this, is another source of inspiration).

The problem we focus on is the transition to a digital economy: data and the ability to process them into information will form the basis of the future economy – perhaps in the same way as in which coal was the basis for the Industrial Revolution. Data will be the main source of power and wealth in the economy of the 21st century. This leads to a number of questions (which give the project an economic historical twist): can we identify similar transitions in the past and what can be learned from them?  How can the role of data and information in the past and present be conceptualized, and perhaps even measured? Given the dominance of companies of the US and China in this field, is it possible to develop a European/Dutch strategy for this? Big questions, that we cannot answer fully of course, but all academic work starts with asking relevant questions…

I am not going to summarize the article but just pick two issues: the role of information and of trust (and perhaps later return to the question of a European strategy). We all know that all economic activity is based on data, on information – this is similar for the hunter-gatherer who collects berries in the woods and the multinational enterprise drilling for oil near the coast of Surinam. Yet, this aspect is only rarely studied (we think), and there are almost no theories about the interaction between structures of information gathering and distribution and development. Certain societies are based on centralized forms of information gathering (ancient temple societies such as the Incas or the Sumerians, 20th century planned economies), others have decentralized systems (famously defended and theoretically explained by Hayek). We also have no idea about magnitudes: how much data were available and how were they processed, in the past and in the present, etc. All these questions have not systematically been posed in the past, are now becoming relevant – or acute – as we are moving to a society that is ‘entirely’ based on data.

The second issue, about trust, is inspired by Douglass North. We argue that in the data economy that is emerging new forms of exchange have become important, which are based on the value of data themselves. Many platform services are free because the user supplies his/her data in return, and the business model of companies such as Google, Facebook, and Amazon is to exploit the information that can be derived from it for other purposes (nudging your buying behaviour, selling commercials, etc.). But this only works in a smooth, stable way if we can trust these tech companies, but since they are driven by commercial interests, that is probably not the case. The alternative, Chinese model also does not work for a European population. The problem is a bit similar to – we think – the issues concerning trust that were behind the slow growth of the market economy in the Middle Ages and Early Modern Period, when, if we are to believe Douglass North, people lacked the trust in market-related institutions, because they did not trust the king. Constraining the power of the king is seen by North as the key to creating the right institutions for a flowering of the market economy. Protected property rights were one of the key institutions in the change. Similarly, we argue that we need clear property rights concerning data and protection against the powers of the state and big tech companies to create the right conditions for efficient use of the new possibilities of the digital economy.

Let me give an example. It may well be that – until a vaccine has been found and distributed – forms of social distancing will be with us for quite some time. This must in some way or another be regulated and monitored. Social contacts have suddenly become a ‘scarce commodity’, and we have to think of ways to allocate them in an optimal way. The ideal tool for this might be some kind of tracer app, which will not only trace your social contacts because that it the most efficient way to follow the possible spread of the virus, but also to limit the number of social contacts people are having. But would we trust a Facebook tracer app? Or prefer one introduced by the Dutch government? How can we set up such a system in a way that we can really trust this new technology?

Until a few weeks ago, I thought that the crucial weakness of the current organization of the world economy was its growing dependence on the internet. We have, without really considering the long-term consequences and dangers, for almost all the things we do – individually and collectively -become almost entirely dependent on the smooth functioning of this new technology. However, ironically, it is not a computer virus that is causing the current Armageddon, but a real virus. The effect has been that we have become even more strongly dependent on the internet – the switch towards a digital economy has accelerated dramatically.

 

Parking tickets in New York and the moral consequences of capitalism (4-2-2020)

Parking tickets New York

What happens when people can without impunity break the law? For example, in the busy city of New York park where ever they like? Diplomats at the UN cannot be forced to such fines, as they have diplomatic immunity. But the parking police of the city does register these tickets, and two smart economists, Raymond Fishman and Edward Miguel, in 2006 published a paper analyzing these data; they, for example, know the countries of the perpetrators and make a classification – correcting for the size of the diplomatic missions – of the number of tickets per country. Kuwait ranks number one – with 246 tickets per diplomat during the 1997/2002 period – followed by Egypt (134), Chad, Sudan, and Bulgaria. There is, at the other extreme, also a group of 18 countries without violations, including the UK, The Netherlands, Japan, Greece, and Canada, but also developing countries such as Burkina Fasso or Ecuador.

 

 

 

 

Fishman and Miguel link this to corruption, and on a blog, by Jon Bruner, you can find the map printed to the left of ‘diplomatic parking scofflaws’ compared with the more usual, but highly subjective corruption index. It is, for example, striking that Russia does so poorly on the corruption index, but scores very low on the parking fines index.

 

 

 

 

In his 2017 book The Moral Economy, Samuel Bowles (a leading social scientist who has pioneered  experimental research focused on human motivation and incentives) uses this example (and many others) to speculate about the long term consequences of capitalism on behaviour. On the one hand it has been shown that the market and the related material incentives tend to lead to ‘moral disengagement’, to an undermining of fairness and other intrinsic forms of motivation. On the other hand, countries such as England and the Netherlands with the longest experience with capitalism, seem to be characterized by, according to Bowles, ‘admirable civic cultures’, as illustrated by the parking tickets. So the problem is why has our behaviour not been eroded by the pursuit of short-term gains? Or has it?

 

 

 

 

A republican manifesto (3-4-2020)

Yesterday we saw that the bible contains an interesting story about bottom-up state formation, where the elders of the 12 tribes of Israel demand a king in order to be more effective in the battle against the Philistines. The short story is that they get such a king – anointed by the ‘judge’ Samuel – and that this institutional innovation – the voluntary imposition of hierarchy – is highly successful.

What makes this story  even more interesting is that Samuel initially opposes the institution of kingship, and eloquently explains why:

But when they said, “Give us a king to lead us,” this displeased Samuel; so he prayed to the Lord. And the Lord told him: “Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. As they have done from the day I brought them up out of Egypt until this day, forsaking me and serving other gods, so they are doing to you. Now listen to them; but warn them solemnly and let them know what the king who will reign over them will claim as his rights.”

10 Samuel told all the words of the Lord to the people who were asking him for a king. 11 He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. 12 Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. 13 He will take your daughters to be perfumers and cooks and bakers. 14 He will take the best of your fields and vineyards and olive groves and give them to his attendants. 15 He will take a tenth of your grain and of your vintage and give it to his officials and attendants. 16 Your male and female servants and the best of your cattle[ and donkeys he will take for his own use. 17 He will take a tenth of your flocks, and you yourselves will become his slaves. 18 When that day comes, you will cry out for relief from the king you have chosen, but the Lord will not answer you in that day.”

This is a fascinating ‘prophesy’ of the consequences of introducing this form of political hierarchy. I have my doubt about the ‘perfumers’ that are mentioned – perhaps this is slang for something more serious. But that is not the point I would like to make. This speech of Samuel is probably one of the first statements of the ‘republican’ ideal. Samuel predicted that on all dimensions of broad wellbeing, the move towards kingship would have a dramatic, negative impact. However, we do not know if this was a true statement by Samuel (assuming for the moment that he was an actual historical figure and a ‘judge’  at about 1000 BC ). These books of the bible were probably written down as part of the until then oral tradition of the people of Israel after they were enslaved and deported to Babylonia at about 580 BC. As slaves in Mesopotamia, they had plenty to complain about, and these statements by Samuel can perhaps also be read as comments on the situation they were in at the time. Whichever is true – or perhaps both are true, the oral tradition of Samuel’s warning against the consequences of kingship obviously fitted the situation of the exile perfectly – it shows that the writer(s) of the bible as a kind of proto-social-scientists developed insights into the causes of political and economic inequality. It is a nice example of the anti-authoritarian undercurrent present in (part of) the bible.

I also wanted to write about the issue of whether we can use such a story, taken from the bible, in our writing of ‘big history’, but this blog is (again) becoming too big, so I will perhaps discuss this in another contribution.

 

Tilly in Palestine: the people of Israel demand a king (2-4-2020)

You may perhaps know that Sarah and I are trying to write an ‘airport book’ about family systems, gender relations, and their impact on economy and society in the extremely long run (from hunter-gather societies to the present). This will be based on the findings of the agency-project that we together with Selin, Auke, Lotte, and Jan Kok worked on a few years ago. I am not sure an ‘airport book’ is an existing concept, but you probably get the idea: an accessible but serious academic work that you buy when you have to spend quite some time on a plane.

 

Jared Diamond’s book on Guns, Germs, and Steel is probably the archetypical example: it is not only a pleasure to read, but it has a lot of new insights and a clear message. We have used this idea also in teaching, inviting students in the Great Divergence course to write a chapter for such an airport book (instead of a ‘normal’ academic paper). We discussed with them what the features of such a book are – for example, the importance of nice stories and anecdotes that illustrate the main message – and they were asked to bring their favorite book with them and explain why they liked it.

 

 

Anyway, this is a bit a detour of the real story of the blog. At some point, we try to explain how the Neolithic revolution – the invention of agriculture – leads (after a few millennia) to the development of cities and states that are highly unequal, both in terms of political power and gender (another argument of the book is that these two inequalities often move together and reinforce each other). But we needed a story to show the dynamics of the process, which was driven – we ‘know’ since Charles Tilly’s work on state formation in Europe between 990 and 1990 – by warfare. In order to survive the next round of fighting, states have to prepare, by raising funds (taxation), organizing an army, setting up a bureaucracy that can do both. This is all very well documented for the ‘recent’ period, but how did this work in deep Antiquity? Based on the Dutch experience, we had this idea of an absolutist king – say Charles V, or Filip II – who in order to streamline the state and increase its capacity for warfare, imposed new taxes, and robbed the provinces and cities of their privileges. But how does this process work when there is not yet a state which drives the process?

Icon of the prophet Samuel, 17th century

 

And then the bible came to help us with a fascinating story about ‘bottom-up’ state formation. The relationship between state-formation, warfare, religion, and gender inequality is exemplified in the Old Testament book of Samuel, which recounts the Israelites’ struggles against the Philistines after they settled Palestine around 1000 BCE. The people(s) of Israel were a loose federation of tribes (12 according to the bible) held together by kin relations and governed by a ‘judge’, a spiritual and charismatic leader who also adjudicated conflicts between (and within) the clans. They were in an almost constant state of warfare with surrounding tribes but had come under strong pressure because they had lost a number of battles against the Philistines. This was a seafaring people that had settled in a number of port cities of Palestine, and who, moreover, possessed superior iron technology for making weapons (a fact mentioned by the writer(s) of the biblical story and confirmed by archeological research).

 

 

 

Samuel anointing David as king of Israel

The desperate state the tribes of Israel were in, made the elders ask for a King, to lead them into battle. Samuel, the judge-without-royal-power, had two sons who were not fit for the job. I Samuel 8 tells the story (in the words of the English James’ Bible):

“When Samuel grew old, he appointed his sons as Israel’s leaders.]The name of his firstborn was Joel and the name of his second was Abijah, and they served at Beersheba. But his sons did not follow his ways. They turned aside after dishonest gain and accepted bribes and perverted justice.

So all the elders of Israel gathered together and came to Samuel at Ramah. They said to him, “You are old, and your sons do not follow your ways; now appoint a king to lead] us, such as all the other nations have.”

19 But the people refused to listen to Samuel. “No!” they said. “We want a king over us. 20 Then we will be like all the other nations, with a king to lead us and to go out before us and fight our battles.”

21 When Samuel heard all that the people said, he repeated it before the Lord. 22 The Lord answered, “Listen to them and give them a king.”

Why was a King important? The elders complained that the cooperation of the 12 tribes failed in times of crisis. This had happened recently:

When the Israelites saw that their situation was critical and that their army was hard pressed, they hid in caves and thickets, among the rocks, and in pits and cisterns. Some Hebrews even crossed the Jordan to the land of Gad and Gilead”.

This points to the key problem of the combination of 12 different forces that had in the past been the army of the people of Israel: the most rational way to fight a battle was not to fight at all, but let others do the fighting and bear the casualties. But if all behaved like this, the army collapsed, as it had done in the past. A king would unify the command structure of the army, and force all tribes to fight. Therefore the elders of Israel demanded a king. Samuel finally yielded to their demands, Saul was selected and anointed, who was very successful in the next rounds of warfare. He was succeeded (to make a long story short) by David, who further expanded and deepened the state of Israel – and won many a war. So the institutional innovation to introduce kingship to unify the loose collection of 12 tribes of Israel (or in fact the borrowing of this idea from abroad – the elders explicitly referred to ‘such as all the other nations have’), laid the basis for the ‘golden age’ of Israel personified by king David and his son Solomon. At least that is how you can read this story.

That unified command structures were necessary for warfare, was also acknowledged by Republican Rome, where in times of war a ‘dictator’ was appointed for a year with unlimited powers to defend the city. The Dutch Republic had a rather smart solution for it: its default power structure was republican, with a highly fragmented authority (each province and within it each city was in principal autonomous), but in times of crisis, with hostile armies at the borders, it would fall back on an alternative (or perhaps supplementary) power structure of the stadholders, the house of Orange, as leaders of the army.

Samuel, however, never fully agreed with the idea of a strong king. He predicted that the consequences would be grave – but that is the story of tomorrow’s blog, as this one is already far too long.

 

The group portrait as an institution (30-3-2020)

When I introduce the concept of ‘Institutions’ to students, I sometimes use the following picture, taken at a summerschool in Beijing in 2013.

Summer school Bejing, 2013

What do you see in this picture? There is always one student who see social inequality or hierarchy: the most important people are supposedly in the center, the less important near the margin of the group. Indeed, that is the key, and then I tell the story of this picture (or more generally, pictures taken at Chinese academic meetings in general). When I arrived at this summer school in July 2013, the first thing they told me was that the picture was going to be taken on Wednesday morning at 8 AM and that it was important that we all showed up in time. And this was repeated a couple of times when announcements about the organization of the summer school were made: be there and be in time! Why this was so important became quite clear on Wednesday morning. Long before 8, the members of staff of the group that was organizing the event were discussing the placement of their group. Who had to sit on the front row, who should be close to the boss, prof. Chen Zhiwu (a finance economist with a strong interest in economic history who had organized the event), and who had to sit on the back rows to the extreme left or right. They were clearly nervous – this classification meant a lot to them – and became even more nervous when Zhiwu showed up and started to reorganize the placement. Some staff members were promoted on the spot, and others, therefore, demoted, all in a very friendly way (‘you must come to the fore! Sit right behind me!’ – I could not understand the details as they were, of course, speaking Chinese, but the gist was quite clear). The international experts were also shown their spots (I was at the time still honorary president of IEHA, which explains my elevated position right next to him). Our friend Debin Ma who knows the organizer well is also on the front row. Finally, the picture could be taken, and we all received a copy. So the importance of the picture was not the picture itself, but the reclassification of the hierarchical order of the TsingHua group that occurred. Everybody was shown his or her place in the pecking order.

(one Chinese student explained to me that it was also significant that the picture was taken in front of the main building of TsingHua university, a building that radiates authority – it is perhaps also the most prestigious university of the country – and that this adds to the standing of the group on the picture)

Next, I show a picture of another academic gathering. I explain to them, the students, this is our research group, and ask them who, they think, is the boss of this group. You will probably not be surprised that Ewout gets most of the votes, and they are surprised when I tell them it is the tall guy with the red hair in the back. There is no clear order in this group, by Chinese standards, but does that mean that power differences are smaller? Is this a picture of academic equality or inequality disguised differently?

 

 

 

 

 

 

 

 

 

 

 

 

I was reminded of these pictures when I saw a news item on television about a group portrait with Kim Jong-Un. He was comfortably sitting in front of a massive group of about 200 almost identical military men in highly disciplined order (something they are particularly good at in North-Korea). Their striking similarity dehumanized them – they were clearly the puppets with which Kim played; he was the only guy with agency on the picture. Unfortunately, Google did not bring me to this very extreme form of hierarchy and inequality, so I cannot show you the picture.

 

Broad Well-Being (27-3-2020)

And now for something entirely different! Broad well-being! This is a bit a clumsy translation of ‘brede welvaart’,  but this is probably a chance to add a concept to international academic debate, as there is no better word for it, as far as I know. Multidimensional well-being?  Anyway, you know what I mean – our group has been quite active in this ‘beyond GDP’  debate. Yes, it is another blog on quantification, but I promise that next week all blogs will be qualitative.

There is this impressive book by a group of scholars lead by Harry Lintsen about De Kwetsbare Welvaart van Nederland 1850-2050. I was a bit puzzled by the overall index of well-being they present as the core message of the book, which shows, after about 1950, hardly any increase in well-being anymore, whereas GDP per capita continues to rise. A gap opens up between the two, and the question is: why did so much economic growth lead to so little increase in well-being (see pp. 406-7). In the brede welvaart project that we carried out with Rabobank we arrived, for a much shorter period of time, at a similar conclusion. The underlying issue is one of societal failure:  why did income growth not result in a faster rise of well-being? What is wrong with this society?

It recently became clear to me what is wrong, when I saw the underlying data of the Lintsen project and tried to reverse engineer from the final series of well-being they put together. There are a number of problems. Firstly, the most important ’other’ series that are usually used, those of life expectancy and educational attainment, are growing towards a certain limit (90 years or so for life expectancy, 20 for years of education). After a doubling of life expectancy from 40 to 80 years in the century after 1860, nobody expects this to increase to 160 during the next century; instead, both series grow towards asymptotes, and increasingly more economic growth is  ‘needed’  to achieve the same increase.  A second set of series included in the broad index is even more problematic in this respect as they have no trend at all: unemployment is an example: it goes up and down with the business cycle,  but you cannot expect a long term trend which keeps up with GDP per capita. Security (homicide rates), and perhaps environmental indicators (pollution by SO2 for example) show large swings, but not a consistent trend over time. Inequality measures show a similar absence of a consistent long term trend. The result of including such series in the index is that long term growth of wellbeing will be lowered. And then, thirdly, there is the problem that many series are measuring their dimension of well-being ‘upside down’ (unemployment is ‘optimal’ when it is zero, and highly depressing wellbeing when it is high), so that some kind of formula has to be designed to create an unemployment series which show the opposite pattern (when high, well-being is high, as this is the general idea of the final well-being index). This is, more generally, the problem of standardization, to create, from the chaos of a multitude of dissimilar series measuring very different social and economic phenomena with different scales, a set of standardized series that can be compared with each other, and weighted to form one broad well-being index. The way in which this standardization is carried out (Auke already told me in 2014), defines to a large extent how growth – of individual series and by implication the final index – is distributed over time.

So I am not sure if a divergence between broad well-being and GDP growth is a significant issue, pointing to societal failure; well-being increasing by 1% and GDP per capita by 3% may simply be caused by the fact that they measure different things and use different scales. It may be significant to find that broad well-being goes down, and GDP per capita up (or vice versa). And comparisons of well-being between countries and time periods are, I think, not really affected by these problems. A lot of the important work we have done on this topic still stands, but we have to careful with the conclusions we draw from this research.

 

What can be learned from the Olympics (25-3-2020)

The Olympics are postponed for a year! Nothing is certain anymore, for sure. One reason to be disappointed is that sports events reflect the countries that compete. An interesting dimension of sports is that there are team sports and individual sports, which require different skills. 11 individualists will never win a soccer match; you need perhaps at least 8 players who ‘sacrifice’ themselves to get the striker to strike. The idea is that some cultures are better in this than others and that the performance of their athletes may demonstrate this.

 

 

 

 

Golf offers a nice example. The peak event of golf is the bi-annual Ryder Cup, where an American team plays against a European one. Individually, the Americans rank much higher on the international lists of top players; they have real superstars such as Tiger Woods. But the European team has been much more successful, beating the American 11 out of 20  times (and one was a draw). The match combines different versions of golf, and the more teamwork is required, the bigger are the chances that the Europeans win that part of the match. And it has become a tradition that Tiger Woods disappoints… So the conclusion is simple: Americans find it hard to work together (at the golf course), and the Europeans are much better at it

 

Olympics 1896

We as Europeans love to hear stories like this: yes, they are superior, but we can compensate this with our cooperative attitudes and skills! Obviously a message with considerable political implications. But is it true? One way to test it is to look at the Olympics. It offers a much larger mix of team sports and individual sports, and there are data going back to 1896 covering many Olympic events.  Some time ago Rex collected these data, and together with Selin, we started to analyse them. It is still work-in-very-slow-progress, and I hope Selin and Rex will not mind that I give you a sneak preview of some of the results. So we defined team sports (Rex only included sports with a team of 6 or more, so small teams of rowers, or relay athletes, are not included) and started calculating the share of medals from team sports in the total. We did this for the entire period, but limiting the analysis to the last 50 years or so gave almost identical results. The share of team sports was 24,7% for the entire population. The Netherlands scores significantly higher: 35%. Belgium, probably the first competitor you have in mind, also scores a decent 25%, but most European countries fare much worse: Germany 17% (all Germanies put together, DDR 20%), France 14%, UK 18%, Italy 17%, Poland 17%, Sweden 24%, Norway 14% – only Spain with 58% (!) does much better than ‘us’ (but the absolute number of medals is low in the Spanish case; the total number they won is less than half the Dutch total). The USA, the real challenge, scores at 28% somewhat above the global average (Canada 33%). Russia/USSR is similar: 27%, and the idea that ‘communism’ furthers ‘cooperation’ is not really confirmed by China with only 15%. Koreans seem to be much better in team sports: 37%! And the Swiss disappoint with a very low 12%, and that the Alps do not inspire teamwork is confirmed by Austria with an excessively low 8%. Finally, the shining star of this comparison is Cuba: 43%.

Part of the explanation of these differences – and perhaps the good score of the USA – is the mix of sports that is traditionally practiced in various countries. The Americans are almost unbeatable in basketball, and Cuba’s high score is probably mainly caused by baseball. Wintersports are much less cooperative than summer sports, explaining perhaps the low score of Norway (but The Netherlands also does very well at winter sports, and still realizes 35%).

The data tell us something, but it is as yet unclear what the real message is. We can also calculate which country’s athletes have a real ‘killer instinct’ (and win a disproportionally large number of gold medals) and who suffer from the Zoetemelk-syndrome (becoming 2nd all the time). And we know the gender distribution of medals – is the success of the Dutch in recent Olympics really mainly due to the female athletes? Anyway, it is really a pity that we cannot add new observations to this dataset….

 

Church Building in the Middle Ages – and the power of the referee (23-3-2020)

Let me start the new week with serious academic research and a serious issue. The good news is that the paper about church building in Western Europe has been accepted for publication and is about to be published by Exploration in Economic History. Thanks to Eltjo’s skills in collecting obscure historical sources, Auke incredible data manipulation skills, and Bruce expertise as a medievalist and his amazing writing skills, we now have a paper that charts church construction in Western Europe (England, France, Germany, Switzerland, Low Countries, and Italy) between 700 and 1500. For a large part of the period this is probably the single best indicator of economic performance that is available, and thanks to Auke the paper contains some beautiful ‘heat maps’ (shown below) which summarize 800 years of economic history. They speak for themselves.

Heat maps of church building activity in Western Europe (cubic metres per square kilometre), 700–1500. Maps smoothed using a Gaussian filter (Hijmans 2016). Note: 700–1000 is plotted on a different scale.

The story can go into different directions here. I could tell you I am fascinated by Medieval cathedrals since a visit to Amiens when I was 12 or 13 years old. Or I could speculate on the meaning of the fact that in western languages ‘church’ both means the real building and the religious community, which is a way perhaps makes our indicator also an index of the intensity of religious beliefs. But there is something more mundane I would like to share with you. When we submitted the first version of our paper to EEH, which did not include Italy (but did have estimates for the rest of Western Europe), one of the referees, a specialist on Italian economic history (and not necessarily an Italian economic historian), criticized the paper for this reason. Including Italy would be the real test case for the idea, he argued. He suggested a number of references we could include as well. Moreover, the editor agreed; including Italy seemed to be a condition for acceptance. I am worried about this. This was not a criticism of the method, the sources, or the idea. The original paper covered 5 countries during a period of 800 years – is that really not enough to test its potential? Increasingly, referees seem to be furthering their own research agenda, and as an author, you have to comply because you want the paper to be published. I don’t mind suggestions like this (include Sweden, or China, etc.) but to make one’s approval dependent on this is – I feel – going much too far. We were lucky in the sense that Eltjo was already working on the Italian data, but the focus of the paper changed a lot due to the inclusion of Italy. This little incident shows, I think, that the rules of the game of the refereeing process should be spelled out more clearly (and we all can probably give many more similar examples of the unpredictability and unfairness of the refereeing process).

Let’s celebrate the near publication of this paper with the beautiful heat maps!

 

 

 

Bach’s contribution to GDP (21-3-2020)

Johann Sebastian Bach (1685-1750), in a portrait by Elias Gottlob Haussmann, copy or second version of his 1746 canvas. The original painting hangs in the upstairs gallery of the Altes Rathaus (Old Town Hall) in Leipzig, Germany.

Today is Bach’s 335th birthday. One of the big mysteries is that he did not get much appreciation and praise during his lifetime. Composers who nowadays have a similar status, such as Beethoven, Mozart, and Händel, were big stars performing for kings and large audiences. By contrast, when Bach applied for the job of musical director of the city of Leipzig in 1722, he was ranked no. 3, behind two other candidates with, in our view, modest reputations. He only got the job because no. 1 and no.2 both declined! During his years in Leipzig, when he was composing and performing the best music ever made (according, for example, to the Dutch classical top 300), no one noticed!  Nobody saw his brilliance, the depth of his music, the beauty of his songs. There is not a single review of the amazing music that was performed. Bach historians have studied letters and diaries of people who were there in the Thomaskirche when the great passions of Bach were staged but did not find a single quote praising the new music. The only feedback that the poor man received was complaints by members of the city government that his music was too dramatic for the Church service. Did he know himself how wonderful his music was? Could he have any idea that 335 years later people would almost religiously perform his passions and cantatas?

It is possible to estimate the contribution that Bach is still making to GDP. Economists do this via surveys, asking people to specify the value of certain free services that they enjoy (how much would you be prepared to pay for Google search, or for Facebook). For a devoted segment of the Dutch population, Bach is a basic need, so they would probably be happy to pay a lot for his music. My guess is that the share that Bach’s music is contributing to GDP (and consumer surplus) is higher than that of any other (dead) artist. I can’t do the surveys but have a substitute measure: the number of hits on Google. I assume that hits reflect impact – the number of websites and places where the person involved is mentioned. When I type in Bach, I get 287 million hits; Mozart scores 146 million and Beethoven (whose enjoying an anniversary this year) ‘only’ 92 million (his two competitors in 1722, Telemann 4 million and Fasch less than one million, indeed reflecting their true status). Händel is a bit difficult as his name in English is often spelled Handel, which includes a lot of hits unrelated to the composer, but his German gives about 8 million hits. But Bach can also refer to other members of the Bach family, and literally means brook, which may help as well. Including first names and/or initials leads to 81 million hits for both Beethoven and Bach, and 70 for Mozart. Compare this with Shakespeare: 154 million; Beatles: 160 million (John Lennon 80 million); Van Gogh: 79 million, Marx: 116 million, or Leonardo da Vinci 176 million. Music, however, is different from enjoying a painting by Van Gogh or reading Das Kapital, and I wonder they (still) have the dedicated supporters who would be willing to sacrifice money for that pleasure. My estimate is that Bach is the dead artist who still contributes most to current Dutch GDP (and even more to multi-dimensional well-being). But I might be slightly biased.

 

Imperialism and Vergaderen (20-3-2020)

I always wanted to experiment with a blog, and see how it is to write a small piece every day. So I see this corona-thing as an opportunity to share with you my stories of birds, Bach, and economic history (and occasionally I might comment on how we deal with the virus). Tomorrow is Bach’s birthday, so the point will be made that he is the most undervalued artist in history (for which I will offer quantitative evidence). Let’s today talk about the link between ‘vergaderen’ and imperialism.

Together with Maarten (Prak) I am writing a new economic history of Dutch capitalism in the period 1000-1800. We, for example, want to understand why overseas expansion after 1602 created societies on Java, in South Africa and Surinam which were fundamentally different from the Netherlands.

One potential source is the impressive biography by Jur van Goor of J.P. Coen, the most ambitious and successful empire builder in Dutch history, who founded Batavia and established the commercial-empire in the Indonesian Archipelago.

Jan Pieterszoon Coen (1587-1629)

Who is this man, who was responsible for the most infamous massacre in Dutch history, of the population of Banda in 1621? When his superior and predecessor as governor-general Both proposed to promote him in 1613 he wrote about him: “een persoon zeer matig van leven, zedig, goed van karakter, geen dronkaard, niet eigenwijs, zeer bekwaam in het vergaderen, zeer goed thuis in de handel en het boekhouden’’. So the most aggressive Dutch imperialist excelled in book keeping and meetings! Don’t think about this when you participate in the next departmental meeting….

Van Goor gives nice examples of this. Indeed, the Raad van Indie, with the top officials of the VOC (including at least one legal specialist) was the main decision making institution, and Coen (and other governor generals) had to listen carefully to their deliberations. When war was on the agenda, the raad was even enlarged with all captains of the ships that might be involved in the fighting – to get their commitment as well (it turned into a ‘krijgsraad’). In 1618, for example, Coen convened this krijgsraad to discuss the option of leaving Banten (where the headquarter of the VOC was initially located) for Jakarta (later Batavia). He stressed at the opening that all participants had to frankly give their views on this change, which might lead to war with the pangeran of Banten. The majority of the 13 participants were against, and Coen skilfully concluded that the meeting was not intended to take decisions but was meant for mutual consultation. He continued to relocate activities to Jakarta, but the formal move had to wait until 1619.

So the institutional ‘oil’ of the VOC war-and-commerce-machine was the vergadering in which all participants listened respectfully to each other.

Question of the day (in Dutch): waarom is er geen Nederlands woord voor ‘deelnemer aan een vergadering’? we hebben wel de voorzitter die voorzit, maar niet de vergaderaar die vergadert; wel de vergadertijger, maar dat is meer een typering van een karakter dan een neutraal woord voor deze activiteit. Waarom is voor deze activiteit in al die eeuwen dat we nu vergaderen niet een actief zelfstandig naamwoord uitgevonden? Wat zegt dat over hoe we ‘echt’ denken over het vergaderen?

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