The Industrial Revolution and the Netherlands: Why did it not happen?

The Industrial Revolution and the Netherlands:
Why did it not happen?
Joel Mokyr
Departments of Economics and History
Northwestern University
j-mokyr@nwu.edu
December 1999
Prepared for the 150th Anniversary Conference Organized by the Royal Dutch Economic
Association, Amsterdam, Dec. 10-11, 1999.
I am indebted to Arnold Heertje, Edwin Horlings, and Karel Davids for helpful comments
and Steve Nafziger for research assistance.
Revised, February 15, 1999

---

1
Why was there no Industrial Revolution in the Netherlands? To ask the question in that form
in this day and age invites controversy. Anyone who raises similar – and equally legitimate –
questions about China, for instance, is likely to be told that this is a Eurocentric, teleological, and
essentialist point of view, which presumes that the Industrial Revolution was some kind of crowning
achievement of a concentrated effort. This kind of critique seems rather silly. To ask why any
historical event that seems a priori feasible because it did happen elsewhere did not take place is
useful analytically: why did Canada not have slavery? why did the U.S. not have a successful
socialist movement? why did the Soviet Union fail to develop the microprocessor? These seem
useful questions.
The stylized facts are well-known. Despite its position as a commercialized, sophisticated,
and urban economy, the Netherlands was a latecomer to the Industrial Revolution. Yet while it is
legitimate to pose the question why this was so, answering it is decidedly tricky. To sharpen the
issue, I should like to follow a Kuznetsian way of formulating what changed in Western Europe in
the years of the Industrial Revolution. It was not, it has been said often, the beginning of economic
growth, it was the beginning of modern economic growth. That may seem to be a distinction without
a difference. European economies grew in the centuries before the Industrial Revolution, even if our
estimates of the exact numbers are even less precise than for those of the nineteenth century. In fact,
the best numbers we have suggest that the rate of economic growth before 1760 and the rate of
growth between 1760 and 1830 were both on the order of about .5% per capita per annum. If there
was an acceleration, a “take-off into sustained growth” as we used to call it decades ago, it post-dated
the Industrial Revolution.
And yet, I would like to suggest that the type of growth experienced after the Industrial

---

2
Revolution was of a different character than that before. The real breakthrough, in this interpretation,
was not the new technology of the “years of miracles” between 1765 and 1790, but the fact that it
did not slow down and peter out a few decades later. Previous episodes of economic growth in the
West and elsewhere in the world had always run into ceilings and negative feedback. By feedback
I mean, just as in biology and in systems analysis, that the output of the system becomes an input
into the next time period or generation and affects its productivity and functionality. It is, so to speak,
the control of a historical process by the end products of that process. Before 1750, feedback was
on the whole negative. Each time economic growth of any nature took place, its consequences after
a while became obstructive inputs in that process and worked to slow it down and end it.1
To state this is not enough. The net direction of feedback is a reduced form equation. We
have to specify the structural mechanisms at work here. The most widely discussed mechanism is
the Malthusian model in which growing income produces rising population. But models from
political economy do the same: economic growth due to commercial expansion (known as Smithian
growth), led to rent-seekers, tax-men, mercantilist protectionists, state-sponsored monopolies, and
at times pure plunderers and pillagers. Such parasites often killed the geese that laid the golden eggs.
A particularly interesting case of negative feedback has to do with the political economy of
technological change. A successful breakthrough of a new technique, say in printing or shipbuilding,
will lead to considerable investment in specific human capital. Once entrenched, these interests will
then rationally resist further innovations that would reduce the value of their investment. The pre-
modern Guild system by the seventeenth century had become an instrument of this conservatism
(Mokyr, 1994c, 1998).
1The opus classicus describing and analyzing this phenomenon is Jones (1988).

---

3
The Industrial Revolution changed the economic system from one dominated by negative
feedback mechanisms to one of predominantly positive feedback, where growth begat more growth.
In other words, while before the Industrial Revolution “nothing failed like success,” by the middle
of the nineteenth century growth “fed on itself.” It gathered speed and momentum in the years
between Waterloo and the Crystal exhibition, and by 1860 a new stage was beginning that led to the
technological breakthroughs of the 2nd Industrial Revolution and to the mass consumption and
increases in income that the first could not quite pull off. But how and why did that happen? In part,
the change was institutional: some of the rent-seeking groups and other parasites were weakened by
the growing influence of Liberalism and economic rationalism brought about by British Political
Economy but even more so by the French Revolution. But I would like to suggest there is something
else, equally powerful that changed economic history in an irreversible and dramatic fashion, and
this something had to do with new technological knowledge.
Technology is knowledge and if we are to understand how it works and what it does, we need
to go back to its epistemology.2 I would like to suggest that there are basically two kinds of
knowledge. There is what I call S-knowledge, which catalogues and describes natural phenomena
and regularities, and there is 8-knowledge which is knowledge “how” – how to do the things we
now call “production.”3 The relation between the two is the crux of the historical phenomenon I want
to describe. Before, it is necessary to be a bit more explicit about what these concepts look like.
First, S is a union of the pieces of knowledge possessed by individuals in a society or stored
2Simon Kuznets (1965, pp. 85-87) was the first to explicitly link what he called “Modern Economic growth” to his idea
of “useful knowledge” which corresponds closely to the concepts developed here.
3The idea goes back to at least Ryle (1945). For a recent formulation, see Loasby (1996). A more detailed presentation of
this argument can be found in Mokyr (1999b).

---

4
in storage devices such as books and artefacts. Second, I include in this all knowledge about natural
phenomena but leave out such areas as the social sciences, literature, law, and philosophy because
they do not bear upon technology. This may seem an arbitrary limitation, but it is motivated by the
observation that au fond technology involves primarily the manipulation of natural phenomena.
Third, the word knowledge really means here “beliefs” – that is, it is not essential that this
knowledge be in some sense “true” – by which we mean that it conforms to our own ideas. The
Ptolemaic-Aristotelian image of the physical world was “knowledge” in this regard. Fourth, S
knowledge would be associated today with what we call “science” but it includes a great deal more
knowledge that we would call “useful” but which was more artisanal knowledge than “science”: the
lubricating qualities of oils, the hardness and durability of different kinds of woods, the location of
minerals, the direction of the trade winds, and the strength and dietary needs of domestic animals.
On the eve of the Industrial Revolution, with “science” in the modern sense in its infancy, this was
most of what there was of S. The critical characteristics of S are not only its size but diffusion (who
and how many know what is known?) and what I call “access costs” that is, if someone in the society
knows something that I want to know, how difficult and costly is it for me to find out?
The set 8 is the union of all feasible techniques known in this society, what some economists
used to call the “book of blueprints.” A technique is a list of instructions on how to produce a good
or a service. The existence of such a set is implicit in the concept of an isoquant, which delineates
the choices among different techniques that each firm has. The set is of course much larger than the
techniques on the isoquant since all the points above and to the right of it are also feasible but would
not be efficient. But where exactly do these techniques come from? The answer is that normally they
are based on some prior knowledge of nature, a knowledge that can be exploited and manipulated

---

5
to yield a technique. The “epistemic base” of a technique in the set 8 can be wide or narrow, and
its width helps determine how effective the process of technological change is. The extreme case is
the one in which nothing is known about the how and why of a technique except that it works.
Narrow epistemic bases were the rule, not the exception in the pre-Industrial era, especially in
medicine and agriculture. These techniques emerged by chance discoveries and may in some cases
have worked quite well, but they rarely led to new applications, extensions, refinements, or new
technological trajectories. If you do not know why things work, you do not know what will not work
and you will waste valuable resources in fruitless searches for things that cannot be made such as
perpetuum mobile machines or gold out of other metals. To paraphrase Pasteur’s famous aphorism,
Fortune may sometimes favor unprepared minds, but only for a short while.
What does all this have to do with the Industrial Revolution? Basically, everything. The
widening of the epistemic base of technologies, both new and old, allowed their sustained
improvement. Economic Historians have long agonized over the possible relationship between the
development of “useful knowledge” and technological progress in the eighteenth century. The
argument has often been made that many of the significant breakthroughs in physics, engineering
science, and chemistry occurred after the main thrust of the Industrial Revolution and therefore could
not have caused it. But that misses the point: the really significant event is not the early inventions
of the 1760s and 1770s but their continued development after 1820, in sharp contrast with earlier
episodes of technological breakthroughs.
What differed was the fundamental change in the characteristics of the S set and the way it
interacted with the 8 set. The period 1700-1850 experienced a profound transformation in the way
useful knowledge was accumulated and communicated. The scientific revolution did more than

---

6
establish the paradigm of Newtonian mechanics as the centerpiece of scientific methodology. It
created standards of open science in which new knowledge was communicated freely using a
common vocabulary and terms and measures that were generally understood. It established the
criteria of authority and trust that were necessary for the efficient communicability of useful
knowledge. It also clearly set out the purpose of science as the means by which natural forces could
be tamed and subdued by people for the explicit purpose of improving the material conditions of life.
And it established a belief in “progress”, that is in the ability of cumulated knowledge of the “useful
arts” to improve living standards. Useful knowledge, whether we would call it “science” or not,
became thus more diffuse and more accessible in the critical years between 1720 and 1780. We often
refer to this process as the enlightenment, although that term is often used for related phenomena.
The Industrial Revolution was preceded by something like a “knowledge revolution” which widened
the epistemic base of technology and made it possible for the people who created the new techniques
to access useful knowledge more easily.4
Describing in detail the exact phenomena I am referring to here will take me too far from
my main point. It is well understood how access to useful knowledge became easier and cheaper in
this period. The establishment of learned societies in Provincial towns, for example, provided a fruit-
ful opportunity for entrepreneurs and industrialists to communicate and exchange ideas.5 At the same
time, the enlightenment produced new ways of organizing “useful knowledge” which made access
all the more easy. The paradigmatic example of this new approach was the encyclopedia, which
4This argument is made in detail in a forthcoming book by Daniel Headrick (2000).
5 For an excellent survey see Inkster, 1980. Yet, as Robert Schofield (1972) has argued, the formal meetings were secondary
to the networking and informal exchange of technical information between members.

---

7
reproduced useful knowledge in alphabetical order. Diderot and d’Alembert Grande Encyclopédie
is the most famous but by no means the only example of this.6 Alphabetization and indices were the
search engines of the eighteenth century, cheapening the access to knowledge. Nobody, of course,
is suggesting that one could pick up a volume such as these and start boiling soap or so; but what this
literature illustrates is a live, continuous, deep interaction between the savans and the fabricans. For
new mappings from S to 8 to occur, the economically active have to converse with the intellectually
informed.
It is that interaction, I propose, that contains the explanation of the positive feedback I noted
before. The broadening of the epistemic base permitted three types of positive feedback: the
feedback from technology to useful knowledge; the feedback from useful knowledge to other
knowledge; and the feedback from some techniques to others without the necessary augmentation
of S. By the 1820s, this take-off had begun.7
The enlightenment and the scientific revolution were not British phenomena, they were
European ones. Asia, despite its enormous scientific achievements, never attained anything like it.
But within Western Europe, the differences were not all that large. No single country had a
monopoly on science or engineering, and a large number of the most significant breakthroughs of
the period were made by Continental scientists. All the same, the closing decades of the eighteenth
century found the British at an advantage. Compared to the economic gap between Europe and
6Other ways of organizing useful knowledge were experimented with: consider only the 80 volumes of the Description des
Arts et Métiers (1761-1788). They included articles on candle making, sugar refining, masonry, glassmaking, and most famously
(since it inspired Adam Smith’s celebrated Ch. I), pin making.
7Two examples are Sadi Carnot’s theory of the steam engine (1824) and the invention of the modern microscope in 1830.
Cf Cardwell (1971, pp. 186-238), Reiser, (1978, p. 76).

---

8
Africa or Central America, this leadership was small and temporary. It was much on the minds of
contemporaries, however, and led to many decades of British industrial leadership and the Pax
Britannica in Europe and to a smugness and self-congratulary mood in Britain that took many
decades to fade.
Not only that the Netherlands was not the first country to follow Britain, but its Industrial
Revolution came late, not until the last third of the nineteenth century by which time Belgium,
Switzerland, and important parts of France and Germany had passed it by. Its slowness to adopt and
emulate the new technologies we associate with the Industrial Revolution has been the subject of a
substantial literature. Technical innovation in the Netherlands, once part of the glory of the Golden
Age, never completely came to a halt, but it slowed down in the later eighteenth century exactly at
the time that it accelerated in Britain. By 1825 or so, the Netherlands had been transformed from a
paradise of technological ingenuity to a museum (Davids, 1991, pp. 18, 36).
On the surface, this is an astonishing fact of economic history: after all, on the eve of the
Industrial Revolution the Netherlands was in some ways the most advanced economy in Europe.
Some of the glittering edges of the Golden Age had worn away, perhaps, but Adam Smith for one
was unimpressed by arguments of Holland’s decay (Smith, 1776, 1976) Book I, Ch. ix, p. 102. In
their recent magnum opus, De Vries and V.D. Woude (1997) describe in great detail the many forms
that this “modernity” took: sophisticated capital and labor markets, a high degree of monetization,
advanced education and high literacy rates, an urbanized, commercialized economy, and a highly
productive, market-oriented agriculture.
There are a number of hypotheses competing for an explanation of why this “modern”
economy did not become the first Industrial Nation. The most obvious one was simply contingency,

---

9
that is, bad luck: the Netherlands from 1780 on were almost continuously at war, mostly with
England, subject to political turmoil and instability, and from 1795 were dominated in one form or
another by France which did not have its interest at hand. In a sense, the disastrous events between
1780 and 1815 could themselves be regarded as an example of classic negative institutional
feedback. One of the first decrees the victorious French ordered was an indemnity of 100 million
guilders (later increased to a total of 230 million). The Dutch also had to maintain a French army of
25 thousand men (De Vries and V.D. Woude, 1995, p. 686; Schama, 1977, pp. 186-98 and 206-07).
The vulnerable maritime economy of the Netherlands was set back grievously during the war, and
the economy of western provinces suffered simultaneously from inflation and unemployment.8 A
sharp decline in the demand for capital reflected these shocks, and much of the Dutch capital supply
fled overseas or was hoarded. In 1814, the Dutch economy emerged dazed and diminished in a new
age. After the dust of war and revolution settled, it was exposed to the tough competition of British
manufacturing and the protectionism on the Continent, coupled like a Siamese twin to the Belgian
provinces whose economic structure and interest was quite different from the Northern Netherlands.
No wonder it took them a long time to recover. To be sure, the growth rate between 1815 and 1840
in the Netherlands was quite respectable, but that was largely because of the very low starting point.
An influential interpretation of the tardiness of the Industrial Revolution in the Netherlands
concentrates on the lingering heritage of the Golden Age. Under the old economic regime, as I argued
above, negative feedback assured that nothing would fail like economic success. Economies whose
8Dutch manufacturing known as “trafieken” depended heavily on imported raw materials which became hard to come by
as they had to arrive through neutral ports. The British occupied the Dutch colonies and the Dutch East India Company, a symbol
of the success of the Dutch economy in the Golden Age, was abolished in 1798. Fisheries and shipbuilding also suffered heavily. On
the other hand, more traditional industries such as agriculture and rural-domestic industries prospered by comparison. Enterprising
Dutch merchants were able to use neutral and French registration and make large profits. On the whole the declining sectors
outweighed those gaining from the war. For details see Buyst and Mokyr (1990) and Van Zanden and Van Riel, 1999, ch.2.

---