ECONOMY (1600AD)
“Growing without grabbing”
The 17th century is a time of change, new facts, contacts with foreign cultures and products from remote continents. In north-west Europe a spirit of curiosity and entrepreneurship is awakening. Global trade with the Far-East is getting started. Small Dutch settlements are founded in India, Java and even Japan.
For the first time in history luxury goods become affordable to ordinary people. Many Dutch households own a clock, a bible, Delft pottery, paintings, curtains, linen and even sometimes mirrors. Exotic products like pepper, cloves, cinnamon, tea, sugar and tobacco are getting more widely used. With some exaggeration one may say that Holland’s golden age is the very first beginning of the consumer society.
The Dutch Republic comprised seven provinces, each with their own government. There were few nobles and big landownership was scarce. Most people lived in towns, were craftsmen with fair income and enjoyed relatively much freedom. Calvinism was deeply rooted here. And possibly the Dutch spirit of cooperation (struggle against the sea) also played a role. All together this yielded fertile ground for organizational- and commercial innovations, that were crucial to economic growth.
In 1602 the VOC was founded, the first public company in the world with tradable shares and limited liability. Not a family-owned business but a novel way of entrepreneurship enabling many people to invest capital without knowing each other. Trade brought supplies from all over the world. The first stock exchange and ‘Wissel-bank’ started. Amsterdam became the financial capital of the world. More than 300 years of fabulous economic growth would follow with an average growth rate of 1% per year. Enabled by business innovations, new kinds of money, industrialization and political institutions.
Today the world economy has reached a limit. Our environment is literally threatened by the warming of the earth’s atmosphere; and also, by erosion of cultural identity and social cohesion. What to do next with enormous growth, consumption, mountains of debt and the wide gap between rich and poor? Just for how long can our economic and monetary system be sustained? The biggest problem is our dependence on economic growth. Governments are well aware of the constraints but they still firmly stick to the policy of growth in order to provide jobs for a growing, greying and more productive population. Also, to keep the gap between rich and poor manageable; to finance government services and debt and to enable households to pay off their debts.
An economist might say ‘money is neutral’ and the pastor will warn ‘it is about morality’. A good dialogue is needed between economic- and ethical experts to further develop personal values and society systems. As yet, economists are primarily concerned with mathematical models and calculations. Preferably they stay away from ethical issues. This is strange because first of all, economics is about choices and attitudes of people. Economics is based on facts and values. Looking more closely shows clear that economic theories do in fact apply models of human- and society behavior. Often though these models are simple and outdated. People are supposed to be calculating and egoistic. The ‘invisible hand of the market’ is supposed to take care of everybody’s interest. This is way too rational. It does not do justice to the relational side of humans.
On the other hand, many ethicists are calling for frugality and lower consumption without worrying about the economic consequences. That will also fail. An ‘economy of sufficiency’ primarily dealing with sharing wealth does not acknowledge the human drive to develop. It defeats its purpose. And also, the collective morality is not clear. Whose ethics will decide? Governments, banks, investors? Or citizens, consumers, employees, entrepreneurs or members of a society, church or political party?
Business as usual with undirected growth based on private property, efficient markets and short term returns on investment ignore the future, human relations and nature. Sustainable economic development needs a dialogue on personal values and society systems. In the next sections several (hidden) drivers will be reviewed. Perhaps most of all our money system needs urgent improvement. And that will need a lot of wisdom, courage and resilience.