Afternoon Tea: “Shareholder Activism at the Dutch East India Company 1622-1625”

This paper explores the reason for the absence of control rights of shareholders in the Dutch East India Company (VOC) and the background of the conflict between shareholders and directors that arose in 1622/1623 when the VOC Charter of 1602 was extended.

The VOC was the result of a merger between several companies that had been trading in the East Indies between 1594 and 1602. The legal structure of most of these “pre-companies” which were incorporated for a single voyage to the East Indies, prevented shareholders from having actual influence. In most of these companies, the shareholders invested their money, not in the company itself, but via one of the individual directors. The relationship between a shareholder and most of the precompanies was therefore indirect, which impeded the exercise of control rights. Furthermore, shareholders may not really have been interested in their control rights given the high returns and the expectations of the newly opened trade route.

When these pre-companies were merged into the VOC in 1602, nothing changed with respect to the absence of shareholder control rights. The VOC, however, was established for a longer period and had to meet other more long-term challenges than those faced by the pre- companies. The failure to adapt the control structure to suit the different circumstances may have been a source of the conflicts that arose between the directors and shareholders between 1602 and 1623.

In 1622, upon extension of the 1602 Charter, a significant conflict erupted between the shareholders and directors. The so called dissenting participants complained about the numerous conflicts of interests that had been arising between the various directors and the VOC. They accused the directors of abuse of power, short-selling and self-enrichment. They argued that shareholder approval was required for the VOC to turn to the capital market to borrow funds. They also demanded that large investors be entitled to vote on the appointment of new directors. As the dissenting participants supported their arguments by referring to the English East India Company, the corporate governance of the EIC is briefly described.

Publishing their complaints in pamphlets, the shareholders mobilized public opinion and attempted to convince merchants not to invest in the Dutch West India Company, which was being incorporated at the same time. They exerted pressure on the government to ensure that more rights were granted to the shareholders when the VOC Charter was extended. To a limited extent, the activism of the “dissenting participants” was successful. The 1623 Charter granted certain rights to large investors, including the right to nominate new candidates for appointment as director. The 1623 Charter further regulated insider trading by the directors and encouraged the directors to pay a yearly dividend to the shareholders. In addition, a committee of nine shareholders was entrusted with the supervision of the VOC directors. This corporate body was known as the “Lords Nine” (Heren IX).

This is from Matthijs de Jongh, a judge in the Netherlands. Here is the link.

Nightcap

  1. Radical republicans and early modern democrats, Dutch style Dirk Alkemade, Age of Revolutions
  2. Did socialism keep capitalism equal? Branko Milanovic, globalinequality
  3. John McCain in 1974 Arnold Isaacs, War on the Rocks
  4. U.S.-Soviet hotline a symbol of Cold War cooperation Rick Brownell, Historiat

Could free speech have led to overseas empires?

Tridivesh’s recent post on China’s multilateral struggles got me thinking about the difference between the United States and China when it comes to coalition-building and international affairs more broadly.

I don’t think the Chinese are purposely attempting to smaller countries in debt so that Beijing may have a shorter leash for them. I think Beijing simply doesn’t know what it’s doing, and is proceeding apace with multilateral initiatives like the BRI through a trial-and-error process. Unfortunately, trial-and-error processes only work if there is a mechanism to identify the error that takes place during the trial. In the West, we call this mechanism “free speech.” In China, free speech ruins order and is thus discouraged at best and disposed of at worst.

China’s expansionist efforts will probably, as a result of the lack of free speech, end poorly for the regime. Beijing’s reputation will suffer, and it will have to resort to more coercive tactics to secure its alliances and influence over its smaller neighbors.

This thought process, in turn, got me thinking about how the West came to churn out so many powerful worldwide empires in such a short span of time, and how these empires managed to coexist with each other at various points in time. Given China’s troubles with establishing hegemony, the fact that the United Kingdom, the Netherlands, France, and the United States were able to achieve what they achieved is amazing. Throughout most of history, empires (or wanna-be empires) have sought to expand abroad while keeping order at home, just like China is doing today. In the sixteenth-century West, order at home was rejected in favor of liberty at home, and as a result the few societies that tried liberty ended up being able to afford overseas empires, where order was sought instead of liberty!

The short-sightedness of imperialists continues to astound me. If liberty at home leads to opportunities to establish colonies abroad, why on earth would you try to stamp out liberty in the colonies you’ve been able to establish thanks to liberty? Imagine if the people living in Indonesia, or India, or Algeria, or the Philippines, had all the liberty that Americans and western Europeans had. Alas…

“The Dutch Empire”

That’s the subject of my weekend column over at RealClearHistory. An excerpt:

6. The Dutch Empire vied for supremacy with the Portuguese empire, which, beginning in 1580 with the Iberian Union of Spain and Portugal, was a rival Catholic state attempting to establish a global hegemony of its own. The Portuguese were actually the first Europeans to establish trading forts throughout the world, but the aforementioned Iberian Union severely weakened Lisbon’s plans for global hegemony due to the fact that the union made Portugal the junior partner. The Dutch conquered and then established colonial rule at Portuguese colonies on four different continents, and unlike the Portuguese, focused on commercial interests rather than converting the natives to Catholicism and creating a politically connected empire. Because of the commercial nature of the Dutch project, many of the indigenous factions were happy to switch from Portugal to the Netherlands as business partners. And partners they were. Both the Portuguese and the Dutch (as well as the British and French later on) paid rent to local political units on the trading forts they built throughout the world. Such was the nature of power on the world scene before the end of the Napoleonic Wars in the early 19th century.

Please, read the rest.

2017: Year in Review

Well folks, another year has come and gone. 2017 was Notes On Liberty‘s busiest year yet. Traffic came from all over the place, with the most visits coming from the US, the UK, Canada, Australia, and India. (In the past, India and Germany have vied for that coveted 5th place spot, but this year India blew Germany out of the water.)

NOL is a voluntary cooperative, and as such this year saw the introduction of 6 new Notewriters: Kevin Kallmes, Nicolás Cachanosky, Ash Navabi, Tridivesh Maini, Matthew Bonick and Trent MacDonald.

Michelangelo invited Kevin to join, Nicolás is an old grad school buddy of Rick‘s, I reached out to Tridivesh, and Ash and Matthew were invited on Vincent‘s initiative.

Speaking of Vincent, 2017 was his year. He had Tyler Cowen (MarginalRevolution), Mark Thoma (Economist’s View), Anthony Mills (RealClearPolicy), Barry Ritholtz (Bloomberg), Don Boudreaux (Cafe Hayek), John Tamny (RealClearMarkets) and Pseudoerasmus (a well-regarded economic historian) all link to his thoughts multiple times over the course of the year. His Top 10 list for best papers/books in recent economic history (Part 1 and Part 2) were legitimate viral sensations, dominating the top 2 spots on NOL‘s most-read list. Other huge posts included “Did the 30 Glorious Years Actually Exist? (#5),” “The Pox of Liberty – dixit the Political Economy of Public Health (#9),” “James Buchanan on racism,” “The GDP, real wages and working hours of France since the 13th century,” “Did 89% of American Millionaires Disappear During the Great Depression?,” and “A hidden cost of the war on drugs.” My personal favorite was his “Star Trek Did More For the Cultural Advancement of Women Than Government Policies.” Dr Geloso’s thoughts made up 40% of NOL‘s 10 most-read 2017 posts.

My favorite posts from Edwin this year were his analyses of Dutch politics – “Dutch politics, after the elections” and “North Korea at the North Sea?” – but the reading public seemed to enjoy his posts on Ayn Rand, especially her thought on international relations, and his summary of Mont Pelerin Europe more than anything else. Van de Haar’s day job is in the private sector, so his blogging is understandably light (especially given his incredible publishing output in academic journals). I look forward to what looms ahead in 2018.

Federico’s most recent post on artificial intelligence and the law got love from some major outlets, including FT‘s Alphaville blog and 3 Quarks Daily. His question “Does business success make a good statesmen?” and his report on a Latin American Liberty summit are worth reading again, but my personal favorites were his comments on other Notewriters’ thoughts: first jumping in to add some historical clarity to Bruno’s post on Latin American conservatism and then to add layers onto the debate between Mark and Bruno on the Protestant Reformation. Federico has been invaluable to NOL‘s welcoming, skeptical culture and I cannot wait to see what he comes up with in 2018.

Barry was generous enough recount the situation in Turkey after the coup earlier in the year, and fruits of this endeavor – Coup and Counter Coup in Turkey – can be found in six parts:

  1. First of a series of posts on Turkey since 15th July 2016 and background topics
  2. Immediately after the coup and party politics
  3. Gülenists and Kemalists
  4. The Kurdish issue in Turkey
  5. Jacobins and Grey Wolves in Turkey
  6. Presidential Authoritarianism in Turkey

Dr Stocker also began writing an appendix to his six-part series, which resulted in a first post on authoritarianism and electoral fixes. Barry is hard at work on a new book, and of course the situation in Turkey is less than ideal, so I can only hope he has a bit more time in 2018 for NOL.

Michelangelo had a banner year at NOL. His #microblogging has been fun, as were his post analyzing relevant data from his surveys: What libertarians think of climate change, for example, or urban planning in Oregon. Michelangelo also utilized NOL to play around with concepts like race, marriage markets, data, Spanish language services, affirmative action, and freeware, to name a few. My absolute favorite Michelangelo post this year was his excellent “Should we tax churches? A Georgist proposal.” Michelangelo is a PhD candidate right now, too, so if he ever gets some time to himself, watch out world!

Rick also had a banner year at NOL. His post arguing against Net Neutrality was one of the most-read articles of the year here (#4), and many of his wonkier thoughts have been picked up by the sharp eye of Anthony Mills (RealClearPolicy) and the excellent Chris Dillow (Stumbling and Mumbling). Rick is my favorite blogger. Posts on cycling in Amsterdam, subsidies, management and measurement, linguisticsmore subsidies, and my personal favorite of his for the year, “Why do we teach girls that it’s cute to be scared,” always make me think and, more importantly, smile.

Bruno’s blogging was also amply rewarded this year. His thoughts on some of the problems with postmodernism brought in the most eyeballs, but thankfully he didn’t stop there: Articles introducing postmodernism and highlighting the origins of postmodernism also generated much interest. RealClearWorld picked up his post analyzing Brazil post-Rousseff (he had more analysis of Brazilian politics here and here), and his post delving into whether Nazism is of the left or the right provoked quite the dialogue. Dr Rosi was at his best, though, when prompted by Mark to further advance his argument that the Protestant Revolution played an integral role in the rise of the freedom of conscience. Times are tough in Brazil right now, so I can only hope that Bruno continues to play a vital role as a Notewriter in 2018.

Chhay Lin, now in the private sector, had his post about Bruce Lee’s application of Taoist philosophy head to the top of reddit’s philosophy sub, and his post on Catalonia and secession got love from RealClearWorld and Lew Rockwell (Political Theater). I hate to be *that* guy distracting a man from making his money, but I hope to see Chhay Lin pop in at NOL much more often in 2018!

Zak has been busy with a number of different projects, as well as attending Michigan-Ann Arbor full-time. He still managed to have one of his posts, on “libertarian” activist hypocrisy (#10), highlighted in the Guardian, the UK’s premier left-wing mouthpiece. His post on The Nancy MacLean Disgrace earned him plaudits from the online libertarian community and Don Boudreaux (Cafe Hayek), and his posts on open borders and income inequality show just how much of a bad ass he has become. I had a tough time trying to pick out my favorite Zak article of 2017, so I’m just gonna highlight all three of them:

  1. Immigration, Cultural Change, and Diversity as a Cultural Discovery Process
  2. Why I’m No Longer A Christian…
  3. Against Libertarian Populism

They’ve all got great self-explanatory titles, so do yourself a favor and read ’em again! Hopefully Zak can continue to work NOL in to his many successful ventures in 2018.

Jacques continues to amaze me. He’s been retired from academia for – as far as I can tell – at least a decade and he’s still producing great material that’s able to reach all sorts of people and places. His post on the Ottoman Empire and libertarianism (#6), which was featured at RealClearWorld and much-shared in Ottomanist corners of Twitter – took aim at popular American libertarian understandings of decentralization and seems to have landed pretty squarely on target. My favorite post of Dr Delacroix’ this year was about French Africa (also featured at RealClearWorld), but his late-year book review on Christopher De Bellaigue’s 2017 book about Islam might end up being a classic.

Bill’s 2017 here at NOL was productive and he continues to impress. His “Speech in academic philosophy: Rebecca Tuvel on Rachel Dolezal” brought in thousands of readers, but it was not his ability to draw crowds that I found impressive. His ability to tackle tough concepts and tough issues came to the forefront this year: drug use, “vulvæ,” more drug use, party culture (my personal fave), schooling (another personal fave), more schooling, and music (personal fave). Bill’s ability to weave these trends together through the lens of individual freedom is so much fun to read and important for fostering a culture of tolerance and respect in today’s world. I can’t wait to see what 2018 has in store for him!

Nicolás came out firing on all cylinders this year. With excellent dialogues between himself and Vincent, as well as between himself and guest blogger Derrill Watson (who I hope will be back for more in 2018), Dr Cachanosky’s passion for teaching has shown through clearly and brightly. I hope 2018 – his first full year with NOL – is filled with much more hard-hitting but insightful blogging from Nicolás.

Ash brought the heat, too. Check out the subject matter of his first few posts here at NOL: “A Right is Not an Obligation,” “Physical Goods, Immaterial Goods, and Public Goods,” “The Economics of Hard Choices,” “Markets for Secrets?,” “A Tax is Not a Price,” and “A Radical Take on Science and Religion.” Like Nicolás, Ash’s first full year at NOL is coming up, and if 2017 is any indication, readers can look forward to an interesting and engaging 2018.

Mark’s first full year here at NOL was a definite barnburner. His debate with Bruno on the Protestant Reformation (#8) brought in a bunch of eyeballs, including from RealClearHistory, while his “The Return of Cyclical Theories of History” also brought in thousands of readers, thanks in large part to Robert Cottrell’s excellent website, the Browser. Dr Koyama’s review of Aldo Schiavone’s The End of the Past also caught Mr Cottrell’s eye and the attention of his readers. Mark’s post on geopolitics and Asia’s “little divergence” is well worth reading again, too. Like Zak and Bill’s posts, I couldn’t choose just one favorite, so I give you two:

  1. Political Decentralization and Innovation in early modern Europe
  2. Some Thoughts on State Capacity” (an especially good criticism of American libertarian understandings of the “state capacity” literature)

We’re lucky to have Mark here at NOL.

Kevin, like Ash and Nicolás, brought the ruckus for his first few posts here at NOL. Kevin’s very first post at Notes On Liberty – “Rules of Warfare in Pre-Modern Societies” (#3) – ended up on the front page of RealClearHistory while his “Paradoxical geniuses…” earned a spot on the Browser‘s prestigious reading list. Not a bad start. Kevin will be finishing up the second half of his first year of law school (at Duke), so I doubt we’ll see much of him until June or July of 2018. My personal favorite, by the way, was Kevin’s “Auftragstaktik: Decentralization in military command.” His posts on taking over Syria – Roman style, the median voter theorem, and inventions that didn’t change the world also got lots of love from around the web.

Nick’s post on public choice and Nancy MacLean (#7) earned a nod from Arnold Kling (askblog), Don Boudreaux (Cafe Hayek), Chris Dillow (Stumbling and Mumbling), Mark Thoma (Economist’s View), and pretty much the entire online libertarian community, while his post analyzing the UK’s snap election earned a spot at RealClearWorld. Dr Cowen’s thoughts on school choice and robust political economy, as well as a sociological analysis of Trump/Brexit prompted by Vincent, all garnered love from libertarians and scholars around the world. My favorite Cowen post was his question “Is persecution the purpose?

Overall, it was a hell of a year here at Notes On Liberty. I’m really looking forward to 2018. Here’s to a happy, healthy you. Oh, and my proudest piece this year was “North Korea, the status quo, and a more liberal world.” HAPPY NEW YEAR!

Dutch politics, after the elections

Now that the Dutch elections for the Lower House are over, as well as the unprecedented international hype surrounding it, it is time for a few pointers and reminders.

Turkey

Prime Minister Mark Rutte used the crisis with Turkey to his greatest advantage. When the crisis just loomed he escalated, helped of course by the increasingly hysterical reactions of the Turkish authorities, particularly the President.

I have not been able to get figures, but it is rather normal for foreign ministers, including from Turkey, to visit the Netherlands and address their nationals, also for political purposes. This is just the consequence of allowing Turkish people to have dual nationality and -in the Turkish case- also double voting rights. With the referendum in Turkey coming up, it is only logical to allow proponents and opponents to campaign as well.

This said, any thinking person would strongly object to the plan to give even more power to the already way too powerful Turkish executive. Dictatorship looms (please read Barry’s much better informed blogs on this).

Politicians almost always choose the short term over the long term. Certainly four days before elections. Still, the downside of Rutte’s actions are immense, as they also serve the interest of Erdogan, enabling him to play the victim of the ‘racist Dutch’. It might even pull the deciding number of voters into his camp. That would be bad for Turkey, and for Europe.

Chances for Turkey joining the European Union were already small, but have now disappeared completely. (Which I personally do not mind much, but others differ, including many in Rutte’s own party).

Populism

Another topic of international concern surrounding the election was the rising populism and its alleged ending by the electorate at the ballot box. Indeed, Geert Wilders’ Party for Freedom did not become the biggest party, yet he did win votes again. An increase of a third actually, from 15 to 20 in the 150-seat Lower House. His party thus became the second largest party in parliament.

He was never going to be Prime Minister anyway, as all parties had said before the elections they would not collaborate with him. This was important as the Dutch electoral system has a low threshold, which means many parties can enter parliament and no party has ever won a majority of 76. It demands parties to negotiate a governing coalition. After Wednesday at least four parties are needed for such a majority, which will take months.

There is a less-noted, other ‘bad populism’, which includes the largest winner, the Green Left party. This party represents are the radical environmental left, led by a young good looking leader who has been able to attract a lot of young people, in particular women, according to electoral research. There are also other populist parties elected, most notably the party for pensioners, the Islamic party DENK,  and the Forum for Democracy, the intellectual version of Geert Wilders’ party.

Coalition building

It remains to be seen whether Green Left will get a seat in government, given the large differences with the other parties who will be negotiating the new government: the centre right VVD of Rutte, the social liberals of D66, and the Christian democrats.

This process is slow and boring for most people, except for political junkies like myself. So chances are you will not hear about Dutch politics until a new government has finally been installed. Do not be surprised if this does not happen before Christmas.

BC’s weekend reads

  1. Understanding Trump’s trade mistakes
  2. Empiricism and humility
  3. Epistemological modesty and unintended consequences
  4. Immigrants and slaves
  5. 5 takeaways from the Dutch election

McCloskey, Western equality, and Europe’s Jews

Warren shot me the following email a few days ago:

Brandon, do you know the name Deirdre McCloskey?

She is a first-rate economist with extensive expertise in history, literature and anthropology.  She recently finished a trilogy, the third volume of which is “Bourgeois Equality.” It’s a fat book but you would be well rewarded for time invested.  You don’t have to read the first two volumes to benefit from the third.

The purpose of the trilogy is to explain why we’re 30 times richer than our forebears of 250 years ago, as best that can be estimated.  Conventional answers like the industrial revolution and rule of law don’t go far enough.  The answer lies in attitudes toward commerce.

I haven’t read McCloskey’s book yet, but it’s been on my amazon wishlist for awhile and thanks to Warren’s prodding it’ll be my next purchase. (Here is all of NOL‘s stuff on McCloskey so far, by the way.)

My first instinct on this topic is to think about Europe’s Jews. Bear with me as I lay out my thoughts.

McCloskey’s book, which as far as I can tell takes readers to the Netherlands and the United Kingdom from the 17th to 19th centuries, is about how Europeans began to reconceptualize equality in a way that was very different from notions of equality in the past.

A very basic summary is that notions of equality in Europe prior to the modern era largely aligned with notions of equality elsewhere in the world. Basically, an established hierarchy based on either inherited land ownership or clerical ranking was justified in all cultures by a religious appeal: “we’re all Christians or Buddhists or Muslims or fill-in-the-blank, so don’t even worry about what we have and you don’t have.” This way of thinking was irrevocably altered in 17th century northwestern Europe. Once I actually read McCloskey’s book, I can give you more details (or, of course, you can just read it yourself).

This argument, that northwestern Europe became free and prosperous because of a change in ideas about equality, is of course very broad and qualitative, but I buy it. The big “however” in this line of reasoning is Europe’s treatment of its Jews.

I forget where I heard the argument before, but somebody or some school of thought has argued that because Europe’s Jews were forced by legislation to go into “dirty trades” like commerce, they became more broadly open-minded than other ethnic groups in Europe and therefore more prosperous. Dutch and British bourgeois culture no doubt had a Jewish influence, and because bourgeois culture is internationalist in scope this Jewish influence must have penetrated other European societies, but anti-Semitism in these other bourgeois centers was more rampant than than it was in the UK and the Netherlands. Why was this?

My main guesses would be “Protestantism” (because Protestants at the time were more open-minded due to being at odds with the Catholic Church), or “the seafaring character of British and Dutch societies.” These are just guesses though. Help me out!

The European Union is Pathetic

So here we are. Prime Minister Cameron got his ‘special deal’ from the rest of the EU leaders. It is pathetic, from both sides. I like the Brits, and admire their great tradition in political thought. Because of their constant doubts about the EU, they are (potentially) the most informed about it, if the enormous flow of publications pro and con is a sign, which have seen the light since the eighties. Therefore, one questions the sincerity of Cameron, who has repeatedly said he will campaign against Brexit. His pathetic result seems a sure vote winner for the No side though. I find it hard to belief that anyone can be seriously convinced to stay in, if his four main results should do the trick.

These four are: a minor semantic thingy (Britain is exempt from striving to a closer union); a complicated procedure for a majority of national parliaments to reject or change intended European regulation (a comparable procedure has been a failure); the possibility to decrease the amount of children allowance for children who do not live in Britain to the purchase power parity level of the country concerned (especially aimed at Eastern Europeans); and finally an emergency break on social security benefits. Great results to build a campaign on…

These results are mostly symbolic, and while symbols are important in politics, it still amounts to little. So the other European leaders were not willing to change much in the way the EU is now run and its enormous amount of laws, rules and legislation. This is by far the saddest of it all. The leaders  let the moment pass to really change the EU, to not only address the British fear and frustration, but also those of the people of many other member states.

This is especially relevant for The Netherlands. On April 6 there is national referendum on the association treaty with Ukraine. The No-camp is leading the polls. If rejected (and the government acts accordingly, which it is not obliged legally), the whole treaty has to be discarded by the EU. We have been in this situation before. In 2005 the French and Dutch populations rejected the EU constitution by large margins. Only to have force fed on their throats a marginally different constitutional treaty a year later. So strange support for the EU had been decreasing for years.

The EU cannot make a fist in foreign politics, not in defense and security affairs, not in the current refugee crisis. It fails to ensure free competition in services, it still wastes billion of euros in subsidies on agriculture, regional support, industrial policies, et cetera. In short: it is a mess, the EU fosters the development of turning itself into an open air museum: admired for its culture, laughed at for its dismal politics and economics. Thanks a lot for the leadership, European Council.

A quick update on NOL’s art project

Chhay Lin sent me this email detailing a rough timeline for the NOL art project he initiated:

I met my friend about the art project last weekend. He told me that he is experimenting with an Escher-esque logo/banner for NOL. He doesn’t know how long it will take, and is not working on it full-time. In the meantime he is busy moving out from the city of Breda to Rotterdam, opening his own workshop, and making portraits for a book that he and I are working on. 🙂 I’ll keep you up to date if I hear anything new about the NOL artsy project.

His friend, Cheerted Keo, has a website that you can check out here.

Theory versus Common Sense? The case of the Dutch

Since the fifteenth century, [the Netherlands] has had several features which later liberal thinkers, such as David Hume and Adam Smith, enviously referred to. Compared to other countries, economic freedom was an important issue, just as the larger degree of religious freedom. Trade, tolerance, and cultural developments turned the Dutch into an early manifestation of liberalism. However, with the possible exception of Erasmus, Spinoza, and perhaps the Rotterdam-born but London-based Bernard Mandeville, the Dutch lacked great thinkers who could provide this liberal practice with a theoretical base.

This is from the introduction (page 2) to Dr van de Haar‘s excellent new book, Degrees of Freedom: Liberal Political Philosophy and Ideology, and I think it makes a good argument in favor of the “common sense” approach to the political. This common sense approach, for those of you wondering, is often contrasted in American libertarian circles with the theoretical approach espoused by academics. Common sense libertarians tend to be more socially conservative and more parochial than theoretical libertarians who, in turn, are less socially conservative and more cosmopolitan in outlook. This difference in outlook between the two factions leads to the former camp appealing to “the people” in arguments, whereas the latter often appeal to the authority of a scholar or school of thought. Dudes like Ron Paul and Lew Rockwell are in the former camp; dudes like Steve Horwitz and Eugene Volokh are in the latter. This is not a tension limited to American libertarians, of course. You can find it just about anywhere, but libertarians have made it interesting, mostly because – once they have acquired facts like the one Edwin reports on above – they ask questions like this:

How is it possible for a society like the Netherlands to exist when it had no great thinkers to claim as its own?

The common sense faction will reply with something like this: “That’s easy: because the Dutch people were left alone they were able to prosper. With no busybody do-gooder class of intellectuals around to make rules for the peons, folks were able to thrive thanks largely to personal freedoms and self-interest.” This line of reasoning has a lot of merit to it. In fact I buy it, even though it’s not complete.

I think the Dutch had plenty of good theorists whose work contributed to the peculiar nature of the 15th century Dutch republic, but it is also true that the high theory of guys like Smith and Hume is largely absent from Dutch political thought (I don’t remember reading any Dutch philosophers in my introductory philosophy courses in college, for example). I can clarify this in my own mind by drawing parallels with American political theorists up until the end of World War 2, when the US suddenly became a superpower and has received a great influx of the Really Smart People from around the world. Like the good Dutch political thinkers, nobody outside of the US knows who James Madison or Alexander Hamilton are (specialists excepted, of course). A few quirky weirdos out there might know who Ben Franklin is, but they won’t know him for his political theory.

Maybe this also had to do with the fact that the Dutch (and American) theorists were more concerned with keeping Spain (or other scheming Great Powers) at bay, and this could only be accomplished with a heavy does of pragmatism to supplement ideals; pragmatism is, of course, something that high theory avoids.

The great thinkers, who we all know (even if we have not all read), in contrast, don’t seem to have a lot of experience in policy and diplomacy. Furthermore, these guys all seemed to be in well-integrated outposts of cosmopolitan empires that were largely populated by minorities. Scotland, for example, was part of the British Empire, or Kant’s Prussia, which was technically independent of the Austro-Hungarian Empire but still very much a cultural and economic junior partner to Vienna at the time.

Here is my big question, though: If the Dutch had no Great Thinkers, how were they able to create the richest, most extensive overseas empire the world had ever seen?

Common sense libertarians, 1

Theoretical libertarians, 0

By the way, my answer to that last question goes something like this: the Dutch, as former subjects of the Spanish Empire, had intimate access to Madrid’s trading networks (cultural access as well as economic and political) and this, coupled with the federal republic that Dutch statesmen were able to cobble together, gave lowlanders just enough breathing room to raise the bar of humanity. Again, you can find Dr van de Haar’s new book here.

Myths of Sovereignty and British Isolation XV, From Dutch Model to German Kings

Continuing from the last post, the story of the temporary Anglo-Dutch fusion and then moving onto the German kings of Britain.The invasion of late October was not strongly resisted, James fled London and then England, giving Parliament the pretext to declare that James had abdicated. His son was ignored with the falsehood pretext that he was not the son of James and his wife, but a baby smuggled into the royal chambers. All this evasion and pretence should not be allowed, in Burkean fashion, to conceal the reality that Parliament had asserted itself as the sovereign power in the country, and accordingly that the monarch reigned at its pleasure, which could be withdrawn. This was not a restoration but a very radical innovation.

On the conservative side, it was designed to maintain a religious settlement in which only members of the state church were full citizens, removing rights James had given to Catholics and also Protestant Dissenters. The immediate impact then was a major loss of religious freedom, though partly based on fear that ‘tolerance’ was a tactic only for James on the road to state enforcement of Catholicism. We will never know the truth of that.

William’s Dutch invasion did not inspire much of a war as James II’ authority collapsed quickly, but further violence was to come in Ireland until 1691 featuring sieges and major battles, with the French helping the Catholic Irish against the Dutch prince turned English monarch. There was war in Scotland until 1692, featuring one of the infamous events of Scottish history, the Glencoe Massacres of Scottish Jacobites (supporters of James). The massacre was partly the result of clan rivalry, but was certainly also the consequence of state policies.

The Dutch connection disappeared with William’s death, as he had no children and the throne passed to Mary’s sister Anne, ignoring of course the claims of ‘James III’, the exiled son of James II. However, the impact of the Dutch connection was not just in the person of William. His reign as William III (1688 to 1702) coincides with the foundation of the Bank of England in 1694, which took place in the context of Dutch investments in London and a strong Dutch influence as a model of Protestantism, science, crafts, public finances, naval and merchant fleets, trade and colonialism which preceded 1688, including the exile of the liberal political philosopher John Locke in the Netherlands from 1683 to 1688, and was intensified by the Dutch invasion/Glorious Revolution.

The Dutch Republic had shown how to fight wars through a reliable, credible form of public debt which Britain was able to use in eighteenth century wars. Generally, the temporary relationship between the two states, which was somewhere between mere alliance and full fusion, was important in enabling Britain to become the leading eighteenth century power in Europe for all the things associated with the Dutch Republic in the seventeenth century.

The temporary semi-fusion of course had a drastic impact on British foreign and defence policy, which was now heavily oriented towards Dutch aims in northwestern Europe, and even the whole of Europe. Britain was heavily engaged in European politics, including wars, particularly the War of Spanish Succession (1701 to 1714), which led to Britain’s still current acquisition of Gibraltar on the southern tip of Spain and included one of the most famous victories of British military history, Blenheim, under on the most famous British generals, John Churchill (ancestor of Winston Churchill), Duke of Marlborough on German territory. The main aim of British participation was to prevent French domination of Europe, which was threatened by a French claim to the Spanish throne, and the possibility of over generous compensation to France if it gave up Spain, with regard to Spanish colonies and the parts of Italy dominated by Spain.

Moving back briefly to the period before James II, his brother Charles II, had a secret treaty with Louis XIV of France which meant that state policy was covertly guided by the French who were subsiding Charles. So the temporary semi-fusion with the Dutch Republic was itself nothing new in terms of British state policy coming under the influence of a European power, it was simply a more open form of it. Looking forward, William was succeed by Mary’s sister Anne.

Parliament then legislated for a Protestant only succession, which went to the Elector Prince of Brunswick-Lüneburg, generally known as the Elector of Hanover. This family supplied British monarchs from 1714 to 1837. The legislation of Queen Anne’s time precluded military commitments to Hanover, but inevitably in practice the defence of Hanover and the protection of Hanover’s interests in Germany were a major consideration of state during that period. The first two Hanoverian monarchs were more German than English, though the third of the Hanoverian Georges, George III established himself as a largely popular archetype of supposed British character.

Next post: Britain in relation to some European nations

Myths of Sovereignty and British Isolation XIV, Revolution and the Dutch Model in the Late 17th Century

The last post in this series looked at the impact of Dutch republicanism on constitutional innovation and revolution in mid-seventeenth century Britain. Now on to Dutch influence on the Glorious Revolution of 1688.

Britain, or what was still three kingdoms (England, Scotland and Ireland) only unified in the person of the monarch did not have just one revolution connected with the Dutch model in the seventeenth century, but two. Furthermore the second of those revolutions required invasion by a Dutch prince to happen. The Glorious Revolution, as that second revolution is known, established something like the modern British political system in 1688 in establishing that the monarch could not legislate or even nullify legislation without parliament, could not govern without parliamentary consent and that parliament had the right to decide who could inherit the monarchy.

That this fundamental reorientation of the state system took place through violence and foreign intervention is not the sort of thing that sovereigntist believers in a British special path separate from mainland Europe, since Edmund Burke like to emphasise. Edmund Burke, a remarkable parliamentarian and writer on various topics including philosophical aesthetics, of the latter half of the eighteenth century, is introduced here, because his way of presenting British history is very connected with his assertions of British superiority in Reflections on the French Revolution, his most widely read book.

Of course there were things to condemn in the French Revolution, and Burke was a very acute observer of the violent polarising tendencies within it before they reached their extreme points, but his assumptions about British history are absurd. Given the importance of the Glorious Revolution for the British polity within which he played a distinguished role (though never in government), and his wish to condemn revolution, he reacts by denying a real revolution in 1688, presenting it as essentially restorative rather than innovative and as an essentially peaceful consensual event. It was of course presented in that way at the time, but then the French Revolution was influenced by ideas of restoration.

Evaluating Burke’s attitude will require going back to those events. Inevitably there are debates about the real causes of the Glorious Revolution, but it is anyway undeniable that it was a reaction against the rule of James II, who had only come to the throne three years previously suggesting remarkably poor powers of persuasion and conciliation.

The collapse of his reign was in some important part the result of religious issues going back to the simple fact that he was a Catholic monarch in a Protestant country. This would have been tolerable for Parliament and everyone else participating in political life if James had left the state religious settlement alone and if he was to die without a Catholic heir.

James was, however, very busy with changing the state religious settlement letting Catholics into powerful positions, and more seriously institutionalising the Catholic church in ways that suggested that at the very least he intended to give it equal status with the Protestant Church of England. This could be defended on grounds of religious tolerance at the time and still is.

Unfortunately for him James was not successful at persuading many Protestants, even those subject to discrimination themselves, that he had good intentions, and his methods of enforcing changes in the state religious settlement did not suggest someone willing to limit his general powers as Parliament expected. These methods included the assertion of a Dispensing Power, in which laws were suspended at will, and measures to manipulate parliamentary elections.

At the beginning of the reign he benefited from an extravagantly royalist Tory Parliament, but in a short period became mistrusted and feared. The birth of a son in June 1688 brought opposition to a new peak as it suggested that what James II had done would last beyond his own lifetime and it was not enough for those who disliked his policies to simply wait for his death, which would bring his Protestant daughter Mary to the throne, if he had no male heirs and she lived long enough. The outcome was that the Immortal Seven, seven prominent parliamentarians invited Princess Mary’s husband, Prince William of Orange to invade England.

The title ‘Orange’ refers to territory in France, but the Orange family was Dutch. They had a rather complicated and changing status as the first family of a country with no monarchy, tending to lead the army and to some degree provide a focus for central executive power in a  very decentralised system. The invitation to William enabled him to become King by will of parliament, but as he was the husband of the next in line to James, apart from his son, the hand over to William could be concealed as Mary taking her inheritance.

The next post will look at the steps from Dutch model to German kings linking Britain with Hanover.

Myths of Sovereignty and British Isolation XIII, Revolution and the Dutch Model in the mid 17th Century

The last post went up to the reign of James I in the early seventeenth century known as Jacobean England/Britain, because Jacobus is the Latin form of James. James I was also James VI of Scotland, unifying the two crowns in his person. He wished to created a unified British state, but this was not achieved until the early eighteenth century and Scotland always remained a distinct nation within Britain, de jure through different laws and state institutions, de facto through a distinct culture, or cultures, and a partly separate economy.

Sovereigntists and Eurosceptics might find the reign of James I to be an amenable part of history, with some qualifications. James I was married to a Danish princess and his son-in-law was a German prince at the centre of the opening phase of the Thirty Years War, a German and central European conflict which drew in the major European powers. James nevertheless kept British involvement very limited, though that would undermine any idea of Britain as distinct and exceptional as a champion of Protestantism in Europe. James could have played that role but preferred not too and was happy to try to ally with the major Catholic power, at least at the beginning of the Thirty Years War, Spain, though was also willing to give some support to French Protestants who had communities to some degree autonomous from the French state, which was a more generous attitude to religious ‘heresy’ than was shown in Britain.

Enthusiasts for the supposedly special and exceptional history of the English then British parliament will not find comfort in his notorious and eloquent belief in absolutism and divine right of kings, though James was sufficiently pragmatic and politically talented to realise that he could not avoid working with parliament in practice, at least in matters of new legislation and raising taxes. It can be said that his era is one in which Britain was not extremely involved in European affairs, colonisation of north America progressed, and parliament survived as a major state institution if not with the enthusiastic approval of James. That is the case for the twenty two year period from 1603 to 1625.

His son Charles, decent and cultured as an individual, was less talented at preserving the state and engaged in various forms of disruption. He tried to rule without parliament by stretching his tax powers to a creative extreme and pushed through changes in the doctrine and ritual of the Church of England with some brutality. This all started becoming counter-productive when the Scots rose up against a clumsy attempt to enforce conformity to the changed Church of England, though differences in the Scottish church had been recognised under James. The very brief summary of subsequent events is that Charles lost the subsequent Civil War/War of the Three Kingdoms, and lost his head after failing to acquiesce in a more limited form of monarchy.

A strong strand of sovereigntist-Eurosceptic thought comes out of a Tory detestation of the execution of a king and the institution of a republic known as the Commonwealth. Such blunt dislike of a movement which at least started as an increase in parliamentary power looks a bit odd now after a long period of purely symbolic monarchy in Britain and Oliver Cromwell who betrayed or stablished the republic as Lord Protector after three years, has long been recognised as a constructive and personally honest figure in British state history, even by those with a strong dislike of his more autocratic and religiously enthusiastic inclinations.

Some republicans, such as the poet and political thinker John Milton were themselves inclined towards a very Anglocentric understanding of liberty and Protestant religion (the Civil War was in significant part about the rights of those Protestants not conforming to the Church of England), so providing a kind of alternative sovereigntist narrative to the royalist story. In the past the republican narrative has been associated with the left, but the Eurosceptic right has to some degree recently been happy to be associated with it, as they attempt to associate the European Union with seventeenth century absolute monarchs supposedly following a state system foreign to the ancient Liberties and Constitution of England.

One problem with this is that republicans were initially eager to pursue a state union with the Dutch Republic which provide a model of republicanism in Protestant Europe. This failed because of a Dutch wish to protect a privileged trading and colonial system from British competition, and avoid being swallowed up by a bigger state. The Dutch Republic of the United Provinces was not even the only European model of republicanism. The most important British republican of that time, James Harrington, was inspired by Machiavelli and therefore the Florentine republican tradition, though he did not follow Machiavelli in every respect.

It should also be noted that European assemblies sometimes had more power than the English parliament. Though Spain of that era is generally associated with absolute monarchy of a cruel and even obscurantist type, the reality is that provincial assemblies and laws strongly hemmed in the power and tax raising capacities of the Habsburg monarchs, to the extent that these autocrats were less able to raise taxes than English monarchs and finance an effective state system.

Next Revolution and the Dutch Model in the late 17th Century

Myths of Sovereignty and British Isolation XII, 16th Century England in relation to the Dutch Revolt, Germany & Spain

The idea of a very sovereign and separate England, which does not really fit with the highly French oriented Middle Ages as discussed in the last post, may look a bit more plausible after 1485 when the Tudor dynasty came to power, ending the Wars of the Roses between different Plantagenet claimants to the throne. Under the Tudors, the English (including Welsh) state system is consolidated, the English church passes from authority of the Pope in Rome to the monarchy, and the dynasty ends in the unification of England and Scotland. That is when Elizabeth I died in 1603, the throne passed to the Stuart King of Scotland, James VI, who became James I of England.

The break with the church in Rome was an accident which had nothing to do with the religious inclinations of Henry VIII, who took the national church under his control for marital reasons. In the mid-1520s, he wanted an annulment of his marriage to Catherine of Aragon, in which the Pope would declare the marriage to have been invalid according to Canon law (in this case  because she had been married to Henry VIII’s late brother) . The Pope would have been willing to co-operate, but was under the control of Catherine’s uncle Charles V (German ‘Holy Roman’ Emperor and King of Spain), who regarded the proposed annulment as an insupportable insult to the imperial-royal family honour.

Conveniently for Henry, it was a good time for finding a religious base for a national church independent of Rome. The Reformation, that is revolution of new Protestant churches agains the Catholic church was underway, in a process normally dated back to Martin Luther posting 95 theses critical of the hierarchy on a church door in Wittenburg in 1517. Henry VIII did not break with Rome because of Protestant inclination and though there was a dissident religious tradition, the Lollards going back to the  fourteenth century, which anticipated Protestant thinking, it was a movement of strictly minority interest. Henry seized church lands and allied himself with Protestants. This accidental partial adoption of Protestantism was followed by swing towards more pure Protestantism under Edward VI then a swing back towards Catholicism under Mary Tudor followed by a final victory of Protestantism under Elizabeth I, though not a victory of the most radical Protestants, and not a result of majority sentiment in the nation, which would have favoured Catholicism before decades of state pressure and persecution made Protestantism the majority religion.

The struggle of the Protestant cause in England was associated with an intensified presence in Ireland through very bloody means, and an international struggle against Catholic Spain, associated with support for the Dutch Revolt against Spanish and Catholic control. Overall this might give the picture of England, as a proto-United kingdom fully incorporating Wales and partly incorporating Ireland, rising up as a free Protestant nation outside the control of the major trans-European institution of the time, the Catholic church. However, Protestantism was an import from Germany (Martin Luther) and Switzerland (John Calvin’s Geneva and Huldrych Zwingli), even if some tried to see it as the product of Lollardy.

The time of Elizabeth and the first Stuart James I was the time of colonialism in the Americas, which sovereigntist-Eurosceptic enthusiasts are inlined to see as part of Britain’s unique global role. This claim seems strange given the major colonial ventures of Portugal, Spain, and the Netherlands at this time. Britain was not uniquely Protestant or uniquely colonial and trading. The consolidation of a national state at that time has equivalents in Spain, Portugal, France, the Netherlands, Denmark and Russia. The ‘growth’ of Parliament under the Tudors absolute monarchs who conceded that taxes had to be raised by Act of Parliament, and that laws properly speaking were also from Acts of Parliament, but held onto complete control of government  and saw no need to.call Parliament except when new taxes or laws were needed, is paralleled by representative institutions in the new Dutch Republic, the continuation of German and Italian city republics along with self-governing Swiss cantons, the continuing role of regional assemblies in Spain and local courts ‘parlements’ in France which had the power to comment on new legislation, and the elective-representative structure of the Holy Roman Empire all provide parallels.

English state and national life was caught up in Europe most obviously through support for the Dutch, but also in the trade and diplomatic activities of the time. Mary Tudor, who attempted Catholic restoration, was married to Philip II of Spain while she was Queen, so placing England under heavy Spanish influence. Defeat of the Armada (Spanish invasion fleet) under Elizabeth became a symbol of English independence, but was itself strongly linked with English involvement in the Netherlands. So it was not a period of continuous English independence from European powers and was certainly not a period of isolated separation. The connections with the continent were reinforced during the reign of James I who had dynastic connections in Denmark and Germany.

More on Jacobean (from Jacobus, the Latin form of James) and seventeenth century England in the next post.