Will Wilkinson has written a really thoughtful essay on international relations among nation-states in which he critiques a recent essay by Martha Nussbaum that invokes the Dutch political theorist Grotius. I’ve been thinking about Grotius recently because I am reading Simon Schama’s The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age. My knowledge of political theory is sufficiently superficial that I am ill-equipped to think carefully about Grotius, so Will’s essay is incredibly helpful.
Schama’s book is very interesting, and I am learning a lot about the central Dutch identity during their commercial heyday. I’m also learning that there was a lot more antipathy and aggression between the English and the Dutch than I realized. Much of that antipathy revolves around conflicting ideas of the extent to which each nation could use access to waterways to increase their commercial ventures. It’s also interesting in the context of the subsequently rising commercial and financial star of the English and the waning star of the Dutch. One hypothesis is that English institutional change post-1688 (for which they really have to thank the Dutch, after all!) created a stable environment in which financial innovations could occur, such as new credit instruments and new financial relations that allow for risk spreading. Increased credit and its associated risk spreading enabled increased trade and interconnection of physically disparate markets, which harnesses the Smithian “division of labor is limited by the extent of the market” increased extent of market to increase specialization, thereby increasing efficiency and incomes. That dynamic had worked to a large extent for the Dutch in the 17th century, and it worked at an even larger order of magnitude for the English in the 18th century. And don’t forget that this dynamic also occured in the context of, and further encouraged, technological change in shipping, navigation, road and carriage.
I think the decentralized dynamics of growth are truly beautiful.