It would be difficult to tell the history of economic development in pre-modern Europe without spotlighting the Low Countries. Although this region of Europe now holds only peripheral status in relation to the great powers of the 21st century, it once held many of the biggest centers of commercial activity in the western world. In popular imagination, the economic history of the Low Countries also often sits in the shadow of the better-known stories of the northern Italian trading empires of the Middle Ages. However, many historians trace the origins of modern capitalism to the trade and industry which emerged in regions like Flanders beginning in the Middle Ages, and which, with the rapid expansion of the Dutch empire in the 1600s, came to dominate economies not just in Europe but all across the world.
This paper will look at the importance of the Low Countries in three different works: Henri Pirenne’s Medieval Cities (1925), Bas van Bavel’s The Invisible Hand?: How Market Economies have Emerged and Declined since AD 500 (2016), and Peter H. Wilson’s Heart of Europe: A History of the Holy Roman Empire (2016). Pirenne’s and van Bavel’s works both fall into economic historiography, and as such, fit the growth of trade and industry in the Low Countries into a broader European economic landscape. However, Pirenne largely deals with the Low Countries insofar as they prove his thesis on the intrinsic link of trade and urbanism—and, writing in the 1920s, he had access to very little of the data that strengthen the arguments of 21st-century historians like van Bavel. Van Bavel uses the Low Countries to exemplify the complicated relationship between individual freedoms, societal progress, and the growth of trade. Wilson, whose encyclopedic book could fit into a number of historiographic categories, sheds valuable light on the way the Low Countries’ economic development fit into the European political landscape, and particularly that of his proposed “heart of Europe,” the Holy Roman Empire.
Of these three books, Pirenne’s narrative of European economic patterns in the Middle Ages makes for the easiest to follow: Civilization thrived in Europe until the empires of Islam conquered much of the Mediterranean and locked Europe out of Eurasian trade networks, and that European civilization only re-emerged with the rise of cities as commerce hubs in the late medieval period. Although he argues that European civilization derived its strength initially from the Mediterranean alone, in the late Middle ages, he shows that Europe’s commercial power re-emerged primarily in the cities of the Low Countries as well as the urban areas of the Mediterranean, after the Islamic empires declined and Christian Europe once again extended its trade networks to the outside world.
In Pirenne’s thesis, a number of different traits positioned the Low Countries—and particularly the region of Flanders—to urbanize early and develop free markets ahead of the rest of Europe. First, Pirenne argues that the Low Countries had a robust trade economy even before the resurgence of the late-medieval commerce, in part because they had held key trade sites as early as Roman times. He explains the continued commercial power of Flanders in this light: “Among the causes of the commercial importance which so early characterized Flanders, should be pointed out the existence in that country of an indigenous industry able to supply vessels that landed there with a valuable return cargo.”[1] Indigenous industries (particularly textiles, per Pirenne) meant potential for long distance trade; given his argument that long distance trade stimulates European civilization (and its absence in the early medieval period caused European civilization to collapse), Flanders’ ongoing roots in trade made it a key actor in the revival of commerce in the late Middle Ages. Furthermore, industrial production and long-distance trade mutually constituted each other, and Flanders’ historic industries created a perfect crucible in which for commerce to grow. In Pirenne’s words, “trade itself stimulated industry. In every region where industry was carried on in the country, trade made a successful effort first to lure it to the city and then to concentrate it there. Flanders supplies one of the most instructive examples.”[2] And although Flanders’s cosmopolitan economy declined with the rest of Europe in the early Middle Ages, Frisia (northwest of Flanders) carried on: “Friesen cloaks… seem to be the only manufactured products which furnished, in the Carolingian era, the substance of regular trade.”[3] Where the flame of commerce flickered and died elsewhere, it carried on in the Low Countries.
But beyond its latent industries, two other important commercial trends emerged from the Low Countries and set the ball rolling for European economic growth. The first of these were regional trade fairs. Fairs show up all over medieval economic historiography and, in Pirenne’s work, when they emerged in the Middle Ages, they marked an important step toward an economy based on permanent long-distance trade. Pirenne says fairs served “as a periodic meeting place for the professional merchants, to put them in touch with each other, and to get them to gather there at fixed seasons… In Flanders those [fairs] of Thourout and Messines… figured among the principal centers of medieval trade up to near the end of the twelfth century.”[4] Fairs were key prototypical institutions of the formal markets and trade relationships that emerged later on in the medieval period.
The other trend that developed early in the Low Countries—that of municipal institutions—also led to a more stable long-distance trade economy in Europe. He does not define “municipal institutions” in a particularly succinct way, but these generally entail a more formalized structure of socio-economic relations in urban areas, which benefitted the commercial class by providing greater security and stability for production and exchange. Once again, Flanders led the charge here: “No region offers a better chance for studying municipal origins in a purely lay environment than does Flanders. In this great country… the episcopal cities never rivalled in importance and wealth the commercial and industrial cities.”[5] Pirenne argues that municipal institutions simplified the complex socioeconomic environments of cities, which incubated more modern trade practices. Municipal institutions created an urban environment in which all moving parts worked in unison around the common goal of commerce. Although the cities of Flanders are the best example, Pirenne says that distinctive municipal institutions emerged in cities across the western Low Countries and far northern France, from Ghent to Douai.[6]
Van Bavel would agree with Pirenne’s analysis of the Low Countries as centers of economic growth, but The Invisible Hand? adds a great deal more nuance to the role of that region in the pre-modern world. Van Bavel particularly concerns his work with factor markets: that is, exchange systems of “land, labour, and capital.”[7] Where Pirenne argues that “modern”-looking markets were only a twinkle in the eye of the medieval Low Countries, van Bavel claims “factor markets emerged earlier here than traditionally assumed,” as early as the thirteenth and fourteenth centuries.[8] But van Bavel takes this argument even further; the author argues that such markets actually created greater social good in the Middle Ages than later on. Van Bavel states “in the late medieval period, the institutional organization of these markets, as most conspicuously in Holland, offered flexibility, accessibility, and low transaction costs.”[9] But as the markets of the Low Countries grew and expanded to build a global system, these benefits fell away: “by the mid-seventeenth century, the high point in the organization and effects of these markets had already passed, as again most pronounced in Holland, despite the label of ‘Golden Age’ placed on its seventeenth century.”[10] Van Bavel stresses this point particularly because he intends with this book to show both that market economies across the world emerged earlier than classical economists tend to assume, and also that our “modern” laissez-faire economy has in fact lost many of the benefits that earlier market economies possessed.
What made the market economies of the medieval Low Countries such a hotbed of progress? Van Bavel argues that “the weakness of feudal institutions” (particularly in Frisia, but also across the region)—that is, the relative absence of rigid lord-vassal economic bondage—allowed for “broad participation in public matters,” and a general freedom to self-organize among groups of producers and tradesmen (“horizontal association,” per van Bavel).[11] Van Bavel’s argument sounds most similar to Pirenne’s here, as the former argues that pronounced urbanization in went hand in hand with greater market strength and social freedoms. In the Low Countries more than perhaps anywhere else in Europe, producers and tradesmen held power to enforce their rights against the higher political structure (whether that consisted of local nobles or imperial lords): “the growing self-organization enabled the people to absorb the shocks and disruptive effects” of the growth of the market economy. “This buffering was achieved especially by securing the economic independence and welfare of the producers… by limiting the accumulation of capital and production facilities.”[12] This argument adds detail to Pirenne’s basic belief in the dialectical relationship of industry and trade: producers, per The Invisible Hand?, created a healthier and more humanist environment for trade because of their relative economic power in this region. Pirenne’s and Van Bavel’s arguments complement each other well; from both of these works, we learn that the Low Countries from the beginning had a nascent industry combined with greater urbanization and autonomy, all of which combined to make them the breeding-ground for economic and social advancements.
Peter H. Wilson’s Heart of Europe adds an important political history perspective to the role of the Low Countries in Europe’s socioeconomic development. Wilson includes the Low Countries within the jurisdiction of the Holy Roman Empire,[13] and argues that “for most of the Empire’s history, its most dynamic economic regions were those of the greatest political fragmentation, like Flanders, Brabant and the Rhineland, rather than the larger territories such as those of the north and east.”[14] This point makes an interesting addition to van Bavel’s claim that the weakness of noble authority in the Low Countries led to greater economic prosperity; if both Wilson and van Bavel are correct, then their combined argument would hold that political fragmentation leads to more economic autonomy amongst non-elite classes, which in turn would create prosperity. This makes an interesting contrast to more commonly accepted theories of economic development such as those of sociologist Immanuel Wallerstein, who argues that Europe developed proto-capitalist commerce in conjunction with centralization of states.[15]
Wilson attributes this distinctive character of the Low Countries primarily to their proximity to the Rhine River as one of they key trade routes of western Europe, a geographical element which does not play a major role in either van Bavel’s or Pirenne’s writings. Wilson also diverges from the two economic histories when he claims that the strong structure of the Low Countries actually encouraged some of their unique prosperity: “while this concentration of wealth [in the Low Countries] facilitated a dense lordly hierarchy, the resulting political diversity did not inhibit further demographic and economic growth. The proximity of different authorities could also encourage innovation and experimentation.”[16] Wilson returns to this point regularly: contrary to the argument in The Invisible Hand?, he argues that strong and diverse political authorities in fact created a socioeconomic environment in which the institutions of commerce and industry developed more rapidly than in regions with a simpler political hierarchy and allowed for space for various producers and traders to cooperate or compete with each other. Wilson would likely not disagree with van Bavel’s points on the relationship between social freedom and economic prosperity found in the Low Countries; instead, he implies that “free” markets emerged from these regions because the balance of powers—rather than the absence of power—in these regions gave greater agency to the producing class.
Wilson provides even further analysis of the complicated role of political authority under the Holy Roman Empire in the economies of the Middle Age, which bears particular relevance to the regions of greatest economic advancement. Commercial growth and political stability lay in a sort of balancing act in this period: “the real test was how far the Empire could mitigate the constraining consequences of its internal [political] structure, whilst not stifling the potentially innovative economic aspects.”[17] To make its structure too rigid would certainly weaken the Empire economically; but to loosen the reigns too much on the productive classes, in Wilson’s argument, would also lead to commercial stagnation. That very internal structure which classical economists would say always stifles growth, in fact created a crucible of political-economic innovation in which regions like the Low Countries could flourish.
But Wilson clarifies an important point on political authority: economic growth was largely a collateral benefit of imperial policy. He argues that “like other monarchs, the emperor’s main task was guaranteeing peace and justice for moral reasons, with any benefits for prosperity remaining secondary considerations. Direct intervention was restricted to what would now be termed investment incentives: privileging particular lords and communities through grants of market, mint, mining, and toll rights, all of which proved significant in promoting urban development.”[18] The Low Countries’ economies did not explode to world prominence because of any imperial prerogative; their growth was rather incidental from the central authority’s perspective. The empire’s “hands-off” economic policy indeed have benefitted politically fragmented world of the Low Countries. Although the imperial structure played a substantial role in creating the socioeconomic worlds of northwestern Europe, it still left room for the producing and trading classes to take agency for themselves: an agency which, per the argument of all three authors, strengthened horizontal associations, urban institutions, and the structure of the market economy in the Low Countries.
How did a region as small as the Low Countries become one of the most prominent actors in the economic history of Europe? Henri Pirenne argues that this region had a “built in” commercial superiority that emerged well before the High Middle Ages, and which positioned it to lead the charge of economic development. Bas Van Bavel claims that the political circumstance of the Low Countries in the medieval period specifically created greater personal liberties for the producing and trading classes, and the economy flourished from this healthy base. Peter H. Wilson views the region in the political context of its medieval overlord, the Holy Roman Empire; the Empire fostered political diversity in the Low Countries, which in turn created a space wherein various groups innovated in cooperation or competition with each other, and in the end produced remarkable economic growth. None of these claims necessarily preclude the others; rather, when we compare these three authors’ works, we learn that the Low Countries were able to leverage their historic commercial advantage and build upon it by innovating from above and nurturing freedom of organization from below.
Bibliography:
Pirenne, Henri. Medieval Cities: Their Origins and the Revival of Trade. Princeton: Princeton University Press, 1970.
Van Bavel, Bas. The Invisible Hand? How Market Economies Have Emerged and Declined Since AD 500. Oxford: OUP, 2016.
Wallerstein, Immanuel. Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century. Berkeley: University of California Press, 2011.
Wilson, Peter H. Heart of Europe: A History of the Holy Roman Empire. Cambridge: Harvard University Press, 2016.
[1] Pirenne, 98
[2] Pirenne, 153
[3] Pirenne, 99
[4] Pirenne, 137
[5] Pirenne, 183
[6] Ibid.
[7] Van Bavel, 1
[8] Van Bavel, 146
[9] Ibid.
[10] Van Bavel, 146-147
[11] Van Bavel, 148
[12] Van Bavel, 150
[13] Which he justifies via a number of sources, for example: “As late as 1240, Bartholomaeus Anglicus included Brabantia, Belgica, Bohemica, Burgundia, Flandria, Lotharingia, Ollandia, Sclavia, and Selandia [as members of the Empire] whilst omitting perhaps more obvious Austria and Bavaria from his list.” Wilson, 185
[14] Wilson, 463
[15] Wallerstein, Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century, pg 15.
[16] Wilson, 463
[17] Ibid.
[18] Ibid.
Aidan Lilienfeld, for “Europe’s Commercial Revolution” at Columbia University, April 2021
Haus Lilienfeld 