British Industrialization: What did the British have that the Low Countries did not?

Introduction

The Industrial Revolution marks the start of modern economic growth as we know it.
Much remains debated about its causes, and why Britain specifically was the genesis for it all. Existing literature has proposed a variety of factors that contributed to Britain’s industrialization, but while many of them are prerequisites - they weren’t unique to Britain.
This review presents and discusses the most debated theories, and judging the Low Countries and Britain to have a lot of similarities, specifically compares Britain and the Low Countries to figure out which factors - if any - were exceptional to Britain.

Max Weber | The Protestant Work Ethic

A theory on the origins of the Industrial Revolution that is still debated more than a hundred years later is Max Weber’s famous ‘The Protestant Ethic and the Spirit of Capitalism (1905)’, in which he argues for the role that Protestantism had on work ethic, entrepreneurial spirit, and focus on worldly affairs - which to him gave rise to the spirit of capitalism.

“…the valuation of the fulfilment of duty in worldly affairs as the highest form which the moral activity of the individual could assume.” (p.40)

Instead of being a part of the clergy or being a monk as the highest religious virtue, Protestantism stressed the value of a man’s work inherently.
But while it is true that the fastest developing countries post-Industrial Revolution had large Protestant influences, it was not unique to Britain.
In fact, The Netherlands had a stronger Protestant movement than Britain did.
Calvinism became the state religion in The Netherlands, while the state religion of Anglicanism in Britain was often described as a sort of ‘middle-way’ between Catholicism and Protestantism.[1]

Douglass North and Barry Weingast | Glorious Institutions

North and Weingast (1989) wrote a detailed account on how political institutions evolved in Britain around the Glorious Revolution. The central takeaway being that more and more power was transferred from an absolutist monarchy to parliament and increasingly independent courts. This was good for property rights, political freedom, and even the government’s own coffins as this new rule-based order spurred a wave of voluntary lending.
The government became increasingly trusted as being committed to its debts and citizens, in stark contrast to the arbitrary taxation and exploitation in the past. As the rules of the country changed in favor of the merchant-class, they had increasing incentives - and security - to engage in trade and production. And yet, while they make a strong case for the impact of these changes on the British economy, it wasn’t so different on the other side of the North Sea.

After uniting against the Spanish monarch, the Union of Utrecht became a confederacy of sorts, laying the basis for the Republic of the Seven United Netherlands. While in no way democratic, the country was run through a complex system of city representatives making up a provincial council, which then on their part decided on provincial representatives for the nationwide ‘Staten-Generaal’. Decisions were made by majority, but often times were not forced on cities, which maintained a large amount of autonomy. The decentralized nature of The Netherlands allowed them to repel attempts of a single person taking control - as shown by the failed attempts of Stadhouders Maurits and Willem II to do so. In short, just like in post-Glorious Revolution Britain, Dutch merchants did not have to fear a bad-faith absolutist ruler that extracted money from them at will anymore. Political power was diluted to a vast network of national, provincial and city councils - made up of nobles, regents and capitalists instead.

Joel Mokyr and Gregory Clark | Enlightened England

Joel Mokyr, in ‘The Enlightened Economy (2010)’, argues that it was the Enlightenment that changed the mindset of people - which he judges to be the main cause of the Industrial Revolution. By applying reason and observation to the world around us, he says a new mindset was born - that thought it possible to improve our lives through understanding the world and building on that with innovations. However Clark (2012), in his review of this book, rightly contends that the Enlightenment was a broad change across all of Europe.
Many other countries that did have famous thought leaders in the sciences stagnated, or even declined in the case of Italy for example. Clark mentions The Netherlands specifically when commenting on the issues with Mokyr’s line of reasoning:

“The Netherlands in the 17^th century was - as the richest, most commercially developed economy then - one of the centers of this new scientific interest. Why was it not the center of an Industrial Revolution?” (p. 91)

This point is further cemented by scholars like René Descartes, whose work ‘Discourse on Method’ is sometimes called the beginning of the Enlightenment. Descartes, a Frenchman, spent more than twenty years in The Netherlands - and published all his work there.[2]

Robert Allen and Jan Willem de Zeeuw | Wages and Energy

Perhaps the most famous theory on why Britain was the birthplace of the Industrial Revolution comes from Robert Allen’s work over the years.
In ‘Why the Industrial Revolution was British (2011)’ - he argues the key factors were 1) high wages and 2) cheap coal, which together created a unique incentive-structure to invent technologies that replaced expensive labour with the cheap chemical energy of coal.
Over time, gradual improvements in the technology rapidly improved efficiency and thus reduced production costs - leaving human labour in the dust.

However, Britain was not the only country with high wages.
In the same article, Allen concedes that wages between London and Amsterdam were similar up until 1820, and the same is true for Antwerp in his earlier work (Allen, 2003).
At the end of the 18^th century, London had at most a 20% higher silver wage than the former, and this gap is even smaller when using Allen’s real wages in the form of subsistence ratios.

In a lot of his work, he often groups England and The Netherlands as the only exceptions:

“Graphical analysis revealed two very different demographic regimes. In England and the Netherlands, population growth clearly rose with the wage. These countries, in other words, exhibited the Malthusian preventive check. The rest of the continent did not.”
(Allen 2003, p. 423)

Beyond wages being similar, he also analyzes The Netherlands to have a higher urbanization rate, and a higher agricultural productivity than England.
If high wages and beating the Malthusian trap were not what decisively set apart Britain from the Low Countries, maybe (coal) energy prices were - Allen’s other main factor.

Coal vs Peat
In ‘The British Industrial Revolution in Global Perspective (2009)’, Allen analyzed that for most of the 17th and 18th centuries peat and firewood in Amsterdam were cheaper or of a similar price to coal in London. [p. 99–101], and explaining further he argues that while coal could have been bought in Amsterdam for the same price as in London; “that was too expensive to induce consumers to switch to a dirtier fuel” [p. 476].
This makes sense because the port of Newcastle, a major coal exporter, was roughly as far from London as it is from Amsterdam.
However, this does suggest that it cannot be the wage/energy ratio of London compared to Amsterdam that caused the Industrial Revolution to happen in England, as coal was roughly the same price, and wages in London were at most 10-20% higher.

Instead of London, Allen makes the case for the towns and cities sitting directly on top of coal deposits, in the north of England. Wages were almost as high in Newcastle as London, but coal was dramatically cheaper, which gave Newcastle “the highest ratio of labour costs to energy costs in the world.” (p. 364)
He does concede that the wage/energy ratio was similarly high in the coal regions around Liège and Mons, in Belgium. But he never gives specific numbers for the price of coal there, nor for the wage/energy ratio - which would be of interest for further research.

He does however make a very good case for why Belgian coal output remained limited, at only 13% of Britain’s in 1800. As he eloquently puts it, while coal deposits are a natural resource, the coal industry was not a natural phenomenon. The two regions were similar in wage/energy ratios, but it was the rapid population growth of London that drastically increased demand for coal. Wood and charcoal were the main forms of energy for the entire continent in the middle ages. But as populations expanded and the shipbuilding industry exploded, demand outstripped supply, and deforestation followed. While wood could be brought from faraway forests in the Baltic region, prices rose with increased shipping costs and demand.
Around 1650, Dutch harvestable forests were practically non-existent, and Dutch peat-traders started shipping as far as Hamburg - proving its cheaper price to wood at the time, as described by De Zeeuw (1978).

The swamp-like Netherlands were blessed with uniquely large deposits of peat that were easily accessible and thus cheap. While British urbanization was not exceptional to The Netherlands, the corresponding increase in Dutch energy demand was met with peat, while the British relied more and more on coal. Peat however, had serious limitations. Chemically, it is much less energy dense than coal - at around 15 MJ/KG compared to roughly 20-30 for most sorts of coal.[3]
It also doesn’t reach the temperatures that coal does, and is thus not suitable for some heavy industry uses.
Not only was peat inferior in energy density and use cases, there simply wasn’t enough of it. Coal deposits in England were abundant, and the gradual improvements in mining, transportation and usage meant that more and more deposits were profitable.
In The Netherlands though, peat was running out - thus getting more and more expensive.[4]
But by the time the Dutch turned to coal, the British production and consumption of it was already two steps ahead.
Whereas the British kept improving production through scale, the improvement of internal infrastructure, and improvements such as coal-powered pumps and carts on rails - the Dutch were left behind as they stuck to an inherently limited fuel - hampering Belgian/German coal development. This created a path-dependency that snowballed into large differences. The coal industry in England became the biggest in the world, while Belgium had a much lower output and lagged.

“In the late middle ages, coal and charcoal sold at about the same price per BTU in London … As London’s population exploded in the late sixteenth century, the demand for fuel rose, as did the prices of charcoal/firewood. By 1585, wood fuel was selling for twice the price of coal per BTU. … and shipments of coal from Newcastle to London began their rapid growth.” Allen (2011)

Gregory Clark | Overlooked Details

Lastly, Gregory Clark (2012) used Mokyr’s work to argue that coal had always been cheap and largely stagnant in England, implying that costs reductions were only due to improvements in infrastructure, and that this couldn’t have been a factor because coal was a similar price in Dublin, London, or Amsterdam.
What he crucially misses is not only the divergence between coal and wood/peat prices, but especially the importance of the wage/energy ratio in the coal producing cities themselves. This is where it was first profitable to use coal, and where gradual experiments and improvements were made to increase efficiency which made it profitable in more regions and for more use cases later on.
Clark even acknowledges that Mokyr, in a way, identifies this:

“It also has to be the case that labor saving technological advances occur in small increments, so that they are only initially profitable in high wage/low energy cost countries, but then through local learning by doing become much more effective.” (p. 88)

This is what happened in northern England, but Clark does not make the connection - as he remains too focused on national comparisons to see it.

Conclusion

Something as complex as the Industrial Revolution can only have a variety of different causes and angles to study it from. However, while many factors were likely prerequisites - Britain was unique to The Netherlands in one very specific way.

Cheap and abundant peat brought many benefits to The Netherlands in the short-term, but it ultimately set them on a different path to the British, one that was not sustainable in the long-run - and without much potential for efficiency gains.
In contrast, the British environment set in motion a coal industry that became exponentially more efficient over time - and with large resources to draw from. This started in the north of England, where wage/energy ratios were highest, and snowballed into the worlds biggest coal industry as demand soared.
As this industry progressed, (English) coal became cheaper than peat or wood could ever be.
Leaving the Dutch to play catch-up with the British, in the following period.

An important lesson can be drawn from this energy revolution to our modern day green energy revolution amidst the Inflation Reduction Act, the EU Green Deal, and Made in China 2025. Similarly, it is in effect a race for new energy systems that will crown the economic beneficiaries of the future.

Bibliography

 Allen, R. C. “Progress and Poverty in Early Modern Europe” The Economic History Review, (2003), Vol. 56, No. 3, pp. 403- 443

 Allen, R. C. “The British Industrial Revolution in global perspective.” Cambridge University Press. (2009) https://nyuscholars.nyu.edu/en/publications/the-british-industrial-revolution-in-global-perspective

 Allen, R. C. “Why the industrial revolution was British: commerce, induced invention, and the scientific revolution” Economic History Review, 64, 2 (2011), pp. 357–384

 Clark, G. “A Review Essay on ‘The Enlightened Economy: An Economic History of Britain 1700-1850’ by Joel Mokyr” Journal of Economic Literature (2012), 50(1), 85-95.

 De Vries, J.and Van der Woude, A. “The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy”, 1500–1815. Cambridge University Press, (1997).

 De Zeeuw, J. W. “Peat and the Dutch Golden Age: The Historical Meaning of Energy-Attainability.” A. A. G. Bijdragen 21 (1978): 3–31.

 Mokyr, J. “The Enlightened Economy: An Economist History of Britain 1700-1850” Yale University Press (2010). https://scholars.northwestern.edu/en/publications/the-englightened-economy-an-economic-history-of-britain-1700-1850

 North, D. and Weingast, B. “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England” Cambridge University Press, The Journal of Economic History Vol. 49, No. 4 (1989), pp. 803-832

 Unger, R. W. “Energy Sources for the Dutch Golden Age: Peat, Wind, and Coal.” Research in Economic History, (1984): 221-253.

 Weber, M. “The Protestant Ethic and the Spirit of Capitalism” (1905) https://selforganizedseminar.files.wordpress.com/2011/07/weber_protestant_ethic.pdf

 University of Calgary, https://energyeducation.ca/encyclopedia/Peat

[1] The Netherlands also had a long history of religious tolerance, especially towards protestant movements, whereas Britain had longer lasting conflict between Catholics and Protestants. A large reason for the initial Dutch uprising against the Spanish was in fact the violent suppression of Protestants.

[2] This despite Descartes being a Catholic, working out of the Protestant University of Leiden - an example of the religious tolerance in The Netherlands.

[3] University of Calgary, https://energyeducation.ca/encyclopedia/Peat

[4] De Zeeuw, 1978 (see Bibliography)