Conclusions and Discussion
The second-generation CPI presented in this chapter, in combination with wage data collected by de Vries, has shown that even in the relatively dynamic economy of the western part of the Netherlands real wages declined during the early modern period.
The decline was fastest between 1450/75 and the middle of the sixteenth century, after which a long period of stability followed, ending in the second half of the eighteenth century. Previous estimates, which indicated some increase in purchasing power during the Golden Age, are probably (much) too optimistic: this period of brilliant economic performance, traditionally dated from the 1580s to the 1670s, did not lead to real-wage growth. The stabilization of real wages after the middle of the sixteenth century was, however, an important achievement—in other parts of (northern) Europe this probably did not occur and real wages continued to decline. England may, however, be another exception (see Allen 1998).At the same time, GDP per capita increased by perhaps 35—55% between 1510/14 and the 1820s (van Zanden 1987, 1992, 2002). There appears to have been a ‘great divergence' between wage growth and output growth. An increase in the number of days and hours worked can only help to explain a small part of this divergence.20 New estimates of the size and composition of the GDP of Holland at the beginning of the sixteenth century suggest that the share of wages in income (including the imputed wage income of the self-employed) was much higher than during the nineteenth century.21 This shift was related to fundamental changes in income distribution (see also the chapter by Hoffman et al., Chapter 6, this volume).
This does not, however, necessarily mean that there was a sharp polarization in the income distribution. There is no doubt that the rich (i.e. the merchants) became
much wealthier in real terms, certainly compared to labourers, whose real income fell.
But certain parts of the middle classes grew too, because economic development resulted in increased demands for salaried employees (whose relative incomes rose as well) and in the growth of a ‘middle class' of shopkeepers, middlemen, and specialized craftsmen. The absolute gap between the top and the bottom widened markedly, but at the same time the social layers in between grew in size and complexity. The possibilities for upward social mobility remained intact, whereas the rewards to rises in status increased as income disparities went up. This combination of processes also helps to explain why investment in human capital continued to rise and literacy increased substantially. It became increasingly profitable to invest in one's children in order to enhance their chances at social mobility.Finally, this divergence between the real wage and the development of GDP per capita may also help to explain the paradox that was mentioned at the beginning of this chapter: that at about 1800 the standard of living in the most advanced parts of Asia was perhaps as high as in western Europe, whereas GDP per capita in Asia was probably less than 70% of the European level.