Introduction
In the second half of the 1990s, several important studies were published which showed that the standard of living in the most developed parts of Asia (China and India in particular) in the early modern period was on par with those in the most advanced regions of Europe (see especially Parthasarathi 1998; Pomeranz 2000: 36—42; Allen (Chapter 5, this volume); and Parthasarathi Chapter 4, this volume).
This is based on new evidence concerning various indicators such as life expectancy, levels of consumption, and in particular, real wages, especially in the eighteenth century. Implicitly, and at times also explicitly, it is assumed that this also implies that levels of economic development as measured by gross domestic product (GDP) per capita in those different parts of the Eurasian continent must have been similar as well. This contrasts sharply with the estimates of GDP made from attempts to reconstruct historical national accounts, which have shown that at the beginning of the nineteenth century there was a big gap in GDP per capita between western Europe on the one hand and China, India, Indonesia, and Japan on the other hand.1One of the problems with the new comparative studies is that the relationship between GDP per capita and the standard of living is very complex. This is evident from the large body of literature that addresses what happened to the standard of living during (early) industrialization. The debate on this issue relating to Britain seems to have converged to the view that early industrialization did not result in major gains in living standards; for example, the conclusions of the synthetic study by Feinstein on real incomes during industrialization were highly pessimistic (Feinstein 1998). The literature on the ‘biological standard of living' has produced a comparable ‘height paradox', the finding that in a number of countries (the United States, the Netherlands, Great Britain) early industrialization went together with stagnation or even decline in the average stature of the
population (Floud, Wachter, and Gregory 1990; Komlos 1996; Tassenaar 2000).
The reasons for this are still unclear, but probably include a worsening of the disease environment as a result of urbanization and a possible decline in the consumption of certain food products.2 It may well be that the ‘costs of modernization' were such that (large) parts of the population did not profit from the first phases of industrialization.In another chapter I have argued that a similar ‘growth paradox' can probably be found in Europe during the early modern period (van Zanden 1999). In short, the argument is that real wages declined between the fifteenth and the (end of the) eighteenth century, in spite of the ongoing process of economic development, which resulted in moderate growth of GDP per capita, especially in the North Sea region (the Low Countries and Britain).
However, this study, and independent estimates made by de Vries (1994^) and Allen (1998) concerning the development of real wages in this area, also suggest that the Netherlands may have been an exception to this rule. During the period in which its economy was very dynamic (between the 1580s and the 1670s) nominal wages increased considerably, and this may have led to an improvement in the real wage (and may perhaps also have affected other dimensions of the standard of living). The problem that is at the core of this chapter is what happened to the standard of living of the inhabitants of the western part of the Netherlands during this period. Specifically, did they profit from the ‘Golden Age', the period of dynamic economic development between the 1580s and the 1670s?
First, I concentrate on one of the weaknesses of previous studies (including my own), measuring price changes. I hope to show that a more careful estimation of the consumer price index (CPI) of workers can dramatically change our view of what happened to real wages. A database is constructed to analyse price changes between 1450 and 1800, which also makes it possible to examine changes in the prices of goods that were consumed by other social groups, particularly the elite.
The main body of this chapter therefore presents new evidence about changes in the cost of living in Holland (or more accurately, the western part of the Netherlands, because data from the adjacent province of Utrecht are also included) between 1450 and 1800, and discusses the importance of this new CPI for measuring changes in real incomes.Next, I give an overview of other evidence related to changes in the standard of living between the fifteenth and the eighteenth centuries, and discuss briefly what these results mean for our understanding of the process of economic growth before industrialization. In the concluding section, I return to the original problem: what happened to the relationship between income per capita and real wages in the early modern period? Does the fact that, within western Europe, real wages and GDP per capita diverged help to explain the different outcomes of the historical national accounts, in which large disparities in GDP per capita between Asia and western Europe at about 1800 are found, and the results from the recent work on standards of living in both regions which point towards much smaller differences?
2.