My Discussion of Chase Dunn

    To some extent I agree with Chase Dunn and Warran Wagar's responses for
which I kindly thank them that if you see `hegemony' as a central position
in the complex of markets within the European subsystem of global trade, and
if you say that this was a `decisive institutional innovation' then the
Netherlands in the seventeenth century certainly fits the definition of
hegemony. Nor would I deny that the seventeenth century Netherlands has
played a very important role in the rise of the modern capitalist
world-system - no doubt about it.

    Certainly too in most respects the Dutch economy - at least that of
Holland, Zeeland and to an extent Friesland -  was a capitalist economy.
Thus, for example, in the absolutely critical criterium of commercialisation
of agriculture, the Holland or Friesland peasantry were  working purely to
make a profit and to sell their products to the market - I should add that
is always somewhat more natural for a peasantry raising cattle than for a
peasantry growing grain. But unlike most of the rest of Europe by 1600 the
Dutch agricultural sector was throroughly commercialized and controled by
`capitalist' enterpreneurs - actually many of them originally of noble
descent -. Van Winter and De Vries recently wrote a book of 800 pages
ennumerating further criteria of capitalism and I see no reason to disagree
with them.

    I'm not so sure for the political system though as Chase Dunn argues,
for as some of you may know, the Dutch Republic was merely a lose Union of
Seven Provinces and decisions of the General Estates could be vetoed by each
of the seven provincial Estates. Now, while in Holland, Zeeland and to some
extent Utrecht the provincial Estates were dominated by the towns and the
voice of the nobility was purely nominal, in other provinces - particularly
in the province of Gelderland - the nobility very much dominated the
decisions and the towns had only a minor say. Thus - the capitalist
`regenten' certainly dominated the state-apparatus in Holland but they did
not dominate it throughout the country.

    For the Dutch revolt was not primarily for religion and not primarily
about `national' identity but was primarily to defend the jumble of late
medieval local privileges against the centralizing impetus of the `modern'
Spanish state. It was in that respect a `conservative revolt' - meaning that
in provinces where the towns were already strong their position was further
strengthened by the revolt but where the nobility was strong - as in
Gelderland - the position of the nobility was rather strengthened. Thus,
while in Holland the towns flourished and the nobility - already in severe
debt in the fifteenth century - was more or less `bought out' by
land-investors; in Gelderland the towns (except the Rhine towns of Arnhem
and Nijmegen) actually declined and `feudal' dues were re-installed or
became even more heavy. Again, in Friesland - which unlike Holland and
Zeeland was almost fully rural - but which never had a feudal nobility but
instead a system of proprietor-farmers and farmers on various forms of
leasehold - the propietor-farmers increasingly closed their ranks during the
seventeenth century and leasehold-farmers were increasingly reduced to
landlessness. Parallel to a decline of the few towns in Friesland after 1670
Friesland increasingly became a society divided between a prosperous rural
gentry and a class of landless or small sharecropping peasants. A case of
rural enterpreneurs considering itself a new `nobility' by 1750, or perhaps
becoming an `oligarcia' like in contemporary Argentina - in any case a very
different world than that of the commercial towns and prosperous tenant
farmers of Holland. I could go on with treating the situation in Overijsel,
Drente (a land of desperately poor, almost totally self-sufficient,
peasants, who as to material standards were in 1800 still rather living in
800) or in the again totally different `occupied territories' of Brabant and
Limburg but this ought to suffice.

    What I'm trying to point out is this: though I agree with Chase Dunn
that the Dutch Republic was somewhere between a "capitalist city-state"
(this within a BIG ".." because I think it's simply rubbish to say Dilmun,
Tyre or Carthago were capitalist in any way we understand it, call them
`merchant-republics' or `commercial city states' instead) and a national
state it's simply not true "the capitalists of Amsterdam took over the
state" . That's not how the Dutch Republic functioned - it was a highely
complex structure, based on an intricate balance between the Prince of
Orange and the Estates General, between the towns and country, nobility and
burgers, and between the provinces. As a matter of fact, Amsterdam was the
last city in Holland to join the Dutch revolt because: A.) the good burgers
of Amsterdam were afraid independence from Spain would harm their trade and
B.) Amsterdam was a center for Roman Catholic pilgrimage from which it was
earning good money !

    However, Wagar's use of "leadership" instead of "hegemony" remains an
extremely difficult thing to define - it's really in my view much too vague
to be of much epistemic use. Let me discuss Wagar's Genoese example in
detail to make this clear. I would absolutely agree with Arrighi if he says
that Genoa's role was paramount in developing the institutions of modern
financial capitalism - however, if it goes to any other criterium, such as
international banking, international trade and above all, of course,
literature, architecture, painting and science then Florence - for art
together with Rome - would have been `hegemonic'.

    Again, if I were to look at fifteenth century Europe from a strictly
contemporary point of view (say around 1410) and pick the place which from
the perspective of that period would have seemed hegemonic I would not have
picked ANY of the Italian city-states, which - except Venice - were military
midgets and hopelessly divided at that but instead the Duchy of Burgundy.

    For not only was Burgundy way and out the richest state of Europe and
united powerful centers of trade - like Gand, Antwerp or Bruges each of them
well comparable to Florence though perhaps not to Venice or Genoa if Gand
came close - under a single crown but it also had certainly the most
efficient and progressive administration in Europe, as well as the most
productive agriculture and the largest merchant-fleet of Northern Europe.
And above all, of course, a dazzling court-life and late chivalric culture
(the culture of Van Eyck or of the paintings of the Tres Riches Heures du
duque de Berry) which served as muster for the Spanish court-ceremonial in
the sixteenth century and hence for the Austrian in the seventeenth century.
In a way the glitter of the yearly newyears' concert from Vienna is a vague,
pale, memory of the dazzling culture of early 15 th century Burgundy.

    Now, I could go on saying that if I were really to look at the system as
a whole and were to pick one hegemonic center of military, state and
commercial power around 1420 I would not look to Europe at all but would
rather look at Central Asia and to the city of Samarkand under the Timurid
dynasty in particular but I hope this suffices.

    So - to save Arrighi because I agree with Wagar he has a point with
Genoa, if we were to reformulate `hegemony', we ought probably to ask "what
place was the central location for placing commodity and financial
transactions within the European subsystem before the formation of the
nation-state" and then around 1400 this would undoubtebly have been either
Florence or Genoa. Other candidates would for earlier periods certainly
include Venice, Sienna - which for reasons unclear to me is totally ignored
by Abu Lughod although it was THE financial center of the mid-thirteenth
century - Bruges and - in the tenth-twelfth century - Amalfi, Palermo and -
yes ! - Cordoba.

    Now, let me try to explain why commodity and financial transactions
tended to `cluster' in a single location and why therefore the ancient
European `world-economy' "invariably had a town at its center" as Braudel
claims for the Middle Ages and the early modern period. And, indeed, this
already to some extent applied to Antiquity. A town which then could be
styled `hegemonic' for the conduct of international trade. To explain this I
would refer to the concept of `transaction-costs', meaning the costs
involved in buying and selling a product - including for the purpose
transport-costs and not the least `protection-costs' - The `economy of
scale' in transaction-costs quite easily explains why banking, shipping,
insurance etc. and even bulk-good transactions tended to cluster in a single
place - logically mostly a town although fairs such as those of Champagne in
the late twelfth or those of Piacenza in the sixteenth century could fulfill
some of these functions. For transaction-costs were a considerable part of
costs involved and therefore the easiest way to cut overall costs of
products was to cut transaction-costs. Indeed, innovation in the
pre-industrial epoch first and foremost involves the reduction of
transaction-costs.

    That's easy to grasp. Obviously, if you want, for example, to book a
trip on a ship to another place it's much cheaper if many ships are going
from there then if there's only one. If you want to change your money with
money-changers it's much cheaper to do that if there are many active and
they have large stocks of foreign coins -and so on and so forth.

    For - and that's a difference between nation-state societies and
pre-national societies which is ever more marked the further you go back
into the Middle Ages - transaction-costs are nowadays to a large extent
shouldered by the state and paid through imposts whereas before they were
`privatized' and thus had to paid by individual merchants and customers. A
trivial example (although it was a major expense of merchants upto the
sixteenth century in Europe) before the rise of regular postal services in
Europe you had to pay literally the cost-price for a letter. For you had to
hire a runner to get a letter from A to B. No minor expense since any
merchant would send several letters daily. Since the installation of regular
postal services since the seventeenth century the state has gradually
shouldered those costs, so that they are not directly charged in the price
of products anymore. That's true for post and it's true for hunderds of
other services, of which the price is not directly charged in products but
instead is charged through taxes and thus - more or less equally or rather
unequally - spread over the population. So - with this as with other things,
the rise of modern capitalism can not be imagined without the constant role
of the state

    Albeit there's now a dialectic at work - on the one hand, capitalism
still expects the state to assume the transaction-costs and in fact it
expects the state to constantly lower the prices charged for that - I'm
talking things like fibre cables, safety regulations on airports, quality
guarantees for goods etc . (Note that advertisements etc. should really be
seen as intrinsic to the price of the product itself. If one company sells
forty different times nearly the same detergent but in forty different
packages for forty different prices then the price really depends on the
advertising and not on the product.) On the other hand, though, capitalism
wants to get `global' and not to contribute to paying these transaction
costs - instead the tax-payers of the national states have to pay, since
it's supposedly also in his/her interest: e.g. if the state has to clean up
polution caused by a factory mostly nearby tax-payers have to pay the costs
since they don't want to sit in the stench too.

    So, here's the dialectic of globalisation: on the one hand companies
expect the national state more and more to shoulder transaction-costs - take
e.g. the thousands of volumes of legislation and the thousands of inspectors
which the state now needs to insure the quality of products and which
remains a responsibility of national states even within the EU - Yet on the
other hand they don't want to pay for that since they're supposedly no
longer tied to a national state. We all know already what has been the
historic solution to that problem in the US and increasingly in Europe and
Japan too - namely the growth of a whole new branch of private provision of
services: claims for indemnities in court. If you can't tax them - sue them.
And to be sure companies are no often paying more to their lawyers than they
ever did in taxes.

    I will here not comment on Chase Dunn's rather off-hand remark that
"feudalism is an exceedingly decentralized form of the tributary mode of
accumulation" to which I don't agree at all: this whole concept of Tributary
Mode should be abolished the sooner the better. But I' ll be specially
coming to the US in June to comment on feudalism and the supposed tributary
mode of production as it's a much too vast a topic to deal with in a single
e-mail.

Best wishes to all and hope others enjoyed this discussion as much as I did

R.J. Barendse
The Netherlands