I spent most of Sept, 2025 in Belgium in an effort to understand why the Industrial Revolution seemed to bypass Catholic Ireland while Protestant England got rich. This question formed as I listened to 180 episodes of The History of the Germans podcast. Addressing that question directly seemed too painful so I reframed it as “why did the Dutch Protestants get rich and the Dutch Catholics stagnate after the 30 Years War?”

The Thirty Years’ War, fought primarily in Central Europe between 1618 and 1648, was one of the most destructive conflicts in human history. An estimated 4.5 to 8 million soldiers and civilians died from the effects of battle, famine, or disease, with parts of Germany reporting population declines of over 50%.

The trip helped me to understand that the reasons were complex and included Corruption, Capital, and Contracts. Shortly after I got home, Joel Mokyr was awarded 50% of the 2025 Nobel Prize in Economics “for having identified the prerequisites for sustained [economic] growth through technological progress.”

Joel Mokyr used historical sources as one means to uncover the causes of sustained growth becoming the new normal. He demonstrated that if innovations are to succeed one another in a self-generating process, we not only need to know that something works, but we also need to have scientific explanations for why. The latter was often lacking prior to the industrial revolution, which made it difficult to build upon new discoveries and inventions. He also emphasized the importance of society being open to new ideas and allowing change.

I promptly read Mokyr’s book “The Lever of Riches” (1990). He likes to point out that, before his innovative reading of economic history, people tended to quote Adam Smith about how countries and cultures got rich..

Moktyr described his contribution as the requirement for Useful Knowledge (this is Mokyr’s slide). Inventors needed to understand the science behind the technology (like how steam engines work) in order to develop things like the four-stroke engine or the hot air balloon. Metallurgy was needed in addition to knowledge of printing to develop the alloy that allowed movable type. Creating colorful dyed fabrics required understanding chemistry and developing aniline dyes.

 

Moktyr’s “Gains from trade before the Industrial Revolution” in the slide above meant real goods, traded in person. “Value added” in the 1500s meant shipping English wool up the Scheldt River to Bruges/Ghent/Antwerp where it was spun and finished into fine fabric and dyed with the organic colors available at the time. English wool was sometimes blended with French flax which the Belgian specialists could weave into luxury linen. The wool and flax fibers were processed by hand in family workshops, usually in the home. There were trade secrets passed down through families. Because all the work was at home and everyone participated, child care was not separate from paying work. Everyone took part in the family business, maintaining the home and taking care of the children.

 

“Good institutions” in the slide above meant that the Guilds were strong and the cities operated with much autonomy from the sometimes-changing monarchies that claimed them. Taxes meant that merchants carrying wool from England weren’t dinged at every town they passed on the Scheldt River on their way to Antwerp. “Peace” is crucial for stable market-building and the refinement of fiber processing to looming into fabric and the production of goods for sale.

Peace collapsed in 1618 with the start of the Thirty Years’ War over territory and religion which forced the Dutch-speaking Protestants and Sephardic Jews out of Spanish Hapsburg Catholic controlled Antwerp/Ghent/Bruges to Dutch-speaking territory in the North, Amsterdam, which in 1600 was a little fishing village at the bottom of a bay that opened to the North Sea. The Dutch protestant fisherman knew how to build boats that could travel the North Sea. The weavers and merchants needed to get their goods to market, safely bypassing the wars on land. They needed bigger boats and the money-lenders could provide the capital to build them. But would the merchants pay back the loans, or simply kill the money-lenders as the Catholics tended to do in Southern Belgium?

Wikipedia “Reformed Christianity” observes:

Calvin expressed himself on usury…when he criticized the use of certain passages of scripture invoked by people opposed to the charging of interest. He reinterpreted some of these passages, […] saying that money should be lent to people in dire need without hope of interest, while a modest interest rate of 5% should be permitted in relation to other borrowers.

As the wars continued and millions died in these small countries, millions more fled the countryside. Those with skills, ambition and the “Protestant Work Ethic” of discipline, diligence and frugality prospered in Amsterdam. Plundering soldiers destroyed farms which were then lost to “enclosure” by aristocrats who simply expropriated the farmland. Eventually there were no farms or villages for displaced people to return to so the merchants expanded outward, eventually colonizing the New World in search of riches.

Riches, money, capital became the new goal. Max Weber observed that good fortune from hard work was seen as a vindication of God in one’s life. Protestant Capitalists came to believe that profitable actions were blessings from God that proved their right to possess even greater wealth. Some Capitalists took this to the extreme of pursuing unlimited wealth through colonization, slavery on plantations and in mines, wiping out South American natives with disease and stealing their gold and silver, eradicating Mayan documents, artifacts, and culture, etc.

On page 176, Mokyr refers to Marx’s famous dictum that his purpose was not just to understand the world but to change it. Mokyr says that this value applied to “thousands of tinkerers, mechanics, and engineers who built the windmills, clocks and fully rigged ships of medieval Europe.” This pursuit of functional improvement was seen in commerce, war, and politics was decisive. European pragmatism in this period far outstripped most non-European societies, according to Mokyr.

Corruption, Capital, Contracts

As the Reformation changed religion from the old medieval Corrupt (selling of indulgences, the sin of Simony, clerical concubines, etc) to the pursuit of Capital, we should also look at Contracts. Mokyr says that Patent systems did not emerge until the fifteenth century and turned out to be a double-edged sword for inventors (p.177).

“What is clear is that between 1750 and 1850 the British political system unflinchingly supported the winners over the losers, on both matters of technological progress and, increasingly, free trade. On the eve of the Industrial Revolution the British ruling class had most of its assets in real estate and agriculture; it had no interest in resisting the factory and the machine. (p.256)

The British ruling class had grabbed most of the land, forcing the peasants into cities where factories were starting up. Patent and commercial law developed favoring the merchants taking financial risks to develop mechanical looms and factories. The land-owning aristocrats did not interfere with the bourgeois legal proceedings in patents and contracts. Scot James Watt (steam engine) and Englishman Richard Arkwright (water-powered cotton spinning) became famous and wealthy men. “As the technology of building roads and canals improved in the 1700s, Britain became an integrated market system. p. 245”

In 1600s Catholic Belgium there was tremendous resistance to mechanical spinning and looming which displaced generations of Belgians who had created luxury hand made fabric with poor quality and much cheaper woven goods.

“After 1760, guilds came under pressure in France and Germany, and were abolished in 1784 in Southern Netherlands. The French Revolution abolished them in France in 1791 and subsequently in areas that fell under French domination. By 1815 the guilds had either been fatally weakened or abolished altogether on the Continent. … However, the Revolution’s long term effect was to clear up the debris of the ancien régime on the continent, thus assuring Europe’s ability eventually to follow Britain in revolutionizing its productive systems. (p.259)”

Yet, even Britain, the cradle of the technologies that created the Industrial Revolution lost its preeminence in the late 1800s and early 1900s due to resistance to change by entrenched businesses and the rise of technical universities in Germany and Netherlands.

The other 50% of the 2025 Nobel Prize in Economics went to Philippe Aghion and Peter Howitt for creating a mathematical model in 1992 for what is called creative destruction, yet Mokyr mentions it on page 261 as a crucial component of continued creativity. The Nobel Prize committee went on to say:

“When a new and better product enters the market, the companies selling the older products lose out. The innovation represents something new and is thus creative. However, it is also destructive, as the company whose technology becomes passé is outcompeted.

In different ways, the laureates show how creative destruction creates conflicts that must be managed in a constructive manner. Otherwise, innovation will be blocked by established companies and interest groups that risk being put at a disadvantage.

“The laureates’ work shows that economic growth cannot be taken for granted. We must uphold the mechanisms that underly creative destruction, so that we do not fall back into stagnation,” says John Hassler, Chair of the Committee for the prize in economic sciences.

On page 298 Mokyr makes a key parallel between evolutionary biology and human creativity: they happen both with big mutations like the primate divergence from 48-chromosome apes to 46-chromosome humans, and in small mutations like skin color to compensate for levels of sunshine. Both are necessary, valuable, and sometimes hard to cope with. I would add one biological note: in order for people to learn and innovate, they need to be relatively safe and relatively calm.

My favorite line in the book is from page 164 where Mokyr says,

“Why were the Dutch so much more adept at sea than, say, the Irish? And why did Portugal after 1500 fail to develop spillover effects similar to those of the Netherlands?”