From the Dutch to British Hegemonies: What Were the Differences?

According to the Modern-World System advocated by Immanuel Wallerstein, the first hegemonic state was the Netherlandsthe Netherlands and the second was Britain. Thus, the modern world was born in the Netherlandsthe Netherlands during the seventeenth century. However, Wallerstein does not show how the Dutch economy contributed to the rise of the second hegemonic state and the second modern economy in Britain. This chapter discusses the shift of economic hegemony from the Netherlandsthe Netherlands to Britain with special reference to different constitutions and institutions and shows clear differences between the first and second hegemonic states. On the one hand, the Netherlandsthe Netherlands was a decentralized country, and its hegemony was based on liberal economic systems. On the other hand, Britain became a centralized state based on its fiscal and financial institutions. The British state actively intervened in economic growth to catch up with the Netherlandsthe Netherlands. Meanwhile, the Dutch invested in Britain because the Netherlandsthe Netherlands was the most advanced economic country in the region and the Dutch government did not have strong enough power to prohibit Dutch investors from investing in Britain because the British and Dutch empires differed in their constitutions. In the fiscal sense, Britain had a strong and centralized state. Therefore, it was able to establish a type of “Commission Capitalism,” by which world economic growth likewise supported and increased British economic growth. The more world trade increased; the more commissions poured into Britain’s government. In this way, British hegemony led to the formation of a global economic system, “for the British, by the British, of the British” by the end of the nineteenth century.