Dutch version of the East India Company was ‘the original military-industrial complex’

by Rashmee

Posted on December 31, 2021



Headquarters of the Vereenigde Oost Indische Compagnie, the Dutch version of the East India Company. By Job Adriaenszoon Berckheyde – http://hdl.handle.net/11259/collection.38024, Public Domain

Founded in 1602, just a couple of years after the English established the East India Company, the Vereenigde Oost-Indische Compagnie (VOC), or the United East India Company had a monopoly over Dutch operations in Asia until its demise in 1796.

It sent a million people to Asia, more than all of Europe, had a fleet of nearly 5,000 ships, was larger than some countries, and has been described by Bryan Taylor  of Global Financial Data  as “the original military-industrial complex”.

The Data piece also says that the VOC “transformed financial capitalism forever” by introducing “limited liability for its shareholders which enabled the firm to fund large scale operations.” It also paid high dividends, sometimes in kind, rather than in money. In 1605, it paid dividends of 15 per cent of capital, in 1606 75 per cent, in 1607 40 per cent, in 1608 20 per cent, in 1609 25 per cent. For the seven years after that, VOC paid dividends in produce, of an average of 71 per cent of capital. For three years from 1621, it paid dividends in cloves at 41 per cent. In 1638, it paid a 44 per cent dividend in spices.

But this was not always a winning strategy because it often meant the company simply dumped its inventory, rather than paying out something of universal value (ie, actual money). It was a point the East India Company and South Sea Company noted and learned from.

VOC also caused several innovations  to be introduced at the Amsterdam Stock Exchange. Futures contracts, options, short selling and the first bear raid transformed the Amsterdam Exchange’s  status and led to the first government regulation of stock markets.

So, none of this makes Amsterdam sound particularly ethical. But remember the four worthwhile facts about the city that we considered yesterday in Part I? As 2021 closes itself out, I suggested that Amsterdam might be a contender for capital of sustainable capitalism. That’s because:

** it has a cap on bonuses of 20 per cent of an individual’s salary

** it saw no increase in millionaire bankers between 2015 and 2019

** After Brexit, which weakened the City of London, Amsterdam became Europe’s largest share-trading centre in 2021

** its success is a throwback to an earlier age of heady capitalist innovation

So, all in all, Amsterdam’s history seems to fit it very well as Europe’s potential financial centre. More to the point, it seems to have learnt the lessons of history too, with its conscious decision to cap bonuses.

If there were an election for the capital of sustainable capitalism, Amsterdam would have my vote.

Click here to read Part I: Amsterdam, capital of sustainable capitalism?


Rashmee has lived and worked in several countries in the past decade, including Afghanistan, India, Haiti, Tunisia, the UAE, US and UK

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