The Economics of the Dutch East India Company

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Trillion-dollar mega corporations are a very big deal these days. Only about 2 or 3 exist in the modern world and they're primarily tech companies that have achieved this status by capitalizing on cutting edge modern technology (and probably a bit of optimistic speculation). But there is one corporation that has snaked its way through history and may have very well been the largest corporation in history.

This was a company that laid the foundations for modern multinationals and created systems, procedures, and expectations that we take for granted today.

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Sources & Citations -

Lucassen, J., 2004. A multinational and its labor force: the Dutch East India Company, 1595–1795. International Labor and Working-Class History

Landwehr, J., 1991. VOC: a bibliography of publications relating to the Dutch East India Company, 1602-1800. Brill Hes & De Graaf.

Van Dyke, P.A., 1997. How and why the Dutch East India Company became competitive in intra-Asian trade in East Asia in the 1630s. Itinerario

Robertson, J. and Funnell, W., 2012. The Dutch East-India Company and accounting for social capital at the dawn of modern capitalism 1602–1623. Accounting, Organizations and Society

Gerstell, D., 1991. Administrative Adaptability: The Dutch East India Company and Its Rise to Power. Journal of Political Economy

Gelderblom, O., De Jong, A. and Jonker, J., 2013. The formative years of the modern corporation: The Dutch East India Company VOC, 1602–1623. The journal of economic history

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[EconomicsExplained]

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[mistrants]

I find the valuing at the end to be rather... weird.
Saying those ships would be worthless today and the spices too seems utterly irrelevant to me. Because its not about how much its holdings would be worth today, but how big the company would be in todays money. And that is a significant difference.
Imagine doing this to apple from 1980 and saying "well all that technology is hella outdated and basically worthless so 1980's apple would be worthless today". I mean, its true, but its also completely NOT what people mean when they say "what x would be worth today".

"wasnt that wealthy because it came from a time that was extremely poor".
Imagine going 100 years into the future and saying "well google wasnt that wealth because today we are way wealthier".
It does feel like you kinda forget to focus on putting it into the perspective of the time.

It would have been interesting to see for example how big of a percentage of the world economy the VOC was and to extrapolate that to today to give a more realistic view of how powerful it was for its day.

[callumsunderling]

Say what you will about this channel, but they're extremely creative with their use of stock footage

[thorin]

The issue with any comparison, it will be flawed:
The 40 warships, are little museum and tourist ships if transplanted today as they were. But the same time the UK fleet was around 100 warships, so we also could transplant it as 40% of the largest fleet in today, that would mean 4 carrier and 100 other ships, valuing around 500-1000 billion USD. And anything in between.

[primaldialga]

Again, you're valuing 1670 assets with 2020 prices; even if you believe accounting for inflation gives an unfair picture, wouldn't it be also unfair to not value their assets at book values of 1670?

[TLtaka]

+4 Gold.
-Trade routes with other players made to a city with an East India Company will generate an extra 4 Gold for the city owner and the trade route owner gains an additional 2 Gold for the trade route.

[CarthagoMike]

You know what they say:
_If it ain’t Dutch, _
_it ain’t much._

[EconomicsExplained]

last time I was this early nutmeg was an investment.

[FishHeadswg]

The whole premise here is flawed.

When they say it's worth $7 billion they're comparing how much wealth the company had compared to the global wealth at the time. If they controlled 12% of the world's GDP at the time, they would COMPARATIVELY be worth ~$85*.12 or $7 trillion today if they controlled 12% of the global GDP today. Which makes sense when you consider they were basically Amazon on steroids and Amazon is valued at trillions today.
Obviously their goods wouldn't be worth $7 trillion today, so taking the "book value" of their rink-a-dink ships means nothing.

[octaviusaugustus]

My knowledge of history may be lacking, but wasn't it the Portuguese who imported the spices from Asia, while the Spanish got their wealth primarily from precious stones and gold mined from their south american colonies?

[Rerbun]

Something really expensive is still called "pepper expensive" in Dutch

[OneOnOne]

Will you ever do "The Economics of the Hanseatic League?"

[gunnarherzog]

Instead of splitting hairs about how much the East India Company was really worth, could you instead create a more comprehensive video about how it operated, its history and other peculiarities?

[berargumen]

This company even had its own military, made law in the region that it exploited.

[afifaqeela]

Greetings from The East Indies. The Dutch played us good for 350 years.

[Happy_Smiles]

15:50 I like it when he’s talking about gold appreciating in value, then there’s just a croissant being baked

[commentatorxyz]

Just reading a $20 book about the history of VOC can give more knowledge about corporations and management than an average $20, 000 MBA

[Bobylein]

"Land and gold appreciated value over time"

Shows a stock video of croissants baking....

[justazebra]

The summary at the end makes no sense to me at all. You shouldn't just compare the gold price of more than 200 years ago and the value it has today. You should have compared how much you could have bought with 1 gram of gold.
If i buy 1000kgs of gold today, i'd be a rich man. If the price crashes down to practacly zero in 200 years from now, the same 1000kgs of gold would be worthless.
But you can't say that I, the guy with 1000kgs of gold in 2020 was poor or less wealthy because of the price in 200 years is lower or because the people are wealthier in the future so gold is easier to obtain.


And there is the comparison of the ships. Todays battleships are going to be useless in 100 years from now, this doens't mean that it is worthless in todays market.


So saying 30 billion is a generous estimate is kind of weird in my opinion.


You are right that if they had the same business model in this modern time, it would have failed. But if microsoft or google didn't move along with the time it wouldn't have existed today eighter.

[thedoruk]

The scientifically accurate *Megacoorporation*