Spinoza winner Bas van Bavel studies how to measure prosperity in society

Two weeks ago, Bas van Bavel received a phone call from the man in charge of research organisation NWO. The message was a joyful one: Van Bavel was one of the four scientists who’ll receive the Spinoza Prize this year.

It’s not the first award won by the professor of Economic History (with a focus on Transitions of Economy and Society). He had previously received a Vici and a European ERC Advanced Grant. Van Bavel: “The big difference is that the others were awarded on the basis of a submitted research proposal. This is a personal award, and that makes it very special.”

Together with others
Still, Van Bavel doesn’t see the prize as a personal success. “I want to stress the importance of working together in research. Within my own discipline, but with scientists in other disciplines as well. I often work with sociologists and economists. Within my own field, I often work with Jan Luiten van Zanden. They’re all involved with the strategic theme of Institutions for Open Societies.”

“Collaborating with other disciplines is inspiring to me. You see economists creating abstract models, and sociologists trying to discover new patterns in society. They develop hypotheses, and then it’s important to test them against history. History is a treasure trove of empirical data. History also offers the option of tracking developments in the long term. This way, you complement each other, and you can make insights from history relevant for contemporary society. I’m not saying history repeats itself, by the way. But you can look at certain patterns and mechanisms that happened in the past, and see whether they still work like that.”

Bold new approach
That’s an approach the Spinoza Prize jury praises. As an economic historian, he manages to connect microdata (for instance about employment contracts and tenancy contracts) to bigger issues in social sciences. At the same time, he manages to apply modern economic and sociological theories to centuries long gone. This bold, innovative approach on the cutting edge of several disciplines leads to a ground-breaking new theory about the social roots of economic growth, development, and stagnation.

The jury also praises Van Bavel because he developed a new vision on the role of the market economy in our society. Until recently, economists and historians viewed the market economy as a typical characteristic of our modern time, come forth from older systems of economy. Van Bavel’s original, innovative analysis of the role of the market in past societies radically changed this point of view.

Rise, prosperity, and decline
This analysis can be found in his 2016 book, The Invisible Hand, published by Oxford Press, of which a popularised Dutch version was released last year. In this book, he shows how past societies also had market economies, and how it went through cycles of rise, prosperity, and decline. He analyses upcoming and declining markets in Iraq between the 6th and the 11th century, in Italy during the Renaissance, and in the Netherlands in the late Middle Ages and early modern times. The decline, Van Bavel says, isn’t mainly caused by meddlesome governments or foreign rivals. The economies become unbalanced, thus causing decline from the inside out.

In his research, he compares several periods with each other, and connects the past to the now. His conclusion is that the concept of prosperity shouldn’t only be measured in terms of market value of output, the value of all produced goods and services expressed in money. “Measuring wealth based on the gross domestic product is one aspect to look at. But it’s more valuable to look at the health, purchasing power, and living situation of people in a time.”

An example is the update of the Better Well-Being Index (BWI) 2019, which is published this week. This indicator is an integral indicator that provides insight into the development of broad-based prosperity in the Netherlands.

For years now, Van Bavel has focused on the distribution of income and wealth, a subject that received a lot of attention a few years back thanks to a book by French economist Piketty. Van Bavel conducted research at the WRR (Netherlands Scientific Council for Government Policy), among other places, on the inequal distribution of wealth in society. He points out that people at the top see their wealth grow while a growing number of people have more debt than possessions.

“I conducted this research, because I’d noticed that we seemed to know more about distribution of wealth in the seventeenth century than about this distribution in our modern times. And it’s my goal to try and take these lines of development from the past and extend them to the modern era.”

Scientist with a message
The topic was thoroughly discussed on radio and TV. In the laudation, the jury observes that the professor effectively places social equality and broad prosperity on the agenda in the media. Is he a scientist with a message?

“It’s not the case that my message stems from tackling injustice or inequality. I have, however, been interested in distribution of wealth since the ‘90s, because in my opinion, it’s an important factor that decides the development of a society. Wealth is land, natural resources, and capital, so two of the three production factors. And when placed in historical perspective, it becomes clear that when the distribution of wealth is in imbalance, this has a negative effect on the development of wealth of a society. That’s one message I can spread. It’s up to the societal debate and politics to do something with it.”

On Friday, Bas van Bavel will be honoured as an internationally renowned researcher with a powerful research agenda. In the past two weeks, he’s spent a lot of time thinking about how to spend the 2.5 million euros that come with the prize. The money has to be spent on new research. “I want to use the money to develop new lines of research. After the study on the market economy, I want to study the development of other coordination systems throughout history. Think, for example, of how we designed the state, what the role of family is, and how we affiliated through guilds. I want to achieve a better understanding of how these systems balanced each other within society throughout history. What patterns and mechanisms are visible? And how does that determine the wealth in that period?”