the greatest foreign reserves assets in the world by a factor of over two, the largest lender/investor in the
emerging world, the second most powerful military power, and a geopolitical rival of the United States. And
it is growing in power at a significantly faster pace than the United States and other “developed
countries.”
At the same time, we are in a period of great inventiveness due to advanced information/data
management and artificial intelligence supplementing human intelligence with the Americans and
Chinese leading the way. As shown at the outset of Chapter 1, human adaptability and inventiveness has
proven to be the greatest force in solving problems and creating advances. Also, because the world is richer
and more skilled than ever before, there is a tremendous capacity to make the world better for more people
than ever if people can work together to make the whole pie as big as possible and to divide it well. That
brings us to where we now are.
As you can see, all three of these rises and declines followed the classic script laid out in Chapter 1 and
summarized in the charts at the beginning of this chapter, though each had its own particular turns and twists.
Now let’s look at these cases, especially the declines, more closely.
A Closer Look at the Rises and Declines of the Leading Empires Over the
Last 500 Years
The Dutch Empire and the Dutch Guilder
Before we get to the collapse of the Dutch empire and the Dutch guilder let’s take a quick look at the whole arc of
its rise and decline. While I previously showed you the aggregated power index for the Dutch empire, the chart
below shows the eight powers that make it up from the ascent around 1575 to the decline around 1780. In it, you
can see the story behind the rise and decline.
After declaring independence in 1581, the Dutch fought off the Spanish and built a global trading empire
that became responsible for over a third of global trade largely via the first mega-corporation, the Dutch
East India Company. As shown in the chart above, with a strong educational background the Dutch innovated in
a number of areas. They produced roughly 25% of global inventions in the early 17th century,4 most importantly
in shipbuilding, which led to a great improvement in Dutch competitiveness and its share of world trade. Propelled
by these ships and the capitalism that provided the money to fuel these expeditions, the Dutch became the largest
traders in the world, accounting for about one-third of world trade.5 As the ships traveled around the world, the
Dutch built a strong military to defend them and their trade routes.
As a result of this success they got rich. Income per capita rose to over twice that of most other major
European powers.6 They invested more in education. Literacy rates became double the world average. They
created an empire spanning from the New World to Asia, and they formed the first major stock exchange
with Amsterdam becoming the world’s most important financial center. The Dutch guilder became the first
global reserve currency, accounting for over a third of all international transactions.7 For these reasons over the
course of the late 1500s and 1600s, the Dutch became a global economic and cultural power. They did all of this