The Tulip Crisis of 1637

This chapter examines the assumption that there is a relationship between innovations and economic crises economic crises , with a particular focus on the AmsterdamAmsterdam Tulip CrisisTulip Crisis of 1637. The following question is examined: Is there a relationship between innovations and economic crises? The purpose of the chapter is to determine which innovations triggered the social mechanismssocial mechanisms that led to the Tulip Crisis. The findings that emerge are that the following innovations fed through social mechanismssocial mechanisms led to the crisiscrisis : The establishment of the first limited liability company and the world’s first stock exchangestock exchange in 1602 (both institutional and political innovationspolitical innovations ); the DutchDutch East India Company the Dutch East India Company (Dutch: Vereenigde Oost-Indische Compagnie), VOCVOC , “United East India Company”, which was granted the authority to use military force in the name of the state (an institutional, political innovationinnovation ); tuliptulip bulbs were introduced into the marketmarket (a financial, product innovationproduct innovation ); “ Windhandel Windhandel ” (“Wind TradeWind Trade ”), i.e. the first “futuresfutures ” market (an economic and financial product innovation); and the breakthrough of mercantile economics in EuropeEurope (an institutional, cultural innovation).