From the late 16th to the late 18th century, the United Provinces of the Netherlands, measured by libertarian standards, had perhaps the best government in Europe. Although today we can easily find much to criticize about the Dutch Republic, it remains a crucial early experiment in toleration, limited government, and commercial capitalism.

The results were stunning: Even contemporaries noted the Dutch Republic's astonishing wealth and military power. “The United Provinces are the envy of some, the fear of others, and the wonder of all their neighbors,” wrote Englishman Sir William Temple in 1673. The tiny state was then engaged in an all-out defensive war against both France and Britain, a war that the Dutch won, thus maintaining their territorial integrity. Despite its small size, the Dutch ...