How does a coordinated market economy evolve? Effects of policy learning in the Netherlands in the 1980s

Abstract

This article studies the changes in economic policy in the Netherlands and their effects on the coordinated market economy (CME). In order to gain insight into the development of the CME, the neo-corporatist literature and the concept of ‘policy learning’ are called upon. The article takes the analysis of Visser and Hemerijck on the changes in the Dutch labor market in the 1980s and 1990s as a starting point for the analysis of the development of the Dutch CME. The analysis includes a systematic review of macroeconomic developments. The frequent introduction of market-oriented solutions is related to a paradigm change in macroeconomic policy. ‘Policy learning’ explains the transition in priorities of economic policy in the Dutch corporatist economy. After a decade of increasing polarization in the 1970s, economic urgency increased and stimulated a regime change towards more market-oriented policy, creating a more liberal CME. In any CME, either new forms of coordination will develop, or market-based solutions will be sought. In the Netherlands, in various policy fields coordination was transferred to the market. Labor market reform was accompanied by supply-side reform and deregulation. The tension between global trends in economic ideas and their application in a CME was resolved by policy concertation (as institutionalized regular consultation between parties is often called) and learning, creating a more liberal business environment within the CME.