THE POLITICAL-ECONOMY OF A CONSENSUS SOCIETY - EXPERIENCE FROM BEHINDTHE DYKES

The Dutch economy shows that capitalism with a friendly face can work. Job growth has been spurred by an investment and export boom and a mo ve towards more labour intensive methods of production. The combinatio n of anchoring the guilder to the D-mark and a policy of sustained wag e moderation has been the motor for the job growth. It has led to a bo ost in profits and competitiveness and held back labour productivity. Wage moderation, a strong currency and social cohesion do not come lik e manna from heaven. They require consensus, trust and corporatism as well as tax cuts, training and child care programmes to support it. Th e challenge for the Dutch is to boost labour market participation, par ticularly of older workers and partially handicapped. This requires sp ecific tax incentives as well as further reform of social security.