The Rotten Growth Model of the Netherlands and the Crisis of Financialized Capitalism

The Dutch economy is currently in bad shape. Despite a triple AAA status on international capital markets, negative interest rates on short term governments bonds and a record sized surplus on its trade balance, the economy has now shrunk for three quarters in a row, unemployment is rising rapidly and -- despite unprecedented austerity measures -- the budget deficit does not budge and state debt is gradually increasing. In this lecture I will claim that the Netherlands before the crisis had developed a more or less coherent growth model consisting of three elements; it was export led, meaning that it had a strong emphasis on containing labour costs through wage moderation; it practiced 'privatized keynesianism' by letting its outsized banks feed an enormous real estate bubble to compensate for the downward effects on disposable income of wage moderation; and it was arbitrage driven, in the sense that its logistic, distributive, financial and fiscal infrastructure came to play an ever more important switchboard function in international capital flows and arbitrage schemes. The crisis has demonstrated this growth model to be extremely vulnerable to sudden stops, flow reversals, contagion effects, abusive practices by predatory, opportunistic agents. The lecture ends with a reflection on why it is that these vulnerabilities are not yet widely acknowledged by Dutch political, financial and economic elites and suggests that this is indeed a structural crisis which goes to the core of the means by which the Netherlands has, before the crisis, generated its wealth. The challenge then is to invent new ways of generating growth to steer Dutch society safely into a post-crisis, post-financialized era.