Hostname: page-component-68c7f8b79f-7mrzp Total loading time: 0 Render date: 2025-12-24T17:43:37.590Z Has data issue: false hasContentIssue false
  • English
  • Français

An Austere Nation? Dutch Public Choice Theory and European Monetary Union

Published online by Cambridge University Press:  21 April 2025

Merijn Oudenampsen Open the ORCID record for Merijn Oudenampsen [Opens in a new window]
Merijn Oudenampsen*
Affiliation:
Social Sciences, Free University of Brussels, Brussels, Belgium
*
merijn.oudenampsen@gmail.com
Rights & Permissions [Opens in a new window]

Abstract

When considering the ideas behind economic and monetary union, most of the scholarly attention has focused on Germany and its ordoliberal tradition. The role of smaller countries such as the Netherlands, however, has yet to be considered. The Netherlands has long been one of Europe's staunchest fiscal hawks. To explain Dutch hawkishness, the international business press has reverted to the cultural trope of Calvinism. In contrast, this article traces this hawkish stance to the Dutch neoliberal turn of the 1980s, in particular the rise of public choice theory. In early 2012, during a meeting in Brussels, the Dutch Prime Minister Mark Rutte described the need for fiscal discipline as ‘the lesson of the 1980s’. Building on institutional analysis and intellectual history, this article shows how Dutch policymaking elites conceived of EMU as a response to that lesson.

Information

Type
Article
Information
Contemporary European History , First View , pp. 1 - 15
Check for updates
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NC
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial licence (http://creativecommons.org/licenses/by-nc/4.0), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original article is properly cited. The written permission of Cambridge University Press or the rights holder(s) must be obtained prior to any commercial use.
Copyright
Copyright © The Author(s), 2025. Published by Cambridge University Press

Introduction: A Leading Fiscal Hawk

After the eurozone crisis, scholars grappled with the moralistic and rule-bound nature of European austerity politics. When looking at the ideas behind the governance of the Economic and Monetary Union (EMU), the focus has generally been on Germany and its ordoliberal tradition.Footnote 1 In recent years, the rise of fiscally conservative coalitions independent from Germany – first the ‘frugal four’ and then the ‘Hanseatic league’ – has highlighted the importance of smaller member states. It is particularly the Netherlands, ‘the greatest of the small’, that has captured attention as the initiator of these fiscally conservative coalitions.Footnote 2 But as of yet, little has been published on the ideas motivating the Dutch position on fiscal policy, which has erroneously been described as pragmatic and non-ideological by leading scholars.Footnote 3

The Netherlands has long had a reputation as Europe's staunchest advocate of austerity and structural reform, often outdoing Germany in its fiscal rectitude. While Germany is said to favour a more multilateral approach, it has relied on the Netherlands to be the bad cop and ‘take the lead in confrontational arguments’.Footnote 4 Already in the late 1990s and early 2000s, the Dutch Minister of Finance Gerrit Zalm – nicknamed ‘Il duro’ by the Italians – was known for his insistence on budget discipline.Footnote 5 In 1998, he threatened to veto Italy's accession into the eurozone. And in 2003, Zalm famously confronted Germany and France when they exempted themselves from the Excessive Deficit Procedure.Footnote 6 Later, during the eurozone crisis, the Netherlands again lived up to its stringent reputation. First it was the Christian-democrat Finance Minister Jan Kees de Jager – personal motto: ‘I am Dutch so I can be blunt’ – who outflanked Germany in his zeal for austerity. De Jager unsuccessfully proposed an automatic procedure for dealing with budget transgressions and demanded a European budget tsar with the authority to expel countries from the eurozone.Footnote 7 His successor, social democratic Finance Minister Jeroen Dijsselbloem, made headlines as the Eurogroup president clashing with the Greek Finance Minister Yannis Varoufakis over austerity and evoked anger with his comments on southern member states wasting their money on booze and women.Footnote 8

The insistence on austerity and budget discipline isn't just an aspect of Dutch foreign policy. Repeatedly, the Netherlands has had to swallow its own medicine. In 2004, after Finance Minister Gerrit Zalm had taken France and Germany to task for their budgetary transgressions, the Dutch government had to impose austerity itself to salvage its reputation. Something similar happened during the eurozone crisis. Dutch politicians harshly lectured southern member states and even proposed kicking out Greece altogether.Footnote 9 But after economic forecasts projected a budget deficit of 4.6 per cent for 2013 in the Netherlands, the Dutch government, too, had to walk the walk.Footnote 10 Subsequent coalition governments led by the right-wing liberal Prime Minister Mark Rutte oversaw an extensive austerity programme of an estimated fifty billion in cutbacks and tax hikes from 2010 till 2017. It proved to be a spectacular exercise in self-harm, forcing the Dutch economy into a double dip recession. Official estimates of the economic damage of austerity range from 7.5 per cent to 10 per cent of Dutch GDP, with 365,000 of additional unemployed.Footnote 11 Rutte's coalition partner, the Dutch Labour Party (Partij van de Arbeid, PvdA), went on to suffer the largest electoral defeat in Dutch political history, losing twenty-nine of its thirty-eight seats in the Dutch parliament during the 2017 elections.

It raises the question what ideas inform Dutch hawkishness. In the 1970s, the Dutch government still had very different ideas about government debt and budget deficits. According to the then influential Keynesian view, in times of crisis the government had to engage in debt-financing to stimulate the economy. Dutch hawkishness, this article argues, can be traced back to the rejection of Keynesian economic thinking by Dutch policymakers in the 1980s. It formed part of the international breakthrough of neoliberalism, which made public spending part of the problem rather than the solution.Footnote 12 The Netherlands experienced a highly technocratic and depoliticised neoliberal turn. Politicians depoliticised the reforms by outsourcing initiative to economic policymakers within the ministries of Finance and Economic Affairs.Footnote 13 During the eurozone crisis, the austerity policies of the 1980s continued to be an important reference point for Dutch economic policymakers. But in contrast to Germany with its ordoliberal tradition, Dutch policymaking elites have a more Anglo-American orientation and were inspired by monetarism, public choice theory and new classical economics.Footnote 14 For reasons of scope, this article centres on the role of public choice theory. To be clear, by focusing on the Dutch argument for austerity and the role of public choice theory therein, I'm not arguing that the Dutch fiscal policy mix can be reduced to this dimension.

Dutch economists working within this public choice tradition portrayed the state as beholden to pressure groups and structurally prone to overspend.Footnote 15 Their proposed solution was to depoliticise budgetary decision making and place it at one step removed from politicians. This argument informed a series of initiatives that sought to bind Dutch public spending to strict norms and targets in the 1980s, while monetary policy was closely tied to that of the German Bundesbank. In the midst of this domestic transformation, the Dutch position on European monetary and fiscal policy was formed. Dutch economic policymakers saw EMU both as a threat and an opportunity. The downside was that it eliminated the exchange rate as a disciplining mechanism. But it also served as a helpful external constraint, which allowed politicians and technocrats in the different member states to enforce budget discipline in the face of electoral opposition. This idea of an external constraint has generally been associated with southern member states, particularly Italy.Footnote 16 But for the Dutch, it was also the domestic lesson of the 1970s/1980s that democracy and budget discipline were difficult to combine, and that political discretion should give way to enforceable rules and targets, elaborated by technocrats removed from immediate electoral concerns.

The remainder of this article is structured as follows: first, I will introduce public choice theory and its relation to the neoliberal turn and EMU. Then I move on to the role of public choice theory in the Netherlands. Finally, I show how the public choice analysis of democratic profligacy fed into EMU and the Dutch position as Europe's foremost fiscal hawk.

Public Choice Theory, the Neoliberal Turn and EMU

As Kathleen McNamara argued in her classic The Currency of Ideas, the Maastricht Treaty and EMU were built on an ascending ‘neoliberal policy consensus that elevated the pursuit of low inflation over growth or employment’.Footnote 17 A new set of dominant economic ideas had emerged as a result of the stagflation crisis of the 1970s/1980s. These revolved around the belief that fiscal and monetary stimulus was counterproductive due to inflationary expectations.Footnote 18 To achieve growth and employment, price stability had to be ensured, and the best way to do that was to have a rules-based monetary and fiscal policy, with a large degree of autonomy for technocrats and central bankers. The Maastricht Treaty, EMU and the Stability Pact further institutionalised these ideas.Footnote 19 In the scholarly research on the ideational backgrounds of EMU, the focus has been on ordoliberalism and monetarism, while another important pillar of that neoliberal consensus – public choice theory – has received less scholarly attention.Footnote 20

The discipline of public choice theory came into its own in the 1960s.Footnote 21 Particular to this American current of economic thought was to take the model of neoclassical economics assuming individual utility-maximisation and then apply it to government. It had long been argued that while actors in the marketplace pursued their rational self-interest, the public sector was driven by another, more public ethos: that of serving the common good. Public choice theorists disagreed. They argued that bureaucrats, voters and politicians ‘are like other men’, making ‘most if not all their decisions in terms of what benefits them, not society as a whole’.Footnote 22

While self-interested behaviour worked well on the marketplace, this was not the case for government. In the eyes of public choice theorists, the government was plagued by perverse incentives. Bureaucrats were interested, first and foremost, in increasing their pay checks and expanding their departments at the taxpayers’ expense. Voters had little interest in informing themselves properly, since the cost of casting an informed vote outweighed the individual benefits. In the absence of informed voters, politics was dominated by powerful pressure groups of organised interests. Since politicians were primarily interested in maximising votes and winning elections, they courted these interest groups by spending lavishly. These combined dynamics meant that democracies had an inherent tendency to overspend.

All in all, public choice amounted to what James Buchanan, the founding father of the discipline, called ‘a theory of government failure’.Footnote 23 It formed a rebuke to the established theory of market failure and the idea that government intervention was a necessary corrective. While officially an objective theory (or ‘positive theory’, as economists have it), public choice theory was an important pillar of the broader neoliberal movement. As Melinda Cooper has shown, James Buchanan's work formed an integral part of the Reaganite mobilisation against the ‘Great Society’ welfare programmes of the 1960s.Footnote 24 Between 1984 and 1986, Buchanan served as president of the Mont Pèlerin Society, the foremost neoliberal network. Public choice thinkers had important organisational and advisory roles in neoliberal think tanks on both sides of the Atlantic.Footnote 25

When the stagflation crisis of the 1970s hit, this body of literature provided a powerful framing of events. It diagnosed the crisis as a form of ‘state failure’.Footnote 26 A key argument therein was ‘the overload thesis’: the idea that the state had become so overburdened by the demands of interest groups that it had reached a point of ‘fiscal crisis’. To unburden the state, public choice theorists proposed a sustained policy of austerity and depoliticisation. They believed politicians and bureaucrats couldn't be trusted with the budget and important aspects of economic policymaking therefore needed to be depoliticised: on the one hand by developing strict budgeting norms and targets, and on the other by placing budgetary decision making at a distance from electoral politics. This analysis, originally formulated in the academic sphere, was popularised in the Anglo-American context by a network of neoliberal think tanks and helped frame political events in public opinion.Footnote 27

Public choice theory played a similar role in the Netherlands, but it developed in a different institutional setting. The Netherlands has never had a significant private think tank infrastructure.Footnote 28 Instead, the intellectual work on economic policy traditionally takes place within the ministries and affiliated bureaucratic think tanks, and in the close-knit academic networks around these institutions. The Dutch finance ministry played a central role in the development of Dutch public choice theory.

Dutch Public Choice Theory

The Netherlands, like Germany, did not partake in the post-war Keynesian consensus.Footnote 29 The Dutch government had chosen an export-led growth strategy based on low wages and sober social services. As a result, the Netherlands was able to quickly build up a highly competitive export sector. However, the economic boom of the 1950s and 1960s led to continuous pressures to increase wages and public spending. Long a welfare laggard, the Netherlands began expanding its welfare state at rapid pace in the 1960s. The Ministry of Finance, a stronghold of fiscal conservatism, believed in upholding the soberness of the post-war model. In this context, an early version of public choice theory was developed by the economist and senior finance official Willem Drees Jr.Footnote 30 He argued that self-interested politicians and bureaucrats were responsible for driving up spending and pleaded for strengthening the institutional position of the finance ministry.

In the 1970s, public choice theory had become a standard element of the new academic field of public finance in the Netherlands. A leading figure was Lenze Koopmans, who had worked under Drees Jr. at the Ministry of Finance and wrote the leading Dutch public finance textbook as part of his work at the ministry. In 1973 he became public finance professor at the Erasmus University of Rotterdam. In his inaugural lecture Controlling Public Spending, Koopmans combined the ideas of American public choice theorists James Buchanan and William Niskanen with those of Drees Jr.Footnote 31 According to Koopmans, public spending (around 40 per cent of Dutch GDP at the time) was out of control. He believed it was the self-interested behaviour of ministers, parliamentarians and civil servants that led to increased spending. Koopmans proposed to centralise decision-making and to strengthen the institutional position of the Ministry of Finance.

Of course, the stagflation crisis of the 1970s was a complex and overdetermined event, with many interconnected causes.Footnote 32 An important factor was the inflationary supply-shock of the oil crisis. The resulting global recession hit the Dutch open economy especially hard. At the same time, there was the collapse of the Bretton Woods system and the ‘Dutch disease’ of gas exports leading to an appreciation of the Dutch guilder. Meanwhile, in the background, the larger process of deindustrialisation, caused by automation and the rise of newly industrialising countries, led to increased unemployment and accompanying social spending. This, in turn, prompted a crisis of the Dutch welfare state, with costs spiralling out of control.

The immediate response to the oil crisis was a coordinated international attempt to reflate the economy.Footnote 33 Due to the higher oil prices, large amounts of money were effectively withdrawn from the global economy, resulting in a collapse of effective demand. The Netherlands with its large gas reserves was one of the few countries able to afford an expansionary policy. The leftist Den Uyl cabinet complied with international requests and started stimulating its economy. In 1975, however, this policy was abandoned: the curbing of inflation now became the highest priority. The Ministry of Finance and the Dutch Central Bank successfully pleaded for a turn to austerity and monetary rigor. As part of this shift, Koopmans was appointed Deputy Director-General of the Budget by Finance Minister (and later ECB President) Wim Duisenberg.Footnote 34

Particular to the public choice analysis is that it framed stagflation as a crisis of the state, rather than the market. While monetarism and new classical economics criticised the effectiveness of Keynesian economic policies, public choice theory went one step further and argued that it wasn't in the interest of politicians to govern well. From a public choice perspective, the expansionary policies of Den Uyl were seen above all as the result of spendthrift politicians and bureaucrats caving in to pressure groups and maximising votes for the next election. At this point, the ‘overload thesis’ emerged. In 1976, Milton Friedman had given a controversial lecture in the United States, titled ‘The Fragility of Freedom’.Footnote 35 Using public choice theory, Friedman argued that the continuous growth of public spending would, at some point between 40 and 60 per cent of national income, give rise to an economic dictatorship.

In the Netherlands, it was the Institute for Research on Public Spending, a conservative fiscal watchdog founded by Drees Jr., that kicked off a similar debate in the autumn of 1976. The institute had organised a conference on the Budget Memorandum, titled ‘The State Entrapped’.Footnote 36 A close colleague of Drees Jr., public finance professor Theo Stevers, shocked the public when he declared that the Netherlands was headed towards a ‘Kafka-society’ based on forced labour.Footnote 37 He identified a vicious cycle of growing unemployment and rising public spending. At some point, the government would turn authoritarian, resulting in the loss of political freedom. It became a prominent topic of national debate. Stevers later attributed these views to the influence of public choice theory, in particular the work of James Buchanan.Footnote 38

When the leftist Den Uyl government gave way to a centre-right coalition in 1977, talk of a Kafka-society subsided. The economic crisis, however, had not subsided. Protests and internal divisions within the centre-right over austerity led to political paralysis. For economic policymakers, this confirmed the analysis that democratic institutions weren't up to the task of maintaining budget discipline. The economic situation went from bad to worse in 1979 after the second oil crisis and the Volcker-shock – the dramatic increase of interest rates by Federal Reserve Chairman Paul Volcker to drive out inflation. Dutch interest rates went throught the roof, record numbers of Dutch companies went bust and unemployment skyrocketed. It caused public spending to balloon, hitting 60 per cent of GDP in 1983. The budget deficit had reached 10 per cent in 1982.Footnote 39 The high interest paid on government debt made debt-financing costly, while the close integration of the Dutch with the German economy complicated any reflationary policy.Footnote 40 A turn to austerity was in the making, this time for real.

Former senior civil servants of the Ministry of Finance collaborated on the report Controlling Public Spending, written for the think tank of the right-wing liberal party (VVD) in 1981.Footnote 41 Koopmans was the lead author of a chapter that, using public choice theory, proposed to strengthen the position of the Ministry of Finance in the decision making process vis-à-vis parliament and the ‘spending departments’.Footnote 42 To that end, the report recommended strengthening the role of two technocratic expert committees led by the finance ministry. The first of these high-level technocratic committees was the Study Group Fiscal Space (Studiegroep Begrotingsruimte). It published an important advice in the months preceding the election, on the available room for public spending. Later dubbed the ‘formation bible’, its reports were a crucial reference point in the negotiations to form Dutch coalition governments. The Study Group had been created in the early 1970s, when it still had a moderate Keynesian orientation. In the 1980s and 1990s however, the Study Group became an influential advocate of austerity and balanced budgets, adopting monetarist and public choice ideas.Footnote 43

The second committee, Broad Societal Review (Brede Maatschappelijke Heroverwegingen), was created in 1981 to develop plans for public sector cutbacks. The reports of this interdepartmental taskforce – also known as ‘the austerity bible’ – were coordinated by senior finance official Gerrit Zalm, a future finance minister and leader of the right-wing liberal party (VVD). Instead of relying on the (ineffective) promises of the spending departments themselves, political parties could choose austerity measures from these reports and include them in their political platforms. The report Controlling Public Spending wanted to make the activities of this committee permanent and advised that the ‘spending departments’ should be excluded from the process. Overall, the recommendations amounted to a significant depoliticisation of the decision-making process, with senior technocrats from the finance ministry adopting a powerful policymaking role.

When the centre-right parties won the Dutch elections of 1982, the Ministry of Finance got much of what it was pleading for. A new government was formed under the leadership of Christian democrat Ruud Lubbers and his finance minister Onno Ruding. Inspired by the international rise of neoliberalism, it engaged in an ambitious programme of fiscal consolidation, privatisation, deregulation and wage moderation, under the slogan ‘more market, less government’. Many of the measures from the ‘austerity bible’ were implemented. From 1983 till 1986, the Lubbers cabinet cut public spending by about 3 per cent of national income per year, principally by lowering the wages of public sector workers and social security.Footnote 44 It earned Lubbers the international nickname of Ruud ‘Shock’.Footnote 45 At the same time, the government successfully pressured the Dutch trade unions to accept wage moderation in the market sector.Footnote 46

By the middle of the 1980s, public choice theory had become an important intellectual pillar under the Dutch market-oriented reforms. Fittingly, James Buchanan was invited in 1985 to come and present his work in the Netherlands.Footnote 47 Under the watchful eye of an elite audience of politicians, journalists, bankers and industrialists, Buchanan debated the Dutch sociologist Abram de Swaan at the Rotterdam Hilton hotel. There was a telling intervention by Rudolf de Korte, the upcoming Minister of Economic Affairs of the right-wing liberal party (VVD): ‘The government has decided that packages of cigarettes should carry the warning “Dangerous for your health”. Would it not be advisable that politicians were provided with a warning too: “This man is dangerous for the government budget?”’Footnote 48 It was a sneer at the former social democrat Prime Minister Joop den Uyl, also present in the audience. ‘The enthusiasm with which Buchanan had been received’, the Keynesian economist Jan Pen concluded, was a ‘telling sign’ of the prevailing anti-Keynesian sentiment.Footnote 49

When Onno Ruding, the Christian Democrat minister of finance in the 1980s, gave a lecture at the end of his term to defend his austere views on public finance, there was more than an echo of Buchanan in his words. Referring to Buchanan's concept of ‘fiscal illusion’, he said that Dutch voters were unaware that more spending meant more taxes, since those taxes were displaced onto future generations in the form of rising public debt. ‘Vote-maximising politicians’ made use of this ignorance by attempting to win elections through increased public spending. Meanwhile, ‘interest groups, pressure groups and advisory councils’ were lobbying ceaselessly to increase spending.Footnote 50

The belief that political actors were plagued by perverse incentives informed a ‘technocratic turn’ in Dutch policymaking in the 1980s. As political scientist Hans Daalder observed in a 1984 public lecture, a ‘muscular technocracy’ had replaced the Dutch consensus culture from the time of pillarisation.Footnote 51 Because politicians couldn't be trusted with the budget, technocrats needed to provide an institutional counterweight. ‘Ministers, MP's, pressure groups – everybody only sees sectional interests. It is only the Prime Minister, the Minister of Finance and the President of the Dutch Central Bank have the task to understand the big picture’, Dutch central bank president Wim Duisenberg stated in 1984.Footnote 52

Towards Economic and Monetary Union

In terms of budget discipline, European integration was seen as both a problem and a solution. It was a problem, because European institutions expanded the challenge of budget discipline into new terrains. The Institute for Research on Public Spending – the aforementioned fiscal watchdog – organised a symposium in the summer of 1988, titled ‘Europe Without Frontiers, Budgets Without Frontiers?’Footnote 53 At the event, senior civil servants cautioned about the ever-expanding European budget. They proposed to export the new Dutch budgeting standards to Brussels: strict norms and targets and a specialised taskforce to advise periodic cutbacks.Footnote 54 The senior official Gerrit Zalm compared the European agriculture budget to a heroin addiction: ‘Someone in financial trouble can be helped with advice. They could keep a household ledger and make some price comparisons. But if he spends all his money on heroin, only one advice counts: stop.’Footnote 55 The power struggle between the Ministry of Finance and the ‘spending departments’ appeared to repeat itself, this time on a European scale. As finance minister Onno Ruding later wrote in his autobiography, ‘for Dutch budgeting policy, Europe became a permanent problem case’.Footnote 56 The growth of the European budget in the 1980s, Ruding explained, allowed national governments to escape their own budgeting constraints on the national level.

Leading Dutch economists involved in formulating the Dutch position on EMU, such as Lans Bovenberg, Rick van der Ploeg, Jeroen Kremers, Roel Beetsma and Jakob de Haan, used public choice theory to argue that member states had a ‘deficit bias’.Footnote 57 The elimination of the disciplining role of the exchange rate mechanism would further encourage public debt accumulation in the European Union, since the costs of that debt could partially be displaced to other member states. Hence the need for strict norms and targets on deficits and debt at the European level, with a prohibition of monetary financing and a no-bailout clause to prevent moral hazard. ‘The criteria might very well be arbitrary, too restrictive, pro-cyclic, and resulting in a skewed composition of the public budget’, Rick van der Ploeg admitted in a 1992 meeting on EMU at the Royal Dutch Economics Association.Footnote 58 But the norms made sense from a public choice perspective focused on enforceability and the unreliability of political institutions.

At the same time, EMU offered a solution to the problem of reconciling democracy with budget discipline. It tied budgetary decision-making to strict international rules and depoliticised economic policymaking. For this reason, leading public choice theorists were enthusiastic about the possibilities of EMU. In a 1990 Mont Pèlerin conference dedicated to the European Union, James Buchanan presented a paper in which he welcomed the ‘genuine diminution of sovereignty that nation states must experience’ in the European Union. He believed ‘the transference [of sovereignty] to the free play of competitive forces operating across and beyond national boundaries’, would mark the end of the twentieth century belief in state provision.Footnote 59 Crucial, though, was to keep the federal state in check, with formal rules set out in a constitutional contract and through ‘an attitudinal climate that embodies generalized scepticism about both the motives of political agents and the working of political institutions, at all levels’.Footnote 60

While more moderate in their scepticism than Buchanan, Dutch economic policy makers saw European integration as an important tool to discipline spendthrift politicians. As the Director of the Budget at the Ministry of Finance argued in a lecture in 1988, ‘European integration forces budget discipline and targets upon us’.Footnote 61 Naturally, the ministry was itself a strong proponent of such rules, but these new constraints weren't presented as a deliberate political choice but rather as an external reality that simply had to be heeded. As finance minister Onno Ruding stated at the end of his term in 1990:

When we have an economic and monetary union, a country like the Netherlands can no longer freely stir up the budget deficit to its own satisfaction. Brussels will enforce what is and what isn't allowed. Some will deplore the loss of that freedom. I don't, I applaud it. Of course, it strengthens the position of the Ministry of Finance. You can use Brussels to make ministers and parliament toe the budgetary line.Footnote 62

Frans Rutten, the neoliberal economist who served as the powerful head of the Ministry of Economic Affairs from 1973 till 1989, saw EMU in similar terms:

The biggest disappointment and harshest lesson of the end of the seventies and beginning of the eighties was the impossibility of creating societal support for changing the policy framework in time, while it was obviously necessary to control public finances better. It is not merely theoretical that in the nineties, we will repeat old mistakes. It is now again the case that the financial-economic development and governability of our country are cause for concern. In the United States, Nobel prize winner Buchanan has argued that constitutional constraints are needed for good governance. In our country there is less enthusiasm for that, especially among politicians. I believe it isn't the summum of a well-functioning democracy to leave as much as possible to the discretion of elected politicians. I am enthusiastic about the design of EMU, not solely because the exchange rates are fixed. […] I believe guaranteeing solid public finances by law or international treaty should be applauded.Footnote 63

This corresponds with Kenneth Dyson's and Kevin Featherstone's characterisation of EMU in their classic The Road to Maastricht.Footnote 64 They described the new monetary architecture as an external anchor that ‘gave the strategic opportunity to central banks and finance ministries to strengthen their hold over domestic policy, at the cost of other parts of the government machine’.Footnote 65 More specifically, they argued that EMU and its binding commitments can ‘enable governments to implement unpopular reforms at home whilst engaging in “blameshift” towards the “EU”, even if they themselves had desired such policies’.Footnote 66 In this way, EMU fostered the depoliticisation of economic policymaking that public choice theorists favoured. It strengthened the hand of technocrats: both their institutional position, their information advantage and their ideological legitimation.Footnote 67

However, Dyson and Featherstone saw this mechanism as exclusive to southern member states, in particular Italy.Footnote 68 In their estimation, the Netherlands and Germany did not need an external anchor, since these countries already had a powerful tradition of budget discipline at home. Featherstone even contends that in the Netherlands, ‘“Europe” has seldom been seen as a prime stimulus to domestic reform and EMU has played no significant part in the justificatory discourse for recent social reform’.Footnote 69 This is demonstrably not true. For both budget discipline and structural reform, ‘Europe’ became the key reference point in the Dutch debate.Footnote 70 The only difference is that technocrats took the lead, while politicians were remarkably silent on the matter.Footnote 71

By the end of the 1980s, the dominant sentiment in the Netherlands was that the neoliberal reforms of the past decade had achieved limited success. It is true, wage levels had been moderated, Dutch business was competitive again and the growth of public spending had been halted. But at the same time, the Dutch economy had fallen seriously behind. In a 1988 Economic Outlook, the OECD placed the Netherlands among the worst performing economies in the 1980s. Unemployment remained stubbornly high (12.5 per cent against the OECD average of 7.5 per cent), Dutch economic growth lagged structurally 1 per cent behind the OECD average, while public debt had doubled from 40 per cent of GDP in 1977 to 80 per cent in 1988.Footnote 72

Economic policymakers concluded that more structural reform was needed. The concern was that the Netherlands with its rigid labour market, monopolistic business culture and oversized welfare state, wasn't ready to compete on the European single market. Especially the Ministry of Economic Affairs made this a recurring topic of national debate. Economic law professor Ad Geelhoed, the head of the Ministry of Economic Affairs in the 1990s and a self-declared ‘neoliberal’, campaigned intensively on this issue in the Dutch press.Footnote 73 He warned that due to European unification, there was ‘no room for our political folklore’, such as slow Dutch consensual decision making.Footnote 74 He contended that ‘EMU forces us to lower labour costs’ and cut social security, to not lose out to other member states with lower taxes.Footnote 75 He cautioned that ‘the Netherlands was not yet ready for EMU’ and that ‘the Dutch welfare state was no longer tenable’.Footnote 76 These dire warnings often resulted in front-page headlines. As the largest Dutch newspaper De Telegraaf cautioned on its front page in January 1992: ‘Prof Geelhoed: European race to lowest taxes’.Footnote 77 In contrast to what Featherstone states, ‘Europe’ and EMU were in fact a prime stimulus to domestic reform in the Netherlands.

EMU and the Rise of Dutch Fiscal Hawkishness

The same period saw the development of the Dutch position as one of Europe's leading fiscal hawks. Up until the early 1990s, the Netherlands was itself performing badly on public debt and had little opportunity to lecture other countries. Moreover, the Netherlands had long been a strong proponent of European federalism.Footnote 78 The hawkish Dutch position on European fiscal policy was formed during the ‘Purple’ coalitions of Third Way social democrats (PvdA), right-wing liberals (VVD) and progressive liberals (D66) that governed from 1994 till 2002. In these years, the Dutch economy experienced a remarkable economic boom and the Dutch were able to pass the EMU convergence criteria with flying colours. The relatively generous Dutch contribution to the European Union budget became an important political controversy. The Netherlands now formed an austere alliance with Germany on the Stability and Growth Pact. And the right-wing liberal (VVD) finance minister, Gerrit Zalm, emerged as a prominent fiscal hawk on the European stage.

In part this was simply due to the Dutch economic interest. As one of the hard currency countries, the Netherlands believed that southern European countries with weaker currencies should bear the costs of adjustment to the euro. They shouldn't be allowed to freeride on Dutch and German fiscal respectability. ‘We are not throwing our good guilder in the pond’, Prime Minister Wim Kok reportedly said in a private meeting with Finance Minister Gerrit Zalm in November 1997, while looking out over the pond surrounding the seventeenth century Dutch parliament building in The Hague. Kok and Zalm spearheaded an international lobby to force Italy's Prime Minister, Romano Prodi, to agree to more austerity, or else the Netherlands would veto Italy's entry into the eurozone.Footnote 79 It was the first time the Netherlands positioned itself as Europe's foremost fiscal hawk. At the time, Germany was itself unsure whether it would meet the convergence criteria and was late in supporting the effort.

While Third Way social democrats and right-wing liberals both supported EMU, they had political disagreements about the future of European integration. Dutch social democrats believed that EMU and Dutch social democracy were mutually reinforcing, ‘because EMU rewards the Dutch competitive strategy of wage moderation and punishes foreign strategies like industrial policy’. Furthermore, it prevented competitive devaluation from southern European countries.Footnote 80 In other words, European integration vindicated the Third Way strategy of competitive corporatism. But the Dutch social democrats also had a functionalist vision of EMU and European integration, which assumed that integration would ultimately lead to the expansion of European norms, budgets and competencies. These would ultimately form an institutional counterweight to the neoliberal logic of the Single Market. The convergence generated by EMU, in other words, would be ‘convergence around a social-democratic Europe’.Footnote 81

The right-wing liberal VVD in contrast, was opposed to harmonisation and the deepening of European integration. Frits Bolkestein, the leader of the VVD (1990–98) and the upcoming European Commissioner for the Internal Market (1999–2004), was the first to politicise European integration in this way. He shared James Buchanan's scepticism on politicians and the public purse, quipping that ‘a dog can sooner build up a stockpile of sausages than a democratically elected politician can implement a sound budget policy’.Footnote 82 A self-professed fan of Friedrich Hayek and the British Institute of Economic Affairs, Bolkestein was a card-carrying neoliberal, who joined the Mont Pèlerin Society at the end of the 1990s.Footnote 83 He stood for a ‘liberal Europe’ that limited itself to ‘core tasks’.Footnote 84

In the pursuit of this ideal, neoliberalism and Dutch nationalism went hand in hand. Bolkestein pioneered a Eurosceptic discourse in the Netherlands, mobilising Dutch nationalist sentiment against the deepening of European integration. In a much-discussed party speech in February 1995, Bolkestein claimed that the Dutch position on European integration had been naïve and idealistic. Criticising cohesion funds and transfers, he called for a European policy strictly based on Dutch ‘national interest’:

Dutch financial interests have been neglected […] In Europe, around a hundred billion of subsidies are pumped around yearly. That is bad enough in itself. But we do not seem able to pilot much of this Silver fleet into the Dutch harbour. The coming five years, the Netherlands with its net contribution of 25 billion guilders is the largest contributor per inhabitant. While partly with our money, highways are built on the holiday paradise Tenerife, we must count every penny to strengthen our dikes.Footnote 85

The position of the VVD, as set out in a 1992 party report, was that the ceding of Dutch sovereignty on differing policy terrains was premised on ‘the direction given to European integration’, and ‘whether that direction was liberatory’ or not.Footnote 86 The position of the VVD on European integration was a milder version of the Thatcherite maxim: to seek as much negative integration as possible, with as little positive integration as possible. In this way, the VVD hewed close to Friedrich Hayek's original neoliberal vision of European integration in his famous 1939 essay on interstate federalism.Footnote 87

Leading Dutch economic policy makers tended to support the neoliberal vision. They argued that a small open economy like the Netherlands had a specific national interest in focusing on negative integration. Ad Geelhoed, the influential head of Economic Affairs and from 1998 the senior assistant of Prime Minister Wim Kok, spelled out the argument: because smaller member states had more limited means of intervention, they would lose out to the larger member states when it came to national industrial policy. Moreover, a small country such as the Netherlands would have little say in any European social or industrial policy. As a country with a small domestic market and a large export sector, the Netherlands had much to gain from market integration and little from Keynesian stimulus to promote domestic demand. ‘Pure market integration offers the Netherlands from a strategic point of view, much more possibility’, Geelhoed concluded.Footnote 88

But it was also the political dynamics of the European Union that favoured the neoliberal vision. European politics is said to follow the logic of a two-level bargaining game.Footnote 89 Politicians use the international context to increase their leverage on the domestic stage, and the domestic context to increase their leverage in international negotiations. In the Netherlands, European rules have strengthened the bargaining position of Dutch politicians and policymakers advocating austerity and structural reform at the domestic level. In their book on the Stability and Growth Pact (SGP), Martin Heipertz and Amy Verdun give the example of Finance Minister Gerrit Zalm, who used European fiscal rules ‘to contain the mounting pressures in his own country’ against austerity measures.Footnote 90 Vice versa, domestic aversion to the European Union strengthened the bargaining position of Dutch politicians internationally, this time in opposing European fiscal solidarity and debt mutualisation. In this way, the Eurosceptic vision of the Dutch centre-right took precedence over the functionalist ideals of Dutch social democrats, who favoured more European harmonisation and policy coordination.

The problem for Dutch economic policymakers was that the Stability and Growth Pact was never as binding as the constitutional constraints touted by public choice theorists such as James Buchanan. In fact, when Germany and France amassed large budget deficits and flouted the rules of the Stability and Growth Pact in 2003, it showed that budgetary discipline in EMU was essentially based on political voluntarism.Footnote 91 To maintain fiscal discipline, the Netherlands was dependsnt on its political alliance with Germany. What's more, leading political figures questioned the logic of the pact. Romano Prodi, now President of the European Commission, called the rules ‘stupid, like all rigid decisions’.Footnote 92 In the Netherlands, this was widely felt as a betrayal. The Dutch had surrendered their hard guilder on the condition of strict fiscal rules, and at the first sight of trouble, the rules were cast aside.

In an opinion piece, the leading Dutch economist Lans Bovenberg called on the Netherlands to take the initiative in defending the Stability and Growth Pact, since stability was in the national interest of a small, open economy.Footnote 93 In his eyes, the pact was a crucial instrument to ‘strengthen the domestic institutions that enforce financial and fiscal discipline’ in the different member states. He called on the Netherlands to lead by example, by enforcing fiscal discipline and structural reform at home. ‘To maintain our moral authority, our country has to conform to the rules of the Stability Pact and if possible, to the three percent norm of the Maastricht Treaty […] Showing that good reforms work is more productive than lecturing Europe.’Footnote 94 The Netherlands, in other words, had to become the best boy in class. Rather than debating the wisdom of the European fiscal rules per se, making the grade became the dominant discourse on European integration.

In this Dutch stress on austerity and structural reform, the intellectual and policy legacy of the 1980s played an important role. That the Dutch austerity policies of the 1980s weren't considered all that successful at the time, was by now forgotten. The experience of the 1980s formed the basis for the political belief in expansionary austerity, which defined the Dutch position during the eurozone crisis. ‘It's not about what Brussels wants’, the Dutch Prime Minister Mark Rutte underlined at a Euro Summit in Brussels in March 2012. ‘I value fiscal discipline because I think it's important. It's the lesson of the 1980's.’Footnote 95 Similarly, the government's Budget Memorandum for 2011 made the case for expansionary austerity while referring to the 1980s:

the Dutch experiences of the 1980s showed that while consolidation can indeed hurt, it can also provide the basis for economic recovery. The government decided to intervene vigorously: industrial subsidies were halted; unemployment benefits lowered; public sector wages cut. With the Wassenaar Accord, the social partners and the government agreed to moderate wages in the private sector. This contributed in subsequent years to a lower inflation and the recovery of Dutch competitiveness.Footnote 96

The Budget Memorandum mentioned public choice theory and stated that a crisis provided a rare window of opportunity to make these cuts: ‘Insights from political economy plead for starting now with the necessary consolidation. In practice, cutbacks and important structural reforms are only feasible in bad times.’Footnote 97 Furthermore, in a 2011 book on the European debt crisis, the single most influential Dutch economic think tank, the Central Planning Bureau (CPB), held up the Dutch 1980s reforms as example to the European periphery:

Experience teaches that often a large crisis is necessary before far-reaching reforms can be implemented to boost growth. The Netherlands has successfully implemented such a policy in the 1980s and 1990s and is now reaping the benefits. Before that could occur, our country had to bite the bullet.Footnote 98

In other words, the lesson drawn from the 1980s by Dutch policymaking elites was that one should never waste a good crisis. The crisis also saw a harkening back to the institutional solutions of the 1980s, with technocratic expert committees as crucial depoliticising instruments in the turn to austerity. ‘These are exceptional circumstances that have compelled us to use a well-tested instrument. The Societal Reviews of the 1980s have proved their value’, Dutch Prime Minister Balkenende said in December 2009.Footnote 99 The Dutch turn to austerity was given further intellectual support by an advice of the Study Group Fiscal Space. In the lead-up to the 2010 elections, it advised twenty-nine billion euros in cuts, of which eighteen billion were to be achieved in the coming government's term.Footnote 100 When Mark Rutte's right-wing liberal VVD won the 2010 elections, it saw an opportunity to reduce the role of the state. ‘The Netherlands suffers from administrative obesity, and it's about time we put the state on a diet. Bureaucracy is a tax on growth.’ […] ‘We have to cut our way to growth’, Rutte said in the 2010 government policy statement.Footnote 101 All too soon, though, the negative impact of austerity led to a double dip recession. Rutte had to cut even deeper to stay within the three per cent norm, resulting ultimately in an estimated fifty billion in cutbacks and tax hikes from 2010 till 2017. ‘It has rarely been as important to behave as the best boy in class’, outgoing president of the Dutch central bank Nout Wellink said in an interview during the height of the eurozone crisis in May 2012.Footnote 102

Conclusion

This article looks at the ideas informing the Dutch position on European fiscal policy. The Netherlands has long been one of Europe's foremost fiscal hawks, but little has been written about the economic ideas that helped shape the Dutch position on European integration. The article seeks to make three distinct contributions to the literature. First, the existing literature on the ideas informing EMU and European austerity has largely focused on the larger member states, in particular on Germany and its ordoliberal tradition. This article argues that the role of smaller member states, such as the Netherlands, is also deserving of attention. Second, in opposition to a still dominant narrative of Dutch pragmatism, the article argues that Dutch fiscal rectitude is a result of the Dutch neoliberal turn of the 1980s and informed by a Dutch tradition of public choice theory. The public choice analysis of the crisis of the 1970s was that democratic institutions were prone to overspend, since politicians were eager to please pressure groups and self-serving bureaucrats. The response was to strengthen budget discipline by devising norms and targets and by depoliticising parts of the budgetary decision-making process. The lesson of the 1970s and 1980s, Dutch economic policy makers argued, was that budgeting decisions should be insulated from electoral politics and brought under technocratic guidance. EMU was seen as a helpful instrument to that end. It served as an external constraint that helped economic policy makers and politicians overcome domestic opposition to austerity and neoliberal reform. Third and finally, it argues that the role of EMU as an external constraint isn't restricted to southern member states, as stated by Dyson and Featherstone. The fact that this dynamic is also at play in northern member states, such as the Netherlands, provides a more complicated picture of European economic governance. Aiming to be the best boy in class, the Dutch government believed it had to discipline itself in order to discipline others.

Acknowledgements

I would like to thank the anonymous reviewers for their generous and helpful comments. I also owe my gratitude to the organisers and participants of the symposium ‘Economic Thought and the Making of the Euro’, which was held at the European University Institute in Florence in April 2023. Finally, I would like to thank co-panellists and the public at the ‘Intersections of Finance and Society’ conference, held at the VUB in Brussels in September 2023.

References

1 Matthias Matthijs, ‘Powerful Rules Governing the Euro: The Perverse Logic of German Ideas’, Journal of European Public Policy 23, no. 3 (15 Mar. 2016): 375–91; Malte Dold and Tim Krieger, eds., Ordoliberalism and European Economic Policy: Between Realpolitik and Economic Utopia (London: Routledge, 2019); Josef Hien, ‘The Rise and Fall of Ordoliberalism’, Socio-Economic Review 22, no. 4 (Oct. 2024): 1947–66; Sebastian Dullien and Ulrike Guérot, The Long Shadow of Ordoliberalism: Germany's Approach to the Euro Crisis (London: European Council on Foreign Relations, 2012).

2 Ivo Maes and Amy Verdun, ‘Small States and the Creation of EMU: Belgium and the Netherlands, Pace-Setters and Gate-Keepers’, JCMS: Journal of Common Market Studies 43, no. 2 (2005): 327–48; Amy Verdun, ‘The Greatest of the Small? The Netherlands, the New Hanseatic League and the Frugal Four’, German Politics 31, no. 2 (3 Apr. 2022): 302–22; Magnus G. Schoeller and Gerda Falkner, ‘Acting in the Shadow of German Hegemony? The Role of Small States in the Economic and Monetary Union (Introduction to the Special Issue)’, German Politics 31, no. 2 (3 Apr. 2022): 197–217; Erik Jones, ‘Hard to Follow: Small States and the Franco-German Relationship’, German Politics 31, no. 2 (3 Apr. 2022): 344–62.

3 Erik Jones, ‘The “Monetarist” Turn in Belgium and the Netherlands’, in Monetary Union in Crisis: The European Union as a Neo-Liberal Construction, ed. Bernard H. Moss (London: Palgrave Macmillan, 2005), 247. See also Jelle Visser and Anton Hemerijck, ‘A Dutch Miracle’: Job Growth, Welfare Reform and Corporatism in the Netherlands (Amsterdam: Amsterdam University Press, 1997); Erik Jones, Economic Adjustment and Political Transformation in Small States (Oxford: Oxford University Press, 2008).

4 Kenneth Dyson, ‘Hans Tietmeyer, Ethical Ordo-Liberalism, and the Architecture of EMU’, in Architects of the Euro: Intellectuals in the Making of European Monetary Union, eds. Ivo Maes and Kenneth Dyson (Oxford: Oxford University Press, 2017), 144.

5 Jouke de Vries and Ton Bestebreur, ‘Budget Reform in The Netherlands: Sadder but Much Wiser Now’, in The Reality of Budgetary Reform in OECD Nations: Trajectories and Consequences, eds. John Wanna, Lotte Jensen, and Jouke de Vries (Cheltenham: Edward Elgar, 2010), 221–39.

6 Martin Heipertz and Amy Verdun, Ruling Europe: The Politics of the Stability and Growth Pact (Cambridge: Cambridge University Press, 2010), 144.

7 Reuters, ‘Dutch Government Calls for Powerful EU Budget Enforcer: Report’, Reuters, 8 Sept. 2011, https://www.reuters.com/article/us-eurozone-dutch-idUSTRE78680620110907 (last visited 20 Feb. 2024).

8 BBC News, ‘Fury at Eurozone Chief Dijsselbloem's “racist” Remarks’, BBC News, 22 Mar. 2017, https://www.bbc.com/news/world-europe-39350113 (last visited 20 Feb. 2024).

9 Mark Rutte and Jan Kees de Jager, ‘Expulsion from the Eurozone Has to Be the Final Penalty’, Financial Times, 7 Sept. 2011.

10 Matthew Steinglass, ‘Netherlands Vows to Meet EU Budget Target’, Financial Times, 24 Apr. 2012.

11 CPB, Middellange-Termijnverkenning 2018–2021 (Den Haag: CPB, 2016).

12 Mark Blyth, Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century (Cambridge: Cambridge University Press, 2002); Colin Hay, ‘The “Crisis” of Keynesianism and the Rise of Neoliberalism in Britain: An Ideational Institutionalist Approach’, in The Rise of Neoliberalism and Institutional Analysis, eds. John L. Campbell and Ove K. Pedersen (Princeton, NJ: Princeton University Press, 2001), 193–218.

13 Merijn Oudenampsen, ‘Between Conflict and Consensus: The Dutch Depoliticized Paradigm Shift of the 1980s’, Comparative European Politics 18, no. 5 (2020): 771–92; Uwe Becker, ‘“Miracle” by Consensus? Consensualism and Dominance in Dutch Employment Development’, Economic and Industrial Democracy 22, no. 4 (2001): 453–83.

14 Merijn Oudenampsen and Bram Mellink, ‘Bureaucrats First: The Leading Role of Policymakers in the Dutch Economic Paradigm Shift of the 1980s’, TSEG – The Low Countries Journal of Social and Economic History 18, no. 1 (2021): 19–52; Oudenampsen, ‘Between Conflict and Consensus’.

15 Merijn Oudenampsen and Bram Mellink, ‘The Roots of Dutch Frugality: The Role of Public Choice Theory in Dutch Budgetary Policy’, Journal of European Public Policy 29, no. 8 (3 Aug. 2022): 1206–24.

16 Kenneth Dyson and Kevin Featherstone, ‘Italy and EMU as a “Vincolo Esterno”: Empowering the Technocrats, Transforming the State’, South European Society and Politics 1, no. 2 (1 June 1996): 272–99.

17 Kathleen R. McNamara, The Currency of Ideas: Monetary Politics in the European Union (Ithaca, NY: Cornell University Press, 1998), 3. See also Peter A. Hall, ‘The Economics and Politics of the Euro Crisis’, German Politics 21, no. 4 (1 Dec. 2012): 355–71.

18 McNamara, The Currency of Ideas, 62.

19 Matthias Matthijs and Kathleen McNamara, ‘The Euro Crisis’ Theory Effect: Northern Saints, Southern Sinners, and the Demise of the Eurobond’, Journal of European Integration 37, no. 2 (23 Feb. 2015): 229–45; Matthias Matthijs and Mark Blyth, ‘When Is It Rational to Learn the Wrong Lessons? Technocratic Authority, Social Learning, and Euro Fragility’, Perspectives on Politics 16, no. 1 (Mar. 2018): 110–26.

20 Matthijs, ‘Powerful Rules Governing the Euro’; Hien, ‘The Rise and Fall of Ordoliberalism’; Dullien and Guérot, The Long Shadow of Ordoliberalism; Dold and Krieger, Ordoliberalism and European Economic Policy.

21 See Sonja Michelle Amadae, Rationalizing Capitalist Democracy: The Cold War Origins of Rational Choice Liberalism (Chicago: University of Chicago Press, 2003); Jacob Jensen, The Marketizers: Public Choice and the Origins of the Neoliberal Order (Cambridge, MA: MIT Press, 2023); Melinda Cooper, Counterrevolution: Extravagance and Austerity in Public Finance (Princeton, NJ: Princeton University Press, 2024).

22 G. Tullock, ‘The Vote Motive: An Essay in the Economics of Politics’, in The Economics of Politics, Selected Writings, vol. 4, ed. C. Rowley, 192.

23 James M. Buchanan, ‘The Achievement and the Limits of Public Choice in Diagnosing Government Failure and in Offering Bases for Constructive Reform’, in Anatomy of Government Deficiencies, ed. Hanusch Horst (Berlin: Springer, 1983), 15.

24 Cooper, Counterrevolution.

25 Daniel Stedman Jones, ‘The Neoliberal Origins of the Third Way: How Chicago, Virginia and Bloomington Shaped Clinton and Blair’, in The SAGE Handbook of Neoliberalism, eds. Damien Cahill, Melinda Cooper, and Martijn Konings (Los Angeles: SAGE, 2018): 167–82.

26 Hay, Why We Hate Politics; Paul Pierson, Beyond the Welfare State: The New Political Economy of Welfare (Cambridge, UK: Polity Press, 1991); Noel Thompson, ‘Hollowing out the State: Public Choice Theory and the Critique of Keynesian Social Democracy,’ Contemporary British History 22, no. 3 (1 Sept. 2008): 355–82.

27 Hay, ‘The “Crisis” of Keynesianism’; Thompson, ‘Hollowing out the State’; Eamonn Butler, Public Choice: A Primer (London: Institute of Economic Affairs, 2012).

28 John L. Campbell and Ove K. Pedersen, ‘Knowledge Regimes and Comparative Political Economy’, in Ideas and Politics in Social Science Research, eds. Daniel Beland and Robert Henry Cox (Oxford: Oxford University Press, 2011), 14; Petrus Willem Zuidhof, ‘Imagining Markets: The Discursive Politics of Neoliberalism’ (PhD, Erasmus Universiteit, 2012), 210.

29 Christopher S. Allen, ‘The Underdevelopment of Keynesianism in the Federal Republic of Germany’, in The Political Power of Economic Ideas: Keynesianism Across Nations, ed. Peter A. Hall (Princeton, NJ: Princeton University Press, 1989), 263–89.

30 For a more extensive description of the history of Dutch public choice, see Oudenampsen and Mellink, ‘The Roots of Dutch Frugality’.

31 Lenze Koopmans, Beheersing van de Overheidsuitgaven (Deventer: Kluwer, 1973).

32 Jones, Economic Adjustment and Political Transformation in Small States, 135–69; Jan L. Van Zanden, The Economic History of the Netherlands 1914–1995: A Small Open Economy in the ‘Long’ Twentieth Century (London: Routledge, 2005), 161.

33 See Laurent Warlouzet, Governing Europe in a Globalizing World: Neoliberalism and Its Alternatives Following the 1973 Oil Crisis (London: Routledge, 2017), 144–5; Judith Clifton and Daniel Díaz-Fuentes, ‘The OECD and Phases in the International Political Economy, 1961–2011’, Review of International Political Economy 18, no. 5 (2011): 552–69; Matthieu Leimgruber and Matthias Schmelzer, The OECD and the International Political Economy Since 1948 (Berlin: Springer, 2017); see also E. Bini, G. Garavini and F. Romero, eds., Oil Shock: The 1973 Crisis and Its Economic Legacy (London: I.B. Tauris, 2016).

34 Bruno de Haas and Cees van Lotringen, Wim Duisenberg: Van Friese Volksjongen Tot Mr. Euro (Amsterdam: Business Contact, 2003), 89.

35 Milton Friedman, ‘The Fragility of Freedom’, BYU Studies Quarterly 16, no. 4 (1 Oct. 1976): 561–74.

36 NRC Handelsblad, ‘Publieke Discussie Instituut Onderzoek Overheidsuitgaven over Miljoenennota Symposium “De Overheid in de Klem”’, NRC Handelsblad, 1 Oct. 1976.

37 Theo Stevers, ‘Daling Werkloosheid Vrome Wens’, De Volkskrant, 22 Sept. 1976; Theo Stevers, ‘Is het Overheidsbeleid Endogeen?’, Economisch-Statistische Berichten 61, no. 3076 (27 Oct. 1976): 1037–40.

38 Theo Stevers, ‘Waar Staat de Staat?’, in Waar Staat de Staat? Een Conferentie van Het Convent van Christelijk-Sociale Organisaties, Zomer 1983 (Den Haag: Boekencentrum B.V., 1984), 9–33.

39 Anthonie Knoester, Economische Politiek in Nederland (Leiden: Stenfert Kroese, 1989), 153; Van Zanden, The Economic History of the Netherlands 1914–1995: A Small Open Economy in the ‘Long’ Twentieth Century, 66.

40 Jones, Economic Adjustment and Political Transformation in Small States, 141.

41 P. Korteweg, ed., Beheersing Van De Overheidsuitgaven (Den Haag: Teldersstichting, 1981).

42 Lenze Koopmans, Dick Meys, and Cees Oort, ‘Herziening van Besluitvormingsprocedures,’ in Beheersing van de Overheidsuitgaven, ed. P. Korteweg (Den Haag: Teldersstichting, 1981), 15–26.

43 Henk Brons, ‘Dr. Bart Le Blanc, Bezuinigingsideoloog,’ Het Vrije Volk, 30 July 1983.

44 Knoester, Economische Politiek in Nederland, 159; Van Zanden, ‘The Economic History of the Netherlands 1914–1995’, 69–70.

45 Oudenampsen, ‘Between Conflict and Consensus’; ‘The Netherlands: Ruud Shock’, Time Magazine, 23 Jan. 1984.

46 R. A. Andeweg, ‘From Dutch Disease to Dutch Model? Consensus Government in Practice’, Parliamentary Affairs 53, no. 4 (1 Oct. 2000): 697–709; Oudenampsen, ‘Between Conflict and Consensus’.

47 Bram De Swaan, ‘Collectieve Schuld’, NRC Handelsblad, 19 Jan. 1985; Andreas Kinneging, ‘Collectieve Schuld’, NRC Handelsblad, 2 Sept. 1985; Stan Huygens, ‘Economie Aan Tafel’, De Telegraaf, 17 Jan. 1985; NRC Handelsblad, ‘Geld Lenen Overheid Moet Aan Banden Gelegd’, NRC Handelsblad, 16 Jan. 1985; Kees De Vré, ‘Mag de Staat Rood Staan?’, Trouw, 22 Feb. 1985.

48 Huygens, ‘Economie Aan Tafel’.

49 Jan Pen, ‘Keynes in Nederland’, Maandschrift Economie 50 (1986): 451.

50 Onno Ruding, Staatsschuld Als Morele Last (Assen: Van Gorcum, 1989), 14.

51 H. Daalder, Van Oude En Nieuwe Regenten: Politiek in Nederland (Amsterdam: Bert Bakker, 1995), 99–100.

52 Nico van Grieken and Cees van Duuren, ‘Wat heb je eraan als je niets met je verdiende geld doet?’, Elsevier Weekblad, 27 Apr. 1985.

53 R. Gerritse, ed., Europa Zonder Grenzen, Begroting Zonder Grenzen? (Den Haag: Instituut voor Onderzoek van Overheidsuitgaven, 1988).

54 Ibid., 45.

55 Paul Friese, ‘De EG Als onbeheersbare kostenpost’, NRC Handelsblad, 3 June 1988.

56 Onno Ruding, Balans: Het Ging Om Meer Dan Geld Alleen (Amsterdam: Boom, 2020), 284.

57 Lans Bovenberg, Jeroen J. M. Kremers, and Paul R. Masson, ‘Economic and Monetary Union in Europe and Constraints on National Budgetary Policies’, IMF Staff Papers 1991, no. 001 (1 Jan. 1991): 387. For the Dutch debate on public choice, fiscal norms and budget discipline see also: Harrie Verbon and Frans van Winden, The Political Economy of Government Debt (Amsterdam: North-Holland, 1993); J. de Haan, De noodzaak van normen: een beschouwing over begrotingsbeleid (‘s-Gravenhage: Prof. Mr. B.M. Teldersstichting, 1987); J. de Haan, Towards Budget Discipline: An Economic Assessment of the Possibilities for Reducing National Deficits in the Run-up to EMU (Brussels: Directorate-General for Economic and Financial Affairs, Commission of the European Communities, 1992); Roel M. W. J. Beetsma and A. Lans Bovenberg, The Optimality of a Monetary Union without a Fiscal Union, Discussienota 9802 (The Hague: Ministry of Economic Affairs, 1998). Ministerie van Financiën.

58 J. A. J. Alders, ed., Begrotingsbeleid en financiering Nederlandse staatsschuld: op weg naar de EMU (Amsterdam: NIBE, 1992), 8.

59 James M. Buchanan, ‘An American Perspective on Europe's Constitutional Opportunity’, Cato Journal 10 (1990): 624.

60 Buchanan, ‘An American Perspective on Europe's Constitutional Opportunity’, 628. For the Mont Pèlerin conference, see Roberto Ventresca, ‘Neoliberal Thinkers and European Integration in the 1980s and the Early 1990s’, Contemporary European History 31, no. 1 (2022): 31–47; see also Quinn Slobodian and Dieter Plehwe, ‘Neoliberals against Europe’, in Mutant Neoliberalism: Market Rule and Political Rupture, eds. Zachary Manfredi and William Callison (New York: Fordham University Press, 2019): 89–111.

61 Jan Postma, ‘Europese Integratie Dwingt tot Budgetdiscipline en Normering’, Nederlandse Staatscourant, 18 Jan. 1989.

62 Onno Ruding, ‘Er moet meer gebeuren’, in Het Sociaaleconomisch Beleid in de Tweede Helft van de Twintigste Eeuw, ed. Jarig van Sinderen (Groningen: Wolters-Noordhoff, 1990), 60.

63 Frans Rutten, Zeven Kabinetten Wijzer: De Nieuwe Zakelijkheid bij het Economische Beleid (Groningen: Wolters-Noordhoff, 1993), 32–3.

64 Kenneth Dyson and Kevin Featherstone, ‘Framing EMU as a New Vincolo Esterno: Policy Entrepreneurs, Co-Ordination, and Reflection in Italy, 1988–1990’, in The Road To Maastricht: Negotiating Economic and Monetary Union, eds. Kenneth Dyson and Kevin Featherstone (Oxford: Oxford University Press, 1999), 485–507.

65 Kevin Featherstone, ‘The Political Dynamics of External Empowerment: The Emergence of EMU and the Challenge to the European Social Model’, in Euros and Europeans: Monetary Integration and the European Model of Society, eds. Andrew Martin and George Ross (Cambridge: Cambridge University Press, 2004), 226–47.

66 Featherstone, ‘The Political Dynamics of External Empowerment’.

67 Andrew Moravcsik, Why the European Community Strengthens the State: Domestic Politics and International Cooperation (Cambridge, MA: Minda de Gunzburg Center for European Studies, Harvard University, 1994).

68 Dyson and Featherstone, ‘Framing EMU as a New Vincolo Esterno’; Dyson and Featherstone, ‘Italy and EMU as a “Vincolo Esterno”’.

69 Featherstone, ‘The Political Dynamics of External Empowerment: The Emergence of EMU and the Challenge to the European Social Model’, 241.

70 Of course, an external anchor was not new, because the Dutch guilder had long been pegged to the Deutschmark. But the peg to the Deutschmark never became an object of debate – and argument for domestic reform – in the way that EMU did.

71 This is a recurring pattern in the Dutch neoliberal turn. See: Oudenampsen and Mellink, ‘Bureaucrats First’. For the absent political debate on EMU, see Jos De Beus, ‘Dutch Social Democracy and EMU’, in Social Democracy and Monetary Union, ed. Ton Notermans (New York: Berghahn Books, 2001), 225–52.

72 OECD, ‘Economic Outlook’ (Paris: OECD, 1988), 122, 166.

73 ‘Marktdenker Ad Geelhoed’, De Groene Amsterdammer, 15 Jan. 1997.

74 ‘Geen plek voor politieke folklore’, Het Parool, 12 Dec. 1991.

75 ‘EMU dwingt ons arbeidskosten te verlagen’, De Volkskrant, 16 Dec. 1991.

76 ‘Niet klaar voor EMU. Topambtenaar: aanpassen verzorgingsstaat voor Europa’, Trouw, 3 Jan. 1992.

77 ‘Prof Geelhoed: Europese wedloop naar laagste belastingen’, De Telegraaf, 3 Jan. 1992.

78 Robert Harmsen, ‘Euroscepticism in the Netherlands: Stirrings of Dissent’, in Euroscepticism, eds. Joachim Schild and Robert Harmsen (Leiden: Brill, 2004), 99–126.

79 Roel Janssen, ‘Nederland gidsland’, NRC, 1 May 1998.

80 De Beus, ‘Dutch Social Democracy and EMU’, 237.

81 Ibid., 245.

82 Willem Breedveld and Marcel Ten Hooven, ‘Frits Bolkestein: Lubbers zit nu op de blaren’, Trouw, 19 Sept. 1990.

83 Frits Bolkestein, ‘The EU's Economic Test: Meeting the Challenges of the Lisbon Strategy’ (19 Nov. 2001). Robert Schuettinger, ‘Washington, D.C. 1998 Golden Anniversary Meeting’, The Mont Pelerin Society Newsletter 51, no. 1 (Feb. 1999).

84 Frits Bolkestein, ‘Europa Zal Liberaal Zijn of Niet Zijn’, NRC, 14 June 1996.

85 Frits Bolkestein, ‘Herijking van het Buitenlands Beleid’, in Boren in hard hout, ed. Frits Bolkestein (Amsterdam: Prometheus, 1998), 163–71. See also Samuel Rozemond, Bolkestein en de Euroscepsis, Clingendael-notitie (Den Haag: Clingendael, 1996); Hans Vollaard, ‘Dutch Discourses of a Small Nation in an Inefficient Europe: Cosmopolitanism, Pragmatism, and Nationalism’, in The 2009 European Parliament Elections and Beyond (Baden-Baden: Nomos Verlagsgesellschaft, 2011), 85–104; Harmsen, ‘Euroscepticism in the Netherlands’.

86 Werkgroep van Aardenne, Europa: Een Volgende Akte, Geschrift 76 (Den Haag: Teldersstichting, 1992), 70.

87 Friedrich A. Hayek, ‘The Economic Conditions of Interstate Federalism’, New Commonwealth Quarterly 5, no. 2 (1939): 131–49.

88 Ad Geelhoed, ‘Het Europese Integratieproces en het Coördinatievraagstuk’, in Inspelen op Europa: Uitdagingen voor het Financieel-Economisch Beleid van Nederland, ed. Jeroen J. M. Kremers (Schoonhoven: Academic Service, 1993), 181–82.

89 Dyson and Featherstone, ‘Italy and EMU as a “Vincolo Esterno”’.

90 Martin Heipertz and Amy Verdun, Ruling Europe: The Politics of the Stability and Growth Pact (Cambridge: Cambridge University Press, 2010), 144.

91 Mathieu Segers and Femke Van Esch, ‘Behind the Veil of Budgetary Discipline: The Political Logic of the Budgetary Rules in EMU and the SGP*,’ JCMS: Journal of Common Market Studies 45, no. 5 (2007): 1090.

92 Heipertz and Verdun, Ruling Europe, 135.

93 Lans Bovenberg, ‘Nederland moet het Stabiliteitspact redden’, NRC, 10 Sept. 2003.

94 Ibid., 4 Dec. 2003.

95 Cited in Teulings, ‘Over de Dijken’, 103.

96 Kamerstukken II, 2010–2011, 32 500, nr. 1, 37.

97 Ibid., 38.

98 Coen Teulings et al., Europa in Crisis: Het Centraal Planbureau over Schulden en de Toekomst van de Eurozone (Amsterdam: Balans, 2011), 147.

99 Kamerstukken II, 2009/2010, TK 34, 3324.

100 Studiegroep Begrotingsruimte, Risico's en Zekerheden: Dertiende Rapport Studiegroep Begrotingsruimte (Den Haag: Ministerie van Financiën, 2010), 11. For a critique see: Bas Jacobs, ‘Studiegroep Begrotingsruimte is de Kluts Kwijt’, Politieke Economie – Bas Jacobs (blog), 2 Apr. 2010, https://basjacobs.wordpress.com/2010/04/02/studiegroep-begrotingsruimte/.

101 Ministerie van Algemene Zaken, ‘Regeringsverklaring 2010 minister-president Rutte’ (Kamerstuk, 26 Oct. 2010), 3.

102 Fleur de Bruijn, ‘“Nederland moest beste jongetje zijn”’, Business News Radio, 8 May 2012, https://www.bnr.nl/nieuws/10192187/nederland-moet-beste-jongetje-zijn.