The Implications of Change
This chapter examines how the breakdown of consociational democracy (depillarization) complicated the process of consensus building, and so made it more difficult for Belgium and the Netherlands to benefit from European integration. It describes the economic shocks that affected both countries that resulted in lost competitiveness, mounting unemployment, and current account and fiscal deficits. The chapter then sets out the necessary conditions for an effective response. This response involved an important transfer of income and resources from labour to capital. The challenge, therefore, was to build consensus around the need for such redistribution. It was also necessary to develop new institutions for exchange rate stabilization at the European level.
Keywords: competitiveness, depillarization, economic shocks, exchange rate regimes, income redistribution
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