Golla: The Netherlands and Germany – 2 faces of capitalism

At first glance, the Netherlands and Germany present common features of the highly developed Western European countries – unchangeable economies, strong institutions and membership of the EU and the Schengen area.

However, under the surface there are crucial systemic differences that are increasingly affecting socio-economic development, citizenship and adaptability to global challenges.

Ordoliberism vs. Commercial pragmatism

The German economy is based on strong institutionalism – so-called. Soziale Marktwirtschaft (social marketplace economy) is simply a legacy of the post-war years and of the Ordoliberic School, which assumes a strong but non-interventional state[1].

The Dutch model is more pragmatic and market-export, with an emphasis on a compromise between social partners (so-called: polder model) and advanced fiscal flexibility.

According to economists, the Netherlands is “Start-up in the body of the old colonial empire” [2].

Migration: managing diversity and the labour market

The Netherlands has been attracting migrants for years – both qualified specialists from Asia and Europe and inexpensive workers from Central and east Europe (mainly Poland, Romania and Bulgaria). In 2023, more than 24% of the population had an immigration origin [3].

Germany, although the largest country receiving migration in the EU (more than 15 million people with migration background), has a much slower and more bureaucratic integration system, with greater social and political tensions. The Netherlands in turn introduced a "selective assimilation" model – it requires cognition of language and work, but tolerates cultural diversity in the private sphere.

Temporary work agencies: between flexibility and exploitation

The Netherlands is simply a European leader in temporary work, with more than 14,000 registered agencies operating there (utzendbureaus) [4]. They employment hundreds of thousands of migrants, mainly in logistics, food production and horticulture. This strategy provides flexibility for companies, but frequently deprives workers of stability.

"Women are needed but kept at a distance – this is simply a typical Dutch ambivalence" – notes the sociologist Godfried Engbersen from the University of Erasmus, Rotterdam [5]. In Germany, temporary work (Leiharbeit) is more regulated – it requires longer periods of employment and guarantees higher minimum wages but besides does not offer companies the same freedom as the Dutch model.

Monarchy in the 21st century – cost or social capital?

Maintaining a constitutional monarchy in the Netherlands is simply a controversial topic, especially in the context of housing crises and the cost of living. The yearly cost of the royal household is estimated at over €50 million [6], but the monarch's institution (now king Willem-Alexander) is inactive supported by about 55-60% of the population. The image of the monarch – as an apolitical guardian of unity and promotion of economical interests (including during commercial missions) – makes him a national ambassador of entrepreneurship.

Germany, as a national republic, has no monarchy, and their head of state is the president with limited powers. For many Dutch, the monarchy is simply a "living bridge between tradition and global PR".

Colonial Heritage and Modern Economy

Although both Germany and the Netherlands had a colonial past, it was the Netherlands that maintained economical and organization ties with the erstwhile colonies. Countries specified as Suriname, Aruba, Curaçao or Indonesia are crucial trading partners and their citizens frequently have Dutch citizenship.

The colonial heritage allowed the Netherlands to build global trade, banking and logistics networks, which facilitated the transformation into a digital and financial centre of Europe. In Germany, the colonial past was practically completely extinct after 1919 (Versal treatise), resulting in a lower presence of postcolonial influences in culture and economy.

Telecommunications and digital infrastructure

The Netherlands is at the forefront of Europe in terms of access to high-speed Internet, 5G networks and digital public services. Already in 2022, more than 97% of households had access to fibre or broadband [7]. "Digital Netherlands is like its port in Rotterdam – it just works" – ironic the diary "de Volkskrant". Germany, despite being the world's 4th economy, is lagging behind in digitalisation. The fragmented national structure, civilian conservatism and lengthy legislative processes consequence in the fact that in 2024 there is inactive a deficiency of fibre optics and LTE coverage in many regions.

Different paths of development, common challenges

The Netherlands and Germany are 2 competitive models of European capitalism. Both countries are facing the same challenges today: an ageing population, global competition, energy transformation and social polarisation.

The Netherlands, thanks to its smaller scale, organization flexibility and colonial network resources, reacts more rapidly to changes. Germany – powerful but dense – can benefit from reforms if they can overcome their own structural resistance.

Matthäus Golla

Sources and footnotes:

[1]: Müller-Armack A., Genealogie der sozialen MarktwirtschaftKöln 1956.

[2]: Interview A. Boot, NRC Handelsblad, 2022.

[3]: CBS – Migratiecijfers 2023.

[4]: ABU — Algemene Bond Uitzendendernemingen: https://www.abu.nl

[5]: G. Engbersen, De nonuwe migratieklasse, Erasmus Universiteit Rotterdam, 2021.

[6]: NOS – Kosten Koningshuis 2023: https://p. nl/artikel/2455046.

[7]: DESI study 2023 (European Commission): https://digital-strategy.ec.europa.eu/en/policy/desi.