J. Zijlstra en H.J. Witteveen: van denken naar doen: Economische theorie in politiek en beleid (1945-1982)

J. Zijlstra and H.J. Witteveen: From Thought to Action
Economic theory in politics and policy making (1945-1982)
The two Dutch economists Jelle Zijlstra (1918-2001) and Hendrikus Johannes Witteveen (1921-2019) were academics, politicians and financial/monetary policymakers. They belonged to a small group of economists who shaped the new Dutch policy institutions and economic policy after World War II. This dissertation examines how differences in academic thinking between them drove the differences in their economic policies and draws conclusions on how academic insights can improve policymaking.
In part I of this dissertation, the theoretical ideas and methodological approach that captured Zijlstra en Witteveen as students and PhD candidates are analysed and positioned within Dutch economic thinking. Part II shows how, for nearly four decades, Zijlstra and Witteveen clashed as academics, politicians and monetary policymakers. Driven by their scientific convictions they came to very different positions on fiscal policy, monetary policy and the way empirical evidence in policy making should be used.Witteveen wanted to capture the economy quantitatively and test economic theory empirically. He looked through the macroeconomic lens of aggregated analysis and used statistics not only to describe economic developments, but also to explain and predict them. Zijlstra assessed the economy through a microeconomic lens. In his view the economy was too complex to understand in full. He described the economy mostly qualitatively and in verbal terms.
The policies of Witteveen and Zijlstra differed but often not because of party political differences or ideology. In many cases it were the differences in their academic thinking about economic equilibrium, the interaction between the monetary and real economy or the use of empirical models that drove the differences in their economic policies. Witteveen's tax based business cycle policy, known as the wiebeltax and Zijlstra's budget norm, known as the Zijlstra-norm are reflections of their very different perception of economic theory. The differences between Zijlstra and Witteveen on budgetary policy were the differences between Keynesians on the one hand and the ordo-liberals and monetarists on the other. Zijlstra’s economics were also firmly grounded in the specific Dutch monetary tradition.
In democracies there is a tension between scientific knowledge on the one hand and political intuition and normative judgments on the other. Witteveen was convinced that science-based policy formulation combined with the use of empirical models could improve democratic decision-making. Zijlstra emphasized a strict separation between academic insights and policy. He used science mainly strategically and as a communication tool. Zijlstra was less optimistic about the potential of empirical models for economic policy. He did not want to leave normative decision making to non-democratic policy institutions or economic models.
The story of Witteveen and Zijlstra is still of great importance today. Their case shows that policymaking can be improved by using scientific knowledge. But it also shows that knowledge among policymakers about the academic insights they use in policy making is of great importance for the working of our democracy.