This crisis is no excuse for technocratic government

In the author's prescient May 2010 article there is the central observation that we are seeing a fundamental fault-line separating economic logic and political legitimacy. The author would have preferred to be less right. Today, saving democracy from the market means all democracies facing the market together.
Eberhard Kienle
5 December 2011

Key aspects and episodes of the current European debt crises vividly illustrate the threat that the search for efficiency and competitiveness (to be distinguished from competition) erected into the guiding, even absolute, principle of political action poses to checks and balances and therefore to the future of democratic government.

In the world today states like Greece need to demonstrate readiness and ability to reduce public debt considered excessive by the ‘markets’ if they want to continue to borrow at manageable interest rates. They are strongly encouraged to announce credible reforms supposed to improve the medium and long term competitiveness of their economies and thereby their own financial position. They are also asked to take immediate measures to cut expenses and/or raise revenue. From the outset the package of immediate action and overall reform needs to be sufficiently competitive to attract large loans at low interest rates and investment that otherwise could benefit recipients elsewhere or not be made at all. The search for competitiveness dominates any strategy for recovery from the beginning to the end. Though possibly a successful tool to ultimately enhance growth, reduce deficits and decrease debt, the emphasis on competitiveness has already taken its toll of procedures and mechanisms that are part and parcel of democratic government. Attempts to address the current European debt crises thus strengthen the argument reprinted below that was first published by openDemocracy in May 2010.

In Greece and Italy new governments were formed and sworn in with the explicit task to reassure the markets that action would be taken to reduce deficits and debts. Voters were not given the opportunity to approve or reject these governments, or to influence post election policies through pre election debate, deliberation and mobilization as one should expect in a situation in which far reaching and indeed painful decisions invite themselves onto the political agenda. In Greece, the belatedly and hastily announced referendum was quickly abandoned. Certainly, the crisis had been simmering for a while, but the voters in the last Greek and Italian general elections could not necessarily be expected to cast their vote for deputies and governments that would have to confront the current challenges. In both countries, constitutional requirements and minimal standards of representative democracy were no doubt respected. However, as the sovereign as the most basic check on elected officials was left out of the process even the departure of Silvio Berlusconi who actively destroyed checks and balances comes with a bitter taste.

In Greece, the new coalition government moreover includes the extreme right wing Laos party which has rather questionable democratic credentials. Forgotten are the times when European institutions and governments attempted to isolate the Schuessel government formed in 2000 in Austria that included ministers from the extreme right wing Freedom Party. There seem to be no more political or moral hesitations when it comes to the implementation of what are described as objectively necessary policies.

At the European level, the fateful decisions were largely made by the governments of two member states of the euro zone. Other euro zone governments came in merely to rubber stamp agreements reached by the French president and the German chancellor. Non euro member states of the EU were hardly consulted and sometimes told to shut up despite the fact that they are also affected by the decisions. The guardian of the European treaties, the European Commission, seemed to have no longer an existence of its own, even though the creation and use of the euro are governed by the Maastricht and its successor treaties; obviously the Commission is no model of democracy and basically supports the Franco-German policy choices, but the treaties nonetheless define it as one of the checks and balances that should guarantee a however limited degree of equity and pluralism in EU decision making.

At this point one may object that in Germany checks and balances were reinforced when the Supreme Court ruled to limit European bail out options open to the government and to strengthen parliamentary oversight of such policies. However, Germany is a creditor country that in this particular situation felt no need to worry about its own competitiveness.

More generally, one may argue that there was no alternative but to act swiftly and reassure the ‘markets’. In order to raise additional funds at reasonable interest rates state authorities had to signal quickly and convincingly that they took the necessary measures to be able to repay the money they sought to borrow. Decisions to reduce expenditure or raise new revenue therefore had to be made ‘before the markets open’. It is certainly true that as the events unfolded such short term constraints tied the hands of many politicians including committed democrats like president Giorgio Napolitano.

It is also true that state insolvency or bankruptcy could have disastrous consequences for democratic government.

However, these truths are not superior to the competing truth that decisions to address the crises in many ways sidelined established participatory mechanisms and checks and balances. Optimists may claim that democratic principles may be temporarily floated in order to save entire states and peoples including the long term prospects for democracy. The more realistic alternative view is that floating democratic principles in crucial matters and moments like this puts them onto the slippery slope of further erosion. To avoid such danger the question cannot simply be whether or not at a particular moment in time efficiency could have been better balanced with the requirements of liberal democracy conceived as majority rule with the checks and balances that guarantee minority interests and therefore the survival of democracy itself.

Rather the question is whether the current balance of power between liberal markets and liberal democracy is reasonable or whether it needs to be rebalanced more fundamentally. Why for instance not tax rather than borrow ? Needless to say that in a global economy none of these changes can be implemented in one single country; there is no way to defend one democracy without defending all democracies.

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