Roland D. Kulke, 15. April
The fiscal aspects of post-democratic Europe
Since years the European public complains about the lack of democracy in regard to the political system of the EU. A lot of work has been invested by political scientist to explain to the public that what they might perceive as democratic deficit would in fact be a strengthening of democracy, at least in the long run. But as Keynes once rightly said: In the long run we are all dead, so the democracy in the EU is now in the final stage of attack by teh ruling elites of the Europe.
Bourgeois concept of legitimacy
The basic argument put forth by the political scientists was that the ordinary citizens would not be competent enough to understand the real content of the legitimacy of a (post?) modern political system. While the citizens still incorrectly belief in the idea that they might have something to say about the content of the decissions taken by the public administrations, the social scientists tried to exlain them that they had something important missunderstood regarding the bourgeois revolutions of the last centuries: these revolutions would have not intended to open the political system to the influence of the broader public but to reform the political system, so that it would be a better „faciliator“ for the larger common good. The outcome of the political system would thus count and not some kind of normative oriented wishful thinking. Once this story had been accepted by the scientists themselves it was easy for them to decompose the concept of legitimacy into different aspects. One aspect would be the input legitimacy, the other the output legitimacy. While the input legitimacy is what people usually perceive as the heart of any democracy, its normative core: the „government by the people“; the output legitimcy is the technically „government for the people“. In the last decades the second aspect gained more and more ground vis-à-vis the normative input orientation in the Western democracies.
A topsy-turvy world, thinking about monopolies and elections
Neoclassical economists, invented the idea, that monopolies would not hamper the capitalist process, as monopolists would naturally tend to behave as if they would work under total competition, i.e. the prices would not rise . This is pretty funny, but a kind of usual ideological construct of organic intellctuals working in favor of the oligopolistic elites. A comparable construction to legitimize the decay of Western democracy was the invention of US political scientist, who told their amazed audience that the falling turnouts at US-elections would not at all prove a problematic situation of the political system. Au contraire! As the political system in the USA would be so perfect the people just did not see any reason to get registered for the elections.
Dismanteling of the European democracies in the wake of the crisis
The economic post-Lehman Brothers crisis has been used, wittingly or unwittingly, by the European elites to enhance their room to maneuvre vis-à-vis the disruptive influence of the citizens. The logic is very simple: the public had to save the banking system, any attempt for a sincere re-regulation of the same has succesfully been prevented by the finance capital, afterwards states had to take additionally care for the crumbling economies and thus had to take even more debts. As the economies shrank in the course of the crisis, the debt ratio increased naturally as the GDP (the denominator) contracted. With a little help from their friends, the media, the lobbyists of the financial system were able to change the perception of the crisis fundamentally: the crisis was suddenly understood as a state debt crisis, not as crisis of the whole financial system. But if it is not a crisis of the bank but of the states than the receipts to overcome the crisis funfamentally change. The state had once again to be targeted, the state had to stop wasting money, the state has to be cut back to a supposeldy „healthy“ size. This thinking flowerished in the year 2010 in the European Union and has since then become hegemonic in the management of the crisis.
A real problem: lack of a common fiscal policy in the EU
It is commonly accepted that the lack of cohesion in the fiscal policy in the EU is a major stumbling block in Europe for economic growth. There is a broad consensus from left to right that this has to be changed. The left once had coined this idea „economic government“ and aimed at a socially oriented economic growth regime, where the economy was to be embedded in strong social and political instituions. This idea was taken up by the right but perveted in the wake of the crisis. Nowadays economic government only stands for a system which is short-term oriented and which aims at the reduction of the public debt. Currently there is nothing positive left in the idea of an economic gorvernment in the EU.
The EU member state’s governments have introduced a couple of new rules to government the economic processes in the EU, many of these new sets of rules will have a dramatic, and honestly: a devastating effect on the EU as a whole.
Economic effects of the new structural adjustment programme regime in the EU
This contribution will concentrate on the political outcome of these new rules. But before some short remarks shall be given in regard to the economic effects. The fiscal pact, the so called six-pack, the Euro-Plus Pact etc, all together will slowly but surely cause the seath of the rests of the European social welfare states – provided that this new regime will survive long enough to cause these before destroying itself.
As a definition economists say that each national economy (in our case now the EU economy as a whole) has four different sectors. The private households, the enterprises, the state and last not least the foreign markets:
1.the private households are financially under stress since years. Neoliberalism forced them to act as agents for a „privatised Keynesianism“, thus increasing the private debts to an unsustainable hight . For this reason the private households will have to write of debts in the coming future, and can’t act as growth stimulating actors.
2. the private enterprisis will thus naturally not invest in new technologies.
3. in such a situation the states need to stimulate the demand for goods. But due to the new instutionalised austerity cum anti-debt regime of the EU, the states will not be able to stimulted this highly needed economic demand. For that reason the possibilities for economic growht look more than bleak in Europe.
A very concrete problem: the loss of budgetary sovereignty of the national parliaments
But the new fiscal regime does not only have economic impacts, but at least as strongly effects the legitimacy of the whole European democratic system in a very direct political way. One of the fundamental contents of democracy is the budgetary sovereignty of the national parliaments. This tool is one of the most effective mechanism to ensure that the public administration acts according to the public will, however mediated it is by the parties. No state can claim itself democratic where the parliament does not have the ultimative power over the national budget. Theorists of political theory already have problems to explain the fact that the budget is developed defacto by the national adminstrations. But as these ministries are directly under control of the governments, which are again directly accountable to the parliaments, this reality can be accepted more of less easily from a theoretically concerned perspective.
The „New ‚New Constitutionalism’“ at the EU level
The new European wide austerity regime has changed this situation dramatically. On September 7th 2010 the „European Semester“ was introduced. Each Spring the national governments have to send their own plans for the next years’ budget to Brussels to the European Commission. Only after the non democratically legitimised European Commission has approved these plans, the national parliaments can start debating about the national budgets. The idea is that the Commission matches the individual national budgets with each other, so that a kind of trans-european budget is developed. This means again that the national parliaments can’t change a lot in the budget plans after they got approved by the Commission – otherwise the idea of a coordination of the national budgets will not work. The national Parliaments have thus lost one of their major prerogatives: the last say on the national budgets. They have thus lost one of the major tools to control the state executives.
Other new rules, like the Euro-Plus Pact, which was decided by the 17 Euro zone member states goverments on the 11th March 2011 in Brussels, aims at strenthening the economic competitiveness. This means nothing else than the further reduction of social welfare measures. To isolate this decission from potential influence of the parliaments the state executives of the 17 states decided to use a very special form for the this „treaty“. It was discussed in secret, and it is neither implemented in the law of the European Union, which means that Commission and European Parliament have no say at all in the pact. Nor is this a regular international agreement with possibilities for the national governments to have any influence. Other rules (like the Fiscalpact) reduce the room to maneuvre for the national political systems even further by establishing automatic financial sanctions if a state does not reduce it public debt!
We see that the scope of national democracy has been heavily reduced by the new sets of rules for the „economic government“ as it is understood by the ruling post-neoliberal elites in the EU. The question now is if the loss of public accountability has been compensated by an enhanced democratisation of the European insitutions as such.
On June 29th 2011 the European Commission published its proposal for the budget of the European Union 2014-2020. These coming years will determine how Europe can cope with the crisis.
One of the most important daily newsletters concerning the policies of the European Union stated regarding the debate on the „multiannual financial framework“ for 2014-2020:
„… It is impossible to over-estimate the significance of this the debate on the multiannual financial framework] issue: in the guise of reaching agreement on the financial resources the EU will have its disposal, it is the very nature of the European construction that is being decided. The principles are even more important than the financial allocation itself. … In fact the debate is seeking to define the nature, the objectives and the operation of the EU of tomorrow.“ (Bulletin Quotidiene Europe, 10591, 11.04.2012)
Who influences this very important document, the multiannual financial framework? The determination of the multiannual financial framework is done by a regulation, which the Council of the European Union (the ministers or the heads of the governments of the member states of the EU) on a proposal from the Commission unanimously adopt after the European Parliament has voted by a majority of its members. What is important here is that unlike the annual budget, the Parliament has only a right to veto and thus no possibility of making formal proposals for change of it.
Intergovernementalism vs. Supranationalism – 1:0
After a few years of economic crisis the elites of the EU have thus paved the way for a coming formidable political crisis. The national parliaments are depreeved of the power to determine the national budgets. Furthermore international (new sets of rules outside of the realm of the EU law, where the European Parliament has at least some influence) and supranational (EU law) rules have been set which reduce the ability of the national governments to secure their citizens against market outcomes. Instead the new rules forces the states to reduce the welfare policies more and more in the name of an already failed neoliberal agenda. While the nation states loose their role to protect their citizens there is no development to build up a new real European democracy at the EU level which could balance the loss of democratic rights at the national levels. The European Parliament as the only directly democratically elected institution of the EU has no real impact in the development of the multiannual financial framework. It is developed and largely determied by the state administraitons and the European Commission.
Left academics in Europe already talk about a „New ‚New constitionalism’“ á la Stephen Gill, or they quote Habermas new book on the European Union:
„Angela Merkel and Nicolas Sarkozy appear to have settled some sort of compromise between German economic liberalism and French statism with a completely different intent. If I am not mistaken, they want to extend the executive federalism of the Lisbon treaty into an outright intergovernmental rule by the European Council.“ (The Guardian, 10th November 2011)
1. Baumol, W. J.; Panzar, J. C. & Willig R. D. (1982) Contestable Markets and the Theory of Industry Structure, see: http://en.wikipedia.org/wiki/Contestable_market
2. see: http://wrap.warwick.ac.uk/28891/1/WRAP_Crouch_privatised_Keynesianism.pdf
