This post is archived. Opinions expressed herein may no longer represent my current views. Links, images and other media might not work as intended. Information may be out of date. For further questions contact me.
I have repeatedly criticised the Economic and Monetary Union (EMU)—the euro—for being a system of “common rules without common politics”. In the present article I expound on my understanding of “common politics” while providing an outline presentation of the “common rules”.
I call for the EMU to become a system of “common politics with common rules”. The premise of my argument is that EMU integration cannot proceed along its current path, for it risks to jeopardise the broader project of European unification. As such, the EMU must either be transformed into a genuine republic founded on a constitution (most favourable), or be dismantled in an orderly fashion (least favourable).
The euro area has no government. Instead, it features legal provisions that define the modal aspects of economic governance. These can be outlined thus:
- One monetary policy: uniformity of monetary policy is enshrined in Treaty law, with the European Central Bank, a fully independent institution, mandated to pursue a policy of inflation targeting—price stability—that aims at a medium term rate that is below but close to 2%;
- Rigidity of fiscal policy: a complex and multi-faceted legal framework for fiscal policy encompassing Treaty law, the Stability and Growth Pact, secondary legislation found in the Two-Pack and Six-Pack, and a couple of inter-governmental Treaties outside the community acquis, namely the Fiscal Compact and the ESM Treaty (for an in-depth analysis, technical experts can study the European Commission’s Vade mecum (pdf) on the Stability and Growth Pact);
- Quasi-permanence: the “de-politicisation” of fiscal policy and technical instruments thereof, as found in the commitments of euro area Member States to incorporate fiscal policy restrictions in their national law, preferably at constitutional level, so as to ensure that the essential requirements in point (2) have a binding force and a permanent character.
With the exception of secondary legislation, none of these rules can be amended or abolished without Treaty change. In practice this means:
- no parliament, be it the European or any given national one, can conduct an ex post review of the primary rules that frame its own decisions, while it cannot object to the substance of the rules its respective executive is obliged to abide by or enforce;
- all Member States have to agree on [the need for] a Treaty change and, most importantly, they have to form a common position on its content, suggesting that any qualitative shift depends on the inter-state as well as the ideological balance of power across the Union.
The heteronomy here described is hard-wired in the EMU’s very architecture. Its individual rules, as well as the overarching mindset, cannot be changed without a holistic approach that involves the drafting of a new Treaty.
As the history of European integration teaches us, the fundamental flaw in a “new Treaty” aimed at correcting the previous ones is that it perpetuates the very method of integration that causes heteronomy in the first place: the top-down, gradualist, inter-governmental, international-treaties-based model. It is a feedback loop that can only be broken by a shift in paradigm, a democratic turn towards a European Republic founded on a corpus of primary law.
If this qualitative change were to be realised in a new Treaty, then the substance of that document would have to be a European constitution, with the prerequisite of being outright approved by all citizens via referenda; referenda that would be given sufficient time for preparation and deliberation, and which would be insulated from outside pressures, including from EU institutional actors.
Common politics and autonomy
Every democracy is, in essence, a system of common politics. The state is the space in which rules are created, reviewed, or abolished, so that they contribute to the attainment of common ends.
The notion of “common ends” implies the contextuality and nominal quality of human law. Rules are set in place to systematise behaviour in accordance with social norms, often extending historical-cultural path dependencies, to pursue objectives perceived as laudable and desirable by a given group of inter-subjectively defined-and-influenced agents. Human law is not made to be de-contextualised, nor is it set in place so that people may become its slaves.
The great advancement in political history was the realisation that a polity striving for freedom requires a set of primary laws defining the scope of what is possible. This is particularly important for any republic, for it provides the intellectual basis for abolishing autocracy. A democracy needs rules and strong institutions, otherwise we end up having a regime of adhocism, where the ruling elite can choose to act frivolously and arbitrarily.
By criticising the EMU’s heteronomy and its flawed model of “common rules without common politics”, I am only searching for the application of what is standard practice in every mature republic: “common politics with common rules”.
Common politics entails the following:
- constitutional order: the polity is founded on a corpus of primary law which is subject to review by the sovereign people and/or representatives thereof;
- democratic executive: a democratically-mandated government is in place, which is held accountable to the people and their representatives, and which has authority to raise revenues, issue debt, and run all the affairs of the state;
- parliamentary authority: the midpoint of the state is the parliament, which has the mandate to initiate legislation, amend the government’s own legislative proposals, exercise scrutiny over the state’s entities and actions, and ensure that every official is held sufficiently accountable to the people;
- substance before procedure: the actual impact of policy is the ultimate criterion for its desirability; no predetermined technicality can inform the substance of policy, for that may have deleterious ramifications in cases where conditions are not favourable; hence the need for discretion.
In the absence of common politics, such as in the EMU, we end up in a sub-optimal state of affairs where we witness:
- sovereignty mismatch: the political entity is based on a nexus of inter-state treaties that no sovereign people can review, also due to the fact that no European demos exists (see The emergent contradiction of Europe’s inter-governmentalism);
- inter-governmentalism: though the European Commission performs most of the tasks peculiar to the executive function, it cannot raise its own revenues and, hence, issue its own bonds, while its real mandate comes from the European Council, which is a non-legislative inter-governmental institution;
- technocracy: the European Parliament cannot initiate legislation, it does not shape fiscal policy, its control over the EU’s budget is limited as that is a Multi-annual Financial Framework mostly agreed to by the Member States; all while the European Commission is not really the equivalent of a government in a parliamentary system (the spitzenkandidaten process is devoid of substance, not least because of the previous point on this list);
- procedure before substance: as the eurocrisis has proved, the satisfaction of the criteria stipulated in the EMU’s legal framework is more important than the evaluation of the impact of policies, so that e.g. internal devaluation must be achieved in a rigid time frame, without accounting for its social cost; in this light discretion is either prohibited or, more likely, it is introduced arbitrarily depending on inter-governmental bargaining.
Common politics is, in short, a desirable state of affairs: one which enables autonomy, which empowers us to pursue common ends in accordance with common needs.
Furthermore, it ought to be stated that democratic legitimacy is not granted once, nor is its bestowal on the state’s functions irrevocable and unconditional. Legitimacy is continuously confirmed through the exercise of sovereign will-formation (see Normative aspects of the future European Democracy). If that is the case, fiscal policy rules of a polity that are insulated from parliamentary review—that stand outside the citizenry’s reach—are not just un-democratic: they are anti-democratic.
It is one thing to provide for the automatic and clearly defined application of purely technical provisions; it is another to apply such modi operandi to the area of policy that has among the most profound effects on the social-economic fabric, the use and distribution of resources, the role of the state in future development prospects, the humanitarian character of the welfare system, and so on. Fiscal policy is not “purely technical” and must not be treated as such.
Political sphere and politicisation
Euro integration cannot proceed along its current path. What the EMU really needs, for it to be democratic, and for its policies to be economically viable and socially sustainable, is to become a genuine republic. I am referring to a political sphere underpinning the EMU, a democracy of the euro area at-large.
Does this mean that all rules must be politicised?
No, that is a crass misunderstanding of the pro-democracy position. Every republic functions properly when it is founded on clear laws and strong institutions. State arbitrariness is the bane of political freedom’s presence. Yet every such republic holds the ultimate power to modify its own legal framework in accordance with changing circumstances. A state that has no such power operates in a framework of heteronomy.
Should technocrats be replaced by politicians?
Every function has its specificities and must be judged in its own capacity. In a democracy normative judgements should always conform with the popular will. They are essentially political. There are however a whole range of issues that require technical expertise. These concerns the functional or formal aspects of the state and its individual policies. Technocrats need not—and should not—be replaced by politicians, nor vice versa. What is urgently needed, is a reform of the system which, due to its inner contradictions, inevitably allows or even forces technocrats to assume the role of politicians.
The architects of the EMU succeeded in placing the cart before the horse. We need common politics and common rules, and they have to be framed correctly so that substance takes precedence over procedure.
At any rate, the present order is ill designed. On the political front, it engenders heteronomy. On the economic front, it lengthens and deepens asymmetric shocks. If, due to the antinomies of Europe’s inter-governmentalism, it is not possible to proceed with the EMU’s thoroughgoing reform, then this system had better be dismantled in an orderly fashion.
The euro is not an end in itself, but only an inadequate means for forwarding the project of European unification. It is a failed experiment at a stateless single currency. Its inability to deliver desirable states of affairs, cannot discredit the call for political union. Indeed, it is the absence of common European politics that rendered the euro a failure from the outset. Conversely, it is in—and through—common politics where a true solution will be found.