Europe is on the move; new thinking is emerging among social democrats. This is what I discovered at the meeting on the Renaissance of Europe organized by four important think tanks, FEPS, Fondation Jean Jaures, Friedrich Ebert Stiftung and Italianieuropei in Paris on 16-17 March.
Social democrats do not want to see Europe die. In 2011, the European integration project nearly fell off the cliff. Financial markets were worried about the sustainability of public debt and populist pressures stopped governments from providing the liquidity necessary for the rescue. Conservative governments seemed to have lost the will and capacity to save the euro.
In the end, Europe was rescued by its only federalist, but purely technocratic, institution: the European Central Bank. The Greek Socialist Prime Minister Papandreou was removed from office and replaced by the former ECB Vice President Papademos, because he had dared to offer democracy to the Greek people. Berlusconi had to go because ECB President Mario Draghi finally convinced the Italian establishment that rising bond spreads signaled the total loss of trust in the Italian government. Financial markets have now calmed down, because the ECB was able to pump enormous amounts of liquidity into the banking system – but only after 25 governments had agreed to conclude a fiscal pact. Useful as they may be, none of these developments are very pretty. In fact, for democrats they are revolting. Technocrats have saved Europe when democratically elected leaders were unable to do so. Is democracy passé?
Europe is not a Democracy
Abraham Lincoln has famously defined democracy as “government for the people, by the people, through the people”. Political scientists call government for the people output-legitimacy. It justifies technocratic governments as long as they improve collective welfare, because citizens will approve the results. Government by and through the people is called input-legitimacy, because through their vote in democratic elections the majority of citizens who are affected by their policies give governments the authority to implement collective choices in accordance with their will and preferences. Europe is clearly not a democracy. For those who can vote, like next month the French, are always a small minority compared to those who are enduring the consequences. National elections disenfranchise all other European citizens. The technocratic argument for European integration is based on a patriarchal philosophy of output legitimacy: great leaders know best, and the people should be grateful for what they get.
Full democracy requires both: input and output legitimacy. For over 150 years, social democrats have understood that a free and fair society is only possible if every citizen has a vote. They have opposed autocrats even if they introduced benevolent social reforms, like Bismarck in Germany. They have fought for democracy in the nation state as a tool to repair social injustice. When they were successful, they built the welfare state on the basis of free and equal citizens. However, the recent global financial and euro debt crises have shown that in the 21st century the nation state has become dysfunctional. The internationalization of capital circumvents national regulation and threatens the accomplishments of the welfare state. National governments have lost their capacity to act. When the world is divided in nations, international capital rules. Not surprisingly, social democrats are now waking up to the idea that European policies need input legitimacy at the European level. European democracy is on top of the political agenda.
In Paris, former British Foreign Secretary David Milliband made a smart remark. He acknowledged that the economic logic of European integration pushes Europe in the direction of federalism, by which he means greater centralization of policy-making at the European level. But he also observed that as a representative of the people, the political logic of his constituency pulls him into the opposite direction. This is Europe’s paradox.
The economic logic pushing towards centralization informs many new regulations issued by the European Council, the Commission and Parliament in response to the euro-crisis. Governments commit to new rules by which they declare to limit their autonomy and coordinate their behavior. They have done it before, for example in the Stability and Growth Pact, but it has not worked. The reason is that voluntary cooperation between sovereign and autonomous governments only achieves results in a small range of policy situations, where everyone can win. Initially, this cooperative logic has been the driver of European integration. However, with the completion of the single market and the euro, a far larger policy domain has now become competitive where my gain is your loss. Competing governments only serve their partial interests and agree on minimal compromises, which reflect the veto power of minorities rather than the will of the majority of citizens. In this new setting, the old idea that European integration is legitimate because it generates benefits for everyone is no longer valid. Output legitimacy is dying, because national governments do no longer cooperate but compete for scarce resources. The problem is old. It is not confined to Europe. David Hume has already observed in the 17th century that the solution to cooperation failure is setting up a government. The recent financial crises have shown the urgency for creating an economic government for the euroarea.
However, and this is a paradox, as output legitimacy diminishes in the European Union, people are less willing to delegate governmental functions to the European level in order to improve their collective standards of living. The experts may know that more “cooperation” will improve welfare, but in a climate of generalized uncertainty it is natural to turn to what is familiar and traditional and to stick to what “we” have always done. No doubt, this impulse supports right-wing euro-skepticism and populist chauvinism. However, a much more important source of euro-skepticism is precisely the lack of input legitimacy: people feel that policies are made “up there” in Brussels, by a technocracy of foreign elites and they have no say over the decisions. They must accept what comes from “above”, and this is less and less often what they want. Yet, they have no way of weighing in on the decisions except by rejecting Europe en bloc. Thus, Europe is stuck: welfare increasing output becomes rarer, but better governance is rejected out of frustration and fear. Efficient democracy and decisions in the interest of a majority of affected citizens are not possible, because people are fed up with Europe.
Europe’s two Options
The European paradox has two solutions: we can stop European integration, abolish the freedom it guarantees and with it the euro and the single market, and return to the nation state. Nicolas Sarkozy has already called for the end of the freedom to travel under the Schengen Agreement; limiting free movement for goods and capital will soon follow. In the end, Marine Le Pen and her likes will triumph. Politics may win, but the economic costs in terms of jobs, wages, income wealth and social welfare will be disastrous and the ultimate price is less political freedom and democracy.
Alternatively, we can accept the requirements for a more efficient and centralized European economic management, but we must tame the tiger by submitting such government to proper democratic control. A democratic government, for the people, by the people, through the people. Such a government must be elected by all European citizens, because it must be told by every citizen, irrespective of national belonging, how the common interests and the public goods people share are to be administered. Nothing else. There is no need to create a federalist Leviathan that invades people’s lives and customs, but there is a case for democratic freedom and the political equality of “one man, one vote”.
How can social democrats solve Milliband’s paradox? The must fight for genuine European democracy. In the last century they struggled to democratize the nation state, today they must democratize the European Union. This means, European citizens must have policy choices. They must be able to choose between representatives who want a neo-liberal or a social Europe. When people have a right to choose, they are engaged; they will participate in open debates. They will not reject, but accept Europe. Social democrats must polarize the debates in Europe instead of seeking consensus with their opponents. And polarization must have a visible face: social democrats must put forward their candidate who will be elected President of the European Commission after assembling a majority in the European Parliament. The Lisbon Treaty allows them to do so; all they now need to muster is the courage to push democracy through, if needed even against the European Council.
I have been defending these ideas for some time. For a long time, they must have seemed idealistic, if not utopian. Yet, I was fascinated to see in Paris that I am no longer in a minority. Today, Europe’s social democrats are on the move. Avanti popolo!