Populism, Austerity And Democratic Deficit

Critiques of the European Union target a political problem – the so-called democratic deficit – and an economic (and social) one: austerity, sometimes subsumed under the broader heading of neoliberalism. It is also often claimed or simply assumed that there is a connection between the two: the first being the main cause of the second. Bureaucrats in Brussels, Frankfurt or Luxembourg operate without adequate democratic oversight and control, which makes them ignorant about people’s actual needs and immunizes them from their concerns and interests. Thus, it is argued, policies represent the interest of narrow elites rather than the broad mass of the population.

There are undoubtedly real and important shortcomings in the EU architecture (‘polity’). Democratic legitimacy needs strengthening, and lobbying by business is influential. In economic policy there is clearly a bias towards ‘stability’ versus ‘growth’, thanks to rules enshrined in hard-to-change legislation. We argue here, however, that the case for a causal link from lack of democracy to neoliberal policies falls down on a number of grounds. The legal structure of the EU does not condemn the Union to follow a neoliberal path.

Democracy and technocracy – examples of confusion

Complaints about the EU’s alleged democratic deficit have played a major role in the Brexit debate, often with shades of the pot calling the kettle black. To make the EU as democratic as the UK, perhaps twice-elected Donald Tusk could be replaced by a royal family, the European Parliament could drop (close to) proportional representation and be supplemented by an unelected, largely hereditary upper chamber. The written Treaty could also be scrapped and the EU could perhaps rely more on case-law. Joking apart, in public discourse the problem of democratic deficit is grossly exaggerated through simple misconceptions. Largely this is because of a failure to see the EU as an integrated, multi-level polity, leading to obtuse, but oft-repeated and too-seldom challenged statements, such as that the executive body, the Commission, is ‘unelected’.  Academic studies point to resolvable issues rather than fundamental problems (e.g. here).

The experience of Greece at the hands of the troika is also often cited as evidence of the EU’s lack of democracy. Finance minister Varoufakis was arguably right intellectually more often than not. However, in the political debate he became isolated, and became a one-man minority in the Eurogroup.  Greece, unfortunately, failed to build an alliance with which it could argue for a more reasonable set of credit conditions or burden-sharing, let alone progress towards a fiscal union. That a majority can be wrong on some (key) issues does not mean that the process is undemocratic. While Greece had democratic legitimacy for its opposition to certain policies, the 18 other Euro Area governments had too, and each had voters’ interests to represent. The policies imposed on Greece were stupid and may even have harmed those imposing them but they were not undemocratic.

The workings of the Eurogroup could certainly be improved. It is probably true that greater transparency and openness would make it more difficult to sustain a dominant position that is far away from an academic consensus (such as the huge costs of pro-cyclical austerity under prevailing conditions). But this does not change the basic finding that a majority decision was taken over a minority (of one). It will seem counter-intuitive to some, but a cool look at the facts suggests that in such cases the problem is not too powerful but too weak a technocracy. A more independent chair may not represent a full solution to the problem, but it can only help.

A big part of the problem is that outcomes and tendencies seen as negative are often wrongly attributed to the lack, or weakness of EU democracy. Hungarian authoritarians, Polish conservatives, British bankers, Spanish trade unionists, Italian five-starists and German greens may dislike different policy outcomes. But they are often united in ascribing them to structural failings of the European polity. Faced with national policies they dislike, they do not typically blame the legal-political structure that generates the laws; rather they accept that they lack sufficient popular support and redouble their efforts to (re)gain elected office within the given national rules of the game.

Bureaucratic tyranny or right-of-centre hegemony?

To the extent that austerity has been a major problem in Europe this is not primarily because the governance apparatus is detached or undemocratic; rather, at decisive junctures, right-of-centre forces won the argument either at national or at EU level and had the political majorities to put their views into effect. To give a recent example: in 2011, the year policy shifted dramatically towards pro-cyclical fiscal tightening and reform in the Euro Area, the European People’s Party (EPP) was paramount in all three EU institutions, with the Merkozy (Merkel/Sarkozy) tandem calling the shots. Overlooking this fundamental fact is a major analytical error. As centre-left forces started winning elections from late 2011 onwards, the composition of Council (and European Council) started to change, and the EU level policy focus began to shift at least partially towards growth, investment, employment and social rights (e.g. so-called Juncker Investment Plan, some relaxation of fiscal rules).

The significant impact of party politics on EU governance is nothing new. In the mid-1990s, the centre-right had a majority in the European Council (Kohl, Chirac, Berlusconi, Major), and this period produced the Stability and Growth Pact, a set of rules and procedures limiting the scope for autonomous, and potentially counter-cyclical fiscal policies at national level. A few years later, the centre-left dominated European politics (Blair, Schröder, Jospin, D’Alema etc.) and oversaw a very different type of EU policy, the Lisbon Strategy. Certainly, that strategy’s lasting impact has been less pronounced than that of the earlier dominant grouping. This may well restrict subsequent policy choices but it does not raise a fundamental question of democratic legitimacy. (Principles set out in national constitutions are also hard to change.) The solution is to reduce the number of veto points by reforming governance structures so that majoritarian decision-making can be applied more easily and more widely, for example moving beyond unanimity on taxation issues.

This fundamental point can be made more systematically. Of the ten European Commissions starting with the one led by Roy Jenkins in 1977, only one (Prodi from 1999) clearly had a left-of centre majority in the College. Fully seven had a centre-right (EPP/ALDE) majority. Yet the College of Commissioners consists of those sent by national governments and thus its composition reflects the electoral outcomes in the Member States. Similarly, in every European Parliament but one since 1979, conservative-liberal parties have formed a larger block than left-of-centre groups. MEPs are directly elected by EU voters (albeit not proportionately, to the advantage of smaller countries). Given the above it goes almost without saying that on the (European) Council, the EU’s real powerhouse, the centre-right, has had an iron grip on power; indeed, EPP-affiliated parties alone have held a majority of Council votes almost uninterruptedly (apart from that interlude in the late 1990s).

Progressives need to face up to an ‘inconvenient truth’. To put it in a nutshell: right-of-centre policies – or ‘neoliberalism’, if you prefer – have not been imposed against the popular will by an unelected technocracy, as is frequently claimed. It is, in truth, exactly what democratic political majorities in Europe have voted for most of the time.

Bureaucratic smoke and mirrors

Keeping the focus of critical debates on technocracy or bureaucracy often serves a particular purpose which is not scholarly but political. One such intention can be precisely to divert attention from the party political or national origins of specific ideas or actions. Such tactical language is not alien to Wolfgang Schäuble, for example. Unelected EU bureaucrats are also easy scapegoats when attention has to be diverted from democratic backsliding and the weakening of the rule of law in particular member states.

In other cases, a populist attack on bureaucracy is a way to package a deregulation agenda. Brexit is a good example. The EU has been criticized for long by UKIP and many UK Conservatives for being a (large, unelected, overpaid etc.) bureaucracy and thus being undemocratic. Since the referendum, however, the mask has started to slip, and the key Brexiteer program, which is to get rid of EU social and environmental legislation, has become more visible.

If we are to have a more constructive discussion, the simplistic technocratic versus democratic dichotomy needs to be overcome. A black and white picture serves no purpose in defining what concrete steps would improve performance as well as legitimacy within the EU.

The EU is not a multilateral organization (like the WTO or the ILO) but it is not a nation state either. It is more powerful in policy coordination than the first category, so it requires much more political oversight on national policymaking as well. But democratic expectations cannot be set at the same level as within nation states which re-distribute 40-50 per cent of the GDP; the EU budget is a mere 1 per cent of GDP and has limited redistributional properties. How to develop this ‘half-way house’ and resolve its associated problems is at the core of the Future of Europe debate which the Commission has sought to frame with its recent White Paper. Most recently President Macron’s election in France has revived hopes of resolving this in the direction of a step-change in integration, at least within the Euro Area.

On the other hand, critics of the EU’s democratic deficits cannot be thoughtlessly rebutted by dismissing such voices as populistic. The usefulness of the word populism runs out very quickly. Opposition politics may have become increasingly populistic in Europe because mainstream politics became excessively technocratic. Decisions have been explained by rules and expertise instead of values and social goals. However, when some progressives get the focus wrong and put the main blame (for austerity, neoliberal reform etc.) on technocrats or bureaucrats instead of the political forces that control them, their arguments become equally populistic and lacking in proper analysis. They may then highlight some of today’s key issues and concerns but are unlikely to arrive at viable strategies and solutions.

From counter-populism to alliance building

One way to ensure that there is less room for populist opposition is to make mainstream politics less technocratic at both national and EU levels even though issues and policy-making are inevitably more complex at EU level. In our view, the way forward is to strengthen the genuinely European elements of democracy, which would imply, among other things, strengthening the European Parliament (at the expense of the Council). Steps should also be taken to incorporate the social partners in decision-making and strengthen the bonds  between policy measures at Member State and Euro Area level.

The task of progressives is not to win purely academic arguments. It is certainly not to succumb to an incorrect, but in some way comforting, view that undemocratic structural forces block progressive change. It is to win the important political debates and thus acquire legitimate political power to implement progressive policies. They must design policies for a better society and, above all, build strong and lasting alliances for their implementation.

Data on the political make-up of relevant EU institutions since 1977 (Para 9) draw on unpublished information provided by Frank Ey, Arbeiterkammer Wien.

The analysis/argument of this post can be found in Saving the Euro – redesigning Euro Area governance (forthcoming, Social Europe Journals/Hans-Böckler-Stiftung)