Regardless of if and when Greece defaults, it is now clear that the Eurozone faces an existential crisis. The contradictions in the Euro are a symptom of a much deeper malaise and the inherent fragility of the European political project. As Martin Kettle points out, lifelong Europhiles now openly question whether the European Union itself is on its last legs.
At the heart of the European Union’s problems lies a structural ‘democratic deficit’. David Marquand gets to the heart of the matter in his excellent new book on Europe – at its core, Europe was always a technocratic undertaking aimed at transcending the “clamorous irrationality of political life”, in need of popular support but “wary of popular engagement”. This technocratic focus was not a bug but a feature, a natural byproduct of the emphasis on the “low politics” of agriculture, free trade, regulatory harmonisation etc. that is so amenable to technocratic decision-making. Underlying this approach was a “theory that integration would spread ineluctably, like an inkblot, from one policy domain to another…..The end was political, but the means were economic; and the means gradually eclipsed the end. Integration was supposed to spread, irresistibly and irrevocably, from one economic field to another; there would be no breaks in the process, when popular consent would have to be mobilized. Economic success, facts on the ground—market freedom, economies of scale, rapid growth, rising living standards—would be enough to embed the project in the public culture. There was no need to buttress legitimacy of the fact with the legitimacy of shared purposes. That would take care of itself.”
But as Marquand notes, this economistic and technocratic view is not rooted in the effective democratic consent of the citizens of Europe. In Marquand’s words:
You can’t hold institutions you don’t understand to account; and it is hard to see how they can represent you. And no one outside a tiny group of Euro-actors and Euro-academics understands how the European Union works. National politics often baffle ordinary citizens, not least because national governments are entangled in increasingly complex webs of European and global interdependence. But the citizens of the Union’s member states mostly have at least a vague notion of what national political parties stand for, and who national leaders and would-be leaders are. In the time-honored phrase, they can, if they wish, “throw the rascals out.” And there is, at least, a tenuous connection between their votes and the policies their governments pursue, None of this is true of Union politics. Voters in European elections can’t throw the rascals out. The connection between their votes and Union policies is not just tenuous but invisible. There is no shortage of rascals, but the most egregious of them belong to national governments and administrations, not to European institutions of any kind. Even the ones that do belong to European bodies—notably, Commission and Council permanent officials—are mostly out of reach of European voters and their representatives in the European Parliament. Worse still, there are no Europe-wide political parties to focus debate and offer choices to a European electorate. European citizens vote in European elections when they do (and, as earlier chapters have shown, increasing numbers don’t) to punish or reward national political parties, fighting on essentially national platforms. And though the European Parliament’s role in the Union’s legislative process has grown immeasurably in recent years, the process itself is both labyrinthine and impenetrable by outsiders….the EU has no buck—or, at least, no buck that stops. There is only an endless maze of indeterminacy.
Apart from a growing apathy (as signalled by the low and falling turnout in European Parliament elections), a perceived inability to influence political outcomes through the democratic process opens the door for the electorate to pursue more radical options. It is not a coincidence that so many of the protests and movements across Europe in Greece, Spain, Ireland and France have focused on the common theme of demanding more direct and local democracy. Although most of these protests have been allied with a distinctly left-wing political stance, they share the emphasis on more direct democracy with many right-wing Euroskeptics. This radicalisation in response to a perceived loss of democratic voice is easily understood when viewed in the context of the history of democratic rights and universal suffrage. As Albert Hirschman has pointed out in his book ‘Shifting Involvements: Private Interest and Public Action’, the introduction of universal suffrage effectively delegitimised more direct revolutionary political action. In his words:
when the vote was granted to the people of France, and in particular to that obstreperous, unruly, and impulsive people of Paris which had just made the third revolution in two generations, it became enthroned in effect as the only legitimate form of expressing political opinions. In other words, the vote represented a new right of the people, but it also restricted its participation in politics to this particular and comparatively harmless form. It was similarly a means of offsetting the perpetual Parisian avant-garde and direct-action leanings by the much more traditional and law-abiding mood of the provinces. This interpretation of the universal vote decision as restraining and conservative in fact though not, of course, in intent is suggested by the conservative outcome of the April 1848 elections to the Constituent National Assembly-and, more important, by the moral force and claim to legitimacy which this freshly elected body was able to throw against the insurgents of June 1848. If insurrection is justified in the absence of free and general elections, as republican opinion maintained at the time, then, in counterpart, the implantation of universal suffrage could be held to be an antidote to revolutionary change. This was indeed the way the more conservative republicans saw it soon after the February Revolution, and the idea is well expressed in the contemporary slogan, “the universal suffrage closes the era of revolutions.”
Hirschman quotes Gambetta’s imploring speech to his fellow conservatives in defence of universal suffrage which captures this logic perfectly:
I speak to those among the conservatives who have some concern for stability, some concern for legality, some concern for moderation … in public life. To them I say: How could you not see that with universal suffrage, provided you let it function freely and respect, once it has spoken, its independence and the authority of its decisions-how could you fail to see, so I ask, that you have here a means of ending all conflicts peacefully, and of solving all crises? How could you fail to understand that, if the universal suffrage functions in the fullness of its sovereignty, revolution is no longer possible because revolution can no longer be attempted and that a coup d’Etat need no longer be feared when France has spoken?
It is in the troubled periphery of the Eurozone that this structural deficiency has reached a boiling point with the situation being made worse by the participation of the even less democratically accountable IMF. As the Guardian notes: “Eurozone policymakers too often treat democratic accountability as a luxury rather than a necessity, as shall be made amply clear this week when Brussels will force the Athens parliament to pass a raft of sharp spending cuts, tax hikes and privatisations – despite the hostility of Greek voters.” For much of the middle class in Greece, exit via emigration is a costly option given that they do not possess significant financial assets that can be easily transferred out of the country. As Hirschman would have predicted, absence of a viable exit option combined with the neutering of the democratic voice makes direct, even revolutionary action the only feasible option for many such Greek citizens.
The Greek middle class also feels squeezed due to what they perceive as the unfair burden of taxation foisted upon them relative to businessmen or the self-employed. Although it is entirely possible that this is simply a function of cronyism and corruption, taxing those who are least able to exit without incurring significant pain is the easy way out even in the absence of cronyism. In a globalised economy with free movement of capital, peripheral economies are unable to tax those sections of the populace who possess a credible threat of exit. The focus of increased taxes on those least able to exit, even if the policy is regressive, is therefore logical.
In a world where capital flight is an option for a select elite, social inequality instead of being alleviated by government policy is almost always exacerbated by it. Even the most progressive taxation and policy regime in theory translates into a regressive regime in practise. As Hirschman notes (emphasis mine):
There are numerous varieties of such mobility: transnational corporations can move subsidiaries from one country, considered unsafe, to another; more threateningly, mobility can take the form of international banks refusing to “roll over” their loans to a country that is considered to be “out of line.” Still, the principal weapon is wielded by the country’s own citizens – particularly of course by the more opulent ones among them – as they engage in capital flight on a massive scale whenever they feel threatened by domestic developments.
Occasionally these various exits do occur, according to the 18th-century script, in response to the arbitrary and capricious actions of the sovereign. But a much less favorable interpretation may be in order: exit of capital often takes place in countries intending to introduce some taxation that would curb excessive privileges of the rich or some social reforms designed to distribute the fruits of economic growth more equitably. Under these conditions, capital flight and its threat are meant to parry, fight off, and perhaps veto such reforms; whatever the outcome, they are sure to make reform more costly and difficult. It looks, therefore, as though the availability of the kind of exit that was hailed by Montesquieu and Adam Smith were today a serious menace: it damages the capability of capitalism to reform itself.
Hirschman also identified that the problem afflicts countries at the periphery of the global economy to a much larger extent than it does those at the core:
Capital flight is obviously much less of a weapon in the largest and most powerful countries where the owners of capital feel that there is no place else to go. Here it can be expected that voice will be activated by the impossibility of exit. Capitalists will make elaborate attempts to influence public opinion and public policy. An ideology in defense of capitalism will arise. At the same time, concessions are likely to be forthcoming where reforms of the system are obviously needed and are essential to the demonstration that the capitalist system can itself evolve and ameliorate the problems it creates. Purely on the basis of the differential availability of exit for capital and capitalists, one might therefore expect that the largest and most central countries of the capitalist system would be, at one and the same time, the ideological bulwarks of the system and its most active problem-solvers; the more peripheral states, on the other hand, might be in the grip of an anticapitalist ideology, and would at the same time exhibit unconscionable extremes of wealth and poverty……Here is perhaps a key to the old puzzle why anticapitalist revolutions have consistently broken out at the periphery rather than at the center of the capitalist system.
The simplistic viewpoint that democratic liberal Europe is immune to the kind of revolutionary uprisings we have seen in the Arab countries this spring is wrong – it is not just dictatorships that are prone to violent expressions of popular anger. The electorate needs to believe that their vote counts and that decisions impacting their lives are taken by a government that is accountable to them. Clearly this is no longer the case in many parts of the EU. And this disenchantment with vote as the mechanism of voice means that the people of Europe may choose much more radical means of voicing their frustration.