Posted on 04 July 2013
The question of political economy – how the economy and democracy interacts has become an increasingly pertinent one in Europe as the Eurozone crisis unfolds. EUI professor, Pepper Culpepper discusses the effect of the crisis on the regions democracies.
Recently the crisis in the Eurozone appears to have reached a more stable existence. While full blown recovery still looks a long way off, the threat of defaults and the need for bailouts has eased.
Professor Culpepper says Europe, over the last six months can be describes as, “[a] stable place, that is not widely regarded as being terribly democratically legitimated. It is a place where there are a lot of constraints, and there is not a lot of ways for voters to have a say on that.”
There has long been a tension between economics (capitalism) and democracy. While democracy attributes power by votes, economics attributes power according to wealth. Within this tension, how much space remains for politics to influence the markets?
“Those who study Western Europe feel there is reduced space” says professor Culpepper. “You elect a party of the left, you elect a party of the right – and you get a structural austerity programme designed by troika.”
Economics v Democracy?
At the recent conference “Economics and Democracy: Are they still compatible?” held at the EUI, delegates discussed whether ultimately the two principles can co-exist.
Addressing the role of banks in both the crisis and recovery, Mark Blyth from Brown University, took the example of the Dodd-Frank Act, designed to ensure institutions do not become “too big too fail” and require a federal bailout. According to Blyth, the Act is a series of little dodges, because the banks have too much political power to be met head on, even without the backing of a buoyant economy.
Blyth also suggested the US might find it easier to bring their over leveraged banks under control because the US Central Bank has a wider mandate than the European Central Bank.
Regardless of the path the economy takes, Culpepper thinks the crisis has already had a fundamental effect on European politics. Elections in Greece have seen the rise of the far right and left, while Beppe Grillo’s Movimento Cinque Stelle gained more votes than any other party in last year’s Italian elections.
During the height of the crisis many of the most fragile European countries turned to technocratic leadership as a way out of the crisis.
“Jean-Cluade Juncker described a technocratic government as one where people in Brussels say, ‘we know what needs to be done. But we don’t know how to get re-elected once we do it’. That model of ‘If we could just get rid of elections temporarily’, won’t work,” says Culpepper.
“If you want to get people to make sacrifices it requires a certain degree of democratic legitimation. You can’t get away for long doing things un-politically.”
Future of European Politics
“Mario Monti (former technocratic leader of Italian government) got thrown out because he didn’t deliver a road to growth. The road to growth runs through the EU when you’re in the euro. His government couldn’t do it alone.”
A common narrative has emerged of the need for more political integration to match the economic integration brought about by the euro. If this is going to happen, Culpepper thinks we need to be very careful about how it is structured.
“Running European democracy through the European parliament would be the worst thing you could possibly do. The European elections are second order elections, people vote based on what is going on nationally. The European Parliament has been a completely ineffectual actor.”
Not going the route of increasing the power of the European Parliament raises the question of how to increase democratic accountability to decision making at the European level. “It has something to do with clarifying the links between national parties and super national decision making. Especially Intergovernmental summits.”
“Given this juncture between the European level of decision making and the discussion going on in national politics the change that need to happen is an elite driven discussion that would somehow integrate your national political narrative with the EU narrative.”
(Text by Mark Briggs)