A better Europe - Village Magazine

74 — village July - August 2012

¥ÊÙ®¦Ä

IT IS not only an economic crisis that is being

faced by Europe. Another economic treaty won’t

resolve the issues. It’s a crisis of democracy as

decision-making becomes technocratic, unre-

sponsive to popular demands and dominated by

the powerful states. It’s a social crisis as inequal-

ity deepens, poverty becomes more widespread

and unemployment burgeons. Any debate on the

evolution of the European Union has to address

how best to re-discover a social and democratic

Europe.

An agenda for change is therefore needed that

goes beyond the economic. More particularly, this

agenda needs to be based on and tested against

the values of equality, environmental sustainabil-

ity, participation, accountability and social justice.

These values needs to shape the economic dimen-

sions of change.

Where is the political or public debate to build

this agenda? It is not evident in Ireland where

referenda have locked us into a for-or against

straightjacket without space to debate what we

are for or against. It is not evident at European

Union level either. We need to build an alterna-

tive agenda for Europe.

Please turn to page 76

Niall Crowley sought

three alternative

perspectives on the

future for a better

European Union.

Special on future of

European Union

Better

Europe

Europe is about people

76 — village July - August 2012

¥ÊÙ®¦Ä

THE reality is that decent work and social

protection and welfare systems (a key

way to secure dignity for all) have been

marginalised. This is despite their proven

track record as economic stabilisers and as

essential contributors to social

cohesion. The long-term failure

to see these issues as priorities

is a contributor to the crisis

we are now experiencing. The

continued failure to ensure

and build high-level social

standards delays ﬁnding a

sustainable way out of the crisis.

The International Labour

Organisation (ILO) has set out

an agenda for decent work. This

fairly uncontroversial agenda

includes creating jobs, rights

at work, social protection and

civil dialogue. It has gender

equality as a cross-cutting theme.

Controversy would most likely

be conﬁned to the extent of regulation needed

to secure decent work. Given the general

desire for decent work, it is extraordinary

how little attention has been given to securing

it. This has led to the growth of ‘in-work

poverty’. One third of people of working

age living in poverty actually have jobs.

Ensuring access for people who are not in

work to rights, goods and services is a much

more contested area. Recent

times have seen ramped-up

political debate and proposals that

attempt to distinguish between

the ‘deserving poor’ and the

‘undeserving poor’. Cash transfers

to people of working age who

are often presented as ‘work shy’

are particularly contested. The

diﬃculties in accessing decent

work are conveniently ignored.

The fate of people denied access

to cash in a society where cash

is gospel and king is ignored.

Enfranchisement and

employment are equal in

importance to actual cash

transfers. Access to health,

education and social services, but also

to energy and transport, is also equally

important. The increasing introduction of

‘for proﬁt companies’ in the provision of such

services has signiﬁcant implications for access

to ‘services of general interest’ for individuals

and groups which experience marginalisation.

It is necessary to argue why this social

Europe is good for everybody and to win

majority support for this social vision. It

is also necessary to articulate how such a

social Europe can be delivered in the current

context of an increasingly globalised world.

National policies alone are not suﬃcient

to secure such social standards. Inter-

governmental co-operation and harmonised

trans-national approaches, both securing

the revenue needed to deliver social systems

and avoiding competition that drives

down social standards, are required.

If we wanted to develop high-level social

standards from scratch it would be necessary

to build something like the European Union

(EU). Without an EU-level organisation

playing a positive role in social standards we

would be unlikely to secure such outcomes

by national eﬀorts alone. So better to start

from the reality that the EU exists and try to

shape a very diﬀerent EU that has the securing

of high-level social standards not just as an

aspiration but as a central driving force of

its activities. There is a need to establish

how the diﬀerent levels of governance -

local, national and EU - must work together

to secure these social standards.

This social EU would look very diﬀerent

from the EU we experience today. Substantial

changes would be introduced into its Treaties

to overcome its current market-driven

bias. Progressive forces must combine to

develop and lobby for such an EU Treaty.

Even within the current Treaties much

can be done to promote decent work and

to strengthen co-operation in the areas of

social protection and social inclusion.

We should seek the introduction of

an EU Directive to build co-operation on

the issue of the adequacy of minimum-

income schemes. Such a Directive would

be a conﬁdence-building measure that

would demonstrate the EU commitment

to defending social protection. It would

be the basis for increased co-operation

to achieve high-level social standards.

The achievement of high-level social

standards has always been totally linked

to democracy that defends and demands

social justice. It follows that securing an EU

that plays a positive role in social standards

is closely linked to the debate about a more

democratic Europe. Therefore to make

progress requires an interlinked debate

and progress in all three areas – democratic,

economic and social. To escape the current

reality the EU needs a social vision.

A social Europe would be a Europe where decent

work is the norm and where people who have no

access to work can still have access to the rights,

goods and services needed to live a life in dignity.

Achieving this social Europe should be a key focus

for our public debates and a key priority for our

political leaders and institutions according to

Fintan Farrell, Director of the European Anti

Poverty Network (Europe)

One third

of people

of working

age living

in poverty

actually have

jobs

THE ink had hardly dried on the returning

oﬃcer’s paper for the Fiscal Treaty

Referendum when speculation spiked on

the further need for a ﬁscal union, a banking

union, a transfer union, an insurance union,

an adjustment union and even a full federal

union. The report (‘Towards a Genuine

Economic and Monetary Union’) presented

by President Van Rompuy to the June summit

did acknowledge the need for renewed

democratic legitimacy and accountability.

However, it is not at all clear that the political

elite of the EU has any real commitment to

further integration. Moreover, it is clear

that the people of Europe have substantial

concerns about further integration and

serious misgivings about the increasingly elite

nature of European and national democracy.

What needs to change about EU

democracy for citizens to legitimise and

trust the emerging shape of the EU is that key

values must inform the discussion. Equality,

participation, subsidiarity and transparency

have to be at the core of renewing both EU

and national democracy. There can be no

further deepening of European integration

without parallel steps towards strengthening

the democratic quality of both national and

EU democratic institutions. Democracy

and participation are themselves only

meaningful when there is some level of

basic equality between citizens in states and

between citizens across states. Democracy

requires commitment to cohesion. The

concept of a social Europe has to be asserted

at the heart of European democracy.

Writing in June in the Irish Times, R

Kinsella observes how power in Europe

has shifted to the centre and how

disproportionate adjustment imposed on

peripheral countries has created a crisis of

democracy. J O’Brennan had earlier noted the

alarming shift from the “Community Method

of EU governance” to the “Union Method”.

This ‘Community Method’ involved laws

being proposed by the European Commission,

acting in the European interest. These were

then enacted by the Council of Ministers

(representing member state governments) in

conjunction with the European Parliament

(representing citizens). This balance revolved

around a search for consensus and protected

the interests of the smaller nations.

This method of EU governance has

been replaced by the ‘Union Method’. This

is based on more intergovernmental

decision-making where the larger states

dominate. There is less supranational

collectivism and a lesser role for the European

Commission. This shift needs to be reversed.

Within the ‘Community Method’ there

was space for social and civil dialogue. This

dialogue needs to be strengthened rather

than weakened, especially for

those civil-society organisations

representing marginalised

groups. They not only constitute

a layer of democracy but also

legitimise and mediate the EU.

Like the canary in the mineshaft,

they should not be ignored.

Participative democracy and

tools such as citizens’ initiatives

need to feature in an improved EU

democracy. We need to be creative

about mechanisms for citizens

to participate in meaningful and

targeted ways in decisions at

EU, national and local levels.

European citizens have

always understood national

politics as the space for resolving

national redistribution issues, taxation

and public expenditure. The chaos in the

Greek elections shows up how meaningless

national politics becomes when key budgetary

issues are removed from national politics.

Decisions are increasingly being made by

technocratic managers rather than directly-

elected representatives of the European public.

This has not gone unnoticed by citizens and it

is unsustainable, even in the short term. No

move to greater integration can be legitimised

without the engagement of a European

citizenry satisﬁed that there are transparent

European-level political processes which

they can democratically hold to account.

In developing plans for a more integrated

Europe there are various models of federalism

available (including the USA, Germany,

Canada, Switzerland and Australia). With

some notable exceptions, there has been

little public debate in Ireland about what

greater political federalism might mean.

Ganley and Simms writing

in the Sunday Business Post

proﬀer the US model with a

powerful directly-elected EU

president at the centre of power.

Other models of federalism

oﬀer greater subsidiarity at

state level and so achieve a more

meaningful balance between

federal and state power. They

leave signiﬁcant ﬁscal capacity

at state level and transfers

between states are temporary

and limited. Retaining national

supremacy at budget level

appears to be a fundamental

part of any reform. There are

functions however, particularly

those related to adjustment

to shocks beyond the scope of any one

country, that do need to be federalised.

This relationship between national

and federal power can only be eﬀective if

national or state parliaments take their role

of linking the federal to the state seriously.

Much can be done to improve the role of the

Irish parliament in this regard. It is crucial

that both national parliaments and the

European Parliament have legally-based

and meaningful input into all decision-

making. We need to see the issue of EU

democratic renewal fully debated in the

Irish parliament and in wider society.

One way or another something will change. The

euro it seems will not survive without greater

integration. There is no popular demand for this

integration. Whether European citizens think

this is a price worth paying to save the Euro

will depend very much on the level of trust and

legitimacy they grant to any new democratic

institutions. The debate on a democratic Europe

is crucial according to Mary Murphy, lecturer in

Irish Politics and Society in NUI Maynooth.

This

‘Community

Method’

revolved

around a

search for

consensus

and protected

the interests

of the smaller

nations

78 — village July - August 2012

¥ÊÙ®¦Ä

AS A professor who has taught Economics

for 40 years I could adopt the line that

my research has provided me with a deep

understanding that enables me to say, with

objectivity and truth, what the future of

Europe must be, for the maximum welfare

of society. However, I must warn that

any economists who suggest that their

deep understanding enables them to say

anything with objectivity and truth must

be shunned. If I have learned nothing

else, I have learned that values, ideologies

and politics pervade economics.

Mathematical sophistication provides

economists with an apparently scientiﬁc

veneer, but underlying their models are

assumptions about people, about how they

are motivated and about how they interact.

The “best” economists publish in the “top”

journals; this is what makes them the best.

But those journals do not accept articles

that do not share both the methods and

the values of the dominant ideology of the

discipline. This would not matter if it were

not for the fact that society, the media and

politicians for various reasons accept the

way that the discipline of economics ranks its

members. Virtually all the economists who

are listened to are those who share either the

methods and/or the values of the mainstream

journals. The methods provide the appearance

of science and the values provide the

support for conservative forces in society.

At the heart of the assumptions about how

people are motivated and how they interact

are markets. Economics, as everyone knows, is

all about demand and supply. In the textbooks,

the chapters on demand always come ﬁrst,

followed by supply. Demand is people’s money-

based intention to buy goods. It is presented

ﬁrst as there is an explicit belief in ‘consumer

sovereignty’; the consumer is king/queen and

it is his/her money that is the primary mover.

It is less explicit, but presenting demand ﬁrst

also suggests that ‘necessity is

the mother of invention’. All that

is required is for something to

be needed for it to be invented,

produced and supplied.

In explaining supply after

demand, the textbooks suggest

that innovators, entrepreneurs

and ﬁrms in general respond to

some market need. Demand and

supply are then followed, in all the

textbooks, by the explanation of

“market equilibrium”. This is where

supply equals demand. This, the

theory proves, is normally stable

because equilibrium is where

the price signal is responded to

by people being willing to buy

just the same amount that sellers

in that market are willing to sell. It is stable

because there is no incentive to change.

One need only think of how computers

came about, with a small number of bright

people working away in their garages to see

if they could make a computer that could

ﬁt in a box, to realise that in reality supply

often precedes, and only subsequently

generates, demand. Once big and powerful

companies, including computer companies,

use all sorts of ways of overcoming consumer

sovereignty to generate demand.

Anyone who does the household weekly

shopping can tell you that prices are not

stable. Yet Schumpeter, one of the greatest

economists of the 20th century, who argued

against basing theory on equilibrium, and who

had a great deal to say about big,

powerful companies, is not even

mentioned in economics degree

programmes in Ireland. Worse,

his ideas do not merit mention.

The dominant ideology in

economics holds that, for all

the above reasons, markets

are best, and that decisions

should be left up to market

forces. We have seen the

consequences of this for the

ﬁnancial sector, but this is being

ignored. Facts are not permitted

to interfere with theory.

So, what sort of Europe

should the government be

arguing for? Well, for a start, let’s

hope that it is not one informed

by economists. At the very least, let’s hope

that the economists advising government

are not imbued with the conviction that their

ideologically-based theories provide them

with a way of knowing the objective truth.

I will take just one example, the issue

of privatisation of state-owned companies.

State-owned companies must be privatised

supposedly because the state should not be

actively involved in the economy. Strangely,

economic theory provides a justiﬁcation for

state ownership. This is the case of “natural

monopoly” where, given the size of the

country and its population, there is only room

for one factory, electricity network, water

distribution system, etc. But the extremists

– as in religions, the extremists often wield

power in economics – emphasise the value

of individual people interacting in state-free

markets. These extremists must be resisted

because rather than ideological purity, social

and political reality should determine policy.

There should be heterodox, and not just

orthodox, economics departments in our

universities; our media should give airtime to

people trained in diﬀerent traditions in

economics; the government should take

advice from economists with varieties of

views. More broadly, the economics that I

would like to see prevailing in Europe, shaping

the societies that are its members, and the

relations between them, is a more pluralist

economics, consistent with more pluralist

societies.

Niall Crowley has asked me to “push forward the

debate” on “the sort of Europe the government

should be arguing for” and, in this context, to

focus on “economic/economic justice Europe”,

writes Professor David Jacobsen, of Dublin

City University

In reality

supply often

precedes,

and only

subsequently

generates,

demand