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A Better Europe

Niall Crowley sought three alternative perspectives on the future for a better European Union 

 

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, unresponsive to popular demands and dominated by the powerful states. It’s a social crisis as inequality 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 sustainability, participation, accountability and social justice. These values needs to shape the economic dimensions 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 alternative agenda for Europe.

 

 

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)

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.

 

 

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.

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.

 

 

 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

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.