Thoughts on the EU’s fiscal union

5 Dec

The main topic of Eurozone discussions this week, amongst finance ministers, heads of states, and journalists, will be the Franco-German proposal for a “fiscal union”. The details of exactly what is being proposed remain vague. Later today, Sarkozy and Merkel are expected to outline some of what they mean. But for the full plan, we will have to wait for the final announcement at the European summit in Brussels at the end of this week, assuming this proposal wins the support of other EU members.

Already, the debate about this fiscal union has begun. For Sarkozy’s critics in France, from the Socialist Party through to the right-wing National Front, the President has sold French sovereignty (very cheaply) in his attempt at saving the Euro. For many others, the proposed fiscal union is little more than a German Europe.

There is no doubt that Germany is pushing through its own preferred solution to the crisis. France may manage to win concessions on both the role of the European Central Bank and on who has the final say regarding the imposition of sanctions on profligate states (the European Commission? the European Court of Justice? the European Council?) but it has certainly conceded to the German demand that national budget lines are policed as closely as possible.

But does this represent the imposition of German sovereignty over the rest of the Eurozone? The reality, as we have argued before, is more complex. That some states have had their interests better represented via the EU than others goes without saying. In a region where power is unevenly distributed, any consensus has tended to represent a compromise between the more powerful members. Others have been bought-out via side deals designed to ensure their acquiescence to the bigger picture. But to reduce everything to power politics is lose the distinctiveness of what we are seeing today in Europe. The question is not whether or not we are seeing the emergence of German Europe. It is rather: why is a German-dominated Europe taking the form of this kind of fiscal union?

The first point to note is that whilst the new fiscal union may be German in content, it is hardly German in form. Instead, it is premised upon the unerring power of rules overseen by unelected bodies. The idea here is that rules are not merely a tool used in order to reach a particular destination; rules have become an end in themselves. The idea of the fiscal union is that what matters is the ability to constrain – via punitive sanctions if necessary – the spending power of national governments. Attention is focused on how to organize these constraints, not on what they will achieve. The result is actually based on very shaky assumptions, namely that via tighter fiscal policy and some key reforms (e.g. the raising of the retirement age) Europe can return to growth (see here for a critique). Few are convinced by this argument but they agree with the focus on rules.

This fetishizing of rules has driven the sentiment of the markets as much as that of European policymakers: Italy and Greece have been seen in a more positive light ever since their political leaders were swapped for technocratic managers. These managers are seen as more reliable enforcers of common rules, in comparison with their mercurial predecessors. Far from representing a break with the past, this tendency to fetishize rules is a hallmark of European integration. Actual expressions of raw political power reappear at the EU level as neutral rules overseen by technocrats. We have seen this in many other areas and today it has reached fiscal policy.

This faith in rules reflects something broader, what we might call the ideology of technocracy. It is nothing new to say that particular social and political interests present themselves to us not as they are but as carriers of something universal. That is, after all, the very definition of ideology: the particular represented to us as the universal. What is distinctive is that today’s universal is the universe of neutral and non-partisan rules. In Europe today, this ideology is unchallenged because its main opponent – the nation as a particular interest – is so attenuated. The Occupy movement itself has consolidated this trend, seeking to please everyone with its “we are the 99%” slogan. A more divisive and particularlistic politics is needed in order to challenge this ideology of rules.

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2 Responses to “Thoughts on the EU’s fiscal union”

  1. John Waite (@floatingcopy) December 8, 2011 at 4:30 am #

    A gratuitous, back-handed swipe at OWS at the end of an otherwise fine, dead-on read. Really, how has OWS “consolidated this trend?” If there’s an ideology at work in OWS, I have yet to discern it. The 99% slogan seems more about an inclusive, big-tent strategy. How it squares with the technocratic preference for obsequious rule-making is lost on me.

  2. The Current Moment December 9, 2011 at 8:24 am #

    The point was simply that the Occupy movement is wrong to think that it can please everyone. In doing so with its 99/1% slogan, it fails to make a political case for change, which would be much more disruptive and conflictual than protestors suggest. In that respect, as with the ideology of technocracy, there is a depoliticizing move, refusing to engage with actual interests that divide up society in fundamental ways. But point taken about the lack of an ideology at work in OWS, a problem in of itself.

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