Tag Archives: technocracy

Fiscal rules and election campaigns

24 Sep

As the UK Labour Party’s annual conference kicks off this week, ideas are beginning to emerge about what Labour will offer in the run up to the 2015 general election. One of these ideas is to have the country’s independent budgetary body, the Office for Budget Responsibility (OBR), to audit all of the pledges made by Labour in its election manifesto. Assuming that Labour’s tax and spend plans are found to be consistent with budgetary discipline and pledges on meeting deficit and public debt targets, the OBR would thus bolster Labour’s claims to responsibility and sound fiscal management.

This idea is nothing new for the Labour party. When Tony Blair carried his party to victory in 1997, he had promised to match Tory party spending commitments. This pledge had been intended to bury the long-standing image of the Labour party as a motley crew of profligate leftwingers. Over time, we have seen fiscal policy steadily depoliticized through the creation of fiscal councils and various fiscal rules, a development supported by the Left and the Right. The IMF estimated in 2009 that 80 countries in the world have adopted a fiscal rule of one kind of another. Debt brakes have been inscribed into constitutions in Germany and in Switzerland. In the UK, the OBR was created in order that government be made accountable to an independent body for its public spending. Elsewhere, fiscal councils with varying powers have become a common feature of the macro-economic policymaking landscape, as the table below highlights.

Fiscal Councils

Austria

Government Debt Committee (1997)

Belgium

High Council of Finance (1989)

Canada

Parliamentary Budget Office (2008)

Denmark

Economic Council (1962)

Germany

Council of Economic Experts (1962)

Hungary

Fiscal Council (2008)*

Netherlands

Central Planning Bureau (1947)

Slovenia

Fiscal Council (2010)

Sweden

Fiscal Policy Council (2007)

United Kingdom

Office for Budget Responsibility (2010)

United States

Congressional Budget Office (1975)

* Hungary’s fiscal council was dismantled in 2010

The European Union as a whole is organized around a set of budgetary rules that are policed and monitored by the European Commission, the so-called Fiscal Compact of 2012.  Monetary and fiscal policy are slowly starting to look alike as both policy areas come under the oversight of independent bodies of experts.

The idea of the British Labour party to submit manifesto promises to an independent audit takes this idea one step further. The message is clear: a promise made about spending by politicians is only credible if it has been overseen by a body of experts. Credibility and responsibility lies with apolitical bodies. Politics, itself, is the terrain of half-truths and misleading creative accounting.

One problem with this is the idea that once a policy has been given the stamp of approval by a body of experts, it becomes incontestable. Especially in the realm of fiscal policy, this is nonsense. Spending plans are notoriously subject to revision and change because they rest upon assumptions about the wider economy. Small changes in growth projections throw even the most carefully prepared and audited spending plans into disarray. That a party’s manifesto commitments are given the all clear by the OBR tells us little about what a party will do once in government. The OBR itself operates according to a set of assumptions about the maco-economy that are constantly subject to revision and change.

Another problem is that parties and governments that rely on monetary and fiscal rules set by independent bodies are in effect out-sourcing responsibility to these agencies. At the same time, these agencies – fiscal councils, central banks – only operate according to strict mandates set by politicians. The result is that neither the politicians nor the agencies accept the responsibility of making choices that are not right or wrong in any objective sense, but are based rather on what one believes is the right thing to do. This leaves us with a vacuum at the heart of politics. Ed Balls’ idea of auditing his campaign pledges brings that vacuum into the election campaign itself. Far from being a moment where rules are challenged and redrawn, the 2015 campaign risks becoming subject to the same rules and constraints that govern everyday politics today.

A word of advice to Ed Balls? It’s not because the OBR has given your policies the all-clear that voters will trust you. That will only come from building a direct relationship with them and engaging with them as citzens.

Italy: populism versus technocracy?

7 Mar

Article originally published here with Le Monde Diplomatique

Written by The Current Moment co-founder, Chris Bickerton, and Carlo Invernizzi Accetti

Italian politics has reached an impasse. In last month’s elections, the vote split three ways. A roughly equal proportion of votes (almost 30%) went to the centre-left coalition led by Pier Luigi Bersani and to Silvio Berlusconi’s centre-right coalition. Ahead by a fraction of the votes for deputies, the centre left won a majority of the seats in the lower chamber. But with the regional basis for the senatorial elections, no corresponding majority was produced in the upper chamber. The third block, which secured roughly 25% of the vote in both chambers, is Beppe Grillo’s Five Star Movement (M5S). Since the other two blocks are coalitions, M5S actually stands as the single largest political party in the parliament. Mario Monti, who headed the Civic Choice party and whose decision it was to have early elections, secured just over 10% of the vote, leaving him far behind in fourth place.

How will this impasse be overcome? The media are full of speculation. Some predict new elections, others some sort of political bargain between the main players. Grillo is so far refusing to strike deals with any side, making new elections likely. But beyond the political quid pro quos, we can draw broader political lessons from Italy’s election, which also illustrate more general structural trends in European politics.

Several commentators have pointed out that the traditional left-right axis appears to be ceding ground to a different polarity, structured around the opposition between populism and technocracy. The successes of Grillo and Berlusconi were denounced by the leader of the German social democrats, Peer Steinbruck, as the victory of two “clowns” – an assessment taken up by the German media and by The Economist. Yet, opposed to the “clowns” are figures like Bersani and Monti, considered more serious and reliable. More than any concrete difference over policy, at issue is the competence, seriousness and expertise of the political actors: Mario Monti is cast as Italy’s technocrat-in-chief, Grillo as his populist nemesis. Even Bersani himself played the card of the responsible centre-left leader. In an effort to distinguish himself from Berlusconi’s campaign, which blamed Italy’s ills on Monti’s EU-backed austerity agenda, he firmly committed himself to respecting Europe’s fiscal rules.

While this opposition between populism and technocracy is emerging as a fundamental dividing line in Italian politics, the electoral campaign illustrated something further: it suggested that populism and technocracy entertain a far more complex relationship with each other, which involves some unexpected points of contact and elements of complementarity. Many of the key players and party coalitions actually seem to display several of the distinctive features of both.

Reading the Italian election results through this lens may help us to make better sense of them. It also warns us that there is something amiss in the common opposition between European technocrats and national populists.[1] These political categories are part and parcel of the changing nature of national politics and mapping them onto a clash between atavistic nationalists and dry Brussels bureaucrats only reproduces the Eurosceptic discourse.

Let us begin with the figure most widely seen as the victor, Beppe Grillo. It is clear there are several characteristically populist elements in his political style and in his message – the attack against the established political order and elites, the appeal to the wisdom of the ‘ordinary man’ and the central role of Grillo himself as a charismatic authority figure. Yet few commentators have noticed the more technocratic side of his movement. A recurring element of Grillo’s rhetoric is the claim that the Five Star Movement is neither left- nor right-wing but, rather, interested in proposing “effective solutions” to “concrete problems”, thus going beyond “ideological disputes”. And it is in this spirit that Grillo has claimed that even though his movement will not enter into a coalition with any other political party, they are open to giving their support to specific policy proposals, to be evaluated on a case by case basis “on their own merits”. Far from the ideological discourse we are used to associating with traditional populist movements, Grillo’s flaunted pragmatism suggests that if he is to be considered a populist at all, we may have to admit the existence of a new specifically ‘technocratic’ populism. The Five Star Movement’s programme reinforces this impression. It is a long list of concrete measures, backed up with evidence from local experiences: there is no justification of the underlying values or assumptions of the movement, and no political vision. Challenging the empty professionalism of career politicians, Grillo claims that his parliamentarians, selected from all walks of life, are the real experts.

Mario Monti, the great loser in the election, presents the inverse picture. The respect he initially commanded, domestically and internationally, stemmed from his credentials as a competent technician. The moment he decided to forego this a-political stance and enter the electoral contest, he revealed something about the way technocrats understand the notion of politics. For him, becoming a politician meant trying to dumb down his message in an effort to appeal more directly to what he thought were people’s real concerns. This led to several awkward moments in his campaign, where he appeared to be desperately trying to use some of the same theatrical tricks as a Grillo or Berlusconi, without any of the flair. The image of the erstwhile sober European commissioner holding a puppy on TV and trying to endear himself to viewers by saying “I can feel its heart” was perhaps one of the defining moments in his campaign. Just as Grillo appears to be the harbinger of a new kind of ‘technocratic populism’, has Monti created the opposite image, as some kind of ‘populist technocrat’?

Bersani’s failure is different, but falls within the same basic framework. The leader of the centre-left coalition had the opportunity to break out of the technocracy-vs-populism model and present a properly political programme focused on the pan-European debate about austerity versus growth. For the Italian Democrat Party, this would have meant challenging some of the basic assumptions of the austerity framework and contributing, by way of substance, to the question of growth in Italy, and in Europe. But Bersani’s party failed to do this: its overwhelming concern was to reassure doubters of its seriousness and reliability as an enforcer of austerity. During the campaign, the Democrats’ economic spokesman Stefano Fassina said his party was against fiscal stimulus and preferred an EU-level deal in which a softening of austerity measures was the sweetener, received in exchange for handing over extensive powers over national budgets to the EU. The counterpart was his denunciation of both Berlusconi and Grillo as politically and economically “irresponsible”. So the real choice in the election, according to Fassina, was between the populists and Europeanists, a position that avoided criticizing the operating assumptions behind austerity policies. Bersani frequently said that he was not against austerity and had sided with Merkel in her criticisms of Berlusconi in late 2011.

Berlusconi’s own performance deserves some comment. Initially written off as a sure loser, he managed to rally a sizeable part of his previous electorate, preventing a clear victory of the centre left. But this (relative) success did not just come from his populist appeal. Contrary to most foreign media reports, Berlusconi did not transform himself into a German-bashing anti-austerity advocate; his attacks on Merkel were a very small part of his overall campaign. The key to his appeal has long been his capacity to combine a specific brand of populism with a more familiar technocratic discourse. His public persona, his identification with the Italian people, the emptiness of his party and the dependence on his charisma all point to a populist figure. Yet his constant references to himself as a businessman rather than a politician, his managerial and corporate approach to politics, and his emphasis on numbers and ‘practical’ solutions are closer to a technocratic discourse. This combination highlights the similarities between Berlusconi and other prominent political figures in Europe, such as Tony Blair and Nicolas Sarkozy.[2]

This all suggests that populism and technocracy are not two poles of a new political spectrum, replacing the erstwhile contest between left and right. Nor does this division map onto a confrontation between nation-states and supranational bureaucracies. Populism and technocracy amount to complementary political styles, not to different political programmes. In fact, their strength comes from the fact that national political life is no longer organized as a contest between competing world-views. It is because there was little to separate the political programmes of the centre left, centre right and the M5S movement that the opposition between populism and technocracy captured the imagination of the media and analysts. Monti tried his hand – very awkwardly – as a populist whilst Grillo’s adherence to evidence-based policies and refusal to present an integrated, ideological vision of change makes him as much technocrat as populist. Berlusconi has combined these two styles for years. And Bersani – fleeing any real engagement with the debate about austerity and growth in Europe – hid behind comfortable reassurances about the safety of a Democratic Party victory.

Why should populism and technocracy emerge as the dominant political styles of our post-political age? The answer lies in their common affinity over political representation: they share an open hostility to parties and to parliaments. The technocratic vision is based on a very clear critique of the partisanship of elected assemblies and the inherent bias of party cadres. Monti’s strength was his distance from party politics. As soon as this disappeared, his aura evaporated. Grillo’s movement is equally hostile to parties and parliaments. Its operational logic is that of sensible local initiatives raised magically to the level of national policy. Its campaign was not about issues or ends; it was about the veniality of the political class itself. Populism and technocracy are the political styles that best correspond with widespread public cynicism and an elitist disregard for majoritarian democracy. They are symptoms of the demise of politics, not expressions of its renewal.


[1] See for instance Mark Leonard’s much publicized essay, Four Scenarios for the Reinvention of Europe, published in November 2011.

[2] On the similarities in political style between Berlusconi and Sarkozy, see Pierre Musso’s 2008 book, Le Sarkoberlusconisme (Paris: Aube). On Tony Blair, see Peter Mair’s 2006 essay, ‘Ruling the Void? The Hollowing of Western Democracy’, New Left Review, 42, pp25-51..

Italy: the return of politics?

15 Dec

Originally published on the 14th December in the Monde Diplomatique

Last Friday, the secretary of Silvio Berlusconi’s right-wing People of Liberty party launched a vitriolic attack against the technocratic incumbent, Mario Monti. Stating clearly that Monti no longer enjoyed the support of his party, Angelino Alfano’s goal was to prepare the ground for Berlusconi’s return to Italian politics. Monti responded by calling everyone’s bluff. He promptly resigned, brought elections expected in the spring of next year forward to February, and made it clear that the rising borrowing costs and tumbling market confidence that followed were all Berlusconi’s fault.

Monti’s move reveals the shallow political foundations of today’s interim resolution of the Eurozone crisis. Temporary stability was bought in Italy via the suspension of partisan politics. In the 1970s and 1980s, economic and political crisis saw the ushering in of military rule in Greece and Turkey. Today, technocratic rather than military solutions are preferred. This was seen at the national level in Italy and Greece with governments led by Monti and Papademos. In Spain, Greece and Ireland, it was managed via bail-out agreements brokered between national and European officials. In the Portuguese case, its bail-out was carefully timed so that it would be finalized and signed off by a caretaker government. The incoming government elected in June 2012, led by Pedro Passos Coelho, was then able to declare that its hands were tied and agreements made by its predecessor should be honoured. The Eurozone crisis has been contained only via the suspension of politics, a course which Monti’s resignation would appear to reverse.

Monti may well now run for office. But on what ticket? If he stands as a candidate in the elections early next year, Monti will no doubt present himself as the candidate who is beyond politics. Already egged on by centrist Catholic parties, and feared by the main centre left and centre right parties, Monti’s whole political persona is that of a non-partisan figure who implements what is sensible and what interest-driven political parties cannot bring themselves to do. Monti’s personal austerity matches his political message. If he ran, he would be a serious threat to those mainstream parties, the Party of Liberty especially, who in the public mind encapsulate the corruption of the political process itself. Monti’s ticket would be a technocratic one.

Against whom would he run? Italian politics is dominated by the centre right and centre left parties. Berlusconi’s return is indicative not only of his relentless desire for public attention but also of the absence of alternatives to him within the party. On the centre left, the new leader, Pier Luigi Bersani, is generally seen as a pragmatic ex-Communist, willing to endorse much of Monti’s programme so far. It is possible, however, that both these parties suffer from public disaffection with organized politics. Many doubt the ability of Bersani to reign in trade unions and have few illusions about the direction Berlusconi would take if re-elected. The alternative to these mainstream parties is Beppe Grillo’s Five Star Movement: a popular political movement that mobilizes the disenchantment widely felt with the political establishment. A well-known comedian in Italy, Grillo’s movement is explicitly anti-establishment and many of those involved in it deny that they are members of a political party at all.

In next year’s elections, Italian politics may find itself squeezed between the technocratic programme and figure of Mario Monti and the populist alternative of Beppe Grillo. Already, some support for the Five Star Movement has disappeared as Monti has soaked up the anti-establishment sentiment of Grillo’s followers. Squeezed in the middle, the mainstream parties are increasingly tempted by either the technocratic or populist alternatives. Berlusconi has already suggested that he plans a virulently populist campaign, focusing on anti-German sentiment in Italy. Bersani may seek to out-manoeuvre Monti by adopting his own version of technocratic austerity.

Italy is in this way a microcosm of wider trends present within European societies. The shrinking of the political mainstream and the rise of technocratic and populist alternatives appear to be one of the main leitmotifs of how the economic crisis is transforming social and political life in Europe. Europe’s political systems are slowly being transformed into populist technocracies. Italy will be worth watching as a barometer of these important trends.

Guest Post: Europe’s Soft Coup d’Etat Part 2

21 Feb

Editor’s Note: This is the second of a two part analysis of the politics of the euro-crisis by James Heartfield. Part 1 found here.

In this current moment some of those who are standing up to the EU’s austerity packages have shouted about the attack on democracy. They think that the EU is attacking democracy so that it can push through its spending cuts. So it is. But much more so it is using the debt crisis to push through the abolition of national sovereignty. So often it has.

Two and a half years ago a very prescient sociology professor Ulrich Beck wrote ‘The crisis cries out to be transformed into a long overdue new founding of the EU’. Beck went on: ‘until now there has been no joint financial policy, no joint industrial policy, no joint social policy – which, through the sovereignty of the EU, could be pooled into an effective response to the crisis’. The only real barrier, thought Beck was ‘the national self-delusion of its intellectual elites’ who ‘bewail the faceless European bureaucracy’. (Guardian, 13 April 2009)

December’s Brussels summit, drawing its moral imperative from the sovereign debt crisis, ended with a commitment to create a much-greater coordination of economic and financial policy. Under the agreement national governments must submit balanced budgets, and face ‘automatic penalties’ if they do not. The thesis behind the agreement is that the southern European countries’ spending and indebtedness has undermined confidence in them and because of that in the Euro.

Shifting the blame onto Greece, Spain and Italy for the Euro crisis twists the truth. Throughout the buoyant years of the noughties the success of the European periphery was cited proof that the European Union was working. More, exporting countries, including Germany, were glad that easy credit boosted Greek and Spanish buying of their goods.

Apart from the economics, though, the important shift is towards ‘stronger economic union’. When the crisis began Greece’s troubles suggested to many that the European Union would ‘fall apart’.Professor Beck’s intuition that the crisis would drive the greater integration of economic policy proved to be as insightful as the fears that the whole thing would fall apart. Where he misleads us is in portraying this movement as a greater democratisation ofEurope. On the contrary, the trajectory is towards a much-diminished role for democratic oversight, and a much enhanced role for unelected officials dictating terms to elected governments. ‘Automatic penalties’ is European code for ‘not subject to political negotiation’.

The reason for the ‘automatic penalties’ is that as national elites European governments do not have the authority to see through tough measures. For many years now, governments have leaned on the European Union as an extra-national source of authority. Governments that are not willing to make the case for tighter budgets honestly in their own terms, have hid behind the claim that they must make adjustments to meet the external restraints imposed by Europe.  That is what Italian Minister Guido Cali meant when he said that ‘the European Union represented an alternative path for the solution of problems which we were not managing to handle through the normal channels of government and parliament’.

Not just Italy or Greece, but Britain and Germany sought again and again to ‘tie’ or ‘bind’ themselves into European Union rules that would limit the political temptations of excessive spending. Quite why sovereign states should choose to bind themselves and their successors in obligations that they cannot change or renegotiate is a conundrum for students of international relations. The answer to the puzzle is that these elites no longer derive the same authority that they used to from national electorates or constituent assemblies that once they did. Instead it is in the international summits, most notably the European summits that leaders feel secure, bound together in their mutual fear of the unruly electorates.

Fear of economic crisis is driving the integration of European policy, and it is not being consolidated as a democracy, but as a technocracy, where officials follow procedures, rather than make policies. Six years ago the voters of France and Holland voted down the centralisation of Europe under its then proposed constitution – which was abandoned soon after. Now, using fear of economic collapse, European elites have talked themselves into submitting to a more onerous set of impersonal and bureaucratic rules.

Guest Post: Europe’s Soft Coup d’Etat Part 1

20 Feb

Editor’s Note: Mainstream commentators for the Financial Times, like Wolfgang Munchau, are now giving titles to their op-eds like ‘Greece must default if it wants democracy.’ Meanwhile, ECB bankers argue that you have to scare democratic publics into sado-monetarist bailout packages. And finance ministers, like the Netherlands’ Jan Kees de Jager, want to radicalize Europe’s democratic deficit: “I am in favour of more control, more supervision … Money is the thing we can control Greece with.” The conflict between democracy and technocratic management is becoming increasingly clear. Today and tomorrow we run a two part analysis of these developments by James Heartfield, who argues that this tension is embedded in the logic and political structure of the European Union itself, not just the euro and monetary union. James Heartfield is a writer based in London. His most recent book is The Aborigines Protection Society: Humanitarian Imperialism in Australia, New Zealand, Fiji, Canada, South Africa, and the Congo, 1837-1909 (Columbia University Press).  

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Europe’s Soft Coup d’Etat Part 1

Winter 2011/12. The Greek parliament is besieged from without by angry protestors. They riot burning down banks and government buildings. The Italian government, too, faces mass opposition – a general strike in protest at government €450 billion spending cuts. InIreland,Spainand many other European countries there are angry protests. But the Greek and Italian governments are not only under pressure from the public. They are answerable to other masters than the electorate.

Greek Prime Minister Lucas Papademos took office on 11 November 2011, though he stood in no election. Before becoming Prime Minister Papademos had been a senior official at the European Central Bank, and an advisor to the outgoing PM George Papandreou. Italian Prime Minister Mario Monti was appointed on 12 November 2011, having been made a life senator three days earlier by President Giorgio Napolitano. Before becoming Prime Minister Mario Monti had been an economics professor and a member of the European Commission. On the face of things, both Papademos and Monti draw their authority from their own parliaments – but everyone knows that is not so. Both of these unelected experts came to power in a ‘Soft Coup’; both deals were brokered by the European Union, in the middle of a harsh public debt crisis.

In the case of Greece, the European Union had been dealing with Prime Minister George Papandreou, leader of the largest, and best-polling political party in the last democratic elections, PASOK, twisting his arm to agree spending cuts. Talks were held between the Greek government, and the ‘Troika’ of the International Monetary Fund, the European Central Bank and the European Commission. Having agreed one round of cuts after another, Papandreou baulked at just how unpopular these were, and in October said that he would let the people vote on more cuts in a referendum. The European Union was outraged at the idea that the voters should be asked.

‘The announcement has surprised the whole of Europe,’ said French President Nicolas Sarkozy. ‘Giving the people a way to express themselves is always legitimate, but the solidarity of all the euro-zone countries cannot be exercised unless everyone agrees to make the necessary efforts.’ In a parliamentary session in The Hague, Dutch Prime Minister Mark Rutte called the threatened vote a ‘very unfortunate development’ and said ‘we have to do everything to prevent it.’ (Wall Street Journal Europe, 2 November, 2011) After crisis talks Papandreou agreed to cancel the public vote and to suspend normal party politics in favour of a government of ‘national unity’, and to stand down as Prime Minister in favour of Papademos. Robbed of a voice Greek people were more willing to protest and even to riot. German Finance Minister Wolfgang Schäuble wants the Greeks to cancel future elections and have a government without any politicians, only ‘experts’.

Around the same time another European leader – of the right in this case – was forced to stand down. Silvio Berlusconi had often been attacked by the European Commission, charged with corruption. But each time the question was put to the polls the wily Berlusconi won over voters. In November 2011, though, the debt crisis gave the Commission the lever it needed to prize Berlusconi out, and he resigned. European Council President Herman van Rompuy told Italians on 11 November 2011 that ‘the country needs reforms, not elections.’ Mario Monti was appointed Prime Minister and, in turn, appointed a ‘Professors’ Cabinet’, or ‘technocratic government’. Monti’s first reforms were to cut spending and to attack trade unions.

In a single week the elected governments of two of Europe’s democracies had been swept aside. At the very moment that Italian and Greek people needed to deal with the problems they faced, they were robbed of the chance. Before they could see their own political representatives argue out the best outcome on party lines, with the parliamentary contest mirroring the contest for votes. The party political system was a lever for ordinary people to push their goals right into the centre of government. But without it, public administration stopped being democratic, or even political. It was called ‘technocratic’ – government as technique, not as a negotiation; mechanical, not through dialogue. Instead of leaders there were experts. Instead of a contest ‘national unity’ was imposed (though many outside did not feel they were a part of it).

The events of November 2011 were called a ‘Soft Coup’, or a ‘coup without tanks’. But what Junta was taking over? Even the angriest protestors were not sure who to blame. If there were no tanks, where was the confrontation?

It would be hard to avoid the role that private financiers played appearing at every corner to warn against any backsliding on cuts. The ‘technocrats’ were not experts in juggling or medicine, but in finance. Mario Monti has been an advisor to Goldman Sachs, Coca Cola and the listing agency Moody’s as well as European Commissioner responsible for the Internal Market, Financial Services and Financial Integration, Customs, and Taxation. Massachusetts Institute of Technology graduate Papademos taught economics at Columbia University and even served as senior economist for the Federal Reserve Bank of Boston in 1980, before taking up positions at the National Bank of Greece and the ECB. Not surprisingly the anti-cuts protestors have been outraged to learn that Monti is a member of the secretive Bilderberg Group – all of which adds to the sense that government has been subverted by a secret coup led by high finance. Still, pointing the finger of blame at ‘capitalism’ or finance seems too vague. Down with capitalism, for sure, but does that really tell us any more about the forces arraigned against democracy?

Greek protestors have seen a German hand behind the changes, and they are not wrong. Chancellor Angela Merkel has called loudly for tighter rules on government spending, and for wayward governments to be reined in. In Athensthe protestors have even burned the German flag (and alongside it the Swastika flag to heap on the insults) while the newspaper Demokratia reports the new austerity agreement with a parody of the sign over the gates at the Auschwitz Concentration Camp ‘Memorandum macht frei’. Greeks talk more often of the wartime occupation when the German Wehrmacht starved the country. Pointing the finger at Germanyseems to make sense, except that Angel Merkel is not alone in her demands for Greek probity. Nicolas Sarkozy (whose country was also occupied by Germanyin the Second World War) is so close to Merkel that the press have coined a collective noun Merkozy. Just before he was bundled out of office, Silvio Berlusconi, too was lecturing the Greeks on the need to stick to their promises. Greek protestors wish that their enemy was justGermany’s leaders.

The Coup d’État against democracy inGreeceandItalydoes have a shape, however soft it looks. Its shape is the European Union. The pressure brought to bear on both countries came through the European Union. The ‘Troika’ of the European Central Bank, the European Commission and the International Monetary Fund brought pressure to bear on the Greek government to change its policies and make-up. Though an ad hoc body, the Troika is reported to be renting an office inAthensto keep an eye on spending there.

The Troika does not just oversee Greek spending. There is a Troika looking at Portugal’s budget, too. Jürgen Kröger, Head of EC mission, Rasmus Rüffer for the ECB and

Poul Thomsen of the IMF visited in May 2011, returning in February 2012 to spend two weeks looking at the budget there before deciding whether to release the latest batch ofPortugal’s €78 billion rescue loan.

In January 2012 all but two of the 27 heads of state at the European Summit agreed to German Chancellor Angel Merkel’s new fiskalpakt with binding limits on budget deficits and quasi-automatic sanctions on countries that breach deficit and debt limits enforced by the European Court of Justice. ‘The debt brakes will be binding and valid forever,’ said Merkel: ‘Never will you be able to change them through a parliamentary majority.’ (Guardian, 31 January 2012). From the European Union viewpoint to put questions of government beyond democratic control is a great success. Binding limits, with automatic sanctions, policed by unelected officials is what they want. ‘Parliamentary majorities’ overriding the expert officials is what is to be avoided.

Nor is it always the case that the enemy is the left. In the same month that the European Council was cooking up the fiscal compact, the European Commission wrote three separate letters of warning to Hungarian President Orban charging him with bringing in ‘undemocratic’ laws. By ‘undemocratic’ they meant that the new constitution put the Central Bank under the control of the democratically elected government, instead of leaving it in the hands of the expert technocrats, while threatening, too, that judges and information commissioners would be subject to the rule of parliament. Step through the looking glass into the EU-world where the rule of the people is dictatorial, but the rule of unelected experts is democracy.

Ex-sixties radical Daniel Cohn-Bendit stood up in the European Parliament to demand that Orban’s constitution be investigated for breaching the EU’s Lisbon Treaty. The man once known as Danny the Red ranted on that the Hungarian leader was striving to beEurope’s equivalent of Hugo Chávez or Fidel Castro (Guardian, 18 January 2012).

Cohn-Bendit as a student radical wrote

“The emergence of bureaucratic tendencies on a world scale, the continuous concentration of capital, and the increasing intervention of the State in economic and social matters, have produced a new managerial class whose fate is no longer bound up with that of the private ownership of the means of production.” (Obsolete Communism, the Left Wing Alternative, London, Penguin, 1969, p 249)

It was far-sighted indeed to spot the very trend towards bureaucratic-managerial rule for which Cohn-Bendit himself would become a spokesman. The only thing he did not foresee was that the bureaucracy that was emerging would be transnational, not just national.


“In a democracy you have to push people to do things by scaring them”

17 Feb

This past Tuesday, at a roundtable on ‘the future of the euro’ at Harvard University, we heard Lorenzo Bini-Smaghi utter these exact words. His Royal Smaghi-ness was a member of the ECB executive board until last November, and was advising his audience on more than his personal political views. He was giving us a glimpse deep into the technocratic vision that predominates in Europe at the moment, and the particular techniques in play to manage the situation. What stood out in the banker’s comments was, first, an extraordinary ideological commitment to the euro and, second, a somewhat delusional vision of social control.

The context for the banker’s comments was a discussion of the austerity measures being rammed down the throats of the Greek public. The measures are but one of the preconditions for a bailout package that will include other disciplinary measures, like international monitors of Greek spending decisions. The ‘people to be scared’ that B-S had in mind were, most immediately, the Greeks. They were to be scared into believing that there was one way and only one way to resolve their debt crisis, and that if everyone did not get in line, the withdrawal of European help would lead to even worse consequences. But it became clear that Bini-Smaghi’s comments applied to more or less the whole European public, perhaps minus the ‘sensible’ Germans. At another choice moment, LBS said “The Italian situation is different from the Greek one, but don’t tell the Italians. That is only something you say outside Italy. Inside, you say the opposite.” In other words, you want them to be scared, even if you have to lie to them.

Why? Because otherwise two things will happen. For one, the majority of Italians or Greeks might get the crazy idea that they don’t have to screw themselves in order to save themselves. There might be alternatives to massive austerity and a bailout of the banks. For another, the greater the fear the greater the limits on political outrage, or at least, the more the local ruling political parties will feel pressure not to attend to local outrage.

Bini-Smaghi’s comments speaks volumes both about a certain technocratic vision or political method and its limits. The method is based on the thought that central bankers and related technocrats possess the technical expertise and know-how to know what the rational response is to an economic crisis. This knowledge is supposedly value-free, and a matter of pure economics. However, most people not only lack this knowledge, they take to the streets in a mistaken, irrational pursuit of their own interests. BS dismissively called this ‘politics.’

So far, so familiar. But the most striking thing about Lorenzo’s BS is that the technocratic vision of control is far more expansive. It is not an attempt simply to apply expert economic knowledge to economic policy. It is a more radical ideological project. The delusion is that the political domain can be subject to the kind of fine-tuned control ‘at the margins.’ It is not just that technocrats ought to run national governments, or at least monitor their spending, but that national publics themselves can be pushed, pulled and cajoled with precision. Bini-Smaghi was talking about incremental doses of austerity until public outrage boiled over, and then stepping off the gas. And if outrage becomes too threatening to the background project, then more and more fear of a withdrawal of bailout funds to scare political leaders into imposing budgets and repressing unrest. One almost wonders if there isn’t some model floating around technocratic circles in which the relevant variables are ‘fear’ ‘austerity’ ‘bailout money’ and ‘outrage.’ The policy strategy being a kind of optimization function in which the aim is to get as close to ‘outrage’ without it boiling over into revolution.

Of course the dream of total social control is nothing new. It rattles around in the mental recesses of any expert claiming a monopoly on the legitimate possession of pure knowledge. But it is in play here in a substantial way. The coyness of the troika – demanding one package of reforms one day, another the next, promising money then imposing more terms, softening stances when protests get too dicey but putting the screws to national leaders, and above all playing a long game of amorphous indecision so as to maximize the space for deception – is all part of this managerial political approach.

Aims are not the same as success. The aim of total social control, especially when it becomes ideological, and especially when it sees politics exclusively as a domain of irrational, emotional behavior that has to be manipulated by various techniques, is its own foolishness. For one, it leaves actors without the ability to acquire actual political knowledge – there appears to be no knowledge to acquire, beyond that of the techniques of manipulating irrational publics. For another, the social world simply is not amenable to that kind of technical, fine-tuned control. Tweaking with the margins of outrage in relation to doses of austerity and fear is not just a creepy and outrageous political project, it is a fool’s game.

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.

Specterless Europe: What is the problem to which Europe seeks a solution?

2 Dec

A crisis of confidence says ECB President Mario Draghi, and just about everyone else. Confidence is lacking in the ability of eurozone countries, especially in the south, to pay back their debts. According to Draghi, as quoted in the Financial Times, “the most important element to start restoring credibility” and confidence is…you guessed it, austerity. The outlines of the new “fiscal compact” includes, first and foremost, agreement on “strong rules on public finances,” and stronger European control and enforcement of national budgets. The nature of this enforcement, and the punishments it will entail, are still in formation. The differences between Merkel and Sarkozy over the amount of budgetary control to allow national governments are familiar, though increasingly appear as the narcissism of petty differences.

After all, the underlying agreement about how to ‘restore credibility’ is striking – more Europe, more technocratic control, more budgetary austerity. There is no serious threat of exit from any national leadership, no major political or social movement directly addressing itself to the constraints of the eurozone or the imposition of austerity. The Spanish indignados have faded, Greek protesters pushed aside, with both countries electing conservative or unity governments to push through cuts. The closest thing to a direct mass challenge has appeared outside the eurozone, in the form of the one-day national strike against pension reductions by public workers in the UK.

But in what way is greater technocratic enforcement, at the European level, of budgetary limits a means to ‘restoring credibility’? After all, balanced budgets here are not ways of increasing productivity and restoring growth. The underlying structural problems in the economy not only remain but will be made worse in the short run. The eurozone is already in zero growth. Greece, as it prepares another round of cuts, revised growth downwards. Italy was already running a balanced budget before the sovereign debt worries emerged. But given 5% real interest rates, it would now have to run a 5% budget surplus – a surplus increasingly difficult to maintain under contractionary fiscal policies. Contraction slows growth, creating new need for more cuts to please creditors. Overall, then, the two major obstacles to economic growth, and thus ability to repay debts, are being reinforced: the monetary union, and fiscal constraint. From whence comes the ‘restored credibility,’ the new confidence?

What we are seeing is not what one might call ‘economic’ confidence, based on restoring economic fundamentals, but ‘political’ confidence. Measures, implemented by ostensibly neutral technocrats, are aimed at creating a new supranational political technology of social control, wherein investors in debt are given greater confidence that their claims will be given priority in any struggle over the stagnant or shrinking pie. The flash in the pan, halcyon days of the bubble, when a rising tied lifted all boats are gone. This is a struggle over a stagnant surplus. The new confidence is in who will control political apparatuses, both at the state and European level, and creditors have clearly won this round. They have barely faced a challenge in spectreless Europe.

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