Euro Crisis and the Transformation of European Democracy

As non-democratic market forces overtake popular will, the continent may have to fundamentally alter how it governs

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An anti-austerity demonstration in Portugal / Reuters

With the financial crisis, the debt crisis, and the worldwide coverage of Occupy Wall Street, capitalism has been under fire publicly for quite some time in Europe. Since the debt crisis started to show real potential for damaging the euro zone, both the euro and the European Union have had their futures dissected as well. The question has been this: can the European federal project survive the debt crisis? But now, that question is being repeated with a more melodramatic substitution: can democracy survive the debt crisis?

At first across-the-pond glance, this public hand-wringing seems to suggest that the continent should be sedated until it can pull itself together. Why is "democracy" -- the entire concept and practice -- being brought into this?

It turns out the debate breaks down into two sets of dualities -- two fundamental conflicts the European commentariat feels are being stoked by the current crisis. The first is democracy versus capitalism. American viewers might immediately see this as the "Occupy" duality, European edition. The debate over capitalism has probably been more explicit and vibrant in Europe than in Manhattan, and existed prior to the "Occupy" movement, but the point is that the rhetoric is familiar, though the catalyst is different. The second is democracy versus bureaucracy, specifically bureaucracy at the European level. Fascinatingly, both duality debates seem to take the story of Greece as their departure point.

In the democracy-versus-capitalism debate, what seems to worry European spectators is the way in which the markets, as expressed through bond prices and ratings agencies, have overtaken the political process. Some European see the exit Greek prime minister George Papandreou -- welcome though it was after his surprise call for a referendum on a bailout package for his country -- as deeply troubling, particularly when put together with similar political exits of the past year.

Here's a good example of the argument, coming from constitutional rights professor Dominique Rousseau, who presented his take in French newspaper Le Monde:

That which sit-ins, protests, strikes, marches, Molotov cocktails couldn't accomplish, the markets have: the resignation of prime ministers. The Irish Bian Cowen in February, the Portuguese Jose Socrates in March, Jose Zapatero in July, Iveta Radicova in October, George Papandreou and Silvio Berlusconi in November. Karl Marx, who was accused of caricaturing the functioning of the bourgeois republic, would smile today to see how reality surpasses his analysis. What are we seeing? That the markets delegate political management of society to politicians; that these men, because they are elected by the people, think themselves to be free in their decisions; that, as long as these decisions don't infringe upon their interests and remain compatible with their projects, the markets let them govern; that day when politicians take decisions which contradict [these interests], the markets dismiss them without care; and--which Marx didn't even dare to imagine--that the markets replace elected politicians by Lucas Papadémos, former vice president of the central European bank, and by Mario Monti, former European commissioner.

In other words, whether or not these politicians should have been removed, what's disturbing is that it was the markets that accomplished it, not the malcontents in the streets. When we see political change, we see it because the markets wish it. Or, as articulated by a German writer, "in the opposition between democracy and capitalism, Europe does not stand on the side of democracy."

This, though, brings us to the second opposition threatening democracy, as seen in the current debate. That is the battle between democracy and bureaucratic federalism, between popular national sovereignty and the fight to hold together the European Union. Though pretty much everyone not in Greece (as well as a good number of Greeks) was irritated by Papandreou's decision to hold a referendum on a hard-won bailout, the standoff also highlighted an issue that European project enthusiasts have been trying, unsuccessfully, to sweep under the rug for some time: how to reconcile European unity with popular sovereignty, traditionally expressed at the national level. In other words: how often should the citizens of France or Italy or Germany get to vote on what their European representatives are signing them up for? Will allowing more votes cripple progress towards greater unity?

When famed sociologist Jürgen Habermas was asked if the European leaders feared democracy, he responded, "They are afraid of not obtaining a majority or of losing power." He added that, due to the debt crisis, "fears about the future of Europe have become the number one theme of discussion. Perhaps the time of the European public sphere has finally come. The political leadership must show itself capable of an open mind about the reorganization of Europe -- and have the courage to swim, as needed, against the current, rather than follow polls in search of a majority."

This isn't a lone opinion, either. An op-ed in the German Süddeutsche Zeitung made a similar point back in October. "Critics hold that democracy is not suitable to bring Europe through the crisis," wrote Heribert Prantl, but, he contended, "what's necessary is a debt cut, not a democracy cut ... Germany cannot let its parliamentary democracy be castrated because of Greece."

The Democracy ReportSo why should anyone outside of Europe pay attention to this debate? The answer lies in how the two separate segments of the debate -- democracy versus capitalism and democracy versus European unity -- are linked. What Jürgen Habermas and several others are arguing should interest Occupy Wall Street supporters, for example. The idea is that the way for the state to escape domination by the markets is not to go at it alone. "A united market, divided people: who wins?" asks Dominique Rousseau. "It's not normal for the German people to decide through their parliamentary representatives the validity of Brussels agreements; it's no more normal for the Greek people to decide solely by referendum this validity. It is the European people together who should decide." Or, as Rousseau's fellow academic Yves Charles Zarka has also argued, "the sharing of sovereignty shouldn't be thought of as a sharing between member states but between the peoples of Europe."

What's being suggested, in effect, is a radical reworking of popular sovereignty -- "a solidarity between citizens of the union," as Zarka puts it, exercising citizenship rights at both the national and the supranational level. Habermas makes the argument even more explicitly: "the 'democracy of a single country' is no longer able to defend against the injunctions of a mad capitalism, which themselves cross national boundaries."

Is supranationalism the solution to the problem of markets dominating politics, dominating society? That, then, is the broader, and potentially much more interesting, question coming out of this European debate. Social theorists, of course, have been wrangling with the fundamental problem for over a century now: what do you do when the market becomes more powerful than the society and political system (think property rights and so forth) from which it springs? The idea seems only to be half-formed at present, but the notion of supranational solidarity as a possible way out is one that should intrigue Europeans and non-Europeans, academics and laymen, alike.