The New Old World (20 page)

But isn't there any democratic deficit in the Union? None whatever—the very question arises from a confusion. The EU deals with issues best handled by experts, of little direct concern to voters: trade barriers, rules of competition, product regulations, legal adjudication, foreign assistance. Insulation of
such areas from popular decision-making is not just practicable, it is desirable. Citizens understand this: they have little respect for their parties or parliaments, but hold their armies, courts and police in high regard. Those political issues people do care about, because they are directly affected by them—essentially, tax-rates and social services—are decided at national level, as they should be, where the Union, lacking any independent fiscal base or civil administration, does not impinge. In its own sphere, however, the EU needs to be shielded from demagogic interference by referenda or other hopeless attempts at direct democratic decision-making. ‘Forcing participation is likely to be counterproductive, because the popular response is condemned to be ignorant, irrelevant and ideological'.
⁴⁰
In any case, the wish to democratize the Union is bound to fail, because ‘
it runs counter to our consensual social scientific understanding of how advanced democracies actually work
'
⁴¹
(italics in original). For we should never forget that ‘political learning, mobilization, deliberation and participation are extremely expensive for rational citizens'.
⁴²
Fortunately, the masses realize this themselves, declining to pay the high costs in time and attention that interest in EU affairs would require. They would quickly turn against any effort to get them more involved: far from enhancing the legitimacy of the Union, schemes to democratize it would only render it less popular. Such features of the defunct Constitution as might be of some use can be quietly infiltrated through national parliaments without attracting undue public attention, for ‘the EU's greatest tactical advantage is that is, in a word, so
boring
'.
⁴³

As a casuistic for chloroforming any residual trace of popular will, these avowals have the merit of candour. But if the legitimacy of the Union does not lie in some inappropriate democracy, what is its raison d'être? Moravcsik's answer—as we have seen above—is commendably straightforward: ‘The EU is overwhelmingly about the promotion of free markets. Its primary interest group support comes from multinational firms, not least US ones'.
⁴⁴
Or, more bluntly still: ‘The EU is basically
about business'.
⁴⁵
So it should remain. The neo-liberal bias of the Union is ‘
justified
', for no responsible analyst believes current national welfare systems in Europe are sustainable.
⁴⁶
Nor can or should they be rearticulated at Union level. ‘Social Europe is a chimera'. In its perfect rationality, on the other hand, actually-existing Europe is the best of all international regimes.

Moravcsik's Panglossian outlook is alien to Gillingham. Far from any triumphalism, the diagnosis of the current state of the Union offered by his
Design for a New Europe
(2006) tends towards an extreme alarmism. The repudiation of the Constitution at the polls is stark evidence of a crisis in the legitimacy of the EU, and one for which there is good reason. Since the era of Delors, bureaucratic corruption, prejudice and meddling have been hallmarks of the unaccountable Commission in Brussels, where only the internal market and competition portfolios have retained integrity. The Parliament in Strasbourg remains an impotent talking-shop. For much of the time the Council has been hi-jacked by absurd French projects such as a global positioning system in outer space to rival the comprehensive American one already in existence, not to speak of rotten deals to extend the life of a moribund Common Agricultural Policy. What credibility could such a retrograde and venal contraption enjoy? The essentially simple tasks of negative integration have been perverted into a machinery of such complexity and opacity that few citizens can make head or tail of it.

Worse, in its resistance to scientific advances in agriculture, the EU has sunk into actual obscurantism. The blockade by Brussels of GM crops—Monsanto, the world's leading producer of them, is based in St Louis—represents a
ne plus ultra
of statist ignorance and incompetence. The same Canute-like attitude threatens to render the EU incapable of coping with the two greatest challenges it faces today: on the one hand, the momentous transformations under way as a new scientific revolution makes info-, nano- and bio-technology the cutting edge of industrial innovation; on the other, the entry of vast reserves of cheap labour into the world
market, available for mass production of traditional goods at much lower prices than in the past. Lagging behind US in the first, Europe is already under pressure from China, tomorrow perhaps India or Brazil, in the second.

Less publicly discussed, it is the former that is more critical. Confronted with technological changes comparable to those of the Industrial Revolution, blurring ‘the very distinctions between plants and animals, the animate and inanimate, and even life and death', the EU has been incapable of unleashing the market dynamism needed to compete with these.
⁴⁷
What is to be done? Gillingham's remedies are draconian. Certainly, the abolition of the CAP and liberalization of services are essential. But beyond such measures, whose necessity has so often been bruited without being acted on, more radical changes are required: nothing less than a true ‘bonfire of inanities' that would wind up regional funds, ditch the euro, downsize the Commission, flog off the buildings in Brussels, and convert the Parliament into a small and harmless consultative body. Ideally stretching from Ireland to the Ukraine, a free-trade zone encumbered with no more rules or bureaucrats than EFTA of old, such a Europe would reclaim and extend democracy as the true final purpose of integration.

The exasperation of these proposals—half tongue in cheek?—has something of the spirit of the more uncompromising passages in Hayek. But in another sense, they depart from his legacy quite sharply. Hayek's vision of ‘inter-state federalism', as he called it, was expressly designed to safeguard the free workings of the market
from
democracy, against whose dangers he was always on his guard, preferring to envisage a ‘demarchy' dispensing with the fetish of universal suffrage.
⁴⁸
His reasoning was just that which would take shape in the European Central Bank—that the higher above national sovereignty regulation of the market could be raised, the more insulated it would be from electoral pressures for state intervention or redistribution from below. For his disciple to turn the argument round, as if the aim of integration, rightly conceived, were to promote democracy rather than protect us from it, is a whimsical move. But beyond further enlargement—Gillingham writes with special sympathy for the Ukraine, not the most popular candidate in Brussels—it remains a gesture without institutional specification.

Design for a New Europe
abstains from any scheme that might be taxed with constructivism. What it offers is, in effect, a sweeping demolition plan—negative integration as gelignite under Commission, Parliament, Structural Funds and Monetary Union alike. The extremity of these proposals reflects the baffled note on which Gillingham's large history of European integration concludes. For what his narrative cannot explain is why the forces liberated by regime change should suddenly fade at the end of the story—true liberals vanishing, leaving behind only governments without conviction in deadlock with oppositions without a future. The balance of social forces below the surface of political events is missing.

In their prescriptive upshots, the accounts of the EU offered by Moravcsik and Gillingham are polar opposites. One would keep everything as it is. The other would level much of it to the ground. Behind such divergences lie two contrasting outlooks, each devoted to the market, but differing completely in their conceptions of public life. The first conceives politics as if it were little more than a branch of economics, subject to the same kind of calculus of utilities and predictability of outcomes. The second, by contrast, seeks to insulate economics as far as possible from politics, as a system whose spontaneous workings can only be impaired, and risk being destroyed, by government intervention of any kind. Here consequences, in any important sense, are always unintended: to benign effect in the market, to ironic or malign effect, for the most part, in the state. One of J.G.A. Pocock's most formidable essays, and his longest, is a historical reconstruction of ‘the varieties of Whiggism'. The varieties of liberalism have not been less. Curiously, in the galaxy of current versions, Europe might be described as a virtual object of predilection. Among these, ‘liberal inter-governmentalism' and ‘classical liberalism' are by no means the last word.

Mentally, perhaps even more than materially, America weighs on Europe. If citizens of the EU must now look to the US for leading accounts of the community to which they belong, that is not the only way in which their past and present are being written from a transatlantic vantage-point. The most rigorous thinker
to have reflected on the paradoxes of integration is an Italian, Giandomenico Majone, now retired at the EUI in Florence. Trained in Pittsburgh, he wrote his doctorate at Berkeley, and has taught at times at Harvard and Yale. More than stages of a career, however, attach him to the United States. The specialist field he commands, and the sources of his theory of Europe, are peculiarly American. The title of his first book on the subject,
Regulating Europe
, announces his angle of vision.

In Europe itself, the term ‘regulation'—in so far as it had any currency at all—was long associated principally with a school of economists of Marxist derivation originating in France, who were interested in the ways in which production, credit and consumption became interconnected in distinct ‘structural forms', or rules of reproduction of the system, in successive phases of capitalist development. In recent years, the word has acquired a more familiar ring in the vocabulary of a bureaucratic officialdom, without gaining much salience in public consciousness, not to speak of popular wisdom. Even in England, where regulatory bodies started to proliferate well before the rest of Europe, few have more than the vaguest notion of what functions, let alone personnel, lie behind their grey acronyms. The world of Oftel, Ofgem, Ofwat, Ofreg, remains a closed book to most citizens.

In the US, on the other hand, regulation has been a central part of the political landscape for more than a century, ever since the Interstate Commerce Act of 1887 set up a federal commission to regulate the railroads. In due course, there followed regulative agencies in one industry after another, most created during the Progressive and New Deal eras. The result has been, in Majone's words, that ‘as every student of the subject knows, in America regulation is a distinct type of policy-making that has spawned a distinct theoretical and empirical literature'.
⁴⁹
Majone's undertaking has been to bring this body of thought back across the water, to dramatic intellectual effect.

He begins by observing that nationalization was for long the functional equivalent of regulation in America. Wherein then lay the distinction between them? The answer is to be found in the ‘significant ideological and institutional differences between the American and European approach to the political control of
market processes. The long tradition of regulation in the United States expresses a widely held belief that the market works well under normal circumstances, and should be interfered with only in specific cases of “market failure” such as monopoly power, negative externalities or inadequate information. In Europe, popular acceptance of the market ideology is a more recent phenomenon'.
⁵⁰
It would be wrong, however, to treat the contrast as simply a matter of collective beliefs. There is an objective difference, Majone goes on, between nationalization and regulation, that makes the latter inherently superior as a solution to market failures. Public ownership was supposed to serve multiple purposes: industrial development, full employment, social equity, national security. Such goals were not only often incompatible, their very diversity detracted from the pursuit of efficiency, eventually casting the idea of nationalization itself into discredit. Regulation, by contrast, has just one ‘normative justification'—efficiency—and so avoids the redistributive tensions, and confusions, generated by nationalization. Whereas redistribution is a zero-sum game in which one group must lose what the other obtains, ‘efficiency issues, on the other hand, may be thought of as positive-sum games where everybody can gain, provided the right solution is discovered. Hence, such issues could be settled, in principle, by unanimity'.
⁵¹

Since, however, ‘unanimity is practically impossible in a large polity', the task of improving market efficiency is best entrusted to expert regulatory agencies. The key feature of these, as they gradually evolved in the United States, came to be delegation: that is, the abandonment by the state of any attempts to direct the work of the agencies it had created to regulate the market, leaving these to the discretion of those it appointed to them. This development was consummated with the reforms of the Reagan administration, which went still further by devolving most federal expenditures to third parties of various kinds in civil society. So conceived, the logic of regulation is an increasingly complete severance of expert authority from the popular will. Majone employs the idiom of a Californian school of conservative economics, property rights theory, to express this. Regulation represents a ‘partitioning of
political property rights',
⁵²
that transfers public powers from fickle legislatures, subject to partisan majorities that can change every half-decade, to independent authorities capable of making credible long-term commitments, without interference from voters.