The Issue Remarkable for its Absence: The Resilience of Neo-Liberalism in Europe

As the referendum campaign nears its end, one central issue is remarkable for its absence, despite the fact that it has been a major contributor to the anger that lends support to the Brexit camp:  neo-liberalism.  The revolt against the political parties, the rejection of the experts, the distrust of the elites more generally—all of this has to do with neo-liberalism—as does the venting by working and middle class people against the worsening of their life chances due to stagnant wages, growing inequality, and the increasing difficulty for the young to get a foot on the real estate ladder, or a steady well-paying job.  And yet the real cause of these concerns is never addressed.  Instead, the EU and immigration are blamed for all of Britain’s ills.  But whether the decision on June 23 is Leave or Remain, neither Britain’s problems nor citizens’ dissatisfaction will go away.

Neo-liberalism has been so resilient in the UK as well as in the EU that it receives barely a mention in the mainstream press or in public debates.  It is so pervasive that it is hardly recognized as a major source of the disenchantment that lends support to the Leave campaign.  Better to blame the outsiders (i.e., immigrants and Eurocrats) than to recognize that the problem comes from the inside, from the policies of British governments.

Democratically elected British governments beginning in the 1980s sought to transform the UK economy based on a neo-liberal economic philosophy.  It touted the market as the solution, the state as the problem; denigrated politicians and civil servants as rent-seekers not to be trusted; believed that financial market players were rational actors who deserved little or at most ‘light touch’ regulation; and promoted a growth model focused on debt-based real estate speculation rather than rising wages, and on service industries in place of manufacturing.  It should be no wonder, following the financial crisis of 2008 with the concomitant rise in job insecurity and poverty, in the face of no change in the neo-liberal discourse let alone the policies, that working people would have lost faith in their politicians, and expect some alternative.  But, surprisingly, there is no mainstream alternative, just the sirens of the populists blaming immigration and the EU.

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The New EU Governance: New Intergovernmentalism, New Supranationalism, and New Parliamentarism

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I was was in Brussels on June 16 to give a talk at a seminar hosted by the Open Society European Policy Institute and the Istituto degli Affari Internazionali based on my contribution to the IAI’s essay collection Govering Europe: How to Make the EU more Efficient and Democratic.

In the piece, entitled “The New EU Governance: New Intergovernmentalism, New Supranationalism, and New Parliamentarism,” I explain how governance in the EU has changed in recent years, what its problems are, and how it could be governed in the future.

I argue that only by by considering the  actions  and  interactions  of  all  three  main  actors  together  can we  fully  understand  the  “new”  EU  governance  and  its  problems. I use, by way of illustration, EU’s  crises  of  money,  borders  and  security, suggesting that it is best to think about the future of EU governance not in terms of any hard core but rather as a “soft core” of  member-states  clustered  in  overlapping  policy  communities. Finally I propose ways of reinforcing EU-level capacity for policy  coordination  with  national-level  decentralisation to address problems of democracy and legitimacy.

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Europe’s Crisis of Legitimacy: Governing by Rules and Ruling by Numbers in the Eurozone

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I was in Mannheim on June 6 to give a talk entitled: “Europe’s Crisis of Legitimacy: Governing by Rules and Ruling by Numbers in the Eurozone” at the Mannheim Centre for European Social Research (MZES), in their political science seminar series. I argue that the Eurozone’s economic crisis has generated a crisis of democratic legitimacy, as deteriorating economics and increasingly volatile politics have combined with restrictive governance processes focused on ‘governing by the rules and ruling by the numbers’. I analyze this legitimacy crisis in terms of problems with the ‘output’ policies, ‘input’ politics, and ‘throughput’ processes, arguing that in response to such problems, EU institutional actors—ECB, Council, Commission, and EP—all sought to reinterpret the rules and recalibrate the numbers ‘by stealth,’ that is without admitting it in their public discourse. My talk addressed not only issues of democratic theory but also neo-institutionalist theory, by analyzing on-going processes of ideational innovation and discursive legitimation during the Eurozone crisis using discursive institutionalism.

Vivien Schmidt in El Español on “The Seven Challenges Facing Europe”

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Spanish readers: Here is the link to an article on “The Seven Challenges Facing Europe,” for which I was interviewed along with Christopher Bickerton, published yesterday in El Español: http://www.elespanol.com/mundo/20160504/122237835_0.html. I gave this interview in conjunction with a talk on the impact of European integration on national democracies for the BBVA Foundation in Madrid on May 5, 2016.

Download the book  La búsqueda de Europa (kindle, epub y pdf)

Vivien Schmidt in Hungarian Press

Vivien Schmidt was interviewed recently by Hungarian news outlet HVG (World Economy Weekly) on Europe’s refugee fears and populist responses to threat of terrorism on both sides of the Atlantic. The interview was published in two parts on January 4 and on January 6.

The interview appears to have been widely read in Hungary, as the number of comments on both publications suggest. Zsolt Bayer, a co-founder of Fidesz and a friend of Viktor Orbán referenced the interview in one of his recent pieces arguing that it is an emblematic example of a conspiracy between the so called Western professors and the so called journalists which exemplifies the European left’s flawed way of thinking and the international leftist propaganda that tries to convince people that multiculturalism is something good.

Refugees on the Austrian- Slovenian border on November 1. Fotó: Túry Gergely
Refugees on the Austrian- Slovenian border on November 1. Fotó: Túry Gergely

Vivien Schmidt Presentation on the Euro Crisis of Governance at Dublin European Institute

Vivien Schmid’s UCD lecture draws on a report that she recently prepared for the European Commission. The EU’s economic crisis has generated a crisis of democratic legitimacy, as deteriorating economics and increasingly volatile politics have combined with restrictive governance processes focused on ‘governing by the rules and ruling by the numbers.’

Using the systems related terms of democratic theory, this paper first analyzes this legitimacy crisis in terms of problems with the ‘output’ performance of EU policies, the EU’s responsiveness to European citizens’ political ‘input,’ and the quality of the EU’s ‘throughput’ processes. It then considers how these play out for EU institutional actors—including in turn the ECB, the Council, the Commission, and the EP. The paper’s overall argument is that EU actors have sought to fix the economics and calm the politics by progressively reinterpreting the rules without admitting it in the discourse, and that such reinterpretation ‘by stealth,’ although perhaps beneficial for output legitimacy, risks generating further problems for input and throughput legitimacy.

The paper also shows that EU institutional actors differ with regard to their avenues for legitimation and their responses to fast burning versus slow burning phases of the crisis, with the main differentiation between technical and political actors. The paper finds that both EU technical and political actors have generated mixed responses from the public and analysts alike as a result of the disconnection between what they do and what they say. The ECB is seen either as ‘hero’ or ‘ogre,’ the Council as ‘dictator’ or ‘deliberative public body,’ the Commission as ‘ayatollahs of austerity’ or ‘ministers of ‘moderation,’ and the EP as a ‘talking shop’ or a potential ‘equal partner.’

The paper ends each of the sections on EU institutional actors with proposals in the short-term for modest remedies to the EU’s legitimacy problems, even without treaty change, plus some more bold solutions for the medium and long-term. It adds a final note centered on how to rethink EU governance if Eurozone economic governance deepens. In the conclusion the paper sets the crisis into the context of globalization, capitalism and democracy, and suggests possible future developments for EU legitimacy.

For the Commission, this paper highlights the need for leadership through greater flexibility and transparency in the reinterpretation of the rules, made possible by its new EP linked input legitimacy, and its now simultaneous accountability to the EP and Council. It also recommends a transformation in the Commission’s own approach to administering the rules—from community enforcer to community enhancer/facilitator/advisor within a more decentralized system of supervision/support. For all the institutions, it proposes a return to the long-standing institutional balance embodied by the Community Method. Among the other EU institutional actors, the ECB is to limit its focus to Euro-related issues of monetary governance, leaving economic policy orientation to the other institutional actors, while doing all the necessary as quasi lender of last resort and bank supervisor. The Council is to become a more open and transparent arena for political debate about the rules.

The EP is to be brought into all Eurozone decision-making, and better tied in with national parliaments, which will also see their role expanded. Finally, for the medium and long-term future, in addition to greater fiscal solidarity, the EU should end the unanimity rule, replaced by supermajorities with opt-outs, while treaty-based rules regarding the Eurozone are to become ordinary legislation, and therefore more readily amended. Moreover, instead of a Eurozone hard core with its own Euro-parliament the EU should be conceptualized as consisting of overlapping policy communities made up of clusters of member-states, in which all have voice but can vote only in the communities in which they are members.

Understanding the Eurozone Crisis Seminar Series (Autumn 2015) was co-hosted by UCD Dublin European Institute, UCD College of Social Sciences and Law, UCD College of Business and UCD Industrial Relations and Human Resources Group.

–Originally published November 25, 2015 at https://www.youtube.com/watch?v=ttPk3CQOZug&index=10&list=PLHKVjBSDqMB6VImr3bEut6Cp0In5Wrp7n

Vivien Schmidt Delivers Kleh Family Foundation Distinguished Lecture on the Eurozone Crisis to BU Alumni in London

Last week, Vivien Schmidt, Director of BU’s Center for the Study of Europe, travelled to London to deliver the Kleh Family Foundation Distinguished Lecture on “The Eurozone Crisis: A Problem of Economics or Politics.” Over 100 people attended the sold-out event at the Boston University London Center in South Kensington.

In her lecture, Schmidt argued that Eurozone crisis is not just about the economics, it is also about politics. The EU’s flawed economic policies have left Europe at risk of deflation, with slow growth, high unemployment, rising inequality, and a humanitarian crisis threatening the poorest Europeans. The toxic politics in response have become increasingly Eurosceptic and volatile, as citizens’ loss of trust and confidence in national governments and the EU have resulted in the cycling of incumbent governments and the rise of extremist parties and populist movements. The EU’s governance processes, focused on ‘governing by the rules and ruling by the numbers,’ have only exacerbated these problems, while also undermining national democracies. Is there any way out of the Eurozone crisis for the EU? Following her discussion of the challenges facing the EU in the crisis, Schmidt speculated on possible scenarios for the future.

Download audio of the lecture here.