On November 26, 2021, I spoke on a panel during the European Central Bank’s (ECB) Legal Conference 2021 on my forthcoming research.
The panel, titled “Relationship between Law and Markets,” also featured Katharina Pistor, Edwin B. Parker Professor of Comparative Law at Columbia Law School; Marco Dani, Associate Professor at the University of Trento; and Barbara Balke, Director General and General Counsel at the European Investment Bank.
In my presentation—“Reconsidering the EU’s Economic Ideas on Market and Law: Toward greater effectiveness, accountability, and democracy”—I discussed the resilience of ordo-liberal and neoliberal ideas with regard to Eurozone governance over time (Law), the impact of such ideas on European economies (Markets) and the deleterious economic, social, and political consequences related to the populist democratic backlash. I also spoke about the changes resulting from the COVID-19 response, suggesting some pathways forward for the decentralization and democratization of the EU’s economic governance that could ensure greater legitimacy in terms of performance, procedures, and democracy.
Full details on the ECB Legal Conference can be found on the ECB website. Video recordings are available at this link:
Earlier this morning (Thursday, November 18, 2021), I presented a paper entitled “Reallocation: Neo-liberal Scripts and the Transformation of European Capitalism and Democracy” for an online conference organized by the Cluster of Excellence: “Contestations of the Liberal Script (Scripts).” The event took place as part of a book project, The Liberal Scripts at the Beginning of the 21st Century (Tanja Börzel, Johannes Gerschewski, and Michael Zürn, eds.) to be submitted to Oxford University Press.
In this paper, I talk about the resilience of neo-liberal ideas since the 1980s until the Covid-19 pandemic, and their impact on capitalist structures, institutions, and policies. I argue that neo-liberalism, focused on promoting ‘less state to free up the markets,’ has dramatically transformed democratic capitalism in ways that have increased inequalities and led to a democratic backlash with the rise of populism. But the responses to Covid-19 in Europe and the US suggest at least a pause to neo-liberalism, if not its demise, with the shift to an emphasis on sustainable and equitable growth with a renewed role for the state.
On Wednesday, November 17, I took part in a panel discussion with Nathalie Tocci and Alexandros Yannis on the EU's approach to climate change in view of the Glasgow COP26. The event, entitled A Green and Political Europe, was hosted by the Belfer Center at the Harvard Kennedy School.
In my remarks,I focused on the ways in which the EU seeks to lead the world through example on its approach to climate change, with ambitious goals as evidenced by its many different policy initiatives. But I also talked about the internal challenges to the EU, not only to ensure implementation but also in terms of big differences among member states on which aspects of the program they support. And needless to say, I also discussed the problems coming from populist climate skeptic parties on the extreme right.
On Tuesday, November 16, 2021, I gave a talk for the video-conference: “The Political Science of Next Generation EU: Exploring Potential Impacts of the New Recovery Fund” organized by the European Parliament Research Service and the European University Institute (Brussels and Florence). I spoke on the panel: “The Potential Impact of NGEU on EU Institutional Dynamics and Imbalances.”
I am delighted to share that my book, Europe’s Crisis of Legitimacy: Governing by Rules and Ruling by Numbers in the Eurozone, received the Best Book Award 2021 from the American Political Science Association's Ideas, Knowledge and Politics Section.
Schmidt’s subject is the Eurozone crisis, which revealed the fragility of the EU’s technocratic institutions (which she pithily summarizes as suppliers of “policy without politics”). As Greece crept towards a default on its sovereign debts in 2010, the EU’s principal decision-making bodies (the European Council, which consists of the various heads of EU member states, and the European Commission, which proposes and implements EU policy) imposed a rigid prescription of bridging loans and austerity requirements. However, Political Epistemology 42 Fall 2021 • No. 1 the effects of this rigidity were dire: financial market speculation over Greece’s debts not only failed to recede, but spread to other peripheral economies. Meanwhile, political divisions within the EU intensified, and what had been a general apathy among EU citizens about the supernational body in many cases morphed into outright hostility. In response, Schmidt argues, EU leaders relaxed the policies that had catalyzed the crisis in its early years. However, despite apparently better policy outcomes, these leaders continued to profess their adherence to “neoliberal” orthodoxy. The moralized language of profligacy and prudence that they had employed in 2010 to justify their rigidity had itself become a constraint on their political agency. Thus, when they finally acknowledged their reinterpretations of their rules in 2015, the EU’s figureheads appeared confused (if not dishonest) rather than victorious. Rather than settling the controversies surrounding the EU’s constitutional and political basis, they had in fact exacerbated them. By setting out to save the euro (albeit from a seemingly negligible threat), they had imperiled it.
The political epistemologist will find much of value in Schmidt’s thorough account. Her analysis is impressively ecumenical, drawing on political theory as well as economics, IR, and comparative politics. But, in common with her previous studies of the EU, Schmidt’s main method is interpretive. The constraints established by the leading figures at the onset of the crisis (inter alia, German Chancellor Angela Merkel, ECB president Jean-Claude Trichet, and EC president José Manuel Barroso) were fundamentally discursive. Moreover, Schmidt does an excellent job of showing that the various conceptions of legitimacy to which these figures oriented themselves were entirely ideational—and thus intangible. Early in the crisis, policymakers may have thought that they were generating sufficiently good “outputs” that the lack of democratic “inputs” didn’t matter. However, even when they did materialize, the “outputs” policymakers favored did not match those expected by voters. This led to changes in what Schmidt calls the “throughput” of the policy process—the ways in which policy is generated and citizens are, or are not, included. The bulk of Schmidt’s account is addressed to these changes, which followed dramatic shifts in power and epistemic authority as economic conditions in the periphery deteriorated. Crucially, she shows that despite their apparently salutary effects, it is far from clear that these changes will be sufficient to address the EU’s lack of democratic (input) legitimacy. Despite the discursive churn, policymakers had not (before the pandemic, at least) relinquished the idea of rigid rules and numbers, even if the content of those rules and numbers had changed. There may be good reason for this: given the technocratic discourses and expectations baked into the EU’s identity, any fundamental change might lead to more, not less conflict. Yet if elite ideas do not calibrate with those of ordinary voters, conflict may be unavoidable. Either way, Schmidt’s analysis suggests, the EU’s democratic crisis is nothing less than a crisis of ideas.
On Friday, November 12, I gave an online talk entitled “The Power of Ideas in Capitalism Transformations and the Democratic Backlash.” My talk was based on a paper to be published in the journal Stato e Mercato for the 40th anniversary of the journal. My main focus was on how to explain the resilience of neo-liberal ideas since the 1980s, its impact on democratic capitalism, and whether it would remain the paradigm in the future. I began with theorizing about the nature of the resilience and power of neo-liberal ideas and discourse. I next explored the powerful role of resilient neo-liberal ideas and discourse in the neo-liberal transformations the 1980s, the 1990s, the 2000s, and during the Eurozone crisis. I then considered what neoliberalism wrought in terms of the deep changes in capitalist structures, institutions, and policies brought about by the neo-liberal project. I followed with the rise of alternatives ideas, first with the populist democratic backlash to the impact of neo-liberal transformations, then with the Covid-19 crisis response that has seemed to put a pause to neoliberalism, with a shift to sustainable and equitable growth. I concluded with an analysis of neoliberalism’s seeming decline in resilience at the moment.