Abstract
How is Europe trapped (or rather, how did it entrap itself) and how can it get out of this trap? These are the questions that Claus Offe, one of Europe’s leading social scientists who currently teaches at the Hertie School of Governance in Berlin, tackles in this short and incisive book, which provides a panoramic overview of the economy, the financial crisis, the European response to this crisis, and the loss of legitimacy suffered by the institutions of the European Union (EU). The greatest problem concerning the crisis in the EU – the consequences of which we are still experiencing today – has been that the measures that were necessary to get out of it were precisely those that were politically impossible to take. The crisis, explains the author, eroded the very attitudes and motivations that are a prerequisite to resolving it. This is one of the main threads running through Europe Entrapped, published in 2015. Contrary to the mainstream framework of analysis of this crisis, Offe argues that the problem was not so much money as political consensus, and beyond this the fragility of the institutional mechanisms designed to build this consensus.
The first chapters of Offe’s work offer the reader an analysis of the so-called ‘free’ markets and, paradoxically, the central role of states in institutionalising the rights and regulations that allow the functioning of these markets (property rights, contractual rights, licenses, subsidies, etc.). He shows how the European Union plays a major role in their extension; an integrated Europe provides competitive advantages for both investors and employers, notably through the uniformity of regulations, the reduction of national political sovereignty, and the mobility of capital, work, property and services which enables greater competition.
The author then launches into an uncompromising analysis of the financial crisis, and especially the response of the EU. This is a crisis which has exacerbated the social and economic imbalances between and within Member States, and which has above all exposed the political incapacity to promote what the monetary union’s existence depends on: convergence. The analysis of the effects of the austerity policies and structural reforms, that they intensified the economic recession and increased rather than reduced public debts due to the denominator effect, is certainly not new. However, Offe highlights in an incisive way that those who have been the most exposed to the market, due to these measures taken in the name of internal devaluation, are also the most vulnerable and least well-equipped to cope; for example, young people and the retired. Meanwhile, those who praise the virtues of these ‘free markets’ have in fact managed to protect themselves from them (other authors demonstrate this phenomenon very well, notably Akerlof and Shiller, 2015). Offe also emphasises the dimension of nepotism, corruption, privilege and clientelism which should, of course, be eradicated. However, a national political debate is needed – and not, he says, a technocratic European approach – on the question of who needs to be protected from market forces and who does not.
The reader would perhaps expect this assessment to become the premise for an argument in favour of an exit from the European Union, or at least from the eurozone. It is, however, exactly the opposite that Offe proposes. While declaring that the euro was a mistake he warns that to dismantle it today would constitute an even greater error because it could not be done without causing a tsunami of economic and political regressions. And this is precisely where the trap lies; particularly as, in the context of the financial and economic crisis, the neo-functionalist theory of integration has, for the first time, not worked: the crisis has not triggered a process of increased integration but rather a dynamic of disintegration.
So what is to be done? It is necessary to analyse the faults of the economic and monetary union and to repair the defects in its construction. But this requires a political consensus and a strong democratic legitimacy, because the measures that need to be taken could prove to be unpopular. If the euro further strengthens the strong and weakens the weak, a political capacity must exist to reverse this tendency. Thus, Offe argues, Germany should have borne the brunt of the crisis; perhaps unsurprisingly, both the elites and the people of that country refused this. However, by favouring a reactive policy of small steps, reflecting both the abandonment of the normative approach towards European integration and the establishment of a mutual mistrust between Member States, the German elites have chosen to pursue their own short-term interests, and risk paying dearly for it in the long term.
Clause Offe goes on to show very convincingly how, throughout Europe, the context of democratic distrust has transformed an attitude of opposition to European policies into an opposition to Europe. As the democratic deficits seem to make it impossible to oppose EU policies, all that remains is to oppose the EU itself, an attitude which today is sowing the seeds for the growth of radical parties. This is something that the author strongly denounces, instead arguing that we must strive to understand in what ways the current European institutional arrangements are defective. Offe’s analysis on this matter is illuminating. For example, he points out that it is exactly those institutions which have the greatest impact on the daily life of citizens (the European Commission, European Council and European Central Bank) which are in fact accountable to nobody. Such a contradiction asks us to ignore the fact that the European ‘public interest’ that the Commission is supposed to work for is clearly the subject of debates, deliberations and political battles, or that the search for ‘consensus’ at the European Council does not necessarily have to lead to cross-party, or in other words depoliticised, positions.
However, the reader has to turn to the very last pages of the book to find any details of the author’s proposals for overcoming these institutional shortcomings, which include democratic legitimacy, supranational democracy, elected bodies, agencies which have to be accountable, and mechanisms of territorial representation. With the legitimacy that these changes would bring, the EU could then commit itself to strengthening social justice through social security and the redistribution of revenues between Member States and between social classes, which would have the effect of mobilisation and legitimisation.
Besides this, the author argues that a mental reframing is needed to stop pitting country against country and nation against nation, and recognise that the conflicts are rather those of losers against winners, class against class, and generation against generation. These conflicts should be tackled via the tax system (notably, through the harmonisation of corporation tax), social spending (establishment of a minimum level of social spending), wages (coordination of minimum wage systems), and the establishment of a ‘euro-dividend’ (for example, in the form of a basic income of €200 per month as suggested by the political philosopher and economist, Philippe Van Parijs who is one of the leading figures in the debate on a basic income) (Van Parijs, 2013). It is only when European citizens see these policies of redistribution at work that the EU will recover its legitimacy in their eyes. The paradox here is that it is only through their implementation that such proposals, which otherwise seem to be politically unworkable, would be made legitimate.