Book Review: Zwischen Globalismus und Demokratie: Politische Ökonomie im ausgehenden Neoliberalismus

The future of Europe squeezed between neoliberal globalism and democracy

Even in response to insistent questions, he does not want to be politically positioned, in favour of neither Orbán nor Brexit, but navigates in vagueness: the EU suffers from too much centralisation and strongly resembles a – non-military – empire. The vanishing points of his vision are decentralisation and democratisation, along with small states, although it remains unclear how a loose association of small states could assert itself against the ‘imperial’ claims of China, for example, or maintain an equidistance between the USA and Russia. In the geopolitical context, this idea seems like an embarrassment because a better argument against EU developments – which are indeed questionable in many respects – is not in sight. Let us look in detail at the argumentation in this book of over 500 pages, in which he explains his view that globalism and democracy are incompatible, that globalism with its neoliberal ideology has passed its peak, and that it is time to elaborate a convincing alternative, given that the EU in its present form does not seem sustainable.

Streeck sets out with the high claim of ‘outlining future prospects for Europe’ (p. 213), to which the following applies: ‘whoever wants to talk about Europe must not remain silent about capitalism’ (p. 385). Streeck sees the EU as an ‘exemplary combat zone’ and thus differs favourably from numerous ‘Europe researchers’, who all too often abstract from different interests and see Europe rather as an identification offer for pro-Europeans, as a welcome opportunity to fight the nation state, which is perceived as backward, preferably combined with an optimistic vision of a (rarely defined) ‘social Europe’, which is revived especially in time for European elections, only to be shelved as soon as possible. Streeck rejects Europe as an identity-political confession or civil religion: the sacral treatment of Europe lends the project an aura that makes questions about its meaningfulness appear blasphemous (p. 134). He rightly criticises the recourse to arbitrarily interchangeable ‘narratives’, not least the peace narrative, but also concrete developments such as the constitution of the Court of Justice of the EU, which means that the chance of overturning Court of Justice rulings tends towards zero. The book explores the extent to which principles of neoliberalism are built into the foundations of the EU. Streeck criticises with good reason researchers such as the advocates of neo-functionalism with its spillover theorems, who seem to believe we are living in a pure ‘knowledge society’, driven by no interests whatsoever, and are never exposed to confrontation, for example, to a real trade union assembly.

Rise and fall of neoliberalism

At the centre of his analysis is neoliberalism, its rise and limits. He sees the rising national debt of EU Member States since the 1970s as an indication of an attempt to raise revenues in the face of shrinking taxability. The expansion of government budgets necessitated recourse to unlimited central bank money. The role of central banks and the over-extension of their mandate, he argues, is technocracy-promoting and democracy-threatening (p. 300 ff). How far can this process be stretched?

The great turning point occurred in the early 1990s, with the transition from globalisation to hyperglobalisation, which led to the interplay of crises of systemic and social integration (pp. 458, 463). He sums up the phase of hyperglobalisation, identical with the high phase of neoliberalism, in the EU context with the keywords ‘four freedoms’, ‘isonomy’, ‘privatisation’, ‘market before state’ and ‘euro as the new gold standard’ (333), whereby the supranational institutions contributed to the promotion of a denationalised, supranational economic system. ² The ‘Single Market 1992’ project enacted a ban on capital controls, committed to unlimited mobility of capital worldwide. The state became increasingly unable to act; the social-democratic/‘socialist’ ‘Third Way’ also contributed to this.

Streeck situates the political economy in the tension between ‘globalism’ and democracy. His ‘intuition’ is that the overcoming of the nation state in favour of a global techno- or ‘mercatocracy’ (rule of the market) always goes hand in hand with de-democratisation. Consequently, he identifies the EU as a (neo-)liberal empire of post-democratic states (p. 218).

After the turn of the century, instead of a super-state, an imperial configuration emerged, ‘associations of rule’ (Herrschaftsverbände, Max Weber) with centre and periphery (p. 335). Empires differ in the extent and role of military force; the EU is an instance of a neoliberal empire, whereby it is crucial that the elites of the periphery support those of the centre. Hence the interest in imperial elite management.

He rightly criticises attempts by the EU to force the hand of governments that stand up to it: he points to the situation in Greece when then Prime Minister Tsipras wanted to organise a referendum on whether to accept the European Commission’s austerity plans and was forced to give it up, as well as Italy with Monti and the current situation regarding Poland and Hungary. Streeck assumes that the Next Generation EU programme will serve to secure and expand Germany’s economic lead and will not change the economic disparities between the north-western European centre and the southern periphery. Instead, the money will serve as an instrument of international elite management to keep friendly governments in the saddle, like the technocratic governments under Conte or Draghi. The guiding purpose would be the cohesion of the ‘empire’, a kind of Ponzi scheme. He analyses in detail the asymmetrical effects of the euro regime on the disadvantaged southern countries of Europe and on the Federal Republic of Germany as beneficiary.

Europe overstretching its competences and powers

In the chapter on Europe, Streeck first deconstructs the idea of a ‘superstate’ Europe, thus using a term that opponents of Europe like to invoke, whereas convinced pro-Europeans tend to speak of a sui generis entity or the ‘United States of Europe’.

The attempt to break out of the single-market logic, which is presented as having no alternative, and to put the European project on a new footing, an imperative necessity anyway in view of climate change, is certainly meritorious. The current ‘business as usual’, for example in EU agricultural policy, which is still ‘fuelling’ climate change, is an unintentional confirmation of Streeck’s theses, although paradoxically he dwells on climate change and agricultural policy only selectively. The strong path dependency of certain policies, such as agricultural policy, makes a change of direction towards climate protection virtually impossible, as has been shown with the most recent agricultural package. The European Parliament did not side with climate protectionists at all when it was passed, but supported ‘business as usual’.

Before the advent of COVID-19 there were plenty of warnings of pandemics, but they were ignored. In the first stages of the pandemic, references to the fragility of global supply chains and the dependence of national health systems on globalisation were ‘anathema’ in Brussels and in particular in Germany. The pharmaceutical industry had relocated the production of basic materials mainly to China and, of all places, production stopped in China and with it the supply. With the pandemic, a global economic crash occurred that had not been experienced since the 1930s. On the continuing effects of austerity policy, Streeck notes, using the example of the pandemic, that it forced an excessive shrinkage of the health systems in Italy and Spain, which made it harder to fight the virus. He points to a study showing that between 2011 and 2018 the Commission called for health spending to be cut 63 times, pensions to be cut 10 times, wage growth to be restricted 50 times and unemployment benefits to be cut 45 times (p. 377).

In particular, the disruption of supply chains in the medical sector reinforced the trend towards reshoring and reindustrialisation in Europe and the USA to reduce global dependency and strengthen supply chain resilience (p. 433). The pandemic drew attention to another aspect of globalisation, the scandalous conditions in slaughterhouses (pp. 435 ff). Globalisation scepticism had by now reached even traditionally market-friendly media such as the Financial Times, the Frankfurter Allgemeine Zeitung (FAZ) and the World Economic Forum in Davos, and the pandemic put reversal high on the agenda. Brexit and Trump were not ‘industrial accidents’ but rather portents. It is still unclear what new order will replace globalisation, but polycentrism, pluralism and regionality will play a greater role. In Germany, the fearful notion of protectionism is associated with crisis, and deglobalisation with disintegration because of the issue of where to export.

In the early 2000s, the realisation dawned that globalisation requires compensation for the losers (p. 314). Discomfort with globalisation had always existed, but it was only with hyperglobalisation that globally articulated counter-positions and demands for de-globalisation developed and since then the Multilateral Agreement on Investment (MAI) and the Transatlantic Trade and Investment Partnership (TTIP) failed because of global protest movements such as Porto Alegre. In the wake of the financial crisis, there was a counter-movement, putting the brakes on internationalisation. The discussion about withdrawing from globalisation, deconstructing it and bringing production back home (‘reshoring’) had begun. Streeck agrees with Dani Rodrik, who considers a world state normatively undesirable because it cannot successfully balance the diverse particularities of territorial societies (p. 259) – Streeck speaks of ‘super-statism’. Rodrik postulates that if national social arrangements collide with the demands of global economies, the latter should take a back seat (p. 259).

The ‘global governance’ approach as cover for unfettered globalisation

Streeck rightly criticises the truncated character of those theories of democracy that simply ignore the power imbalance between labour and capital and the need to contain it through the right to strike and democracy in the workplace. The arrangement of a peaceful coexistence of capitalism and democracy based on this began to erode in the 1970s, a process that accelerated in the 1990s. With globalisation, there was a shift of power towards international capital, which increased the pressure to supplant national democracy with global governance. Global governance suggests control without mechanisms of domination, the participants united in good will and expertise, as if it were about problem-solving through intelligence and not at all about distribution of power, resources and domination (p. 304): the goal is not profit but a good life for all. Therefore, there is never any talk of capitalism in governance discussions. The example of climate policy, which, despite an unmanageable succession of meetings has not halted the rise in global warming, serves as a further example of the dubiousness of the global governance approach, which rewards free riders or even inaction.

As an alternative to the rational choice paradigm, a moral imperative that leaves no choice is offered as the result of a communal rethinking: social movements could disseminate or revitalise moral orientations better than large-scale state-bureaucratic apparatuses (p. 484). If something is perceived as immoral, one should not do it, regardless of whether others do it, for example, eating meat or going on holiday by plane. Positive examples of this shift in thinking are cities that commit to becoming carbon-neutral or CO₂-free. Moral renewal spreads horizontally, but in the EU this does not work: if a country wants to limit the number of animals per square metre, it should have this freedom, but in the EU this is not the case.

Streeck rightly emphasises that there cannot be an inevitable configuration of political form, state structure and decommodification, with no alternative, always based solely on normative or functional presuppositions. This starts from the basic assumption that democracy is not possible at a global level; if so, at most as a façade democracy. Centralised state systems elude democratic design. Already at the European level, a lack of democracy is unmistakable and a cross-party coalition in the European Parliament has been trying for some time to deepen this deficit, for example by allowing so-called ‘European lists’, which would represent a new degree of diffusion of responsibility, not to say disconnection from democratic intervention and defence against possibilities of control. It will therefore meet with resistance.

Streeck’s definition of nationalism as a ‘neutral term for action related to the nation-state’ is problematic; the negative facets of nationalism are conjured away and the system of coordinates is thus deprived of an axis. Streeck only knows the opposite poles of ‘accomplished globalism’ (nowhere defined) versus ‘renewed nationalism’, which has shed all the negative characteristics of the old nationalism.

In line with Edward Gibbon, Streeck is caught up in an enthusiasm for small states and their advantages, which are exemplified in military thought-games about ‘barbarian’ incursions from the ‘Tartar deserts’ that could be repelled by means of intensive cooperation. These remarks on military simulation seem strangely old-fashioned: modern warfare and flying machines such as drones do not appear, only hordes riding on horses, which verges on the fantastical (p. 153). They serve the purpose of showing that the EU is ‘fragile and doomed to fail in the long run’ (p. 157), whereby Streeck remains true to himself in memory of Keynes’ ‘in the long run we are all dead’. This also applies to empires, to the USA and China, depending only on the chosen time span. The fact that the number of sovereign states has more than doubled since 1950 and the population under colonial rule has fallen virtually to nil is proof for him. Conversely, he complains that from a pro-European point of view ‘failure is not an option’ – as it is for most states, one is inclined to add.

His point that the EU should adequately establish its legitimacy with its citizens and encourage them to identify with it is quite justified. Although the outdated dogma of an infallible internal market logic has had its day, internal market fanatics still decide on issues that should be debated democratically. With the Fiscal Compact, a framework was created that – according to Streeck – makes an alternative economic policy impossible. Finally, Streeck addresses the connection between Germany’s opening of its borders in 2015 and the 2016 pro-Brexit vote against the stated position of the British government at the time, a connection that has been effectively tabooed by the German media (p. 344).

What is the alternative to globalism, neoliberalism and the EU?

Streeck argues in favour of ‘small statism’, localism, sovereignty and democracy ‘on the ground’ (p. 387). He targets a confederation, defined as a horizontal-cooperative-associative entity that can be exited at will, rather than a vertical-hierarchical entity with a monetary union that makes exit impossible. At first glance, a cooperative-associative rather than a hierarchical-imperial order seems naturally sympathetic, although level-dependent combinations of cooperation (‘à la carte’) are conceivable.

The bottom line for Streeck is that neoliberalism is in a double crisis, stuck on the path to globalist centralisation (‘upwards’) and, at the same time, in economic stagnation. This situation opens up new prospects, but also new dangers. After the failed attempt in 1954 to establish a European defence community, politicians are again calling for the creation of a European army, in a sense as a further pillar towards a political union. Streeck criticises these efforts and interprets them as the final stage on the road to empire.

Streeck vehemently advocates the model of a ‘Keynes-Polanyi state’, in which production and consumption should take place in the same country, if possible, with different forms of compromise between capitalism and society (p. 440). Democracy in the ‘Keynes-Polanyi state’ should be imagined as active participation, communitarian practice instead of ‘passive-regressive expectation of salvation or politically correct declaration of faith’ (p. 474). A new monolithic system of universal rules cannot be the goal (p. 412), rather multipolarity in the form of coexisting subsystems. Interdependence proves fatal in times of crisis, and national autonomy, disentanglement and deglobalisation are the order of the day (p. 408). With Keynes, he argues for minimising rather than maximising economic entanglements (p. 401). Only the nation state was able to assert the primacy of politics against hyperglobalisation and ensure the protection of citizens. Streeck leaves it to others to judge whether the Keynes-Polanyi state is system-breaking or a new version of capitalism (p. 475).

Who is the new subject committed to the alternative, and which actors would drop out? First of all, a decidedly left-wing project would have to be pursued by the left, but Streeck is sceptical because it once ran towards the Third Way and is now cosmopolitan-inspired with a tendency towards technocracy and ‘big government’. He complains that green and left politicians are more afraid of the nation state than of the self-regulated world market, and that the channels of communication of the left are currently clogged by identity politics. So not the left, nor the trade unions (they have been decaying for a long time and their voice counts less and less, p. 458), and not political parties (of which there is hardly any talk ³ ), but rather the new ‘social movements’ of the opponents of globalisation, the ‘citizens’, ‘society’, that is, actors that remain relatively unspecific, at least ‘from below’.

What time would be most favourable? According to Streeck, we are in a ‘Polanyi moment’ (p. 492), so there would be room for a European ‘sociotope’ that cherishes small-statism. Multipolarity and polycentrism allow for diversity, disunity and pluralism in the organisation of world regions. According to Streeck, the signs are not bad for a turn away from asymmetric-monocentric nationalism towards a symmetric ‘Polycentric Nation-based Order’ (PNO) (pp. 491; 504) ⁴ : the USA is preoccupied with itself, China has no need to extend its social order to Europe or the USA, and Germany is clinging to post-war pacifism and therefore blocking French military ambitions, while at the same time rejecting transfer payments and thus blocking genuine EU reform. A shift to domestic growth is already taking place: this includes the rise of personal services, regionalisation of food, expansion of public transport and charging infrastructure for electromobility, building renovation and environmentally friendly urban redevelopment.

What are the limits of the ‘new vision’?

Several mosaic pieces are curiously missing from Streeck’s analysis. On the one hand, workers’ participation and board-level participation, and democracy at work, with which he could have put his arguments on a broader basis: for Streeck, democracy always remains limited to the political level, the economic does not seem democratisable. On the other hand, one might mention ‘local currencies’, which already exist and function and would also fit well with the proclaimed goal of securing local work. Given the preference for cooperative-associative forms of ownership, it should have been obvious to consider this topic in view of his prediction that there will be a reform of the monetary system, whereby he at least considers a renovation of the European Exchange Rate Mechanism II (p. 479).

To absolutise a simple return to small states as a bulwark of democracy – according to the formula: nation state = democracy – would amount to a naïve simplification that the author does not intend. There are limits to thinking on one’s own turf; nation-state politics is a restrictive return to the framework of the ‘fatherland’, as can be seen again in the fight against the pandemic. Nevertheless, Streeck – intentionally or unintentionally – glosses over the history of nation states as if it were a linear history of constant progress towards more democracy and not more ambivalent, being at the same time a machinery for unleashing wars, religious conflicts, even world wars, with the side-effect of the complete abolition of democratic achievements. Despite all justified and necessary criticism of the EU, that particular supranational entity has helped to secure a long period of peace.

The publisher declares the book to be ‘excoriating’, especially in view of the pandemic, the ‘gilets jaunes’ (literally ‘yellow high visibility jackets’, as worn by members of the movement) and the limits of neoliberalism. On the other hand, the pandemic, but also the climate-related floods or forest fires have shown the limits of small states. For example, the EU has long since set the course for mobile phone broadcast warning systems for direct notification of those affected, of the kind that have long existed in the USA, China and Japan, and are being introduced in France, Italy and Great Britain, while in Germany there is talk of reintroducing sirens. Streeck ignores the fact that some European course-setting can be helpful, whereas a traditional small state such as Belgium remained at the same level of unpreparedness as Germany in the face of the floods. No one seems properly prepared for regularly recurring fires.

His alternative concept of a united but not unified Europe, however, suffers from a lack of institutional anchoring and thus follows a German tradition of building castles in the air. ⁵ The small states would coexist peacefully and harmoniously, he postulates, so that the question seems justified whether there would be any international relations at all. In parallel, he pleads for a Europe of variable geometry or à la carte (p. 390). It can be assumed from this that the Keynes-Polanyi state is incompatible with many building blocks of the EU, such as membership of the monetary union with fixed debt and budget deficit limits, and prohibition of capital controls, internal as well as external. In order to implement the desired changes in the EU, not only would considerably higher transfer sums be necessary, but nothing less than an abolition of the Fiscal Pact, the ‘debt brake’ and the ban on capital controls, together with a revival of industrial policy with the possibility of subsidies, the enforcement of the ‘polluter pays’ principle, an increase in the size of the public sector, and crisis resistance and resilience. In this context, why the editors left in footnotes on dumplings and pasta remains unfathomable.

It is not least to Streeck’s credit that he has brought blasphemous questions about the EU back into the culture of rational discourse. In any case, pro-Europeans have to answer a few tricky questions that go to the heart of the matter, including many neoliberal ingredients. Why is it that in the USA a state like California can introduce stricter emissions standards, while in the EU it is impossible for a Member State to do the same? Is the EU therefore more neoliberal than the USA or at least the EU internal market more neoliberal than the US internal market? Why do minimum standards in the EU necessarily have to be maximum standards at the same time? In the USA, the car industry quickly adapted to the Californian standards instead of producing different types of cars in each case; in Europe, no one is allowed to lead the way: can Europe still afford this ideological narrow-mindedness in times of accelerated climate change?