All Stick and no Carrot

All Stick and no Carrot

An Article by Dr. Markha Valenta, University of Amsterdam, published at “openDemocracy” on March 6th, 2012

Why are Europe's fiscal technocrats so afraid of democracy? There is no evidence that good economics requires keeping European peoples out of the equation

Recently, the German minister of finance Wolfgang Schäuble suggested in a radio interview that the Greeks should install a technocratic government without political parties. This came just after the opposition parties had been required to promise in writing that they would not in the future tamper with any bailout agreement the current Greek government makes. The basic point here was clear: the Euro and the economy are too important to be dealt with democratically. At least in Greece.

One wonders if Schäuble thinks the same for Germany: would his country perhaps be better off without political parties for a while? Or does Germany’s wealth and stability ensure its people’s right to democratic politics – notwithstanding the ignominious departure of president Christian Wulff for inappropriate economic relations and the official promise just made by the Siemens Corporation to stop bribing their way through Greece? Is democracy only the fundamental right of those whose states are ‘financially responsible’?

Schäuble’s comment exposes the fractious relation between neoliberalism and democracy in Europe today. More remarkable is the undercurrent of moral righteousness. The Greeks, Schäuble is saying, cannot be relied upon to act responsibly and do not ‘deserve’ democracy. Implicit in this judgment is a more general argument that democratic processes are suspect and disrupt sensible economic decisions. Much more effective and dependable are technocratic solutions, uncontaminated by politics. Politics is the problem and technocracy is the solution.

In fact, this is a vicious inversion: the European Union as an economic (but not fiscal) union, the euro as transnational currency and Greek entry into the Euro-zone were all the outcome not of democratic mobilisation across the continent, but of technocratic negotiation among a highly limited group of elite politicians and civil servants. Not only that, but at the time of Greece’s entry into the euro, the condition of the Greek socio-economic and political infrastructure – the low education levels and weak social net, lack of diversified industry, ineffective tax system, everyday corruption, clientelist politics and a parasitic oligarchy that has politics and the media in its pocket – were well-known to all those concerned. The romantic conviction of the technocrats as much as of the politicians was simply that, as it were, Europe could carry Greece.

Perhaps they would have been right, had they not made three fundamental mistakes in crafting the euro. The first entailed ensuring there would be limits on excessive public sector spending but not on private sector excesses and bubbles ↑ (as in the construction and housing sectors). Here again we see the deep neoliberal distrust of the public, common good coupled with its profound faith in an imaginary, all-seeing “hand” that – like a good father – will correct markets, despite the all too obvious fact that the market, even more than the public sector, depends on surging trends, emotions, longings, fears, self-deception and other mass phenomena and a-rationalities.

Secondly, it deprived individual European states of a set of tools – exchange rate management, monetary policy and fiscal policy – whose ultimate effects were to severely hamstring the abilities of these states to adapt to changing economic circumstances. The reigning discourse (as opposed to practice) has been, however, that states have remained fiscally sovereign. Correspondingly, even struggling states that actually were fiscally disciplined in the years before the crisis, such as Ireland and Spain, are imagined to have been irresponsible: that is, the difficulties they now face are assumed to have been their own fault rather than those of a faultily-designed system.

And thirdly, the European technocrats failed to anticipate both the vulnerabilities of the American economy and the profound influence of such external agencies as US credit-rating agencies, the media, financial speculators, hedge funds, and the complex currency and derivative calculations that have become popular among both investors and governments trying to mask their deficit and debt levels. In other words, Europe and the euro were more open than they could imagine to influences beyond the technocrats’ control and to distortion and manipulation by both external and internal interests.

The high degree of moral righteousness with which austerity is now being imposed on Greece is, then, deeply self-deceptive and hypocritical. Greece is a symptom, not the problem. ‘Solving’ Greece will not solve the problem we have. To fail to understand this means misunderstanding completely what the challenge is facing us. To wit: the question of whether today we have the necessary resources – conceptual, institutional and political – to structure and direct our economic relations? Or has globalisation, real-time hyper-technology, and the radical mathematical abstractions of our financial and economic relations created a constellation of forces we do not understand, much less control?

The shift in scale, speed and intensity with which our economics now takes place means that today, entire developed countries can become the ravaged victims of economic surges far beyond their control. While Greece is more vulnerable than northern Europe to such a surge – bringing together weak local institutions, industrial under-development, messy (inter)national politics, spectacle-driven media, techno-economics, and a range of local, regional and global players – the fate of Greece today could tomorrow be that of almost any country in the world, depending on circumstances no one has in hand.

If we imagine that we are immune, because our economic and political institutions are different from those of Greece, this is self-deception.


Yet Schäuble’s comment cheerfully goes along with this conceit, sustained by and sustaining those who imagine that the problem is the Greek people. It was striking how quickly after the crisis hit, the cliché of the lazy Greek started to make its rounds. In fact, the Greeks work the hardest of any Europeans (even as the Dutch work least of all, with the Germans not much better). Nor, in fact, does Greece have an overly bloated public sector relative to other European countries, nor do Greeks retire significantly earlier, all of which have been popular accusations.

Our technocrats, politicians and any number of pundits would like us to think that this is a morality play, where finger-pointing and blaming the victim is part of the solution. As if to say: if only they had been less Greek! Thank God we are German, French, Dutch, Finnish, fill-in-the-blank! If they are hungry, their businesses collapsing, violent crime and racism spreading, their old people starving, their young people fleeing, their civil servants unpaid, the country in tatters, well, they have only themselves to blame! To solve their problems they simply need to become more like us: just have to tighten their belts (like we did), just have to work harder (like we do), just have to be more responsible (as we are).

Crucially, variations on these analyses are also what we hear from within Greece, where the educated middle classes also blame Greek laziness, a bloated public sector, corruption and so forth. This does not make the analysis any more correct, especially if we want to understand the forces beyond Greece shaping the Greek disaster. It only shows the impoverishment of our European public debate. Within Greece, the only current energetic alternative to this self-flagellating analysis is a rabid, racist nationalism (so far as I can tell from up here in Amsterdam). Outside Greece, there is no real alternative. Most, except the Greek nationalists, are happy to blame the Greeks.

It is this high-handed moralism that allows Schäuble’s comments to go unquestioned, along with the confusion of many Germans at the angry Greek response to it. Are we not helping the Greeks, the Germans ask? Should they not be more grateful? And there you have it again: more moralism. The moralism of the strong towards the poor; the moralism of the handout: I will give you money only if you behave yourself.

Certainly voices now are arising that call attention to the harshness of Merkozy austerity; but these largely focus on its human impact on the everyday life and people in Greece, without offering a different frame for understanding it.

Missing is the public and political recognition – both at the European level and in our national debates – of how thoroughly uncontrolled our economic life is: driven by the conjunctions and disjunctions of calculations, transactions, chains of production, fantasies of consumption, business interests, speculators, criminals, superbanks, the superrich and the superpoor. Missing is the consciousness that it was European econo-technocracy, as much as Greek structural weakness, that set in place the conditions for Greek failure. Missing is the corresponding sensibility that this is a collective European failure rather than a matter of Greek (im)morality. ‘The promises from Greece are not enough for us anymore,’ Schäuble is cited in another interview: ‘Greeks need to do their homework’ and ‘This is all in the hands of the Greeks.’

Schäuble embodies perfectly the utter absence of trans-European solidarity with the Greek people who have become the object of globalized neoliberalism at its worst: to speak in the terms of the Occupy movement, today the Greeks are Europe’s 99% and we, for the moment, are its 1%. And yet our TV screens are blank, filled everyday with news from Homs, but nothing from Athens, Thessaloniki, Heraklion, Volos, Agrinio.

Missing is the acknowledgement that this is a deeply political matter: the Greek people were not irresponsible, any more at least than the Germans and the rest of Europe have been. To assert otherwise is not common sense but a power ploy.


There have been mistakes, there have been misjudgments and lies, but their net effect was not only to feed the Greek oligarchy but to help make the Germans (and others) rich, as their trade with Greece blossomed through European economic structures invented far from the Aegean Sea. Once we take all this into account, Schäuble’s comment seems both awful in its self-deception and dangerous in its illiberal, anti-democratic intentions.

Our only option, say Schäuble and others, is to protect the liberalised economy from the people. But Iceland’s democratically-sustained economic recovery over the past few years (despite its significant differences from Greece) puts the lie to this idea. It exposes it as ideology rather than common sense. Austerity with democracy is possible. So in fact keeping the Greek people out of the decision loop is not intended to keep politics at bay so much as it means excluding those most affected by the austerities themselves. Economics by definition entails politics: what Schäuble actually yearns for is not a suspension of politics but a continuation of the politics of the European elite at the expense of the local and the demotic.

In this way the hefty elite paternalism of the west European welfare state is brought to bear on the Greek people: they are made to acquiesce in a punishing liberal economic regime at the expense of their liberal political rights. In this political sense the Greek people do not count and can make no claim to justice at the European level.

To say that this is an example of the infamous European democratic deficit is to do no more than state the obvious. The deeper point is that this democracy deficit is not simply a structural problem – how to institutionally and procedurally connect the European people to European decision makers through the interminable ruminations on an EU architecture – but ideologically partisan as well.

There is a deep distrust of the demotic embedded in western Europe’s political structures and conventions. This creates a persistent, if diffuse, resistance to any partial let alone full incorporation of the people into the process of decision-making. While distrust of the masses are an inheritance of both European social history and the traumas of totalitarian war, the crucial point in Europe is that its structural trust in the elite and fear of collective irrationality is now no longer being transformed into a supranational project of human rights, peace and solidarity (the originating mythic ambition of Europe). Rather it is being used to bring about a deeply illiberal implementation of liberalization: that is, liberalization through the maintenance of national difference, hierarchy and power politics.

So, rather than extending the values of the welfare state – of collective solidarity, equality and redistribution – to the continental level in the process of shifting from welfare to liberal political economies, quite the opposite is happening. The continent is being liberalized at the expense of solidarity, justice and equality. That this might ultimately endanger the project of liberalization itself – which depends fundamentally on structural, procedural and social equality – is obvious.

There is of course an alternative: like Iceland, we could develop the legal tools necessary, at the European level, to literally bring to trial those responsible: those who badly designed the euro, those whose greed led them to give bad loans, the politicians who lied to keep this hidden, the heads of the international business corporations that sustained the system’s corruption, and the oligarchs who control Greek politics and media while draining the country of its resources.

At the same time, unions, NGOs, and other organizations that currently are still fractured along national lines could begin to organize (politically) along European lines: imagine for example German, French and Dutch organizations allying with their Greek counterparts to protest current agreements by their own national leaders made with Greece because of their effects on the Greek labour, health, education and welfare. In other words, imagine a truly European democratic counterpart to the layer of elite decision-makers. For now this is unimaginable, precisely because such organizations have not figured out how to collectively force an entry into European decision-making, but continue to form alliances with their own national elite. This leaves all the people of Europe vulnerable to precisely the tactics that are now being meted out to the Greeks.


Last but not least, Schäuble’s comment begins to expose something more elusive: the way in which today European ideologies of technocratic liberalism and those of xenophobic populism – despite extensive differences in technique, style and content – are complementary in their deep disruption of the democratic rights of Europeans to recognition, respect, and economic justice. That is to say, they expose the ways in which the moral emptiness of neoliberalism and the moral pretensions of right-wing populism collaborate.

Once the economic crises in southern Europe emerged, talk of cultures of laziness and so forth flourished in the very same terms that are thrown at Third World and Muslim immigrants living in the working class neighborhoods and banlieues of continental Europe. Meanwhile, just as the populist does with the immigrant, the technocrat does with his recalcitrant (Greek) economic subject: threaten expulsion from Euro(pe) and loss of sovereignty, the better to impose stringent discipline, build a security wall and guard his national (economic) domain from contamination by the other. That is to say: the fall-back position for both the right-wing populist and the technocrat is not solidarity but exclusion, sustained by notions of crisis, superiority, walls of separation, purity and contamination. The problem always lies with the other, who doesn’t do his best to be like us.

Both the populist and the technocrat use a politics of fear to justify a politics of privilege. Both use strategies of punitive exclusion and disciplining integration, at the expense of egalitarian reciprocity. And both make use of the gap between what we know and what our media exaggerates or forgets to tell us.

So while some furious Greeks now accuse the Germans of still being Nazis, it is maybe better for us to remind ourselves that the Greeks are being treated like Muslims.

Both elite technocracy and xenophobic populism respond to and feed a more comprehensive aversion we are seeing today to the inclusivity – and corresponding irresolvable messiness – of pluralist, egalitarian democratic systems. The basic argument of both technocrat and populist is: it’s much more simple and effective when not everybody is equal. Both populism and technocracy promise simplicity and decisiveness. Both do so at the expense of those who disagree with them.

Most importantly, both technocratic liberalism and xenophobic populism excel at making utilitarian use of democratic structures in order to achieve their anti-democratic aims. Both top-down liberalism and bottom-up populism are represented as necessary responses to crises: the one in the economic field and the other in the cultural. These crises are portrayed as exceptional in the threat they pose to our future welfare, stability, security, and continuity. This in turn calls for exceptional responses: to wit, the compromising of democratic values in the interests of decisive action. At the same time, this exceptional response is presented as both a matter of common sense and as the only possibility: it is stringently, fiercely naturalized as both our only option and as morally justified. If they (the Muslim, the Greek, the poor of the world) had not failed so obviously and utterly – to the point of endangering our future – we would not have to be so hard with them.

‘We’ could not be more wrong.

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