Dark times for democracy

Even as Yanis Varoufakis was resigning as Greece’s Minister of Finance last week, he was proclaiming a victory for democracy. The July 5 referendum, in which the Greek population rejected the austerity measures imposed upon it by the Eurozone countries, was, he said, a ‘unique moment when a small European nation rose up against debt-bondage’. The vote was a reassertion of sovereignty, and a reminder to the powers that be that true sovereignty resides with the people themselves, not with bankers and bureaucrats.

That this message was sent from the very part of the world in which democracy was first articulated as a principle gave Varoufakis’ sentiments piquancy. But it also rang a little hollow. For the fact is that the relationship between democracy and economic integration – whether on the European scale or the global one, or both – is a matter of profound concern to those who value universal suffrage as both a means to an end and an end in itself. In the contest between democracy and an increasingly globalised economic environment, it is democracy that is losing out.

This issue has always had resonance in Europe, not least because the Eurozone is comprised of individual nation states with long, overlapping, often fractious histories. Europe’s critics have long complained of a ‘democratic deficit’ in the Union – of too much power concentrated in the bureaucracy and not enough in the European Parliament – and while many of their key concerns have been dealt with in recent years, the fact remains that the Eurozone countries, though politically and fiscally independent from the central European structures, are at the mercy of a monetary policy that greatly limits what they can and can’t do in times of economic crisis. Obviously they can’t devalue their currency, since it isn’t only their currency to devalue. All they can do is reduce their spending (impose austerity) or borrow more money.

Though this tension between democracy and the priorities of international finance is especially pronounced in Europe, or especially conspicuous, it is certainly not peculiar to it. After all, independent central banks are not a European phenomenon, and just as it is necessary to ask whether Chancellor Angela Merkel is more or less powerful than the President of the European Central Bank, so it is necessary to ask whether it was President Barack Obama or the Federal Reserve Chairman who was pulling the strings in the midst of the global financial crisis. The fact that the behaviour of the major banks hasn’t changed in the years since the GFC tells its own, not very encouraging, story.

For the economic journalist Philip Coggan, the author of a book called The Last Vote, these developments are part of a broader trend, which he calls ‘double delegation’. Athenian democracy was pretty straightforward. The free men of Athens – not women or slaves – would meet in one place and vote on the issues. But in the modern democratic period the electorate is too vast and too spread out for direct democracy to be practical. Consequently, we evolved representative democracy, in which voters entrust representatives, or delegates, to do their decision-making for them. Of course, these delegates are expected to vote in a way beneficial to their individual electorates and in keeping with their election promises. When they don’t – which is often – their electorates have the option of replacing them with someone else.

The problem with most politicians, however, is that they aren’t necessarily experts in anything other than their own political survival, and so there is always a temptation to shift responsibility for important decisions to other bodies. In the last fifty years, this tendency has become especially marked in Western countries, in which politicians either farm out decisions to quasi-autonomous non-governmental organisations (‘quangos’), or refer them up to international bodies such as the WTO and the IMF. The argument in favour of such non-elected bodies is always that they improve efficiency and serve to ‘depoliticise’ decision-making. But it is clear that this extra stratum of delegation is imposed at the expense of the representative principle, and based on a narrow conception of politics as something that politicians do, and of which the machinations of big corporations and financiers are independent.

Moreover, double delegation shows a pronounced tendency to spread through the system. For why, if it is now accepted practice to put economists in charge of monetary policy, should it not also be accepted practice to put economists in charge of fiscal policy? In the years since the global financial crisis sent shockwaves through the world’s financial markets, both Italy and Greece have submitted to periods of technocratic government in which non-elected bureaucrats were brought in to try to sort out the mess. But if politicians can’t be trusted to sort out the mess other politicians have made, what use are politicians at all?

It goes without saying that this democratic deficit comes most sharply into focus in times of economic strife, when powerlessness becomes most palpable. Nor are electorates enamoured of the idea that the nation state, which developed in tandem with democracy, now has such limited power over its destiny. Democracies dependent on foreign creditors; massive multinational companies subject to few democratic controls; an international financial market with the power to decide the strength of currencies: such things sit uneasily with the idea that a nation can determine its own fate and the fate of its people. Factor in the massive rise in inequality across the world, the ostensibly perverse dynamics of ‘the bail out’ (socialism for the rich, capitalism for the rest) and a more general suspicion that financiers do not so much earn their money as make it, and one begins to see how the idea that democracy involves a conspiracy of the rich against the poor can take hold.

The result is a well-founded cynicism about the power of politics to change anything at all, a cynicism which leads to yet more delegation as trust in politicians diminishes. Meanwhile, the economic rise of China seems to sanction the idea, long resisted in the West, that capitalism can get on fine without democracy. The phenomenon often condescendingly referred to as ‘capitalism with Asian values’ could well be the favoured paradigm of the future.

It was the anarchist Emma Goldman who said that if voting changed anything they’d make it illegal – a sentiment reiterated by Russell Brand in his infamous interview on the BBC last year. I used to baulk at that view, and still do. But we cannot pretend that liberal democracy and globalisation are easy bedfellows. The evidence from Greece, and from the rest of the world, is that greater economic integration is often achieved at the expense of the demos.