Democracy, Banks, and the Current Euro Crisis

[marmar]

from Dissent magazine:



Democracy, Banks, and the Current Euro Crisis
Sheri Berman - January 4, 2012 12:00 pm


The recent summit of European leaders in Brussels seems to have produced some agreement among the seventeen members of the Eurozone on a new plan to deal with the EU’s current crisis. This plan, in turn, seems to have been at least partially spurred by Mario Draghi, the head of the European Central Bank (ECB), who has indicated that if the union could enforce more fiscal discipline on its members, the ECB might be willing to do more to help the EU’s beleaguered members. Despite the widely held view that some sort of implicit (or explicit) grand bargain was in the works, Draghi began to back away from his earlier statements almost as soon as the Brussels summit concluded. This episode was, or should be, disturbing. Why, in a time of crisis, should democratic leaders have to make deals with (or even beg) unelected technocrats to come to their aid? Why have central bankers been given such power over the fates of democratic governments and their citizens? Indeed, why are such questions only rarely asked?

Although almost all aspects of the European project are being debated today, few
question the ECB’s independence from politics. Indeed, the ECB’s “apolitical” stance now seems natural; it is, however, anything but. The ECB’s independence is better viewed as the culmination of one of the crucial trends of the neoliberal era: the increasing independence of banks (and other financial actors) from government oversight. During the 1990s, for example, more countries increased the independence of their central banks than in any other decade since the Second World War.

Advocates of this trend tend to justify it with two arguments. The first is technocratic. According to this logic, monetary policy is simply too difficult and complicated for your average politician, much less your average citizen, to understand. On top of this, monetary policy has powerful long-term implications, and politicians and voters are simply unable to think about the long term. For these and other reasons, monetary policy is best left to “experts” who have the knowledge and discipline necessary to make tough decisions.

.....(snip).....

The neoliberal project of the late twentieth century, which diminished and denigrated the power of politics and celebrated the wisdom of markets, has been a failure. Although the European project was born out of a desire to solidify democracy after the Second World War, it too fell prey to the neoliberal dogma of the late twentieth century. The time has come to begin reversing these trends. Now more than ever, Europe needs to find a way to convince its citizens of the value of European project and the need, sometimes, to sacrifice for it. It’s not clear that these goals can or should be reached without more democracy. .........(more)

The complete piece is at: http://www.dissentmagazine.org/atw.php?id=646