The big development as this week drew to a close was Standard & Poor’s decision to drop both France and Austria one notch down from a triple A rating to a AA+. As much as I read about these issues, I never find myself getting any closer to fully grasping the complexity of the Euro(zone)’s current predicament. From what I do gather, it looks a bit like this: with the drop of ratings from a supposedly non-biased, 3rd party observer, investors’ confidence in the country’s capacity to make good on bonds and other financial products instantaneously erodes, and as foreign investment looks elsewhere, the country’s incapacity to raise funds via public debt prohibits short-term growth possibilities. Add this to the reoccurring nightmare of 17 countries being tied to a single monetary policy dictated by yet another 3rd party, the European Central Bank, and you have an equation whose denominator is zero, i.e. an undefined value.
I must confess that, while I had an affinity for math at a younger age, my studies have largely been in the field of letters. Yet even the discomfort caused nowadays by the prospect of having to compute macroeconomic equations isn’t my biggest gripe. Rather, I worry for the evolution of the state of democracy such complicated financial institutions cause. When the individual citizen is at the mercy of investors’ whims, there is precious little that political ideology can do to encourage, to borrow Fritz Scharpf’s term, “input legitimacy.” In the same way Edward Luce’s article in this weekend’s Financial Times stressed Americans’ political apathy, we’re seeing a transition of politics lead solely under the auspices of financial output legitimacy.
In other words, in as much as the elected candidate vindicates or fails the citizenry, democracy’s input legitimacy is upheld. Yet if those voting can only aspire to elect candidates on the basis of which austerity measures they choose to pursue, legitimacy is curtailed by the market and with it the desire to participate in politics. There will always be limitations to which policies governments can afford to subscribe, but when 3rd party bodies impose rulings that may or may not improve the citizens’ standard of life (the prime tenet of establishing output legitimacy), the principles on which democracy is conceived—which for me reside in the social contract theory—are violated to a point of mockery.
A scenario in which you are forced to choose between the lesser evil may not, in the long run, be that uncommon in politics. However, I do think an historical trend is reoccurring with greater frequency: political ideology, be it based on size of government or its involvement in the citizens’ daily lives, will always take a backseat to economics in a recession. The more pervasive capitalism becomes, the less likely a sovereign nation’s political leanings will weather a global market storm.
Lest we forget, some of the 20th century’s most infamous totalitarians rose to power on the back of economic success. It is for this reason I shudder when I read quotes like those of Martine Aubry, secretary-general of France’s Socialist party, who was reported in the FT as having said: “The loss of the triple A is a condemnation of the policies pursued since 2007. Mr. Sarkozy will remain the president of the degradation of France.” When politicians speak in solely economic terms (and especially when referring to decisions imposed by 3rd parties such as S&P) it paves the way for economic achievement to be the torchbearer for any ensuing ideology, rather than for democracy to provide a forum in which economic ideological debates can occur.