The ascendancy of technocratic economic management in Europe – notably through central banks and EU-level institutions – has unhelpfully ‘depoliticized’ economic policymaking by divorcing it from national-level democratic scrutiny.
Chapter 2 discussed the relative importance of, and relationship between, cultural and economic factors in explaining the rise of populism. But another way of understanding populism is as a reaction to the expansion of technocratic modes of governance during the past 40 years. Previously, voters could oust governments whose economic policies they disagreed with, but this settlement has changed as national governments have ‘depoliticized’ policymaking by moving many powers previously in the domain of national legislatures to courts, central banks and supranational institutions – that is, to bodies without electoral mandates.
In part, the rationale for this shift has been to address the challenges of regulating highly technical policy areas, for example to make monetary policy more credible by disconnecting it from partisan political interference. In part, it has also been a response to hyperglobalization and the associated proliferation of international treaties and organizations, which again largely sit outside national politics.
But because of these changes, technocracy can also be understood as a threat to democracy because of the way it insulates policymaking from public deliberation and democratic control. In fact, although much of the debate in recent years has focused on the impact of populism, technocracy may pose an even bigger threat in Europe – especially if populism itself is a response to technocratic governance, as some suggest. At the centre of such concerns are the EU and its institutions, which set certain aspects of policy in isolation from national-level actors and are thus often characterized as technocratic by populists (who in Europe also tend to be Eurosceptic). As a result, the contest between technocracy and populism effectively plays out along a fault line between ‘pro-Europeans’ and Eurosceptics.
This chapter discusses how the growth of technocratic governance has changed economic policymaking in Europe. In particular, it examines the relationship between the ‘neoliberal turn’ and what Peter Hall has called the ‘technocratic temptation’ – that is, the impulse ‘to leave the important decisions to experts ensconced in agencies far-removed from electoral politics’. Although the transfer of power to so-called ‘independent’ institutions such as regulatory agencies or central banks is understood as ‘depoliticization’, it is actually deeply political because such institutions make policy decisions that have highly asymmetric distributional consequences.
A brief history of technocracy
A neologism formed of the Greek words for art (tekhne) and power (kratia), technocracy is commonly understood as the ‘rule of experts’. The concept was originally used between the world wars as the aspirational description of a political system designed around the application of Taylorist principles of productivity, and only became a target of critique in the 1960s. The term gradually shed its association with engineering and planning, and became ever more associated with the fields of economics and law. As a result, the issue has increasingly become whether the institutions governing national and global capitalism offer adequate space to reconcile technocracy and democracy without being undermined by fatal shortfalls in social legitimacy.
In its early incarnation, technocracy implied the replacement of democratically elected politicians by adepts of applied science. Technocracy offered a useful label for prognostications of the convergence of socialism and capitalism around the shared ideal of productivism under the oversight of technical experts. In 1923, for example, the German jurist Carl Schmitt observed: ‘The big industrialist has no other ideal than that of Lenin – an “electrified earth.” They disagree essentially only on the correct method of electrification.’ The interwar dream of technocracy, as historian Charles Maier writes, ‘heralded utopian change from power over men to the administration of things’.
Schmitt also introduced a key term into the technocracy debate in another essay when he wrote of the ‘depoliticization’ of rule under the League of Nations, an early iteration of the ‘technocratic utopia’ of international organization. The prospect of depoliticized technical governance survived the Second World War as the post-war ‘hegemony of growth’ offered another basis for technocratic consensus. In this era, new ‘economic policy devices’ such as GDP, cost–benefit analysis and unemployment rates offered a means of assessing political success or failure from an apparently objective external perspective. Councils of economic advisers took on a key role in directing and auditing policy choices.
Starting in the 1960s, debates about the ‘post-industrial society’, the ‘end of ideology’ and the apparent ‘economism’ of post-war government brought technocracy into affiliation with the concept of management. Social scientists and ecologists argued that social complexity had developed to such a point that average voters were no longer able to comprehend the trade-offs of policy choices, and that the delegation of decision-making to experts was therefore a matter of social survival. But this ‘technocratic society’ became a target for the New Left, which saw in it the reproduction of the dominance of the ‘power elite’ linking the heights of government to the heights of business.
In the 1990s, as globalization accelerated after the end of the Cold War, literature on a ‘new constitutionalism’ arose in response to the multilateral treaties of the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA) and the EU. Technocracy was understood to embody a form of ‘constitutionalization’ that locked in rules impervious to modification by popularly elected governments. What scholars have called the ‘logic of discipline’ or the ‘internationalization of authority’ took rules ever further from the grasp of everyday people. For example, during protests at the WTO ministerial meeting in Seattle in 1999, a banner was unfurled that showed the WTO headed one way and ‘democracy’ headed the other. In the context of hyperglobalization, technocracy was thus seen as squarely in opposition to democracy. Depoliticization meant de-democratization.
This specific kind of technocracy has coincided with the rise of neoliberalism in the past 40 years. Whether there is a deeper causal connection between the neoliberal turn and the expansion of technocratic governance, however, is less clear. Some argue that technocracy can be combined with different ideologies – somewhat like the ‘thin ideology’ of populism mentioned earlier. But there may be a deeper connection between a particular kind of neoliberalism and depoliticization as a specific form of technocracy. As Quinn Slobodian has shown, the so-called Geneva school of neoliberals sought to ‘encase’ economic policymaking and thus protect it from democratic control.
Technocracy in Europe
There has been a general expansion of technocratic governance in much of the world during the past 40 years. Nowhere is this more evident than in the delegation of monetary policy responsibility to increasingly independent central banks since the early 1990s. After the beginning of the global financial crisis in 2008, the role of central banks in macroeconomic management increased significantly, including through large-scale asset purchases and other unorthodox policy. It now includes maintaining financial stability and increasingly even combating climate change. Paul Tucker, a former deputy governor of the Bank of England (which was made independent by the New Labour government as soon as it came to power in 1997), aptly calls central banks the ‘third pillar of unelected power alongside the judges and the generals’.
The almost universal process of ‘constitutionalization’ or ‘depoliticization’ – that is, the removal of areas of policy, especially economic policy, from the space of democratic contestation – has gone further within the EU than anywhere else.
The almost universal process of ‘constitutionalization’ or ‘depoliticization’ – that is, the removal of areas of policy, especially economic policy, from the space of democratic contestation – has gone further within the EU than anywhere else. The ability of European national legislatures to control fiscal policy was reduced through the fiscal rules for the eurozone countries, which set limits on debt and deficit levels but not surpluses. Industrial policy was constrained by the EU’s state aid rules, and legislators’ room for manoeuvre was further curtailed through global and regional trade agreements. The European Central Bank (ECB) was modelled on the highly independent German Bundesbank and, like it, was assigned a clearly hierarchical mandate focused on maintaining price stability. (In fact, the ECB is even more ‘independent’, and has an even narrower mandate, than the Bundesbank.)
In a sense, depoliticization is at the core of what the EU does. Deep integration requires rules, and because integration has gone further within Europe than elsewhere in the world in the past 40 years, it has required a more extensive system of rules than those that underpin the workings of the global multilateral economic system. In particular, as Dieter Grimm has shown, legislation that would normally have the status of secondary law in a nation state has constitutional status in EU law and is therefore ‘immunized against political correction’. This process can also be understood as an increase in the domination of the constitutional pillar of democracy over the popular pillar – or, quite simply, as ‘the triumph of law over politics’.
Critiques of technocracy in Europe first proliferated in the 1990s, when the internal market was rapidly liberalized following the Maastricht Treaty and resistance to European integration often took the form of opposition to so-called ‘technocrats’ in Brussels. Critics used the term to describe the expansion of executive power through unaccountable, non-transparent and elitist decision-making, which repressed the political in the political economy by ignoring the distributive consequences of policy choices.
A second spike in debates about technocracy in Europe came in the context of the euro zone crisis in the early 2010s. In response to the crisis, the EU’s rules-based approach gave way to a kind of state of emergency – as would happen again in subsequent crises. In that sense, this represented a shift from technocracy towards more improvised policymaking, though the latter was hardly any more democratic. Although decisions were taken by democratically elected politicians led by the German chancellor, Angela Merkel, they were often clearly influenced by the preferences of the group of creditor states dominated by Germany and were presented as alternativlos – a German word that translates as ‘without alternative’. National legislatures, when not bypassed completely, mostly fell in line with the steps demanded by the executive as negotiated at the EU level.
The ECB’s role in the management of the euro crisis has similarly added to the debate about technocracy in Europe. This has been seen in increased public contestation of the proper role of the ECB, and in a rise in political discontent directed towards it. Indeed, since the start of the recent crisis period, the ECB’s interventions in domestic economies have grown significantly – in part also because of the inability of democratically elected politicians to solve problems effectively. For instance, the ECB repeatedly asked member states to reaffirm their commitment to fiscal discipline and structural reforms as the main route for addressing the euro crisis, implicitly subordinating ECB monetary support to such commitments. One of the best-known and most debatable attempts by the ECB to solicit government action was the confidential correspondence it sent to the Italian and Spanish prime ministers in 2011, on the back of rising bond yields across the periphery of the eurozone.
The pressures exerted on euro member governments have been rightly criticized for their dubious democratic legitimacy. In particular, serious questions have been raised about the basis upon which an independent central bank can dictate policy to elected governments. It should be noted that ECB policymakers were in many cases uncomfortable with the political weight of their new role, and regularly but erroneously insisted that their interventions would be without redistributive consequences. This highlights how depoliticization is not necessarily a deliberate agenda but can arise from political dysfunction – in the case of the eurozone, from the inability or unwillingness of member state governments to adopt expansive fiscal policy that would remove the need for extensive intervention by the ECB.
During the crisis, the ECB operated as part of the ‘troika’ together with the European Commission and the IMF. Influenced by ‘ordoliberal’ or neoliberal thinking, it was seen as a vehicle for imposing austerity on debtor countries such as Greece. The troika’s judgments about debtor countries seemed to be based not on productivity or efficiency, but on enforcing rules for their own sake or sending a message that no alternatives to its policy prescriptions were possible. Some have even seen in the eurozone’s response to the crisis a kind of ‘authoritarian liberalism’ – that is, an authoritarian approach in the name of economic liberalism.
A renewed technocratic temptation
After the political shocks of 2016, technocracy seemed to be on the back foot as the problems associated with it from a democratic perspective became clearer. But the need for policymakers to respond urgently to the COVID-19 pandemic – potentially bypassing normal parliamentary approval processes – led to a renewed ‘technocratic temptation’. Since that crisis began, many ‘pro-Europeans’ have argued that the response to the pandemic has discredited populism and vindicated the EU’s technocratic approach. For example, High Representative Josep Borrell wrote in April 2020 that the pandemic ‘brings the importance of a rational approach, expertise, and knowledge into sharp focus – principles that the populists mock or reject as they associate all of those qualities with the elite’. Thus policymakers felt empowered to double down on technocracy.
There is clearly a place for experts in policymaking. It is also clear that, in an acute public health crisis such as the one that Europe was confronted with, decisions about lockdowns or other restrictions on freedoms should be guided by science. But such measures are still political and should therefore be taken within the space of democratic contestation, in other words through legislatures. Future questions around post-pandemic recovery, and in particular how to deal with the huge debt overhang that has been created during the crisis, will have even greater distributional consequences than decisions about imposing and lifting lockdowns.
In short, the debate over the merits of technocracy has not been decided, and the problems with technocracy are already coming back into sharp focus. A striking example of this is the ongoing battle between the ECB and the German constitutional court. In May 2020, the court ruled that the ECB’s bond-buying programme could be unconstitutional and gave the ECB three months to demonstrate that the programme was proportionate to the need. This in turn followed an earlier ruling in favour of the ECB by the European Court of Justice in 2018, a ruling which the German constitutional court called ‘untenable’. Regardless of the merits of the case, it was problematic from a democratic perspective that a eurozone monetary policy with huge distributional consequences was to a large extent being decided through a battle between non-majoritarian institutions.
Difficult decisions in the future, particularly around the climate transition, will also have major distributional consequences. Such dilemmas are often approached in a technocratic way in the EU, where central bankers and other technocrats, in particular at the European Commission, drive economic transformation. Yet if policy does not visibly reflect the interests and preferences of large segments of the population who already felt overlooked by their governments, it could generate another populist backlash. The emergence of the gilets jaunes in response to the introduction of a new carbon tax in France in 2018 has already given a hint of what this might look like.
The political shocks associated with populism have demonstrated the need to find a new balance between ‘responsible’ and ‘responsive’ government. If the EU were simply to re-emphasize its institutional preference for technocracy, this would not only be to ignore the lessons of the last few years but would also deepen the challenges to liberal democracy in Europe. Instead, Europeans should think about how they can ‘repoliticize’ economic policymaking by bringing it back into the realm of elected political actors.
