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From a social-market perspective, European integration has reduced the capacity of democratic politics to deal with the challenges of global capitalism, and it has contributed to rising social inequality. The article summarises the institutional asymmetries which have done most to constrain democratic political choices and to shift the balance between capital, labour and the state: the priority of negative over positive integration and of monetary integration over political and social integration. It will then explain why efforts to democratise European politics will not be able to overcome these asymmetries and why politically feasible reforms will not be able to remove them. On the speculative assumption that the aftermath of a deep crisis might indeed create the window of opportunity for a political re-foundation of European integration, the concluding section will outline institutional ground rules that might facilitate democratic political action at both European and national levels.
MPIfG Discussion Paper
MPIfG Discussion Paper 14/21
After the Crash
A Perspective on Multilevel European Democracy
Fritz W. Scharpf
Fritz W. Scharpf
After the Crash: A Perspective on Multilevel European Democracy
MPIfG Discussion Paper 14/21
Max-Planck-Institut für Gesellschaftsforschung, Köln
Max Planck Institute for the Study of Societies, Cologne
December 2014
MPIfG Discussion Paper
ISSN 0944-2073 (Print)
ISSN 1864-4325 (Internet)
© 2014 by the author
Fritz W. Scharpf is Director emeritus at the Max Planck Institute for the Study of Societies, Cologne.
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Scharpf: After the Crash: A Perspective on Multilevel European Democracy iii
At the end of the postwar period, the politically shaped configurations of normatively integrated Eu-
ropean political economies differed greatly among “social-market” and “liberal market economies.
Such differences persist even though the characteristic achievements of social market economies
have since eroded under the pressures of global capitalism and of European integration. Focusing on
European integration from a social-market perspective, there is no question that it has widened the
range of individual options. But it has also reduced the capacity of democratic politics to deal with
the challenges of global capitalism, and it has contributed to rising social inequality and the erosion
of public services and transfers.
This paper will first summarize those asymmetries of European integration which have done the
most to constrain democratic choices and to shift the balance between capital, labor, and the state by
establishing an institutional priority of negative over positive integration and of monetary integra-
tion over political and social integration. It will then explain why efforts to democratize European
politics will not be able to overcome these institutional asymmetries and why politically feasible
reforms will not be able to remove the institutional constraints. The changes that would be required
to restore democratic capacities to shape the political economy could only have a chance if present
veto positions were to be fundamentally shaken. On the speculative assumption that the aftermath
of a deep crisis might indeed create the window of opportunity for a political re-foundation of Euro-
pean integration, the concluding section will outline institutional ground rules that would facilitate
democratic political action at both the European and national levels.
Am Ende der Nachkriegsperiode waren in Westeuropa höchst unterschiedliche, aber jeweils politisch
gestaltete und normativ integrierte Konfigurationen der „liberalen“ oder „sozialen Marktwirtschaf-
ten“ entstanden. Die Unterschiede bestehen weiter, auch wenn seitdem unter dem Einfluss des glo-
balen Kapitalismus und der europäischen Integration die besonderen Errungenschaften der sozialen
Marktwirtschaften erodieren. Insbesondere die europäische Integration hat zwar die Optionen der
individuellen Lebensgestaltung erheblich erweitert. Aber sie beschränkte zugleich die Möglichkeit
der demokratischen Politik, auf Veränderungen und Krisen der kapitalistischen Ökonomie wirksam
zu reagieren, und sie hat zum Anstieg sozialer Ungleichheit und zum Abbau staatlicher Leistungen
Der vorliegende Text beschreibt zunächst Asymmetrien der europäischen Entwicklung – den Vor-
rang der negativen vor der positiven Integration und der monetären vor der politischen und sozialen
Integration –, die am meisten zur Entmachtung der demokratischen Politik und zur Verschiebung
der Verteilungsrelationen zwischen Arbeit und Staat auf der einen und Kapital auf der anderen Seite
beigetragen haben. Er zeigt dann, weshalb eine Demokratisierung der europäischen Politik im ge-
genwärtigen institutionellen Rahmen diese Asymmetrien nicht überwinden und weshalb realisier-
bare Reformen die institutionellen Restriktionen nicht beseitigen könnten. Die Veränderungen, die
erforderlich wären, um die Gestaltungsmacht der demokratischen Politik wiederherzustellen, hätten
allenfalls dann eine Chance, wenn die gegenwärtigen Vetopositionen erschüttert würden. Unter der
spekulativen Annahme, dass eine tiefe Krise auch Chancen für eine fundamentale Neugestaltung des
Integrationsprozesses eröffnen könnte, präsentiert der letzte Abschnitt Entscheidungsregeln für eine
europäische Verfassung, die politische Gestaltungsmacht auf der europäischen wie auf der nationa-
len Ebene verstärken würden.
iv MPIfG Discussion Paper 14/21
1 Integration through law and the priority of negative over positive integration 2
2 Monetary integration and the priority of rescuing the Euro 4
1999–2008: Divergence-increasing Monetary Union 4
Euro crisis and euro-rescuing policies 5
The new euro regime 6
Economic and distributional implications of the new euro regime 7
Institutional implications of the new euro regime 8
The Commission’s authority under the euro is not a “rule of law” 9
3 Is democratization the answer? 10
Majoritarian democracy and persistent minorities 11
The Community Method protects democratic legitimacy 12
The price is high 13
The EU at an impasse – waiting for the crash? 14
4 Community and autonomy 16
A European demoi-cracy? 16
Ground rules for a multilevel European democracy 17
References 23
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 1
After the Crash: A Perspective on Multilevel European
Postwar varieties of capitalism and social models in Europe have evolved under specific
historical conditions and contingencies. They were shaped by political processes con-
ditioned by specific configurations of state power, policy legacies, economic structure,
cultural repertoires, and distributions of political power. Reaching their maturity in the
permissive environment of postwar “embedded liberalism (Ruggie 1982), democrati-
cally shaped European political economies differed significantly at the end of the 1960s
– differences which were later captured by the concepts of coordinated and liberal mar-
ket economies (Hall/Soskice 2001) and of social-democratic, conservative, and liberal
welfare states (Esping-Andersen 1990). In European constitutional democracies, these
diverse socio-economic configurations – which for purposes of the present discussion
are collapsed into the rough distinction between “social-market” and “liberal-market”
political economies – have become constitutive parts of the legitimate social order.
Since the end of the postwar period, these normatively salient configurations have
changed in response to internal moral and social changes and to the external challenges
of global capitalism and European integration (Streeck 2014). Focusing specifically on
European integration from a social-market perspective, there is no question that it has
greatly widened the range of individual options. But by prioritizing negative over posi-
tive integration and monetary over social and political integration, it has also reduced
the capacity of democratic politics to deal with the challenges of global capitalism,
and it has contributed to rising social inequality and the erosion of public services and
In present political debates, pro-European and left-of-center authors tend to ascribe
the erosion of social-market models exclusively to the forces of globalized capitalism –
against which European integration is hoped to provide the effective sword and shield.
They see “more Europe,” combined with the democratization of the present union, as
necessary and sufficient conditions for creating a Europe-wide, social-market economy
(e.g., Collignon 2003; Bofinger et al. 2012). Considering ourselves no less pro-Europe-
an, colleagues and I are more impressed with the liberalizing and deregulatory impact
of EU law on social-market economies and with the democratic deficits of decision
making in the present European Union (Höpner/Schäfer 2008; 2010; Scharpf 2010). In
our view, “more Europe” under present institutional conditions would destroy the “le-
gitimate diversity” of European political economies (Scharpf 2003) and would further
undermine the chances of democratic self-government in Europe.
2 MPIfG Discussion Paper 14/21
My present contribution will first summarize those aspects of European integration
which have done the most to constrain the capacity of democratic politics to deal with
the challenges of global capitalism – the priority of negative over positive integration
and the priority of saving the euro. I will then explain why efforts to democratize Euro-
pean politics will not be able to overcome these constraints, and why politically feasible
institutional reforms will not allow them to be removed. In my view, the changes that
would be required to re-create at the European level democratic capacities to shape
political economies could only have a chance if present veto positions would be fun-
damentally shaken. On the speculative assumption that the aftermath of a deep crisis
might indeed create the opportunity for a political re-foundation of European integra-
tion, I will try to outline in the concluding section the institutional ground rules that
would facilitate effective political action at both the European and national levels.
1 Integration through law and the priority of negative over positive
Among the original six member states, and after the political failure of the European
Defense Community, the European Economic Community represented a political com-
mitment to create a common market. After the removal of tariff barriers, the way for-
ward was to be through legislation removing nontariff barriers by harmonizing differing
economic regulations (i.e., through “positive integration”). As European legislation after
the “Luxembourg Compromise” of 1966 continued to require unanimity in the Council,
respect for the legitimate diversity of member states was obviously secure, whereas the
progress of economic integration through legislative harmonization was slow.
Governments, however, had failed to appreciate the coup-d’état of the European Court
of Justice (ECJ), which in 1963 and 1964 had postulated the supremacy and direct ef-
fect of European law. As a consequence, “integration through law” (Cappelletti et al.
1985) became an option to bypass political legislation through “judicial legislation if
agreement in the Council could not be obtained. In substantive terms this meant that
all European law and its judicial interpretation would gain constitutional priority over
the laws and constitutions of member states. In other words, political objections to
legislative harmonization could be and were bypassed by the Court’s capacity to disal-
low national regulations and practices which, in its interpretation, were constraining
undistorted competition and the free movement of goods, services, labor, and capital
(i.e., “negative integration”).
The doctrine gained practical importance in the economic crises of the 1970s which
had revived academic and political support for neoliberal beliefs in the efficiency of un-
fettered competition in deregulated markets. Economists in the European Commission
tended to share these beliefs, but that was not true of all governments of “high-regula-
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 3
tion” states, some of which had managed the crises of the 1970s rather more successfully
than the liberal economies. In this historical constellation, “integration through law”
came to play a crucial role in promoting the liberal transformation of social-market
member states.1 At the national level, the judicial enforcement and extension of “nega-
tive integration” removed the state’s control over its economic boundaries and created
incentives and opportunities for regulatory and tax competition. Beyond that, it has
greatly reduced the space of legally allowable state action in economic matters.
In theory, of course, the liberalizing impact of negative integration might be countered
by “positive integration – that is, by uniform European rules replacing national regula-
tions the Court had disallowed.2 In contrast to negative integration, however, positive
integration could not be achieved through the Court’s liberalizing case-by-case deci-
sions.3 It requires “political” legislation which, even after the Luxembourg Compromise
had been replaced by the present “Community Method,” depends on an initiative by the
European Commission, an absolute majority in the European Parliament, and a quali-
fied majority of government votes in the Council. In short, European legislation must
be adopted in a multiple-veto system depending on very broad political agreement –
which is ever more difficult to obtain in the increasingly heterogeneous union (Höpner/
Schäfer 2012). On issues which, among the old member states, would provoke conflict
between “liberal” and “social market” preferences, consensus is practically out of the
question, and similar conflicts between old and new member states or between creditor
and debtor states in the eurozone are also beyond resolution by European legislation.
1 The Court had originally interpreted the Treaty’s commitment to a free-trade regime as a pro-
hibition of discrimination on grounds of nationality. At the end of the 1970s, however, the stan-
dard was shifted from nondiscrimination to nonimpediment even in cases lacking any trans-
border aspects. From then on, all national regulations and institutions could be challenged as
“nontariff barriers” impeding the exercise of the Treaty’s four economic liberties” or as distor-
tions of free competition. To be sure, not all challenges would succeed under the Court’s “pro-
portionality test.” But those that did were written in constitutional stone, creating a “ratcheting
effect” that allowed “progress” only in the direction of further liberalization (Scharpf 2010).
2 If the “nontariff barrier” is constituted by the mere diversity of national rules, a uniform Euro-
pean rule of the same type could replace it. But if the national “impediment” reduces the sub-
stantive reach of a Treaty-based “economic liberty,” liberal economic constitutionalism would
deny that it could be replaced by an identical European rule (cf. Mestmäcker 1973; Maduro
1998; Dardot/Laval 2013: ch. 7; Davis 2014). In practice, for instance, the case law defining pa-
tient mobility as a Treaty-based liberty became a significant constraint on uniform EU legisla-
tion trying to regulate the conditions under which national health systems would be obliged to
pay for hospital care abroad (Martinsen 2014).
3 This is strictly true for economic liberalization, where the Court could, at best, require the “mu-
tual recognition” of national regulations (Schmidt 2008) but could not define common Europe-
an standards. By contrast, the case law disallowing gender discrimination or age discrimination
in the labor market may have the effect of directly regulating private action. Even though they
are also protecting private self-interest against community” (Weiler 2011: 691), these nondis-
crimination cases are not promoting economic liberalism but, rather, socio-cultural individual-
ism (Somek 2008; 2011).
4 MPIfG Discussion Paper 14/21
As a consequence, there was and is practically no chance that European legislation by
the Community Method would correct the liberalizing impact of judicial legislation and
negative integration. It therefore was and is unreasonable for left-of-center pro-Europe-
an political parties and unions to expect that political action at the European level could
either create a meaningful “European Social Model” or would protect the existing social-
market economies of EU member states against the pressures of interstate competition
or the impact of global capitalism (Rödl 2013; Dardot/Laval 2013: ch. 7; Grimm 2014).
2 Monetary integration and the priority of rescuing the Euro4
When the Internal-Market program was sent on its way in the mid-1980s, the Delors
Commission had proclaimed the “social dimension to be the next item on the Euro-
pean reform agenda, whereas the German foreign minister asked for progress toward a
European “political union and the French government promoted monetary union to
end the hegemonic role of the German Bundesbank in the European Monetary System
(EMS). After the fall of the Berlin Wall and the international politics of German uni-
fication, however, it was only the French proposal that was included in the Maastricht
Treaty (Marsh 2009).
Since the difficulties of the EMS had been caused by the divergence of hard-currency
and soft-currency member states, some (mainly American) economists had warned that
the future eurozone was not an “optimal currency area” (e.g., Mundell 1961; Eichen-
green 1990; Feldstein 1997), and from a comparative political-economy perspective it
also seemed clear that a currency union would severely disadvantage economies whose
industrial-relations systems did not have a capacity for coordinated wage-setting strate-
gies (Scharpf 1991: 263–269). Commission economists, however, for whom one mar-
ket – one money” appeared as the logical culmination of the Internal-Market program,
downplayed these structural and institutional differences. In their view, monetary
union itself would increase competitive pressures to such an extent that any structural
differences would soon disappear (COM 1990).
1999–2008: Divergence-increasing Monetary Union
What in fact happened was just the opposite: between 1999 and 2008 the convergence
of nominal interest rates and uniform European Central Bank (ECB) rates, in the face
of continuing differences in national inflation rates, pushed eurozone economies ever
4 I apologize for the fact that citations in the following section will be mainly to my own recent
work, which contains ample references to the literature and relevant data.
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 5
more apart. In low-inflation Germany, real interest rates increased, domestic demand
declined, unemployment escalated, and real wages fell. By contrast, real interest rates
turned negative while domestic demand, employment, and nominal unit labor costs
increased in Greece, Portugal, Spain, and Ireland (but not in Italy). Since the Monetary
Union (EMU) had eliminated exchange-rate risks, the dramatic divergence of capital
accounts was conveniently bridged by private capital flowing from surplus to deficit
economies (Scharpf 2011).
When the international (Lehman Bros.) financial crisis caused a worldwide credit
squeeze in the fall of 2008, deficit economies were hit hardest by the collapse of inter-
bank lending. As all governments came to rescue their overcommitted banks, state debt
escalated everywhere but most dramatically in deficit countries, including Ireland and
Spain, whose budgets had even been in surplus before 2008. Toward the end of 2009,
finally, capital markets also began to worry about the ability to pay of over-indebted
governments in deficit economies, and in early 2010, rapidly rising risk premia on state
bonds raised the specter of state insolvency, first for Greece, then for Ireland and Portu-
gal, and potentially for Spain and Italy as well.
Euro crisis and euro-rescuing policies
Under the rules of the Maastricht Treaty, which prohibited the bail-out by other mem-
ber states as well as monetary state financing by the ECB, the ensuing scenario would
have been clear: state insolvencies would be inevitable, state creditors would have to cut
their losses, bankrupt states would leave the monetary union, and their newly indepen-
dent currencies would devaluate against the remaining eurozone economies in order to
restore international competitiveness. As it was unclear whether the Monetary Union
could then be maintained, the constellation that faced eurozone governments in the
spring of 2010 was interpreted as a euro crisis (Scharpf 2014).
Governments of deficit states seem to have considered bankruptcy as the worst-case
outcome to be avoided at any cost. But the governments of surplus states, led by Germa-
ny and France, also came to realize that it was in their interest to maintain the common
currency. Since their banks were heavily invested in Greece, Ireland, and other deficit
economies, insolvencies might unleash a second wave of banking crises which, follow-
ing so soon after 2008, they would have had to face with deplenished fiscal resources.
Moreover, a collapse of the euro might boost nominal exchange rates to such an extent
that massive job losses in export-dependent industries were to be expected. In order
to rescue the euro, therefore, the Council agreed to ignore the Maastricht rules and to
create rescue funds that were guaranteed by the fiscal commitments of surplus states.
6 MPIfG Discussion Paper 14/21
The decision to rescue the euro put the focus exclusively on the state-credit crises, rather
than on the economic and social crises of deficit economies. Since the confidence of
the markets” had been lost by the escalating state debt of economies with high current-
account deficits, it seemed initially plausible to combine rescue credits with “condition-
alities” that specified fiscal austerity and internal devaluation through wage-reducing
“reforms” for debtor governments. Institutionally, agreement to these conditionalities
was not defined by European legislation under the Community Method or through
consensus-oriented voting in the Council but through extremely asymmetric bargain-
ing between creditor and debtor governments that resembled conditions of an uncon-
ditional surrender.
Combined with the ECB’s expansion of the money supply and its interventions in the
market for state bonds, these measures have so far averted the collapse of the euro. From
the perspective of creditor states, they succeeded (for the time being) in avoiding both
the need to cope with another banking crisis5 and the job losses caused by a massive
revaluation. From the perspective of debtor states, however, conditionalities combin-
ing fiscal austerity and internal devaluation have reduced domestic demand to such an
extent that declining economic activity and escalating rates of unemployment have not
only caused a deep economic and social crisis but have further increased excessive pub-
lic-sector indebtedness. Hence, even though declining domestic demand has reduced
imports and thus current account deficits, and even though rising unemployment has
reduced average unit labor costs and thus the overvaluation of real effective exchange
rates, the basic vulnerability of debtor states still remains (Streeck/Elsässer 2014). As a
consequence, the original state-credit crisis could still reassert itself if the confidence
of “the markets” in the ECBs resolve and capacity to support the credit-worthiness of
debtor states would come into question.
The new euro regime
In order to reduce the risk of another euro crisis, a new regime has been designed and
partly implemented over the last three years. Its options have been quite limited, how-
ever. Since the structural heterogeneity of EMU member states persists, uniform ex-
change-rate and monetary policies will continue to generate divergent impulses. In a
federal state with full taxing powers and a large budget, these would be counteracted by
the central government’s fiscal, economic, labor-market, and social policies. But these
capacities are lacking at the European level. Hence, the new euro regime must attempt
5 As private capital was withdrawn in the euro crisis, the need to finance continuing current def-
icits through capital imports was and is reflected in the surplus positions of “Northern” central
banks on the ECB’s “Target-2” balance sheet. In effect, the private risk of creditor banks and
investors has been transformed into the public risk of these central banks and the states owning
them (Sinn/Wollmershaeuser 2011).
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 7
to prevent the rise of external imbalances by either transferring additional competences
to the European level or by increasing central controls over the exercise of governing
powers remaining at the level of EMU member states.
Thus, the new regime is adding banking regulation and supervision to the centralized
competences of monetary and exchange rate policies. Beyond that, however, it adopts
and extends the model established through the “conditionalities” imposed on debtor
states in the euro crisis. In substantive terms, the new Fiscal Compact combined with
the Six-Pack’s Excessive Deficit Procedure and the European Semester generalizes the
austerity requirements that were initially imposed on debtor states. The Six-Pack regu-
lations adopted at the end of 2011 also include a new Excessive Imbalance Procedure,
which invests the Commission with practically unlimited authority to investigate eco-
nomic conditions in member states, to identify imbalances on a wide variety of indi-
cators, to define some of these as excessive,” to recommend their correction through
policy responses involving the full range of national competences, and to enforce these
with severe sanctions – unless a qualified majority of the Council should interfere.
Economic and distributional implications of the new euro regime
In substantive terms, these policies are guided by a consistent economic logic: if EMU
member states continue to be structurally heterogeneous, and if the resources of a Eu-
ropean federal state are beyond reach, the Monetary Union will generate external im-
balances which cannot be corrected through the adjustment of nominal exchange rates
or countercyclical monetary policies. If it is further assumed that rising state deficits
may again trigger state-credit crises, the insistence on fiscal austerity and budget con-
solidation will also constrain the countercyclical use of national fiscal policy. In other
words, economic imbalances must be prevented by the use of the remaining domestic-
policy competences of national governments (Scharpf 2013).
In a booming economy, therefore, governments must prevent external deficits and rising
real exchange rates by cutting domestic demand through restrictive credit regulations,
tax increases, spending cuts and, above all, by somehow preventing the rise of nominal
unit labor costs. If the economy is moving into a recession, however, fiscal reflation of
domestic demand through tax cuts and deficit spending is ruled out, and the regime
may instead force the state to adopt additional austerity cutbacks to avoid violating the
deficit rules. Under these conditions, cost-reducing supply-side reforms and wage cuts
appear as the only option that might contribute to an export-led recovery. But if this
strategy should succeed, as it did for Germany between 2001 and 2005, the consequence
will be external surpluses which will then imply external deficits elsewhere.
8 MPIfG Discussion Paper 14/21
In economic and distributional terms, therefore, the new euro regime implies that gov-
ernments must exert continuous downward pressures on public-sector functions and
on wages – in the upswing to dampen the rise of external deficits, and in the downswing
to stimulate export-led recovery. If successful under both conditions, this regime would
institutionalize a vicious cycle of competitive internal devaluation in the eurozone,
where successful wage restraint in some parts would undermine competitiveness else-
where, requiring new rounds of fiscal cutbacks, supply-side reforms, wage concessions,
and so on. As a consequence, the distributional balance between capital, labor, and the
state, which became externally constrained by international capital mobility after the
1970s, will be shifted further in favor of capital incomes by the new euro regime. In
other words, saving the euro will continue to reduce the role of the state and to increase
social inequality in eurozone economies (Schraad-Tischler/Kroll 2014).
Institutional implications of the new euro regime
Apart from the effectively centralized competences of exchange-rate, monetary, and
(in the future) banking policy, the competences which need to be employed for the
management of individual eurozone economies will remain at the member-state level.
Thus, actual policies on taxation, social services and transfers, labor law, wage control,
or credit regulation must be adopted and implemented by national governments. Com-
pared to the “global” management of aggregate demand through monetary policy, these
policy choices will be more complex, less-well understood, and likely to have much
higher political salience.6
From the perspective of the euro regime, therefore, democratically accountable national
governments acting on their own cannot be relied upon to pursue precisely those poli-
cies which the Commission considers essential for avoiding another euro crisis. Hence,
it is indeed necessary that these choices should be supervised by a supranational author-
ity in charge of the eurozone at large and with the capacity to enforce its directions. That
is why the European Semester requires national budgets to be reviewed by the Com-
mission before they are even communicated to the national parliament, and that is why
the Six-Pack regulations authorize the Commission to issue specific recommendations
of national policy choices and to enforce these recommendations through severe sanc-
tions. The euro group of the ECOFIN Council is formally involved in all these processes
– except that the government under examination is not allowed to participate. However,
6 The use of monetary policy instruments may draw on theoretical and econometric models that
are not available for other policy instruments. Moreover, monetary policy is meant to serve
macroeconomic purposes, short-term changes are expected, and debates are generally confined
to an expert constituency. By contrast, policies regarding taxes, pensions, minimum wages, la-
bor law, or mortgage rules are meant to serve their own purposes, expected to create a stable
environment for private actors, and debated in their own constituencies, which may not be
ready to accept the priority of macroeconomic purposes.
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 9
with regard to binding recommendations and the imposition of sanctions, the distrust
of political solidarity among member governments is so acute that, under the “reversed
qualified-majority” rule, the Commission’s proposals will become effective unless they
are rejected by a qualified majority in the Council (Scharpf 2011; Seikel 2014).
In effect, the new euro regime depends on the supranational capacity to control and,
if necessary, override democratic political processes at the national level. This power,
including the authority to also override political majorities in the Council,7 has been
vested in the Commission by the Six-Pack regulations that were adopted as European
law by the Community Method. Under normal constitutional standards, however, these
regulations cannot legitimate the Commission’s exercise of this authority.
The Commission’s authority under the euro is not a “rule of law”
Regardless of its democratic deficit, Europe has always claimed to be “a government
of laws, not of men.8 It was generally accepted that the legitimacy of these laws rested
either on treaties adopted by democratic member states or on European legislation ad-
opted according to the Community Method defined by the treaties. Under these condi-
tions, acts of government applying European law were to be accepted under the legiti-
mating principle of “legality.” By the same logic, the Maastricht Treaty and the Stability
Pact had attempted to establish a rule-based (though economically counterproductive)
regime for the Monetary Union. When these rules were ignored or fudged in the inter-
national financial crisis and in the euro crisis, deviations could be justified as emergency
measures that had the blessings of member governments as the “masters of the Treaty.
For fiscal policy, the new Excessive Deficit Procedure is an attempt to return to a greatly
tightened rule-based regime (which presently is again proving to be economically coun-
By contrast, the Excessive Imbalance Procedure, which was also established by the Six-
Pack legislation, seems to be based on the recognition that the eurozone economy (or
any economy, for that matter) cannot be successfully managed by predefined rules. In
order to prevent the rise of external and internal macroeconomic imbalances, the Com-
mission must respond to extremely divergent, highly contingent, and extremely variable
conditions in individual member-state economies. To have any chance of success at all,
therefore, the Excessive Imbalance Procedure must rely on the informed judgment of
policy makers, who must be allowed to respond flexibly, even opportunistically and
unequally to highly diverse and uncertain problem constellations. It must also be able
7 The European Parliament in its unrelenting hostility against the Council would even have pre-
ferred the automatic effectiveness of Commission proposals.
8 On the ordo-liberal foundations of this commitment to rule-bound economic governance, see,
e.g., Mestmäcker (1973), Dardot/Laval (2013: ch. 7), Joerges (2014).
10 MPIfG Discussion Paper 14/21
to employ all policy instruments available at the national level – without regard to the
division of European and national competences in the Treaties (Scharpf 2012, 2013).
Hence, the Six-Pack legislation only defined the procedures through which the Com-
mission may act; it did not and could not specify rules for the actual exercise of the
Commission’s functions. In total departure from any claims to rule-bound legitimacy,
what the Excessive Imbalances Procedure has established is, and is meant to be, an en-
tirely discretionary regime whose scope of delegated authority far exceeds the limits of
generally allowable delegation in constitutional democracies.
In constitutional democracies, it is true that exceptionally wide discretionary authority
is not entirely unheard of. But on matters with potentially high political salience, it is
delegated to political actors whose authority rests, directly or indirectly, on democratic
accountability. That is true of the autonomous powers of the directly elected president
in the United States or in France, and it is also true of heads of governments or ministers
in parliamentary democracies whose delegated authority may be limited or withdrawn
by parliamentary majorities at any time. These conditions are obviously lacking in the
case of the European Commission.
Even if the political role of the Council were not emasculated by the reverse-qualified-
majority rule, its formal authority could not invest the Commissions discretionary
decisions with democratic legitimacy. Ministers in the Council may be indirectly le-
gitimated by being accountable to their national parliaments, which are legitimated by
national elections. If that chain of legitimation is thought to be sufficient, it could legiti-
mate the German minister of finance to accept sacrifices for Germany and to agree to
general rules applying to all member states. But there is no normatively acceptable argu-
ment empowering German voters to authorize German ministers to impose discretion-
ary orders and severe sanctions on Greece. From the perspective of Greek citizens, being
ruled by the euro group of the ECOFIN Council is not democratic self-government but
the rule of foreign governments. In short, it is not only the practically unlimited scope
of delegation and the intrusiveness of decisions that makes the Six-Pack regime nor-
matively unacceptable, but also the lack of democratic legitimacy of the Commission’s
exercise of discretionary authority.
3 Is democratization the answer?
Left-of-center authors who are concerned about the erosion of social market economies
and the rise of transnational and social inequality under the euro regime consider the
“transfer of sovereignty” to the European Union as part of the solution, rather than as
the problem. If they acknowledge present deficiencies of European action, the standard
response is to reassert a commitment to a genuine democratization of the European
Union (e.g., Collignon 2003; Hix 2008; Habermas 2011). What is necessary, in their
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 11
view, is to transform the union into a parliamentary democracy and the Commission
into a parliamentary government and to replace the veto positions of national exec-
utives through majority rule in a bicameral European legislature. As a consequence,
legitimacy deficits would be overcome because expanded European competences and
resources would be employed and controlled by democratic European politics.
At this point, I will not reiterate the obvious arguments against the political feasibility
of such changes under the existing rules of treaty amendment or against the adequacy
of present political parties and political communications for linking the exercise of Eu-
ropean governing powers to the interests and expressed preferences of European voters.
Instead, I will argue against the desirability of majoritarian democracy in the present
European Union on grounds of normative democratic theory.
Majoritarian democracy and persistent minorities
The question about the type of collectivities in which majority rule could be justified
is one of the most difficult and least explored in normative democratic theory. In re-
gard to democracy at the European level, it cannot even be discussed without entering
the normative and empirical minefield of the “no-demos” debate (Kielmansegg 1996;
Habermas 2001; Risse 2014). Eventually, this field will have to be charted, but not in the
present contribution. I will also not base my present argument on “communitarian
or “republican versions of normative political philosophy (Scharpf 2012). Instead, I
will turn to a strictly individualistic or “liberal” version of axiomatic democratic theory
which bypasses these issues and to an author who has explicated a deductive justifica-
tion of straightforward majority rule derived from normatively undisputed egalitarian
principles (Christiano 1996).
In Christiano’s view, the fundamental principle of democratic equality cannot imply
equality of outcomes. But it does imply equality of resources to influence the outcomes
of political decisions. At minimum, therefore, democratic legitimacy presupposes the
“one-man-one-vote” rule and the equality of voting power. By the same logic, demo-
cratic equality also implies neutrality: decision rules must not favor certain preferences
or discriminate against others. In the abstract, both of these principles are uniquely re-
alized by the rule of decision making by simple majority. Any super-majoritarian rules
or institutions would favor some preferences over others – generally, the defenders of
the status quo over the promoters of change. But the two principles justifying simple
majority rule come into conflict with each other when they are applied in real-world
constellations where the specific preferences of “persistent minorities” would never have
a chance to influence the outcomes (Christiano 1994, 2010; Ganghof 2005: 758–759).
Under these conditions – Christiano refers to the situation of Catholics in Northern
Ireland as an illustration – egalitarian democratic theory must allow for the possibility
of super-majoritarian correctives.
12 MPIfG Discussion Paper 14/21
The Community Method protects democratic legitimacy
In fact, this has been the practice of constitutional democracies (such as Switzerland,
Belgium, or Canada) with deeply divided societies, structural majorities, and hence
potentially persistent minorities. In order to avoid disruptive conflicts or, ultimately,
disintegration, they have developed institutions and practices of “consociational” or
“consensus democracy” (Lehmbruch 1967; Lijphardt 1968, 2012) with bicameral leg-
islatures, super-majoritarian decision rules, and consensus-seeking procedures that are
supposed to protect the highly salient interests and preferences of recognized minority
groups. Surely no less would be required by democratic legitimacy in the EU.
Compared to consociational democracies, the economic, institutional, cultural, and
political heterogeneity of European states is extreme. In terms of the varieties of capi-
talism, differences are now greater than they were in EU12 or EU15 in the 1980s and
1990s, when the present typologies were developed (Hall 2014; Höpner/Lutter 2014;
Streeck/Elsässer 2014). In effect, not only the German model of capitalism is, in Wolf-
gang Streeck’s (1997) words,parochial” and cannot be generalized – the same qualifi-
cation applies in principle to all nonliberal models of capitalism and the welfare state.
From the perspective of egalitarian democratic theory, therefore, they all would qualify
as persistent minorities in a Europe-wide egalitarian democracy – at least with regard
to majority decisions that would interfere with the politically salient values, institu-
tions, and interests of their parochial political economies. In fact, EU decision rules for
political legislation have respected this counter-majoritarian democratic restraint. The
consensus requirements of the EU’s Community Method are so high that it appears
most unlikely that EU legislation would ever override the politically salient interests of
even a small group of member states.
Present decision rules could, of course, be modified in some ways, perhaps to relax the
Commission’s monopoly of legislative initiatives. But they could not be replaced by a
regime of straightforward majority rule without provoking disruptive political conflicts
and radical anti-European opposition in member states whose national politico-eco-
nomic and socio-economic orders and values could be overridden by explicitly political
decisions adopted by majorities of “foreigners” in the European Parliament and in the
Council. In other words, the explicit switch to majority rule would destroy the pro-
tection of persistent minorities that is presently ensured by the Community Method.
Furthermore, it could politicize European legislation in ways that might transform the
largely dormant “no-demos issue” of EU legitimacy into conflicts that could destroy the
union (Bartolini 2005).
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 13
The price is high
The European Union, however, is paying a very high price for respecting the normative
limits of majoritarian democratic legitimacy. The immediate effect is the procedural
self-paralysis of legislative political action on the European level. Institutionalized veto
positions are, of course, not only used in defense of the legitimate diversity of national
institutions and values; they may be employed to advance any kind of interest – not least
the interest of less-involved governments in maximizing the price at which they could
sell their vote. In the past, “bloody minded bargaining” was to some extent impeded by
the pro-European esprit de corps of long-serving national officials in the Committee of
Permanent Representatives and the Council Secretariat. But what worked in EU12 or
EU15 (Hayes-Renshaw/Wallace 2007; Lewis 2000) has in the meantime become less
effective. At any rate, when consensus appears unattainable, the Commission will not
even try to launch a legislative initiative. In cases where it does do so, total blockade will
be less likely than extended bargaining over relative advantages and, ultimately, agree-
ment on the lowest common denominator. In other words, on issues involving salient
conflicts of interest, European legislation has never been, and is not now, an instrument
of effective political action (Falkner 2011).
That is why the “bypass” of integration through law has been effective in promoting
economic liberalism even in periods where a majority of member states were governed
by left-of-center political parties. It is also why, when confronted with a fundamental
crisis that could not be resolved through judicial action, European efforts to rescue the
Monetary Union completely bypassed the Community Method in favor of asymmet-
ric bargaining between creditor and debtor states. When those emergency measures,
adopted in disregard of the Maastricht rules, were followed by institutional reforms,
the new euro regime even abandoned the pretense of relying on political consensus in
the Council. What has been established instead is the supranational authority of the
Commission to adopt and impose discretionary policy choices on EMU member states
without either parliamentary or intergovernmental political control.
In substantive terms, moreover, it hardly needs saying that the liberalizing effect of in-
tegration through law on social-market political economies is being dramatically rein-
forced by the euro regime, which is compelled to ensure the continuing confidence of
“the markets” in the solvency of eurozone states by imposing continuous downward
pressures on wages and government spending in all eurozone political economies. In
short, from the perspective of pro-European and pro-social market democrats, the
present combination of policy-making regimes in Europe must appear as an unmiti-
gated failure in terms of both problem-solving effectiveness and political legitimacy.
14 MPIfG Discussion Paper 14/21
The EU at an impasse – waiting for the crash?
Present demands for the democratization of the EU, assuming they were politically fea-
sible, might improve problem-solving effectiveness if they implied straightforward ma-
jority rule. But then they would be normatively unacceptable for violating fundamental
requirements of democratic equality, and they might well raise political conflict to a level
where the EU might disintegrate. In any case, however, all radical institutional reforms
that might strengthen problem-solving effectiveness and democratic legitimacy at the
same time would appear to lack political feasibility. They would have to be designed and
adopted in the same veto system that is presently constraining democratic political ac-
tion as well as the range of feasible policy options. Under these conditions, institutional
and policy reforms would continue to depend on the agreement of all present veto play-
ers. Hence, feasible changes will at best be incremental and path-dependent and thus
most likely to produce “more Europe” of the same variety – more liberalization, internal
devaluation, centralization, and more technocratic-authoritarian rule.
In short, the EU seems to be at an impasse in which, according to the best of our present
knowledge as political economists, political scientists, and policy researchers, politically
feasible policies appear to be ineffective and illegitimate, whereas radical policy changes
seem to lack political feasibility. In other words, our conclusions seem to resemble the
advice the tourist received when asking an Irish farmer for the way to Tipperary: “If I
were you, I wouldn’t start from here.
We also know, however, that political-feasibility constraints depend on conditions
which may change. Institutional positions may lose their veto, occupants of veto po-
sitions may be displaced, the exercise of veto power may be delegitimated, and veto
players may even change their policy preferences in light of changed circumstances or
changed ideas. Thus, the most likely scenario to allow major institutional and policy
changes would be a crisis that is so deep and destructive that present policies could
not be maintained and present veto players would be either swept away or would no
longer prefer the status quo. For a moment, the international financial crisis following
the collapse of the Lehman Brothers bank in the fall of 2008 seemed to provide such an
opportunity because the neoliberal belief in the efficiency and stability of unregulated
financial markets was badly shaken. But once stop-gap measures at taxpayers’ expense
had prevented the total collapse, initiatives for regulatory reforms were slow in coming,
and international agreement was soon impeded by governments defending the interests
of their respective financial industries.
Perhaps that crisis was not deep enough to jolt international and European political
economies out of their path-dependent tracks. What also mattered was that no exist-
ing political forces, internationally or in Europe, were prepared to exploit the crisis as
an opportunity for fundamental change. Instead, we had and have brilliant analyses of
what has gone wrong in Europe and the world since the end of trentes glorieuses. But we
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 15
did and do not have normatively and pragmatically convincing ideas of what could and
should be done if the window of political opportunity for a basic overhaul of the system
should open. This is regrettable, because the opportunity might arise again.
There is little assurance that the international financial system should now be more
stable than it was before 2008. By all realistic accounts, the euro crisis is not yet over, and
it seems that present policies may actually increase the risk of its recurrence. Should it
recur, Angela Merkel’s prediction of 19 May 2010 may yet be confirmed: “Scheitert der
Euro, dann scheitert Europa.”9 Should the euro indeed fail and throw Europe into an ex-
istential crisis, we must hope that the response will not again be about saving the euro.
It should be about saving Europe.
Even if that extreme emergency should arise, the world would not come to an end.
However, political veto positions might be shaken, and previously unthinkable options
might suddenly be worth considering. I have little doubt that climatologists, when faced
with the opportunity, would have programs to promote. Since almost everybody (with
the possible exception of Jacques Delors and Helmut Kohl) now seems to consider the
Monetary Union a mistake, one should also hope that political economists studying its
deficiencies (e.g., De Grauwe/Ji 2014) would propose not just limited improvements
but fundamental (and viable) alternatives to the present regime – perhaps even includ-
ing the option of replacing bank money with “sovereign money” (Jackson/Dyson 2013;
Huber 2014). These are perspectives which I will not pursue here.
But even the best substantive policy proposals might fail or would deepen the EU le-
gitimacy deficit, unless they could go hand in hand with the activation of democrati-
cally legitimated capacities for political action at the European and national levels. For
Europeanist policy researchers, including myself, that implies a shift in normative per-
spective from the critique of output legitimacy to an emphasis on input legitimacy.10
This shift does not imply a belief in the prestabilized harmony between (“deliberative”)
democratic inputs and the common good. It responds, instead, to the suffering im-
posed on European non-elites through European policies defined by democratically
unconstrained pro-European elites. If this is felt to have populist overtones, so be it.
Democracy is meant to empower non-elites in relation to governing elites.11 Since de-
9 Regierungserklärung, 19 May 2010;
10 The point needs more reflection than I can provide here (Scharpf 2012). Before the crisis, EU
legitimacy had depended on low political salience. It was ensured as much by the outputs the EU
avoided (policies challenging salient citizen interests and preferences) as by the generally wel-
come outputs ascribed to it (e.g., Europe-wide mobility and exchanges). Under these conditions,
the lack of input legitimacy was more of an academic concern than a political issue. But the crisis
has changed that, and the institutional and policy reforms which will be required could not pos-
sibly succeed in the absence of input legitimacy and effective democratic accountability.
11 This is not meant to deny the basic tension between “responsive” and “responsible” government
(Mair 2013). But for the tension to be resolved in the “well-understood” interest of the gov-
erned, governing elites must be made to depend on the political support of non-elites.
16 MPIfG Discussion Paper 14/21
politicized integration through law and the depoliticized euro regime have led Europe
into its present impasse, a fundamental change of direction will presuppose the politi-
cization of policy choices under conditions of political accountability on both levels of
4 Community and autonomy
Politicization without the possibility of autonomous policy choices is more likely to
produce frustration, alienation, apathy, or rebellion, rather than democratic legitimacy.
In multilevel polities, however, political autonomy is necessarily constrained on both
levels. These constraints are minimized in the institutional architecture of “separation
federalism” in the United States, where the federal government and the states have sepa-
rate areas of legislative competence, separate tax resources, and separate administrative
agencies. The European Union, however, shares some of the crucial aspects of German
“joint-decision federalism,” where the federal government depends on the Länder for
the implementation of its laws, whereas Länder governments participate in federal leg-
islation (Scharpf 1988; Stepan 1999; Nicolaidis/Howse 2001). In such structures, the
ideal of democratic autonomy on both levels of government is difficult to realize. If it
is to be approximated in Europe, it depends on the spirit and the practices of mutual
accommodation, where member states must defer to democratic majorities on the Eu-
ropean level, while at the same time European majorities must respect the legitimate
diversity of democratic member states.
A European demoi-cracy?
On the empirical level, the need to accommodate diversity is reflected in long-standing
discussions and the unsystematic and quite limited practices of “differentiated inte-
gration” and “enhanced cooperation” (Holzinger/Schimmelfennig 2012; Leuffen et al.
2013). On the normative level, a growing number of contributions to the theory of a
European demoi-cracy have come to challenge the unitary bias of standard democratic
theory as well as “messianic” political beliefs (Weiler 2012a, 2012b) that treat European
integration as a value that is lexicographically superior to all other concerns.12 The orig-
inal intent of these contributions was to defend the legitimacy of the EU against chal-
lenges asserting the lack of a common European demos and a “democratic deficit” be-
cause European institutions did not resemble majoritarian democracies at the national
level. Treating legislation by the Community Method as paradigmatic, the theory of
12 This literature requires and deserves a more thorough discussion. See, e.g., Nicolaidis (2003,
2012), Chevenal/Schimmelfennig (2013), Bellamy (2013), Lindseth (2014).
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 17
demoi-cracy denies the assumption that political legitimacy presupposes the existence
of a unitary European demos. Instead, EU governance is assumed to be legitimated by
the multiple demoi of its constituent polities, whose citizens are represented individu-
ally and as “states-peoples” at the level of the union. Being part of a common polity,
however, these demoi must be aware of their increasing interdependence. Hence, they
must accept not only the need for mutual accommodation among each other, but also
the need for common policies to avoid negative externalities and to facilitate coopera-
tion for common purposes. What is crucial, however, is that common policies must not
undermine their own bases of legitimacy; they must respect the integrity of the multiple
demoi. In spite of various imperfections, therefore, European legislation by the Com-
munity Method is seen as approximating the normative ideal.13
Demoi-cracy is attractive as a normative concept. What is problematic, however, is the
implicitly affirmative interpretation of the present state of the union. By focusing on
European legislation, authors tend to downplay the constraints imposed on the plural
demoi through negative integration and the supranational euro regimes as well as the
constraints imposed on effective political action at the European level through the mul-
tiple-veto system of the Community Method. In order to approximate its normative
aspirations, therefore, the theory of demoi-cracy would require a substantial reversion
of governing powers to the level of EU member states and at the same time a substantial
strengthening of the capacity for European political action on problems which can-
not be resolved through the horizontal self-coordination among states-peoples. What
is lacking, in other words, are discussions about the ways and means through which the
normative aspirations of the theory could be realized in practice.
Ground rules for a multilevel European democracy
As a contribution to such discussions, I will suggest a set of basic decision rules for a
European constitution that responds to demoi-cratic aspirations for member-state au-
tonomy while at the same time facilitating political action and opportunities for po-
liticization and democratic accountability at the European level. As will be obvious,
however, such rules could not possibly be realized through path-dependent incremental
reforms within the present institutional framework. Hence, they are here presented as
suggestions from the perspective of the morning after the crash.
13 In this regard, demoi-cracy differs from the position of Jürgen Habermas (2011: 62–69). He also
asserts a dual identity of individuals as citizens of their respective states and of the union, but
in his view this dualism justifies majoritarian democracy at the European level in order to break
the stranglehold of intergovernmental veto players under the present rules of the Community
Method. See also, Gaus (2014).
18 MPIfG Discussion Paper 14/21
1. Deconstitutionalization of European law
In comparison to the present Treaty, the coverage of a European constitution should be
greatly reduced. In addition to rules for the organization and procedures of European
governing institutions and the allocation of legislative competences between the union
and its member states, the constitution should ensure the protection of individual civic
and civil rights, but it should not include rules amounting to an economic constitution.
All other rules of the present Treaty and the acquis should remain in force but would
lack constitutional status.
2. Multiple legislative initiatives
Not only the Commission but also qualified minorities in Parliament and Council
should be able to introduce legislative initiatives.
3. Majority rule
Ordinary European legislation should be adopted by majority votes in Parliament
and Council.
4. Member-state opt-outs
Individual member states should have the right to opt out from ordinary legislation.
5. Opt-outs denied by qualified majorities
Legislation that proposes to exclude opt-outs must be adopted by absolute majority
in Parliament and by qualified majority in Council.
6. Conditional opt-outs from the acquis
One or more member states should be able to initiate legislation even if it contra-
venes parts of the acquis. Such initiatives must be notified to the Commission. They
may be denied by joint majorities in Parliament and Council.
The rationale of the rules suggested is to enlarge the action spaces of national and Eu-
ropean political processes and, at the same time, to reduce the constraints imposed by
nonpolitical domination.
Rule (1) is an attempt to reduce the domain of constitutional law in the EU. As has often
been noted, the Treaties are much more extensive than national constitutions, regulat-
ing in great detail questions which in constitutional democracies would be settled by
political legislation (e.g., Grimm 2004, 2014). Under the ECJ’s doctrines of “supremacy”
and “direct effect,” these rules and their judicial interpretation take precedence over the
laws and constitutions of EU member states. By itself, this is not remarkable: federal
law will override state law in federal states as well. Even if a reformed Treaty would ap-
proximate the ideal of a “lean constitution,” member states and private actors would, of
course, continue to be bound by the present acquis.
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 19
What would matter, however, is the removal of constitutional constraints on European
legislation – which under the ECJ’s extensive interpretation of Treaty law is often re-
duced to enacting mere codifications of the case law (Martinsen 2014). Instead of being
bound by petrified European law, political legislation could then remove existing legal
constraints on member-state political action, and it could adopt European policies that
might conflict with the “economic constitutionalism of the present Treaties as inter-
preted by the Court and the Commission.
Rule (2) would eliminate the Commissions monopoly of legislative initiatives.
Rules (3) and (4) represent the constitutional core of the proposal. The capacity for po-
litical action at the European level will increase as the stranglehold of the multiple-veto
system is loosened. At the same time, rule (1) will have opened the deconstitutionalized
acquis for political reconsideration, and rule (2) will widen the opportunity for legisla-
tive initiatives. As a consequence, one should expect a much broader range of politically
more salient issues to be introduced and debated on the European agenda.14 Because
European politics will lose its boring character (Moravcsik 2002), media attention will
probably increase and political parties and parliaments in the member states are more
likely to debate the significance of European options from national and perhaps also
from European perspectives. Such debates will become more salient due to the percep-
tion that politically controversial legislation is also more likely to be actually adopted at
the European level, rather than bogged down in endless bargaining.
At the same time, of course, straightforward majority rule would raise the political sa-
lience of the “no-demos” and persistent-minorities issues. As a consequence, political
conflict and protests might delegitimate political action at the European level. For this
reason, the proposal would replace the protection of legitimate diversity, which is pres-
ently provided by the Community Method, with the possibility of national opt-outs.15
It would present the national demoi with Albert Hirschmans (1970) three moral op-
tions: they could mobilize political resources to influence the outcome by exercising
voice – which also would increase their involvement in, and perhaps commitment to,
political processes at the European level (and thus contribute to the eventual emergence
14 Since a “lean constitution” would reduce the ever widening domain of the Court’s teleological
interpretation of the Treaties, I am not sure how much more would be gained by additionally
insisting on a range of substantively defined “reserved powers” of member states (Grimm 2014:
1057). In principle, the political dynamics of majority rule plus opt-outs could favor decen-
tralization as well as further centralization. What would matter more, in my view, would be the
possibilities of challenging the existing acquis (Rule 6).
15 The possibility of opt-out would eliminate the persistent-minorities problem. Whether it will
also remove the “no-demos” issue (which I have not discussed here) is less certain. But if the
opt-out enables decisions by a “coalition of willing demoi, the “no-demos” issue may lose much
of its normative salience. What would matter instead are the procedures by which national
demoi decide about the use of opt-out options.
20 MPIfG Discussion Paper 14/21
of a European demos).16 If unsuccessful, they could manifest their loyalty by accepting
the outcome of majority rule in European as in national politics. If the outcome should
indeed violate highly salient national concerns, the possibility of an opt-out would pro-
vide them with an exit option that should defuse potentially explosive opposition.
Rule (5) needs some elaboration. It is meant to respond to constellations where uniform
application throughout the union is considered essential. In the normative context of
demoi-cracy, of course, the uniformity of European law as such will cease to be treated
as a value by itself. It may often be desirable for reducing transaction and mobility or
supervisory costs, but in cases of disagreement, proponents of change will consider
these in relation to the purposes they hope to advance. These may differ significantly
in their vulnerability to opt-outs, and such differences may be clarified by reference to
some analytical distinctions.
On the one hand, European action may realize gains from cooperation in situations
where the costs and benefits will mainly affect the participating member states – in
which case there is no reason to insist on uniformity. If the benefits are generally attrac-
tive, initially hesitant collaborators may join later – as was true of the Schengen Treaty
(Adler-Nissen 2011). If collaboration is not generally considered desirable, opt-outs
would allow the union to accommodate legitimate diversity.
On the other hand, opt-outs become more problematic if outsiders cannot be excluded
from sharing benefits whereas the costs of collaboration must be borne by participants.
In that case, free-riders may reduce, but probably will not destroy, the benefits of coop-
eration. In still other constellations, however, noncollaborators might enjoy competitive
advantages or otherwise reduce the benefits that collaborators hope to achieve. Where
that is the case, the anticipation of opt-outs may well prevent potential beneficiaries
from agreeing on a common rule – think of the harmonization of capital taxes.17 In
other words, while the possibility of opt-out should be the general rule, it should not
apply everywhere.
The question of where it should or should not apply is a matter of political judgment.
Rule (5) would thus allow promoters to propose legislation that will apply without ex-
ception. In that case, democratic legitimacy would also require a return to decisions by
qualified majorities in Parliament and Council.18 It would then be for the promoters
16 As Hirschman noted in a later contribution, creating the possibility of exit may in fact increase
the motivation to use voice (Hirschman 1986: 89).
17 That condition seems to be assumed by Martinsen/Uygur Wessel (2014) when they warn of a
“spiraling of opt-outs” that might cause a far-reaching decline of integration. But these condi-
tions do not apply everywhere, and the possible decline of integration must be seen in compari-
son to the gains of European action achievable through majority rule.
18 In German federalism, the basic idea of “conditional opt-outs” had been first suggested in 1977.
While still controversial in the debates leading to the reforms of 2005, it was cautiously accepted
for a narrow range of issues (Scharpf 2009: 130–136): Art. 84 (1) of the Basic Law allows Län-
Scharpf: After the Crash: A Perspective on Multilevel European Democracy 21
to assess the trade-off between a more easily adopted rule that is potentially vulnerable
to opt-outs, and the delay, compromises, and potential blockades that a generally ap-
plicable rule might face.
Rule (6), finally, addresses the fact that the “petrified” acquis does include more uniform
European rules than would henceforth be adopted under majoritarian procedures. Rule
(1) would allow existing nonconstitutional law to be corrected by legislative majorities.
But given the diversity of national political economies, potential conflicts may not be
sufficiently general to mobilize majorities on the European level. In that case, initiatives
with high political salience in one or a few member states would still be ruled out by the
existing acquis.19
Under these conditions, there ought to be some kind of political recourse, but unilat-
eral opt-outs – which might violate common values or impose negative externalities on
other member states – would not be the appropriate solution. Instead, it is suggested
that member states should notify the Commission of legislative initiatives that would
conflict with existing European law.20 After being reviewed in light of the specific case,
such initiatives could be denied by parallel majorities in Parliament and Council. In ef-
fect, the possibility of re-examining the acquis on a case-by-case basis should result in
a more fine-grained pattern of European law that is based on a political assessment of
the actual need for Europe-wide uniformity,21 and it should eventually limit the body
of binding European law to rules that serve a positive European purpose and that have
the political support of current legislative majorities at the European level.
In combination, these ground rules would have two beneficial effects. On the one hand,
they would protect the autonomy of EU member states against legal constraints that are
not effectively serving common European purposes in the considered political judg-
ment of present European legislative majorities, and they would allow effective defenses
for the critical interests of “persistent minorities.” On the other hand, however, they
would liberate political initiatives at the European level from some of the legal con-
der opt-outs from procedural regulations in federal statutes. But opt-outs may be excluded in
statutes requiring an absolute majority of Bundesrat votes. Art. 72 (3) also introduced the pos-
sibility of exceptions for a few items of substantive federal legislation. In a recent evaluation of
post-reform practices, these “world-wide unique” rules were assessed to be unequivocally suc-
cessful in practice and to provide a model for the further evolution of federal–Länder relations
(Schneider 2013: 743–749).
19 The acquis itself may well have been produced through “integration through law” and judicial
legislation that never had political support at the European level.
20 If several states are trying to be exempted from the same European rule, this procedure might
serve as a partial equivalent to the largely ineffective option of “enhanced cooperation.
21 For cognitive reasons, general legislation will always over-generalize because it can never con-
sider all potential case constellations. In federal systems, however, where it is combined with the
supremacy of federal over state law, general legislation is bound to produce over-centralization
if both levels of government may legislate in the same policy area (which is true in Germany and
in the EU, but not generally in the United States).
22 MPIfG Discussion Paper 14/21
straints imposed by the economic-liberties case law of the ECJ and from the politi-
cal constraints imposed by the multiple-veto system of the Community Method. One
might expect, therefore, that the combination of majority rule and the opt-out options
would widen the potential agenda of legislative choices at both levels of government,
and that it would also politicize policy choices in the European arena and in national
politics. As a consequence, the level of conflict over European legislation may well rise.
But it should matter that such conflicts would now have a chance to be resolved through
political action. If that option is available, politically productive conflicts may actually
contribute to further political integration – or so one might hope.22
These suggestions are not presented with the claim to represent a normatively validated,
theoretically coherent, and empirically supported blueprint of the procedures of a vi-
able European constitution. They are meant to suggest that it may indeed be worth our
time to shift some attention from the study of what is going wrong in European affairs
to controlled speculation about what might be put right if the window of political fea-
sibility should ever open.
22 Exploring the possibility, the preconditions and the limits of political integration through po-
litical conflict must be left for another time: See, e.g., Dahrendorf (1959), Dubiel (1992), Göhler
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... The perceived structural impossibility of popular sovereignty to penetrate the governance of the EU and shape the content of norms in the normative direction of equality and participatory parity prompts a skepticism about the EU. Indeed, proponents of views that fall within the spectrum of what I identify as the instrumentalist position share different degrees of doubt with regard to the potential of the current institutional framework of the EU-or even of supranational ordering in general-to deepen democracy and assert social over liberal economic priorities in new legal ascriptions (Grewal 2018;Streeck 2012;Scharpf 2014;Mitchell and Fazi 2017; but see Hennette et al. 2017). For some, this would only be possible following a set of structural changes capable of both embedding diversity and democratic participation in the government of the Union and of reversing its current structural orientation towards liberalization and the preservation of transnational flows-in short, following a reinvention of the Union (Scharpf 2014). ...
... Indeed, proponents of views that fall within the spectrum of what I identify as the instrumentalist position share different degrees of doubt with regard to the potential of the current institutional framework of the EU-or even of supranational ordering in general-to deepen democracy and assert social over liberal economic priorities in new legal ascriptions (Grewal 2018;Streeck 2012;Scharpf 2014;Mitchell and Fazi 2017; but see Hennette et al. 2017). For some, this would only be possible following a set of structural changes capable of both embedding diversity and democratic participation in the government of the Union and of reversing its current structural orientation towards liberalization and the preservation of transnational flows-in short, following a reinvention of the Union (Scharpf 2014). ...
... Against this background, several scholars have demonstrated that the many crises faced by the EU (Vollaard, 2014(Vollaard, , 2018Webber, 2014) have sparked not only persistent implementation failures (asylum policy, euro crisis) and increased politicisation of the EU (de Wilde & Lord, 2016) but also a general rise in Euroscepticism (Bulmer et al., 2020). Furthermore, member states have often questioned the legitimacy of policy changes that were introduced in times of crisis (Scharpf, 2015;Schmidt, 2021) as these decisions were often taken unilaterally by the Commission. More specifically, the EU's responses to crises often sparked criticism from the member states as these measures tended to bypass crucial steps in the decision-making process. ...
Full-text available
Public procurement is a policy area located between two contradictory tendencies. On the one hand, the European Commission strives for greater competition to widen procurement markets. On the other hand, the boosting of competition encounters resistance among the member states. This article investigates how these colliding tendencies played out during the initial stages of the Covid-19 crisis and, more specifically, how changes in the field of procurement affected legitimate governance in the EU. Based on institutionalist and EU governance theories, the study contributes to the literature with three principal findings. First, it demonstrates that the pandemic enabled exogenously driven changes in the field of public procurement with new policies and guidelines, while the EU’s overall aims in this field were upheld. Second, the study demonstrates that the Commission was the main driver of change and that it enhanced the harmonisation of procurement rules and supranational integration despite the crisis. Third, while these changes strengthened the role of supranational actors, the study demonstrates that the changes introduced allow member states increased flexibility when it comes to the implementation. In practice, however, this flexibility has the potential to undermine the EU’s initial aims, thereby jeopardising the EU’s legitimacy.
... Audiences in creditor member states criticize the Commission for leniency towards fiscally irresponsible member states (Schmidt, 2019). Others argue that the SGP centralizes control over 'core state powers' (Genschel and Jachtenfuchs, 2018) in the hands of unelected Commission experts, as democratic delegation and accountability chains leading to the Commission are thin (Scharpf, 2015;Seikel, 2016;Sanchez-Cuenca, 2017). Politicization thus yields strongly heterogeneous pressures on the Commission, depending on the audience involved. ...
Full-text available
Recent research indicates that bottom-up EU politicization shapes top-down EU policy enforcement, yet leaves open questions on the pervasiveness of these effects in policy areas that are depoliticized by design. This contribution asks how societal EU politicization shaped the enforcement of the Stability and Growth Pact up until its COVID-19-induced suspension. It employs causal process-tracing to analyse fiscal rule enforcement under varying levels and constellations of EU politicization. Results indicate that enforcement by the European Commission is shaped both by mandate and exogenous pressures created by politicization and the reputational concerns they induce. Moreover, politicization has gradually pushed the Commission towards increasingly flexible enforcement of EU fiscal rules. These conclusions are relevant because they show that politicization permeates even the most depoliticized areas of EU policy. Additionally, they suggest that the SGP's COVID-19-induced suspension can be understood as a continuation of existing enforcement strategies.
... This applies especially for the creation of de novo bodies (e.g. EFSF and ESM) to implement conditionality or austerity policy on fiscally beleaguered member states; moreover, these developments have transpired under the conditions of a persistent lack of a common EU welfare regime as corrective counterpart to integration that one-sidedly favours the market freedoms of people, goods, capital and services (see, for example, Matthijs 2017;Scharpf 2015). In the case of the Eurocrisis, the fiscal and economic governance responses were not led by the EU government, but rather national governments. ...
Full-text available
The European Union remains an ambivalent polity. This uncertainty complicates the assessment of its democratic and federal quality. Drawing on comparative federalism research can contribute not only to making sense of whether, or rather which kind of federalism the EU has developed. It can also enable addressing such a compounded, but necessary inquiry into the federal and democratic character of the EU and how to ascertain which type of democratic government for which type of federal union may be appropriate. The article first elaborates a framework to assess the dimensions of federal and democratic government, drawing on comparative federalism research to delineate basic types of federal democracy. Here the democratic dimension of government is taken as referring primarily to the horizontal division of powers (among ‘branches’) of government, the federal dimension to the vertical division of powers (among ‘levels’) of governments. The framework is applied to the government of the EU in order to gauge its own type(s) of division of power arrangements and the interlinkage between them. Finally, the discussion reflects on whether or rather how the EU could comprise a federal democracy , especially in light of recent crisis challenges and subsequent institutional developments in EU governance.
... It is, however, also solidarity in this sense, as embedded in our national welfare states, that is often said to be threatened by the grip of the single market and its four freedoms. This is the threat cheerfully anticipated by Friedrich Hayek ( 1939 ), militantly invoked by so-called Lexiteers, i.e., left-wing Brexit supporters, and systematically denounced by left-wing critics of the EU's "negative integration" such as Fritz Scharpf ( 1999Scharpf ( , 2015 or, more vehemently, Wolfgang Streeck ( 2013 ). ...
Full-text available
This text will address three questions. Firstly, what roles has the appeal to solidarity been playing in the process of European integration? Secondly, what does solidarity in the normative sense of an obligation really mean? Thirdly, to what extent can we and should we rely on appeals to solidarity as we fight for a better Europe?
... 61 These asymmetries, not limited to but particularly connected to the EMU, have led to deterministic accounts highlighting the impasse the EU is faced with when enacting policies to 'socialise' the landscape. 62 Indeed, any efforts to enhance the social dimension of the EMU based on soft integration through Europe 2020 and the European Employment Strategy have not been very successful, calling for more concrete legally binding measures as the way forward. 63 The enhanced cooperation proposed by the Reflection Paper appears to fit these criteria, despite the -similar to the first scenario -danger of a race to the bottom and regulatory divergence between the Eurozone members and the rest of the EU. ...
This article considers the impact of Brexit on the future of Social Europe. Through recourse to key moments in the history of European social integration, where Britain more often than not vehemently opposed any coming together, its role as an important veto player in EU social policy-making is established. With the UK set to leave the Union, the option for further social integration is no longer inconceivable. It is featured as one of the possible scenarios in the Reflection Paper on the Social Dimension of Europe, and recent developments, such as the European Pillar of Social Rights, together with its accompanying initiatives, appear to lay the groundwork towards that. The article concludes that, although the realisation of Social Europe is more likely post-Brexit, there are other Member States willing to take over the UK’s role and act as veto players on their own terms.
... Perché sarebbero anche pienamente consapevoli dei pericoli di consentire ai singoli Paesi di sottrarsi ai loro obblighi solidaristici e di minare l'autorità della Corte di giustizia europea attraverso delle sfide superficiali o egoistiche. Percorrere una strada parallela per contrastare la costituzionalizzazione dei trattati da parte della Corte implicherebbe: a) consentire solo procedimenti giudiziari e di infrazione basati su regolamenti e direttive adottati ai sensi degli articoli 289-291 TFUE 56 ; b) permettere la formulazione di proposte legislative da parte dei Parlamenti nazionali e del Consiglio che comportino l'abbandono parziale o totale di alcune parti dell'acquis comunitario per alcuni o tutti gli Stati, previa approvazione della maggioranza qualificata in seno al Consiglio e della maggioranza al Parlamento europeo 57 . Quest'ultima misura consentirebbe la rimozione di aspetti dell'acquis che non richiedono più un sostegno politico, anche solo perché hanno perso la loro utilità. ...
This article aims at analyzing the structural changes that occurred in the Portuguese economy after the 2010/2013 sovereign debt crisis, compared with what occurred in Germany and using the current debate surrounding the new reform of the Eurozone as a backdrop. We thus intend to find out whether a peripheral southern economy like Portugal and the Eurozone’s core economy (Germany) have become closer and, if so, what that means in terms of the sustainability of the Eurozone as a set of different economies sharing the same currency. The study is framed in an institutional political economy approach (Varieties of Capitalism) and a macroeconomic post-Keynesian perspective (demand-led growth regimes), as well as a structural analysis of economic complexity and product specialization of these contrasting economies.
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EU institutions are best conceived as representing the peoples of Europe - a contention set out in the first, introductory, section and developed over the next five sections. The second section establishes how democratic legitimacy involves governments being representative of a people and specifies the characteristics a people need to possess for such representation to be possible. Though no EU demos exists with these features, the third section shows how in an increasingly interconnected world, governments have incentives to form associations of democratic peoples via a process of republican intergovernmentalism. Such associations guard against the domination of one people by another by preserving the capacity of the associated peoples for representative democracy. They constitute a form of demoi-cracy. The fourth section describes how the EU’s system of representation corresponds to such an association and facilitates mutual respect and fair terms of cooperation between the peoples of Europe. However, as the fifth section indicates, moves away from such a union of peoples towards greater political unity involve an inevitable loss of representativeness and democratic legitimacy. The sixth and concluding section argues the euro crisis results from attempting such a move. Current efforts to resolve the crisis through yet further integration compound economic with political failure by circumventing the EU’s associational decision-making mechanisms. The only democratically legitimate and non-dominating solutions will be those that respect the EU’s fundamentally demoi-cratic character.
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European integration has created a multilevel polity in which governing powers are exercised at the European, national, subnational and local levels. But whereas in EU member states there is generally a clear hierarchical relationship in which the political and legal bases of legitimate authority at the national level dominate those at the regional and local levels, the relationship between the EU and its member states is much more ambivalent.
As my work has argued previously, European integration enjoys an “administrative, not constitutional” legitimacy. This view is in obvious tension with the deeply-rooted conceptual framework—what we might call the “constitutional, not international” perspective—that has dominated the public-law scholarship of European integration over many decades. Although the alternative presented in my work breaks from that traditional perspective, we should not view it as an all-or-nothing rejection of everything that has come before it. The administrative alternative can be seen, rather, as providing legal-historical micro-foundations for certain theories that also emerged out of the traditional perspective even as they too are in tension with it. I am referring in particular to Joseph Weiler's classic notion of European “equilibrium”—now updated as “constitutional tolerance”—as well as Kalypso Nicolaïdis's more recently developed theory of European “demoi-cracy” on which this article focuses in particular. The central idea behind the “administrative, not constitutional” interpretation—the historical-constructivist principal-agent framework rooted in delegation, as well as the balance demanded between supranational regulatory power and national democratic and constitutional legitimacy— directly complements both theories. The administrative alternative suggests how the relationship between national principals and supranational agents is one of “mediated legitimacy” rather than direct control. It has its origins in the evolution of administrative governance in relation to representative government over the course of the twentieth century (indeed before). By drawing on the normative lessons of that history—notably the need for some form of national oversight as well as enforcement of outer constraints on supranational delegation in order to preserve national democratic and constitutional legitimacy in a recognizable sense—this article serves an additional purpose. It suggests how theories of European equilibrium and demoi-cracy might be translated into concrete legal proposals for a more sustainable form of integration over time—a pressing challenge in the context of the continuing crisis of European integration.
Dubiel bricht eine Lanze für die Konflikttheorie, in gut kritischer Tradition möchte er den Glauben an den Konflikt als politische Grundkategorie wiederherstellen. Nun würde in der Politikwissenschaft derzeit wohl niemand leugnen, daß die Gesellschaft durch vielfältige und tiefgreifende Konflikte gekennzeichnet ist und daß auch die Politik davon nicht unbeeinflußt bleibt. Wenn das so unstrittig ist, muß das Anliegen tiefer reichen. Augenscheinlich geht es Dubiel nicht um die Bestimmung aktueller Konfliktlinien in ihrem Intensitätsgrad und ihren Auswirkungen. Der Klassenkonflikt — intellektuelles Vehikel so manch kritischer Theorien — wird nicht hypostasiert; Nord-Süd-Konflikte, Nationalitätenkonflikte oder die Konflikte geistiger und psychischer Selbstbehauptung in der Integration der neuen Bundesländer sind nicht herangezogen. Umso dramatischer werden die Existenzbedingungen der modernen Demokratien westlicher Industriegesellschaften in der Ubiquität von Konflikten, im Streit als solchem, vermessen.
In der Auseinandersetzung um die Demokratisierung der Europäischen Union (EU), die seit dem Vertrag von Maastricht 1992 unvermindert die Aufmerksamkeit akademischer wie politischer Debatten bindet, haben sich zwei weithin geteilte Überzeugungen etabliert, die den Rahmen einer wünschbaren und möglichen künftigen demokratischen EU abstecken. Zum einen gibt es heute, im Unterschied zur frühen Phase der Debatte, kaum noch Stimmen, denen die Einrichtung der EU nach dem Vorbild des demokratischen Nationalstaats als machbar oder wünschenswert erscheint.