After the Brexit vote, there is a sense of cluelessness, or at least irritation, in Germany, that is, in the newspapers, in political journals, in the parties represented in the Bundestag, and certainly also in the federal government. Pre-referendum polls appeared to indicate that it was alarmingly possible that people would vote as they finally did, but nobody really wanted to believe it; it was simply unimaginable that a country that had so long been an EU Member State could suddenly leave it.

But the Brexit vote is not the first big convulsion. When refugees headed in great numbers towards Europe the EU thought it was not in a position to work out a solidaristic solution to the associated problems. Things never looked too good for solidarity in refugee matters; Greece and Italy were particularly hard hit by the EU’s unjust asylum system; only this time Germany accepted people in great numbers and suddenly showed a completely different interest in a European solution. The alternative to a solidary solution was found in the EU by way of a rotten deal with Turkey. It forces the EU, especially Germany, to keep silent on Erdoğan’s civil coup d’état.

But there is more. Over a year ago now Wolfgang Schäuble succeeded through sheer coercion, threatening to push Greece out of the euro, to force Alexis Tsipras’s government to give up its policy. Now not all Germans are put together like Schäuble. The philosopher Jürgen Habermas found justifiably drastic words for this: ‘I fear that the German government, including its social democratic faction, have gambled away in one night all the political capital that a better Germany had accumulated in half a century’ (The Guardian, 16 July 2015).

Looking back to 2005 we find similarly grave events. The ratification of the Treaty establishing a Constitution for Europe was rejected in the referenda in France and the Netherlands. Following this, further ratification procedures in other EU states were cancelled and the EU decreed a ‘pause for reflection’. Not much came out of this other than a new Treaty, the Treaty of Lisbon. It is already quite suspect in that it presents in different legal guise the core ideas of the failed constitutional treaty – a trick used to avoid any risk in trying to win over majorities to support it. But the cost was the lack of legitimacy of the new treaty and the constant manoeuvring to deal with the contradictions between the Member States. Nevertheless it almost failed when it was defeated in an Irish referendum; subsequently it could only be ratified after various renegotiations.

The ‘risk’ of a referendum already existed in previous situations involving the EU. This shows that mistrust in the face of European affairs had been building well before the financial and euro crisis. The reaction of governments in the EU to this risk now consisted of minimising the referendum risk. The first example is the Treaty of Lisbon itself. There were referenda neither in France nor in the Netherlands. In France they even changed the constitution. Of course, we should not fetishise what some consider to be the ‘will of the people’. Nonetheless the wrong reaction is to thwart forms of democratic co-determination in order to ‘neutralise’ a rampant scepticism within the populations of the EU Member States. The curbing of co-determination has encouraged and is encouraging this scepticism.

If we therefore want to speak of a crisis of the EU, which I have often done, we should not regard Brexit as its trigger. The crisis was there well before this, and we should ask what its structural causes are. We need more precise discussion of the terms and theories that have repeatedly been floated during the debate: that the EU and the Treaties are ‘undemocratic’ and ‘neoliberal’ (these are not the same things) and that within the EU powerful inequities have been piling up whose reduction is necessary.

Neoliberalism as the answer to the capitalist crisis

Nobody wants to say that they are ‘neoliberal’, while some like being seen as ‘ordoliberal’. But these are not the same. Neoliberals believe in the market and in entrepreneurial initiative. For them only the market can enable an optimal – that is, needs-based – allocation of goods. Put differently, any other mechanism of assigning goods to given needs is against the market in a negative sense (it takes too long, it cannot process all of the relevant data and information for the needed solutions to the problems, etc.); neoliberals are especially suspicious of the state. By contrast, ordoliberals consider a certain degree of state interventionism to be necessary. They are indeed neoliberals at heart, but they understand that, for example, monopolies distort precisely the spontaneity of the market they so worship. Thus they accept that the state has to take care of ‘fair competition’ if the market is to bring its blessings to all. Along with their market optimism, both outlooks have something else in common – a pronounced hostility to Keynesianism, Marxism, and socialism (whatever its variety). Therefore I will forgo differentiating between neo-and ordoliberals in what follows and simply speak of ‘neoliberals’.

Neoliberalism is not simply an ideology. Neoliberalism implies a politics, a policy that is not limited to economic policy. It is directed towards the relationship between economy, society, and the state. If, through the 1960s and 1970s, the developed capitalist countries could still be described as state­restrained markets then today’s phenomenon is that institutions such as the big financial institutions and rating agencies now dictate the line of approach adopted by democratically elected governments. States and their societies are embedded in global markets. Obviously, the neoliberals have succeeded in reshaping existing political institutions and creating new institutions. Still, this is not a peculiarity of neoliberalism but is what more or less all ambitious political ideologies do when they get a chance. What is specific to neoliberalism is that it reshapes and creates political institutions – it aims at ‘market conformity’. This means that democracy will only be permitted when it does not impede capital and its valorisation.

However, this needs to be qualified because the societies constituted as welfare states emerging after the Second World War were also compatible with capitalism. They were arrangements that benefited capitalism in two ways. First, it was precisely democratically and through the welfare state that capitalism could confront state socialism within that era’s system competition: it was more productive, it allowed at least an acceptable internal distribution of prosperity, and it was more democratic than state socialism. Second, democratically constituted capitalism with welfare states could deploy growing mass consumption for an optimal use and expansion of capital’s productive capacities. This enabled a compromise between the interest of the workers in rising wages and less unemployment, on the one hand, and the interest of entrepreneurs in growing profits and greater utilisation of productive capacities, on the other.

This qualification has to take account of the fact that this class compromise is breaking up very quickly. Capital’s interest in high profits played a role in policy; however, the interests of the employees were in no way ranked on the same level. Thus there was profit growth along with equal or declining labour costs. At least for a time this has been feasible through deregulation of the labour markets and especially of the financial markets.

This is how the neoliberals set the scene. Capitalism’s growth crisis, which began to be apparent in the 1970s, was to be broken through profit maximisation at any price. But they did not get particularly far with this. Neoliberalism has broken its own spell. Since 2008, at the latest, we have been living in a permanent crisis capitalism.

It is, however, not so simple to say that we want the financial sphere to be more strongly regulated again. First, because the neoliberals will immediately clamour. Yes, their respectability has been damaged – and, ever since the bank bailouts, the watchword ‘market before state’ seems less convincing to people – but they still intellectually dominate a major part of the political elites. This then poses a question of (intellectual) power. Second, the European Union is founded on a system of treaties that contains within it the Magna Charta of neoliberalism: the four ‘fundamental freedoms’ of capital (the free movement of goods; freedom of movement for workers; right of establishment and freedom to provide services, free movement of capital). The single states of the EU are compelled to dismantle any legal impediments to these freedoms, and the new establishment of any kind of impediment is ‘forbidden’. This has led to a deregulation of the markets.

The EU – motor of neoliberal developments?

This at least is the impression that one can get. I believe that there is a lot of truth in this, the more so as alternative possibilities of development have been discussed and consciously not adopted. But a lot of truth does not mean the whole truth, and it is therefore false, even if only a little.

What is true is that the decision to leave social policy under the aegis of the individual welfare states has led to a massively undesirable development. Through Europe’s economic integration the national social systems have come under pressure without there being a European direction in shaping welfare statism, which could have dealt with this pressure. The latest euro crisis has shown, especially in southern Europe, what it can mean to leave the social systems in the hands of the nation-state, for these nation-states can then be compelled to dismantle these systems ‘on their own’, under European supervision. A European integration of welfare states could have spared the people of these countries a great deal of pain. But the European social model should always be more than the welfare state. It involves trade unions, the right to strike and to collective bargaining, and the like. Here the practices of the European Court of Justice, especially the Laval and Viking judgements, are interesting. The ECJ relativises, even against EU directives, freedom of association and the right to strike in relation to fundamental market freedoms. In the case of the Rueffert judgement we can even see a constitutional conflict between the jurisdiction of Germany’s Federal Constitutional Court and the ECJ. This shows clearly that the market freedoms can damage the social models of the nation-states.

The lack of welfare-state integration only presages it. What is playing out now in Europe is a ‘negative integration’ in the domestic market. The mode of integration is characterised by the dismantling of the impediments to integration vis-à-vis freedoms for capital. There are in fact possibilities of a ‘positive integration’ that can, at the European level, institute a political framework for the European market, but they have not grown at the same pace as nation-state institutions have been weakened or eliminated.

This ‘political imbalance’ has costs for the nation-states, which range from tax-revenue losses to growing scepticism about European integration. The latter in particular provides ground for right-wing populist parties and movements. They imagine a picture of a supposedly perfect past that was destroyed by globalisation and European integration.

Some consider it completely unrealistic to change the treaty basis of the EU in such a way that a welfare-state Europe could be established ‘without barriers’ analogous to the creation of an EU domestic market without barriers. In reality, it is not so easy to gather 27 EU Member States (this not even counting Great Britain, which is still a member) around a table, certainly not around this question. This has to do with the supremacy of neoliberal ideology. At the same time, precisely the example of Great Britain shows that we can no longer take the political costs of a merely negative integration so lightly.

Is the EU undemocratic?

There is no doubt that the EU, if we measure it by the standards commonly applied to states considered to be democracies, is no democracy. However, it also is not a democracy-free zone.

Democratic elements can definitely be recognised:

1.           The European Parliament (EP) is elected.

2.           Since the Treaty of Lisbon the EP has more rights than before (although it does not appoint the head of the European Commission it can reject a proposal made by him).

3.           The same can be said of legislative procedure; the EP is actively integrated into it.

4.           And Citizens’ Initiatives are possible. Admittedly, the scope allowed is not very great, as the EP is obliged only to address the issue in question; however, it doubtless extends the participation of EU citizens beyond the EP elections themselves.

Among the non-democratic aspects:

1.           A change of the Treaties is only possible through unanimity procedures and rests with the national governments.

2.           The EP, it is true, is included in legislative procedure but it can be thwarted in decisive instances. For example, Martin Schulz, pushing his authority to its outer limits, interrupted the debate over the TTIP in the EP and thus prevented its early collapse. The draft is now going through Trilogue negotiations; what the outcome will be we do not know.

3.           The Eurogroup: This is an informal body and therefore very untransparent. Here, at least since the euro crisis, very crucial political decisions are taken.

4.           The ECB works independently of politics but is – as we knew at the latest since the Tsipras government’s surrender in July 2015 – an actor that is so important politically that its effective integration into political procedures would seem imperative.

5.           The Fiscal Compact called into being with the ESM, binds the national governments, as the Stability Pact had already done, to austerity policy even if this is known to be counterproductive on the macroeconomic level. The role of the Commission is noteworthy here. It is often hard to understand when it intervenes, and why it does not, in the case of infractions against the deficit rules.

The question naturally arises, if we are to categorise things as ‘democratic’ and non-democratic’, of what should meaningfully be understood as democracy. With this we enter on uncertain terrain, for we know that the misuse of these terms is, among other things, very closely bound up with power interests. Accordingly, Russia is seen as not particularly democratic even if there are elections there and a legal opposition. On the other hand, the Ukraine, which is allegedly democratising, combines elections with bans on parties. There certainly are differences between states, but what is decisive is how the differences are evaluated, and here power interests play an important role, without this even being specifically addressed.

The most diverse state forms come under the category of ‘democracy’. There are parliamentary republics like the Federal Republic of Germany, semi-parliamentary presidential republics like France, and constitutional monarchies like Great Britain. If we draw an additional comparison between the understanding of democracy handed down in continental Europe and that in the United States, it becomes clear that there is no institutionally effective concept of popular sovereignty in the USA; this has to do with American democracy being based on older concepts of democracy than is the case in France, for example. If we ask what common element makes Germany, France, Great Britain, and the USA democracies then, if anything, what comes to mind is a geopolitical concept: the ‘West’.

But we should not be confused by the power-political contortions of the concept of democracy. ‘Democracy’ also has a normative meaning. In the sense of German idealism we could say that democracy is a state form that produces institutions of freedom. Naturally, states also form other institutions, and not all of these institutions are institutions of freedom. As necessary as bureaucratic administrations are, they are not very democratic. Parliaments are elected and already incorporate free decisions, while administrations are occupied by directors and employees.

It is central to a modern understanding of the state that state rule is dependent on recognition by the ruled. The recognition problem means at least that there have to be plausible reasons, comprehensible to most people, for the necessity of state rule, which includes limits to personal freedom. If one assumes the necessity of state rule, then one also assumes that there are general interests that can only be guaranteed by a state. Hobbes sees, for example, the peace-bringing effects of national law as the basis of legitimation for the state. Social peace could never, at least in Hobbes’s view, arise from the efforts of individuals. What Hobbes is assuming is an interest that all or at least most have in social peace.

If one asks what kind of interests or needs – beyond concrete examples – could provide a viable basis for a community, one might first think of individual interests or preferences. Perhaps through aggregating individual interests a collective preference could be formed. However, considerations of this sort have led to results such as the ‘liberal paradox’, which makes it improbable that individual preferences could provide the basis for the general interests being sought. It seems that philosophers like Hegel had already recognised this paradox. They left purely individual interests to the sphere of ‘bürgerliche Gesellschaft’ (civil society). The subject of civil society – disregarding his/her egoistic interests – has to see him/herself as the subject of a citizenry that reaches agreement on questions of general interest. This is the transformation from ‘bourgeois’ to ‘citoyen’. Clearly, the results of these agreement processes regarding general concerns can be faulty, and therefore they must in principle be revisable; ideally, determinations on general affairs are to be made through consensus, but a pragmatic approximation to this would be the majority principle; it may well be ideal that all have a chance to speak up on common concerns, but a pragmatic solution is an elected, representative assembly. This is acceptable particularly when we are dealing with territorial states and not with quiet towns. What is striking in the discussions about direct and representative democracy is the lack of binding substantive assertions on matters of general interest. Instead, we find formal requirements on procedures: majority principle, elections to representative legislative assemblies, and the principle of revisability of decisions.

Thus democracy can best be characterised as a procedure of opinion and will formation. Democratic rule gains recognition above all through the acceptance of procedures as being reasonable processes – and this is where democracy’s Achilles’ heel lies. The idea sometimes put forward by the left according to which ‘bourgeois’ democracy is only a formal democracy suggests its incompleteness. But democracy is first of all incomplete due to the unspoken way in which it is substantively predetermined. One such predetermination, for example, is that the capitalist economy in fact largely remains impervious to any democratic influence. This is illustrated on the legal level by the fact that it is by and large dominated by private law. The more public law can be established in the economy the less capitalist will the mode of economy be – this would then be at least one possible view of a path to democratic socialism. Another prior assumption is expressed in the slogan ‘private before state’. Its consequence is that private law (for instance, in public-private partnerships) increasingly prevails in the public sphere, which makes political control increasingly difficult.

I see a further prior assumption in an interpretation of the ‘common good’ that conceives this as an objectively recognisable concern. Questions of the common good can then be assigned to bodies of experts, while parliaments are put in the position of being ex post facto providers of legitimacy. We are acquainted with this semi-democratic practice, for example in the Hartz Commission, the Rürup Commission, etc. But it dominates what happens in the EU. Previsions of primary law exist that specify the primacy of market freedoms as well as deficit goals; and then expertocracies concern themselves with how these requirements can be compatibly adhered to. Due to their neoliberal spirit these predeterminations are particularly invidious; but in general they constitute a problem of democracy, which does not go away by substituting ‘better’ provisions for ‘neoliberal’ ones.

Another problem is that all debates around the failed constitutional treaty, the Treaty of Lisbon, and the EU’s new financial constitution (Fiscal Compact and ESM) systematically omit one question: in what direction is European integration heading? Will there be a European state at the end? Or is the goal the integration of a free market in which the integration process simply eliminates all public law that stands in the way of realising market freedoms? Or should the integration goal be a neither-nor? As long as this question is not even raised it is not clear where to meaningfully situate the concept of democracy. If the EU is to become a state then high standards have to be applied to its democracy. But if it is not to become a state?

Are national exit strategies desirable?

The idea that we would be rid of difficulties like neoliberalism and the deficit of democracy if we got out of the EU is naïve. Its persuasiveness is due to the notion that previously everything had always been better. It therefore involves the romantic utopia that sees the past as a model. I want to be clear that this is no specialty of the right. We also see it in the left.

Right-wing strategies of retreat operate ideologically with concepts of national identity and state sovereignty. It is very hard to say, for example, what a German identity is (and it probably belongs to the realm of fiction). Is it language? But the German language exists beyond the territory of the Federal Republic of Germany. Moreover, many Germans speak a dialect, not correct high German. Is it art? This becomes still more difficult. European art traditions lived through exchange between many centres. Certainly, there is a German-language literature, but what would it be without its English, French, or Russian influences? The same applies to science and philosophy, which always lived through exchange. ‘German culture’ is an invention of imperialism and the late nineteenth century. It is time to shed these ideologies. The concept of sovereignty is similarly controversial. Conservatives tend to regard the concept of sovereignty as the actual substance of the state. The idea is that where the state is relativised, for instance through European integration, this also damages the sovereignty of the nation. As an alternative, a concept of sovereignty was formed in the Enlightenment that understands sovereignty as the capacity to enact legislation. It can be the absolute monarch, or the people, which gives itself a constitution and which creates the point of departure for the production of laws through democratic procedure. Sovereignty in this sense always exists; but it changes its form. In other words, that which presents itself as the preserver of identity and sovereignty is to a great degree tied to fictions or one-sided conceptualisations.

But there is also a left that recommends exit. Especially prominent here is Wolfgang Streeck who in his Frankfurt Adorno lectures suggests that only the establishment of strong nation-state bulwarks could offer protection from the neoliberal imperatives of the EU elites. The motive here is of a fundamentally different kind from those of right-wing exit strategies. The worry is about what remains of the welfare state, and the belief is that this is the only way to save it. However, two questions remain unanswered. First, if the German left should succeed in protecting at least some vestiges of the welfare state by abandoning the integration process, why is it not interested in those who are weaker in other EU countries? Is it really ready to abandon these people to their fate? Second, why actually does the left not feel more confident in organising Europe-wide resistance to neoliberal and undemocratic tendencies in the EU? Where has internationalism gone? Here the left runs the risk of letting pessimism change into petty nationalism without even noticing it.