The resistable rise of undemocratic liberalism

Following the election of the current Italian government, European commissioner Gunther Oettinger blurted that the financial markets will soon teach Italians to vote the right way.

While much has been made of the new ‘illiberal democracies’ rearing their ugly head in places like Hungary and Poland, less has been talked about the new political form that is taking shape – undemocratic liberalism.

There are two main drivers of undemocratic liberalism.

The first is the one exposed by Mr Oettinger – the total separation of commercial interests from national, regional or social interests. This is one of the underpinnings of so-called neoliberal economics – commercial interests should be profit maximizing entities focused on accumulating shareholder wealth. They should have little intermingling with political or social interests.

The net result of this philosophy has been a total dissociation between the locus of democratic legitimacy – national governments – and economic interests – which are now significantly trans-national.

That might be tolerable if such commercial interests were truly apolitical, by which I mean that they had no political influence. But we know that that is not the case. Not only can trans-national commercial interests have a direct impact on political decision making through campaign contributions and lobbying power, they are in a position to play one government off against the other through arbitrage in taxation, jobs and investment.

No government today formulates policy without taking commercial interests into account. Even while the same commercial interests pursue their business objectives with little or no consideration for the national interest.

A further element is, of course, debt. All governments have debt, most of it held by private players in the financial markets. As Mr Oettinger pointed out, this allows the exercise of leverage on fundamental aspects of government policy.

The second driver of undemocratic liberalism is the fashion to delegate much political decision making to unelected and unaccountable ‘independent bodies’. Maybe central banks are the most obvious example and one about which we have harped on for a while. But the practice is widespread and affects all areas of policy making – from health to housing; and from pensions to financial stability.

The EU itself is, of course, led by a technocratic body in the form of the European Commission. But, to its credit, much more EU policy-making has reverted to being inter-governmental rather than pushed by the Commission. The increasing powers of the European Parliament is also an attempt, albeit a pretty ineffectual one, at injecting some degree of democratic accountability.

It is becoming increasingly reasonable for people to ask whether there is any point in voting when, in a technocratic state, politicians’ room for maneouvre is so limited.

Are we living in democracies in name only? Have we transitioned from a democratic state to an open but undemocratic plutocratic or technocratic state?

We covered many of these issues in our previous book. At the time, they were not the subject of any kind of public debate. Nor were high profile public officials making comments that brought them to the surface.

Mr Oettinger was rapidly slapped down for his comments. But the mask has slipped. Just like it did when Jean-Claude Juncker boasted that the Commission had instruments of torture in its basement that ensure that renegade countries like Greece can be brought to heel.

There are two broad options for how this will end.

People may decide that they have so little faith in elected politicians and in our previous version of democracy, that either undemocratic liberalism or illiberal democracy (or maybe even fake democracy á la Putin) are worth a try.

Or people may find that they are actually wedded to the idea of true liberal democracy and, eventually, will revolt. Today it is far from clear which of those options will prevail.

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Radix is the radical centre think tank. We welcome all contributions which promote system change, challenge established notions and re-imagine our societies. The views expressed here are those of the individual contributor and not necessarily shared by Radix.

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