Crisis in Europe II

A key aspect of the crisis is the weakening of self-regulation and self-limitation, both essential elements of democracy. Self-regulation is abiding by an overt set of voluntary rules, while self-limitation is the acceptance of the spirit of the rules, of their informal dimension. Very largely, if not indeed entirely, self-regulation goes by the board when market fundamentalism rules. When the market becomes the hegemonic source of rule making, self-regulation is, in effect, superfluous, because market outcomes automatically achieve the same (best) results, supposedly anyway.

If we combine the erosion of self-regulation with the dominance of liberal morality (see supra), then the picture becomes a little more complex, in that an element of regulation is provided by “naming and shaming”, but only in areas not directly subjected to market rules and, in any case, this form of regulation loses its force after a while – shaming only works if the actors care. The two clearest cases where it is evident that the mechanism of shaming has failed are the behaviour of banks and of the media; the latter, of course, is the primary instrument of shaming, but will hardly ever apply it to media behaviour itself. Both banks and media have a relationship with political power, as well exercising power themselves, but in common with other sites of power they seek to establish maximum autonomy for themselves, to minimise regulation and to diminish the voice of the stakeholders.

It is also noteworthy, that when self-regulation and liberal morality are pre-eminent, consistency also tends to weaken, of not indeed disappear, presumably because the actors involved assume that their behaviour is inherently rational and that “the invisible hand” will re-establish an equilibrium. Equilibrium logically restores consistency (somehow, somewhere). Where damage to some actor is visible and evident, this can be dismissed as collateral or as a short term loss. For those with power, the disappearance of the demand for consistency is greatly liberating, because it permits both individuals and institutions to act entirely in their own interest.

The overt primary motivation of the finance sector is, of course, profit and that of the media is a mixture of profit and consumption (influence, authority). These can function as the yardstick by which the activities of these two sectors may be assessed and by which they assess themselves. Both assume a one-way relationship with the society with which they operate, despite their dependence on the public. This assumption underrates or, all too frequently negates the agency of those affected by their activities and thereby weakens or erodes democratic citizenship. Crucially, they both deny that they are exercising power, hence they likewise deny that they should assume any responsibility for the power that they exercise. Politics, as against this, proceeds from the proposition that power is, indeed, being exercised, hence the primary yardstick relied on by political actors is legitimacy, meaning a real legitimacy; instruments of legitimation are similarly real, even if in late modern societies technocracy and bureaucracy have placed a considerable distance between elected politicians and the voters.

So if actors are to be seen as purely market driven, as with the banks and the media, then it is hardly surprising that the authority of overtly political institutions diminishes – the banks and the media, powerful actors, have exempted themselves from the penumbra of politics (or so they think). It is worth noting, furthermore, that whereas actors that claim to operate by market rules are under no great pressure to follow precedent, political actors must do so if they are to retain their legitimacy, because that legitimacy is derived from society, unlike market actors which can and do claim that their actions are motivated by the “magic” of the market. Thus legitimate political actors are at a disadvantage when faced with market actors, given that their accountability (and transparency) levels are very different indeed. The rule of law is supposed to secure consistency, but the market can trump this, as has been evident with respect to both the banks and the media.

The rise of the market as a putatively “pure” and “natural” force is itself a social and cultural construct, albeit one that its countless adherents and beneficiaries would deny that this is so. What this “pure” concept of the market ignores, however, is the underlying foundation of trust and, equally, legal regulation that protect private property and the sanctity of contract. These obviously have cultural and political origins. Adam Smith, so often invoked by market fundamentalists, added morality, which is likewise culturally circumscribed. In this sense, a “pure” concept of the market is a fabulation, as well as a legitimating narrative of self. And it’s a free rider on culture and the law. Imagine what would happen if a state were to say to the market fundamentalists, “ok, you want the state out of the economy? Sure, no more protection of property by the state.” The answer, of course, is something like Russia.

A response to this argument might be that, yes, true up to a point, but other market actors function as a self-correcting mechanism and thereby can protect the public good, the bonum publicum. Hence, the question is, do self-controlling mechanisms exist where power itself is concerned?  Only if those exercising it accept some external control or yardstick. This may be an ethical constraint or the power of others or prudence. Yet trust in those exercising sovereign power to some extent depends on exactly this, that such self-correcting mechanisms do exist and can ensure that the holders of power behave appropriately, in accordance with their stated goals. When they do not and when a section of the elite behaves otherwise and can mobilise society, or a part of it, to support it, then a crisis will ensue.

Yet in both the banking world and the media there is what can usefully be called a belief system, the core of which is that all regulation is undesirable because regulation means imposing constraints one’s freedom of action. Such constraints, goes the argument, are counterproductive and illicit; for bankers this is about profit, for the media it is supposedly about democratic values and accountability. Indeed, I once heard Dunja Mijatović, the OSCE’s Representative on Freedom of the Media, assert that she was opposed to all forms of media regulation, including self-regulation. The belief systems constructed on this basis are naturalised by insiders, who thereby become wholly oblivious of their own power and the impact of their power on others. There are no legitimate stakeholders in this mindset. As with all closed systems, information or arguments that might be disturbing are screened out or attacked as irrational or evil.

All this raises important issues affecting democracy. The implication is that any institution – the overmighty subject problem – that functions as a monopoly or something close, setting its own rules, dominating the discursive options and acting without looking to the interests of the stakeholders is liable to become captive of its own norms and discursivities. Above all, it will not just ignore the bonum publicum, but probably deny that there is such a thing at all. Yet if a democracy is to exist and function, then it is the task of the sovereign power to define what the bonum publicum is. This will vary in time and place, of course and will certainly be the topic of debate by the political class (and the citizens), with a variety of inputs from elsewhere. At the end of the day, however, it is the task of the sovereign power to say, “this is it” (or “the buck stops here”) and to insist that the partial interest of the monocultural institution has become self-serving and not serving the public good.

A different dimension of the same problem is, in fact, the question of monoculture. (On monocultures, see James C. Scott, Seeing like a State.) Clearly, if an institution or individual acts largely or wholly by unregulated market criteria, then the motivations for those actions will be radically narrowed. Monoculture, furthermore, tends to become solipsistic over time and to ignore external realities. Crucially, this applies to the dynamic of power. Every institution, whether primarily a market actor or not, will try to accumulate power as far as it can and it will regard constraints and self-regulation as obstacles to be evaded. The public good – and these institutions do operate in the public sphere – is then downgraded and subordinated to the power dynamic. In the current crisis, a significant part of the problem is the economic power has been able to marginalise politics and to insist that its own norms enjoy hegemony.

In addition, this is where the fragmentation of power problem becomes palpable (see Savoie). These processes, together with the overmighty subject, have combined to exempt sizeable areas from political – as distinct from legal or media – scrutiny, to depoliticise significant areas of the polis and to have come together to constitute of serious crisis of democracy. In many respects, the consequence of market thinking is that the bonum publicum does not actually need to be defined at all, let alone protected, because the market and liberal morality will secure this anyway by some obscure automatism, hence there is no need for stakeholders or governments or even active citizens.

Thus the restoration of sovereign power becomes a necessary condition for the revitalisation of democracy. If this requires a measure of recentralisation, so be it, as long as the sovereign power remains open to alternatives and is aware of the need for self-limitation. Thus auto-regulation and hetero-regulation are to be seen as offering a fundamental condition for a properly functioning democracy, whereas liberal morality and markets are insufficient.

Note too that whereas for markets and liberal morality consistency is not an issue, for the ongoing legitimation of sovereign power it is pivotal. Cultures in which there is a strong culture of pragmatism can finesse this to an extent, but inconsistency in decision-making comes back to haunt power elites at a later date. Indeed, given that inconsistency is widely regarded as immoral, governments which rely on the liberal morality principle and practice pragmatism too blatantly are seen as cynical. In an ideal world, the rule of law and a sense of fairness are supposedly the means by which consistency is secured. The implication is that pragmatism is to be exercised only under tight constraints.

From another perspective, can power itself become monocultural? The answer is clearly yes, as can be seen in the history of communism. In a monoculture, it is increasingly difficult to deal with complexity, in this instance the domestic complexity generated by systemic development, and this is massively exacerbated by globalisation. Those in power, those who have control of the levers of power, are generally determined to accumulate as much of it as they can (this is fairly standard ground in theories of power) and to evade constraints and regulations as tedious obstacles. The bonum publicum then becomes subordinated to the imperative of acquiring power.

This is where self-limitation, self-regulation and the acceptance of constraints come in as essential to the foundation of democracy; and this is where these processes are threatened by liberal morality and untrammelled market behaviour. It is worth stressing that the same imperative of accumulating power applies to the world of banking and the media as it does to governments or other agencies of sovereign power. And this is why the absence of self-correcting mechanisms, the ones that work, are so dangerous from the perspective of democracy and, equally, why these power centres will kick and scream when governments attempt to impose regulations on them. Crucially, and this again is standard, all exercise of power must have an external yardstick by which it can be assessed. The weakening, or sometimes the erosion of the external yardstick – the bonum publicum as it may well be – then demands remedial measures if democracy is to be sustainable, otherwise the overmighty subject will capture too much power.

Sch. Gy.