The legitimacy of governments and of economic policies
from Grazia Ietto-Gillies
In the last few weeks there has been much concern and writing about legitimacy and democratic deficits in connection with the technocratic governments in Greece and Italy. The concern on the latter refers to the fact that the heads of these two governments and (all or most of) their ministers are not members of the respective elected parliaments. Nonetheless, the new governments and their programmes have been approved by the parliaments of the two countries.
The media concern about the democratic deficit is justified. However, it is a concern that should be extended far beyond the confines of the present governments of Greece and Italy. I cannot see how the Berlusconi government can be considered to have had more legitimacy than the Monti government for two reasons. Berlusconi and his parliamentarians were elected on the back of a media controlled by Berlusconi and his family. To add to this problem, there has also been the stench of allegation by some opposition MPs about possible ‘money for votes’ in the Italian Parliament. Allegations denied by the parties involved.
Lest readers come to the swift conclusion that the above imbroglios are a feature of ‘peripheral’ countries (Italy peripheral within the EU? It was one of the founding members and it has some 16.7 % of the Euro area population and 16.9 % of its GDP), let us consider another EU country of which I have some knowledge: the UK. The head of the UKg overnment – be it Labour or Conservative – does not own or control the media. However, Murdoch has set the agenda for policies – such as no membership of the EMU – for a few decades. Disobey Murdoch and his media will see that you lose elections. It is not too far-fetched to claim that in both countries most policies are dictated by control of the media. In one –Italy– the process and conflict of interest is clear and transparent. In the other, the UK, there is more the appearance of independence though the substance is not very dissimilar. Moreover, in the UK, many governments give ministerial responsibilities to members of the House of Lords which is an unelected Chamber. The control of policies does not take place only via the control by the media; money also speaks. Party donations and hope of lucrative positions for retired politicians or the top ranks of the civil service can also be a great inducement to steer policies in specific directions be they in the field of (de)regulation of the financial sector or taxation or the health service. The situation in the US is not much different except in the fact that both Chambers are elected and so an unelected minister would not be possible, as far as I know.
So much for the legitimacy of governments. But where do economic policies gain their legitimacy from? Well, first at the political level, from the legitimacy of the government that puts them forward for approval to elected parliaments. Second, from the validity of the economics behind the proposed policies. Here come the role of the economics profession and its relationship with politics and the politicians. Economics is a subject where several paradigms co-exist. They lead to different analyses of the economy and different prescriptions. Clearly, in the end one prescription must prevail over the others in terms of final policies. However, the process leading to the final policies is key to their legitimacy. In order for those policies to have economic/scientific legitimacy it would be imperative for: (a) the economics profession as a whole to have confidence in the evaluation process of the theories and policy conclusions put forward; (b) for all or most of the main paradigms to be given the same chance of arguing their case; and (c) for economists belonging to different paradigms to be given the ear of ministers on an equal footing. These are among the reasons why the World Economics Association considers pluralism as one of its key commitments and why its journals will be run on the basis of an open and participatory evaluation process.
The austerity policies currently being implemented in many advanced countries have no legitimacy because: (i) the governments that put them forward and implement them lack proper democratic legitimacy. They are policies dictated by the interests of the people and groups that with their money, power and media influence control elections. In the case of the so-called ‘peripheral’ countries within Europe the democratic deficit is enhanced by the fact that the policies are imposed by faceless financial markets via the politician of ‘non-peripheral’ countries. The spectacle of Merkel and Sarkozy and their unelected EC top officials dishing out pages of detailed policy prescriptions to heads of governments of other European countries for implementation back home adds to the sense of serious failure of democracy within Europe. (ii) The policies proposed and being implemented are seen as highly controversial and, indeed, counterproductive within large sections of the economics community including some high profile ones – at least two “Nobel Prize” winners. Yet these voices find no listening ears at the political levels.
Many are beginning to feel that the democratic deficit across many developed countries may be more significant and worrying than the economic deficit. The sense of hopelessness and the lack of trust in politicians, parties and political processes have so far manifested in low participation rates in elections and in the peaceful ‘Occupy the cities’ movement. As austerity further erodes the social and economic fabric of our society, for how much longer will the millions of young unemployed just sit in cities squares and wait peacefully?