Of American “Libertarians” and European “Common Good Economizers”

Which type of economic (and political) system one favors is largely dependent upon what kind of a notion one has of what it means to be human, more specifically, a ‘successful’ or ‘good’ human being - and by extension also a “successful” and “good” society. Yet if our prevailing economic system ought to reflect our collective values of what it means to be successful or good human beings, then it is striking just how unsatisfied we are with the status quo. According to a study by the Bertelsmann foundation, roughly 90% of all Germans and Austrians pine for a new economic system (this figure is likely to be even more striking in economically weaker countries such as those of southern Europe). While the current economic system still tends to find more champions in America than Europe, also the citizens of this largest of capitalistic nations are ripe with frustration, disillusionment and cynicism. The colloquial expression “Corporate America” has long since become synonymous with some large, deceitful bureaucratic machinery that is not governed by the principles of merit, honesty or creativity, but by its own aloof and singular logic of marketing (products and the self, as in Me, Inc.) and Washington DC lobby power.

Yet while Europeans are inclined to seek reform via a notion of human nature based on caring empathy, collective cooperation and sharing of wealth, Americans tend to look towards human success through the prism of healthy competition, individual freedom and merit-based creativity. Never mind that creativity, freedom and caring mean different things for different people, as also to most Europeans and Americans. The point, and difference, between the predominant American versus European stance to fundamental reform is in where in the hierarchy of daily self-awareness these rather ill-defined notions figure. Permit me a brief, although clearly simplified, analysis.

The American is apt to become emotionally roused by anything that threatens his or her “individual freedom” or obstructs the reaping of “merit based fruits of hard work” (both often linked to property rights). This is why Americans, even if they are among the majority of citizens who are demonstratively increasingly among the losers of the current economic system, still tend to extol laissez-faire “free markets” (note the catch word “free”) while scoffing at European notions of statism and “socialism”, which for many is nothing more than the ante-chamber to full-blown totalitarian communism. Thus, a creative, typically American response to the current problems has been in the form of “libertarianism” (See for example the “Libertarian Party” (https://www.lp.org/, or the partially aligned Tea Party movement (http://www.teaparty.org/).

The European, on the other hand, is prone to get emotionally worked up about anything that threatens his or her sense of fairness and material equity, which is looked upon as the direct result of cooperation, sharing and caring. This is why Europeans, even if they are among the relative winners of the current system, tend to still prefer an economic system that constrains wide income disparities and distributes wealth, despite state-coffers that are neigh bankruptcy, and are suspicious of “markets always know best” and are repelled by the winner-takes-all ethos so prevalent in the USA. Hence, a contemporary innovative, typically European solution to the current malaise has been in the form of an “economy of the common good” (see for example, the GWÖ http://snipurl.com/26rosb9).

While an adequate elucidation of what “libertarianism” and “common wealth economy” designate is beyond the scope of this brief analysis (the reader is encouraged to read more on it!), it is once again telling to simply look at the etymological roots of the involved wording. In as much as all words are reflections of the reality we human beings are conscious of, it is the words – and associated stories – we are personally and culturally exposed to, that create our notions of “good” and “successful”. Hence the cultural narrative of “the land of the free and home of the brave” as per the American anthem can easily be understood as freedom from governmental interference and brave, merit based self-determination, while a common European narrative as in the French motto “liberté, egalité, fraternité”, not just enjoins freedom, but notably stresses equality and brotherhood.

At the end of the day, our political leanings and thus our economic preferences are more of a function of our emotions than any rational analysis. They are formed by our personal histories as much as by the histories and stories of the countries and cultures we are part of. A fundamental question that this raises is where and to what extent an international consensus is required and even possible in creating a global economy that is socially and environmentally sustainable in the long-run. Clear is that the effective stewardship of our world economy simply requires domains where all stakeholders are not only involved but also sign on to. The process must be along the lines of libertarianism in as much as any directives cannot be imposed upon individual countries, but the results need to transcend particular interests and be more along the lines of a common good.

Manuel Dawson

Gaining a Common Good through Relinquishing Sovereignty

In the first decades after World War II the Aussenpolitik (foreign policy) from the Federal Republic of Germany (FRG) was embossed by the strategy of gain of sovereignty through a relinquishment of sovereignty: By integrating itself more into the West through concessions to the West-Allies and abandoning thereby national options, the FRG gained more scope for negotiations and an opening via the East. The gained scope used for contacts and negotiations with the Soviet Union finally led to the reunion of Germany.

When one looks at the problems of the European Union (EU) of today in general (e.g. migration, democracy deficit) and the debt crisis in particular the question of relinquishing sovereignty for gaining scope and options is at least as actual as it was in the mentioned decades. The potential gain of today would be a common good in the form of more stable, elaborate and sustainable (financial) institutions in the EU.

The text of the fiscal compact of the EU which has been completed on 30.01.12 was a step in this direction. It requires participating countries to implement a debt brake on the national level to achieve budgets that are generally in balance or surplus. In case of non-compliance sanctions are scheduled. Hence, the aim of the compact is to achieve more fiscal discipline in the participating countries. But the financial compact is often criticized referring its enforceability as well as altogether being to less to solve the debt issue sustainably.

Therefore, it is often stated, a transfer union would be necessary. Overall, this would mean that EU member-states launch common state bonds (Eurobonds) and that transfer payments from countries with balanced budgets to such with imbalanced ones have to be established. But if this really would be a more sustainable solution, why then aren’t Germany as well as other countries not willing to do this by now?

Probably because of the risks that relatively solid EU member-states would be liable for the debts of such threatened by insolvency? Maybe yes, but – and this is decisive – the problem behind the scene is deeper: Ideas like the transfer union – as well as potentially sustainable solutions in other policy fields (e.g. security policy, democracy deficit) – require a transfer of sovereignty from the single EU member-states to Brussels. The single countries are enormous struggling with that. This is understandable: Nobody likes to relinquish scope, power and independence in decision-making. But the gain of the transfer could be a common good in the form of an appropriate institutional design that guarantees stable finances and a healthy European currency. Both are preconditions and set up options for a prosperous European economy. In the picture of the well known prisoner’s dilemma this public good would be the collective optimum, the best solution for all states together. In contrast, preserving and/or even maximizing the available sovereignty for a single EU member-state would mean maximizing the individual gain on the cost of the collective one.

The example of the young FRG showed that shifting some scope from a less important field (crusty national options) to a more important one let one achieve even visionary aims. The only option for Europe today is a deeper integration and coordination what demands relinquishing national sovereignty. This does not at all mean that EU member-states have to give up all their sovereignty. But, solely by relinquishing the hurting, yet necessary part, can Europe come to inner stability. The single EU member-states would have gained the scope and institutional design they need for a prosperous national economy in an interdependent Europe and a globalised world.

Claude Meier