The European recovery fund between political governance and popular sovereignty

Il Sole 24 Ore, 21 ottobre 2020

Government intervention in the economy due to the emergency we are experiencing is now the fulcrum of European economic policy. We believe that the easing of those constraints that have long been described as an undue compression of popular sovereignty should not be read as a backtracking from the current European constitutional framework. On the contrary, it is part of its natural development. The explicit reference to the Social Market Economy model contained in the TEU (Treaty of the European Union) in fact refers to the concept of government intervention in compliance with the market order. This is such when it does not interfere with the price mechanism, creating perturbations (giving rise to the phenomena of free riding or feeding the fiscal illusion), and is aimed at re-establishing the conditions for the correct functioning of the competitive order.

On the basis of this premise, it is therefore legitimate to hope that the discretion that governments will enjoy with respect to the choices of use of the resources of the European Recovery Fund will not result in the arbitration of the political class and the instrumental use of the same for the purpose of acquiring consent. These choices will instead have to deal with the reality of a complex order which, precisely in compliance with the cardinal principle of liberalism: prevents the discretion of the “Prince,” represents popular sovereignty, and places significant constraints on political discretion by limiting it to the boundaries of fundamental rights and economic rationality.

Public choices always generate consequences on the allocative level. In this perspective, placing juridical-institutional constraints on politics and reducing the margins of arbitration of the political authority means implementing inclusive democratic processes and offering greater opportunities precisely to those who live on the margins of socio-economic dynamics, thus including them in the related processes. It is up to the rules that govern decision-making processes to create the conditions so that the allocative choices of the public sphere can be both efficient and fair at the same time, ensuring that the interaction between the different social actors can result in an increase in overall well-being.

The existing rules in Italy have not always proved to be up to this task. They have oriented the behavior of individual players in the public sphere towards the adoption of cooperative “strategies,” capable of generating benefits for all. In view of the challenges facing the country, it is right to ask which interventions can be included or not in the European Recovery Plan. It is equally important to ask whether our legal-political order is able to make allocative choices consistent with the EU constitutional framework and therefore, with the legal-economic order of competition and financial stability.

The debate on the governance of the EU Recovery Fund is polarized between those who favor technocratic solutions and those who favor a classic paternalistic approach. This indeed testifies to the absence of full awareness of the consequences that “extractive institutional contexts” in denying the reasons for an open society and generate in terms of degrowth and underdevelopment. In this way, the Italian system risks missing yet another opportunity to restructure our economic system in the name of environmental sustainability and technological innovation and create the conditions so that, once the emergency has passed, our private economic systems’ degree of dependence from the public sector can be reduced.

The stakes are fundamental rights and freedoms and the sovereignty and dignity of citizens. After the storm, we risk finding ourselves with an even more assisted economic system, with a greater stock of debt, and less ability to resort to automatic stabilizers. With a halted society, we will be unable to be an active and effective part of those inclusive processes on which govern liberal democracies. Ultimately, liberal democracy itself is a condition for the efficiency of public decision-making processes, like a dog chasing its tail.

Fabio G. Angelini, Università Uninettuno di Roma

Flavio Felice, Università degli Studi del Molise

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