Beyond Technocracy: The Intersection of Society, Politics, and Technology

Henry Liu Updated on
Beyond Technocracy: The Intersection of Society, Politics, and Technology

Not a Matter for Technocrats
Reforming EU Economic Policy Governance

Reform of economic policy governance is currently in full swing in Brussels. The European Commission outlined its first reform proposals in November last year. Concrete legislative initiatives will follow in the first half of 2023. While this issue might seem a little arcane, it is not. It is nothing less than a readjustment of Member States’ financial policy-making.

Boosting public investment is key. Depending on what reforms are finally agreed upon, the Member States will have more or less leeway to use public investment to finance the socio-ecological transformation. In this regard, the reform proposals do not go as far as trade unions and other civil society organizations had wanted. For example, the reform package does not contain a golden rule for funding net investments by borrowing. But the Commission’s proposals do contain important investment policy innovations. Whether they will suffice to close the immense investment gap depends on many factors, amongst others, whether industrial policy measures will accompany the proposals.

A Fraught Situation

From a trade union perspective, another consideration is key to the upcoming reform process. In the context of Covid-19 and the energy crisis, debt levels have increased substantially in many Member States. That means the pressure to consolidate will increasingly weigh heavily on national budgets for the foreseeable future. Meanwhile, the European Central Bank (ECB) has recently implemented historically unprecedented monetary policy tightening, and the end is still not in sight. This has already considerably increased Member States’ refinancing costs.

Furthermore, inflation rates in the euro area are increasingly drifting apart, especially between Eastern and Western Europe. This could hinder the functioning of a single monetary policy. Therefore, the currency union situation is fraught, and a new currency crisis can’t be ruled out.

The Troika’s austerity drive had fatal social consequences. Memories of the last Eurozone crisis remain vivid, especially of the following austerity policy imposed by the Troika, comprised of the European Commission, the ECB, and the International Monetary Fund (IMF). Trade unions are adamant that a technocratic institution like the Troika should never again be able to pressure the Member States into cutting pensions and public sector wages or undermining collective bargaining coverage. Therefore, a reform of EU economic governance must effectively rule out a rigid austerity policy this time.

Naturally, any currency union has to have rules to ensure that Member States pursue a sustainable budgetary policy. After the financial crisis, however, they went too far. The Troika’s austerity drive had fatal social consequences. And it didn’t even achieve the aimed-at budgetary consolidation because the so-called structural reforms stifled economic growth. Economic studies have also shown that the Euro system – in other words, the currency union’s institutions and rules – has imposed enormous macroeconomic adjustment pressures that have fallen on ordinary workers’ shoulders. This affects not only so-called Programme countries receiving financial aid from the European Stability Mechanism but also many core countries of the currency union.


Related Facts

  • The European Commission outlined its first reform proposals in November last year.
  • Concrete legislative initiatives will follow in the first half of 2023.
  • The reform proposals do not contain a golden rule for funding net investments by borrowing, for example.
  • Memories of the last Eurozone crisis remain vivid, especially of the following austerity policy imposed by the Troika.
  • The Troika’s austerity drive had fatal social consequences.

Key Takeaway

The upcoming reform process of EU economic governance must effectively rule out a rigid austerity policy that would pressure Member States into cutting pensions and public sector wages or undermining collective bargaining coverage. Boosting public investment is key and will depend on the Member States having more or less leeway to use public investment to finance the socio-ecological transformation. This will be a necessary readjustment of Member States’ financial policy-making that will affect the so-called Program countries and many core countries of the currency union.

Conclusion

The reform of EU economic policy governance is not simply a matter for technocrats. It is a readjustment of Member States’ financial policy-making that must balance ensuring sustainable budgetary policies and investing in the socio-ecological transformation. Memories of the last Eurozone crisis and the Troika’s austerity policies serve as reminders that any new EU economic governance must effectively rule out rigid austerity policies and instead support public investment in a way that benefits workers and society as a whole.

Henry Liu

My name is Henry Liu, and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; my goal (and vision) is to educate every trader on how to take advantage of news trading and become more balanced traders.

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