ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fall of Market Democracy in Europe

With the exit of Britain from the European Union, this ambitious supranational project now faces a seemingly intractable political crisis and a debate has ensued over the legitimacy of the union as a whole. As the sovereign debt crisis unfolded in Europe, neo-liberal economists and politicians offered to solve the problem by cutting back spending. But, advocating cutbacks according to the principles of market democracy created further political and constitutional risks in Europe.

Jean Monnet, considered the founding father of modern Europe, had famously argued that “economic integration would be vital to eliminating intercontinental conflict” and, as Franco Pavoncello put it, that “the way to build the new union was by taking steps toward economic integration that would in turn lead to political integration” (Alessi and McBride 2015). However, with the exit of Britain from the European Union (EU), this ambitious supranational project now faces a seemingly intractable political crisis and a debate has ensued over the legitimacy of the union as a whole. This article is an exposition of the failure of the ideas that underlay not only the EU, but much of the rest of the world.

After World War II, Europe adopted neo-liberalism, which reposed full confidence in market rationality. According to neo-liberalism, markets are self-correcting and self-stabilising, and they can allocate resources efficiently. Therefore, the problems of market fluctuations have been eliminated. It was also assumed that markets alone can serve the public interest. Since markets can suo motu deliver such results, there is no need for centralised state planning. Planning was seen as totalitarian. To borrow the words of Noam Chomsky (1999: 20), under the neo-liberal world order, “the government should ‘get out of the way’—hence the population too, insofar as the government is democratic, though the conclusion remains implicit.” The role of the state is only to guarantee that markets can function efficiently, and markets, in turn, will decide the distribution of goods and services and wealth among all people.

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