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European Unifications (Monetary and Other) and Current European Problems

English Pages, 19. 10. 2004

Vice-Chancellor Stringer, Ladies and Gentlemen,

thank you very much. It is a great honour and a great pleasure to be here in Edinburgh, in this beautiful city, and to receive such a highly important award from your University. I have the feeling I am awarded twice: by getting the award and by getting it here. To get an honorary doctorate degree is a very rare reason for visiting a country for the first time but this is what has happened to me in Scotland. I hope I will – after this very short stay – better understand the diversity and uniqueness of various parts of Great Britain and will be motivated to come here again.

Honorary doctorate degree is a high academic award. As a politician, as President of the Czech Republic and, at the same time, as Professor at the Prague School of Economics I am more than aware of the importance of academic institutions and of the irreplaceable role of universities as citadels of thinking. Universities are places of both an open dialogue and constructive doubts. They are a supply line of scientific research. I wish their voice is loud enough to be heard even in the current world of intentionally misleading headline news and of quick and short e-mails and SMS messages. Their voice needs to be heard in this world of dangerously simplified reasoning, in the world of abundance of information but of shortage of knowledge. I am, therefore, really glad to be here.

This rather pessimistic “entrée”, this expression of my current frustration and nervousness, relates to many contemporary topics. The topic I – in this very moment – consider crucial, but not seriously and sufficiently discussed, is Europe and European Union, its recent evolution, its so-called deepening and widening and its currently prevailing ideology I call Europeanism. I hope I am in this respect consistent. Fourteen years ago, immediately after the fall of communism, in an early article about European monetary union, I wrote the following:

“For a long time, I have been living in Eastern Europe as a victim of communist dogmas and because of that I am really afraid of “human design” (however well-minded). I believe in “human action” (to use the Hayekian terminology) of spontaneous institutional evolution. The major conceptual disagreement about the ideal European future suggests to me that a less ambitious approach or a postponement of such a critical decision would not damage anything…After forty years of experience with one artificially created bureaucratic integration, I am rather sceptical of attempts to create other artificial, and all encompassing superstructures.” It was written one year after the fall, or perhaps, more correctly, collapse of communism and a decade before the start of Euro. I am afraid that these words are relevant now as well.

Today, we are witnesses – and sometimes active participants, sometimes even co-authors – of very important processes and phenomena, which ask for interpretation, explanation, analysis and criticism: these include the idea of an “ever closer union”, declining European dynamism, monetary unification and problems of widening.

- European politicians, intellectuals, and bureaucrats have accepted the idea of an “ever-closer union” and see it as a solution to most problems. In addition to their, almost religious belief in this concept they are convinced that they are the avant-garde and for that reason are not at all distracted from their ambitions and efforts by the absence of similar views of the citizens of their countries;

- the EU deepening is suggested in the moment when everyone sees (and – if he or she is sincere – must admit) that Europe lost its dynamism both in the field of economic performance and in cultural and civilizational fields as well. This is not a surprise because Europe – on the one hand – implemented an unproductive, rigid, and human acitivity discouraging, originally German model of “soziale Marktwirtschaft” (converted nowadays in various forms of “third ways”) and – on the other hand – by weakening nation-states, Europe is constantly undermining institutions which in the past made this continent unique and special;

- monetary unification of the continent, has been – until now – the most important step in extremely ambitious and wide-ranging efforts towards elimination of all existing differences, specifics and comparative advantages by legally binding harmonization and standardization of all imaginable parameters, rules and policies;

- I see ambitions and plans to increase the scale of EU policies (which means of the scale of administrative regulation and of redistribution and financial subsidies), to have more member-countries (inevitably economically less and less developed) and to have at EU disposal – relatively – the same or smaller amount of money than in the past.

Whole volumes could and should be written about any one of these phenomena but what is more relevant is their interplay, their interrelationships. We have to ask, whether their synergic effect will be positive or negative, whether it will augment or diminish freedom and prosperity in Europe, whether it will lead to the rise or fall of Europe vis-à-vis other parts of the globe, etc.

Attempting to give at least a preliminary answer to these questions, I would like to mention forthcoming problems in the following fields: social, political, cultural and economic.

- socially, I see the growing discrepancy between the brave new world of those who naively believe that to europeanize issues means to solve them while they very pragmatically enjoy the easy life in EU institutions –which themselves function without standard democratic accountability – and the normal, less spectacular world of those who live and work in Edinburgh or Prague, who know that the problems must be solved where they arise and who are aware and afraid of the consequences of the lack of democracy as well as of the abuses of insufficiently constrained power. This growing discrepancy threatens to further undermine the credibility of politicians and may bring about significant loss of interest in public affairs, apathy, cynicism, moral decay and widespread pessimism. I assume that the gap between these two groups of people, between the European “priviligentia” (term used recently by Australian author Wolfgang Kasper) and the normal Europeans who are confused by the challenges of globalisation, of international terrorism, of ageing and of the need to basically reform long time functioning economic, social and political institutions, will get bigger and bigger;

- politically, the authority and control of nation-states began to be seriously undermined by transnational and subnational forces even if the public overwhelmingly believes – or pretends to believe – that the old, good nation-states still exist. This process – if unchecked – will continue, because it has influential supporters who are motivated by their interests. To continue this process will give ever greater opportunity for legal and illegal rent-seeking within Europe. And I deliberately say rent-seeking, not profit-seeking. As a result, democracy will be undermined by rent-seeking coalitions and the original national unity, social cohesion, and harmonious intergroup relations will be lost;

- culturally, the position of Europe has been deteriorating as well. In 1950, Europe had 22% of world’s population, now it has 12 % and in 2050 it will have only 7 %. The impact of the observed quantitative demographic decline will be multiplied by qualitative alterations connected with changes in behavioural patterns, in working attitudes, in prevailing values, habits and beliefs. The ideologies of multiculturalism, humanrightism, political correctness, NGO´ism, environmentalism etc., undermine traditional European values and will destroy whatever cultural cohesion Europe has enjoyed. It will make us less resistive to the entry of alien, not always positive influences. Any society needs critical mass of coherency, of unity and a shared image of a community’s self, and some of us are afraid that we may be losing all of that just now;

- economically, European economic slowdown if not stagnation is, both in absolute and relative terms, impossible not to be seen. The reasons are not unknown:

· European economic and social model based on pervasive government intervention and regulation and on state paternalism and redistributive state activity, which is deeply entrenched in European society;

· Europeanism, ideology based on unification, harmonization and standardization, which suppresses competition and the search for comparative advantages;

· Single currency, which – when conditions for an optimal currency area are not fulfilled – brings about more costs than benefits (see my recent article, The Future of Euro: An Outsider’s View, CATO Journal, Vol. 24, No. 1-2, 2004);

- organizationally, I am convinced that there is an inevitable trade-off between the number of member countries and the degree (or deepness) of integration. There is no complementarity between them. It is either – or. To have more of both brings costs, which must be either paid for or result in increase of democratic deficit and in the loss of decision-making efficiency. I am frustrated that the European political and intellectual elite does not see or understand this.

All of that has asymetric consequences for new EU member-states in Central and Eastern Europe. They are weaker and more vulnerable than old members because of their recent, and still not fully overcome past and because of the interrupted genuine evolution of their institutional structures. They need not just nominal convergence but a real one and are not sure whether their entry into the EU will make real convergence (their catching up) easier or will – on the contrary – block it. I think that for them the ever closer Europe is no victory, but a risk and a potential danger. We should be aware of that.

Václav Klaus, Napier University, Edinburgh, October 19, 2004