Risk and the State

How Economics and Neuroscience Shape Political Legitimacy to Address Geopolitical, Environmental, and Health Risks for Sustainable Governance

Phillip LeBel

• Publisher: BrownWalker Press
• Year: 2021
• ISBN:
  9781599426112
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Economics demonstrates how markets can serve as remarkably efficient institutions in allocating scarce resources. At the same time, incomplete information generates prices that can lead to a mis-allocation, producing in some cases too little while in oth

CHAPTER ONE

Political Legitimacy on Trial

Why Political Legitimacy

Political legitimacy is a set of rules and conventions by which a population chooses or accepts to be governed. It differs from military conflicts where the setting of geographic boundaries is often decided. In the West, by which we can think of Western European nations and those in North America for the most part, political legitimacy has come to mean the emergence of democratically elected governments in which sovereignty vested in the population determines who shall govern. This said, it also in the West that political legitimacy is now on trial.

Democracy is often thought to be the logical successor to oligarchies and dictatorships. That notion, a product of the 18th century European Enlightenment, runs counter to historical experience. Ancient Greece and Rome each went through a period of republican government, only to fall to civil unrest and the emergence of dictatorships. France toppled its absolutist monarchy in 1789, and then went through a wave of regimes before settling on a more democratic system in the 20th century. The Weimar Republic, founded after the end of World War I, eventually succumbed to the rise of Nazi Germany under Adolf Hitler. What numerous examples point to is a simple observation: Democracy cannot be taken for granted, nor is it universally recognized as a superior form of government. The question is why should this be so and is it the foreordained path to the future?

The Enigma of Economic Prosperity and Political Nationalism

We live in an age of economic prosperity amidst rising protectionist nationalism. How can we explain the contradiction of growing economic prosperity alongside nationalist movements? Four considerations may helpful in understanding the nationalist reaction to globalization, even if they do not provide a ready justification nor a solution. They are: 1. The geographical and structural contours of states; 2. Rising economic inequality in an age of prosperity; 3. The gathering and dissemination of information relevant to decision-making; and 4. Perceptions of risk that shape the economic functions of the public sector. These considerations can be understood by looking first at the current state of governance in various regions.

It is paradoxical that authoritarian nationalist regimes should arise at a time when globalization has produced unparalleled increases in income and wealth. Real per capita incomes have grown substantially over the past 70 years with global life expectancy reaching never before attained levels.1 Much of this wealth creation is a result of pro-growth and market-based policies through which international trade and investment have played a key role. Why, then, should we see the rise of nationalist authoritarian regimes at a time of economic prosperity?

One key to understanding the paradox of authoritarian nationalism amidst economic prosperity is in terms of how national identity and geographic frontiers are redefined through globalization. Borders of traditional nation-states coalesced historically along lines of ethnic, religious, or language and cultural traditions. In many cases, they emerged from empires founded in previous centuries in which conformity with narrow lines of identity often were less important that the commercial prosperity that an imperial regime used to justify its existence. In Europe, the British, French, Russian, and Ottoman empires were carved out of the conquest of trading routes, and then fell apart following the destruction wrought by World Wars I and II. What can be said is that the stronger the geographic border, the narrower is the definition of sovereignty, and thus, the narrower will be the range of civil and political rights for residents within such a country.

In the West, it was long thought that rising economic prosperity through multilateral trade and investment agreements would lead to the emergence of electoral democracy in authoritarian countries. This was clearly the case that emerged from the Second World War in which democratic governments took on and won against authoritarian regimes in Germany, Japan, and Italy. Those same democratic governments also embarked on a reconstruction of the global economy through a series of international agreements in support of international trade and investment, along with the creation of international security institutions to promote such cooperation. It was a remarkable transformation that, with some exceptions, produced both economic prosperity and the expansion of more inclusive democratic institutions.

Following the end of the Second World War, reconstruction in Europe first placed emphasis on the building of institutions that could provide a basis for sustained economic prosperity. On April 3, 1948, U.S. President Harry S. Truman signed the Economic Recovery Act, and which became known as the Marshall Plan, after the then U.S. Secretary of State George C. Marshall. It was a signal event that helped shape the future of Europe.

Under the Marshall Plan, the United States provided over U.S. $12 billion dollars in low cost loans and grants to West European countries, equivalent to almost $100 billion in 2018 dollars. This initiative was driven in part by the unfolding Cold War, which was first characterized by former British Prime Minister Winston Churchill as an Iron Curtain between Stalin’s Soviet Russian occupation of Eastern Europe and the Allied countries in the West.2

George F. Kennan, Deputy Chief of the United States to the USSR from 1944 to 1946, wrote an article in Foreign Affairs in 1947 under the pseudonym “X”, that would shape a U.S. Cold War strategy of containment of the Soviet Union rather than engage in a further direct military confrontation with an erstwhile World War II ally.3 As a Cold War policy, containment largely succeeded, culminating with the fall of the Berlin Wall in 1989 and the formal dissolution of the Soviet Union in 1991.

Containment and the Marshall Plan reflected a key consequence of the Second World War. West European countries were essentially bankrupt, and could not rebuild quickly to restore confidence in their governments. In contrast, the United States emerged with the bulk of international financial reserves and a surplus balance of payments. Through bilateral policies of foreign aid and multilateral policies driven under the auspices of the newly created World Bank and the International Monetary Fund, the U.S. demonstrated considerable leverage in not just international economic growth, but also in how other countries might be amenable to adopting Western style models of governance. Democratic political legitimacy thus would be affirmed through a mix of economic and political reforms from which enduring prosperity could be realized. What were the aims that drove these decisions?

A major objective of every government is stability. In the first instance, this may mean simply political stability over time.4 At the same time, it also may encompass economic stability, and, through time, economic growth in per capita income. What is not clear is what form of government best leads to economic stability and growth, especially in an age of globalization where national boundaries become increasingly fluid. If stability is a fundamental goal of governments, is it a single responsibility for one country such as the United States, or a global responsibility of one or more countries through such collective political institutions as NATO, the EU, or the UN? Political legitimacy thus depends on setting boundaries and jurisdictions of designated governmental authority.

Borders notwithstanding, achieving stability depends in part on how the exercise of governmental authority affects the level of individual political and economic rights. Put simply, when states exercise expansive authority over its citizens in the pursuit of political stability, individual freedom is reduced.5 At some point this leads to rebellion and the overthrow of the state in search of a new political and social order. At the other extreme, where states exercise too little authority, anarchy could arise to a point where individual political and economic rights also are undermined. We thus face the challenge of how stability can be achieved while at the same time preserving individual liberty.

Visions of an Enlarged Political Union in Europe

Within Western Europe, while nation-states were still considered to be politically legitimate organizations, efforts were made in the postwar era to create a larger economic and political union. This was driven as much by a determination to avoid another war in Europe as it was in responding to Soviet expansion in Europe. It also was driven by the goal of creating an integrated economic region that could better compete in global markets.

In 1950, French Foreign Minister Robert Schuman proposed a regulatory mechanism to oversee coal and steel production in several European countries, notably, France, West Germany, Italy, the Netherlands, Luxembourg and Belgium. It was formally established by the Treaty of Paris signed in 1951. By establishing a multinational governing institution, the European Coal and Steel Community represented a first step in building a United States of Europe. While that has yet to be realized, European countries would go on to create intermediate building blocks, starting with the creation of the Common Market in 1957.

The Treaty of Rome in 1957 created the European Economic Community, or Common Market, across six European countries, namely, France, Germany, Italy, Belgium, Luxembourg, and the Netherlands. Building on the European Coal and Steel Community, it incorporated the European Atomic Energy Agency (EURATOM) and pledged to see a reduction of external tariffs among member states reduced to zero over a ten-year period.

Over the next several decades, the European Economic Community expanded from six countries to thirteen in 1993 when the European Union was created. At first, Great Britain and a number of Scandinavian countries resisted the idea of a supranational organization that could establish regulations over individual nation states. In 1957, the British sponsored the creation of the European Free Trade Association (EFTA), a looser confederation of countries devoted to expanding free trade while preserving greater sovereignty with individual states over matters of fiscal and monetary policy.

As the EEC began to expand, the British changed their position and applied for admission to the EEC in 1967. It first was rejected by French President Charles De Gaulle, but was later admitted in 1973. The agreement of 1973 allowed for England to retain control over its currency, as was the case with Scandinavian countries that had been part of EFTA, even as it accepted such rules as the Common Agricultural Policy that involved extensive agricultural subsidies.

A pivotal moment in the evolution of the Common Market came in 1992 with the Maastricht Treaty, which established the European Union as a successor institution to the EEC. A 1999 Treaty of Amsterdam, a Treaty of Nice in 2003, and the Treaty of Lisbon in 2009, the European Union looked to greater economic and political unification in Europe. Adoption of the euro in 1993 greatly facilitated international trade. The Schengen agreement of 1985 allowed for not just greater trade and investment, but also a freer movement of labor across borders, effectively removing a key dimension of national borders within the Union.

Several treaties noted above elaborated the contours of the emerging European Union. The Treaty of Amsterdam establish European parliamentary control across national borders on immigration, civil and criminal laws, and enacting foreign and security policy. The Treaty of Nice established the foundations of a European Union Constitution, as well as measures for an orderly expansion of the Union. Finally, the Treaty of Lisbon established the principle of qualified voting majority that would provide for a stronger European Parliament with a bicameral legislature. It also established a long-term President of the European Council and a High Representative of the Union for Foreign Affairs and Security Policy. And, critically, it established through Article 50 a procedural mechanism for member states that may choose to withdraw.

What the amended form of the European Union did not do was to move toward greater fiscal union, leaving the burden of economic decisions to monetary policy as implemented by the European Central Bank. This has resulted in some countries experiencing both balance of payments and growth burdens while others could enjoy the fruits of an enlarged economic market. The PIGS, that is, Portugal, Italy, Greece, and Spain, which had weaker economic growth, would experience financial crises through periodic defaults on international debt. Greece in particular went through financial crises in 2008, 2015, and again in 2019, resulting in periodic refinancing negotiations, and changes in government.

Some have argued that while the euro provides greater ease of financial transactions, the imposition of university standards threatens the unity of the Union. A key issue is whether EU members are prepared to cede greater sovereignty through greater fiscal union to address such issues as common defense, climate change, and regional inequality. Agreements on such issues as climate change through the adoption of the Paris Agreement of 2016 within the United Nations Framework Convention on Climate Change (UNFCCC). The Paris Agreement, which sets climate control goals for 2050, does not have an enforcement mechanism and, as with other international agreements, relies on voluntary compliance. That the United States withdrew its agreement in 2019 represents a setback to achievement of the EU climate goals, as does the decision to withdraw from a nuclear accord with Iran which has been upheld by the EU.

Brexit and the Future of the EU

The shift away from the EU has been most dramatically illustrated by the United Kingdom 2016 referendum on membership. At the time, Great Britain was experienced an influx of undocumented migrants coming mostly across the English Channel, and for which EU legislation provides for financial support in settlement and citizenship normalization. England already experienced a backlash on immigration well before its accession to EEC membership in 1973, but as a member of the EU, tensions increased when EU liberalization on labor migration laws expanded.6 Having kept the British pound sterling while a member of the EU, Great Britain held an ambiguous relationship to the continent, even as its own economy thrived in terms of global finance transactions in London. Therein stood Great Britain, faced with a crisis of identity—a post-imperial, European, or trans-Atlantic power in a “special relationship” with the United States, its erstwhile colonial appendage on whose power it had now come to depend.

In 2016, British Prime Minister David Cameron decided to ask Parliament to hold a referendum on membership in the EU. Given concerns over rising immigration, citizens voted to withdraw from the EU. Later, Theresa May’s government foundered on the deep divisions in the country as to whether to pursue an exit from the EU. Opposition, and indecision on the terms of exit, ensued until Boris Johnson won an overwhelming majority in 2019 with the objective of withdrawing from the EU early in 2020. “Brexit”, the move to withdraw has raised uncertainty as to how the UK can prosper outside of the EU rather than within.

Brexit poses the risk that other EU members may choose to leave, thereby posing the possibility that the EU itself may come apart. Whether in England, or elsewhere in the EU, those who are proposing to withdraw are without exception, nationalists who consider that membership in the EU dilutes English identity, and thus the future of an individual population within the greater Union. Now that the UK has withdrawn from the EU, questions remain as to whether the EU can continue to function in its present form. It thus raises the question whether Great Britain will itself dissolve into England, Scotland, and Wales, for example.

Outside the EU, the question is whether Great Britain can hold together politically and produce sufficient economic prosperity to justify Brexit. Following a protracted period of conflict between Ireland and Northern Ireland, a Good Friday, or Belfast, Agreement was signed between the Provisional Irish Republican Army (IRA) and the British government Representative in Northern Ireland.

With Brexit, the truce that was agreed may now come apart, given the it had esta...