Editorial: Coronavirus pandemic, a political model in crisis

1 The coronavirus pandemic is already proving to be the source of a serious economic and social crisis. It will undoubtedly be followed by a public finance crisis. Once again, the place and role of the state are at stake. More so than the financial crisis of 2008, this one echoes the end of the 1970s and even the 1930s. However, we need to refrain from hastily making assumptions. The modern state no longer resembles the model from previous decades. Furthermore, the context is very different in every possible way: at the international and national levels, politically, sociologically, technologically, and so on.

2 In addition to the economic crisis that the shelter-in-place measures and the shut-down of the economy have made apparent, we are also facing a crisis of a political model that is seemingly less perceptible. The state, which initiated a process to tear down that old model some forty years ago in the West, still has not been able to attain a stable form. Most notably, it has not managed to establish sufficiently clear relationships with an economic and financial market that at times it claims to manage, and at others it leaves to its own devices. The political and economic practices and concepts remain hostage to the dogmas and presumably ideologies, but also self-centred interests that limit the effectiveness of actions taken.

3 For whatever reason, institutional creation is broken. While in the hard sciences, biology and all other related fields our knowledge continues to expand and cures are finally being found for some of the worst diseases, our institutions, particularly with regards to the state and market, lack a theoretical and consistent structure that can help address social, economic and political issues that we are facing right now or in the future. The current health crisis caused by the Coronavirus brings this straight into the limelight.

4 In a few decades our era may be considered the age of illusions and defeated hopes. In the current state of affairs, is it not an illusion to believe in the state’s current ability to effectively address, on its own, an economic and social crisis as serious as the one that will unfold over the next few years when we know that it currently faces financial constraints and has few means at its disposal to take action? Does this expectation not reflect nostalgia for a state with wider economic and social powers, as it once existed in France and in most of the developed world during the 30-year post-war boom (known in France as the Trente Glorieuses)? This revival of a protective welfare state may come as a surprise considering it has been called into question for more than forty years. It has been criticised and vilified for its failures just as much as it has been idealised and fostered high hopes. In the same way, the just-as-zealous belief in the virtues of the economic market that blindly trusts in its benefits has also been put to the test with its successive crises and its inability to bind growth to full employment.

5 Over the last ninety years two doctrines successively took root. From the end of World War II until the 1970s, there was a conviction that the state’s role was to regulate the economy and society. When the economic crisis hit in the middle of the 1970s, the belief in the market economy took over and made public finances the focus of all debates and criticisms. Public finances were no longer the method of choice for the proactive and interventionist policies implemented by the state. On the contrary, the policies reduced the influence of public finances to limit their power and restore market-based regulation. Some even called for “starving the beast” and cutting off its resources. In other words, reduce taxes to limit spending. This ideology did not hold up against, at least for some time, the subprime crisis.

6 As a result of these developments, the legitimate need to modernise the outdated public management system led local authorities and the state to transpose corporate management procedures by privileging a managerial culture across the public sector. This was without a doubt necessary. While it managed to take hold, with the purpose of demonstrating the need to control public spending, this culture is unfortunately too often transformed into a genuine ideology with all the bias, excesses and obstinacy that characterise all ideologists. The most sophisticated management methods flourished over the past forty years. Those leading public service administrations threw themselves into the fray, focusing all their efforts and acumen on achieving technical perfection, believing in good faith they were working for the public good.

7 This vision of public management had consequences on decisions that were to come. Political leaders now find themselves surrounded by information and analyses that force them to adopt a model of reasoning that does not necessarily correspond to the reality lived by the majority of citizens and that can even draw them away from the emergencies that affect them. Too often that is where the problem lies. We cannot, without according special attention, use quantifiable indicators to assess measures that impact healthcare, education and the environment, sectors that are so vital for the well-being of a state’s citizens and for the future of a society.

8 However, the current crisis does not mean that we have to abandon the managerial culture and policies that encourage sensible public finance governance, as one might be tempted to conclude in the name of the “whatever-the-cost” mindset. In fact, the real challenge will be to integrate the managerial culture in a project to give a common meaning to society over the long term. It will not be limited or confined to improving the management of how budget savings are shared. The future is what needs to be managed. With this perspective in mind, it is essential that political representatives define a crisis recovery strategy. This does not call for the state to return to an interventionist policy which, although effective during its time, now only lives on as an exalted memory. This strategy must take shape within an international framework and, more urgently, at the European level.

9 To that end, if the suspension of rules concerning limits on deficits and public borrowing proves necessary, this decision proposed by the European Commission and approved by the European Council should not be seen as a sign for members of the eurozone, and more generally the EU’s member states, to shatter their public finance policies. A system that structures and strengthens states from a financial perspective is therefore critical. The proposal spearheaded by France and a few other countries to create eurobonds called “coronabonds” could be a solution provided the EU’s twenty-seven members approve, which so far has not been the case. Beyond the resulting borrowing facilities, for some members states, and even the issues that could arise, it is a political question that is at stake. It would be a step towards more solidarity, and maybe even towards a form of financial federalism, which is much more than the economic, budgetary and even monetary coordination that is needed.

10 If brining such a change to fruition currently seems difficult considering the opposition of a number of member states, the matter is so important that it should be pursued not only during financial negotiations but also when discussing theory. Detailing and implementing a public financial governance doctrine that transcends the borders of the EU’s member states is urgent and even crucial. We need a fully-fledged European doctrine that addresses the question of financial federalism, in other words, political federalism. Now is not the time for a patch-up job or to paper over the cracks in our interconnected society. It is time to create solid political institutions suited for this world.