Sisyphus labour : better democracy and better regulation

The far-sighted French intellectual Emmanuel Berl once observed that the newly created system of government collaboration, the European Coal and Steel Community, the precursor of the current European Union, treated Europeans as Lilliputians. It installed a form of technocratic governance over age old parliaments, thereby further eroding their power already affected by increasing national technocracy.

This is the dilemma : cooperation between European states is necessary for economic reasons, but it leads to a reduction of autonomous decision making by participating governments and parliaments. The top-down creation of a European Parliament could not replace the legitimacy acquired by national parliaments over centuries, not least because of the division of competences between EU and Member States : competences related to the creation of national identity and adherence, such as education and social protection systems, all remain national. In other words, frameworks for competitiveness are set together, the results are spend nationally.

Ever more European integration implied ever more restriction of national economic and monetary sovereignty, while advancing globalisation brought a similar, and cumulative, effect. This constrained governments to manage their social protection models and to prepare them for the global, digitalised economy; many dismally failed to even pay attention to this new challenge, until the financial crisis led to a rude awakening. A temporary reprieve has been gained, but the fault lines in Europe’s societies have not been healed and may be deepening further, once the full effects of digitalization are being felt.

Though this requires deep reform in the EU system, one could already achieve better democracy in the supra-national system is only the ways in which the EU system produces its regulations would be amended. More democracy does not necessarily mean more procedures and structural reforms, concrete improvements are possible in more pragmatic ways too.

Once a regulatory trajectory is opened up in the EU, new political and bureaucratic interests grow from it, and sometimes private interests too, which prevent timely regulatory evaluation of purpose and method. Just continuing on a particular regulatory trajectory without deep, regular checks of its impact and costs, adaptation by industry or other actors, feedbacks and multiple collateral effects, and even without a re-examination of the objectives themselves, are the main causes of excessive regulatory burdens and costs in the EU.

Real regulatory reform processes externalise the cognitive assumptions which have led to the introduction of the original regulation and compare these with citizens’ demand, new scientific advances and competitiveness needs. An innovative, independent analytical approach can expose some inherent weaknesses in the regulatory methodology and can help to promote improvements.

Regulation is the principal governance instrument which the EU has been given by the Member States. But legal science, the basis of regulation, assumes a linear dynamic and, therefore, often has a reductionist outcome in the reality of economic, social or ecological life, even if this was not the intention of decision makers.

In the EU, the heavy reliance on regulations results from the need to integrate markets between hitherto sovereign states. If it is applied similarly beyond the pure integration mechanics, in policies which require a transversal approach, the real danger is that it may cause unintended collateral effects. This is all the more the case because of the rigid procedural mechanics used by the decision-making institutions, each with its own silo approach.

But one cannot govern a digitally driven economy and society with the concepts of the industrial one. Technology development has always led to profound change in societies as much as in markets, and both in turn are changing the political order and the required governance methodology. The competitiveness of nations, or groupings of nations such as the EU, is dependent on the innovation of their economies and the adaptability of their societies. The key challenge therefore is how to build advantage out of the potential convergence between the various issues.

This also requires modernising governance methodology, so as to start with the concepts on which it is based. This is a far more complex exercise than simple regulatory simplification. The real challenge of the Commission, and of the European Council, therefore, is system change.

System change always starts, unless there is a revolution, with stakeholders’ involvement in re-design. This is of course anathema to lawyers, whose precise purpose is to consolidate in legal texts agreed (or imposed) consensus between stakeholders.

It requires to involve them first of all in the definition of the problem which policy makers intend to address. Current consultation mechanisms in the EU mainly start from problem definition by the administrative technocracy, which surely has much to contribute, but cannot possibly claim a monopoly of knowledge. Thereafter, stakeholders are invited to provide comments electronically, in a one way process without real dialogue. This is unsatisfactory from a technocratic point of view, as many non-official experts are not involved in the problem definition. Yet, the problem definition definitively influences the problem solution finding and includes, or excludes.

Democratic decision making in today’s complex conditions where knowledge and experiences are spread widely, requires therefore to seek first of all to properly define a problem. Only thereafter can a collective search for solution development start. Institutions and governments should not hide behind legalistic arrangements and procedures; they can in the short term already re-introduce the spirit of democracy in a pragmatic way and achieve more satisfactory outcomes for all.

Stefan Schepers

 

Delivery is key to democatic legitimacy

Delivery and dialogue: key to EU democratic legitimacy

 

Too often, the concept of liberal democracy is reduced to elections. They are only the formal part of democracy; material democracy, the substance, can be quite far away still and various degrees of authoritarianism remain possible. This is shown clearly in so-called ‘illiberal democracy’. Democracy requires translation of the general interest into evidence based, effective policies which deliver broadly desired outcomes. Evidence requires to a broad range of contextual analysis with input from stakeholders and outcomes need to evolve depending on feedbacks and contextual change. In the current European Union, this is difficult because of the non-aligned views and interests of its component parts, an in-built preference for technocratic and stable legalistic governance.

Economic, ecological and (geo-)political developments have led to ever more new objectives being set for the EU. But not enough attention is being paid to delivery and to dialogues with the technocracy during the preparatory phases of policy-making. Failed dialogues lead to failed delivery and undermines trust and legitimacy of governments and of EU institutions alike, leading to a degeneration of democracy. One of the causes of this problem is a dominance of legalistic thinking and a tendency to focus on repartition of competences between the EU and the Member States, and within the EU institutions themselves, leading to silo thinking and behaviour, and to a lack of policy coherence and efficacy.

In order to solve the convergent problems of the EU and to design an appropriate way forward, decision-makers should complement political-legalistic thinking, which suffers from a ‘sovereignty lock-in syndrome’, and which dates from the 1950s (but with roots in the 1930s), with modern systems and management thinking. According to many scholars, even this may not be enough to move the EU into 21st-century governance, but at least it would be a step forward, which can lead to further improvement.

Systems theory explains that one is faced with paradigm shifts when too many anomalies and dysfunctions occur simultaneously in a particular context and when these can no longer be explained within existing thinking frameworks. It then requires an equally radical shift of mind-set and operational modes. (Thomas Kuhn, The structure of scientific revolutions) Management sciences allow for an interdisciplinary approach to problem solving and achieving desired outcomes, by looking at the management ecology and by adapting management to objectives. (Peter Drucker, Management for the 21st century)

Instead of seeking to fit new policies into existing steering models designed for other objectives, the operational models need adaptation to the new policies. Both are required in order to use the system’s leverage points and to push it in the right direction. One cannot build an electric car with the production models of the mechanical one; neither can one develop policies on, for example, migration or climate, with the methods for construction of a common market.

A discussion has been launched now about the reform of the EU, and five possible political scenarios have been proposed; recently, a sixth scenario has emerged, combining elements of the others. They are supposed to lead to another ‘historic declaration’, a speciality of the EU. Whatever may come out, simple continuation with the present governance system, designed for a different time and purpose, is no option to achieve new goals and expectations. But attention to modern governance is hardly present in Brussels discussions.

In order to increase its efficacy of delivery but at the same time improve the balance between technocratic and democratic governance, at a time of a decline in functionalist economic views in favour of more ecological, cultural and social needs and of a generational shift, radical innovation in its public sector should be among the priorities now. Inevitably, innovation is disruptive; if it is not, it is stagnation.

The focus must move towards efficacy of delivery, complementing political-legalistic thinking about competences with modern management methods about delivery and adjusted to a digital age, to new policy objectives and to the current societal culture and expectations. It will give the EU new vigour, credibility and legitimacy.

A change process in established, but no longer up-to-date systems, has two prerequisites: strong leadership and disruptive innovative thinking. The first must be positioned inside the system, but it will only happen if the leadership has proven skills for managing deep change. It is a quality not usually required for Commission Presidents. The second has to come mainly from outside the system, because (internal and external) vested interests nearly always prefer an appearance of change over a game change. The lack of attention, let alone pressure, of EU Member State Governments has been glaring for two decades at least.

Radical innovation may be asking for too much. But system innovation in the European public sector can be done with incremental steps which create a self-propelling change process if – and only if – they are part of a comprehensive ecosystem design and approach. The current reforms (for example the better regulation policy, which in ten years has achieved nothing tangible) are based too much on path-dependent thinking and a hidden desire to change only appearances. The Commission should try again, and a first step could be using new thinking about strategic agility or leadership under complexity to set the direction of a change process; bureaucratic inertia will certainly ensure that one does not come very far and that ecosystem thinking, the basis of 21st century governance, does not pass the intellectual security controls. Still, one or two steps forward is better than the current stalemate.

Regardless of the future scenario chosen for the EU, Member State governments have little choice but to support a real game-changing process, because they will be the ultimate beneficiaries (for example, as with the game-changing Single Market), or the ultimate losers. The EU is de facto a joint venture between states to minimize the costs of their respective economic and social priorities in an increasingly interdependent context. This required a (limited) transfer of legal competences and more efficient allocation of resources, but at the cost of national sovereignty and democracy.

The latter requires new ways of bringing alignment of vision, purpose and implementation; this has received too little attention, in favour of a legalistic view of democracy and its formalistic side: elections. But parliaments are losing importance in all states because of the increased role of the executive; in addition, in a supra-national system it distorts the necessary checks and balances between the Member States. It cannot bring more democratic legitimacy because there is no European ‘polis’, society or nation. Therefore, one must widen thinking about European governance and democracy.

New major challenges have appeared which cannot be solved within the legalistic conceptual frameworks inherited from the 1950s and which still frame the Lisbon Treaty. They are driven by the consequences of monetary integration, the shift to a sustainable economy, the on-going industrial revolution, growing inequality within and between countries, and geo-political developments. The governance system needs to adapt to these in order to deliver the desired outcomes for all citizens.

Innovation requires thinking outside-the-box, away from silos and vested interests, focussing on complex ecosystems which make up modern economies and societies. To do so in public sector systems, one needs to find more inspiration in experiences of countries which have positioned themselves at the top of innovation and competitiveness rankings, and – why not – at the private sector which copes generally better and faster with new contextual conditions. Of course the EU cannot simply copy; only learn from them, with an open mind.

There is no objective reason to ignore in the public sector the matrix management approach of the private, combining horizontal functions, relevant for the overarching strategy (key political objectives) and all product lines, and vertical, line-based functions (sector policies). What about collaborative sharing of responsibilities, joint ventures (internal or external), innovation deals, voluntary agreements, and other models for reaching desired objectives? Innovative, adaptive corporations have dynamic management methods; they are better at avoiding or at rapidly eliminating contradictory arrangements.

There is no objective reason either why a supra-national system of governance cannot look for inspiration at the most performing national systems. A new scenario at the spring 2019 European Council needs to be accompanied by a new system of delivery. This cannot emerge by simply continuing the governance concepts and methods set out in the 1950s for a common market with six countries, or by current superficial changes.

Interacting economic, social and cultural developments have led today to a growing critique of technocratic governance. European public sector innovation should have therefore as twin objectives to improve the quality of democracy and simultaneously to ensure effective governance delivering the desired outcomes.

The EU governance system needs adaptation to a volatile, uncertain, complex, ambiguous new world (VUCA). But its diverse institutional components and the interactions between them face great difficulty in adapting to new paradigms. Useful ideas, promising initiatives and reform attempts get stuck, because the ecology of management is insufficiently taken into account. There is little comparison possible between managing the integration of the factors of production in a common and single market and designing policies for climate change, research and innovation, managing global interdependence, cybersecurity, supporting modernisation of welfare state systems, or a circular economy, to name a few current policy challenges.

To achieve systemic change, the EU should be seen as a cluster of national economic and social ecosystems that must be managed collaboratively instead of hierarchically. Only an ecosystem approach will help to overcome the present silos and EU-Member State antagonism and to bring about continuity, complementarity and coherence between European and national policy-making. A lot can be done without modifying the Treaties.

Setting grand missions is useful but requires cross-disciplinary inputs and cross-sector collaboration of people with core and secondary competences, from different policy levels (EU, Member States) and from the private sector (business, civic society). Missions require a managerial ecosystem to achieve the objectives through co-creation and complementary implementation by the various stakeholders throughout the process.

To reduce the tension between technocratic and democratic governance, meaningful dialogue methods must replace dated consultation methods. Real dialogue starts with common problem definition which is of as equal importance as problem-solving. Internal and external knowledge must be combined, precisely because it can upset the established internal cognitive patterns. This implies a radical change: consultation is a hierarchical, linear process; dialogue is non-hierarchical engagement with stakeholders. It has to be learned.

To properly assess paradigm shifts and to align various agendas, it is essential to involve not only stakeholders but also the centres of knowledge creation. Research has shown that there is a positive correlation between a society’s degree of tolerance for the independent, unorthodox, creative and entrepreneurial-minded and its economic success and social beneficiation. Therefore, outside-the box thinkers and critical stakeholders will have positive effects if taken seriously.

All this should lead to much improved evidence about the complexity of policy-making, delivered by a variety of stakeholders, but followed by a strictly scientific and multi-disciplinary testing. Positions not validated by scientific peer review should be resisted and not become politically validated because of electoral expediency. This requires a better use of existing own resources and of outside ones. Because the EU has moved from a relatively stable environment into a permanently evolving one, it is necessary therefore to move beyond a culture of regulation and control and towards a culture of flexible and incentive-compatible mentoring and coaching of all stakeholders, without excluding regulation when proven necessary.

This would bring real subsidiarity without reducing the growing need for efficacious collaboration, with diversity and mutuality as guiding principles. The choice of policy direction to achieve common goals can often remain at national level. EU legislation, if needed, can be restricted to framework legislation. National policy choices can be defined as matters of common concern, and efforts can be made to reach agreement on common objectives and clear benchmarks. Governments present their plans for achieving common goals and peer review their performance. Collaboration is voluntary (see also blog on Improving EU democracy and government efficiency).

These ideas may seem radical if judged in the light of more than two decades of operational stagnation in EU governance. They are timid if seen in the light of current policy-making challenges.

Stefan Schepers

Transparency : undermining or improving democracy ?

By Stefan Schepers

Some non-governmental organisations, for example Corporate Observatory Europe, and some MEPs, are making a habit of calling for ever more transparency in European policy-making. Is this a useful contribution to democracy, or is it part of today’s wave of populism?

Transparency is an essential characteristic of open societies and effective governance: it is the basis for cognitive input from and dialogue with stakeholders, which in turn helps to bring alignment of vision, inclusiveness and coherence in public policies and in resulting regulations and capital allocation. It is also needed to evaluate and supervise the actions and non-actions of those elected and paid to govern. The traditional system of representative democracy assumed that stakeholders’ views and interests were represented in parliament. Today, this is no longer sufficient to ensure effective and democratic governance.

Transparency demands result from the tensions between democratic and technocratic governance which have always existed; today they are rising fast, not least because many citizens feel, often rightly, that their interests are being insufficiently taken into account. The aftershocks of the financial crisis are still continuing, worsened by the poorly-managed consequences of globalisation. A different organisation of democratic processes is required therefore, with more dialogue processes, in line with the connectivity in an economy and society that is radically changing due to digital technologies. Transparency is a tool for such dialogues; it is not an objective.

But transparency for the sake of transparency is pointless and can become an instrument for undermining the legitimacy of public institutions. In the debates in Brussels or Strasbourg about transparency in the EU, the focus is on pusillanimous regulation. Who has met whom and when, how much has been spent on advocacy – as if all this has any relevance.

The key issue is the potential contribution to Europe’s economic and social well-being of the objectives pursued by a particular actor in the democratic debate. This requires attention to evidence and to ethics, not to tabloid-style information. Unfortunately, the way in which many transparency demands are presented shows less concern with better policy-making and suggests a more perfidious goal: to undermine trust in EU institutions and discredit other participants in policy debates. An indication of this is the selectivity of transparency demands and the focus on issues with high populist appeal: policy issues in the agri-food sector receive a lot of attention, but not in the financial sector, which poses far higher risks for societies’ welfare. Despite the claim to be market critical, many non-governmental organisations in practice follow a market logic themselves: issues which allow them to expand their income and clientele receive preferential attention.

An important concern is that one seldom hears the word ‘ethics’. It is perfectly possible to respect bureaucratic transparency rules and pursue socially irresponsible objectives which could do great damage to the economic and social fabric, in Europe or elsewhere. Seeking to undermine intellectual property rights for example, at a time when a shift towards a more sustainable economic model demands a massive research and innovation effort, could cause grave long term damage to our global competitiveness on which our social model depends. Another example: ignoring the collateral effects of European policies in other parts of the globe, causing distress and migration pressures there.

Ethics is more important than regulation. There is enough inspiration to look for, such as Max Weber, with his distinction between the ethics of responsibility (‘Verantwortungsethik’) and the ethics of persuasion (‘Gesinnungsethik’); Raymond Aron and the idea of the ethics of precaution; John Rawls, and his concept of ‘a veil of ignorance’ about alternatives and consequences; or more recently Michael Sandel, who starts from the fact the no-one is unencumbered in the views and positions taken and that pure rationality is impossible in the social realm, not by officials, but also not by civil society representatives or parliamentarians. Less high-mindedness would therefore be a first step towards more reasonable approaches.

The other issue is evidence. Today’s democracy is challenged to design new methods for dialogue and alignment between a variety of interests, to balance rational facts and valid social-cultural views. The traditional parliamentary system is no longer sufficient. Policy-makers have a societal responsibility, therefore they must consider all the facts and potential impacts of their decisions on society at large. Failing to take into account all knowledgeable impacts would be irresponsible. Therefore multiple views and interests need to be balanced and the potential impacts of policy and regulation need to be carefully examined to achieve the best possible results and to cause the least collateral damage. Moreover, they need to be agile, to respond quickly to unintended consequences, or to contextual change. Basing policy on the most solid evidence possible is in fact an ethical obligation. But evidence can only be comprehensive if consultation processes become real dialogues with cognitive stakeholders. This is the purpose of transparency: to improve policy-making at a time of increasing complexity and volatility.

Democratic governance is deemed superior, because in theory it allows public decision-makers to take into account all rational ideas and interests before making a rule. In reality, today’s technocratic governance systems, such as the EU, tend to focus on aggregate benefits, to side-line impacts on specific groups and undervalue collateral policies. This lack of policy coherence is a big source of discontent and distrust among citizens. There are many reasons for this, but one surely is that EU policy-makers too are not unencumbered in their own views.

A rethink is required. Information (facts and figures), knowledge (their analytical understanding) and real life experiences are not identical, but they are all needed to improve the quality of public policy-making. Transparency about these inputs before and during a policy or rule-making process is necessary for the quality of European decisions; it is equally necessary during their implementation to evaluate effectiveness and make timely modifications.

Sharing evidence-based knowledge and real life experiences makes a lot of sense if done amongst knowledgeable stakeholders accountable for the Common Good. It requires having the proper cognitive frameworks to understand all the known multi-dimensional and interactive aspects of complex issues. Only then can desirable outcomes be achieved and negative collateral effects avoided. It helps to align visions and get maximum public value out of the intended action, public or private. Transparency needs to happen at the right time and in the right measure during a decision-making process.

Providing transparency can only be based on trust among all knowledge and experience owners. It helps to design realistic, flexible and inclusive solutions which allow adjustment processes with a minimum of disruption and a maximum of benefit for the Common Good. But trust will not emerge when large amounts of information are thrown around, without the contextual meaning of the multiple facts which together make up evidence about a given issue.

Not only policy-makers but also those trying to influence them should take into account ethics and evidence. Spreading false or incomplete facts, scientific information which is not peer-reviewed, or promoting a tunnel vision is unethical and should be exposed as such. Many Brussels-based non-governmental organisations are using tactics out of the populist political handbooks to discredit systematically Europe’s political and economic actors. When the European Parliament made a report about the transparency of these non-governmental organisations, this was immediately decried. Transparency is for others. The fact that many of these organisations are in fact undemocratic, corporatist structures with shady legal bases, or none at all, allows for operational methods which law-abiding people would shy away from.

These kinds of transparency demands will only produce negative effects: declining trust among stakeholders, elected politicians and officials, and exploitation of information by non-stakeholders who push themselves into reasonable debate like a drunk at a family reunion.

Politicians should show enough courage to give the EU the right forms of transparency, at the right time, and among relevant stakeholders that can make a real contribution to the Common Good. They should find innovative ways of collaborative governance, adapted to today’s needs. They must bring ethics and evidence to the forefront of the discussion, rather than largely senseless regulation and bureaucracy.

 21.08.2018

Stefan Schepers