Disciplinary Constitutionalism – EU Economic Governance After the Sovereign Debt Crisis

With every crisis does indeed come great opportunity. In the EU, nobody knows this better than the European Central Bank. The first decade since the sovereign debt crisis saw the temporary alignment of governance interests between the power brokers at the time – the creditor member states and the European Central Bank (ECB). For the creditors, the reformation of EU economic governance was a means of exercising power over debtors in the form of investment insurance and as means for preventing future cross-border fiscal transfers. In practice, the reforms mimicked the discipline, which the ECB had sought to impose on national fiscal domains in the interest of exercising its monetary policy mandate successfully. These events enabled the Bank’s active participation in the legislative overhaul of EU economic governance, reconfiguring competences towards the monetarist utopia the ECB had always championed. The power of money recast crisis dynamics into a permanent state of affairs – a reinforced structure of hierarchical legal arrangements allocating shared sovereignties in the Union across the economic-monetary divide. I describe the resultant unconventional phenomenon as 'disciplinary constitutionalism' – a system based on a particular theoretical conjecture of economic morality. If markets could no longer be trusted to behave ‘normally’ and nor could Member States be relied on to behave ‘responsibly,’ then a legal framework was to be erected to substitute the disciplining potential of the sovereign bond market (itself a theoretical conjecture). Discipline would only prove constraining to those in need of discipline and so, the erosion of sovereignty emanating from the new measures would only affect fiscally profligate member states. This iteration of moral supremacy would not last long. Crisis-reformation of EU economic governance was a serious miscalculation on part of member states who had taken against their peers in a bout of masochistic righteous indignation. Simply put, creditors failed to discern the fleeting nature of their superiority as preconditioned on the subjective realities of money and crisis. The legal framework would only serve creditors’ interests as long as the financial context supported their position of power. It would, however, empower constitutive and constituted actors of the EU legal constellation – such as the ECB – for posterity. Fast forward to the pandemic-induced economic crisis and collapse of the global monetary policy consensus, where the ECB is again trying to lubricate the ‘monetary transmission mechanism’ and again calling on fiscal authorities to do their part. This time around, however, member states who had lead the charge for budgetary discipline through legalized austerity are asked to embrace the Keynesian moment and splurge on their nationals, notwithstanding outrage from Swabian housewives - as palpable as that of Greek pensioners a decade ago. Has the time come for a reckoning between the two economic iterations of Europe? Will disciplinary dynamics prove fit for purpose in sustaining EMU or hamper the recovery with blind adherence to austerity? Shall we watch history repeat itself with the ECB leading the effort in recalibrating EMU after the pandemic?