I can slip into this unique meeting of a group of European policymakers with Immanuel Kant only because I am an intern with training in stenography who is discreet and presentable and good at making tea and arranging chairs. My boss at the Ministry (who is not allowed entry and will be so jealous of me!!) was asked at short notice to organize the reunion which will explore in the broadest possible terms an outline of the country’s philosophical stance on Fiscal Union. Someone at the European Commission is insisting we find a historical defence of the institutions and procedures of the new macro surveillance mechanism to deploy against “cheap criticism” of the democratic legitimacy of EU institutions.
Schäuble is in a hurry. He whispered to Chancellor Merkel that time is short, they should push on. Merkel would have liked to wait for an agreeable atmosphere to settle upon the room. She changed her mind, however, when she overheard Immanuel Kant muttering that “progress in time determines everything and is not itself determined, and every transition in perception to something that follows in time is a determination of time”. Kant arrived punctually, and has finished his tea. It would be advisable to begin discussion while the caffeine still circulates through whatever remains of his veins.
Merkel: Ladies and Gentleman…
Wow! She is talking directly to *me*. I am the only other lady in the room! Wow!
Merkel: The German government has always made it clear that the European debt crisis is not to be solved with a single blow. There is no such single blow…
Schäuble: All quick solutions, like printing money or collectivizing our liabilities without a common finance policy, are the wrong solution...
Merkel: Thank you Wolfgang. As I was saying, I hope our partners understand we are not willing to trade concessions such as bond-buying, joint debt-issuance and sovereign bail outs. This is not about give and take. The precondition of continuation with the single currency is that sovereignty in fiscal policy be delegated to European institutions. So, where today we have only loose agreements we need in future to have legally binding regulations.
Schäuble: It does not make any economic sense to start endlessly pumping money into stability funds, nor starting up the ECB printing press. This would create disincentives for countries to carry on consolidating and reforming. Piling on more debt now will stunt rather than stimulate growth. We need to take big steps to get Fiscal Union done. It was not possible politically in the 1990s but the crisis shows we need it now. That is why crises are also opportunities. We can get things done that we could not do without the crisis. Do you agree Prof Kant?
Kant: The only way for the philosopher, since he cannot assume that mankind follows a rational purpose of its own in its collective actions, is for him to attempt to discover a purpose in nature behind this senseless course of human events. An organ which is not meant for use or an arrangement which does not fulfill its purpose is a contradiction in the teleological theory of nature. This purpose of nature can be fulfilled only in a society which has not only the greatest freedom, and therefore a continual *antagonism* among its members, but also the most precise specification and preservation of the limits of this freedom. The highest task which nature has set for mankind must therefore be that of establishing a society in which freedom under external laws would be combined to the greatest possible extent with irresistible force. It requires a perfectly just civil constitution. Man is forced to enter this state of restriction by sheer necessity.
Draghi: Yes. And the sequencing matters… For example, it is first and foremost important to get a commonly shared fiscal compact right. Confidence works backwards. If there is an anchor in the long term, it is easier to maintain trust in the short term… It is time to adapt the euro area design with a set of institutions, rules and processes that is commensurate with the requirements of monetary union.
Kant: Europe’s citizens should be informed, so that they may comprehend the flow of history, that the fiscal union is but the most immediate feasible step in the direction of a federation of peoples in which every state, even the smallest, could expect to derive its security and rights not from its own power or its own legal judgement, but solely from this Great Federation. However wild and fanciful this idea may appear, it has been ridiculed as such only because they thought that its realization was presented as imminent. It is the crisis, not the Germans, that have made it imminent and feasible. This crisis is the signal that nature sends to man about the current dysfunction of his institutional organs.
Sikorski: But it is a crisis of apocalyptic proportions!!! I demand of Germany that, for your own sake and for ours, you help the eurozone survive and prosper. You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe’s indispensable nation.
Merkel: Radoslaw, let me assure you that is exactly why we are meeting today. I fear we are not winning the philosophical argument. It is bizarre that some people think we wish to dominate Europe. In order to win back trust, we need to do more. What is the fundamental historical argument we must make for Fiscal Union?
Westerwelle: Sound budgeting is not a German idée fixe based on our historical experience of hyperinflation. It is in the interest of Europe as a whole. There is no time to lose. It is vital to send a clear message to markets that the eurozone is determined to end the policies of debt-making.
Schäuble: When things get really difficult, suddenly solutions which seemed impossible become possible. The crisis represents an opportunity. I'm not saying that I enjoy being in a crisis, but I'm not worried. Europe always moved forward in times of crisis. Sometimes you need a little pressure for certain decisions to be taken. We can only achieve a political union if we have a crisis.
Kant: This crisis opportunity is not a lucky accident arrived at by random collisions but rather reveals that nature is purposive in its parts. As in war or any systemic catastrophe, the aftermath is felt by the state in the shape of a constantly increasing *national debt* whose repayment becomes interminable. And in addition, the effects which an upheaval in any state produces upon all the others in our continent, where all are so closely linked by trade, are so perceptible that these other states -- Germany and France -- are forced by their own insecurity to offer themselves as arbiters, albeit without legal authority, so that they indirectly prepare the way for a great political body of the future, without precedent in the past.
Schäuble: This is true. We achieved monetary union, in the short term we want fiscal union, and in a larger context naturally we need a political union… Yet the Mediterranean countries will not become German, and Europe will not be speaking German.
Kant: Although this political body exists for the present only in the roughest of outlines, it nonetheless seems as if a feeling is beginning to stir in all its members, each of which has an interest in maintaining the whole. And this encourages the hope that the highest purpose of nature, a universal *cosmopolitan* existence, will at last be realized. If we trace the influence of the Greeks upon the shaping and mis-shaping of the body politic… we shall discover a regular process of improvement in the political constitutions of our continent. We must always concentrate our attention on civil constitutions, their laws, and the mutual relations among states, and will then notice that a germ of enlightenment always survived, developing further with each revolution.
Weidmann: I’m with you Prof Kant. Right now we’re talking about the EU treaty and I don’t see how you can build trust in a system that violates laws. I am president of an institution which is bound by a legal framework. We should respect the division of labour in a democracy. This has nothing to do with pragmatism or dogmatism. You won’t solve the crisis by reducing incentives for the debtor governments to act. It’s really an absurd debate in which we are telling institutions: ‘don’t care about the law’. In any model you must penalize rule violations. In the Maastricht model, the rules would be the stability and growth pact, with automatic sanctions for violations and the no bail-out clause. In the fiscal union model you also need strict rules for deficit and debt. If you breached those rules you would need to delegate your national sovereignty on fiscal policy to a supranational level. I think the true question at the heart of this is: are governments, parliaments, and *people* ready to accept a supranational level, a European level that assumes the ultimate responsibility for fiscal policy, at least in case of a breach of the rules?
Kant: If the law is such that a *whole people* could not possibly agree to it (for example if it stated that a certain class of subjects must be privileged as a ruling class) it is unjust; but if it is at least possible that a people could agree to it, it is our duty to consider the law as just, even if the people is at present in such a position or attitude of mind that it would probably refuse its consent if it were consulted… in a referendum, for example.
Weidmann: And, furthermore, it’s not about being more German or not being German. Fiscal solidity is not only a German issue, and the crisis has clearly revealed its importance as the basis of financial stability and political stability.
Draghi: I agree. On my appointment as ECB president a British newspaper worried "the euro could be felled by an Italian trying too hard to be a German." I mean it's just absurd...
Kant: Take no notice, Mario. They probably meant another country whose name begins with ‘G’. Germany is a successful country. All this fuss about budget sovereignty! In times past we lost our cities not just our deficits. Because I’m forced to live in Russia I can see things as an outsider. I see that, after wisely moving away from corporatism, Germany and like-minded northern European countries have consolidated as the world’s sustainably strongest and most competitive economies. The BRICS will at some stage inevitably crash against or only slowly clamber over internal institutional roadblocks. Germany already has good institutions *and* the right economy. If the Great Federation is modeled on impersonal non-discriminatory legal-procedural process then it can also be sold to the German people as their victory to be proud of. The voters are bound to like it.
Merkel: Since we’ve drifted to the question of democracy I would like to mention that we are planning another meeting, this time with Max Weber and Jurgen Habermas, who have opposing views on the present democracy debate in Europe.
Weidmann: I think Habermas disagrees with our idea for taking away the budgetary privileges of national parliaments.
Kant: It sounds like the makings of a first-rate quarrel. Can I come too?
The meeting finishes. As intern, I busy myself helping everyone to find their way out of the room without mishap. I give them each my card -- discreetly -- and tell them what a pleasure it has been. Angela says to me “see you at the next meeting then”, which means I can truthfully tell my boss I will be expected to attend. The Chancellor expects it.
Italic Credits: Kant: Political Writings, The Guardian, New York Times, Der Spiegel, Financial Times, The Economist, Reuters, Google.