The European Policy Model and the Challenge of Democracy

The theoretical underpinnings of the European Policy model are 1) the deterministic nature of the economic system; 2) the ability of financial markets to anticipate the future trend of the economy. The crisis denied the goodness of these two assumptions and revealed that the policy structure is unable to counter the crisis. PIIGS countries do not have short run tools to fill the gap with virtuous countries and national priorities appear to be overcome by European claims for budgetary discipline. The existence of a two speeds Europe seriously threaten the future existence of the currency union. In search for solutions national economists and politicians should consider a "new trilemma": the impossibility to have at the same time globalization, democracy and autonomous policy management. The challenge Europe as a whole faces is to build up a political project capable of managing globalization through policy action and at the same time preserve democracy.