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- To understand contemporary challenges to European democracy, it is crucial to look beyond the surface of politics and consider the deeper relationship between democracy and the economy. Instead of focusing exclusively on the rise of ‘populism’, it is necessary to acknowledge the multiplicity of threats to European democracy, in particular those arising from the structure of European economies and economic policymaking. - Understanding these weaknesses in the functioning of European democracies is crucial to an effective approach to future economic transformations, in particular the green transition, but also for dealing effectively and equitably with challenges such as higher inflation. It is important that the relevant policy changes and responses are democratically legitimate and do not foster the kind of political backlash that previous economic transformations did. - Over the past 40 years, economic inequality – ranging from income inequality to discrepancies in wealth and economic security – has widened throughout developed economies. In turn, these developments have generated increasing political inequality, as economic policymaking has served the interests of the well-off. - Democratic systems have also been made less responsive to electorates through the ‘depoliticization’ of policymaking, in particular economic policy, as a result of its insulation from national-level democratic scrutiny. The expansion of technocratic modes of governance – notably through independent central banks and EU-level institutions – has in many cases entrenched the policy preferences of specific groups in institutions removed from direct democratic control. - As this depoliticization has to a large extent made democratic contestation over economic policy redundant, politics has increasingly been polarized around ‘cultural’ questions. But such a focus on culture is unlikely to address the inequalities behind the dysfunction of democracies in Europe. - Strengthening European democracy requires a ‘repoliticization’ of economic policymaking, including both fiscal and monetary policymaking. In the specific context of the EU, this would mean opening up more policy space for national decision-makers and parliaments – in particular by giving them a more influential role in fiscal policy, and by making monetary policy more democratic.

What began with an intense bout of crypto fever has since the onset of the pandemic engendered an explosive rise in online retail trading. While the original political promise of financial decentralization has become ever harder to sustain, the idea of democracy as access, including access to highly speculative and gamified investments, continues to capture the financial imagination.

Eric Monnet’s piece, “Democratic consequences of the insurance functions of central banks,” starts in exactly the right place. Monnet acutely observes some of the most fundamental issues with the dominant contemporary monetary policymaking regime. Most foundationally, he observes a gap between what central banks do and how they are legitimized. The consequence, in short, is a failure of the contemporary regime to justify itself on democratic terms. To overcome this failure, Monnet proposes an institutional reform—establishing a European Credit Council (ECC). He defends this proposal by appeal to democratic theory, particularly the literature on democratic theory that prizes ‘good deliberation’. While there is nothing wrong with Monnet’s claim that establishing an ECC would likely improve the quality of deliberation about the role of central banks, and in so doing, produce better policy, I argue here that this view misses something essential. Democracy requires more than accountability, transparency, and good deliberation. It requires democratic power: the power of the people and their elected officials to steer policy. Adopting this view of democracy, in contrast to the deliberative democratic view Monnet embraces, suggests a different set of required reforms. Instead of establishing an independent credit council, I suggest that we should be vesting stronger monetary policy guidance powers in existing democratic legislative bodies.

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