Hopes that the resolutions of European heads of state would stabilize the financial markets and solve the Eurozone debt crisis, once and for all, have risen with each new summit over the past two years, only to be dashed again once the fine print comes to light. Would investors really join in on the ‘voluntary haircut’? Was the bazooka, after all, not more of a water pistol? No one could say with any degree of certainty what should be done to repair the crashed global financial system. Some demand strict austerity, others growth; everybody knows that both are necessary, but cannot be had at the same time. The technocrats’ rescue packages alternate between the horns of ever-new dilemmas; ingenious patent remedies are offered by the score, but have an ever-shorter life span. If, the British veto notwithstanding, European leaders were able to sleep free of nightmares after December 2011’s summit agreement on a 26-nation treaty, and the ecb’s long-term loans of half a trillion euros to the banks at 1 per cent, soon after it was back to business as usual. One thing is for sure: ‘the markets’ will calm down when they calm down; but they remain silent about when that will be and what they will next demand. Will they attack France? If need be, of course. They will only be satisfied once they are guaranteed to get their money back, through national austerity packages, international deposit-protection agreements or, ideally, both.

A few months ago I argued in these pages that post-war ‘democratic capitalism’ involved a fundamental contradiction between the interests of capital markets and those of voters; a tension that had been successively displaced by an unsustainable process of ‘borrowing from the future’, decade by decade: from the inflation of the 1970s, through the public debt of the 1980s, to the private debt of the 1990s and early 2000s, finally exploding in the financial crisis of 2008.footnote¹ Since then, the dialectic of democracy and capitalism has been unfolding at breathtaking speed. Only a few months ago, reports of jokes in Brussels’s corridors regarding the desirability of a military putsch after Papandreou’s suggestion of a referendum were followed by the replacement of first the Greek and then the Italian government. Accompanied by collective sighs of relief, power was passed to highly regarded economist-technocrats, who, it is now hoped, will finally enforce the logic of ‘the markets’. Such confidence is, at face value, not unwarranted. Mario Monti, Italy’s new Prime Minister, was the eu Commissioner for Competition who broke up the German state banking system (whereupon it attempted a fruitless restructuring exercise, through the purchase of American junk bonds). When his Brussels tenure came to an end Monti earned his living as an advisor to, amongst others, Goldman Sachs, the greatest junk-bond producer of them all. Lukas Papademos, now Prime Minister of Greece, was president of the Greek Central Bank when the country secured, through falsified statistics, its access to the monetary union and thus to unlimited credit at German rates of interest. Help with the creative accounting of the Greek national balance sheet was provided by the European division of none other than Goldman Sachs—to be headed shortly thereafter by Mario Draghi, who is now of course President of the European Central Bank. The three of them should get along well.

Meanwhile, it is now quite clear that the democratic states of the capitalist world have not one sovereign, but two: their people, below, and the international ‘markets’ above. Globalization, financialization and European integration have weakened the former and strengthened the latter. The balance of power is now rapidly shifting towards the top. Formerly, leaders were required who understood and spoke the language of the people; today it is the language of money that they have to master. ‘People whisperers’ are succeeded by ‘capital whisperers’ who, it is hoped, know the secret tricks needed to ensure that investors receive their money back with compound interest. Since investor confidence is more important now than voter confidence, the ongoing takeover of power by the confidants of capital is seen by centre left and right alike not as a problem, but as the solution. In northern Europe, exotic anecdotal accounts of Greece and Italy’s endemic clientelism make it easier to retreat into platitudes about how democracy cannot entail the right to live beyond one’s means or not repay one’s debts, all the more so when it involves ‘our’ money.

Things are not so simple, though. It is not ‘our’ money but that of the banks which is at stake, and not solidarity with the Greeks but with ‘the markets’. As we know, the latter had virtually thrust their money at the former, in anticipation of being paid back, if not by them, then by other Eurozone states, if necessary by means of the ‘too big to fail’ blackmail of 2008. Governments have not contradicted these expectations, even though the giant surveillance apparatuses of the large nation-states and international organizations cannot have failed to notice how countries like Greece saturated themselves with cheap credit after their accession to the Eurozone. Indeed it seems in retrospect that this outcome—shoring up the money supply of the southern states with private credit, to substitute for the dwindling subsidies from strained eu regional and structural funds, in an era of worldwide budget consolidation—was one of the chief reasons for letting the Mediterranean latecomers to democratic capitalism join the European Monetary Union. That way, not only did banks make profitable, seemingly secure deals, but the export industries of the northern states could profit from the steadily renewed purchasing power of their southern customers, without having to fear that countries such as Portugal, Spain, Italy and Greece would protect themselves from the higher productivity of the northern economies through periodic currency devaluations.

The feigned astonishment of the North’s political elites at their Mediterranean neighbours’ use of loans and subsidies for fuelling speculation and corruption—rather than ‘honest’ Anglo-Saxon growth—must count as one of the most brazen feats of political pr-history. Anyone halfway informed knew about the impossibly large Greek olive harvests subsidized twice by the eu: first for their production and then for their equally virtual transformation into machine oil—just as the intimate connections in post-war Italy between Christian Democracy and the mafia, with a figure such as Giulio Andreotti acting as the nerve centre of a powerful network connecting state apparatus, political parties, armed forces, organized crime, and intelligence services were anything but a state secret. As far as Greece is concerned, European politicians were well aware of the outstanding historical bills that had accrued since the end of the military dictatorship: a distribution of wealth reminiscent of Latin America; a practically tax-exempt upper class; and a democratic state that had no choice but to borrow the resources that its rich citizens had stashed abroad from ‘the markets’ or other states, so that the ‘old money’ could peacefully remain ‘old money’, and the new money could be used to buy the support of a growing middle class with its increasingly northern-oriented consumption norms.

That no one took exception to this at the time may be due to the fact that the sole alternative, after the end of military rule in 1974, would have been a radical remodelling of Greek society, perhaps along the lines of Emilia–Romagna, then under Eurocommunist rule. However, no one in northern Europe nor the us was prepared to risk this, any more than in Portugal after the Carnation Revolution, in Spain after Franco, and least of all in 1970s Italy, where the Communist Party under Enrico Berlinguer abstained from participating in the government so as not to provoke a military coup like in Chile. And so the eu admitted anything resembling a post-fascist democracy, in the hope that economic growth would eliminate the archaic social and class structures which had been responsible for both military dictatorships and stalled capitalist modernization.

As for organized Europe, today torn between the North and the South, we may have to brace ourselves for another round of integration. This may seem astonishing, given the commonly diagnosed deterioration of a ‘European consciousness’. But the new drive will once more operate through the proven neo-functionalist model, without the participation— and possibly even against the will—of the populace. Neo-functionalist integration relies on a ‘spill-over’ from already integrated fields into other, functionally associated areas, set off by causal connections which present themselves politically as factual constraints (Sachzwänge) that merely require ratification. This was how Jean Monnet envisaged the European integration process, and how a whole generation of political scientists wrote it on the blackboards. By the 1990s, however, this mechanism appeared to be exhausted. As integration advanced into core areas of the nation-states and their social orders it became commensurately ‘politicized’ and ground to a halt. New steps towards integration became more difficult and could only be achieved, if at all, through the European Court of Justice. A spectre was haunting Brussels’s Europe: would the disempowerment of the nation-states henceforth have to depend upon the ‘European consciousness’ of its peoples—or even upon the mobilization of a democratic European consciousness?