The credibility of decisions

9 The first argument, based on credibility, asserts that elected politicians are unable to make long-term commitments because their decisions are always liable to be challenged at the next election. This seriously impacts the credibility of their decisions, a problem that is especially concerning in an open world, where governments’ decisions must not just be heeded and seen as credible in the long term by their own citizens, but also abroad, where unlike in the domestic context, coercion cannot be used to compensate for a policy’s lack of credibility: Policies cannot be effective or elicit forms of cooperation from partner countries if the latter do not feel confident that they will be maintained in the future. In these circumstances, argues Giandomenico Majone, it can be rational to delegate decision-making power to an unelected body which, being immune to the vagaries of electoral politics, can make decisions with the long-term credibility that those of elected politicians lack.

10 The pro tempore nature of democratic regimes—where power is only entrusted to rulers for a limited time—is undoubtedly one of the principal arguments in their favor, but it is a two-sided coin. The regular holding of elections means that the current majority can be reversed, completely legitimately, by a new majority that will not necessarily have the same priorities and that may even have contradictory interests. Majone compares the right to exercise decision-making power to a property right that, in an electoral democracy, is inherently unstable. But just as stable property rights over goods and resources are a prerequisite for the smooth functioning of economic mechanisms and the credibility of actors’ commitments, so too are stable political property rights essential to the credibility of policies aiming to regulate and provide a legal framework for societies. As a result, Majone continues, it can be argued that elected institutions have a cost, namely the risk of inconsistency over time, which affects their efficacy. And given that electoral arrangements are cyclical, there is also a risk, if we rely exclusively on majority voting, that final decisions depend more on the will of those who have the power to decide the agenda and the order in which questions are raised and resolved than on the will of the majority itself. If we admit, moreover, that the credibility of decisions, particularly in the domain of economic regulation, is a prerequisite to their efficacy and so to the welfare of the citizenry, and that these goods must not be sacrificed to the short-term interests of elected representatives, it is essential for certain decisions to be delegated to bodies that are not exposed to the variations to which elected representatives are by their nature subject. The less independent this delegated body is, the more its decisions can be challenged by its principal, in other words by elected politicians, and the more the credibility and efficacy of its decisions will be impaired.

11 The most striking example in favor of this first argument is, of course, the commitment to monetary stability. Such a commitment would hardly be credible in the hands of elected politicians, because in certain circumstances it could be in their electoral interests to leave mechanisms that jeopardize monetary stability unchecked. In contrast, an independent central bank, whose explicit mission is to guarantee monetary stability, is able to make long-term commitments that are all the more credible because they cannot be affected by ordinary political considerations or electoral opportunism.

12 But there are plenty of other examples that demonstrate the value of this use of unelected bodies in the political process. Suppose, says Majone, that the government imposes strict measures to combat pollution and environmental degradation. At the time they are put in place, these measures have the approval of a majority of voters, and they are effective at countering apparently urgent environmental problems. [7] But suppose that a year later there is a severe economic depression that makes the problem of unemployment seem, to the general public, much more important and serious than that of environmental degradation. If this happens during an election period, the government will be tempted to ask parliament to amend the anti-pollution measures in order to make them less strict and less costly to apply. The government may also use its discretionary powers to slow down the implementation of the measures or to reduce the budget allocated to the bodies tasked with supervising them. The economic actors responsible for pollution will conclude that they can violate the regulations with impunity, and the goals of the initial policy will become unattainable. Environmental policy will become incoherent, and some already incurred costs will become less effective as a result of the reversal.

13 Problems of this type are obviously magnified when a policy’s effectiveness depends on other countries adopting the same position, and so considering their partners’ decisions as credible in the long term. In the case of pollution, the problem clearly transcends borders, and an effective response requires coordinated action by multiple national governments. It might seem, as a result, that intergovernmental agreements would be the right approach for making progress in this area. As Majone points out, however, the principal obstacle to overcome is less the cross-border nature of the issue than the need for all committed parties to trust that their partners will respect their own commitments in the future. But in an agreement between elected national governments, there is no guarantee that a future government will continue down the same route and respect the commitments of the government that originally negotiated the agreement. In such cases, an unelected supranational body can resolve this problem and impose measures which all partners can trust the others to respect, as they themselves do.

14 For Majone, therefore, the delegation of decision-making power to unelected bodies is an essential strategy for achieving credible long-term commitments, at the national or supranational level, and this long-term credibility is in turn a prerequisite for efficiency and so for promoting the long-term interests of the citizenry. [8] If, Majone concludes, we agree that “for some purposes reliance upon qualities like independence and credibility has more importance than reliance upon majority rule,” [9] then the use of forms of regulation that place decision-making power out of reach of elected politicians seems like a rational option, even if, as we will see, it requires the establishment of new standards of legitimacy and responsibility.

The protection of individual and minority rights

15 The second argument claims that unelected bodies are indispensable to the protection of minority rights. Incidentally, in the case of the European Union, the accusation of a democratic deficit due to the role of unelected bodies is largely based on an image of democracy that bears no relation to the actual regimes that nowadays claim to embody the democratic ideal. With the exception of the Westminster system, which is also undergoing changes, all current democracies include constitutional provisions that restrain the action of the majority and are able—via the constitutional oversight of laws—to block majority decisions that could infringe on the rights of individuals and minorities. [10] The idea that the democratic system gives absolute power to assemblies directly elected by citizens is, therefore, a fiction.

16 Nevertheless, some contemporary analysts go beyond the classic idea that the majority could itself become tyrannical and suggest, in the context of European institutions, that majorities need to be limited and controlled because they are susceptible to capture by well-organized minority interest groups that could prevail over more dispersed and uncoordinated interests, especially in a vast population with very diverse concerns. In that respect, unelected institutions, like courts, are better able to enforce the actual will of the majority of citizens and to resist the focused action of these highly organized minorities. In a surprising paradox, therefore, some analysts even argue that counter-majoritarian processes are essential not just for protecting minority rights against the majority, but also for protecting the majority’s rights against the efforts of active minority groups. The director of the European Union Program at Princeton University, Andrew Moravcsik, writes that one of the reasons counter-majoritarian institutions like the European Central Bank or the European Court of Justice were created was “to afford majorities fair and unbiased representation.”

17 The independence granted to such institutions to fulfill their assigned mission—ensuring the stability of the single currency, for the European Central Bank, and interpreting European legislation in judicial terms, for the European Court of Justice—effectively immunizes them against the vagaries of electoral politics and enables them to rectify the distortions that inevitably affect the latter. Most prominent among these distortions is the fact that, in an election, the best organized and most active groups and interests can impose their point of view on majorities whose interests are fragmented and diverse, and whose members pay only sporadic and halfhearted attention to the issue at hand. [11]

18 Nevertheless, the primary function, and the effect, of non-majoritarian systems, particularly those that entrust powers to supranational institutions and so do not depend on intergovernmental agreements, is to protect the rights of minorities and the fundamental freedoms that are not effectively protected in the national context (or at least not always or necessarily). One of the unexpected consequences of European economic integration has thus been the development of an impressive array of rules and decisions designed to protect diffuse interests that lack effective representation or protection at the national level. All the EU’s supranational institutions help to protect economic rights and the other rights set out in the founding treaty (rights against discrimination, as well as a high degree of environmental protection), including against the short-term political interests of member states when necessary. And it could be argued that these non-majoritarian institutions derive their legitimacy from this protection. They are legitimate because European citizens have a deep-seated conviction—not always reflected in the preferences they express explicitly during elections—that these institutions are effective in protecting their rights and promoting their wellbeing. [12] As a result, it is not despite their non-majoritarian and unelected nature that these institutions are legitimate, but because of it, because it enables them to protect both the rights of minorities and, sometimes, the rights of the majority against active minority groups. Of course, as in any bureaucracy, unelected bodies may have their own interests, and they are not completely immune to pressure exerted by special interest groups and their lobbying efforts. Nevertheless, they may be better placed than elected institutions to take the general interest of the whole community into account, because elected representatives are frequently motivated by short-term considerations linked to the needs of their own voters.

The distinction between the political and technical functions of government

19 The third argument is the most important and the most delicate. It asserts that the government assumes two functions, radically different in their nature: one strictly political, the other purely technical. If the first must remain the preserve of elected bodies, the second not just may, but must be entrusted to bodies not subject to the majority will, because it consists of regulatory measures whose self-evident validity means they must be immune to contestation. This distinction between disputed questions (questions of redistribution) and technical questions (concerning exclusively the efficiency of the regulatory system) is central to the school of thought that would shield a portion of government action from the influence of elections.

20 According to this argument, regulations designed to protect the four fundamental freedoms (free movement of people, goods, ideas, and capital), to purify the functioning of the market, to eliminate obstacles to competition and the formation of monopolies, and to prevent all kinds of discrimination, have indisputable objectives. A market that functions unobstructed and without negative externalities must be seen as a Pareto optimum, and the ambition of realizing it as completely as possible must be beyond discussion, because its aim and effect is to improve the situation of some actors without worsening the position of any of them. Such regulations are not, therefore, political arrangements because they do not seek to redistribute resources or to balance certain private interests against others, but simply to make the economy more efficient and so to promote the general interest. [13] That is why they must be sheltered from a debate that could only hamper them and reduce their efficacy by contaminating them with measures intended to promote private interests. As Majone says, “[o]nly a commitment to the maximization of aggregate welfare, and to accountability by results, can legitimize the political independence of regulators.” [14] Conversely, any decisions aiming to modify the distribution of resources and to redistribute them in a way that differs from market results must remain the exclusive prerogative of elected political bodies.

21 This does not mean that regulatory objectives do not have redistributive effects, as in fact do all public policies, but merely that, for the regulator, these effects are not deliberately pursued goals but rather secondary constraints, unintended consequences of arrangements and rules whose exclusive goal is the maximization of wealth. In this case, if certain actors must suffer disadvantages, it is possible and even desirable to arrange for them to be compensated. Majone notes that such compensation is certainly easier to envisage and achieve—for unelected bodies—in a multinational system like Europe than at the national level, where it is liable to immediately become controversial and to be tainted, in the political debate, by particular interests.

22 From this standpoint, says Majone, political influence on regulatory decisions seems excessive for two separate reasons. First, any consideration of particular interests when implementing a regulatory mechanism that maximizes the production of wealth and so the general interest is bound to make said mechanism less effective. Second, all political solutions to questions concerning market regulation, the protection of freedoms, and the appropriate means to maximize overall welfare, are likely to be unstable and to be held hostage to electoral considerations that also reduce their efficiency.

23 Of course, the distinction between politics and regulation (politics and policy) is not always easy to draw, but in Majone’s view it is an essential element of any constitutional democracy. In any democracy that seeks both to protect minority rights and to maximize welfare, a distinction must be made between domains that are sensitive to the majority will and those that must instead be dealt with by bodies that are not. [15] Only when minority and individual rights are effectively protected against all kinds of discrimination and legal obstacles can production and exchange function optimally, without encountering artificial barriers erected by the various factions with a stake in the political process in an attempt to protect their own vested interests.

24 The powers granted to unelected institutions thus increase the credibility of policies, protect minority rights, and, above all, enable the creation of the conditions for maximizing the welfare of society as a whole—away from conflicts between corporatist interests in the electoral arena—by instituting and protecting the property rights and freedoms of movement that make such maximization possible. It is the effective performance of these three functions that underpins the legitimacy of the bodies responsible for them, and this legitimacy therefore depends on the results they are capable of achieving rather than on the elected nature of the agents in charge of them. [16]

The response to the objection that unelected bodies are not subject to control

25 Supporters of this increased role for unelected bodies in the context of European institutions, and beyond that, as part of the very definition of a democratic regime, are well aware that in the classic image of democracy, the periodical return to the polls is the essential mechanism for controlling government action. They know that the legitimacy of political authority is founded on the fact that those who hold power can be held accountable for their actions and must take responsibility for them. Nevertheless, they think it can be possible, with the help of skillful institutional design, to reconcile the unelected nature of a regulatory body with its “responsibility.” In a democracy, writes Majone, although policies are supposed to be decided and implemented by leaders responsible to their voters, those same leaders may want—for the reasons discussed above—to delegate important powers to politically independent institutions like central banks or agencies operating at the national, European, or international level. Doing so solves a series of problems—making political commitments credible in the long term, protecting individual rights, guaranteeing the authenticity of the production and exchange system likely to maximize citizens’ welfare—but creates another: How to subject these unelected decision-making bodies to mechanisms that make them responsible, that hold them accountable for their actions.

26 This second problem is not irresolvable, however. Although the leaders of the bodies entrusted with these powers are not “responsible” to voters who can send them home, they are accountable for the results they achieve, and their actions are only legitimate if these results align with their assigned objectives. As Majone points out, recent research has revealed the possibility of a kind of control that dispenses with elections and relies instead on alternative but equally effective institutional procedures. It is, ultimately, elected politicians who define the legal authority, objectives, and decision-making processes of these agencies, who appoint their leaders and control their budgets centrally. It is also elected politicians who perform the delegation and who define the delegates’ missions, the scope of their discretionary powers, the governance rules they must follow, and the obligations by which they are bound. Institutional architecture and the administrative procedures imposed on agencies are thus powerful means for politicians to maintain control over the policies implemented by their agents. All these arrangements, says Majone, can “guide agencies to make decisions that are broadly consistent with the policy preferences of their elective principals.” [17]

27 The problem is more complex than this, however. As Majone points out, if the aim is for political commitments to be credible in the long term, and for their addressees to have real trust in the fact that they will be fulfilled, it is not enough for the principal to delegate functions to an agency while retaining the power to control the delegate and dictate its actions. This kind of delegation—which we could term incomplete—is completely unable to resolve the problem of consistency over time and, as a result, that of the credibility of long-term commitments: “Only an independent delegate […] can provide credibility to the long-term commitment.” [18] This is the case for members of the European Commission: They are not agents because they are not dependent on their principal, they do not represent the countries they come from, and they cannot be dismissed by their country’s government for the duration of their mandate. The European treaties stipulate that Commissioners must be “completely independent” to ensure they can fulfill their duties “in the general interest of the Community.” [19] Like US regulatory agencies, the European Central Bank and the Commission are responsible for meeting very broadly defined goals (maintaining price stability for the ECB, supporting the Community’s economic policies and the smooth functioning of the single market for the Commission, and regulating a given economic sector in the public interest for US agencies). Majone argues that these missions cannot be defined in sufficient detail to allow for close control of the relevant institutions’ actions, let alone any kind of hierarchical control. The relationship between the principal and the institution that exercises delegated power is, rather, a “fiduciary” one. [20] This implies a lack of day-to-day control, but it does impose a number of obligations on the actor to whom the mission is entrusted: It must justify and give reasons for its decisions, for example.

28 The actions and decisions of unelected political bodies are, therefore, associated with two distinct forms of legitimacy, one based on the procedures to which they are bound and the other based on the results they achieve, as measured against their assigned objectives. For advocates of this approach, these unelected agencies are no less democratically legitimate than the arrangements designed to check the majority will and protect the rights of individuals in the major constitutional democracies.

The response to the objection of a lack of participation

29 From this perspective, argues Majone, it is clear how unfounded the accusation is that European institutions suffer from a democratic deficit. Insofar as the Union’s powers are limited and of a technical nature, their subjection to political procedures dependent on electoral debate would not increase their democratic credentials, but rather impair them. When voters are asked to express their opinion on technical questions, the inevitable presence of particular interest groups makes it impossible to come to an agreement about the solutions most favorable to the general interest, as defined by the three criteria of commitment credibility, protection of minority and individual rights, and maximization of welfare. These three criteria can only be met if the competent authorities are kept apart, immunized against an electoral process that is democratic in name but not in reality. How, in fact, should we define democracy: by the elected origin of leaders, or by the fact of being a mode of governance that makes credible policies, protects individual rights, and promotes overall welfare in the long term?

30 Majone can thus conclude that, in certain areas, the absence of participation and deliberation is so far from running contrary to democracy that it is, on the contrary, an indispensable prerequisite for it. Andrew Moravcsik, another supporter of the idea that unelected bodies can have political legitimacy, points out that making citizens vote on technical questions of little or no interest to them leads to votes based on fanciful criteria that, far from increasing the legitimacy of decisions and the confidence that they will be upheld, in fact undermine that legitimacy. [21] It is not by winning the approval of unengaged citizens, who are like weather vanes, influenced by facts that have nothing to do with the question at hand, that measures acquire legitimacy or become able to attract adherence. On the contrary, there is no guarantee that such measures will promote individual rights and as a result maximize the overall welfare of society. [22] On the other hand, if the European Union were proposing, for example, to implement redistributive measures via its own taxation and expenditure powers (which the current EU institutions do not have), things would be very different, and the “democratization” of decision-making would be both necessary and beneficial. In that case, the decisions being taken would be political ones for which it would be impossible to define consensual goals or establish criteria for measuring whether the proposed goals had been achieved, because such assessments involve value judgments about the relative importance of particular interests, and those judgments depend heavily on the cultural and historical characteristics of each different political community. [23]