reading

The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available online at http://dnb.dnb.de.

Lisa Herzog: Companies should be run by employees, and the EU should encourage such new forms of cooperate governance

Nicholas Vrousalis: The EU should institute a statutory maximum 35-hour workweek for all European workers

Peter Dietsch: The European Central Bank distributes money. It should be mandated to do so fairly.

Clément Fontan, Joakim Sandberg: The European Union should protect its people before its banks

Marco Meyer: How to deal with persistent trade imbalances within the eurozone

Kalypso Nicolaïdis: Sustainable integration: The silver lining of a democratically challenged EU

Kasper Lippert-Rasmussen: The EU and age discrimination: Abolish mandatory retirement!

David Rodin: Human rights must be the basis for the use of force by EU member states

Mark Alfano: Europe has a responsibility to help island nations hit hardest by climate change

Miriam Ronzoni: The European Parliament should be elected on transnational lists

Richard Bellamy: National parliaments should have a greater role in EU decision-making

Jakub Kloc-Konkołowicz: Circles of solidarity – or how to reconcile the European and the national

Helder De Schutter: The EU should erect a language academy for European English

Introduction

The twelve stars in Europe’s flag symbolize Europe’s unity in diversity. But in the run-up to the European Elections 2019, Europeans are divided along national, ideological, and cultural lines. The motivation for Twelve Stars is that philosophical thinking and argumentation, when presented in an accessible way, can help in creating a constructive dialogue and in identifying common ground in controversial debates about the European Union. Philosophers discuss what politicians, dependent on short term approval, rarely like to address: Long-term choices for the future that for some while now can only be made on a European level.

More than two dozen philosophers present their proposals for what Europe should do next. The contributors are political philosophers born and working all over Europe.

Every article is grounded in political philosophy. Yet, contrary to the popular cliché of the thinker in the ivory-tower, at Twelve Stars philosophers take clear stances on concrete political issues. Each essay presents a bold proposal that Europe can implement now. The result are 24 original and thought-provoking essays that float novel ideas and solutions for the “live” policy choices that politicians and publics in the European Union now face.

Twelve Stars is not just a collection of essays by philosophers but also a new format of civil-society making itself heard in political discourse. The thinkers whose policy proposals are presented here do not speak as experts or policy advisers but as citizens – who like any other citizen happen to have a specific professional perspective, in their case that of philosophy. This perspective is distinguished by a consistent interest in normative orientation. All contributions are part-answers to the same over-arching question: “How do we want to live in Europe?”

We have subjected all proposals to a special procedure we call the “Devil’s Advocate Test”: All proposals were debated and challenged in an online discussion open to anybody who wanted to discuss with the authors. The online debates were made available to the authors in summarized and analysed form as an input to take on board in composing their final essays. Readers who want to check how the philosophers coped with those objections can do so by visiting the online-debate – there is a link to the discussion at the end of every essay. For a brief overview we have assembled the most poignant objections at the end of every article.

For this “Devil’s Advocate Test”, we have used the online forum “Change My View”. Change my View distinguishes itself by its established culture of reasoned debate, and a system to reward participants who convince others to change their mind. For the overview at the end of each text, we have structured comments from the online discussion in the categories feasibility, the use, and the risk of any proposal.

The result is more than a collection of philosophical essays on the future of the European Union. You find a selection of comments in the appendix to every essay. There also is a link and QR-tag to the complete discussion. The link takes you also to research on how the author’s proposal relates to what is actually happening in European politics, including ongoing political and legislative initiatives. Most importantly, authors reflected on the online debates before writing their article for the volume. As a result, you will see many challenges from the online debate referenced in the articles.

Twelve Stars and the Bertelsmann Stiftung gratefully acknowledge support by the University of Hamburg, and the Heinrich Böll Foundation for the German version of this book.

Philippe Van Parijs

The Euro-Dividend

Proposal

The EU should pay a modest basic income to every legal resident of the European Union or the eurozone, financed by the value added tax.

Motivation

A Euro-Dividend, used as a transfer scheme, would help to buffer asymmetries between EU countries. The Euro-Dividend thus employed would disincentivise residents of poorer countries from migrating. Also, the Euro-Dividend would help the EU’s nations to cope with the pressure put upon their welfare systems by the free movement of capital, human capital, goods, and services across borders. Finally, the Euro-Dividend would demonstrate the benefits of EU membership to all its citizens.

Criticising is easy, and our imperfect European Union is a deserving target. Making concrete proposals for improvements is a lot harder. Here is one that is simple and radical, yet – as I shall argue – both reasonable and urgent.

What I propose is a Euro-Dividend. It consists in paying a modest basic income to every legal resident of the European Union or at least of the subset of member states that either have adopted the euro or are committed to doing so once the relevant conditions are met. The idea is to provide each resident with a universal and unconditional income floor that can be supplemented at will by labour income, capital income, and social benefits. The level can vary from country to country to track the cost of living. It can also be lower for the young and higher for the elderly.

A dividend generally refers to the part of the profits of an enterprise that gets distributed among its owners. The Euro-Dividend can be understood as the distribution of part of the gains from European economic integration among the entire population. I suggest financing my proposal with the value added tax. To fund a Euro-Dividend averaging 200 euros per month for all EU residents, one needs to tax the EU’s harmonised VAT base at a rate of about 20 percent, which amounts to close to 10 percent of the EU’s GDP.

Europe’s difference from the US calls for a Euro-Dividend

These are hefty numbers. Why, then, do we need an unprecedented scheme of such magnitude? I will provide four reasons, the most urgent of which is the ongoing crisis in the eurozone. Why is it that the US has been managing for centuries with a single currency despite the diversity of its states and their divergent economic fates, whereas the eurozone teetered on the brink of collapse after just one decade? Why has the US left the damage of the financial crisis largely behind it, while Europe still suffers from it? Economists from Milton Friedman to Amartya Sen have kept warning us: European States, before adopting the euro, could use exchange rate adjustment as a safety valve to release the pressures of diverging shocks or trends. Europe, however, lacks the two buffering mechanisms that serve within the US as powerful substitutes for this safety valve.

One of them is interstate migration. The proportion of US residents who move to another state in any given period is about six times higher than the proportion of EU residents who move to another member state. Europeans may become somewhat more mobile with each generation. But our entrenched linguistic diversity imposes rather strict limits on how far we can expect — or, indeed, hope — to amplify this first mechanism. Athens’ unemployed will never migrate as smoothly to Munich as Detroit’s to Austin.

The dollar zone’s second powerful buffering mechanism consists of automatic interstate transfers. This is essentially achieved through social benefits largely organised and funded at the federal level. As a result of both buffers, Michigan or Missouri could never sink into a Greece-like downward spiral if they suffer economically. Not only is their unemployment tempered by emigration. In addition, owing to shrinking tax liabilities and swelling benefit payments, a growing part of their social expenditures is de facto funded by the rest of the country. Estimates of the extent of this automatic compensation vary between 20 and 40 percent, depending on the methodology used. In the EU, by contrast, the dampening of a member state’s downturn through adjustments of net transfers across states amounts to less than 1 percent. Given the reluctance to both emigrate and to receive immigrants, the potential of the migration mechanism is poor. This, in turn, only strengthens the argument that the eurozone cannot afford to neglect the mechanism of interstate transfer payment. What form should it take? In theory, one can think of an EU-wide mega welfare state. However, even the few who believe it to be desirable have to admit that it is unlikely to ever come about given the great diversity of existing national welfare states and the extent to which European citizens are understandably attached to them. What is required is something more modest, far rougher, more lump-sum. If it is to be viable, our monetary union needs to equip itself with a number of new tools. One of them is a buffering mechanism for economic imbalances that can only be something like a Euro-Dividend.

Europe’s diversity calls for a Euro-Dividend

The second reason why we need such a transnational transfer scheme applies to the EU as a whole, not only the eurozone. The linguistic and cultural diversity of the European continent does not only make interstate migration costlier and therefore less likely for the individuals involved. It also reduces the benefits and increases the costs for the communities involved. Integration into the new environment, both economic and social, takes more time, requires more administrative and educational resources, and creates more lasting tensions than is the case with interstate migration in the US. Migrants from not only poorer, but linguistically and culturally different countries flocking into the more affluent metropolitan areas can create a feeling of invasion among the local population. Denouncing such reactions as racism does not make them any less real and potentially dangerous. They feed the drive to reinstate thick boundaries and repudiate both free movement and non-discrimination. Fast migration of large numbers of people also undermines the social fabric and economic prospects of their homelands. There is a much less disruptive alternative, however: Organise systematic transfers from the centre to the periphery. People will no longer need to be uprooted and driven away from their relatives and communities by the sheer need to make a living. Instead, populations will be sufficiently stabilised to both make immigration more digestible in the magnet areas and to stop emigration being badly debilitating in the peripheral areas. If it is to be politically sustainable and socio-economically efficient, a European Union with free internal migration must introduce something along the lines of a Euro-Dividend.

The four freedoms of the EU’s single market call for a Euro-Dividend

Third and most fundamentally, the free movement of capital, people, goods, and services across the borders of EU member states erodes the capacity of each of these states to perform the redistributive tasks they discharged reasonably well in the past. Member states are no longer sovereign states able to democratically set their priorities and to realise solidarity among their citizens. Free movement without some interstate transfer system to buffer economic imbalances forces the EU’s states to behave more and more as if they were firms: obsessed by their competitiveness, anxious to hold onto or build more financial and human capital, eager to eradicate any social expenditure that cannot be sold as an investment, and keen to phase out any scheme likely to attract welfare tourists and other unproductive folk. It is no longer democracy that imposes its rules on markets and uses them for its purposes. It is the single market that imposes its laws on democracies and forces them to give competitiveness top priority. If our diverse ways of organising social solidarity are to be saved from the grip of fiscal and social competition, part of it must be lifted to a higher level. The power and diversity of our welfare states will not survive the murderous pressure of competitiveness unless the united European market operates against the background of something like a Euro-Dividend.

The EU’s defective legitimacy calls for a Euro-Dividend

Finally, the European Union will only function – and, indeed, survive – in all its dimensions if the EU’s citizens regard its decisions as legitimate, so that both national governments and citizens will not feel entitled to circumvent them in all sorts of ways. One important aspect of legitimacy is whether citizens perceive very tangibly that the Union does something for them – that is, for all of them, not only for the elites, for the movers, for those who are in a position to seize the new opportunities, but also for the underdogs, for those left out, for the stay-at-homes. Bismarck helped cement the shaky legitimacy of his unified Germany by creating the world’s first public pension system. If the Union is to be more in people’s eyes than a heartless bureaucracy, if it is to be perceived as a caring Europe with which all can identify, it will need to find a way of bringing about something totally unprecedented: a universal Euro-Dividend.

Some objections

Are there any reasonable objections to this proposal? Of course there are, even if surprisingly few have turned up in the Twelve Stars online debate. Some, for example, may question the wisdom of using VAT to fund the scheme. VAT is the most Europeanised of all major forms of taxation. But would it not make more sense to use the financial transaction tax proposed elsewhere in this volume? Or a carbon tax, for that matter? The issue here is magnitude: What these two taxes could fund, even under optimistic assumptions, is an EU-wide monthly Euro-Dividend of no more than 10 and 14 euros, respectively. Why, then, not use the more progressive personal income tax? Because the definition of the income tax base varies greatly from country to country and is highly sensitive politically. Moreover, today’s income tax is de facto hardly more progressive than VAT. But would a 20 percent rate of VAT added to national rates not be unbearable and thus unsustainable? The answer is that a VAT for the Euro-Dividend does not need to be added to unchanged VAT rates. Rather, the national VAT rates could be lowered as the sheer presence of the Euro-Dividend makes room for increasing the income tax without lowering the net income of taxpayers and for reducing social benefits without lowering the net income of benefit recipients.

Others may well object that each of the four functions of the Euro-Dividend listed above could be served better through some more complicated, more sophisticated device. Most of these arguments will be correct. My claim is simply that no other manageable mechanism would serve all four functions as well while being intelligible to the ordinary European citizen.

A more fundamental objection is that, however desirable the expected effects, it would be unfair to give everyone something for nothing. This objection rests on a misperception. A Euro-Dividend does not amount to an unfair redistribution of the fruits of some hard workers’ work. It rather amounts to sharing among all European residents, in the form of a modest basic income, part of the benefits of European integration. How much did we save as a result of not having to conduct or prepare for war with our neighbours? How much did we gain as a result of having increased competition between our firms or of having allowed factors of production to move wherever in Europe they are most productive? The exact number is obviously impossible to calculate. What we know for sure, though, is that these benefits are real and substantial. What we also know is that they are distributed very unequally in the European population, depending on whether they are movers or stay-at-homes, depending on whether or not the situation created by European integration happened to make their consumption cheaper or their skills more valuable. A modest Euro-Dividend is a straightforward and efficient way of guaranteeing that some of these benefits will reach each European in a tangible way.

Is this utopian? Of course it is. But so was the European Union until not so long ago. And so was the social security system before Bismarck put together its first building blocks. But Bismarck did not invent the pension system out of the kindness of his heart. He did so because people started mobilising in favour of radical reforms across the whole of the Reich he was trying to unify. What are we waiting for?

For background information on how the proposal fits with the EU’s political agenda and procedures, see www.twelvestars.eu/CMV/Philippe-van-Parijs.

Objections

On 30 June 2018, Philippe van Parijs defended his proposal in the Twelve Stars debate. The main objections are presented below. Rebuttals can be followed in the online debate.

www.twelvestars.eu/CMV/Philippe-van-Parijs

Would it be feasible for the EU to pay a Euro-Dividend to each of its permanent residents?

“Would you [… ], as a politician, be able to sell [a massive tax increase for paying for social security in other countries] to your voters?” AffectionateTop

“The EU has never had the right to tax its citizens.” AffectionateTop

Would it be beneficial if the EU paid a Euro-Dividend to each of its permanent residents?

“It’s not a solution to European poverty or cultural integration […].” swearrengen

What risks would arise if the EU paid a Euro-Dividend to each of its permanent residents?

“What you propose would have the immediate effect of having the rich countries leave.” AffectionateTop

“[I]t’s a solution to increasing the citizen’s dependency and reliance on the state, of maintaining political power.” swearrengen

Lisa Herzog

Companies should be run by employees, and the EU should encourage such new forms of cooperate governance

Proposal

The EU should encourage new forms of cooperate governance. This can take on many forms: from self-organising teams to companies with two chambers for labour and capital, to the old idea of cooperatives, where workers also own the company.

Motivation

Capitalist firms exercise a form of “private government” upon their employees. But with new communication technologies, new, horizontal forms of governing work become possible, reducing the tension between efficiency and participatory decision-making. Why not take the opportunity to strengthen employee rights to have a stronger say in company governance?

Lisa Herzog, born in Nuremberg, Germany. Assistant Professor of Political Philosophy and Theory at Technical University Munich, Germany.

In future workplaces, robots and algorithms will play an ever-increasing role. Whether this is a good or a bad thing for working people is not quite clear. Will we all work with low pay and bad conditions like the employees in Amazon warehouses? Or like those trying to earn some money by “clickwork” on online platforms? Will workers be mere “appendages to the machine”, as Marx feared, having their working conditions dictated by the owners of the machines? Or can we hope for a more optimistic vision to come true, with workers using robots and algorithms as useful new tools to handle routine tasks, thus freeing their minds for more humane and socially productive work? The outcome will, to a large degree, depend on who will have the say about how work is organised. This, in turn, depends on how companies will be run – in a hierarchical, profit-oriented way or in a democratic, participatory way.

Digital transformation is changing the world of work dramatically. This change presents a historic opportunity to expand the control workers have over the way their work is organised. In capitalist firms, control lies with the owners or with managers acting on their behalf. Workers trade their right to have a say for their wages. This is, effectively, a form of “private government”, as Elizabeth Anderson has argued. However, in many European countries, and especially in the German system of co-determination, workers have more expansive rights: Worker representatives sit on the boards of publicly traded companies, and employees in all but very small firms have the right to form a works council. It must be informed about and heard on all matters, and it needs to approve decisions concerning working conditions, including working hours. This helps to ensure that firms comply with laws protecting workers, such as regulations on working hours.

Co-determination does not make firms fully democratic, as the side of capital still has the upper hand. Such firms, however, are more democratic than, for example, the corporate model that prevails in the Anglo-sphere. According to standard economic theory, such semi-democratic firms cannot exist as they would be outcompeted by purely capitalist firms. But exist they do, and they compete successfully in the globalised economy. What also exists are numerous cooperatives, that is, firms that are democratically run because the workers are joint owners. Coops for agriculture, food, and banking are standard in many European countries. Some, like Mondragon in northern Spain, run businesses over a whole range of industries. To be sure, democratic companies are no panacea for all social ills. But they do give more weight to the rights of workers – which might make all the difference in terms of how we deal with the challenges presented by new technologies.

Risks and opportunities of the digital transformation

The digital transformation gives new urgency to the old conflict between capital and labour, as it undermines hard-won workers’ rights. This, in turn, forces us to rethink the power relations that prevail in our economic systems. The digital transformation, however, is not only a threat, but also an opportunity. With new communication technologies, new, horizontal forms of governing work become possible, reducing the tension between efficiency and participatory decision-making. Such technologies are already used in many companies, but – alas – the power structures remain the same. Why not seize the opportunity to strengthen employees’ rights to have a stronger say in company governance? This can assume many new forms, from self-organising teams to companies with two chambers for “labour” and capital”, as recently suggested by Isabelle Ferreras, while the old idea of the cooperative is experiencing a revival in the movement of “platform cooperativism”. “Platform cooperativism” applies the principle of cooperatives – that workers are also owners – to online platforms that bring supply and demand together, for example, platforms for taxi services. Instead of paying horrendous fees to the corporate owners of platforms and apps, the drivers run the platforms themselves. We need to understand better how such companies can be successful, which models work for which industries, and how digital technologies can support democratic decision-making.

Expanding democracy to the workplace means expanding a principle we accept in the political realm to the economic realm: Those who hold power should be held accountable to those over whom they exercise it. This argument is contested by those who think that workers can simply exit work relations and “vote with their feet”, so they need not be given any voting rights. But this assumption is unrealistic for most employees. Finding a new job is always costly, both literally and metaphorically. Employees need to invest in the skills and the social networks required for fulfilling a specific role in a specific company; they lose at least part of this investment if they change jobs. The ones who can easily “vote with their feet” in capitalist societies are investors, especially investors in publicly traded companies, as they can simply sell their shares. And, yet, they enjoy voting rights derived from their contribution of capital. However, those who contribute labour to a company’s success should have the same rights.

Why workplace democracy is a concern for the EU

Why is democratic economic governance an issue for the EU? In a traditionally capitalist environment, employee-run firms are usually at a competitive disadvantage due to path dependencies and critical mass issues. Moreover, potential customers, creditors, and even employees may view them with suspicion. Here, the EU could play a crucial role by allowing and encouraging member states to offer tax incentives to employee-run firms. It could also provide seed funding for firms experimenting with new, employee-centred structures of work governance. Furthermore, it could create a platform for sharing best practices and learning more about how employee-run companies can be successful. These steps could help create a critical mass of employee-run companies. This, in turn, might prepare the ground for EU-wide legislation making democratic governance mandatory for all firms.

Some objections from the Twelve Stars debate

Proposals to make the world of work more democratic are often met with resistance. Let me address some counter-arguments that came up in the Twelve Stars online debate.

One worry is that workers would not have the skills necessary to run companies. This objection usually stems from the misunderstanding that democracy in the workplace should be direct democracy. Direct democracy, though, in which all decisions are taken jointly by the entire electorate, is only feasible for small units. The form of workplace democracy we can realistically hope for is representative democracy. Hence, workers would only need to understand enough to vote for managers with the necessary skills, just as they need to understand political issues sufficiently well in order to vote for political leaders. Admittedly, one can question how well this works within the political system. But, if anything, it should be easier for employees to judge the qualities of different managers – after all, they can watch them “from up close” during working hours. It’s also worth noting that in both political and workplace democracy, tasks that require special expertise can be delegated to committees with the relevant skills.

A second worry concerns the property rights of owners, especially owners of small and new businesses. If enterprising people start a company with their own capital, should they not have full discretion about what to do with it? The basic line of response to this worry is that property rights always come in degrees – and with limits and qualifications. For example, owning a knife doesn’t give you a right to jam it into my chest, and you may be held liable if you leave it lying about and a child hurts herself with it. Similarly, the property rights of company owners are always limited by regulations, for instance, concerning safety. Employee’s rights to a democratic workplace would not abolish, but merely further limit the property rights of owners.

A practical way to address this trade-off would be to only demand workplace democracy for firms with a certain number of employees or only for certain legal types of company, such as publicly traded companies. Limited liability and shareholder ownership mean that the owners of a company do not carry the full economic risk; they might lose the money they have invested, but they are not obliged to cover company debt with their private fortune. The formal owner of the means of production in such cases is the company itself, as a legal person. What matters for democratic governance is how control rights are distributed within this legal person; property rights as such do not offer any reason not to share them with employees.

A related worry is that investors would simply not fund democratic companies, if only because they are prejudiced against them. This may indeed be the case in societies that take purely capitalist companies for the natural state of affairs and simply know nothing else. Europe, however, already has a rich tradition of more democratic economic governance, as shown above. World-leading German companies with co-determination models, such as Siemens and BMW, certainly do find investors. And German Mittelstand companies with works councils are preferred takeover candidates of the most capitalist-minded private equity funds. Moreover, they are often funded by Germany’s local Volksbanken, which are themselves cooperatives. We are currently experiencing a phase of record low-interest rates, so bank loans can be a realistic alternative to finding stock market investors. And given that good investment opportunities are rare and that there is growing interest in “sustainable” investment, there is simply no reason for thinking that democratic companies would not find investors.

The concerns about investors – and also, indirectly, the concerns about property – are based on the assumption that democratic firms will be less efficient than firms run in a top-down way. Yet, countless democratic or semi-democratic companies not only survive, but also thrive in competitive global markets. Democratisation clearly has some negative effects on efficiency, as the democratic processes of deliberation and voting consume time and energy (though online tools can help here).

The increased attention to workers’ rights that democratisation is likely to bring about might reduce a company’s profit. But note that this is an “inefficiency” only in terms of monetary outcomes. Yet, there are also positive effects – and not only in non-monetary terms. Employees might be more motivated and less prone to sabotage and “time theft” if they consider the company a shared endeavour in which they have a stake. It is also likely that the feedback mechanisms between employees and management will function better within democratic companies – not least because company leaders who do not have the company’s long-term interests in mind can be voted out of office. The net effect of these costs and gains on a firm’s balance sheet will depend a lot on the concrete context and the industry in question, and is hard to estimate. The undeniable long-term success of many semi-democratic European companies, however, is most plausibly explained as occurring not despite, but at least partly because of how they are governed.

One participant in the online debate raised the concern that democratic firms are less innovative, as workers are more averse to risking their jobs should an innovation fails. I doubt that this is always true, but let us assume for the sake of argument that it is. In this case, some industries in which innovation is key, such as manufacturing, might be less suitable for workplace democracy – or, rather, they would have to pay a price for democracy in terms of innovative strength. But not all industries, such as service industries, face the pressure of innovation in the same way. My proposal entails EU funding of experimentation in order to better understand the dynamics of workplace democracy and to determine what works best in which industry.

Twelve Stars

Contents

Introduction

European Solidarity

Philippe Van Parijs

The Euro-Dividend

Proposal

Motivation

Europe’s difference from the US calls for a Euro-Dividend

Europe’s diversity calls for a Euro-Dividend

The four freedoms of the EU’s single market call for a Euro-Dividend

The EU’s defective legitimacy calls for a Euro-Dividend

Some objections

Objections

Lisa Herzog

Companies should be run by employees, and the EU should encourage such new forms of cooperate governance

Proposal

Motivation

Risks and opportunities of the digital transformation

Why workplace democracy is a concern for the EU

Some objections from the Twelve Stars debate