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Czech Republic’s Transition, European Problems and the Fraser Institute

English Pages, 11. 11. 2004

I am really honored to be celebrating, together with the Fraser Institute, its 30th anniversary and to receive the Founders Award. I say that not as a conventional courtesy, it reflects my actual feelings.

I am well aware of the role the Fraser Institute plays in your country and I can assure you that we know your institute and its activity quite well in a small, very distant country in the heart of Europe, in the Czech Republic. Reading Fraser Forum is for me something I have been used to doing already for many years, starting approximately in 1990, when I – for the first time – met Michael Walker and many other collaborateurs and friends of the Intitute.

I was here in 1991, 1992, 1999 and now again in 2004. I was here in all my public roles – as Minister of Finance, as Prime Minister, as Chairman of the Parliament and now I am here as President of the country. I do not know in what capacity I will come here next time. I hope, nevertheless, I am still the same person who came here 13 years ago and I can assure you that I still do believe in the same set of ideas as they are spread and so eloquently defended by the Fraser Institute.

In 1991, I tried to explain the strategy of the transition from communism to a free society and warned against attempts to mastermind the transition from above – by always prepared and always available social engineers who wanted to lead us and who did not want to let us do the transition ourselves. I tried – in Hayekian terms – to avoid well-known pitfalls of human designs because I trusted human action. I remember I found an open-minded and friendly audience here.

In 1992, I discussed the relative roles of domestic and external factors in a systemic change. I stressed that “democracy, freedom and a market economy can not be transplanted to an unprepared soil by decree, by lecturing, or by giving well-intentioned and good advice” and that “reform begins and ends at home”. I am convinced that the experience of the last decade in my country and elsewhere, not to speak about some recent very problematic efforts to export liberty, freedom and democracy, confirms my original views.

In 1999, I spoke here about “The Third Way and Its Fatal Conceits”. I repeated my often quoted phrase: “The Third Way is the fastest way to the Third World” and I criticised such an approach by saying that “The Third Way of 1990’s is just a new attempt to save socialism, social-democratism and welfare state”. And I also said that “the bureaucratic, non-genuine, non-evolutionary, and therefore artificial unification of Europe” is an example of third ways in international politics.

This final quotation brings me to my today’s topic, which is Europe and European Union, its recent evolution, its so-called deepening and widening and its currently prevailing ideology I call Europeanism.

When discussing Europe now, at the beginning of the 21th century, I must confess that I am getting more and more nervous. Both because of what the discussion contains and makes explicit and because of what it is missing, what is implicitly hidden. It has become more or less accepted in Europe that all fundamental questions of our times have been solved sometimes in the past and that by fixing European relations and structures history is over. Almost all participants in the discussion pay exaggerated attention to – for me – the less relevant issues. In the contemporary brave new world of on-line reporting and of the predominance of SMS length’s headline news everyone behaves as if the real European issue is to invite (or possibly not to invite) three more states to join the EU, to have rotating or permanent EU presidency, to have more or few commissioners in Brussels, to have one system of majority voting or another.

I am afraid that such topics are of second-rate importance, that they do not address the main European problems and – what is even worse – that those who formulate them succeed in crowding-out all other topics. It is not acceptable. We should not capitulate to the intellectual trends of the time. We should raise other topics. The European intellectual space should not be occupied by topics relevant for the EU politicians and bureaucrats only, for a group of people someone recently aptly called priviligentia.

There is no need to dispose of extraordinarily sharp eyes to see in recent developments in Europe evident, non-deniable and undoubtedly unfavourable trends and tendencies. They include:

- long-term economic slowdown (both in relative and absolute terms);

- growing successes of various radical political parties and of nationalistically or populistically oriented movements;

- loss of cultural dynamism coinciding with the victory of multiculturalism and with the belief in the possibility to preserve traditional European values, when abolishing the original institution that made them possible;

- losing of self-confidence, of positive working ethic and habits, and of personal motivation;

- the breakdown of the understanding of the inevitable performance-reward nexus;

- the growing shortsightedness connected with the unconscious and unstructured fear of the future;

- loss of leadership, the depersonification of decision-making in the public sphere, the shift to collective (ir)responsibility;

- the growing disbelief in politics and in politicians at the moment when increasing range of human actions is becoming subject to collective, public choice procedures;

- undermining of national identity and because the search for identity has been caricatured as an obsolete, long-defeated nationalism, the emergence of symptoms of new nationalism.

These phenomena do not have any direct connection with either the recent enlargement of the EU or with the birth of EU constitution. To my great regret, the new members from Central, Eastern and Southern Europe have not and will not bring about an important change because most of them had been – between the collapse of communism and their entry into the EU – already infected by the same virus. The countries from more remote regions could bring some new air but if such a threat arises, they would not be allowed to enter.

The recent enlargement of the EU will have a different impact. Because everything will be bigger and more complicated, the inherent failings of the current EU system will increase and will be more visible:

- both the democratic deficit and the lack of democratic accountability of EU institutions will be more apparent than before;

- the composition of decision-making procedures will further shift from a democratic type to a hierarchical one;

- the power of the EU “core” will be strengthened;

- majority voting instead of unanimity will dominate decision-making in more and more fields;

- attempts to get rid of existing deviations from the “norm” will lead to more intervention from above;

- the distance of citizens from the centre of power, from Brussels, will grow;

- the anonymity in decision-making will increase.

All of that is – given the prevailing integrationist project of ever closer union – unavoidable. The unpleasant trade-off between the number of participating countries and the democracy and efficiency of decision-making (all other things being equal, ceteris paribus) will be felt more and more. The costs of decision-making in a bigger union will be either paid for (resulting in loss of efficiency) or suppressed and hidden (resulting in loss of democracy). Both have a negative sign.

The recently signed European constitution (or perhaps constitutional treaty) will increase both types of costs. In its current form, it is a radical document with far-reaching consequences for freedom and welfare of individual citizens and for the future of nation-states. Somebody may argue that it sounds too alarmistically and that we are not yet that far. This is true. All that is, however, required, is one more treaty. This is my forecast, not a wish.

The new constitution does nothing to resolve the real problems of Europe and tries to side-step them instead. I dare to say that it was caused either by an intellectual defect or by a purposeful and skilfully planned intention.

Whatever the reason, the authors of the constitution started with the following, very dubious assumptions:

- Europe existed in the past as a collective identity and should, therefore, exist as a collective identity in the future again;

- Europe has a common history which can be – similarly as national history – implanted into human minds by means of fairy tales, textbooks, preachings and political speeches;

- the gains from homogenization of the whole continent, from elimination of differences, from harmonization and standardization of the rules of human behaviour are indisputable;

- competition is not the most powerful mechanism for achieving freedom, democracy and efficiency but an unfair and unproductive form of dumping which endangers specific protected groups and, eventually, whole societies;

- big is beautiful and centralisation, bureaucratisation and masterminding of the whole continent will make us stronger;

- intrusive regulation, ruling and intervening from above is necessary because market failure is more dangerous than government failure, because markets need the visible hand of omnipresent administrators to be efficient, and because bigger markets require more regulation;

- regulators at the EU level are better, more efficient, less inclined to listen to special interests than their colleagues at the national level, or to put it differently, the more remote (from individual citizens) the government is and the bigger the territory it governs, the better the government is.

I do not share these views. I do not believe in this conglomerate of ideas characterized by extreme eclectism and lack of consistency and purity. I call this conglomerate of ideas – waiting for a better term – Europeanism.

Its incoherent structure makes it possible to see it as a proof of the end of ideology, of the victory of pragmatism as well as of administrative and technical reasoning, of the importance of genuine and friendly interest-free – which means altruistic – cooperation, of the possibility of win-win solutions (which is a term overcoming all terminological inventions of George Orwell), etc.

Our task is different. We should not europeanize issues but fight for the preservation of basic civil, political and economic liberties.

We need institutional framework which makes them possible. We need unregulated markets, we need states to guarantee and safeguard the rule of law. The alternative is a non-state, post-democracy and administered society.

We need New Europe, Europe without Europeanism. Let us move to Europe of economic freedom, to Europe of small and non-expanding government, to Europe without state paternalism, to Europe without pseudomoralizing political correctness, to Europe without intellectual snobbism and elitism, to Europe without supranational, all-continental ambitions. If somebody across the ocean labels this kind of Europe by the expression “New Europe”, it would only be good. However, I must emphasize that we are still very far from it.

Václav Klaus, T. P. Boyle Lecture, Fraser Institute, Fairmont Hotel, Vancouver, November 10, 2004