Jean Monnet Center at NYU School of Law


2. Legal justifications for transnational governance structures: a retrospective survey of German traditions

The opinion so widespread today, that Europe is not a state but needs a constitution, is a recent one, at least to the extent that the concept of constitution includes that of democratic legitimation - a criterion that the White Paper, too, adopts in referring to the Union's "double democratic mandate" (p 7) in order then to present the "principles of good governance" as democratic, rule of law principles that ought to apply more at all levels of government (p 10).

The legitimation problem often called the "democracy deficit" has, however, concerned legal science more or less from the outset. It has merely responded to it in different terms than are, broadly speaking, usual in the current debate: it has - albeit frequently in the doctrinal cryptography of jurisprudence, and without bothering to translate the legal vocabulary into the categories and approaches of other disciplines or public discourse - pleaded for an institutionalisation of rationality criteria [Institututionalisierung von Rationalitätskriterien]11 able to justify transnational "governance", which may not meet the criteria of constitutional states organised as nation states, but is, nonetheless, compatible with them. "Europe has given itself a constitution that had to institutionalise a legitimacy pattern which fundamentally departed from that of nation state democracy" - there are justifications for this answer in the German legal tradition that can be traced back, historically at least, into the Weimar Republic. German European law was able to take up from them when, very early and in a conceptual stringency hardly to be expected in a legal system with a less problematic past, it responded to the question of how Europe could be possible as a "sovereignty association" [Herrschaftsverband]12 standing above the law of the Member States. These justifications were not uniform - and are illuminating because of their very differences. Three of them appear in the title of this essay; two of them - ordo-liberalism and functionalism - have become important brand-names in German European-law thinking; a third discredited itself - something one also ought to know, and not forget.

2.1. Ordo-liberalism: the unity of national and European economic rationality

In the contexts of his studies on the history of private law, Knut Wolfgang Nörr13 picked out two concepts in (German) economic legal history. Both have to do, in more current parlance, with German varieties of capitalism: Nörr calls one the "organised economy"; the other variant is the "social market economy". Nörr sees the "organised economy" as a hereditary flaw from the Weimar Republic, though its predecessors are, admittedly, to be found in the age of "organised capitalism" in the nineteenth century. The second version, "social market economy", represents the better tradition for Nörr. Its theoretical core is known as ordo-liberalism. This conception was developed in political economy particularly by Walter Eucken, Alexander Rüstow, Wilhelm Röpke, together with lawyer Franz Böhm, in the late twenties - in the face of the economical and constitutional crisis of the Weimar Republic, which was practically at its acme. This was the context for the emergence of the ordo-liberal demand for a "strong" state, which was to impose, without political inhibitions, an ordo intrinsic to economic life and, admittedly, in need of protection.14 Even before the National Socialists' seizure of power, Hermann Heller criticised ordo-liberal liberalism as "authoritarian" variety.15 This characterization was directed against the ordo-liberal critique of a concept and practice of pluralism where the clash of interests determines the content of national politics. The ordo-liberal quest for a strong authority is not, however, to be equated with the "strong state" that Carl Schmitt had, in one sense, identified and, in another sense, called for in his famous 1932 speech,16 which National Socialism soon went on to stage. Schmitt's strong state claimed the political primacy of politics over the economy - and, to the promoters of this idea, the quest for a rule-bound order of the economy was unacceptable.

It was this very core idea that lent ordo-liberalism significance in the formative stage first of the Federal Republic and then of the European Economic Community. Domestically, the economic constitution was set alongside the political constitution, so as to protect the market economy against discretionary political encroachments.17 The ordo-liberal theory of economic governance at the same time answered the question of the legitimacy of European "governance": it conceived of the freedoms guaranteed in the EEC Treaty, of the opening of the national economies, the rules against discrimination and the commitments of competition policy, as a set of interdependent principles which established a market economy system based upon the rule of law.18 And the very fact that Europe had been set in motion as a purely economic community lent the ordo-liberal argument plausibility: interpreting the economy related provisions of the Treaty as a coherent set of principles and rules which guaranteed the economic freedoms embedded in an ordo of transnational and meta-positivist validity conferred a legitimacy of its own on the Community, independent of the institutions of the democratic constitutional state, from which imperative requirements on the Gestalt of this Community could, at the same time, be derived.

2.2. The disjunction between the "organised economy" and European technocracy

The ordo-liberal theory has a twofold factual and normative status. Its statements about the regulatory pattern of the economy refer to economic processes, institutional conceptions, and economic policy programmes; its promises of prosperity are meant empirically, but conditioned upon the actual establishment of the institutional framework that ordo-liberalism postulates. Such a construct can scarcely be embarrassed by practical experience; since political practice will always act according to its own logic and never perfectly comply with ordo-liberal quests, the theorist will always have reason to blame the political system and can never be falsified. Yet, the relationship between theory and practice is not quite so unambiguous. German politics is a case in point. It has continually displayed officious respect for the guiding ideas, conceptions and institutionalisations in the ordo-liberal sense; on the other hand, it has equally displayed complacency when continuing to practice the "organised economy" tradition.19 Such political opportunism could point out that ordo-liberalism was, by now, the prevailing view in constitutional law and administrative law, which defended the freedom of the democratically accredited legislator to pursue the economic policies which seemed to fit majoritarian preferences best. Nörr accordingly calls the Bonn Republic's "double path in economic policy and economic governance... a basic phenomenon in the history of [its] emergence"; and "for the economic system that was to characterise the new state, we have even to speak of two stage productions, two presentations of the same play, that took no notice of each other".20 The Federal Constitutional Court's refusal to attribute any legally-binding coverage of the economy to the Basic Law21 most emphatically confirms this according to Nörr.22

The institutionalisation of both patterns, of ordo-inspired economic law on the one hand, and discretionary economic policy on the other, cannot be reconciled theoretically; in practical terms, however, this "antithesis and contradiction",23 proved to be perfectly sustainable, as the successful economic history of the young Federal Republic undoubtedly proves .

But with the project for European integration, a new constellation arose. Ordo-liberalism could easily accept and even support the new supremacy claims of Community law, because its theory of an economic constitution sought specifically to withdraw the meta-positivist ordo of the economy from the clutches of the parliamentary majority, - at any rate, if, and, so far as, Community law was understood to institutionalise a "system of undistorted constitution". By contrast, the discrepancies between the principles of parliamentary democracy and the Community's not so legitimated powers constituted a problem for the "second tradition": its commitment to parliamentary democracy seemed irreconcilable with supranational governance; this tension necessitated the search for an alternative legitimation for, and restriction of, European supremacy claims. An alternative was, indeed, found. And, as with ordo-liberalism, its origins reached back into the period of the Weimar Republic. Faced with technical development and scientification, which were even then perceived as being headlong, an overwhelmingly conservative cultural criticism arose in Germany,24 while, in the US and elsewhere, the "technocrats" perceived and welcomed these new phenomena much more pragmatically and optimistically.25 In the sixties, these early debates and ideas went through a renaissance. The most prominent position was articulated in German constitutional law by Ernst Forsthoff in his Der Staat der Industriegesellschaft (The State of Industrial Society), where he diagnosed factually powerful governance structures which had de facto substituted the type of governance formally established by the constitution, but were "existentially" [existentiell] inferior to the real existing order.26 Alongside the long established sphere of Daseinsvorsorge and soziale Realisation ("social realisation"; the guaranteeing of elementary social welfare requirements), a term which Forsthoff had taken over from Karl Jaspers in 1938, equally important constraints of a technische Realisation ("technical realisation") came to bear, which, as an accompanying essay explained, compelled the free State public to identify itself partially with technology and to subject social life to the necessities inherent in the technical process.27 In this sphere "technical knowledge" prevails and is administered by an "inner circle", which is to take the "technically correct decisions".28 Similarly, Helmut Schelsky stated: "political norms and laws are accompanied by the technical necessities of scientific and technical civilization... which cannot be taken as political decisions, nor seen as ideological or philosophical norms".29

The so-called technocracy debate, the context for these statements, paid very little attention to the European Community. But it nevertheless nurtured public awareness for the emergence of technocratic governance - and grounds for its justification.30 In Hans Peter Ipsen's theory of the European Communities as Zweckverbände funktioneller Integration ("special purpose associations of functional integration") it found a version that procured institutional anchorage for technocratic rationality in the EEC, the sphere of whose application was, however, to be confined to "questions of knowledge", with genuinely "political" questions to be left to democratically legitimated decision-makers.31 In his purpose association theory, Ipsen rejected both further reaching notions of federal integration and the early interpretations of the Community as a mere international organisation. For him, Community law was a tertium between (federal) national law and international law, constituted through its "technical tasks" and adequately legitimated by problem-solving potential.

2.3. The "hour of the executive"?

It is not just for the sake of completeness that a third alternative, although, admittedly, by now fundamentally discredited, should be recalled. It, too, comes out of the laboratory of Weimar. In systematic terms, it was a critique of both the institutionalisation of economic rationality as contemplated by ordo-liberalism and of the institutionalisation of technocratic rationality, which the American technocrats and their (few) allies in Germany had advocated. Spearheading this twofold critique was Carl Schmitt. A "healthy economy" he had proclaimed in a famous speech in 193232 required a "strong state". However, this strong state was not the ordo-liberal state committed to notions of an economic order. Carl Schmitt insisted on the primacy of politics over a subordinate, "self-administering" economy - shortly afterwards, he was to call this the Führerverfassung. He combined his advocacy of the "strong state" in which politics would assert its priority over the economy with a polemic against all technocratic promises and endeavours to resolve "all questions by technical and economic reason, in accordance with allegedly purely objective, purely technical and purely economic viewpoints".33

Both alternatives, against which Schmitt directed his critique, are concerned with exempting specific dimensions or domains of the polity from the reign of majoritarian parliamentary governance, be it because of its inherently technical character, or be it because of the perceived permeability of political processes by well-organised interests. What is left when, like Carl Schmitt, one rejects both alternatives and, at the same time, requires the possibility of the return to politics legitimated in parliamentary terms to be illusory? In a comparative law study in 1936, Schmitt examined this question in some depth.34 His finding: "legislative delegations" enabling "simplified" decision-making procedures had imposed themselves everywhere; the "sharp contrast between legislature and executive" was outdated, and all attempts to limit delegation in an adequately defined fashion were condemned to failure; the hour for a "suspension of the separation between legislature and executive" had come.35 Schmitt's proclamation of the end of the separation of powers turned out to be premature. All constitutional democracies have insisted on this distinction and continue to delimit executive rule making. "The nondelegation doctrine", commented Cass Sustein recently, "is alive and well".36 It is not an easy life though, even not within constitutional states. It is a particularly difficult life within the Community system. To this challenge we will now turn.

11 On this term, see M.R. Lepsius, Max Weber und das Programm einer Institutionenpolitik, Berliner Journal für Soziologie 5 (1995), 327 ff.

12 On this, again, Weberian term, cf., M.R. Lepsius, Die Europäische Union als Herrschaftsverband eigener Prägung, in: CH. Joerges/Y. Mény/J.H.H. Weiler (eds.) What Kind of Constitution for What Kind of Polity? Responses to Joschka Fischer, RSC Florence/Harvard Law School, 2000, 203 ff. ( and

13 Die Republik der Wirtschaft. Teil I: Von der Besatzungszeit bis zur Großen Koalition, Tübingen 1999, 5 ff.; cf. earlier K.W. Nörr, Zwischen den Mühlsteinen. Eine Privatrechtsgeschichte der Weimarer Republik, Tübingen 1988; idem, Die Leiden des Privatrechts. Kartelle in Deutschland von der Holzstoffkartellentscheidung bis zum Gesetz gegen Wettbewerbsbeschränkungen, Tübingen 1994.

14 Cf., Ph. Manow, Modell Deutschland as an interdenominational compromise, Minda De Gunzburg Centre for European Studies. Working Paper 003/2001, and more recently: idem, Ordoliberalismus als ökonomische Ordnungstheologie, Leviathan 2001, 179 ff.

15 H. Heller, Autoritärer Liberalismus, Die Neue Rundschau 44 (1933), 289 ff.

16 Starker Staat und gesunde Wirtschaft. Ein Vortrag vor Wirtschaftsführern (A strong state and a healthy economy. A lecture before economic leaders, held on 23 November 1932), published, for example, in Volk und Reich 1933, 81 ff.

17 As a representative example that indicates the tone, see F. Böhm, Wirtschaftsordnung und Staatsverfassung, Tübingen 1950.

18 For a systematic and detailed account, see W. Mussler, Die Wirtschaftsverfassung der Europäischen Gemeinschaft im Wandel. Von Rom nach Maastricht, Baden-Baden 1998, 58 ff.

19 Cf., for example, W. Abelshauser, Die Langen Fünfziger Jahre. Wirtschaft und Gesellschaft in Deutschland 1949-1966, Düsseldorf 1987, 21 ff.

20 Die Republik der Wirtschaft (n. 13), 84.

21 Entscheidungen des Bundesverfassungsgerichts Vol. 7, 377 (1958) - ,,Investitionshilfe".

22 Ibid., 103 ff.

23 Ibid., 84.

24 Cf., N. Stehr, Arbeit, Eigentum und Wissen. Zur Theorie von Wissensgesellschaften, Frankfurt a.M. 1994, 278 ff.; J.P. McCormick, Carl Schmitt's Critique of Liberalism. Against Politics as Technology, Cambridge, MA 1997, 31 ff., 83 ff.

25 C. Radaelli, Technocracy in the EU, Essex/New York 1999, 23 ff.

26 E. Forsthoff, Der Staat der Industriegesellschaft. Dargestellt am Beispiel der Bundesrepublik Deutschland, 2nd ed., München 1971; cf. the interpretation of V. Neumann, Der harte Weg zum sanften Ziel. Ernst Forsthoffs Rechts- und Staatstheorie als Paradigma konservativer Technikkritik, in A. Roßnagel (ed.), Recht und Technik im Spannungsfeld der Kernenergiekontroverse, Opladen 1984, 88 ff.

27 Technischer Prozess und politische Ordnung, Studium Generale 22 (1969), 849 ff., 852.

28 Der Staat der Industriegesellschaft (n. 26), 84.

29 Der Mensch in der wissenschaftlichen Zivilisation (1961) in idem, Auf der Suche nach Wirklichkeit, Düsseldorf 1965, 442 ff., 453; cf., I. Maus, Bürgerliche Rechtstheorie und Faschismus. Zur sozialen Funktion und aktuellen Wirkung der Theorie Carl Schmitts, München 1976, 23 ff.; N. Stehr (n. 24), 422 ff.

30 Cf., M. Kaufmann, Europäische Integration und Demokratieprinzip, Baden-Baden 1997, 300 ff.; M. Bach, Die Bürokratisierung Europas. Verwaltungseliten, Experten und politische Legitimation in Europa, Opladen 1999, 46 ff.

31 Cf., H.P. Ipsen, Europäisches Gemeinschaftsrecht, Tübingen 1972, 1045; Ipsen always kept to these distinctions: cf., Zur Exekutiv-Rechtsetzung in der EG, in P. Badura/R. Scholz (eds.), Wege und Verfahren des Verfassungslebens. Festschrift für Peter Lerche, München 1993, 425 ff.

32 N. 16.

33 Ibid., 73.

34 C. Schmitt, Vergleichender Überblick über die neueste Entwicklung des Problems der gesetzgeberischen Ermächtigungen (Legislative Delegationen), Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 6 (1936), 252 ff

35 Ibid., at 266 (emphasis in the original). - Schmitt's dissolution of the boundaries between executive and legislative powers was at the same time a perversion of Germany's tradition of an bureaucracy-led constitutionalism. This type of constitutionalism had not just the bright side mentioned above (see the references in n. 5); its darker side was the top-down creation of a unitarian German state. For explorations of parallels between this executive-driven process and the unification of Europe cf. S. Puntscher-Riekmann, Die kommissarische neuordnung Europas. Das Dispositiv der Integration, Wien/New York 1998; H.J. Lietzmann, Die konstitutionelle Tradition der EU und die europäische Institutionenpolitik der Gegenwart, in: M.Th.Greven/U. Willems (eds.), Interesse und Moral als Orientierung politischen Handelns, Opladen (forthcoming). But even the darker side of Gemany's non-democratic constitutionalism must not be equated with Schmitt's destruction of any type of constitutionalism in his turn to the Führerstaat.

36 C.R. Sunstein, Nondelegation Canons, John M. Olin Law & Economics Working Paper No. 82/1999, available at http://




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