It's Not Just Our Leaders Who are in a Crisis. Democracy Itself is Failing

Are the following intimations of a global crisis in the legitimacy of western democracy? Ireland's confidential budget plan, unseen by the Irish electorate, is leaked by European finance officials to the German parliament where the proposals are examined by the German finance committee.

In Italy, Mario Monti, the country's unelected new prime minister and a former international adviser to Goldman Sachs, stands in the Giustiniani Palace as head of a cabinet of similarly unelected technocrats. Imposed in place of the corrupt, useless and seedy Silvio Berlusconi to satisfy the "markets", Monti promises what we are told the markets want, and that is "sacrifices".

In Greece, both left and right of the country unite against their own technocrat, the former head of Greece's Central Bank, Lucas Papademos, brought in, too, at the behest of the markets. And in Berlin on Friday, David Cameron, the leader of the Conservative party, which could not manage to secure a mandate to govern the UK on its own, sits down with a German chancellor, Angela Merkel, whose countrymen do not trust her to handle the eurozone crisis.

If the picture of our leaders in the midst of a worldwide crisis is not a terribly inspiring one - politicians with clay feet or in hock to business interest, unelected bureaucrats and politicians lacking support - it is because western democracy itself, by and large, is not looking very pretty either. All of which leads to a question, one that has more commonly been posed by those on the farther reaches of the left, but is now infiltrating the mainstream debate: has the intimate partnership between democracy and neoliberalism, the prominent dogma of our age and one which has shaped most of our politicians, has been toxic to democracy itself?

First, however, an issue of terminology needs to be nailed down and that is what we mean by "democracy" - more specifically "free-market democracy" - a notion, that as the world's economic meltdown has gathered pace, has appeared ever more oxymoronic in Italy, Greece and now Ireland. The dispiriting reality is that the west, even as it has preached the virtues of western democracy to other countries, has been moved inexorably towards an ever more procedural and debased version of democracy.

Concerned more with mechanics of electoral choices offered from a narrow menu of options, with most of its drama concocted by the media, democracy under the aegis of the markets has become, as both political theorists and those protesting on the streets have attested, ever more distant from notions such as social justice and equality, with less participation, not more.

Over recent decades, the mania for deregulation, particularly of the financial markets, has diminished scope for action in the sphere of international politics and economics, transforming politicians from leaders to a species of tornado-chasers who have, since 2008, dashed from crisis to crisis.

And where politicians once stood offering their visions, albeit not ones that all could agree with, even the business of politics itself has become victim to the forces of the market either through focus groups or, as seen more recently in the UK, through stunts such as e-petitions which are already threatening to turn policy-making into a kind of cheap and transitory transaction.

We should not, perhaps, be that surprised that the current economic crisis has accelerated already emerging problems in our democracy. As early as 2008, when the economic crisis began, the Economist Intelligence Unit voiced its concern that "the recent halt in democratization" could turn into a retreat. Three years on, the concern is not over how fast democracy is spreading, but what the crisis has done to established democracies.

There were others raising the alarm closer to home. Barely noticed at the time, a prescient warning was delivered to the Council of Europe by the rapporteur for its political affairs committee in 2009 which warned in explicit terms of the dangers democracy was facing in the midst of the crisis, not least through "highly centralized executive decision-making and global negotiation mechanisms with little parliamentary control, insufficient transparency and without opportunities for citizens' participation". The report also warned of a growing lack of interest "in the current institutionalized procedures of democracy and a crisis in representation", noting election turnouts "in free fall" in most European countries.

The center of the crisis for democratic legitimacy has been the point at which all of these trends have collided. The west's political parties, dangerously in thrall to the arguments of a privileged and interested financial class, long ago lost the ability and desire to criticize the self-serving nostrums delivered by the City, even as they have demonstrated a shocking complacency at the destructive risk neoliberalism has entailed. Although that has changed somewhat in the last year, with politicians on both left and right recognizing the necessity for a more values-driven politics and economics, these calls come after the damage has been done.

If damage has been visible in the developing world for some time, what has shocked many Europeans in the recent crisis is how the worst effects of neoliberal policies have been repatriated to Athens and Rome with the same demands .

What's more, national governments, even supra-national political groupings, have struggled when confronted by the destructive failure of truly global mechanisms such as the world's banking system and the bond markets. It has not only been government but democracy itself that has struggled with the markets - but for a different reason. Democracy is a conversational process that moves at a human speed. The deregulated interlocking financial systems we have created, however, instantly arbitrate political decisions from sidelines like spectators at the Coliseum with a thumbs up or a thumbs down that is visible in market movements and bond rates.

But if our politics is failing, it is not enough to blame a small elite, whether from the world of politics or finance. The crisis is located at a far deeper level, in our own acceptance of a series of implausible economic propositions even as populations in the west disengaged from political involvement. Housing bubbles, both in Europe and the US, have been looked upon as cashpoint machines, regardless of the corrosive social cost. Share ownership, including through pension funds, has created a rentier mindset, reflected in the character of the politicians we have too often elected, men and women who see politics as part of a boutique career, not as a passionate calling.

We abrogated our engagement in the democratic process to politicians who abrogated influence to an unaccountable system as part of a pact that saw us happy as long as we were relatively comfortable. With that arrangement breaking down, we discover we have given up more than we bargained for.