Freedom As Non-Domination in the Economic and Monetary Union
Authors:   , Merlo Stefano 
Published: January 2025

This dissertation analyses the Eurozone through the lens of republican political theory, offering a framework to assess the institutional shortcomings of the Economic and Monetary Union (EMU) and proposing reforms to enhance democratic control and ensure reciprocal non-domination among its members. By integrating theoretical insights with a critique of existing governance structures, the dissertation addresses the tension between macroeconomic sovereignty and collective decision-making within the Eurozone.
Chapter 1 sets the stage by applying the normative vocabulary of republicanism to the phases of market turbulence in sovereign debt markets during the Eurozone crisis. It highlights how the institutional preconditions for undominated sovereignty were absent in the Eurozone, allowing self-fulfilling market movements in sovereign bond markets to dominate weaker Member States. By engaging with contemporary debates on the sources and sites of domination, as well as the republican stance toward competitive markets, the chapter argues for the establishment of supranational institutions to foster both private and public risk-sharing mechanisms.
Building on this diagnosis, Chapter 2 explores how the democratic management of macroeconomic externalities within the EMU requires a departure from the legal entrenchment and technocratic administration of fiscal rules. Instead, the fiscal constitution of EMU should serve as a tool to guarantee reciprocal non-domination among European citizens and peoples. This republican goal can be achieved by agreeing on a core set of fiscal principles, which are then interpreted politically by the Council and the European Commission. To prevent these interpretations from becoming arbitrary, a ‘dual contestatory system’ is proposed, wherein citizens exercise control not only through their national parliaments but also over collective decisions made at the EU level.
Chapter 3 shifts the focus to the role of fiscal councils in managing public debt, addressing their democratic credentials from a republican perspective. The chapter critiques Philip Pettit’s strategy of depoliticization as a means to preserve citizens’ nondomination. Instead, it argues that citizens and parliaments must be equipped with the informational resources necessary to hold the executive accountable. Borrowing from the literature on deficit bias, the chapter demonstrates how information asymmetry between executives and parliaments can lead to the arbitrary use of public power. Fiscal councils, rather than managing public debt directly, should function as tools to reduce this asymmetry, thereby enabling citizens and parliaments to exercise effective republican control over the executive.
Finally, Chapter 4 addresses the broader question of whether macroeconomic sovereignty, as conceptualized in republican terms, is compatible with Eurozone membership. Effective macroeconomic sovereignty is conceptualised as the balance between four ‘power-countering strategies’: reducing asymmetrical power, avoid centralised power, avoid entrenching substantive rules and commitments, maximise citizens’ participation. Through a normative analysis of the evolution of EMU governance, the chapter reveals how successive institutional innovations and recent proposals have neglected one crucial strategy: enhancing citizens’ democratic participation at the EU level. This neglect has undermined the compatibility of public power exercises with citizens’ status equality. To address this, the chapter proposes a ‘system of dual partisanship’ in which national and European parliamentarians coordinate their activities.