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The European Economic Constitution After the PSPP Judgment: Towards Integrative Liberalism?

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The European Economic Constitution After the PSPP Judgment: Towards Integrative Liberalism? German Law Journal (2020), 21, pp. 1058–1077 doi:10.1017/glj.2020.64 ARTICLE Special Section: ‘The German Federal Constitutional Court’s PSPP Judgment’ The European Economic Constitution after the PSPP Judgment: Towards Integrative Liberalism? Matthias Goldmann* (Received 23 July 2020; accepted 23 July 2020) Abstract This article argues that the PSPP judgment effectively buries the era of financial liberalism, which has dominated the European economic constitution for decades. It raises the curtain on a new political para- digm, which I call “integrative liberalism”. Whereas the financial crisis put financial liberalism under strain, the development since then has been contradictory, torn between state intervention and market liberalism, focused above all on buying time rather than finding a new constitutional equilibrium. Now, together with the measures adopted in response to COVID-19, the PSPP judgment paves the way for profound change. Integrative liberalism is characterized by an overall shift from the market to the state, mitigating the post-crisis insistence on austerity and conditionality. Contrary to the embedded liberalism of the post-war era, integrative liberalism operates in a corrective and reactive mode with a focus on goals and principles, lacking the emphasis on long-term planning. Like every political paradigm, integrative liber- alism ushers in a new understanding of the law. It puts the emphasis on context instead of discipline, and it elevates the proportionality principle. If integrative liberalism is to succeed, however, the democratic legitimacy of the Eurosystem and its independence require serious reconsideration. A. The PSPP Judgment and the European Economic Constitution Considering the storm of negative reactions evoked by the PSPP judgment1 of the Federal Constitutional Court (Bundesverfassungsgericht, BVerfG) both inside and outside Germany, one might wonder whether the judgment is good for anything. The storm, which seems to have taken the judges by surprise,2 results from the fact that the judgment unsettles a whole cluster of delicate issues. It risks destabilizing judicial dialogue,3 which is premised upon the idea of avoiding escalation.4 It also boosts challenges to the primacy of European law in Member States that are *Goethe University Frankfurt and Max Planck Institute for Comparative Public Law and International Law, goldmann@ mpil.de. 1Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], Case No. 2 BvR 859/15, (May 5, 2020), https://www. bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2020/05/rs20200505_2bvr085915en.html [hereinafter PSPP judgment]. 2See Reinhard Müller, “Das EZB-Urteil war zwingend”, FAZ (May 12, 2020), https://www.faz.net/aktuell/politik/inland/ peter-huber-im-gespraech-das-ezb-urteil-war-zwingend-16766682.html. 3Franz C. Mayer, To Boldly Go Where No Court Has Gone Before. The German Federal Constitutional Court’s ultra vires Decision of May 5, 2020, in this issue. 4See Niels Petersen, Karlsruhe’s Lochner Moment?,inthisissue;AnaBobic,Constitutional Pluralism Is Not Dead: An Analysis of Interactions Between Constitutional Courts of Member States and the European Court of Justice,18GERMAN L.J. 1395 (2017); Matthias Goldmann, Constitutional Pluralism as Mutually Assured Discretion: The Court of Justice, the German Federal Constitutional Court, and the ECB,23MAASTRICHT J. OF EUROP.&COM LAW 119 (2016). © The Author(s), 2020. Published by Cambridge University Press on behalf of the German Law Journal. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited. German Law Journal 1059 threatened by a decline into autocracy.5 And it drowns any positive signal the First Senate’s judgment on the Right to be forgotten may have sent.6 Moreover, the PSPP judgment provides credence to the view that the multiple crises the European Union (EU) has confronted over the last decade precipitated a general erosion of the rule of law7—a position that enables the extreme right to posture as the true defenders of the rule of law in the attempt to gain credibility among more centrist conservatives worried about the course of the Union. Doctrinally, the PSPP judgment is based on a critique of the Court of Justice of the European Union’s (CJEU) understanding of the proportionality principle, claiming it should serve as a yardstick not only for the conditions under which the EU may exercise its competences, but also for the establishment that the EU has such competence to begin with.8 On all of these counts, the BVerfG’s methodological approach suggests that it is struggling with pluralism on an epistemic level.9 As if this were not enough, the judgment also casts a shadow over the EU measures adopted or envisaged in reaction to the COVID-19 crisis.10 When taken together, it is easy to see why the PSPP judgment prompted so many to characterize it as the harbinger of a dystopian future for the EU. While I agree with much of that critique, I believe that the future does not look entirely bleak if one singles out one particular aspect of the PSPP judgment. The PSPP judgment marks a sea- change in the evolution of Europe’s economic constitution. It even might represent the first signs of a new politico-economic and legal paradigm that replaces the limbo in which the European economic constitution has found itself since the dawn of the financial-turned-fiscal crisis. While the European economic constitution has often evolved incrementally, the judgment is one of those rare moments in which the evolution becomes palpable: The institution whose self-understanding cast it in the role of the strongest opponent of change has condoned and accelerated the opening of a new chapter in Europe’s economic constitution. This claim derives from a single, apparently marginal paragraph of the PSPP judgment: The fact that the ESCB has no mandate for economic or social policy decisions, even when using monetary policy instruments, does not rule out taking into account, in the proportion- ality assessment pursuant to Art. 5(1) second sentence and Art. 5(4) TEU, the effects that a programme for the purchase of government bonds has on, for example, public debt, personal savings, pension and retirement schemes, real estate prices and the keeping afloat of eco- nomically unviable companies, and—in an overall assessment and appraisal—weighing these 5Stanisław Biernat, How Far Is It from Warsaw to Luxembourg and Karlsruhe: The Impact of the PSPP Judgment on Poland, in this issue; Friedemann Kainer, Aus der nationalen Brille: Das PSPP-Urteil des BVerfG,31EUROPÄISCHE ZEITSCHRIFT FÜR WIRTSCHAFTSRECHT [EUZW] 533, 536 (2020). 6Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], Case No. 1 BvR 16/13 (Nov 6, 2019), http:// www.bverfg.de/e/rs20191106_1bvr001613.html[Right to be Forgotten I]; Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], Case No. 1 BvR 276/17 (Nov 6, 2019) http://www.bverfg.de/e/rs20191106_1bvr027617.html [Right to be Forgotten II]. It is possible to read these decisions against the background of the rule of law crisis in Poland. See Matthias Goldmann, As Darkness Deepens: The Right to Be Forgotten in the Context of Authoritarian Constitutionalism, 21 GERMAN L.J 45 (2020). 7In the context of the refugee crisis: STEPHAN DETJEN &MAXIMILIAN STEINBEIS,DIE ZAUBERLEHRLINGE (2019). 8Mattias Wendel, Paradoxes of Ultra-Vires Review: A Critical Review of the PSPP-Decision and its Initial Reception, in this issue; Ingolf Pernice, Machtspruch aus Karlsruhe: “Nicht verhältnismäßig? Nicht verbindlich? Nicht zu fassen?”,EUROPÄISCHE ZEITSCHRIFT FÜR WIRTSCHAFTSRECHT [EUZW] 508, 511 (2020). 9On the epistemic challenge of legal pluralism, see Sergio Dellavalle, Addressing Diversity in Post-Unitary Theories of Order, GlobalTrust Working Paper Series 05/2015 (2015) at http://globaltrust.tau.ac.il/wps-2015-05-addressing-diversity-in-post- unitary-theories-of-order/. 10Annamaria Viterbo, The PSPP Judgment of the German Federal Constitutional Court: Throwing Sand in the Wheels of the European Central Bank,5EUROPEAN PAPERS (2020); but see Sebastian Grund, Legal, Compliant and Suitable: The ECB‘S Pandemic Emergency Purchase Programme (Pepp), Jacques Delors Center Policy Brief (2020) at https://opus4.kobv.de/ opus4-hsog/frontdoor/deliver/index/docId/3513/file/20200325_PEPP_GrundII.pdf. On the Union’s fiscal recovery plans, see Federico Costamagna & Matthias Goldmann, Constitutional Innovation, Democratic Stagnation?: The EU Recovery Plan,VERFBLOG (May 30, 2020) https://doi.org/10.17176/20200530-133220-0. 1060 Matthias Goldmann effects against the monetary policy objective that the programme aims to achieve and is capable of achieving.11 I argue that this paragraph in the PSPP judgment effectively buries the era of financial liberalism that has dominated the European economic constitution for decades and raises the curtain on a new political paradigm, which I call “integrative liberalism”. The financial crisis put financial liberalism under strain, but the development since then has been contradictory. It has been torn between state intervention and market liberalism, focused above all on buying time, rather than finding a new, viable constitutional equilibrium. Now, together with the measures adopted in response to COVID-19, the PSPP judgment paves the way for profound
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