Complex situations often require us to take a step back for what consultants call the 10,000 feet view. The problems facing the EU these days—from Grexit to Brexit—surely seem impenetrable. A convoluted potpourri of economic, financial, and political crises leaves most observers either completely disengaged or increasingly reliant on their gut feelings. To wrap one’s head around the forces that threaten the European project, it helps to think in very simple categories: exit, voice, and loyalty.
Few theories still prompt real-life insights almost half a century after their publication. Albert O. Hirschman’s “Exit, Voice, and Loyalty” surely falls into this category. Put simply, Hirschman postulated that members who are unsatisfied with an organisation they are part of, can either exit it or try to change its course by voicing their qualms. The ease of exit is very different, depending on the organization; it is considerably less costly to leave a scrabble club than say one’s family or street gang. The easier the exit, the less likely is one to voice concerns, which clearly affects the workings of an organisation.
Hirschman demonstrated his theory using examples ranging from the hippie movement to corporate shareholders. The original idea occurred to him when riding trains in Nigeria. Hirschman found that these were in lamentable conditions, because the people most likely to voice their concerns, were the first ones to switch to buses and trucks. Their exit option was just too easy.
Exiting the EU or the Eurozone involves slightly bigger costs than buying a ticket for the bus instead of the train. Hirschman suggests that the appeal of exit not only increases with the level of discontent about the organization—in this case the EU or the Eurozone—but also with the creeping sentiment of being unable to change it. Only if members are convinced that their using of voice will be effective, will they postpone exit.
This seemingly obvious insight about the necessity of members to have a voice is at odds with the rule-based EU politics most vociferously championed by Germany. If a member country feels that there is no room for maneuver, an exit becomes ever more appealing. Greece is a case in point. Observers across the ideological spectrum criticize the perceived obsession with rules by the creditor nations that silences the Greek voice. Suffocated members are not only likely to exit, but breathing room for a healthy level of skirmish usually improves performance.
In the UK we find both growing unease with the EU and a perception of impotency to change it. Hirschman’s ruminations about exiting from the use of what economists call public goods sheds light on the choice the country is facing in the upcoming referendum. Public goods are non-excludable things like clean air or national defense. Consider the example of parents deciding to send their children to private school. They exit the public school system and thereby give up the opportunity to change it from within. The quality of public education, however, will one way or another continue to impact the life of the parents and children, meaning that a complete exit is impossible.
“Brexit” would mean giving up the ability to change the EU from within. Yet the EU would, almost like a public good, continue to affect Britain on many levels. A recent study by the former UK Foreign Office chief economist Gregor Irwin estimates that the renegotiation of Britain’s trading relations with the EU upon exit alone would take about ten years. The British exit becomes a question of within or without influence, not just of weighing the benefits of a long and costly exit.
Future EU reforms ought to be mindful of a balanced mix of both voice and exit mechanisms. Internal democracy through voice encourages commitment of members and a reasonable threat of exit is likely to pressure organizations for the better. Yet debates about the formal design of the currency and banking union or the EU treaties are only one side of the coin. The other one is of ideational nature and goes largely unvoiced in the current debate.
Ideational integration should at best precede and at least accompany formal economic integration. The founding fathers of the EU counted on economic integration to foster the political integration toward the “ever more closer union” they envisioned. Europe is now learning the hard way that you can’t unify a continent through laws and institutions—a form of shared identity is indispensible. Hirschman, in the most underappreciated part of his work posits that “loyalty holds exit at bay and activates voice”—making loyalty sound like the panacea EUphiles are praying for.
It’s clear that neither lofty political speeches and intellectual evocations of Europe’s shared cultural treasure, nor an economic recovery will be enough to establish loyalty. To foster a European identity—not in the sense of cultural assimilation, but a shared appreciation of the EU’s historical role—a truly European public discourse and education are the most promising arrows in the quiver.
Theories merely provide lenses through which to look at the puzzle at hand. Hirschman’s work provides a valuable perspective: only a proper mix of exit and voice options in institutional design, paired with a sense of European loyalty, will make a political European Union attainable.
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