What does the protracted financial crisis reveal about the political viability of a unified Europe? Does it confirm the oft-discussed “democratic deficit,” the pervasive anxiety about what Hans Magnus Enzensberger has recently called “Brussels, the gentle monster”? Is it proof that the economic, cultural and social differences among the twenty-seven European Union member states are impossible to reconcile, that the cost of EU cohesion is letting the strongest “core nations”—Germany and France—lord it over the economically weaker, dispirited member states? A decade ago, legal scholars and intellectuals debated whether a Europe-wide democracy required a common cultural heritage rooted in ethnicity, religion and national history, or if shared ethical values, common institutions and social ideals would suffice as transnational bonds. Now the question is whether transnational European democracy is feasible at all.

Jürgen Habermas, Germany’s most famous contemporary philosopher, first contemplated the possibility of the European Union’s collapse in May 2010, when German Chancellor Angela Merkel dithered for weeks over the EU’s bailout of Greece as she tried to secure victory for her party, the Christian Democratic Union, in state elections in North-Rhine Westphalia, a CDU stronghold for six decades. For Habermas, the jarring disproportion between Merkel’s domestic politicking, which proved to be in vain, and the seriousness of the debt crisis revealed the absence of a legitimate institutional mechanism for a Europe-wide solution to the financial crisis. It also exposed the faltering of “ordoliberalism,” the peculiarly German economic policy established in the 1950s, whereby the state reconciles the imperatives of social welfare, efficiency and orderliness to ensure the optimal performance of the market. Administrative and technical adjustments proved inadequate to maintaining stability. In a flurry of articles and interviews that appeared in the German media, Habermas called the Greek debacle a “clear warning of the post-democratic road taken” by Merkel and French President Nicolas Sarkozy (who in May lost his re-election bid), a consolidation of power in the hands of a few government leaders.

A few months earlier, when the government of Prime Minister George Papandreou collapsed in Athens amid a continental panic over his call for a national referendum on the Greek bailout plan negotiated in Brussels, Frank Schirrmacher, editor and co-publisher of Germany’s most influential newspaper, the Frankfurter Allgemeine Zeitung, published an angry op-ed titled “Democracy Is Junk.” Schirrmacher argued that the Greek crisis had laid bare the way international financial markets and unelected Eurocrats were not accountable to the democratic majorities of those EU member states likely to suffer the most from economic collapse. Habermas concurred, declaring a few days later in the FAZ that Schirrmacher had “hit the bull’s-eye” when he diagnosed the referendum affair as an “abandonment of European ideals.”

The Greek crisis changed the “business model” of the EU, which, after the failure in Brussels, turned to the “cramped mentality” of “Merkozy,” who in essence acted as lobbyists for the national interests of the strongest member states. The go-it-alone policies of Germany and France not only jeopardized the economic structure of the EU but also fractured the democratic foundations on which a united Europe might be based. In November 2011, Habermas wrote in the Guardian that Merkel and Sarkozy “appear to have settled on some sort of compromise between German economic liberalism with French statism…. They want to extend the executive federalism of the Lisbon treaty into an outright intergovernmental rule by the European Council.” In the foreseeable future, the imperatives of markets and national budgets would be managed independent of any democratic legitimation; using the threat of sanctions and other types of economic retribution to coerce disempowered national parliaments into accepting back-room agreements had become the only means for managing the crisis. The world’s first transnational democracy, Habermas worried, was being bullied into “post-democratic rule.”

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Habermas’s most recent book, Die Verfassung Europas, has caused a stir in Germany since its publication by Suhrkamp in November; it has just been published here in an English translation as The Crisis of the European Union. But its appeal in Germany has rested not so much on Habermas’s justified indignation about the EU, but instead on his tempered optimism about the future of democracy in Europe. Die Zeit called Die Verfassung Europas “the book of the hour”; Der Spiegel, “a philosopher’s mission to save the EU”; and the Frankfurter Allgemeine Zeitung, a manifesto for “a second chance for a united Europe.” The near unanimous enthusiasm of reviewers probably reflected less a consensus about the book’s arguments than sheer relief, given the daily bad news from Europe, that Habermas had written a hopeful book. He affirms his longstanding commitment to a cosmopolitan Europe in which the dynamics of global capitalism can be remastered beyond the nation-state, at a supranational and global level, and he sees a radically altered European Union as a model—indeed, as the precursor—for a constitutionally sanctioned cosmopolitan world order based not on utopian illusions but on realistic assessments.

Habermas places much of the blame for the EU’s turmoil on the changing role of Germany in a reconfigured Europe. Since its unification in 1990, Germany has gradually assumed the role of Europe’s major economic and military power, abandoning the restrained, post-1945 West German approach of promoting economic coordination and subordinating the unbounded competition between states to the rule of law. After World War II and the Holocaust, Habermas argues, the Bonn Republic was able to return to the circle of civilized nations only because the leaders of both parties—from Konrad Adenauer to Helmut Kohl in the CDU, and from Willy Brandt to Helmut Schmidt in the Socialist Democratic Party (SDP)—understood that the country had to persuade its European neighbors that the mentality of its population had irrevocably changed.

Whatever omissions this overly affirmative postwar history might require of Habermas, who himself spent much of his early career combating illiberal threats to the democratic public sphere in West Germany, he takes great pride in the fact that his generation—“the ‘58ers,” as they are sometimes called—assumed responsibility for West Germany’s moral and political reconstruction. This demanded, above all, an unwavering orientation toward the democratic West and a commitment to making remembrance of the Holocaust a national obligation. West Germany’s antidote to the nationalism, ethnic homogeneity and chauvinism that infected recent German history was what Habermas famously called “constitutional patriotism,” essentially the sundering of citizenship from cultural and ethnic nationalism.

For Habermas, the big difference is that, with the election of the SDP’s Gerhard Schröder in 1998—and continuing apace with Angela Merkel’s chancellorship since 2005—the Berlin Republic has been governed by what he calls “a morally unambitious generation” characterized by shortsightedness and cynical calculation. This argument helps explain Merkel’s preference within the European Union for government by small coteries of elites and their cliques of fiscal and managerial tacticians. Consequently, Habermas writes, a “European Germany has gradually given way to a European Union shaped by Germany.” Yet Habermas’s account of postwar German history ignores a significant dimension of postwar European politics—including the founding of the EU—outlined by the political theorist Jan-Werner Müller: a distrust of popular sovereignty and the exaggerated role afforded to executive power and the courts, which has also given the EU a distinctly German complexion.

During the early 1990s, Karl-Heinz Bohrer, the influential editor of the monthly journal Merkur, argued that Habermas’s emphasis on constitutional patriotism, his suspicion of distinct national identities and his insistence on Europe’s “painful history” was rooted in postwar Germany’s particular political culture. Bohrer coined the term “Euro-provincialism” to characterize Habermas’s definition of European identity as a moral “learning process,” and argued that his suspicion of a national literary and artistic culture did not necessarily apply to the rest of Europe. With the gradual expansion of the EU to encompass a far larger swath of the continent than the population of its six original core members, the different histories and memories of World War II—and, in the case of Eastern Europe, of Soviet occupation—rendered obsolete much discussion about a single European memory and a common European cultural heritage. Significantly, in The Crisis of the European Union, Habermas mostly abandons all talk of history as a “learning process” and a fount of European values. Instead, he turns to a constitutional and political conception of identity grounded in social-democratic compensations for the uncontrolled vicissitudes of the market, as well as in open-ended democratic procedures institutionalized through an accessible and cross-national public space for debate and discussion.

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Habermas argues in a core philosophical chapter of The Crisis of the European Union that all basic rights, dating back to the seventeenth century, are predicated on the notion of human dignity. Though human dignity was not explicitly part of the vocabulary of human rights until after World War II, the principle remains “the explosive force behind concrete utopia,” he writes, following Kant. Human rights specify only the legal components of a broader concept of human dignity. Human rights are therefore the product of a synthesis of rational morality and positive law, and it is this fusion that “makes the citizens of our own, halfway liberal societies open to an ever more exhaustive realization of existing rights and to the ever-present acute danger of their erosion.” After World War II, he explains, a process of international law was designed to prevent, limit and resolve armed conflict—in short, to “domesticate” relations between states by removing the threat of violence and promoting the supranational capacity for action. The novelty of this innovation was to allow the monopoly of force to remain with member states while requiring them to submit to a new supranational and constitutional legal order.

The danger posed by the current crisis, Habermas writes, is that the narrow focus on the banking and debt emergency obscures the larger political dimension of the EU envisioned by its founders. Consequently, governments caught between the imperatives of banks and ratings agencies on the one hand and increasingly frustrated populaces on the other have opted for extralegal, nonbinding, undemocratic agreements. Because the EU has been planned and monopolized by political elites since its incarnation, it’s plausible that right-wing populism, with its pretense that “the state” is one big family rooted in blood and land, could control the definition of the democratic sphere—a development that would block the formation of any political will beyond national borders, even as immigration, the Internet and mass tourism have all made those borders more porous. Because the difficult political questions lie outside the scope of a handful of leaders and experts, Habermas argues, the central problem facing the EU is how to enliven an expanded context for civil society.

For this reason, Habermas sees the current crisis as an opportunity to reassess the European project, which, he insists, is “not merely an institutional fantasy.” Times of crisis, he writes, require more than conventional wisdom or muddling through. What makes the cosmopolitan idea plausible in Habermas’s view is that it doesn’t rely on an illusory notion of the perfect society, but instead grounds the ideal of a just society in existing institutions and in constitutionally sanctioned democratic principles. The European Constitution, enshrined in the 2009 Treaty of Lisbon, is “not so far from the form of a transnational democracy as many of its critics assume,” Habermas writes, despite regarding the agreement as insufficient because it does not draw what he calls the “correct conclusions from the unprecedented development of European law over the past half-century.”

The 2010 crisis shattered the illusion, born of “ordoliberalism,” that Europe could avail itself of a depoliticized political and economic mechanism that could stabilize the eurozone without recourse to a fully democratic union. The achievement of the European Union was to secure supranational rights over the national right to a monopoly of force, making the multidimensional commonwealth a legal order lacking both a monopoly of force and final decision-making power over its sovereign states, all of which must unanimously agree to any change in the basic treaty. Habermas sees this weak structure not as a deficit but as a potential advantage, one that takes “important steps towards the legal domestication of the violence at the core of the state,” even as “the constitution of the supranational political community sets itself apart from the national organizational institutions of its members.” In short, the EU is a polity without a state.

While critics have typically complained that the EU does not have the same legitimacy as nation-states because there is no such thing as a European “people,” Habermas argues that the ethical and political self-understanding of citizens in a democratic community needn’t be rooted in a historical or cultural essence. Simply put, citizens do not have to “feel” that they belong together culturally or ethnically to act in a democratic manner and experience solidarity with their neighbors, especially beyond their borders. It is enough that they share a common set of ethical and civic values and participate in a set of institutions that enable them to communicate and debate. Historically, constitutional democracy emerged from local, dynastic and national entities, he explains, and there is no reason this process should not continue beyond national boundaries. Granted, the European Commission presides over a limited government apparatus, but this role notwithstanding, the “expectation [is] that the growing mutual trust among the European peoples will give rise to a transnational, though attenuated, form of civic solidarity amongst citizens.” Habermas argues that beginning with the constitutional anchoring of rights, first in nation-states and subsequently in international law, there is “a rhythm of development” that extends from the elimination of warfare to the institutional cooperation of “domesticated” states.

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There is a wide gulf between Habermas’s despair at the growing rule of the “potentates” and his competing vision of a supranational constitutional democracy. The current crisis is hardly winning Europeans over to the eurocrats in Brussels and Strasbourg, and venues for the expression of the popular will are few. Nor do the decisions of the European Parliament have the force of international law. But for Habermas, there are still three reasons that the European Union points the way to a cosmopolitan community. First, the more populations that engage in the deliberative process of governing beyond the nation-state, the more likely it is that normative criteria will emerge and find general assent. Second, global citizenship, like European citizenship, does not require a global ethnicity or national identity: citizenship can just as well be based on shared principles, such as freedom of thought, political integrity, justice and the rule of law. Third, as in the EU, individuals simultaneously legitimize the new polity as citizens of their respective states and as citizens of the new commonwealth. States would no longer be fully sovereign powers, but would regard themselves as members of the international community. Because of its transnational character and the need for new communicative structures, the solidarity of world citizens would no longer be “embedded in the context of a shared political culture.”

Habermas does not imagine a global republic but rather a supranational association of citizens and states that is based on a divided sovereignty, as with the EU. Divided sovereignty demonstrates that a change in perspective from classical human rights law to the political constitution of the world society is no longer unthinkable. Ecological and technological risks do not confront single states or coalitions of states alone, but can be mastered only through the cooperation of world powers that can develop globally effective norms and procedures.

The new polity would absorb the UN Security Council and the international courts (like the ICC), develop an expanded legal basis for human rights policy, and extend the system of international law to include matters that take into account moral issues (what Habermas calls “global domestic politics”). Because all world religions and cultures condemn human rights violations and wars of aggression, a supranational polity need only apply “intersubjectively shared” moral principles and norms. From this remote perspective, we need not concern ourselves with the limited efficacy and political fractiousness of existing supranational institutions. For Habermas, the narrative of the “civilizing power of democratic constitutions” at the level of an “international community” would culminate in a “cosmopolitan community.”

In his preface to Perpetual Peace: A Philosophical Sketch (1795), Kant, Habermas’s distinguished predecessor in all things cosmopolitan, offered this brief instruction for users: “If a practical politician assumes the attitude of looking down with great self-satisfaction on the political theorist as a pedant whose empty ideas in no way threaten the security of the state, inasmuch as the state must proceed on empirical principles; so the theorist is allowed to play his game without interference from the worldly-wise statesman.” Ironically, Habermas’s brief for a renewed EU as the basis for a transnational democratic order is in no small degree a measure of the EU’s incapacity to deal with fundamental issues of immigration, freedom of movement and, perhaps more serious, the drift toward authoritarianism, especially in Hungary. But the particular charm of his utopian vision is its genesis in a passionate and combative engagement with the dispiriting state of today’s European Union. Sometimes the theorist can play his game while keeping an eye on “the worldly-wise statesman.”

Sarkozy is now gone from the Élysée. Since May, Greece has had not one but two elections with no clear outcome, and Spain’s precarious financial position threatens to undermine further the political architecture of Europe. These developments hardly diminish the force of Habermas’s argument. The mismanagement of the fiscal crisis by the EU elite has not only eroded its own legitimacy in virtually all member states, but has also made the European Parliament less relevant and fueled discouragement with democratic politics throughout Europe.