Referendum? No referendum? A special parliamentary vote? A unity government? Greek prime minister George Papandreou doesn’t know what to do. Which is not surprising. The Greek debt crisis now exposes the fundamental weakness of the European Union—its democratic deficit.

From its beginnings in the early 1950s as a common market of coal and steel, post-war efforts to unify Europe have been based on the presumption that interlocking economic interests would lead to a new and harmonious international system. As Robert Shuman, the French foreign minister who designed this first common market, once observed, the aim was to “make war not only unthinkable but materially impossible.”

In 1979 elections were first held for a European Parliament, an exercise that few took very seriously because it was a body of precious little consequence. But the Maastricht Treaty in 1992 beefed up the authority of the European Parliament, created the European Court of Justice, and most significantly set in motion the process of monetary policy that led to the Euro, which replaced national currencies in 2002.

The outcome has been a supremely complicated system of governance that layers EU bureaucracies on top of the political systems of each member state. Before the financial crisis of 2008, this complexity tended to be more a source of amusement than affliction. Yes, some were troubled as the European Court of Justice overruled local legislation. Genuine self-rule seemed to be draining away, replaced by administration from afar. But for the most part we just chuckled when reading news stories about an EU commission that categorizes cheeses and regulates the size of plum tomatoes.

The Greeks are not laughing these days. On the contrary, they are rioting. The reason is simple: the social contract in Greece is being ripped up and a new one is about to be imposed by a consortium of international financial institutions coordinated by EU bureaucrats, the same ones who said, in effect, “Entrust your future to us, and you will be comfortable and secure.”

Policy experts and economic managers can avoid—or at least soften—economic difficulties. But to more reliably fulfill their promises they need more resources, greater authority, and wider reach. Thus the basic dynamic of the last twenty years in Europe: a transfer of sovereignty—especially economic sovereignty—to international experts.

It didn’t happen without hesitations. Danish voters notoriously gummed things up by rejecting the Maastricht treaty the first time it was put to a vote. French voters narrowly approved, and England, while part of the EU, has remained outside the monetary union.

However, these were exceptions. For the most part Europeans accepted the new social contract as a natural extension of the old social democratic approach in which national authorities mediated between economic interests to ensure social stability and prosperity. If German and French economic ministers could manage relatively productive and stable economies, balancing the needs of labor and capital and formulating good monetary policies, then why not expand upon their success by bringing the entire Eurozone under the dominion of policy experts?

At first it worked very well for the Greeks. As promised, the policies of the European Union—which included access to low interest borrowing under the widespread assumption that the Eurozone would rise and fall together—allowed Greece to remain insulated from threatening economic realities, not the least of which were its own out-of-control government deficits subsidizing middle class life.

But then came the financial crisis of 2008. Greece teetered, and the EU came to the rescue with bailouts. The Greeks now must drastically cut spending and raise revenue. This amounts to a change in the social contract. The nation was promised that membership in the EU would bring prosperity and stability. Now they are getting “austerity,” a clinical word that in twenty-first century Europe (and America for that matter) means the end of subsidies to the middle class.

Thus George Papandreou’s dilemma. Is he in fact the leader of a sovereign state? Perhaps not. Meanwhile, lacking political legitimacy, the technocrats and economic managers can only threaten to withdraw their benevolent rule (e.g., kick Greece out of the EU), which if you are a middle class Greek might sound more like a reward than a punishment. And in any event, kicking out Greece puts Portugal, Spain, and Italy in a precarious position. So the crisis becomes political and not just economic. Who can legitimately demand sacrifices—and make them stick?

The candy man doesn’t need political support. When you are giving out goodies, nobody asks what gives you the right. Thus we come to the nub of the problem. The EU economic managers have run out of candy, and without political legitimacy, the central bankers cannot impose any lasting (and inevitably painful) solution to the sovereign debt crisis. They cannot impose austerity on the Greeks (or the Portuguese or Spanish or Italians). Nor can they force the frugal Germans to subsidize everybody else.

The architects of the European Union had a plan. They believed that if they could create a zone of common economic prosperity, then slowly but surely a common political culture would evolve to nurture and protect the shared wealth-making machinery. It was in this sense the finest expression of the grand dreams of modern liberalism, which imagines itself in possession of new tools of scientific management of human affairs, tools that can allow us to transcend the passions and irrationalities of political life (“making war unthinkable”).

As the EU unravels, we may find ourselves ruing this dream. I fear that, having neglected the need to build political capital, Europeans elites will find themselves largely impotent. What will fill the vacuum? Modern European history is not reassuring.

R.R. Reno is Editor of First Things. He is the general editor of the Brazos Theological Commentary on the Bible and author of the volume on Genesis. His previous “On the Square” articles can be found here.

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