The Limits of Limiting Democracy

The intellectual and institutional architectures built around democracy are under pressure – and evolving. In Germany, the fiscal constitution was reformed in March of this year and a commission to investigate further reforms is scheduled to start its work this summer. In Europe, the recently reformed Stability and Growth Pact is undergoing a stress test in a context of war and national policy shifts. In the United States, the White House is questioning the independence of monetary policy.

Historically, democracy has an ambivalent reputation: Plato described it as both the freest and the most unstable of governments (The Republic, Book 8). And indeed, democracies have been threatened not just by oligarchic excess or aggression from without, but also by instability and democratic excess within. There is therefore a prima facie case to impose limits on democracy to better carry democracy forward. But how far and in what ways can democracy be limited before it loses its democratic nature?

In light of the importance and urgency of this question, we co-organised an international and interdisciplinary workshop at the University of Mannheim. Speakers included Stefanie Egidy, Stefan Korioth, Philipp Kriele-Orphal, Philip Manow, Tobias Müller, Alec Walker, Ruth Weber, Jonathan White, and Tim Wihl. What emerged were lessons learned and many open questions to explore.

Keeping categories sharp

A first lesson is the importance of precise categories. Democracy and liberalism, to state the obvious, are not identical. Liberal democracy aims at a combination of the two. This justifies certain limits to “pure” democracy – though it is far from clear what “pure” would mean in practice. These limits, however, may be different from those deriving from a desire to protect democracy against its own instabilities. Making clear distinctions here helps to identify the reasons that justify – or fail to justify – limits to democratic decision-making.

A closely related conceptual question is the distinction between internal and external limits: how, if at all, can such limits be meaningfully differentiated? Is the key factor intention, such that internal limits are those aimed at preserving democracy over time, while external limits are imposed to protect liberal values or other, non-democratic values against the possibility of democratic excess or tyranny of the majority? Or is the distinction better be understood in terms of process, either regarding the institution of the limits or their revisability? Or is there another way to draw this distinction? Another question arises: to what extent can external limits be internalised? That is, can limits originating from outside the democratic process – for example from bond markets – be incorporated into a normative system of law?

A further conceptual point concerns the definition of the demos as an important and controversial background limit on democracy. Today, weighty causal processes act across national legal boundaries, most emblematically in the areas of climate change and economic globalisation. This speaks in favour of a wide interpretation of the appropriate demos for contemporary democracies. However, the importance of shared languages and norms for public deliberation speaks in favour of more restrictive interpretations of the appropriate demos. Balancing these considerations emerges as a vital aspect of how and where to draw limits to democracy.

Credible commitments across time

A second lesson concerns the centrality of time and the question of credible commitment. Path dependencies emerge as an essential, inherently historical, and ambivalent category: while path dependencies offer the possibility for democracies to take lasting decisions – to make their own history by choosing a path to embark on –, they also imply that some decisions are never reversible, but only revisable. This creates the risk of current generations narrowing the set of options available to future generations (see BVerfG climate ruling and its reception).

This places the search for future-proof concepts of constitutional law front and centre: how can the agency of future generations be protected, without unduly restricting the present, and without laying the dead hand of the past on the agency of the future? (How) can constitutions offer material guidance, without the risk of ossification?

The crux of this challenge lies in the tension between stability and adaptability. If a protection of the future requires limits on the present, then these limits need to be effective and resistant to override by simple majorities. But if they are resistant to revision, then future decision-makers may find themselves fenced in by old limits that are no longer appropriate. Consider a case where countermajoritarian restrictions – say central bank independence or constitutional fiscal rules – were introduced in response to specific historical circumstances – say excessive inflation or unsustainable fiscal deficits. Now consider a situation where, one generation later, changing circumstances call for policies that conflict with these limits, such as higher public deficits to address chronic macroeconomic imbalances, or cheaper central bank financing for green investments. Where a sizable minority benefits from maintaining the old limits and succeeds in blocking their revision, majorities of the next generation may experience those past limits as a frustrating and no longer legitimate disempowerment.

In this context, the duration for which limits are imposed on majorities becomes crucial. Instruments like sunset clauses (such as incorporated into the EU’s Own Resources decision) offer a concrete example of how time-bound constraints can balance stability with adaptability.

The same considerations raise a deeper question: can democracies credibly commit in the first place? On the one hand, the very essence of democracy is to keep the future open for revision. This renders any credible commitment – other than those arising from predictably stable preferences among the electorate – anti-democratic. On the other hand, in practice, when constitutional rules clash with majoritarian political goals, the rules often turn out to be more flexible than their framers intended. Politics always finds a way. This was arguably the case with multiple (West-)German constitutional fiscal rules, even before the latest reform of the debt brake in March 2025.

And do democracies even need credible commitment? Just because decisions can be altered in the future – revised, not necessarily reversed – does not mean that present decisions are meaningless. If political practice suggests that constitutional clauses may only be parchment barriers when seriously challenged, it also shows that simple majority decisions can last. Turns to fiscal consolidation, for example, often survive a change in government.

Justice, history, and federalism

Three specific perspectives add further food for thought. In the area of fiscal policy, distributional justice as a key lens reveals trade-offs between taxation and the welfare state, with the former driven by an “ability-to-pay” logic, the latter by the principle of needs. Debt and macroeconomic steering bring additional distributive questions to the table: both debt-financed unproductive spending and austerity-driven under-investment can burden future generations. Or, where fiscal policy is used to run the economy hot, tighter labour markets can render the market distribution of income more egalitarian. Preventing this via a constitutional balanced budget rule, in contrast, can have the opposite effect – depending on the willingness of international markets, and especially the US, to absorb the excess production that cannot be sold at home. Whether balancing these competing distributive considerations via a fixed constitutional frame is possible – and/or desirable – remains an open question.

Historical analyses reveal additional aspects. Again focusing on fiscal questions, 19th century German constitutional history shows that while fiscal rules were always a part of the German constitutional tradition, they were originally intended as a tool to empower legislatures by placing limits on monarchical executives. This is no longer their effect: today, in political practice, fiscal rules empower the executive (and the finance ministry in particular) against the legislature, due to the executive’s superior technical knowledge, which allows it to decide how tightly the rules bind and for what ends exceptions apply. The 1969 reform of West Germany’s Grundgesetz brought the role of federalism to the fore, both as a reason for fiscal rules and as a complication of their functioning.

This is highlighted by a third perspective: federalism and multi-level politics prove essential to understanding how and why democracies impose and accept limits on themselves. The dysfunctions of West German federalism were a key reason for the 1969 reform; and worries about unwanted redistribution between EU and especially Eurozone member states are a well-known driver of European constraints on national fiscal policy. In practice, German constitutional rules shape European discussions, with potentially problematic outcomes: rules that are fit for Germany may not be fit for Europe as a whole, even though both national and European fiscal rules have important distributive outcomes.

Re-democratising (the discourse about) public finance

Speaking about “limits on limiting” democracy shifts the focus to the desired leeway or margin for democratic decision-making, i.e. the scope for its agency. While democracy, again in Plato’s words, is the most unstable form of government, it is also the freest.

In the area of public finance, understanding both the idea and the constitutional principle of democracy as a guideline might lead to the following: fiscal rules should not be too rigid (“over-constitutionalised”). Internal limits to democratic discourse and decision-making require strong justifications. At the same time, fiscal rules may legitimately aim at ensuring that sufficient freedom and leeway remain for democratic decision-making in the future. The Bundesverfassungsgericht referred to the principle of democracy in the context of Eurozone liabilities, when it held that the budgetary sovereignty of the national parliament sets limits on the institutions, bodies, offices, and agencies of the European Union. Squaring these competing considerations proves difficult in practice: it is both excessive expenditure (or insufficient revenues) and investments left unmade that can impair future budget autonomy and restrict future democratic processes.

More broadly, trust in the democratic process requires an open and transparent debate on what limits to the democratic discourse can be justified – and why. Should they be grounded in concepts of distributive, retributive or procedural justice? In principles of federalism? In response to time inconsistencies, conceptions of sustainability or economic constraints? If so, they need to be made transparent in the process and discussed on the basis of interdisciplinary knowledge. Or should they be grounded in the above-mentioned ideas of safeguarding the democratic process itself? It is questions like these that must be addressed when it comes to re-thinking fiscal frameworks at national, European, and international levels.