Friday, 22 July 2016

Housmans

On Wednesday 3 August at 7pm, there will be a discussion of my book The City at Housmans bookshop, 5 Caledonian Road, King’s Cross, London, N1 9DX. See here for this and other events at the bookshop.

Tony Norfield, 22 July 2016

Thursday, 21 July 2016

A Dreadful Waste of Money

'Crowdfunding' has become common in recent years to accumulate small sums of money from many people to achieve a particular objective. So far, so social and, potentially at least, progressive. But what is one to think of the reported 180,000-plus people who have recently joined the British Labour Party at a cost of £25 each, giving it some £5 million? Even with the lower value of sterling, that is a dreadful waste of money.

The Labour Party deserves disdain, at a minimum, even if one were ignorant of its blood-strewn history as a defender of (British) imperialism when in government. In all manner of wars and subterfuges, from the partition of India, to Vietnam, to Ireland, to Iraq and the Middle East in general, the Labour party has been the proponent of, or an ally in, a wide variety of imperial crimes.
An apparently saintly Jeremy Corbyn, embattled leader of the Labour Party, shares the same sins. Apart from being a member of the Labour Party for more than 30 years, he is now a member of the Privy Council. This Council includes senior political figures from all major parties, who are informed about the ill-doings of the British state and pledge not to tell. The oath is as follows:
 
“You do swear by Almighty God to be a true and faithful Servant unto the Queen’s Majesty, as one of Her Majesty’s Privy Council. You will not know or understand of any manner of thing to be attempted, done, or spoken against Her Majesty’s Person, Honour, Crown, or Dignity Royal, but you will let [ie stop] and withstand [ie prevent] the same to the uttermost of your Power, and either cause it to be revealed to Her Majesty Herself, or to such of Her Privy Council as shall advertise Her Majesty of the same. You will, in all things to be moved, treated, and debated in Council, faithfully and truly declare your Mind and Opinion, according to your Heart and Conscience; and will keep secret all Matters committed and revealed unto you, or that shall be treated of secretly in Council. And if any of the said Treaties or Counsels shall touch any of the Counsellors, you will not reveal it unto him, but will keep the same until such time as, by the Consent of Her Majesty, or of the Council, Publication shall be made thereof. You will to your uttermost bear Faith and Allegiance unto the Queen’s Majesty; and will assist and defend all Jurisdictions, Pre-eminences, and Authorities, granted to Her Majesty, and annexed to the Crown by Acts of Parliament, or otherwise, against all Foreign Princes, Persons, Prelates, States, or Potentates. And generally in all things you will do as a faithful and true Servant ought to do to Her Majesty. So help you God.”

Corbyn's principal divergence from this blood-oath loyalty to the British state shortly after becoming Labour Party leader was ... not to kneel before the Queen. Perhaps his knees were playing him up a bit.

My message to those who have already pledged their £25 to the Labour Party, or may do so, is that they would have a much better chance of a positive outcome by betting on a three-legged horse next running in the Grand National.

Still better a reward would be secured by purchasing, reading and reflecting upon an informative book by, admittedly, a right-wing, former Labour Party member, Edmund Dell: A Strange Eventful History, Democratic Socialism in Britain, Harper Collins, 2000. It should be read with critical eyes (what should not?), but this book is well-written, full of enlightening information and is available at much less than the otherwise wasted £25.

Tony Norfield, 21 July 2016

Saturday, 16 July 2016

Commercial Capital and 'Finance'

This note is to record an interesting comment on my new book, The City, and my recent blog post 'Value Theory, Finance & Imperialism' on 3 July 2016, and to give my reply that may otherwise be somewhat hidden at the end of that article.

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Comment from 'Kumiko':
You are on the right track generally as far as the theoretical framework goes. But I'd note that in Vol II, where the analytical assumption of the identity of individual with total social capital is still in place, Marx 1) divides the total productive capital into productive-, commodity-, and money-capital circuits, and regards each independently. Here Marx arrives at the conclusion that the commodity-capital circuit can be excluded from further consideration for the purpose of the analysis, that purpose being the determinations of the sources and destinations of surplus value, the source being found in production, the destination necessarily being found in money under capitalism. But Marx also notes the peculiarity of the commodity-capital circuit in that it is the only circuit of the three to both begin and end "bearing" surplus value. In practice that could give rise to various interesting arbitrage possibilities for independent commerce, once the assumption of identity is dropped.
And that brings me to Vol III Part IV. This is limited to the regard of commercial capital in independent form. Note also Marx's assumption that independent commercial capital is scheduled for extinction in the course of the development of capitalist industrial production. This may be true enough, but the question begged here concerns the *combined* forms of industrial, commercial and financial capital, these being the common social aliases for the three circuits mentioned above. You are correct to dismiss the traditional counter-position of "industry" with "finance" as if these still exist only in independent form. Further, one could go on to critique the classical Hilferding formula for "finance capital" that combines banking with industrial capital as perhaps only applicable to Germany in a certain historical period, as only a specific combination of the three circuits. Even if we agree that modern capital nearly always appears in combined form, we could go on to question the "balance" in the combination of the three circuits, where one or another "dominant", with that dominance also fluctuating with the other circuits over the course of history. And finally we can also question the "inevitability" of the rise to "dominance" of industrial capital, particularly in the three different cases of the United States, Britain and France. Otherwise we would not be speaking of "deindustrialization" today.
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My reply:
I agree with your remarks more than might appear at first sight. My focus in the book (and the logic of the book’s exposition as outlined in this blog post) was on how to understand ‘finance’ in a value framework. I saw this as necessary, given the prevalence of shallow, ‘radical’ critiques of finance that usually boiled down to a call for a regulated capitalism. In other words, I wanted to explain how to understand the evolution of the form of value and the key role of finance in the imperialist world economy. This was the subject of my PhD thesis, from which the book, after much rewriting and updating, was derived.
In the book, I do have a critique Hilferding’s concept of ‘finance capital’, both as being too Germany-centric and as a one-sided, nationally-based understanding of how the form of value evolves. I argue instead to analyse how finance develops in the world economy, in particular the role of financial securities and the banking system, to get a clearer view of how the world works.
I take your point that the ‘commercial capital’ aspect of modern capitalism is also a critical one. My priority in the book was different, but it has been on my mind for a while now that commercial capital deserves more attention. For example, major corporations like Apple, Google, Facebook and Amazon are more in the commercial than the industrial sphere. Most of their activities are buying/selling what other companies produce, or getting advertising revenues from these sales. This is also linked to the financial and market power they are able to use. William Milberg and others have looked at this from a ‘value chains’ perspective; John Smith, in his new book Imperialism in the 21st Century, explains well how this amounts to ‘value capture’ in his focus on the globalisation of production.
The latter point also brings out how commercial capital still depends upon production, and how production companies can turn themselves into more commercial ones by getting others to do the producing in markets that are dominated by the powerful corporations. Even in the late 19th century, Britain was more the ‘warehouse of the world’ than the workshop of the world, with huge revenues from maritime transport, shipping, insurance, trade finance, etc, adding to those from its foreign investments.
Does that show how industry was not the ‘dominant’ force in capital accumulation? Not really. Industry (which Marx considered the main form of productive capital) conditioned the developing role of commerce and finance from at least the early 19th century, moulding it into a form that would suit industrial capital. However, it is true that other developments need to be considered. Marx was wrong if he thought that industry had to be the dominant form of capitalist enterprise, but this does not necessarily follow from the logic of his argument if one allows for the development of the world economy, which he had not fully analysed.
While a huge commercial capital sector (or financial sector) could not exist within a single economy taken out of its relationship with others, it is a different question when a small number of powerful capitalist countries dominate the world economy. Britain, for example, could have an outsized commercial/financial sector because Britain dominated world trade and its surplus value was sourced worldwide, not just from within the national economy. This example can be used to understand what has happened today, where domination of world commerce and finance benefits particular countries that, in value terms, produce relatively little themselves. This is explained more fully in my book regarding finance; analogously this is true of commerce as well today, when others do the producing.

Tony Norfield, 16 July 2016

Wednesday, 13 July 2016

The New PM

Theresa May has just made her crossing the threshold speech outside No 10 Downing Street. It was striking for two reasons.

Firstly, it revealed the shallow understanding of history that characterises these people, as she claimed that the Conservative Party's full name 'Conservative and Unionist' had something to do with uniting all the nations of the UK (and gave the impression this meant peace, love and happiness). In fact, the 'Unionist' bit of the name is entirely due to the title of a political faction among the Liberal Party that opposed Home Rule for Ireland and later allied with the Conservatives, as any speechwriter would have been able to check on Wikipedia.

Secondly, the new PM May made a lot of references to improving social justice, being anti-the privileged few and helping workers. This was a clear appeal to the Brexit working
class! The Tories have shown real political skill at sorting out this stage of the mess.

This is likely to add to the UK Labour Party's turmoil. Unless Boris Johnson becomes the new Chancellor of the Exchequer (announcements of Cabinet posts are due later), Labour has had it in the 'Blairite' mould, since the Tories will look like they can do things better. But Labour is also unelectable in a more 'radical' mode, given the nature of the British working class.

Interesting times ahead.

Tony Norfield, 13 July 2016


Saturday, 9 July 2016

BREXIT, the City and British Politics

I was interviewed by the Argentine magazine Ideas de Izquierda about BREXIT, the City and British politics last week. The interview will be published on their Spanish language website in a few days, and the English version is available now on the website Left Voice.

Tony Norfield, 9 July 2016

Sunday, 3 July 2016

Value Theory, Finance and Imperialism


The following text consists of notes from a lecture that I gave in London on 27 June at an IIPPE conference on ‘Imperialism Today’. This set of notes is in the form of bullet points, ones that I elaborated on in the talk and discussion. To that extent, they will not necessarily be completely clear to new readers. But I do not plan to extend these into a full article. Instead the notes are a summary of the underlying value logic that is part of what is explained more fully, discursively and straightforwardly, with examples, in my new book The City: London and the Global Power of Finance. I hope these notes will help as a concise summary of my developed argument, and also give some guidance points for others interested in drawing links between Marx’s theory of value and contemporary financial developments.

Tony Norfield, 3 July 2016
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1. What is Imperialism?

Marx showed how capitalism develops a world economy.
‘Imperialism’ describes a stage when particular countries cannot be understood outside of their world relationships.
Focus of analysis: examine how social relations are shaped by the capitalist world economy.
Example: the US$ is ‘world money’, given the international power of the US economy, not just the local US currency.
Lenin also formulated how economic and political perspectives must change with the emergence of imperialism.
Marx’s analysis of imperialism?
- Marx analysed world developments, but only in a limited way in Capital Volumes 1, 2 and 3
- Vol 3 analysed ‘many capitals’, and their different forms, but not relationships between countries in the world market
- Later volumes planned to cover the state, foreign trade and the world market more systematically
Hence, in Capital there is:
- No real discussion of colonies (just brief mentions)
- Nor much on monopoly, national differences in wages, etc
Obviously, the world also developed further from the 1860s!
‘Imperialism’ as in Lenin’s 1916 pamphlet: 
- decisive role of monopolies in the world economy
- bank/industrial capital merges, producing ‘financial oligarchy’
- capital export (and revenues from it) much more important
- territorial division of the world is complete among key powers
Implications:
- changes in division of world power increases propensity to war
- division of world into oppressed/oppressor countries, with the oppressors benefiting economically (his focus was on the ‘labour aristocracy’)
A century-old analysis still relevant?
Monopolies dominate world economy - yes
Bank/industrial capital & ‘financial oligarchy’ – not this form
Capital export – different kinds of international links today
Territorial division of the world – yes, but also changes
Implications:
Propensity to war – yes, although now many wars by proxy
Oppressed/oppressor country division – yes, some changes
Benefits of the oppressor – yes, but not just a ‘labour aristocracy’
Politics of imperialism:
Conflicts/rivalries between major powers by end-19th century
Wars began to involve the whole population, not just military
Social unrest with the growth of the working class
Ruling class gains loyalty of workers via welfare reforms, extra voting rights, etc (UK, France, Germany, especially)
By 1914, the main European socialist parties backed their own states in war
Implications:
Development of a loyalist working classes in many rich countries that will fight to defend their nation state and their related privileges! So, it is not just a very small portion of the working class in these countries that becomes pro-imperialist. This is a major political issue today!
Summary definition of imperialism:
A division of the world that results from the exercise of monopoly power by corporations and their states.
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Big corporations may have economic advantages, eg better technology, but they have a powerful position in the world economy due to their links with particular states.
States back property rights (from expropriation by rivals, also via patent laws) & extend economic power in international trade and investment deals.
Economic power and ability to exploit is reinforced by these privileges, ones that also include access to finance.
The balance of power is not fixed. Relationships are likely to change with the different accumulation of capital and power-competition successes of different countries.

2. Imperialism & Financial Power

Financial markets show what the world economy allows!
Marx’s ‘law of value’ for commodities has evolved:
- Equity prices, bond yields, FX rates are critical for companies and governments
- For example, the US uses the $ as ‘world money’ to isolate non-favoured countries (eg Iran, Russia)
- Major companies dominate world markets, via stockmarket takeovers, ownership links, etc
- Access to capital occurs via major financial centres, especially New York and London
… in addition to trade/investment deals run by major states
This is a regular, daily mechanism, and does not rely upon crises to work, although such crises often give the major powers an extra ability to gain influence.

3. A ‘Real’ versus a ‘Financial’ Economy?

All big capitalist companies are tied into ‘finance’
- FX deals to buy imports / sell exports
- Borrowing for purchases, or to invest
- Use financial derivatives to insure against price moves
- Mergers & takeovers to monopolise markets
Financial operations are integral to modern capitalism, and it is a liberal, reformist delusion to make a big distinction between 'real' and 'financial' companies.

4. Theory of Finance - Overview

‘Finance’ is big because it is driven by governments, corporations, banks and other financial institutions.
- Value relationships take on a financial form, so ‘finance’ pervades the system as a whole and is a means of gaining wealth and power!
- Note the prominence of the US and the UK, and how the workings of the global financial system are of particular benefit to them.
-  This is not ‘complex financial dealing’ by dangerous speculators, who disrupt the otherwise solid workings of the capitalist economy.

5. Finance & Marx’s Value Theory

Marx’s theory of value is about the capitalist organisation of social labour.
It is an analysis of the forms that arise from capitalist production and the exploitation of labour, the tendency to crisis and the limits of this mode of production.
Capitalist finance in Marx’s theory:
- a means by which existing surplus-value is circulated
- ‘finance’ = money dealing + interest bearing capital
- interest bearing capital (and banking) create new forms of value, and appear also to create new value
Interest, banks, fictitious capital, etc, are dealt with first in Volume 3 of Capital. This is a ‘logical-historical’ development of the earlier analysis.
The first page of Vol 3 of Capital: Marx notes that Vol 1 analysed the immediate process of capitalist production ‘with no regard for any of the secondary effects of outside influences’. Vol 2 studied the circulation process of capital, which must be added to the immediate process of production to complete the ‘life span of capital’.
Vol 3 went beyond this synthesis to ‘locate and describe the concrete forms which grow out of the movements of capital as a whole’.
Vol 3 develops those forms of capital which:
‘approach step by step the form in which they assume on the surface of society in the action of the different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves’.
Vol 1 & Vol 2 do not examine how competition might affect different capitals, nor the forms of capital that arise from that process.
Vol 3 examines ‘many capitals’ and competition, but not in concrete detail. For example, Marx excludes the analysis of the world market, different values of labour-power, etc, except in occasional remarks.
Industrial capital, and its circuit of  M – C … P … C’ – M’, has almost complete attention in Vols 1 & 2:
‘Its existence implies the class antagonism between capitalists and wage-labourers …. The other kinds of capital, which appeared before industrial capital amid conditions of social production that have receded into the past or are now succumbing, are not only subordinated to it and the mechanism of their functions altered in conformity with it, but move solely with it as their basis ….’
But Vol 3, Parts IV & V are critical for an understanding of finance. These show how the ‘M’ and ‘C’ components of this circuit become transformed under the influence of industrial capital. In turn, they have an impact on the forms of value accumulation by the system as a whole.
a) The basic M – C … P … C’ – M’ circuit includes market exchange and changes of value form (M - C, C - M)
b) This circuit implies surplus funds, or demands for funds, arising for productive capital at different times. Merchant capital (commerce, etc) develops in this context
c) The form of value in the circuit changes not only between M, C and P (Vol 2). The forms taken by M also evolve.
d) A key stage in the analysis is where M is an advance of capital outside the basic circuit, as in M – M’. This is the basis of Marx’s concept of ‘interest bearing capital’.
Step 1: Distinguish M – C – M’ from M – C … P … C’ – M’
This is not simply a logical (or functional) separation, but one that develops in reality.
Buying/selling by merchant capital is separate from the part of the circuit of capital that produces surplus value.
The specialist buying/selling function can be done more efficiently by merchants. It shortens circulation time, lowers costs and allows more surplus-value production per year.
Merchant capital produces no value or surplus value itself, but enables more surplus value (per year) to be produced by others.
Step 2: Focus on specialist monetary aspects of merchant capital (eg FX deals or loans for operating capital which assist the circuit of industrial capital, promoting M–C and C–M).
This is ‘money dealing capital’ (MDC), distinct from the previous ‘commercial capital’ part of merchant capital.
Marx’s theory has productive, commercial and money dealing capital as separate, but related, parts of the original circuit of industrial capital dealt with in Vol 2.
Each part of MDC is involved in averaging the rate of profit, assuming each section of capital could move into other areas. Capital advanced for production may be advanced for merchant (MDC) functions, or vice versa.
Money dealing operations are only an advance of money to industrial and commercial capitalists - an exchange for a different form of money (as in FX) or for a security (eg advance money against bills of exchange that are redeemed later). They are not an advance of capital.
Step 3: Another form of capital develops out of this money dealing – Interest Bearing Capital (IBC)
Up to Step 3, Marx examined forms arising out of the circuit of industrial (or productive) capital.
With Step 3, there is a new form of capital, IBC, outside that circuit. It has its own special circuit: M – M’.
With IBC, money is advanced as money capital (by money capitalists) to the 'functioning capitalist' who later returns the money back to the owner with interest.
Marx includes both the merchant and industrial capitalists as potential recipients of IBC from the money capitalist.
In both cases, it is assumed that the loaned funds are invested as capital and (could) gain a surplus value.
Even if the funds are not invested profitably, then the money capital still has to be repaid with interest.
Marx's concept of IBC does not include all loans of money capital for whatever purpose. This is consistent with Vol 3 analysing 'the process of capitalist production as a whole'.
So, bank loans to workers, for mortgages, for personal consumption, etc, are treated differently, or not at all, in Capital. These are just advances of loanable money capital, not of IBC.
The latter loans are still paid back with interest, but the concept of IBC is determined outside this relationship.
However, in all cases, the interest is still a deduction from surplus value deriving from the productive sphere.
Key points on this topic
a) ‘Finance’ is not confined to the operations of banks; monetary advances and transactions pervade the whole capitalist system! ‘Industrial’ companies also conduct many financial operations.
b) For IBC in particular, the advance of money capital in the M – M’ circuit can also be performed in a number of different ways, and by different institutions.
c) This also means that other forms of ‘M’ can develop outside the M – C … P … C’ – M’ circuit.
d) This takes us on to fictitious capital and bank credit, key forms of capital, and of value in modern financial systems.
Bonds, Equities, ‘Fictitious Capital’
‘Fictitious capital’ (basically, the term means financial securities)
The prices of these securities do not represent any value created and are determined differently from commodities.
Bonds have a higher status than equities regarding terms of repayment; but a lower status, usually none, in ownership of corporate assets.
There is a legal differentiation of ‘pure’ money capitalists (bond owners) from owners of companies (via equities).
The securities are tradable, potentially translated into money. They can be used as collateral for loans. Equity securities are often used as a means of payment in takeovers.
Bond prices: the discounted present value of future coupon payments and the principal repayment.
Key plus/minus factors: risk of non-payment (credit risk);  interest rate level at which future payments discounted.
Prices move independently of value created. A bond ‘worth’ $1m need not relate to any sum of capital invested.
Equity prices: an equity represents a share of ownership and future company profits, and the price reflects that.
Key plus/minus factors: expected future profits; interest rate level at which future payments are discounted.
The prices of both kinds of security are also influenced by speculative buying/selling!

6. Economic power, financial securities and bank credit

Bonds
Creditors can set terms for company or government behaviour, especially in a crisis, when a question of writing off debt (privatisation, policy, etc) or access to new funds.
Equities
Ownership, of course. But voting rights on company decisions are not the same as the equity holding! Control of society’s resources via centralising capital and creation of monopolies.
Bank credit is a distinct mechanism of finance!
This topic has been very badly dealt with in Marxist theory.
A bank does not simply use existing sums of money from depositors to lend to borrowers, whether they are companies or individuals.
It does not act simply as a ‘go between’.
Banks can create new funds within the banking system: they grant loans to borrowers, who then use the funds (not usually as cash, mainly bank transfers) to buy things.
Banks make up any shortage of funds from other banks, or via the central bank. This credit creation can boost expenditures and demand from consumers and investors.
‘Stretching’ the law of value creation
The credit creation process is unique to banks. It depends on a (national) banking system and a central bank if it is to work well.
It also allows a bank’s ‘assets’ (loans) to grow far beyond its capital (funds due to shareholders). This can boost demand in the economy and also the potential for a crisis.
The ratio of assets/capital = leverage ratio.
When bank loans/credits run beyond the ability to pay back, a bank’s loan ‘asset’ becomes a loss! With high leverage ratios, a relatively small scale of losses can destroy a bank's capital and lead to bankruptcy.
(Note: Bank loans are not securities, but they may be ‘securitised’, as with Mortgage-Backed Securities.)

7. Conclusions: Imperialism and Finance

The role of ‘finance’ reflects the operation of the law of value on a world scale and the influence of dominating powers.
The form taken by social labour under capitalism (especially imperialism today) is not simply a ‘value’ form based on commodity production and socially-necessary labour time.
It is dominated by financial forms of value that accentuate the concentration of ownership and control of social wealth.
Financial securities (equities & bonds) and bank credits are the dominating forms of value today.
Equity and bond markets act as regulators of corporate decision-making and government economic policy.
Social resources are controlled via mergers & takeovers, assisted by the system of credit and trading in financial securities.
Major banks provide funds to the global economy, especially via the role of the US dollar.
This how capitalist economic discipline is imposed and value is appropriated by those countries and companies with privileged positions in the global capitalist market system!

Wednesday, 29 June 2016

Brexit Developments


Britain now has a tarnished reputation in the imperial family. It has long been the consigliere, advising on disputes and helping negotiate deals. While, of course, it often gets up to mischief for its own reasons, usually this is done in concert with one or more of the family – for example, it instigated the attack on Libya with France, drawing the US in too, and with the US it has promoted more liberal rules on financial dealing. But now the UK looks like a reckless troublemaker. Not only because the Brexit referendum led to shockwaves in world financial markets, but also because the aftermath of the vote further upsets an already crisis-ridden imperial landscape.
World leaders are bemused that the British government can have let things come to such a pass. For a major country to allow a pillar of foreign policy to be decided by the sentiment of a popular vote is just not done! Or, at least, never done unless the right outcome is assured. This outcome is unfavourable for the established powers, but that is no reason to look upon the result as progressive.
The Brits are in probably the biggest mess, not simply due to the drop in both sterling and the UK’s credit rating. It is also a question of status. They will look pretty stupid the next time they try to lecture other countries on the best way to run things. They will also be the wallflower next time they are in a party of ‘friends’, such as in NATO or the UN Security Council, aside from having fewer European-related parties to attend anyway. It is hard to see any way for the British state to restore the status quo ante. Even Britain’s new relationship with EU countries cannot be sorted out easily, quite apart from the main EU powers not wanting to make an exit seem like an easy option. The Brexit stance was based upon wanting (full) access to the single market, but rejecting the EU’s insistence on free movement of people within the single market, something that is anathema to the Leavers.
At the same time, the Conservative Party has to try to get a new leader, following Cameron’s resignation. It may only be then that the UK government will use the celebrated Article 50 of the Lisbon Treaty formally to tell the EU of the intention to exit, which will then initiate a period of up to two years of divorce proceedings. The schedule is uncertain, but the main EU powers have made clear both that they want things over relatively quickly and that there will be no real negotiations until the Article 50 exit period has begun.
Some writers have noted that the Brexit referendum is not binding on the UK government, and could be taken as ‘advice’ from an opinion poll. That is true constitutionally, but it looks politically impossible to reverse it, nevertheless. The point behind Cameron calling the referendum was to stem the populist anti-EU threat to the Conservatives’ base of support. Instead, it revealed how many voters thought they had gained little or nothing from established policies, and how far popular sentiment had congealed on anti-immigration policies for their solution. While the 52%-48% split in favour of Leave was close, there had been no guidance that only a 55% or 60% Leave decision, for example, would endorse a change to the status quo.
To ignore the referendum result would bring an electoral disaster for the Conservatives as much as it would for the Labour Party. The core Leave vote came from England, where the majority was 1.9 million in favour (15.2 versus 13.3 million votes), more than accounting for the overall UK majority vote of 1.3 million in favour of leaving the EU. This was despite a number of the bigger English cities – London, Liverpool, Manchester and Bristol – having large Remain majorities. According to the BBC, the Brexit vote was widespread, on top in 270 UK counting areas versus only 129 areas for Remain.
It will be interesting to see how much further the Labour Party adapts to anti-immigration sentiment, whether or not under the leadership of Jeremy Corbyn. Not under Corbyn is most likely, given the scale of opposition from Labour MPs to his continued leadership (172 against, 40 for). The Labour Party fears a near-term general election that they will lose, and there is evident panic and plotting in its establishment ranks.
Last September, Corbyn won the Labour leadership election by a landslide, driven especially by younger people who had recently signed up as Labour supporters to back a more radical set of policies. They will now find their hopes shattered. One can only hope that they will learn some lessons from their earlier foray into the Labour Party.
History shows that the Labour Party exists to divert popular demands for change into a dead end, and that its policies are always determined by what is viable for British capitalism. Adapting the catchphrase of an old Heineken lager advert, Labour can reach into the parts of the electorate other parties cannot reach, in order to sustain popular support for the system. Even Labour’s welfare spending proposals are made explicitly on the basis of what capitalism can afford. Still worse, Labour’s policies are unashamedly patriotic and support British imperialism’s ventures. In March 2003, for example, the vote on the Iraq war was 254 Labour MPs in favour and just 84 against. Hilary Benn’s more recent ‘bomb Syria’ speech in the House of Commons was not an anomaly. But a few differences with the party line, eg with Corbyn’s timeserving of 30-plus years as a Labour MP, help give a different impression to the gullible.
Scotland is in a separate quandary, having voted 62% in favour of Remain. The Scottish National Party is now trying to deal with the EU on behalf of Scotland’s relationship, but is being told very clearly that Scotland is not an independent political entity so there can be no negotiations. That would require independence from the UK, and that – via another Scottish referendum – is something the EU is not going to encourage, since they are already worried about the threat from other potential regional breakaways in Italy and Spain. In any case, were Scotland to gain independence from the UK and apply for EU membership, it would have to sort out the tricky problems of replacing UK subsidies, avoiding an obligation to join the euro and running a budget on the basis of $50 per barrel of oil.
Meanwhile, other moves are afoot outside the UK. For example, the French government has raised again the role of the City of London in euro financial trading. Back in 2011, the European Central Bank, with Trichet then its French president, put forward a regulation that would have led securities trading in euros to be ‘cleared’ in a euro zone country. The UK challenged that in the European Court of Justice. The legal and financial details are very technical, but the gist of the matter is as follows. Being annoyed at the City’s dominance of euro financial trading, there had been a number of attempts on the part of France to shift financial trading into the euro area, meaning Paris. The 2011 ECB regulation looked innocuous, but the Brits smelt a rat and challenged it in the European Court, since it would have disadvantaged euro-clearing in London. In 2012-13, France and Spain backed the ECB position in Court (Italy did too, in March 2013, but pulled out in November), while the UK was backed by Sweden, also a non-euro EU member.
The ECB argued that the UK did not have the ‘standing to bring an action against it, on the ground that it does not participate in certain aspects of economic and monetary union’. No status, hence not able to make a case at the European Court. However, the Court ruled in March 2015 that ‘as a Member State [of the EU], the United Kingdom has standing to bring proceedings against acts of the ECB’. Furthermore, the Court accepted that the ECB’s new regulation was against the principles of a level playing field between euro and non-euro members of the EU. The UK won the case, and also got the ECB to pay its legal costs. It is unlikely that the same judgement would happen again, since the UK is not (rather, will not be) an EU member any longer, but very likely that a similar ECB regulation will reappear.
Admittedly, this looks like just a small-scale example of an opportunistic use of status to press an advantage. But the bigger picture it shows is how the UK’s changed status in the EU is going to have unexpected effects elsewhere. The Brexit vote has sent tremors through the imperial system’s tectonic plates and a number of structures are shaking. The great pity is that this has occurred in the context of a reactionary debate on Britain’s status in the world and delusions about how the new found ‘freedom’ of the British state will benefit the mass of people, while adding fuel to the fire of growing nationalism in many European countries.

Tony Norfield, 29 June 2016