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

Deutscher Prize Shortlist

I am pleased to note that my new book has been shortlisted by the Deutscher Prize committee for its annual prize. The prize winner will be announced at the Historical Materialism conference, held on 10-13 November this year in London.

The full shortlist is:

Roberto Finelli, A Failed Parricide: Hegel and the Young Marx (Brill, 2015)

http://www.brill.com/products/book/failed-parracide

 

Bob Jessop, The State: Past, Present, Future (Polity, 2015)

http://www.polity.co.uk/book.asp?ref=9780745633046

 

Andreas Malm, Fossil Capital: The Rise of Steam Power and the Roots of Global Warming (Verso, 2016)

https://www.versobooks.com/books/2002-fossil-capital

 

Tony Norfield, The City: London and the Global Power of Finance (Verso, 2016)

https://www.versobooks.com/books/2103-the-city

 

Anwar Shaikh, Capitalism: Competition, Conflict, Crises (Oxford University Press, 2016)

https://global.oup.com/academic/product/capitalism-9780199390632?cc=gb&lang=en&

 

 

Political Fundamentals and the UK Brexit Referendum

What explains the desperation of British capitalism and Conservative Party in the lead up to the Brexit referendum on 23 June? Opinion polls have shifted in favour of a Leave vote and, while the accuracy of the polls is always in doubt, a shift towards Leave seems evident from widespread vox pop views in the media, in the panic of the Remain camp and in the financial market setbacks for sterling’s exchange rate. Equity markets have also been hit, and not just in the UK. As a sign of desperation, the Remain camp has even called upon the Labour Party’s lumbering has-been, Gordon Brown, to add his weight to what looks like a failing balance. Her Majesty has so far been allowed to stay above the dispute, just about. One can imagine that if the polls get any worse for Remain, then Downing Street could try to prompt a Royal appeal to her loyal subjects to do the right thing. Where has this revolt of popular sentiment come from?

My previous coverage of the Brexit referendum has focused on the situation facing the British ruling class in a world where its economic and political interests are clearly bound up with Europe, but where there has been a minority view that an alternative is possible ‘outside’, especially in a context of European economic crisis. But the significant support for Leave shows that this has underestimated a key point. What might otherwise be considered simply as popular disgruntlement with political elites – ‘vote Leave to teach them a lesson’ – is better explained as a widespread view that these elites have broken their pact with the people. The ‘Leave’ support, however disruptive it might be to existing power structures, is based on an appeal to the British state to restore the status quo ante. To understand this point, it needs to be put in context, one that will also confirm that this is not a debate in which one can take sides.

The World System of Power

No country’s politics, still less its economics, can be understood outside its relationships with the rest of the world. Since at least the early 19th century, the world economy has increasingly shaped the position of all countries within it. The world system as we have known it in recent decades has been based upon three elements: American dominance and supervision of capitalism, the European Union project and the relationship between America and Britain. These elements may have come under some threat, for example with the growth of China and the crisis in Europe, but this pattern of world power remains intact.

The dominant European states wish that Britain would be more European, and that it would do more to curb the xenophobic, anti-European drift of British popular culture. But Britain’s relationship with the US is in their interests, because Britain’s mediating, intermediary role helps keeps the whole structure of Western dominance intact, with America at its apex and Europe benefiting from it. The Europeans are worried about an increasingly unstable world that sees the rise of China, a more assertive Russia, all sorts of threats around the Mediterranean and the Middle East, and in Africa. They are concerned that a Brexit vote would begin to unravel their security network, or at least begin to call into question who is allied with whom, and how committed they are to a joint project.

The dominant European imperialist states could easily accommodate Britain’s refusal to join the euro zone, a central plank of European policy. Britain’s role with respect to the European Union is not so much the product deeply ingrained cultural attitudes (although these do exist); it is more an expression of its important role within the pattern of power and the dynamics of its mediating role on the world stage. This role allows, and calls for, the British state to operate at the same time both outside and within the continental European political and economic set up. For example, the British-based financial system is a worldwide one, brokering the US dollar, and the political and economic interests of Britain do not support its membership of the euro zone. But the British state also needs to have a say in the development of European policy to sustain its position and the workings of the world financial system that it has helped to create and from which it benefits. The US also wants Britain in Europe because it is vital to US-European relationships. Every time Britain has shown itself truculent over European membership, and especially now, the US has reminded it, in a firm but friendly way, that it would prefer no change.

A new series of bilateral arrangements between Britain and other countries, as envisaged by the Brexit camp, cannot replace this system. The point is not only why on earth it would make sense for Britain, one of the major world powers, to tear up longstanding agreements that it has helped to produce and try to start again. It is also that a country stepping outside an established system of power would not have much leverage to devise another one. The pro-Brexit calculation can only convince those who ignore, or do not understand, the structure of Western dominance and Britain’s vital role within it. Britain’s business media has reminded the Leave advocates both that Britain alone is a small share of the EU market and that exiting the EU would put at risk all the other relationships that give British imperialism status in the world, from permanent membership of the UN Security Council downwards.

The Working Class Brexit Vote

Nevertheless, British opinion polls show that Brexit looms. A broad section of the population, especially the working class, is now liable to go against the establishment consensus and vote Leave as a way to complain, especially when it sees its troubles as resulting from global economic trends that the establishment has embraced. The focus of complaint is immigration. While the claimed economic benefits of the UK staying in the EU have been the main argument for ‘Remain’, this has been submerged by immigration as the dominant anti-EU point in the referendum debate. Many Brits, perhaps most, including those who themselves or whose families may have been relatively recent immigrants, support tighter immigration controls, as was already clear in the 2015 UK General Election.

Immigration plays such a role because it touches on a key point in British working class consciousness, one that reflects its material interests: a loyal commitment to the British state. This longstanding commitment has given the working class social protection as part of a deal not to cause too much trouble, a kind of ‘social contract’. Now, the immigration question helps to identify the national, British-based working class as the legitimate recipient of state assistance versus the immigrants (or even refugees) from other countries. In this pro-imperial outlook, the issue of inadequate housing, jobs and services delivered by capitalism becomes a moan about the supply of housing, jobs and services taken by migrants. In previous decades, the moan was about blacks and Asians; now it is more about white (East) Europeans.

This is not to say that such a view is held by all working class people, but the fact that it is so widely held should not really shock those who have read any history. For more than a century, despite occasional trade union militancy, the British working class has supported British imperialism and its war efforts. From the First World War, even earlier, the British state had made concessions to workers with welfare measures, ones that were developed further in the late 1930s and into the Second World War, when more ‘sacrifices for the nation’ had to be made. Introducing future plans for comprehensive welfare spending in March 1943, the arch-imperialist and violent opponent of the 1926 General Strike, Winston Churchill, declared himself in favour of ‘national compulsory insurance for all classes, for all purposes, from the cradle to the grave’ as part of his attempt to secure a solid national consensus of all classes.

It may surprise readers familiar with the story that the 1945 Labour Government invented the National Health Service, and broke the mould with state ownership of national assets, that Churchill also said in the same speech that ‘we must establish on broad and solid foundations a national health service’ and that there was ‘a broadening field for State ownership and enterprise, especially in relation to monopolies of all kind’. To underpin his endorsement of a national consensus, Churchill praised the Labour Party’s coalition government Minister for Labour and National Service, Ernest Bevin, for ‘the practical absence of strikes in this war compared to what happened in the last [ie in World War One]’. The rationale for Churchill’s support of welfare spending for the working class was that for Britain ‘to keep its high place in the leadership of the world and to survive as a great power that can hold its own against external pressure, our people must be encouraged by every means to have larger families’. Supporting more education spending, he added that the ‘future of the world is left to highly educated races who alone can handle the scientific apparatus necessary for pre-eminence in peace or survival in war’.[1]

Other articles on this blog have shown how, in the post-1945 period, Labour Governments continued in this pro-imperialist outlook, using exploitation of the colonies to help fund their national welfare spending to benefit the domestic working class.[2] But this perspective is not of only historical interest; in the same way that imperialism – a system of privilege and domination in the world economy – is not confined to the colonial period.

The Brexit debate shows that the British working class wants not so much a better deal within the existing system, but a return to the previous post-war consensus.[3] This perspective is not only far from being any challenge to capitalism; it supports Britain’s privileged position within the world system of power from which the working class had benefited. Brexit has risen in popularity because the domestic working class has faced the problem that British capitalists have benefited greatly from their increased links to the world economy, including an influx of cheap workers, less so from the more ‘home grown’ operations, so British workers have felt neglected. That is why Wetherspoons, a UK and Irish pub chain, very dependent upon local business links, is one of the few large UK companies to be pro-Brexit.

From the perspective of the British working class, the call for Brexit is a call upon the British state to keep to its previous compact with the workers for what can be presented as a fair, national deal. (Incidentally, the British left has the same approach to economic and political problems) Widespread complaints such as this may work to some extent, shifting the balance of the government’s policy tactics. For example, the collapse of Tata Steel Europe’s UK operations in the lead up to this troublesome EU referendum led to some government measures to delay the inevitable. However, the game is up. Whether Britain leaves the EU or not, capitalist companies will not turn their back on the world market and the relevant calculations. Neither will the UK government pretend in its policies that there is no capitalist crisis to deal with.

Above all, the British working class cannot explain to itself why the British ruling class has broken its previous agreement to deliver national welfare, and why it has turned its back on its natural supporters in favour of seeking better profits in international market dealings. That is why its anger is real and solid, although its political economy remains crap because it cannot understand why what used to work before does not work now. Simply belonging to a rich, imperialist country does not mean that you necessarily get a decent share of the rich pickings.

Awkward Moments for UK Policy

Now take a step back and ask yourself why the Conservative Party, the unabashed defender of big capital and the super-rich, has got itself into this mess, which now witnesses senior ministers attacking the Prime Minister’s stance for ‘Remain’. The simplistic view is that there were Conservative Party divisions that had to be resolved by Cameron calling a vote on EU membership, or that Conservative votes were being threatened by the rise of UKIP. But, while true, this story hides a more telling, political problem suggested by what has already been explained.

If a political party is openly ruthless in enforcing capitalist market discipline on everyone, unfortunately for the ruling class that is no way to win the necessary popular support to get elected. Instead, a broad base of loyalists has to be built, one of the annoying features of universal suffrage. The need to have a broad base of support is the reason we still find many ‘one nation’ Tories, why successive Conservative governments did not reverse the post-1945 welfare state reforms and why Prime Minister Cameron still claims to defend the National Health Service. But this creates political difficulties when popular opinion in the UK turns against what is evidently the best policy for British imperialism, ie staying in the EU.

US President Obama, a wide range of other US and European politicians, together with the IMF, OECD, etc, etc, have declared that they favour the status quo, as do the majority of British corporations and the leaderships of the main UK political parties. The logic here is that the existing pattern of world power relationships would be upset, unpredictably and possibly dangerously, if any major country tried to strike out on its own.

At risk is the EU itself, which could well see other countries heading for the exit, undermining an economic and political project that has been decades in the making. Neither is this a good environment for other agencies of imperial rule that have been in place since the late 1940s, the UN and NATO. These could be faced with new questions on who is a key member and why, or who has voting rights on the UN Security Council.

A Referendum Dispute Between Loyalism and Imperialism

At first sight, a vote for Brexit might look to be the more progressive option, because it would help undermine the established structures of power in the world. Many UK voters disagree, noting that it would also give credence to a set of policies that would be driven by reactionary pundits and politicians. The problem with these views is that they do not understand how the debate is between a pro-imperialist populace and British imperialism. That is why the debate lacks any content and there are few substantial differences between the respective positions.

The ‘Leave’ side is not against developments in world capitalism. The bulk of its votes will come from a working class that has sided with imperialism and would like the British state to return the favour, backing up its privileges against others in the world economy, as in the good old days. The ‘Remain’ side too argues for no change to world capitalism, and will attract those who fear an upset to their current economic circumstances. The former expresses complaints against the status quo, wanting an exit in which they think changes could be implemented within the imperial system; the latter thinks the status quo is acceptable, although it might be amended somewhat within the imperial system.

How can complaints about capitalist market discipline be resolved in a crisis-ridden world economy, if the complainers want to keep the system that enforces that discipline, and especially the imperial privileges that accrue to one of the leading powers? If the complainers understood this problem, then progressive politics would be in with a chance. However, that is not the case in the UK, or in a number of other rich countries where the working class is loyal to its powerful state. Instead, the political logic is for pro-imperialist policies to win the day.

If you want to oppose the depredations of capitalism and imperialism, then please do so, but this is not what the Brexit debate is about. Above all, remember the classic revolutionary phrase: ‘the enemy is at home’.

Tony Norfield, 16 June 2016

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[1] To emphasise this point, note that Sir William Beveridge, the main early planner of the UK welfare state – not the UK unions or the Labour Party, or pressure from them – was a collaborator of Churchill’s and supported by him, even though Churchill had doubts on committing to spending when it was not clear it could be afforded. The most that could be said for the 1945-51 Labour Government is that it implemented a more generous welfare system than had been envisaged by Beveridge, although that was paid for by loans from the US and by exploiting the colonies! A transcript of Churchill’s BBC broadcast in March 1943 is available at http://www.ibiblio.org/pha/policy/1943/1943-03-21a.html.

[2] For example this article.

[3] I will not cover this point further here, but for further information I recommend a book on the history of the Labour Party by Edmund Dell, A Strange, Eventful History: Democratic Socialism in Britain, HarperCollins, London: 2000. A Labour right-winger, Dell also spells out, in ways one rarely finds from the left, the consistently pro-imperialist and state-‘socialist’ nature of the British Labour Party, something that was consistent with the political outlook of their electoral constituency.