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The Brexit con: the exit Britain needs is from neoliberal capitalism

Pete Dolack

30th June 2016

The UK's exit from the EU won't deliver for the 'victims of globalisation' whose votes were decisive in the referendum result, writes Pete Dolack. All the economic scenarios advanced to date envisage more of the 'free trade' and neoliberalism that has global empowered capital against communities and the well-paid jobs that once sustained them. Plus ca change ...

One country leaving the EU and agreeing to the same terms as an 'outsider' will effect no change whatsoever. An exit from capitalism is what the world needs, not from this or that capitalist treaty.

Britain can leave the European Union, but it would remain just as tied to capitalist markets as before.

The decision to leave the EU is not a decision to leave the world capitalist system, or even disengage from Europe.

It is thus is not a decision that will lead to any additional 'independence' or 'sovereignty' outside of proponents' imaginations.

What has been unleashed is the nationalism and xenophobia of right-wing 'populism' - those on the Left celebrating a blow against elites might pause for thought.

Yes, voting in defiance of what elites told them to do played its part in favor of a British exit from the EU, but nationalism, scapegoating of immigrants, and convincing people at the mercy of corporate power that less regulation is in their interest were dominant.

It is the far Right that been given a shot in the arm from Brexit - from the National Front in France and the Party for Freedom in the Netherlands to the United Kingdom Independence Party (UKIP) and the hard right within the Conservative Party. The Labour Party's Blairites have also been emboldened, as the parliamentary coup against Jeremy Corbyn illustrates.

EU single market is a corporate 'free trade' project

By no means is the above survey meant as any defense of the EU. It is a neoliberal project from top to bottom, an anti-democratic exercise in raw corporate power to strip Europeans of the gains and protections hard won over two generations.

The EU has a similar function to the North American Free Trade Agreement on the other side of the Atlantic. European capitalists desire the ability to challenge the United States for economic supremacy, but cannot do so without the combined clout of a united continent.

This wish underlies the anti-democratic push to steadily tighten the EU, including mandatory national budget benchmarks that require cutting social safety nets and forcing policies designed to break down solidarity among wage earners across borders by imposing harsher competition through imposed austerity.

So we should be celebrating anything that weakens the EU, yes? Perhaps. If this were the first blow to a visibly crumbling edifice, then surely yes. If there were a continental Left with a clear alternative vision to corporate globalization, then emphatically yes. But neither of these conditions are in force, so a more cautious response is called for. What is really needed is the destruction of the EU, for all countries to leave it, not only one.

Britain leaving by itself will lead to far less of a change than Brexit proponents hope, and not necessarily for the better. This is so because the conditions of capitalist competition will remain untouched.

Norway and Switzerland are out - but are really in

Brexit proponents point to Norway and Switzerland as models of countries outside the EU but which retain trading access. But what those countries have is the responsibilities of EU membership without having any say.

Norway has the closer relationship of the two. Norway (along with Iceland and the micro-state of Lichtenstein) is part of the European Economic Area, essentially an agreement tightly binding those three countries to the EU. The EEA has been described as a 'transmission belt' whereby the EU ensures that the EEA countries adopt EU laws as the price for being a part of the 'free trade' area of the EU. That is a one-way transmission. Norway has no say in the creation of any EU laws and regulations.

The EEA treaty calls for Norwegian consultation, but Norway is not represented in any EU body. The agreement allows Norway to 'suspend' any EU law that is disliked, but Norway has done so only once. By contrast, Norway's parliament has approved EU legislation 287 times, most of them unanimously. This loss of sovereignty does not seem to be an issue for Norway's political leaders. A 2012 Norwegian review of EEA membership concludes:

"This raises democratic problems. Norway is not represented in decision-making processes that have direct consequences for Norway, and neither do we have any significant influence on them. ... [O]ur form of association with the EU dampens political engagement and debate in Norway and makes it difficult to monitor the government and hold it accountable for its European policy."

The chair of the review committee noted that "There is no upside for Norwegian politicians to engage in European policy. ... Because politicians are not interested in European policies, the media are not interested, and lack of media interest reinforces the lack of politicians' interest."

The minister of European Affairs in the current Conservative Party-led Norwegian government, Elisabeth Aspaker, confirms government ease with adaptation to EU law. Norway, in fact, has committed to voluntarily contribute €2.8 billion in aid to poorer EU countries for the period 2014 to 2021. In an interview with EurActiv, Minister Aspaker said:

"[W]e believe this is in our interest to improve social and economic cohesion in Europe. If Europe is doing well, Norway will also be doing well. If Europe is doing poorly or is destabilised, this will have a negative impact on Norway and the Norwegian economy. So this is why we believe we should involve ourselves beyond what is required under the EEA agreement."

Switzerland has a separate agreement with the EU that is essentially a 'free trade' agreement. Switzerland has a little bit of room to not adopt EU laws, but some of its goods are blocked from export to EU countries as a result. Switzerland, however, is under pressure to do as the EU dictates, and not only does Berne not have representation, it lacks even the toothless consultation that Oslo has.

Britain will still pay but have no say

Will Britain really be free of transfers to Brussels as the Leave campaign, dominated by the Tory right and UKIP, loudly claimed before the referendum?

Their immediate back-tracking on that, and on their implied promise of significantly reduced immigration, provides an important clue. The Centre for European Reform, a neoliberal think tank that declares itself in favor of European integration, in a nonetheless sober analysis declares that Britain would pay a substantial amount to retain its access to European markets. In its report, 'Outsiders on the inside: Swiss and Norwegian lessons for the UK', the Centre writes:

"Britain would also have to pay a financial price, as well as a political price, for retaining access to the single market. As a relatively rich country, it would presumably be expected to pay special contributions to EU cohesion and aid programmes on a similar basis [as] the Norwegians and Swiss do.

"Currently, Norway contributes €340m a year to the EU. If multiplied by 12 for Britain's much larger population, that rate would imply a contribution for the UK of just over €4 billion, or nearly half its current net contribution to the EU budget as a full member. That is a lot to pay for associate status of the club."

It is possible to grumble that the foregoing is a product of a pro-EU perspective, but doing so would ignore that Britain's firm place in the world capitalist system, geographical location and trading patterns dictate that it retain its commercial access to Europe.

A post-Brexit Britain's remittances to Brussels might be larger than even that postulated by the Centre for European Reform. An Open Europe analysis calculates that Norway's net contribution to the EU works out to €107 per person, while Britain's current contribution is €139 per person. It may not be realistic to expect a future British contribution to be substantially less than Norway's.

Furthermore, the Open Europe analysis notes that gross immigration to Britain is significantly less than that of Norway, Switzerland and Iceland. Those countries each must accept the free flow of people (along with goods, services and capital) the same as any EU member. The scare tactics of UKIP and the Tory right were simply that, tactics.

And the promise by Brexit proponents of the return of an golden age and the scare tactics of Brexit opponents that financial armeggedon would be at hand? A separate Open Europe report finds the most likely range of change to British GDP would be within minus 0.8% to plus 0.6% by 2030.

Not much of a change. The high end of that modest range assumes that Britain adopts "unilateral liberalisation" with all its major trading partners because "free trade" offers the "greatest benefit", the Open Europe report asserts. But studies purporting to demonstrating the benefits of 'free trade' agreements tend to wildly overstate their casethrough specious assumptions.

These often start with models that assume liberalization can not cause or worsen employment, capital flight or trade imbalances, and that capital and labor will smoothly shift to new productive uses under seamless market forces.

Thus groups like the Peterson Institute invariably come up with rosy projections for 'free trade' agreements, including fantasy figures for the North American Free Trade Agreement and the Trans-Pacific Partnership that ignore the reality of job losses and resulting downward drag on wages. So it is perhaps not a surprise that the rosiest prediction here is for Britain to throw itself wide open to world markets, as if Britain wasn't already one of the most de-regulated countries in the global North.

There are lies, and then there are damned lies

A different sort of lack of realism pervaded the Brexit campaign, and their avowed desire to remain in the European single market surely has something to do with their rapid backtracking.

Boris Johnson, a leading spokesperson for Brexit and a possible successor to David Cameron, certainly was far more cautious in his post-vote June 26th column in The Telegraph than during the campaign.

He claimed, in the face of all evidence, that immigration fears were not a campaign factor, that the British economy is "outstandingly strong" and "nothing changes" except for a goodbye to European bureaucracy. Seldom do we see so much undisguised lying in a single article.

The response from the other side of the English Channel is illuminating. A commentary inDer Spiegel, undoubtedly reflecting official thinking in Germany, concludes by declaring, "The British have chosen out, and now they must face the consequences", given with a favorable reference to hard-line Finance Minister Wolfgang Schäuble. The Guardian, quoting an assortment of European diplomats, provided this report:

" 'It is a pipe dream,' said [one] EU diplomat. 'You cannot have full access to the single market and not accept its rules. If we gave that kind of deal to the UK, then why not to Australia or New Zealand. It would be a free-for-all.' A second EU diplomat said: 'There are no preferences, there are principles and the principle is no pick and choose.'

"The diplomat stressed that participating in the single market meant accepting EU rules, including the jurisdiction of the European court of justice, monitoring by the European commission and accepting the primacy of EU law over national law - conditions that will be anathema to leave advocates who campaigned on the mantra 'take back control.'"

No wonder no Tory seems eager to start negotiations. Perhaps 'more of the same but with less say' will not meet the expectations of those who voted for a British exit from the EU. Certainly, corporate ideology has done its job well of convincing some that corporations abandoning communities isn't the fault of the corporations leaving nor the capitalism that rewards those abandonments.

Consider this passage in The New York Times on June 28, quoting a blue-collar worker in an English city that voted heavily to leave: " 'All the industries, everything, has gone,' said Michael Wake, 55, forklift operator, gesturing toward Roker Beach, once black from the soot of the shipyards. 'We were powerful, strong. But Brussels and the government, they've taken it all away.' "

Capitalism rules ...

Of course, the ceaseless competitive pressure of capitalism, ever ready to move to the place with the lowest wages and weakest regulations, is responsible for the hollowing out of Sunderland, England, and so many industrial cities like it.

Britain adhering to EU rules on unrestricted mobility of capital as the price of retaining its European trade links will have exactly zero effect on that dynamic, and British entry into 'free trade' agreements like the Transatlantic Trade and Investment Partnership or similar deals will accelerate it.

Governments sign such agreements, true, but they are acting under compulsion of powerful industrialists and financiers within and without their borders, conceding ever more sovereignty to multi-national capital as the price of remaining 'competitive.'

The EU is a bonanza for multi-national corporations and an autocratic disaster for working people across Europe. But one country leaving and agreeing to the same terms as an 'outsider' will effect no change whatsoever.

An exit from capitalism is what the world needs, not from this or that capitalist treaty.

 


 

Pete Dolack is an activist, writer, poet and photographer, and writes on Systemic Disorder. His book 'It's Not Over: Lessons from the Socialist Experiment', a study of attempts to create societies on a basis other than capitalism, has just been published by Zero Books.

This article was originally published on Systemic Disorder.

 

 

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