Brexit Politics and Britain in the world economy

One of the many painful ironies of Brexit is the popular belief among ‘leave’ supporters that it means taking back control of our borders. David Goodhart gave this theme a novel twist with his characterisation of people with roots in communities coming from ‘somewhere’ and their globalising cousins from ‘nowhere’. In fact Brexit in the hands of the right – and they are making the running – means full-on globalisation, deregulated trade, and unfettered markets. No room for communities here.

Let’s start with conclusions. Britain’s place in the world, and in the world economy, is as a part of Europe not as a stand-alone global player whether as born-again entrepreneurial capitalist or socialist pioneer. Think about Brexit in Britain’s history. At the end of the 19thC Britain was still (just) the dominant world power, the world’s industrial workshop, imperial power, and investment banker, free trade its slogan. But new competitors were appearing. The Times reflected in 1891 on the need for Britain to hold its empire close lest ‘we sink to the position of a merely European kingdom’.

Even as British power was eroded through two world wars and the slump, the idea of a ‘mere European kingdom’ remained unthinkable, to Attlee and Bevin as much as Churchill. The latter thought Britain could prosper at the centre of three overlapping circles created by a united Europe, America, and the Empire. That prospect soon faded. In the 1950s Britain tried to negotiate a European industrial free trade area to include the EEC, Britain, and other non-EEC countries, still trying to play lynchpin. The EEC resisted and in 1960 Britain negotiated a smaller industrial free trade area with Austria, Switzerland, Portugal and the three Scandinavian countries. This was unsatisfactory and almost immediately Britain changed course and made the first application to join the EEC, actually joining more than a decade later in 1973. According to historian Kevin O’Rourke the ‘the transition from Empire to Europe was complete’. The judgement may have been premature. Brexit illustrates the inability of Conservatives to come to terms with Britain’s real as opposed to imagined world status. Little wonder civil servants have dubbed the Conservative strategy ‘Empire 2’.

But Conservative opposition to Europe is not homogeneous. It includes the Tory shires where old fashioned national identity and insularity generate hostility to ‘Brussels’, and an altogether more ambitious and outward looking element that has provided the rationale for ‘leave’. They think the EU is ‘a pointless middleman as a vast new global single market takes over’ (Roland Smith Adam Smith Institute). Theirs is to be an ‘open globalist Britain with free trade as wide as possible and sensible economic regulation’ (The Institute of Economic Affairs).  Sensible here means a lot less of it, and trade free to take advantage of lower world prices wherever, and however they are to be obtained. They want control of immigration, not to reduce it to the tens of thousands, but to have it conform to world supply and demand for labour rather than privilege Europeans.

These differences are important. Brexit assembled a powerful coalition of the Tory shires, committed working class conservatives, and former Labour supporters in economically devastated parts of the country, backed by a buccaneering section of financial capital, all gathered together under the national flag. Anyone hostile to Brexit should be working to break that coalition apart. Old fashioned Conservatives are not all on the extreme neoliberal wing of the party; socially conservative working class leave supporters are rarely free marketers. None of them will find increased immigration from India an acceptable alternative to free movement within Europe.

Economic questions remain an important part of the argument. On some measures Britain is still the fifth biggest economy in the world, the second biggest in the EU, and despite its shrunken manufacturing sector, the 10th largest exporter of goods. London, of course, is the preeminent global financial centre. But Britain also has an economy which is seriously unbalanced across sectors and regions, has desperately low productivity and investment, and a huge deficit on the balance of trade. Its comparative advantage in services relies too heavily on the most unstable and unproductive arena of all, the financial sector. It simply does not have the resources in depth to operate as a world player. The special relationship with the USA is nothing more than a British comfort blanket, the remains of Empire an occasion for ceremony or embarrassment. Britain will earn hostility not partnership from the EU. We will be a supplicant for trade deals and investment outside Europe trading political control for economic advantage, exactly the complaint made against the EU.

But it is the politics of Britain in the world economy rather than the economic balance sheet that counts. Labour must find the courage to confront the illusions of British power and national independence. For more than a century British policy was aimed at sustaining a balance of power in Europe to her own advantage. That era has gone for good; Britain can only exercise real influence in association with European partners. Taking back control means creating political and cultural links across national boundaries that would make the management of an international economy possible. We can’t abolish the international division of labour; we can re-shape it and manage it but not if we lock ourselves up within national boundaries.

It is not an easy argument to make. The risks for Labour are very great because to make headway Labour must go head-to-head with working class conservatism. An appeal to economic interests won’t penetrate the fog of ‘national identity’ that has become the hallmark of hostility to the EU. For this very reason trying to stitch up a deal that puts Britain in the EEA alongside Norway, trading political voice for access to the single market won’t work. This is the subject of the next post.

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