A Critical Look at the Left Debates Regarding the EU and Brexit…

I voted remain. I have always been pro-European, intensified by my work helping run and deliver community projects across South Yorkshire and applying and obtaining funding distributed from the European Union (EU) to do this.

It was something I explored in my Politics with Research Methods MA, researching into the social enterprise sector in Sheffield, UK and Pittsburgh, US to compare and contrast the sector in the context of changes in political, social and economic relations alongside related ideas/ideology since the 1970/80s. Once the news broke of David Cameron, the previous Prime Minister and former Leader of the Conservative Party, promising an EU referendum, I wrote an article that illustrates my then limited critical analysis of the EU as a structural and ideologically institution. I naively argued there was a simple conflation of the EU and the Eurozone and this was to further the right’s cause of leaving the EU; whilst there are obviously concerns regarding the sometimes merging of these issues, there are clear concerns for the left that liberalisation and capital mobility are core to the EU as a political and economic project – this is just intensified and easier to enforce when a country is also a member of the Eurozone (e.g. via structural adjustment programmes). My argument at the time therefore ignored this wider debate key to anti-capitalist and more progressive, alternative visions of economics, politics and society. For instance, in the article I argued:

It isn’t Europe as an institution, it is specifically the Eurozone with the related Stability and Growth Pact and the Fiscal Compact affecting countries such as Greece, which this referendum will have nothing to do with given we are not a part of the Eurozone or these related conditions.

But, in fact, as I will argue in this article there are real concerns regarding Europe as an institution that we have to understand and analyse. I will also argue that the distinction between a social democratic and democratic socialist position is very important when considering the left debates around Brexit and especially when considering discussions regarding the Labour party’s approach to it.

In recent weeks, there has been an increase in the bashing of Jeremy Corbyn, the Labour leader, and Labour’s approach to Brexit. When looking at the background of many of those doing the attacking i.e. namely centrist, pro-status quo figures and also the misrepresentation of Labour members’ views (see here and an analysis of this misrepresentation here) – it encouraged me to do more reading into the arguments of Lexit (left wing vision for leaving the EU). This approach wasn’t given much coverage during the EU referendum – mostly only visible from the stickers put up – including amongst the left (I hold my hands up here too, just look at my article cited above!). Furthermore, the right wing perspectives – focused on immigration – was the hegemonic discourse shaping the debate and covered by the corporate media. This links into this argument from prominent Lexit advocate Grace Blakeley:

The left was right to campaign against leaving the EU in 2016. Based on the tenor of the campaign, it was clear the Leave campaign would embolden the xenophobes and nationalists that exist across the class spectrum in the UK.

The election of Jeremy Corbyn as the Labour leader (twice!) has fundamentally changed politics. One of the most crucial changes has been to reshape and reconstruct the boundaries of what is considered ‘acceptable’ debate and political discussion. Corbyn has given power to the notion of radically new ideas of how society, the economy and politics can work.

Dawn Foster wrote a perfect article on the EU referendum and Labour’s position and how dangerous it would be to go against the results and promote a People’s Vote. We had a vote – something the Greens and Liberal Democrats supported, and Labour didn’t – and we have to respect the democratic mandate of that vote or risk potentially isolating many people from politics for a long time – something Corbyn has done a great job in addressing through his different, authentic and relatable approach to politics. We also have to look at the reasons for why people voted to leave, which links into arguments around Lexit and the left critique of the EU – namely relating to the effects of liberalisation and capital mobility and what is perceived to be a lack of control in a lot of people’s lives.

David Harvey, Distinguished Professor of Anthropology & Geography at The Graduate Center, CUNY, has studied Karl Marx’s Capital for many years, raising awareness of Marx’s work regarding the general nature and contradictions of capital, especially its need to expand and grow to create more and more profit, relating to the hegemonic capitalist obsession with endless growth. Harvey refers to how a crisis in capitalism is when there is surplus labour and surplus capital side-by-side and to resolve the crisis the two have to be put back together. Harvey cites US suburbanization post-1945 as a good example of this but that it also resulted in urban uprisings given the process mainly benefited the white working class. Harvey refers to how in the 1970s there was a movement away from demand side economics, which had dominated the 1945-1960 period. For Harvey, demand side economics relates to Marx’s arguments in Volume 2 of Capital regarding the need for capitalism to be careful when depressing worker and labour power, as there is an awareness that workers need to be able to consume and spend to keep the system going.

The 1970s was instead dominated by supply side economics, which relates to the issues Marx talks about in Volume 1 of Capital, especially regarding the need to destroy labour power in order to maximise the surplus value and profit. Key to this is capital mobility, and thus the concept of liberating finance capital and removing controls on capital flows. This is why Article 58 and Articles 63-66 of the Treaty on the Functioning of the European Union (TFEU) regarding the need for capital liberalisation and the freedom of capital movement fundamental to The Single Market brought into Treaty discussion in the 1960s, are crucial components of how the EU is structured and therefore critically important to understand and recognise.

It is important to note, given Corbyn was roundly criticised during the EU referendum, that Corbyn was campaigning to remain but reform given the issues many on the left have with the EU in terms of capital mobility, competition and the potential problems Labour will have from the EU when implementing their radical political strategy if Corbyn is elected Prime Minister. These concerns are key to why the Labour party will look to renegotiate a Customs Union agreement, by trying to block Theresa May’s current deal, making sure there isn’t a ‘no-deal’ and encouraging a general election to win and enable them to negotiate with the EU (see here, here and here).

Grace Blakeley, who has written about the problems of financial capital mobility and its connection with “unproductive speculation and trading” and reasons for why the Leave vote won, summaries the concerns regarding the limitations placed upon radical policy from the EU, arguing:

Any attempt by a socialist government to limit capital flows into or out of the UK, or to direct capital into strategic investments a way that extended far beyond ‘correcting market failure’, would be resisted far more strongly than an attempt to limit free movement. This was made abundantly clear recently, when EU officials told the Times they were far more worried about Corbyn’s post-Brexit plans for state subsidies and a return to public ownership than the Tories’ plans for further deregulation and privatisation. They merely highlighted the latter ‘because it is better public relations’ – as though the EU was a multinational corporation looking to clean up its public image.

Blakeley discusses concerns the EU have re Labour’s policies and the EU’s desire for a ‘level playing field’ to be key to negotiations given this. The concept of a ‘level playing field’ is central to the EU’s discussions and actions around capital mobility.

There is increasing attention being paid to arguments from the left that are critical of the EU. For instance, in a New Statesman article, Joe Guinan and Thomas M Hanna argue, “ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s.” Similarly, Costas Lapavitsas argues that:

EU rules would place severe restrictions on a future Corbyn government: State Aid, public procurement and nationalization…These are not minor issues. They lie at the heart of any attempt to transform Britain’s economy in a socialist direction, especially when it comes to industrial policy. As the debate over Brexit rumbles on it is clear that the EU would place unique barriers to a Corbyn-led Labour government—making even a reversal to WTO rules more advantageous than either EU or Single Market membership in these respects.

With regards to public ownership, Guinan and Hanna argue this has been “discouraged and disadvantaged” by EU law, encouraging privatisation (they cite Article 59 of the TFEU, for instance). Lapavitsas agrees, arguing:

There are likely to be challenges on introducing public ownership, if publicly owned firms received support that aimed to replace private provision and pursue wider policy goals…While the European Union includes many member states with nationalized industries and utilities, its rules are set up to steer a course towards privatization, and to make renationalization ineffective at best and impossible at worst…In practice, the EU rule of forbidding public monopolies means that the state could only own a provider of a service in a market, not abolish that market altogether. State providers would be forced to compete with other providers, who would often not be subject to the same constraints. The history of such arrangements across Europe and elsewhere shows how easily state providers are undercut in terms of cost by rivals willing to pay lower wages, or cut corners on health and safety, or even provide services only where they make money.

This relates to discussions regarding the EU’s fourth railway package and what potential consequences it could have on a Labour government’s policies for rail renationalisation. The fourth railway package refers to opening “up each country’s rail network to competition and ultimately create a single European market in rail services.” Jonathan Cowie argues “the only thing that the new system will almost certainly rule out is state monopolies that do not have to compete with rivals to win franchises, renationalised or otherwise.” Furthermore, critically reviewing Cowie’s argument, Nicole Badstuber argues “the EU package may not strictly require privatisation but it is definitely designed to create an environment conducive to this.” Moreover, Alex Gordon and Jonathan White state that the “EU single market membership frustrates any ability to create coherent, integrated, nationalised industries and utilities based on democratically agreed national needs” when discussing the incompatibility of Labour’s manifesto with the EU’s single market, citing how British Rail would not be allowed under these conditions whilst also mentioning the problems Labour would have in creating a national investment bank. There are also concerns that renationalisation of the NHS would be difficult for Corbyn under EU law, with healthcare now seen as an ‘economic activity’ meaning “EU rules on the internal market (free movement of goods, persons, capital and services), public procurement and state aid, in principle apply to healthcare services.”

In reference to industrial strategy, Guinan and Hanna argue that “Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods” and for this to be fundamentally addressed there will need to be state aid. State aid refers to “the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.” The EU will not allow state aid if they don’t see it as being compatible with the internal market and if there are worries it will undermine competition. Guinan and Hanna argue: “Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions.” Lapavitsas even argues that in terms of State Aid, the World Trade Organisation (WTO) rules would actually be better, saying “the World Trade Organization rules — only brings into sharper focus how restrictive and neoliberal EU state aid policy is.” However, there are serious concerns with a no-deal Brexit where WTO rules would become the default. Recent polling shows that there is popular public support for removing the constraints of state aid even if this means sacrificing a close trade relationship with the EU.

Given these concerns, Laurie Macfarlane has written a very useful article looking at the options Labour have when it comes to the EU and Brexit, utilising a handy theoretical framework:

A helpful framework for untangling these issues is Dani Rodrik’s impossibility trilemma. This states that democracy, national sovereignty and cross border economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full. In the context of Brexit, it means that we can do any two of the following:
a) Retain the benefits of economic integration that come via membership of the EU’s single market and customs union;
b) Reclaim national sovereignty by returning powers to the British parliament that currently lie with the European institutions;
c) Uphold democratic principles by ensuring that we have a say over all the laws we are subjected to.

Given this, Macfarlane argues that Labour have two clear options:

This leaves two possible options which, on the face of it at least, do not involve a significant loss of democracy and sovereignty. Firstly, Labour could favour a harder Brexit which seeks to reclaim national sovereignty and take back control of our rules and laws, while sacrificing economic integration with the EU – and incurring whatever economic cost that might carry (hereafter referred to as the ‘Lexit’ option). This effectively combines options b) and c) in the list above, while sacrificing a). Secondly, Labour could favour a second referendum and campaign to remain in the EU, and seek to transform it from within – and incur whatever political cost this might carry (hereafter referred to as the ‘Remain’ option). This effectively combines options a) and c) in the list above, while sacrificing b).

However, whether it can be argued democratic principles would be ensured and C) met by having a second referendum and discounting those who voted to leave in the 2016 referendum is very dubious and contentious.

Macfarlane also argues that in terms of state aid and its impact upon Labour’s policies implementation, it will depend upon Labour’s policy details. This links into a crucial point regarding the left Brexit debate: the difference between social democracy and democratic socialism. Macfarlane explains:

Whether or not these rules are a barrier to Labour’s economic agenda depends on the scope of the Party’s aspirations. Labour’s 2017 manifesto was very much in the vein of moderate European social democracy. Nearly all of the flagship policies already exist in other northern European countries such as Germany and the Nordic countries, and it would be possible to implement most of these within the EU’s State Aid and competition regimes. The reason these policies have not been implemented in the UK so far is not because of any EU rules – it is because successive UK governments, including Labour governments, have been ideologically opposed to them… the UK has consistently spent significantly less on State Aid expenditure relative to other Northern European economies. However, while the EU’s State Aid and competition regime is relatively accommodating of social democracy, it is less accommodating of democratic socialism. At a basic level, the EU’s State Aid and competition regime is fundamentally rooted in the idea that goods and services are most efficiently produced by private firms operating in a competitive market, and that the state should only intervene in markets to ‘level the playing field’ or to correct certain identifiable market failures. If Labour plans to mount a serious challenge to this logic, and move beyond the moderate social democracy implied by its 2017 manifesto, then it is likely that this would place a Labour government on a collision course with the EU’s State Aid and competition authorities.

This is crucial and links into arguments made for a Green New Deal via EU State Aid (see here) for instance, and how EU State Aid helps stop corporate welfare (contra to what happened with Amazon in the US). However, this ignores democratic socialist arguments regarding radically restructuring the way society, politics and economics works and the different perspectives of democratic socialists and social democrats when it comes to capitalism and if it should be controlled or replaced. Replacing capitalism also links into the threat of environmental crisis and the incompatibility of capitalism with environmental justice (especially given its obsession with endless compound growth at huge costs to the environment). This difference between social democracy and democratic socialism is worth bearing in mind when reading any article about how the left should approach the EU.

Summing up Lexit, Macfarlane says:

Lexit therefore demands a hard form of Brexit, where post-Brexit arrangements with the EU are kept to a bare minimum. Any softer form of Brexit would mean that the UK government would not have control over the various policy levers that the case for Lexit relies on. Under such a scenario, the UK would have more flexibility over areas such as State Aid, although it would still be bound by WTO rules, which are narrower in scope compared with EU state aid rules. It would also be able to introduce capital controls if an elected government so wished…Even in a Lexit scenario, the UK would have to comply with European regulations and standards if it wants to maintain and expand its global production chains, but will have no say over these rules. For the same reasons, after Brexit the UK will be less able to hold multinational corporations to account compared with being inside the EU. An independent UK is simply not a large enough economic power to exert influence on large foreign-owned corporations…An independent UK – socialist or not – cannot fully insulate itself from the forces of global capital.

There are important points of discussion here and why many argued – including Corbyn – our best position would have been staying in the EU and focusing on reforming within (see here for suggestions on how to reform the EU), especially given the economic and political consequences of leaving the EU including the negative effect on trade, our service sector, jobs and possibilities for the far right alongside the problems with a hard border in Northern Ireland. On this basis, Macfarlane makes a convincing argument for a second referendum:

Although it would need careful planning, such a strategy could involve painting the Brexit impasse as a crisis engineered by the Tories, highlighting that the only way out of the deadlock is to have another referendum, and then campaigning in the referendum on a radical platform of ‘remain and reform’. With the Tories weakened by internal division and political crises, and Labour’s grass roots membership firmly in favour of Remain, the party would be in a strong position to win the referendum – and ultimately the next general election.

However, Dawn Foster’s article on the problems of another referendum are worth referring to again here; I don’t share the optimism that Remain would win and that it would be easy to disassociate the Remain campaign from the liberal elites who oppose Corbyn and see no need to reform the EU. I also don’t believe it is a democratic thing to do, and would risk inspiring the far right even more as they feel the establishment has ignored them again – something Corbyn has been trying to address with his authentic leadership.

Some, looking for an alternative, argue for a similar model to Norway. Ellen Engelstad, writing in Tribune’s first issue since its relaunch, argues that despite many looking towards Norway’s European Economic Area (EEA) agreement as something the UK should follow, there are many problems with this including the acceptance of the single market – and thus capital mobility – without much say in the laws and rules made and implemented by the EU. Engelstad argues that Norway’s membership with the EEA has been key to members of the public being opposed to membership of the EU, and citing many of the problems discussed above in terms of nationalisation, public procurement and state aid alongside the opposition to the fourth railway package and the undermining of workers’ rights and power under the EEA, sums up Norway’s relationship with the EU as: “not only has it meant more than two decades of neoliberal laws that undermine the welfare state and the workers’ movement, it has also in practice been undemocratic.”

In sum, it is important to acknowledge the complexity of this debate and the challenges this country faces and also the left faces in navigating the reality of a decision created by David Cameron, who promised a vote on membership for his own indulgence as he tried to be friends to all in the Conservative Party with no care for the consequences. Things to consider when discussing the best possible way for the left to move forward involve acknowledging concerns regarding the EU’s structural and ideological obsession with liberalisation and the markets – linking with the promotion of capital mobility – and how much this impacts upon left policies that Corbyn’s Labour wants to implement, relating to discussions regarding the differences between social democracy and democratic socialism. Social Democrats don’t see any issues with remaining in the EU (they might advocate some reform, but nothing too radical), arguing we can increase state aid within EU acceptable levels, encourage (part)nationalisation within a mixed economy and rely upon the EU to curb corporate power (namely through state aid). Democratic Socialists are critical of remaining in a political and economic union that has liberalisation and capital mobility at its core, as shown by agreements such as the fourth railway package and the concerns over how much change Corbyn would be able to do under such neoliberal framing. If Corbyn was able to transform the UK through democratic socialist ideas, the country could become a beacon for other countries to look towards and follow. There are obviously issues and concerns regarding adjustments to WTO regulations and the fact there is global financial capital flows with vested interests intent on stopping Corbyn’s revolution in whatever way possible. However, when we look at the predictions regarding climate change, time is running out. Can we really afford to be content with just reforming capitalism? There is serious potential for supplanting capitalism with democratic socialist ideas, it wouldn’t be easy, but it has to be considered when we think about navigating our way through Brexit.

No Comments

Leave a reply