Kieran Allen, National Secretary of People Before Profit, has written a comprehensive pamphlet which seeks to look at the class dynamics that brought about Brexit and suggest policies that the Left should advocate in response. The pamphlet will be published in parts on Rebel, beginning here with part one.
A shadow has crept over Ireland – Brexit. It has brought worry, concern and even panic about the future. Sometimes the fear is induced and sometimes it is real. The withdrawal agreement drawn up between the EU and British negotiators may appear to offer some hope that there will not be a hard border. But it is not clear that Theresa May can secure enough support for such a deal. And if she did, it is still a transitional deal that lasts until, probably, 2022.
Those living in border counties are most affected. They have enjoyed nearly twenty years without customs posts, immigration officials or soldiers. That has meant free movement between the two states, but Brexit threatens that.
Throughout the island, there are real fears of the economic consequences if tariffs are erected between Ireland, Britain and the EU. Despite all the talk of globalisation, a significant part of the Irish economy is still interlinked with Britain. If tariffs are placed on Irish imports, fewer goods and services will be sold. The first to suffer will be the workers who produce them. Redundancies, short time and even more wage cuts could once again be the order of the day.
And then there is the situation of the Northern nationalist community. The last thing they want is a restoration of a physical border and a growing divergence between the North and South.
And it is not just nationalists. A majority of people – 56% in the North – voted against Brexit. Many who would designate themselves as ‘Other’ do not want to see a return to a border. Neither do liberal Unionists who have become used to travelling back and forth between Belfast and Dublin.
Since the last election, the Democratic Unionist Party have become kingmakers at Westminster. They have fallen out with May because they thought she did not do enough to strengthen partition. But they can just as easily go back into an alliance with their natural right wing friends. If the minority population is locked into a Northern state that is under the direct control of a Tory–DUP coalition at Westminster, many fear that sectarian bigotry will get a new lease of life.
There is also the small matter of border posts which could become the targets for paramilitary groups, thus starting a new cycle of violence.
No one can accurately predict the future, but there is a real basis for these fears. But whether they are real or imagined, the ruling class in both Britain and Ireland want to use Brexit for their own purposes, and, in order to do so, they will induce further fears to create a sense of crisis.
‘You never let a serious crisis go to waste,’ said the Chicago politician Rahm Emanuel. Elite politicians have taken it to heart ever since. In what Naomi Klein called the ‘shock doctrine’ effect, they use a crisis to get away with things they could not do before. You only need to think of how they used the 2008 crisis to raise the pension age, cut wages and target the young for reductions in social welfare.
The Tories in Britain and Fine Gael in Ireland are trying to use Brexit in a similar way.
The Tories want to project themselves as ardent British patriots who are holding back a tide of immigrants. Theresa May was so confident this strategy would work that she targeted safe Labour seats before the last election. Fortunately, Jeremy Corbyn’s Labour prevented her from succeeding. In Ireland, Fine Gael are trying to use Brexit to rebrand themselves as owners of the green jersey. Varadkar presents himself as a man of destiny who is able, by clever diplomacy, to get the EU united behind the Irish interest. Foreign Minister Simon Coveney vaguely hints that the issue of partition might be reopened at this historic moment.
Behind this lofty rhetoric, there are real moves to use Brexit to further cut taxes on big business and limit wage rises.
The ruling class are supremely aware of their class interests and are very strategic about convincing the population to accept their interpretation of events.
It is not all plain sailing for the ruling class, however. Brexit has caused a deep political crisis for the establishment, opening up the possibility for progressive change in the process.
The Tories in London are tearing themselves apart; the last vestiges of the British empire are beginning to crumble; Corbyn’s Labour party is on the verge of power and more and more people are questioning the viability of partition in Ireland.
All of this is the result of Brexit. Indeed, had a Remain vote succeeded, it is likely that the Tory party would have remained united under David Cameron, the Blairites would have sought Jeremy Corbyn’s head in another leadership contest and the question of the viability of the UK would have been left for another day.
This means that the Left, not just the ruling class, can gain from this crisis. Here in Ireland, Brexit opens up the possibility for socialists to advocate for a radical new direction in politics, one that moves away from partition and control by the Tories, breaks with the neoliberalism enforced by the EU and fights for a new 32 county socialist Ireland that everyone on this island can have a stake in.
To do this, however, the Left must break from a fatalism that imagines the best we can do is side with either the Tories in London or the EU in Brussels. Working people on both sides of the border need to approach Brexit from the point of view of their own class interest. This means going beyond nationalist images which, in their latest guise, portray British people as all stupid racists or the EU as a haven of progressive liberalism. To paraphrase the great socialist James Connolly, we stand with neither London nor Brussels in the Brexit fight.
This pamphlet seeks to look at the class dynamics that brought about Brexit and to suggest policies that the Left should advocate in response.
The Tories and Brexit
The British Conservative Party were not always opposed to the EU. In the early 1970s, its Prime Minister Edward Heath enthusiastically supported Britain’s entry into the European Economic Community. The Tory Conference, composed of ‘backwoods squires, retired businessmen, flogging colonels, flower hatted ladies from the women’s Institute, united in frenzied applause for Heath’s historic success in Brussels’.
Prior to the 2010 election, only six Conservative MPs publicly declared their support for leaving the EU. Boris Johnson even advocated Turkish entry to the EU.
Though a minority of Tories backed the Leave campaign in the referendum, the official line of the Conservative Party was to support remaining in the EU. Since then, Theresa May has switched sides, and her party has become an enthusiastic supporter of Brexit. To understand this change, you need to look at the decline of British capitalism and the desperado tactics of its ruling Tory Party.
Britain’s Role in the Global Economy
Britain is a substantial player within global capitalism. It is the sixth largest economy. However, it has been in long-term decline for some time.
In the nineteenth century, Britain was the workshop of the world, and, at its high point in the 1870s, capital invested per worker in UK manufacturing was approximately 10% higher than in the USA and 30% higher than in Germany. Westminster had brought the peripheral regions of Scotland, Wales and Ireland under its control. Britannia well and truly ruled the waves!
Over the next hundred years, however, Britain fell behind its imperial rivals. It fought two world wars to ward off Germany before finally accepting a more subservient role as the US ally. But this decline has accelerated since the 70s.
The British capitalist class have turned away from manufacturing and towards an economy heavily dependent on ‘financial services’.
Economists measure the level of investment through Gross Fixed Capital Formation. In Britain, this has declined from 24.5.% of GDP in 1989 to 16.8% in 2015. This is less than its rivals for the past two decades. By contrast, British companies pay out a higher level of dividends to their shareholders than most other countries. In other words, short-term
greed trumps long-term gains.
Not only is the level of investment low, but it is mainly flowing towards property and finance. For every pound British banks lent to manufacturers in 2014, they lent almost £36 to home buyers. Britain has become a service economy, with 80% of its exports coming from services. Financial services now represent 6% of Britain’s economy compared to just 10% for manufacturing. The near parity between the two sectors is in sharp contrast to Germany, where finance is only a fifth the size of its manufacturing sector, which represents 23% of its economy – more than twice the proportion of Britain.
The low level of investment and the shift to services helps to explain the low pay, precarious jobs market. The productivity of its workforce is relatively low – because of the lack of investment in machinery – and so, low wages have become the key driver of the economy. Michael Roberts describes the situation accurately:
British employers, rather than invest in new technology that could replace labour, have opted for ‘cheap unskilled labour’, both British and immigrant, with full knowledge that with little employment protection and weak trade union backing, they can hire and fire as they please.
The scale of the disaster facing British workers is enormous. Although Britain has full employment, real wages for the average household have fallen further and for longer than at any time since the great depression of the 1930s. A TUC report indicates that wages have stagnated for 17 years. They state that the current period of wage stagnation is the worst for two centuries. Not since the beginning of the the 18th century has it taken so long for real wages to recover from a slump.
An interim report from the IPPRC Commission on Economic Justice noted that:
The UK’s high employment rate has been accompanied by an increasingly insecure and casualised labour market. Fifteen percent of the workforce are now self-employed, with an increasing proportion in enforced self-employment driven by business seeking to avoid employer responsibilities. 6% are on short term contracts and 3% are on zero hour contracts. More workers are on lower pay than ten years ago. Insecure and low paid employment is increasing physical and mental ill-health.
The picture, of course, is not uniform. High salaries are being earned in financial services in London, but this has only added to severe regional disparities. All of this has huge political implications.
The Party of Big Business
The Conservative Party has long been the main party of big business. It was the natural, trusted leader of British capitalism and has held a hegemonic position over a substantial minority of British workers. It promised security, reasonable living standards and stability if the population stayed loyal to Queen and country. It was the party of the Union, upholding an imperial tradition that incorporated Northern Ireland, Scotland and Wales.
The downward trajectory of British capitalism is mirrored in the decline in size, confidence and coherence of the Tories. The Tories are an ageing, mainly male and thoroughly upper-class party. The over 65s, for example, constitute 44% of their membership. They have only a fraction of the membership of the Labour Party, with 100,000 members compared to Labour’s half a million.
Much of the Tory membership base lives off forms of rentier income. They want their dividends to flow in annually. They invest in the City of London and expect a regular income as their fund managers scour the world for profitable returns.
Initially, the EU proved to be a major boon for those who lived off finance. The City of London became the continent’s centre for ‘light regulation’ and tax dodging. Money from all over world flowed into the coffers of its finance houses, which were then able to ‘passport’ their services throughout the EU. Even financial deals conducted in the euro, a currency which Britain did not join, were ‘booked’ in London. About 70% of EU foreign exchange trading and 40% of global trading in euros took place in the UK. The City also hosted 85% of EU hedge fund assets and half of EU investment activity. Only a small cut flowed into the pockets of the local dealer, but as this came from a massive amount of financial activity, it was enough to featherbed them for life.
After the crash of 2008, however, other EU states increased pressure for greater regulation of finance. France began pushing for a clearing house within the eurozone for financial transactions conducted in that currency. This represented a threat for the City of London, but it was by no means a matter of life and death.
However, it fed into the rage and resentment of the Tory grassroots. The EU was already a kind of punch bag for their anger over Britain’s decline. The EU became a symbol of how ‘the foreigners’ were taking down Great Britain, and its ‘red tape’ was apparently strangling their entrepreneurial spirit. Some began to move over to UKIP. Others turned Tory local branches into fanatical eurosceptics.
In normal times, the capitalist class have a stable support base in a right-wing party that champions private property and the market. The big capitalists rarely involve themselves in day-to-day politics, but they draw on an activist base of small business elements, barristers, auctioneers, estate agents and the like who, most of the time, remain deferential and loyal to their big capitalist betters.
But in times of crisis, the easy fit between the economic elite and their political servants comes unstuck. The core base of right-wing parties sometimes revolt – by moving further right – and shout and scream for a return to ‘making Britain great again’.
This is exactly what happened within the British Tory party. The core of the ruling class wanted to remain in the EU. They knew that many of Britain’s export markets were in the EU and that the City of London – despite minor attempts to restrict its activities – was benefiting. The top brass of the civil service, of the army and of the political elite, also knew that Britain’s geo-political interests were best served by Remain.
But in post-austerity Britain, the chains that linked the ‘natural leaders’ of British capitalism to their petty bourgeois activist base snapped. The Eurosceptics consciously inter-mixed the lack of democracy in the EU with resentment against foreign migrant labour. To their own surprise, they won because this rhetoric connected with millions of workers who were fed up with low pay and insecurity. Workers wanted to give two fingers to the ‘establishment’, and they thought Leave was the best way to do it.
The person who most symbolises the ineptitude of the current political elite is Boris Johnson. This political adventurer aimed to lead the Tory party, and so he wrote two opinion pieces for the Daily Telegraph before the Brexit vote. One advocated Remain and the other Leave. In the end, he chose Leave – never imagining that he would have to carry it through. The game-playing of this ex-public school boy was symptomatic of a wider decay of his class.
There were legitimate reasons to vote Leave and, if allowed by his party, Jeremy Corbyn might have put them forward. But he was not. A left voice that was critical of the EU was barely heard, and what the British public got was a Tory Brexit, promoted by ageing, resentful fantasists with no strategy even for their own class.
This Tory Brexit will bring no benefit for workers. In the words of Jeremy Corbyn, ‘Britain would move into a low tax, bargain basement economy on the off-shores of Europe’. Once they leave the EU, the Tories will remove any restrictions on the City of London operating as a hub for global speculation. They will stage a race to the bottom on tax dumping – a move that will even undercut Dublin’s IFSC.
They aim for international trade deals that abolish any labour and environmental standards. Everything from antibiotic-and hormone-impregnated meat to unsafe chemicals will be allowed. Under the guise of even more free trade, they will cut back on ‘state aid’ and open up the NHS to American health providers.
Jacob Rees-Mogg, the current upper class twit who leads the Brexiteers, has said that ‘the overwhelming opportunity for Brexit is over the next fifty years’. In other words, he is admitting there are no benefits for workers, contrary to the promises made during the referendum. Instead, empire nostalgia and the poison of racism will be used as the primary methods of rule.
In the Tory vision, not the slightest element of respect will be shown for the wishes of the majority of people in Northern Ireland and Scotland. Rees-Mogg’s claim that the Irish border will have to be ‘inspected’ for ‘gunrunning’ testifies not only to a deep ignorance but also to contempt for the concerns of the Irish people.
Given these developments, working people on both sides of the Irish border must prepare to defend their own interests from the consequences that flow from a Tory Brexit.