Saturday, June 4, 2016

The EU and the Price of Food (2016)

The Cooking the Books column from the June 2016 issue of the Socialist Standard
In the argument over whether to Leave or Remain in the EU is in the better overall interest of British capitalism, which the media and politicians are urging us to get embroiled in, the Remain side would arguably seem to have the stronger case – from a capitalist point of view that is, of course.
British capitalism benefits from unrestricted access to the single European market and also from having a say in drawing up its rules and regulations. It also benefits from being part of a large trading bloc in negotiations with other states and blocs, on the same principle behind trade unionism that ‘unity is strength’: you can get a better deal when negotiating as a group rather than individually.
But these are not the only arguments that the Remain camp are using. In April the Treasury published a study on what things would be like in 2030 if British capitalism leaves. Apparently, we’ll all be £4300 a year worse off. This is mere fantasy economics, as the Leave camp were quick to point out, including ex-Cabinet minister, Ian Duncan-Smith, who said that governments can’t predict what’s going to happen even a year ahead, citing Chancellor Osborne’s revision in March of the growth predictions in his previous year’s budget. We have always made the same point but can’t recall any politician making it when in government.
Then there is the claim in one of the ‘Britain Stronger in Europe’ leaflets that British capitalism being in the EU is ‘great for families with lower prices in our shops thanks to free trade.’ This is not true as there is ‘free trade’ only within the EU. As far as the rest of the world is concerned, the EU is a customs union which imposes tariffs on goods from outside it, in particular agricultural products. This means higher food prices; which was one reason why some were opposed to British capitalism joining in the first place in 1973.
This is still the case, as Gerard Lyons, of Economists for Brexit, pointed out:
‘There is a tariff wall around the EU that protects agriculture, largely for the benefit of France, and parts of manufacturing, because of Germany. In these protected areas, people pay higher prices than in world markets’ (Times, 6 May).
So, if British capitalism left (and if it is decided not to protect UK farmers – a big If) there would be lower food prices. But this would not benefit workers. We’ve been here before, in the 1840s when there was a campaign to repeal the Corn Laws which imposed tariffs on the import of corn which benefited landowners who creamed off as higher rents the increase in the price of what their farmer tenants sold.
The capitalist opponents of the Corn Laws sought working class support by saying it would bring lower food prices, but, as the more astute trade unionists of the time realised, this would not benefit workers since, by lowering the cost of living, it would lead to lower wages, leaving workers no better off.
Engels, who used to hobnob with Manchester capitalists in the 1840s, wrote in 1881 that ‘there was no secret made, in those times, of what was aimed at by the repeal of the Corn Laws. To reduce the price of bread, and thereby the monetary rate of wages’, so as to increase the competitiveness of British capitalism on world markets or, as Engels said the British manufacturers put it, to enable them ‘to defy all and every competition with which wicked or ignorant foreigners threatened them’ (Labour Standard, 18 June). Which is how the Leave camp is still putting it today.

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