Which way for British capitalism? (2019)

From the February 2019 issue of the Socialist Standard

Interviewed on BBC Radio 4 on 17 January Tony Blair explained the dilemma the UK capitalist class face. He pointed out that for the past 40 or so years their governments (even under Thatcher) had pursued the policy of becoming part of a Europe-wide single market (i.e. a market with common regulations and standards and not just a tariff-free trading area) and that they were now completely integrated into it in terms of export markets and supply chains. They could withdraw but this would cause disruption and would be giving up a secure market they already had. A referendum had voted in favour of withdrawal but this could be interpreted in various ways, including just withdrawing from the EU’s political institutions. He said that this (now called Norway Plus) would avoid the economic damage but would leave the UK in the position of a rule-taker, as the extreme Brexiteers pointed out, as it would have no say in drawing up the single market’s regulations. In that case it would be better for the UK capitalist class if the UK stayed in the EU.

This is politically impossible, at least not without another referendum. But if the UK gives up its frictionless access to the single market this would have to be the first time in the history of capitalism that a capitalist state has voluntarily opted for less favourable access to a market it already has. In proposing this, even via a no-deal, the extreme Brexiteers are in effect arguing that two birds in the bush are worth more than one bird in the hand.

If there is no second referendum and no-deal is ruled out, the only deal that would probably make sense from the point of view of the majority of the UK capitalist class would be Norway Plus, as that would at least ensure the status quo of frictionless exports and imports and would avoid having to turn the clock back by unravelling the single market integration that has happened so far. The trouble is that this is likely to split their main party, the Tories, as the Tories like to remind themselves happened to them in the mid-1840s when Sir Robert Peel embraced Free Trade and repealed the Corn Laws.

From the point of view of pure democratic theory, there is nothing wrong with holding a second referendum. One referendum result can be overturned by another referendum. In this particular case — which is about the trading arrangements of the UK capitalist class — the issue is not one that concerns those who want socialism. It would be an even greater festival of xenophobia than the first. And those favouring it might not get the result they expect, which is why the UK capitalist class might settle for Norway Plus as less risky politically. But they don’t act directly. They leave that to their political representatives, the MPs, who have their own agendas like keeping or obtaining office or being re-elected at the next election or keeping their party together and who might screw things up.

The Labour Party leaders want a general election. This makes sense from their point of view since, if they don’t get one now, they won’t get another chance until 2022. Some Labour supporters imagine that this is the most important issue today as a Labour government will end austerity and usher in a period of prosperity for the many whether the UK is in the EU or not. But they are as deluded as those workers who believe the toffs who tell them that Brexit will bring them sunny uplands and a golden future. Neither will for the simple reason that capitalism does not work, and cannot be made to work, in the interests of the majority. It is a system driven by profit-making that can only work in the interest of the profit-takers.

Single capitalist market (1988)

Book Review from the July 1988 issue of the Socialist Standard

Trading Places by John Palmer, Radius

The media are currently making a big fuss about the "single European market" which is supposed to be coming into existence in 1992. Capitalists have been appearing on television and in press advertisements to tell us what a good thing it will be for them. They are right; it will be a good thing for them, or at least for some of them, but for those who depend on working for a wage or salary it is a monumental irrelevance. About the only concrete change we'll notice will be the suppression of duty-free allowances when we come back from holidays in Europe.

Trading Places is written by Guardian journalist John Palmer, to accompany the ITV television series of the same title. He explains the idea behind the so-called single market is to move from the customs union (with no tariff's, quotas or customs duties) which has already been established in Europe to the abolition of what are called “non-tariff barriers" to trade, by which is meant differing health and technical standards and different taxes (VAT and excise duties) which impede the free movement of commodities. Hardly the most fascinating of subjects, but to be able to argue the case for the abolition of all markets, socialists need to be informed about what's going on under capitalism. This book provides the needed information on this particular subject in a readable form.

Adam Buick

Brexit: will it all be a fuss about nothing? (2018)

From the August 2018 issue of the Socialist Standard

‘Iain Duncan Smith: Cabinet’s Brexit proposal is a betrayal of 17.5 million voters who wanted to take back control of their own laws, borders, money and regulations’, was the heading of his article in the Mail Online on 8 July. That’s only his opinion. Actually, 17,410,742 voted ‘Leave’ to the question on the ballot paper ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’ while 16,141,241 vote ‘Remain’. Strictly speaking, then, what there was a majority for, was for the UK to withdraw from the Treaty under which it joined the EU and so from the EU’s decision-making institutions (Commission, Parliament, Court of Justice, etc).

Iain Duncan Smith may have voted Leave because he wanted the British capitalist state to take back formal control of UK ‘laws, borders, money and regulations’. Many others may well have done so too, but others will have voted to withdraw merely from the political side of the EU project. As the Tory MEP, and prominent Leave campaigner, Daniel Hannan noted, one argument used to attract Leave voters was that things had changed since they had voted in the 1975 referendum to confirm staying in: ‘I voted to stay in the common market. No one ever mentioned a political union’ (Spectator, 28 April). It will only have taken 634,751 (half the difference between the Leave and Remain votes plus 1) to have been convinced to vote Leave on this ground and Iain Duncan Smith’s claim that a majority voted for what he wants falls.

Hannan himself is pretty relaxed about just withdrawing from the EU’s political institutions as long as the UK has some scope to do its own trade deals, writing on a Tory discussion forum:

‘A 52-48 outcome pointed to some sort of association that stopped short of membership. Britain would keep most of the economic aspects of the EU while losing most of the political ones . . .  We’d end up very broadly, in an EFTA-type arrangement à la Suisse’ (Conservativehome, 10 May).

We can leave these two high-profile Leavers to slug it out. The Tory party can split over the issue for all we need to care.

People will have voted Leave for all sorts of reasons – to kick out the Poles, to do down the government, because they believed the promises that they’d be better off, to protest against their personal economic plight. Who knows? In the end it doesn’t matter why, since the outcome will depend on jostling between different sections of the capitalist class.

Most of them were in favour of Remain. A minority, mainly financiers who didn’t want their dealings to be regulated by the EU (and who largely financed the Leave campaign), favoured Leave. Perhaps unexpectedly, they won. Ever since, the majority section, and the politicians who represent them, have campaigned and lobbied to limit the damage to their interests. The plan agreed at Chequers on 6 July goes a long way to catering for their interests. It is more or less what Hannan envisaged as a compromise between the two sections of the capitalist class, even if Jacob Rees-Mogg, the cartoon toff – Lord Snooty in the Beano – doesn’t like it. But then, he’s a financier with interests in Hong Kong.

A customised union

A ‘customs union’ is an arrangement between capitalist states under which there is tariff-free trade between them. A ‘single market’ takes this a step further by also removing non-tariff barriers to free trade such as differing technical, safety and environmental standards. This means that trade within the area can be ‘frictionless’ as there is no need for border checks to see if the goods conform to these standards since they are the same in all the participating states. Another way of defining a ‘single market’ would be that it is a customs union with a ‘common rulebook’.

At Chequers the government agreed that the UK should in effect stay in the EU single market for goods (if not services). It is what the manufacturing section of the capitalist class, as represented by the CBI, wanted, even if it won’t be as good for them as now since they won’t have a say, via the government, in drawing up future additions or amendments to the common rulebook.

Trump had a point when he blurted out that this could sink a US-UK trade deal in goods. There would be no point. As he said, the US would deal with the EU as what was agreed with them would apply to the UK as part of the single market:

  ‘If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal’ (Sun, 13 July).

He’s not all that badly briefed. The government replied that he hadn’t read the small print, and it is true that the Chequers proposal does come up with a novel way for the UK to be able to do trade deals with non-EU countries, if any are interested. Normally, a customs union (which is what a single market implies) involves a common external tariff against imports into the area. The government is proposing that this should only apply to goods intended for parts of the single market other than the UK. So, as now, the UK would collect the common tariff on these goods entering the UK (and pass the money on to the EU), but not on goods from outside the EU intended for the UK market only.

In theory this might work, but it wouldn’t make a trade deal only with the UK that attractive since the EU market is much larger. Conceivably the US might agree to a deal that would allow chlorinated chickens and GM foods to be imported into the UK but there would have to be some way of preventing these getting into the rest of the single market by, for instance, being smuggled across the Irish land border.

It might work if the EU agrees to go along with it. The EU might if they can get guarantees against smuggling but they can be expected to insist on the Court of Justice having a decisive say in any disputes. And there will have to be a deal rowing back on the free movement of people (incidentally, one of the few benefits of the EU for ordinary people) towards the free movement for employment that was part of the original Treaty.

Services (which are mainly financial) are to be excluded from the common rulebook. This should please those financiers who funded the Leave campaign – they won’t be subjected to EU regulation. On the other hand, less shady financiers won’t be happy as they will be excluded from some trading with the EU. To get round this they will have to move a part of their business from London to Frankfurt or Paris or Dublin but no doubt they will be able to live with this. And maybe they will bargain US access to providing services to the NHS for more access to Wall Street.

One thing that won’t happen is the UK crashing out of the EU with no deal. That would provoke an instant economic crisis that would have global consequences, as well as likely to re-ignite the Irish Republican armed struggle in Northern Ireland. It’s in nobody’s interest. Even those who feign to believe that ‘no deal is better than a bad deal’ don’t really believe this. It’s only bluster to try to strengthen the UK’s negotiating hand.

So, in the end, it looks as if it’s all going to turn out to be a fuss about nothing. Britain will stay in the single market and business will continue as usual. Maybe many of those who voted Leave will feel betrayed but they would also come to feel betrayed, if the hard Brexiteers had their way, when these cynical ambitious politicians failed to deliver on their promises of a better life. They wouldn’t be able to deliver because, no more than a change of government, can a change of trading arrangements make capitalism work in the interest of wage and salary workers and their dependants.

Adam Buick

Editorial: Deal or No Deal? (2017)

Editorial from the August 2017 issue of the Socialist Standard

Theresa May called the election to try to get a parliament more compliant to the sort of Brexit her government wanted – No to the single market, No to the customs union, No to the Court of Justice, a stand-alone Britain on the capitalist world stage. In the event she failed miserably and got an even less compliant parliament.

Sensing her weakened position, those elements within the capitalist class opposed to her idea of Brexit – which is most of them – together with their political and media representatives have taken the offensive and are pushing for a much less radical Brexit – leaving the political aspects of the EU but retaining as many of the economic ones as can be.

This makes economic sense from their point of view; which is why they supported joining and remaining in the EU. Being a member of the customs union means no tariffs on goods exported to other EU countries and, also, given the EU's size, more collective clout in trade negotiations with third-party countries and other trading blocs. The single market takes things further and has already made considerable progress in removing non-tariff barriers to inter-EU trade, such as different standards.

Even some die-hard opponents of the EU, who did so much to stir up xenophobia during the referendum campaign, are now hinting that, after Britain officially withdraws from the EU in 2019, they might accept transitional arrangements allowing Britain to stay in the customs union and single market for a period while full withdrawal from them is prepared. They even seem ready to countenance, during this period, some payments to the EU and some role for the European Court of Justice.

Capitalist reality seems to have struck them. No more bluster and bluff about Britain regaining its 'independence' in March 2019.  No more talk of 'no deal being better than a bad deal'. Now, apparently, as they contemplate the economic (and, in the case of Northern Ireland, political) consequences of tariff barriers and customs posts going up on 'independence day' if there's no deal, even a bad deal (from their point of view) is considered better.

There will be a deal of some sort, even one which could leave things much as they are. It will certainly leave capitalism much as it is, as a system of production for profit based on the exclusion of the majority from ownership and control of the means of production with all the problems this causes for the excluded majority and for humanity in general.

Only capitalist interests are at stake in negotiations over trading arrangements between British capitalism, the EU and the rest of the world. Leave those whose interests are at stake to get on with it. It's their business not ours. Meanwhile as socialists we will continue to campaign for capitalism as a world system to be replaced by a world of common ownership and democratic control with production for use not profit.

1992 and all that (1988)

From the December 1988 issue of the Socialist Standard

In 1992. the barriers to trade in Europe will be removed. By then, the twelve member countries of the European Economic Community will be working together as a single market in which capital and workers will be free to move about without obstacle. Despite Margaret Thatcher's recent highly publicised and populist opposition to a United States of Europe, the pressure is now on for political change to match new economic circumstances.

Trade and investment no longer bind firms to their national economies. Improvements in communications technology mean that capitalists can operate on a continental scale formerly only possible in the United States. The combined sales of the top three multinational companies operating in Europe — General Motors. Esso and Ford — are larger than the gross national products of all but four of the EEC countries.

Throughout Europe, capitalists are being forced together in mergers and take-overs to defend themselves against worldwide competition. A small percentage of mergers involve contested take-over bids, such as that of Rowntrees by Nestlé. Most mergers, however, are entirely amicable, and the reason has long been apparent:

The battle of competition is fought by the cheapening of commodities. The cheapness of commodities depends on the productivity of labour, and this depends on the scale of production. Therefore, the larger capitals beat the smaller. (Karl Marx, Capital, Vol. 1. Ch. 25.2).

The post-war labour programme of nationalisation in Britain was simply a capitalist initiative to accelerate the process of concentration by instantly transforming smaller capitals into larger ones. The current trend of privatisation is. in reality, a programme of multi-nationalisation, as the necessity for capital to expand beyond the control of national governments becomes irresistible. British Gas already has oil interests in Canada and Kuwaiti capitalists have acquired a substantial stake in BP. 

The position of multi-nationals makes a nonsense of national frontiers. These companies are simultaneously buyers and sellers. Their plants and workforces are linked to facilitate co-operation in the production of a single product. Although separated by many hundreds or even thousands of miles, workers may be as much a part of the same production chain as those on assembly lines housed in the same factory Ford, IBM, ICI and Nestlé all have subsidiaries in at least six EEC countries. It is in multi-nationals like these that capitalist production has resulted in the socialisation of labour on a continental scale.

The formation of the EEC in 1957 and the widely advertised removal of barriers to trade by 1992 are examples of production relations adjusting to new economic circumstances. However, in contradiction to these developments, there are conservative capitalist interests that operate to put a brake on any change. Capitalism profits from the exploitation of workers and benefits from a workforce divided and weakened by petty national differences. Politicians, posing as patriots, attempt to maintain this division in the interests of the capitalists. "There will be no United States of Europe in my lifetime" Thatcher defiantly proclaims.

National antagonisms provide the capitalists with a convenient diversion from the one antagonism that counts to workers: class antagonism. Narrow-minded nationalism is perpetuated by the idea that poverty is caused by there not being enough to go round, and therefore each nation must compete for the wealth available. High wage claims and strikes for improved living standards are familiarly said to be "against the national interest".

But capitalism has long had the potential to satisfy human needs. Only the social organisation and relationships of production prevent it from doing so. Replace capitalism with socialism, and production will be geared not to selling goods on the market for profit but to creating the necessities of life for the satisfaction of need. Eliminate the waste of human capacities and material resources which exists under capitalism and we will achieve an abundance of the means to life to which everyone will enjoy free access.

In 1883 in his speech at Marx's graveside. Engels said: "Just as Darwin discovered the law of development of organic nature, so Marx discovered the law of human history." This law. every bit as scientific as Darwin s. said that "people must always adapt their relations of production to their forces of production”. Thus, the need to get rid of capitalism and replace it with socialism is the need to eliminate production relations which have become fetters on the productive potential of the world. In short: we need a social revolution.

However, there are today forces at work which act to keep the fetters in place. While the right-wing of capitalism perpetuates national differences, the multitude of left-wing sects argue that the working-class is increasingly fragmenting into separate minority-interest groups that must campaign for their palliative reforms on single-issue platforms. In reality the workers of the world have more in common today than ever before. Earlier this century, a London cockney and a Spanish peasant might have seen each other as alien beings. Now, their grandchildren are probably exploited by the same company, producing parts for the same car, pushing buttons on the same IBM keyboard, having received just enough of the same repressive schooling for the privilege of so doing. One might take a holiday in the other s home town. They probably both wear Levi's, listen to the same analgesic pop music, eat the international standard Big Mac and wash it down with Coca-Cola.

Socialists recognise that developments within capitalism itself are enmeshing workers together in production-relations on a continental and then increasingly global scale. Economic development is guiding the course of human history, whether workers are conscious of it or not. Workers everywhere have long shared interests that transcend national frontiers. A Europe opening for trade in 1992 is one sign among many that the appeal for workers of the world to unite has never been more urgent. History is on the side of socialism. The national state, once essential to the protection of national capital is becoming increasingly irrelevant.

Economic necessity is bringing about the world socialisation of production. We must complete the process and effect a world socialisation of ownership. Only then will the forces of social labour be set free and the means to life be produced in abundance for all.

John Dunn