From the February 1983 issue of the Socialist Standard
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Tuesday, February 2, 2021
Angrynomics by Mark Blyth and Eric Lonergan (Agenda Publishing, 2020. £12.35)
The economist Mark Blyth and hedge fund manager Eric Lonergan postulate that anger takes two distinct forms, public and private. Public shows itself in protests, strikes and xenophobia (tribal), while private anger shows itself as mental health issues and despair. They assert that policies enacted by most of the current ‘neoliberal’ governments have failed to address this underlying public anger and that that is the main reason for the recent rise in the popularity of right-wing populist governments. The analogy of hardware and software to describe some of the economic mechanisms to support their arguments is unconvincing. Fintan O’Toole’s book, Heroic Failure, provided more convincing arguments for the shift in the public mood away from neoliberal ideology and the rise in nationalism.
There are references to the French economist Thomas Piketty’s Capital and his idea of a wealth tax. However, they never get around to properly criticising his ideas, despite the promise in the text. They introduce their ‘big’ idea of taxing corporations for use of the public’s personal data, and then investing this in the stock market. They estimate a high return of 6 percent invested over a 15-year period, which might seem unlikely given the volatility of the market. This scheme seems more likely to increase commissions for the financial services sector while having no impact on the immediate issue of the huge growth in inequality and the dearth of ‘decent’ jobs, poor public healthcare and lack of social housing.
The above ideas are just tinkering around with the capitalist system in a classical Keynesian way. They will not prevent the insatiable advance of capital accumulation and the continued rise in inequality and anger of the dispossessed working class.
So, the shouting is over, and a Brexit deal has finally been agreed. In one sense, credit where credit is due. Boris Johnson and David Frost have achieved what they set out to do: to get tariff-free access to EU market for British goods; to end freedom of movement; and to remove the UK from the jurisdiction of the European Court of Justice (the body that enforces the rules of the EU’s law and single market policies). Credit where it is due to Michel Barnier and the EU negotiating team, who exacted a measured price for agreeing to the UK’s wishes.
The EU came into being because, after the Second World War, the capitalists of Europe found themselves competing with those of the Soviet Union and the United States. The latter could achieve enormous economies of scale and concentration of capital, no single group of European capitalists could match that. In order to expand beyond the narrow horizons of their national arrangements, agreements needed to be struck so capital could flow and investments be made secure.
The European Coal and Steel Community was brought into being to regulate the core resources that can cause war between states and so harm investments. This was supplemented by the European Economic Community, and eventually became the European Union. The goal to harmonise and protect investments led to the creation of a single market and customs union: essentially meaning that all of Europe’s capitalists were competing under the same rules.
Rather than have erratic bilateral negotiation of those rules between states, the institutions of the European Union were born to harmonise, implement and enforce those rules. The European Council, the Council of Ministers, the European Parliament and the European Commission were set up to engage in continuous open discussion about how to build the economic community. The European Court of Justice was given the job of interpreting the rules when dispute arose: taking the politics out of matters and turning them into a predictable architecture so that capitalists knew that mere whims of political office holders could not interfere with their interests.
This pooling of national sovereignty necessarily meant power slipping away from the individual state’s elites and a weakening of the links between their capitalist class and their state (and also meant the emergence of a European elite, such as the likes of Stephen Kinnock, son of the former European Commissioner Neil and in turn married to the former Prime Minister of Denmark Helle Thorning-Schmidt).
Divergence of interests
The Brexit debate in the UK was driven by the divergence between the manufacturers of goods and those engaged in financial services. Different rules and jurisdictions are part of the life blood of financial services, every barrier to trade is an opportunity to make money, whereas for manufacturers they are a cost to be eliminated in the search for profits. As financial services became a more significant part of the UK economy, so the cries to be freed from the regulatory grasp of Brussels rose, and the Brexiteers found their coffers filled with fighting funds.
The deal achieved between the UK and EU, formally styled the EU–UK Trade and Cooperation Agreement, sets out the new terms of trade and investment going forward, now the UK has left the institutions of the EU.
Most obviously, it allows tariff-free and quota-free trade between the two market areas of the UK and the EU. This means no tax will be paid on goods moving to or from either market. Customs checks, however, still apply, although the Agreement does mandate that they will be minimal checks and trusted trader schemes will be set up to keep goods moving through as smoothly as possible. However, this only applies to goods.
Services, and importantly financial services, are not covered by the agreement beyond the general WTO terms to prevent discrimination against overseas firms and investors (eg. by having local ownership requirement rights). There is no provision for recognition of qualifications or ‘passporting.’ The size and strength of London’s financial services mean that, given the commitments to the free flow of capital, this should not be a short-term problem, but it does mean there is a gap and both parties are free to try and exploit it.
The Agreement will be managed by a Partnership Council which will contain a UK government minister and an EU Commissioner (meaning the UK no longer can talk directly to the Council of Ministers, as they discovered during the Brexit negotiations, so that scope for trying to talk to heads of government will be limited. The UK will have to deal with the EU as a united bloc). This Partnership Council will be supplemented by a plethora of working groups and specialist committees to implement the various detailed strands of the Agreement. It will have its own secretariat. The Council will meet alternately in London and Brussels.
The Council will supervise and facilitate the implementation of the agreement. It also has the power to amend the agreement and make supplementary agreements. As such the deal is a deal to keep talking, and be in continuous negotiation over terms of trade, much like the EU infrastructure. That this only needs the agreement of a government minister and an EU commissioner means changes can be undertaken quickly and quietly, without transparency of process.
This is even more so, given that the Act of Parliament to implement the deal expressly gives UK ministers the power to make regulations to implement the agreement. Further, the law requires that UK courts interpret all laws in such a way as to make them compliant with the agreement. So much for Parliamentary sovereignty: from now on one minister’s deal with Europe can radically change all the laws of the UK without debate and without scrutiny. It also raises the prospect of UK courts effectively striking down any future Acts of Parliament that might be deemed to be incompatible with the partnership agreement.
As European Law no longer applies, when disputes under the agreement occur, they will first be raised in the Partnership Council and if bilateral agreement cannot be reached, a three-person arbitration board will be convened. The UK and EU will maintain a list of people who would be eligible for ‘high judicial office’ to serve on these tribunals. Only the UK and EU can raise these disputes, private citizens cannot raise them. Their rulings will not directly become law, and courts in the two jurisdictions are expressly not bound by them.
That is, Johnson has expressly removed the legalistic framework that characterises the EU approach to market governance, in favour of bilateral political relations. Instead of imposing fines or other penalties, the arbitration panels will enable the respective parties to raise retaliatory tariffs should the other side not live up to their part of the deal. This includes cross sectional tariffs, ie. being able to raise tariffs on goods outside the immediate dispute in order to inflict proportionate pain, eg. if the EU started to subsidise cheese, the UK could retaliate beyond imposing tariffs on cars.
The fact that these measures are political (and thus discretionary) means they can be used as a threat before they need to be implemented. The mere threat may be enough to deter investors. The lack of predictability will be a significant factor, but that is the price for leaving the court system.
(As a matter of fact, the ECJ does retain a small role, governing the UK’s participation in European schemes, and also the rules of Northern Ireland, under the Withdrawal Agreement).
Although the UK managed to avoid being bound by the EU’s regulations and level playing field rules, this looser formation will leave the UK in the position of the toddler who goes to bed whenever they want to, and it is just a coincidence that that is the same time their parents tell them to.
Rules on country of origin mean that the UK cannot leverage its proximity and access to become a route for third parties to enter their goods into the EU. With car batteries being subject to country-of-origin rules, the UK wouldn’t be able to turn itself into a place of assembly for electric car makers, an important future market.
The big loss for workers is the end of freedom of movement. To go and work in the EU will generally require a work visa from a member state (short-term working is permitted under restricted circumstances, but people have already noticed that singers and musicians will find it much harder to tour in Europe now).
What the deal amounts to is an architecture for a managed divergence now the UK has left the EU. What it means in practice is yet to be seen, but a possible example is Ireland, after it achieved independence from Britain. It spent the next fifty years effectively as Britain’s farm, bound through infrastructural and economic ties to Britain despite being politically independent. The power of capital knows no national boundaries, and even if a group in Britain has managed to secure their exclusive access to the levers of the British state, it is not guaranteed they will be able to do much with them.
Indeed, it is likely, now the heat has been taken out of the immediate UK/EU relationship, that economic convergence could quietly resume through the mechanism of the Partnership Council.
I am a gnostic. Now, before anyone has an attack of the socialist vapours, this is not going to be an attempt to reconcile Marxism with religion. It is the epistemic principle that lies behind the original esoteric manifestations of Gnosticism that we will consider.
For all the fanciful claims made by Gnostics, the essence is each individual coming to know in such a profound way that the knowledge leads to action via conviction. The alternative was for salvation to be delivered by the Church, the authoritative body controlling ideology, effectively rendering people powerless.
The material conditions for achieving socialism exist and have done so for quite some time. The political structures also exist through which that goal can be democratically pursued. Yet, in the near 120 years of the existence of the Socialist Party in Britain the vital element, the working class, has not embraced their own cause.
The last general election, just over a year ago, once again demonstrated how divided against itself the working class remains, and how distant it seems from becoming a credible socialist force. The collapse of the ’Red Wall’ allowing an insurgency of the Blue Meanies was but the latest example of the dominant acceptance that problems can be solved without really changing anything.
Brexit has been an ongoing exemplar with much heat, but little light, as staying in or leaving the EU was the rancorous issue: which would be best, opting for capitalism or choosing capitalism? Hardly worth the political energy that has been expended on it.
Cue nationalism. With Scotland firmly in the Remain camp, the SNP raised the independence banner for workers to rally around yet again. If they are successful will there be some haven from the travails of capitalism north of the Tweed to Solway border posts?
It’s a nonsense of course, but a powerful and a destructive one because while it occupies the minds of Scottish workers, perhaps rouses the antagonism of English workers, they lose sight of the crucial fact that, actually, they are just workers who share common cause with all other workers.
In a song, ‘The White Rose and the Red’ there is a verse that runs,
‘Pennines slope to east and west, / Yet where on the moorland rangeIs a line that’s clearly drawn / Where the colour of roses change?By colours men are misled…’
Be they the colours of roses or other divisive symbols such as flags such totems remain potent political narcotics. If there was an election tomorrow there is nothing to stop people voting for socialism, except they wouldn’t. It’s not simply an absence of socialist candidates, for most who might claim to be socialist voters, their ballots would most likely go to the present-day wearer of the red rose.
The determining factor in socialism becoming realisable is the material conditions necessary being in existence. Without such conditions, the productive and distributive technology, such a society would remain an unobtainable ideal.
History can furnish examples of idealists establishing communities based on common ownership and equality that proved either unsustainable, or, lacking widespread support, were actively suppressed by vested interests.
By the time Marx was writing, those necessary conditions were either in existence or well on the way to becoming so. There has been no significant material barrier to establishing a socialist society for 150 years or more.
Through those intervening years, despite claims made in disparate countries at various times, socialism has yet to garner the vital mass support needed for it to be realised. What is preventing working people deciding to act in their own best interests?
The answer seems simple, but is proving stubbornly difficult to address. The objective conditions for socialism may well exist, but the subjective conditions presently do not. This is the factor that needs to change to fully realise the vast potential of material reality.
When socialists consider the working class they envisage the majority in society acting collectively to pursue their common interests. However, in Britain for example, that collective is actually so many million individuals and each individual needs to become a socialist for the working class to become socialist.
For socialism to succeed, then it is not just the millions in Britain who must be committed, but also the billions worldwide. Not as followers of a vanguard, but active in their own right on their own behalf. Some task.
Marx famously stated: ‘Philosophers have hitherto only interpreted the world is various ways; the point is to change it.’ It is not enough to mount convincing arguments in favour of socialism if they do not become integral in the thinking of the vast majority. Then they can act collectively to change their world.
And this is where being a Marxist gnostic comes in. Actually, all socialists are political gnostics by dint of having become their own authority. There isn’t a secular ‘Church’ to which they can subscribe that will mediate between them and salvation, the achievement of socialism. This is the case whether there be just a few, or vast numbers of socialists.
My tongue may be lodged a little in my cheek, but those who have seen through the miasma of falsehoods that cloud the general view of capitalist society, are the ones who know in a profound sense, why capitalism cannot simply be made better, why socialism is the only viable alternative.
The task of dispersing that miasma remains daunting, but feudal monarch, bishops and barons felt their positions in the world were unassailable, while their peasants largely regarded society as being divinely ordered and beyond change. Yet change it most certainly did, and profoundly so.
We will conclude with a secular (and very, very loose) reworking of the third secret saying in ‘The Gospel of Thomas’:
If it is said by those who lead you, ‘Socialism is in this country, or that country,’ you are merely hearing the squawking of parrots.
If it is said, ‘Socialism has been tried and failed and is behind you,’ they are trying to blind your vision with myopic hindsight.
Rather socialism is all around you in all its productive potential.
And socialism is within you with your ability to embrace that potential.
Then you will realise socialism for what it is.
But until you know, you dwell in the poverty of philosophy and you are that poverty of philosophy.
Here endeth the lesson.