Brexit: British capitalism struggles to limit the damage

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After replacing David Cameron as British Prime Minister Theresa May said “Brexit means Brexit”. She repeated this mantra, with variations, for many subsequent months. This didn’t help any understanding of what direction British government policy would go. It mostly contributed to the multiplication of uncertainties.

The ruling class in Britain was not prepared for the Brexit result. That there was no plan in place has become evident in the subsequent months. The Cameron government had no measures prepared. Those who campaigned to Leave the EU have gone back on slogans such as ‘£350 million a week to be spent on the NHS’ but not suggested anything in their place. The British bourgeoisie had partly lost control of its political apparatus and was looking for strategies to limit the damage to the economy, to stabilise a situation in which, especially after the advent of President Trump in the USA, instability and uncertainty are rapidly spreading.

May’s “brighter future”

The government’s February 2017 White Paper spends nearly 25,000 words trying to resolve a raft of contradictions. In a speech in January Theresa May said that the “British people … voted to shape a brighter future”. The White Paper aims at paving the way for a “smooth, mutually beneficial exit” and wants to “avoid a disruptive cliff-edge.” Whether this future will be ‘brighter’ remains to be seen.

You can read that “We will not be seeking membership of the Single Market, but will pursue instead a new strategic partnership with the EU, including an ambitious and comprehensive Free Trade Agreement and a new customs agreement.” So, the UK is going to leave the Single Market and then come to some arrangement with the 27 remaining countries. To leave the EU there need only be the agreement of 20 of the remaining countries, whereas a trade deal may need the backing of all the remaining 27 EU states. With trade, the government thinks that “An international rules based system is crucial for underpinning free trade and to ward off protectionism.” At a time when the US under President Trump seems to be going in a protectionist direction, putting America First, and renegotiating trade deals, this is not a welcome prospect for British capitalism as the US is the UK’s single biggest export market on a country-by-country basis. The Institute for Fiscal Studies has suggested that, while the UK’s contributions to the EU budget will cease, the loss of trade will have a much bigger impact on the British economy.

May proposes an alternative to the Single Market “If we were excluded from accessing the single market – we would be free to change the basis of Britain’s economic model.”  Chancellor of the Exchequer Philip Hammond, speaking to Welt am Sonntag (15/1/17) said “If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term. In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.” The proposal to do “something different” has been greeted with much speculation. Will the UK become a tax haven? Will it get stuck into a trade and tariff war? There are only so many options, one of which is certainly not Britain undergoing a revival of manufacture on any significant scale, despite vague promises in this direction.

One reason that British access to the single market seems impossible to many commentators is that it would involve a commitment to freedom of movement for EU citizens. May has said “We want to guarantee the rights of EU citizens who are already living in Britain”, but at the same time her government is prepared to use these nearly 3 million people as bargaining chips. Liam Fox was reported as describing EU nationals in the UK as one of the “main cards” in Brexit negotiations. A leaked document from the European parliament’s legal affairs committee said there could be an EU backlash against this.

The contradictions in the British government’s position reflect the position that British capitalism is stuck in. “We will take back control of our laws”, says May, but, at the same time, “as we translate the body of European law into our domestic regulations, we will ensure that workers’ rights are fully protected”. The goal is to have everything ‘beneficial’ about the EU, plus every advantage of ‘independence’. The British bourgeoisie will employ any and every manoeuvre it can. It will blame the EU for every difficulty. But it’s not starting from a position of strength.

Adapting to crisis

The British bourgeoisie has historically been noted for the ability of its political apparatus to act in defence of the interests of the national capital. The result of the referendum showed a growing loss of cohesion within the ruling class, but it also showed the capacity of the British ruling class to adapt to its difficulties. This was demonstrated after the referendum when May was quite evidently ‘selected’ as Tory leader to resolve a temporary government crisis. Similarly, subsequent legal and parliamentary battles, and the role of the media, have to be seen in this context. The case brought against the government, to stop it acting on its own and insisting on a role for parliament, produced a wave of populist media rage against the judges of the Court of Appeal: the Daily Mail branding them as “Enemies of the People”, while the  liberal media defended the ‘independence of the judiciary’.

But what was being touted as a ‘constitutional crisis’ soon subsided. When the government’s appeal to the Supreme Court was also dismissed there was far less hysteria. The House of Commons performed its duty and rubber stamped the proposals of the executive, despite the majority of MPs having been in favour of remaining in the EU. The Labour Party was particularly helpful. Jeremy Corbyn imposed a three-line whip on MPs to ensure they supported the latter stages of Brexit legislation. Corbyn was loyally supported by the Trotskyists of Socialist Worker (9/2/17) “He had rightly insisted that Labour MPs vote for a bill that would begin the process of leaving the European Union”. For all Corbyn’s attempts to pose as a ‘radical’ he remains a very conventional participant in the battles over Brexit, as he said in a speech on 10 January 2017. “Labour is not wedded to freedom of movement for EU citizens as a point of principle”. Labour principles start from the defence of British capital and the manoeuvres of bourgeois democracy.

Elsewhere in parliament, a government source said “If the Lords don’t want to face an overwhelming public call to be abolished they must get on and protect democracy and pass this bill”.  Brexit Secretary David Davis called on peers to “do their patriotic duty”. Threats to the House of Lords from the Conservative party are intriguing evidence of the divisions within the bourgeoisie, even though at a deeper level they are united as parts of one state capitalist class

Britain’s imperialist options are narrowing

Despite all the declarations of ‘freedom for the UK’, in January 2017 the reality of British imperialism’s position was seen in May’s visit to the US and Turkey. With Trump, she held hands, and clearly grasped at any straws available. The so-called ‘special relationship’ has always been one-sidedly weighted to the US’s benefit and there seems little prospect that the imbalance will be modified in the foreseeable future. In Turkey May “issued a stern warning to Turkish president Recep Tayyip Erdoðan about respecting human rights yesterday as she prepared to sign a £100m fighter jet deal that Downing Street hopes will lead to Britain becoming Turkey’s main defence partner” (Guardian 28/1/17).

This is the current international face of the British bourgeoisie. Unsure of prospects outside the EU, desperate for any crumbs from American imperialism, uncertain about the prospects for its financial sector, but at least able to rely on arms sales to a country in conflict. A leaked government document showed the industries that are set to be prioritised by the government during Brexit talks. High priorities included aerospace, air transport, gas markets, financial services, land transport (excluding rail), insurance, and banking and market infrastructure. Low priorities included steel construction, oil and gas, telecoms, post, environmental services, water, medical, and education. Behind the scenes decisions are being made as to which sectors might survive, or can be sacrificed, and which need more serious backing.

European Commission President Jean-Claude Juncker (Telegraph 11/2/17) doesn’t underestimate the abilities of the British bourgeoisie to intrigue and conspire, “the Brits will manage without big effort to divide the remaining 27 member states”. And the British government does have a fall-back position as, in May’s words “no deal for Britain is better than a bad deal for Britain”. That is the ‘hard Brexit’ position that the British bourgeoisie appears to be rallying round. The ruthlessness of the British bourgeoisie hasn’t vanished, but its ability to function cohesively in a period of growing decomposition has declined.

The problems faced by the working class in Britain echo those faced internationally. In 1989 the momentous transitions in the regimes of eastern Europe were accomplished with the working class just a spectator, not playing any independent role. In the last couple of years, we have seen the spread of terrorism to the streets of western Europe, the EU Referendum, the election of Trump, and the resurgence of Marine Le Pen’s Front National. Again, for all the talk about the tremendous changes that are taking place, and the discontent of the people up against the elites, the working class has not been an active factor in the situation. The bourgeoisie will try and use the decomposition of its system against the working class, whether promoting the populist option or ‘anti-populist’ battles and campaigns. But whereas the bourgeoisie is defending a society in decline, the working class has the capacity to create new social relations based on solidarity rather than exploitation and nihilism.

Car 15/2/17