Friday, June 22, 2018

Socialists should still oppose Brexit: a reply to Costas Lapavitsas Craig Lewis & Len Arthur


Socialists should still oppose Brexit: a reply to Costas Lapavitsas

Craig Lewis and Len Arthur

Jeremy Corbyn’s insistence that the UK must leave both the single Market and the Customs union is not just a consequence of electoral “triangulation” to accommodate leave voting Labour constituencies.  It is also indicative of the extent to which the Labour leadership and sections of the trade union movement believe that a “people’s Brexit” is a viable strategy for the radical left.  This view has been developed recently in a Jacobin article by Costas Lapavitsas, a Corbyn adviser and academic economist. It has been widely publicised on the Lexit left:  https://jacobinmag.com/2018/05/corbyn-labour-eu-single-market-economic-policy

Like most of the pro leave Left, he accepts that Brexit was led by racists and xenophobes but nevertheless it was a working class revolt in areas “ravaged by the neoliberal policies of the last four decades”. The thrust of his argument is that staying within the single market will prevent a Corbyn government implementing key aspects of its “radical” programme.  EU Single Market rules will undermine its industrial strategy by blocking increased public ownership, state aid to rebuild key industries and the use of public procurement to promote decent jobs and employment standards.These are all arguments commonly touted by the CP and other Lexit groups. However, in a mirror image, of arguments used by Tory hard Brexiters, Lapavitsas asserts that WTO rules actually provide significant opportunities to implement a radical industrial strategy.  Finally, like many on the Lexit left, he seems to accept that free movement is nothing more than a business ploy to lower wages. EU rules would therefore restrict Labour’s ability to introduce a “progressive and fair migration policy”.

Much of what he says is tendentious to say the least and has been challenged by many on the left who supported a “remain” position in the referendum.  For instance the idea that free movement should be replaced by a progressive migration policy is a massive concession to the idea that low wages and pressure on public services is the fault of migration not the result of austerity.  An idea which has been extensively challenged even by mainstream economic commentators as Phil Hearse has recently pointed out. https://prruk.org/product/transform-a-journal-of-the-radical-left/

In a widely quoted report for the Renewal Journal, Andy Tarrant and Andrea Biondi have undertaken a detailed analysis of claims that EU rules would present significant barriers to Corbyn’s industrial strategy. They looked at each of Labour’s economic proposals in the 2017 manifesto (26 in total).  17 would not fall within State Aid rules at all. 7 potentially do, but these would be exempted under current EU law. Only 2 measures would need to be reported under existing regulations and these could be structured to comply. With regard to nationalisation they suggest that little of Corbyn’s agenda would be affected, and point to the far higher proportion of public ownership in other EU countries.
State aid and nationalisation rules have not stopped Germany from municipalising energy provision and it has not prevented the operation of publicly owned railways throughout much of the EU. In Germany 90% of passenger services are run by the state railway company; in France both the main train operator and the infrastructure operator are state owned; the same applies in Italy; the Spanish railways are virtually entirely in public ownership; as is the case in Belgium and Holland; even in Sweden which has started to privatise its railways 80% of services are still publicly owned and run.

Lapavitsas’s assertion that WTO rules would be more favourable than the Single Market is frankly bizarre.  It focuses only on WTO regulation of state aid, procurement and public ownership.  He ignores the whole economic and political purpose of the WTO, which is aimed at promoting free market competition and free trade. http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/602053/IPOL_BRI(2017)602053_EN.pdf

The hard right of the Tory party support trading under WTO rules precisely because they understand that it will hard wire austerity and neoliberal economics into the UK economy.  Secretive bilateral trade deals under WTO auspices are not a technical matter, they reflect the exercise of raw political power in an increasingly anarchic trading environment. Will Hutton argues perceptively that leaving the Single Market in order to engage in trade deals with China, Russia, Trump’s America and the emerging economies of the global South is akin to “swimming with crocodiles”
Combined with the disruption to trade and supply chains attendant on leaving the Single Market, such deals would massively increase the rate of exploitation within British capitalism as explained below.  

But Lapavitsas’s justification of a “people’s Brexit” is not just technically flawed. His argument is completely devoid of any serious analysis of the global economic and political circumstances in which Corbyn’s Labour Party and the radical left more broadly finds itself.  This is surprising for someone who had first-hand experience of the Syriza tragedy and at the time developed a much more nuanced and internationalist perspective than those on the Greek left, like the KKE, who advocated an economic nationalist style Grexit. In fact the extent of Lapavitsas’s political analysis seems to comprise a sharp rebuke to those of us on the Left who support remaining in the EU and the Single Market to: “come to terms with the underlying realities of the referendum decision”.  This is the language of Rees Mogg!  It pays no heed to the political realities of Brexit.

There is of course no socialist principle that requires us to remain in the Single Market. The EU is and always has been a “businessman’s club”.  It has become a vehicle through which austerity politics have been imposed by the European elite.  An exercise of class power that has had particularly devastating consequences for the people of Southern Europe especially the Greek working class, where civil society has come close to collapse through enforced privatisation and massive attacks on working class jobs, living standards and welfare provisions since the 2008 financial crisis. But as socialists we must confront reality as it is, not as we would wish it. Brexit will not provide political and economic opportunities for a radical transformation of British society.  There are a number of reasons why this is the case which left remainers have argued consistently since before the referendum: https://prruk.org/product/transform-a-journal-of-the-radical-left/

In short, the referendum was not aimed at giving the “people” a democratic say on EU membership.  It was supposed to resolve the long running Tory civil war over Europe.  When it went wrong the hard right, both within and outside the Tory party, seized the opportunity to initiate a “coup” aimed ultimately at completing the transformation of Britain into a low wage, low welfare, free market economy with increasingly authoritarian forms of government. A process starkly evident in recent attempts to restrict Parliamentary Control over the final withdrawal deal, and to undermine the power of the devolved governments to take autonomous decisions.

The central purpose of Brexit, especially in its hardest and increasingly most likely form, is to attack working class living standards and increase the rate of exploitation of labour in British capitalism in order to overcome a historically low rate of profit.  In concrete terms this is already reflected in the higher inflation generated by a falling £. In consequence real wages have stagnated or fallen for most workers; a process that will intensify after EU exit. Tories talk openly of deregulation as a key benefit of Brexit. Despite weasel words from May and the soft Brexiteers this can only mean stripping away the last vestiges of “social Europe” protections; reduced workplace rights, more restrictions on collective bargaining and trade union rights, lower environmental and safety standards.  Leaving the EU will, even by the Government’s own assessments, be either moderately or massively disruptive of manufacturing industry (http://uk.businessinsider.com/5-charts-secret-brexit-impact-study-damage-threatened-by-leaving-the-eu-2018-3) In practice this means large scale job losses of between 35,000 – 80,000, and a further shift towards precarious work and low pay.

Finally it is undeniably true that the leave vote was high amongst working class communities devastated by austerity. Yet any serious analysis of the referendum result shows that this is neither the whole, nor even the main story.  https://prruk.org/product/transform-a-journal-of-the-radical-left/.  Much more important were the politics driving the vote in those communities.  Like most advocates of a “people’s Brexit”, Lapavitsas downplays the fact that the leave vote was dominated by racist, xenophobic and anti-immigrant ideas pedalled by the authoritarian right inside and outside the Tory party, and legitimated by mainstream politicians and key sections of the media.  Reactionary rhetoric has continued to dominate Brexit discourse since the referendum forming a background to what Neil Faulkner refers to as “Creeping Fascism”.  https://prruk.org/creeping-fascism-and-the-rise-of-the-far-right-one-year-on/. The ability of the Democratic Football Lads Alliance and other far right groups to put large numbers of their supporters on the streets in recent weeks, culminating in the estimated 20,000 who marched in London demanding the release of jailed Nazi Tommy Robinson is a massive wake up call for the left. It is clear that British fascists have been able to strengthen their ideological hold over sections of the working class by using the same “tropes” as those legitimised by the hard Brexiteer right of the Tory Party – denouncing anyone who opposes a hard Brexit as saboteurs, enemies of the people, traitors etc. https://www.theguardian.com/commentisfree/2018/jun/13/brexit-traitor-trope-hard-right-fantasies-risk   The rise of the UK far right becomes more alarming when set in a European context.  Parties of the far right are in government in Austria, Poland, Hungary and Italy. In Holland, Belgium, Sweden, Denmark, France, Germany and Finland far right parties are in national parliaments. As a consequence anti-immigrant and Islamophobic discourse and policies are becoming normalised in much of Europe.
 
The fact that Lapavitsas ignores this wider economic and political context is symptomatic of the dead end in which the Lexit left finds itself as the Brexit process unfolds.  His argument is little more than toothless anti-EU propaganda and isolationist economic nationalism, underpinning the Stalinist notion of a “British road to Socialism”.  As a result he advocates a political and economic strategy for Labour that plays right into the hands of the hard Tory right and those more sinister forces now emerging on our streets.

There is of course another way.  The EU is as much a terrain of struggle for socialists as the individual capitalist states which comprise it.  The radical left in Britain needs to Europeanise and internationalise the fightback.

The Party of the European Left (EL) is a starting point in this process. It covers 23 countries – not all in the EU – and 40 radical socialist and communist parties. It acts more as a network than a democratic centralist party and with regular meetings and congresses it provides an ongoing forum for socialists to develop policy, politics and coordinate action. It is intent on reaching out through the annual Summer University and European Social Forum, the next one to be held in September 2018 in Bilbao. It is coordinating action against the rise of the right and neo-fascism as well as emphasising the fight against austerity, NATO and militarisation. The EL includes 27 MEPs and is the largest part of the 52 GUE/NGL red green group in the European Parliament. A recently agreed EL statement has been put out in the name of Gregor Gysi the EL President, appealing to the left across Europe to work toward a joint platform against the right, neoliberalism and climate change running up to the European Parliament elections next year.

Internationalism also needs to be an integral part of the socialist case and action in the UK. Defending these politics is what this response is all about and in practice, on the issue of the EU working with others through organisations such as Another Europe is Possible, to ensure that the socialist case for remain and fighting for a social and democratic EU is made as opposed to the ‘business as usual’ case being promoted by others. Just as important is the active defence of working class action across Europe, against the attacks of neoliberal governments such as that of Macron in France; opposing the rise of the right, for example the AfG in Germany; and supporting social and human rights, such as the vote against the anti-abortion laws in Ireland.

The key to a radical socialist transformation of Europe remains the process of actively linking local fightbacks, with building an international socialist organisation, such as the EL. It, at least, provides a European starting point of being able to seriously and meaningfully tackle the power of international capital and the threat of climate change. Such a process becomes more urgent than ever, as parties and movements of the hard right target next year’s European elections for their anti-migrant and islamophobic politics.

Pulling up the national drawbridge, as advocated by Lapavitsas, would mean turning our backs on this international project, creating divisions and rendering the required transformation less likely.








Saturday, June 2, 2018

Review for Transform ed 4 - The City by Tony Norfield



The City – London and the Global Power of Finance
Tony Norfield
Verso 2016

Len Arthur

The title disguises a significant and needed Marxist contribution to the increasingly unstable relationship between the global capitalist financial system, financialisation, the state, commodity production, monopolies and imperialism, as well as placing the UK economy and the City of London into this context. The author writes from the coal face having worked in the City as an analyst and dealer for banks. He also brings his radical understanding of how the global financial system works to place this firsthand experience into a social and economic context.

There have been some excellent reviews published since the book’s publication in 2016, one of the best being Michael Roberts[1]. Robert’s review covers a synopsis of the key points made in the book and thus they do not need repeating here in such detail. Roberts also defends the importance of continuing to work toward an evidence base of Marx’s claims about the tendency of rates of profit to fall as an explanation of the rise of the role of finance. Norfield places a key emphasis on this tendency whilst questioning the possibility of developing an adequate evidence base.

The main aim of this review is to propose avenues of further research and discussion exploring the social and economic threats identified by Norfield and using the results to develop demands and policies that socialists can take forward.

Norfield argues that contrary to seeing the financial system completely as a parasitical entity sucking the life out of the ‘real economy’, it is in fact ‘an integral part of the capitalist economy… it is more like a central nervous system: without finance, modern capitalism is dead’. Globally the UK is surprisingly still second to the US on a range of measures as part of a small group of powerful countries having a ‘privileged position in production, commerce, investment and financial relationships…’. Pervading all economic activity the global financial system is in a tension with the real economy of commodity production. The financial system depends on the extraction of surplus value and hence profitability for stability in the long run. However, the system also has the potential to create financial assets that are separately tradeable, commanding a market value based on expected value and income. Norfield uses Marx’s term ‘fictitious capital’ to describe the second stage.

Tensions start to disrupt both spheres of activity when it become more profitable to invest and trade in fictitious capital than to invest in commodity production in the ‘real’ economy; driving ‘financialisation’ of the world economy. Investment falls, speculative future value takes precedence over the production of surplus value and eventually unsustainable expected value is faced with delivery something tangible and the bubble pops as in the last financial crisis. Being an integral part of the capitalist economy a crisis in the global financial system feeds back into the global economy of commodity production.

Norfield explores the consequences of this process for the interaction between states and corporate monopolies. He identifies the current state of imperialism where global monopolies are largely based in powerful nation states and gain world advantages being identified with this state. Likewise an imperialist state is one that can exert power on behalf of its ‘national’ capitalist companies. The US remains the dominant imperial power in this sense not just through the number of corporations associated with the country but also through the dollar continuing to remain the world currency giving it and its corporation access to cheap low risk finance. This gives the US the power to globally control financial securities. Fictitious capital ‘... is a very real form of capital when it comes to exercising power, empire building and appropriating value today’. Moreover, the UK continues to play a very big role in the world financial markets having the second biggest current account surplus on financial services and, if insurance services are added the UK surplus is the highest. The City’s privileged status in the world economy enables it to still facilitate the transfer of revenues into the UK from what the rest of the world produces. The UK remains an imperial power through the City of London.

Given the instability of the relationship between the production of surplus value and fictitious capital it is hardly surprising that imperialism that has evolved and rests on this relationship will also reflect this instability, both in terms of financial crises and in ongoing competition to sustain power and control. In this regard the UK continues to have a major role in global ‘financial parasitism’ largely due to historical reasons and is consequently in an unbalanced and vulnerable position.

Norfield also refers to the more questionable financial activities that the City is turning to expand business in an attempt to sustain its domination. Tax avoidance advice and organisation as revealed by the Panama[2] and Paradise[3] papers and writers such as Nicholas Shaxson[4] and the Tax for Justice Network[5]; the LIBOR scandal; welcoming haven for ‘non’domiciled’ residents; purchase of UK commercial, residential property; football teams; newspapers and other trophy items giving ‘opportunities such ownership might give for money laundering’. He also includes in this expansion of business the connection with sovereign wealth funds such as the £7bn injection of capital into Barclays from the Abu Dhabi and Qatar. The list could have been extended to include the UK Private Liability Partnership law allowing people from around the world to obscure ownership and control as exposed by Private Eye[6]. More recently McMafia the BBC TV series dramatically catches where these tendencies can lead[7].

What can we do about this as socialists?

Theory development: Norfield has made a major and timely contribution to our contemporary understanding of the social and economic power of capital and imperialism. We need to see this as a start of the discussion not the end. As will be seen in Michael Roberts review above of this book, Norfield’s position on the evidence of a declining rate of profit remains controversial.  Norfield has himself moved on to suggesting that the effect of finance is now such that it may outweigh Marx's commodity analysis in the first volume of Capital[8]. The dangerous consequences of the exercise of social power globally by corporations is often lost in the aggregate and detail of economic analysis and Norfield has started to put this back on the agenda. A key work in this regard produced by the Swiss engineers[9] requires further research to expose the people who are actually making decisions that affect us all.

Making the links between theory and practice: Continuing competition between imperial powers to secure share of value and markets creates an instability that drives capital toward continued financial crisis, making workers pay through austerity policies and increased rates of exploitation, continued over exploitation of the resources of the planet, together with associated populist and neofascist cooption and division of workers. Finally, of course, competition morphs into the use of force through wars. As socialist we need to continue to make the links between this context and the problems experienced daily by people as a consequence. Emphasising how integrally important to building resistance are international links like the European Left. And how local acts of resistance can, through starting to block the strategies of capital, can have wider impacts and develop international solidarity against a common enemy.

A danger in making links to the wider context of resistance us ‘hegemonic pessimism’ where the task can be seen so big it overwhelms the confidence to resist. A key to avoiding this danger is the development of transitional demands and actions[10]. Of course, as Michael Roberts argues, Norfield lays the grounds for the radical socialist case of collective and democratic ownership of the process of investment and financing so wealth can be used for need and not profit. If Norfield’s case is convincing then it is important that Labour Party members start to toughen up the next manifesto with demands that take this forward. In addition a series of other policy demands could start to legitimate this radical position.

Although Norfield suggests that a Financial Transaction Tax would hardly touch the surface of the issues he identifies this, combined with other demands, could start to make a package so challenging that it could help to put collective ownership on the agenda. Such a package might include a radical ‘opening of the books’ so that commercial confidentiality becomes a thing of the past with the real owners of corporations being named and their total remuneration fixed at say a 4:1 ratio with their lowest paid employee; their companies being taxed according to where their income is generated at internationally fixed high rates of corporation tax; all companies, no matter what size, directorship and accounts are made publicly available; partnerships are covered by the same rules; all personal income and tax publicly made available and a public register of wealth for everyone with more than say £500,000 in assets. These are just some suggestions, but given the power and influence the rich have over our lives they should be made publicly accountable and, if they don't like it, then their objection starts to lay the basis of legitimating a radical take over.

Of course the challenge of political transitional demands also has to be supported by those that people feel they are prepared to fight for through direct action. Clearly at the moment the central issue facing people are the policies and politics of austerity that directly derive from the strategy of making workers pay for the financial crisis. Demands relating to ending public sector pay capping, defending the NHS, demanding that elected representatives such as councillors refuse to vote for cuts budgets, these all amount to a direct challenge to the implementation and legitimation of the strategies of our imperialist governments that derive from the instability of their system.

So, thanks to Tony for putting this updating of how international capitalism and imperialism works back on the agenda. Hopefully, through this journal we can take the renewed discourse about contemporary imperialism forward as well as develop demands and actions that start to challenge the power of the rich and their corporations.

Notes