On the EU, the Single Market and the Labour Party

9 min read

The result of the United Kingdom European Union membership referendum on 23rd June 2016 resulted in 51.89 per cent of the electorate voting to leave. I voted remain.

The terms of the referendum stated clearly that the government would act on whatever the outcome of the referendum was.

There continues to be arguments about whether the referendum was merely advisory and that it should not be binding, or whether the Leave campaign lied and misled voters and leave won under false pretences or whether there was a sufficient majority or participation to make it clear.

My view is the result is was it is and that under the terms of the referendum, the result must be respected.  I don’t mean that people should not continue with arguments for staying in the EU, but, in my view, the outcome, prima facie, should be respected.

During the referendum campaign I was equivocal about the EU, I see its benefits but I see its drawbacks too. On balance – and because it would be a Conservative-led departure – I voted remain.

I fully acknowledge that leaving the EU is a huge undertaking, there are many risks and the scale and complexity of the task is beyond comprehension. The constitutional lawyer, Professor Michael Doughan, sets out some of the numerous interrelated constitutional matters that must be resolved. The uncertainty of the process, the lack of planning and the lack of an overall plan, could in themselves lead to a conclusion that we should simply remain in the EU. I have sympathy with that, but I don’t agree.  My two main reasons are as follows.

The first is that ignoring the referendum result would result in a crisis of democracy, perhaps even a constitutional crisis. People having made their decision and voted accordingly would rightly feel cheated if the result were overturned. Moreover, it would add to a growing sense of mistrust in politics and politicians. According to the Edelman Trust Barometer 2017:

Among the least well-off 25 per cent of the population, trust in government has fallen to just 20 per cent, one of the lowest figures ever recorded in the history of the Trust Barometer. This might not be surprising, but the sickly condition of trust seems to have infected even the wealthiest tiers of British society: last year 54 per cent of the wealthiest said they trusted government; this year that figure has plummeted to 38 per cent1Edelman Trust Barometer 2017, Crisis of Trust in post-Brexit Britain, p. 2

It is imperative that we uphold democracy. Although a worthwhile purpose in itself, it is of particular importance when it is the far right who would capitalise; the nationalists and xenophobes who trade on people’s emotions under conditions of democratic deficit and lack of opportunity.

Liberals may say that the trade off is not worth it. Sterling is falling, private debt is rising, growth is slowing and EU workers, as a consequence of uncertainty, are leaving the UK. All this, they might say, is reason enough to stop Brexit.

I disagree. While I agree with some of the above concerns, some, such as falling sterling are not as serious as is suggested. But central to our economic woes is austerity. This has the overriding influence on our economy. That is not to say our relationship with the EU and our trading arrangements is not a factor, but primarily we have to look at domestic fiscal policy as well as our own industrial strategy to see the principle drivers of our economic problems. And this is my second main reason for upholding the referendum result, political economy.

It is the UK’s commitment to liberal economics, over the past 40 years, that has put us in our current economic spot. It is based on the belief that a freemarket, with minimum regulation, generates wealth and this rising tide will float all boats. It hasn’t. Thomas Piketty’s  analysis demonstrates the growth in inequality over the last few decades in the UK, Europe and in the USA. And although some centrist governments have made a greater commitment to public spending, liberal economics has been prioritised. This means a minimal role for the state, the reductions and minimisation of public deficits and controls on nationalised industry and services. Furthermore the liberalisations of finance to permit the growth in private-sector debt.

These conditions, often referred to as neoliberalism, have been the defining factors for political, economic and social conditions in the US and Europe. The EU, as a supranational organisation, is of this, it has grown under these conditions, its constitution is based on the principles of liberal economics and the freemarket. The Maastricht Treaty and the Single Market are there to engender free trade, the harmonisation of regulation and law across boundaries.

Generally, the principles of the EU are intended to serve humanity and protect and represent the people of Europe fairly and with respect to human rights. But there is a fundamental clash. A clash between the liberalisation of markets as a priority and the needs of those who have limited representation and minimal power. Marginally, and sometimes in the extreme, we see capital within the European Single Market privileged over and above the rights of workers.

We can look at the EU as a monument to multinational liberalism, a great achievement. But, at the same time, we cannot ignore its limitations in terms of political economy. The power it has been granted means that the centre of gravity within its operations favours freemarkets and capital, over labour and workers.

The Tory vision of Brexit means one of two things, or even a combination of the two. 1) Sovereignty, returning law making and decision making back to the EU, so that the UK elite have unfettered right to exploit the working class of the UK. 2) A reduction in corporation taxes to attract business to exploit UK labour and compete with the EU.

The Labour approach is much more nuanced. It respects the importance of trade with the EU and the complex supply chains that exist within and without of UK territoires. Trade with the Single Market is of major importance to the UK economy. At the same time it is important that a UK Labour government has the freedom to have a democratically agreed industrial strategy. This might require nationalisation or state aid. This has the potential to clash with the principles of the EU. It is necessary that the UK remains open-minded in its negotiation with the EU over its membership of the Single Market and the Customs Union.

It is important to be reminded that although Labour did no win the General Election in 2017, its showing was significant in both national and international politics. What the Labour Party has demonstrated is that it is in a position to win a general election with a manifesto that represents a break from neoliberalism. It has a commitment to Keynesian economics, using public spending to create full employment and manage demand and distribute prosperity more widely and fairly.

This represents a challenge to the EU consensus. I imagine not an unwelcome one in many parts, since there must be recognition of the limitations of the EU’s economic liberalism and the problems and inequalities that has created across Europe.

Given the complexity and scale of the issues within nations and across them. It has to be welcomed that the UK Labour Party is looking to try negotiate productively and fairly with its neighbours. It has opted to be open minded, but is committed to fundamental principles of social justice, equality, fairness and functioning democracy.

It is disappointing that fifty or so Labour MPs, including my own, supported Chuka Umunna’s amendment to commit to the EU Single Market last week. While we must not rule out such a membership, we have to commit to a more nuanced position. And, while still encouraging debate, I suggest that Labour MPs prioritise party unity. They need to be ready to govern and ready to have some grown-up discussions and debates with the country and with our EU neighbours.

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