By Andy Yorke
The Brexit debate in Labour has seen its leadership take a position in favour of some form of Brexit, albeit not for Theresa May’s deal, even though a clear majority of Labour party members and voters want to remain in the EU. Alongside opportunist arguments about losing Leave voters, which come dangerously close to pandering to racism, the debate in Labour has increasingly centred on EU rules blocking state aid, renationalisation and capital controls. In a 21 December interview in The Guardian, for example, Jeremy Corbyn claimed that the EU could say that “we can’t use state aid […] to develop industry in this country”.1
This “Lexit” position is influential on the Labour left, in the rail union RMT, in the Morning Star, a daily paper associated with the Communist Party of Britain (CPB), and on the far left.2 It is also effectively the default position for many on the pro-Corbyn left.
For example, Chris McLaughlin, editor of the newly relaunched Tribune magazine writes that “much of what Labour currently promises would still be effectively illegal under European Union rules”.3 The Marxist economist Costas Lapavitsas goes further to claim that leaving the EU is a precondition needed to “transform Britain’s economy in a socialist direction”, while Grace Blakeley of the Institute of Public Policy Research (IPPR) speaks of it as “an opportunity to build a definancialised economy” and to provide “a space for a socialist government in the UK to ally with governments particularly in the global south and socialist governments”.
Until now, the loudest voices rebutting this have come from liberal Remain campaigns like Open Britain and People’s Vote, or from the Labour right and centre, who claim that the EU is not at all an obstacle to Labour’s policies. Many on the left are understandably wary of this claim, given its source, but in any case most Lexiteers envisage a more radical programme than Labour’s last manifesto.
Would that be possible within the EU’s rules? Certainly socialism cannot come through “market rules”. We need a Marxist understanding both of socialism, and of state aid rules that goes beyond a mere examination of legal claims.
Labour’s Manifesto and the EU
The Morning Star declares that “The EU single market is incompatible with Labour’s manifesto”, which needs to wield “the potential power of the state to a degree we haven’t seen since 1945”.4 The bulk of legal opinion however backs a Fabian Society report’s conclusion, saying that “An analysis of Labour’s 2017 manifesto found that all its policies would be permissible within EU state aid rules, although two of the proposals, a National Investment Bank and regional energy companies, would need to be structured carefully”. It adds that, since the EU is neutral on the form of ownership (public or private), Labour could go further with for example co-operatives, workers’ representation and state-funded housing programmes.5
Certainly the Manifesto’s mechanisms for renationalising (buying up Royal Mail shares and taking rail franchises into public ownership as existing contracts run out) are unlikely to fall foul of EU law. Many EU member states already grant more state aid per head than Britain does, Germany four times as much; and many have state-owned banks, utilities, and transport, including the great bulk of European railways.6 EU rules have not prevented Britain from renationalising Railtrack, or more recently from setting up new public companies.
In reality, the manifesto debate is a storm in a teacup. Labour’s manifesto is not even that radical, and Grace Blakeley herself accepts that “most of the 2017 manifesto [is] probably doable under existing EU rules […] and even a more ambitious socialist agenda would be permissible”. For Labour’s left, then, the immediate problem is not future battles with Brussels but today’s battle with the Labour right, to ensure that Labour fights the next election on a bolder and much more far-reaching anti-capitalist programme that can deal not just with the scale of poverty in Britain, but with the crisis of capitalism globally.
RMT official Alex Gordon writes in the Morning Star that competitive markets are the “DNA of the European project” full-stop, and that its rules block “any ability to create coherent, integrated, nationalised industries and utilities based on democratically agreed national needs”. He adds that “Labour’s manifesto envisages the national investment bank playing a more ambitious strategic role in repairing broken supply chains, building national champions for export industries and stimulating economic redevelopment. This national strategic agenda must inevitably fall foul of EU single market rules.”7
As we have already seen, this assumption of automatic EU obstruction is disputed. But let us accept their prediction for the moment and pose the obvious question: how would Lexit make it any easier to implement such a programme?
WTO vs EU
After Corbyn’s February 2018 Brexit speech, stating that Labour would seek a deal that relaxed state aid rules, the European Commission (EC) stipulated that any future trade agreement must ensure a “level playing field” on competition and on state aid.8 The Tories are eager to do the same, and May’s deal incorporated commitments to apply EU state aid law “in its entirety”.9 Lexiteers however have pointed to a Times article claiming that EU bureaucrats are terrified of a leftwing Corbyn government and are planning a “non-regression clause” in any trade treaty “with trade tariffs, compensation demands and, in the event of fiscal policy to subsidise industry, measures to restrict British air traffic, grounding flights”.10
Ironically, such additional impositions would be impossible if Britain were still in the EU, but this does mean that Labour will not be able to avoid them in any future trade deal with the EU after Brexit. However, all such problems can be avoided, according to Lapavitsas, if Britain opts simply to trade on existing World Trade Organisation (WTO) rules. These he says are “more advantageous than either EU or Single Market membership”. If Britain “reverted to WTO rules, it is clear that, in state aid terms at least, this would actually open up fresh policy space for a left government”.11 But this support for the hardest of Brexits is simply disingenuous.
It is true that the WTO is less restrictive. Its rules are more narrowly focused on exports, while its mechanisms are reactive to changes after the fact, while large-scale projects within the EU have to be lodged at the EC for scrutiny in advance. Moreover, it is only states and not companies that can take a case to court under WTO rules.
But all is not certain even here. Some academics state that the WTO would not allow the bailing out of steel plants, while others claim that despite EU state aid rules being more comprehensive (because of the EU’s economic and political integration), the WTO’s focus on goods means that some subsidies or programmes that are permitted under future EU law would become “subject to WTO disciplines” outside of the EU.
Areas particularly at risk include “state aid for major investments in assisted regions”.12 Regional development is a major plank in the Corbyn project, while a Labour government building Alex Gordon’s proposed “national export champions” wouldn’t escape the notice of corporate competitors from other countries.13 Meanwhile, tariffs are far less of an obstacle to trade than non-tariff barriers like border controls and conflicting regulations are, obstacles that the EU has largely eliminated within its own internal market.
There is a final stumbling block. Britain’s relationship with the WTO is not uncontested, as twenty countries including China and the USA are lining up to block Britain from getting a fast-track deal with the WTO to stay on terms similar to those it already has as an EU member.14
Law, sovereignty and the real world
The Lexiteers’ argument starts from a legal perspective, of reforms and restrictions, that misses the political context and the full spectrum resistance that Labour is likely to face. The Corbyn agenda breaks with decades of neoliberalism, and the capitalist ruling class here and abroad will utilise whatever laws and other routes exist to oppose it. The more radical this agenda is, the sharper this struggle will be.
Britain may be too big to bully in the way that the Troika did to Greece. But the imperialist powers, in the form of the USA and a panoply of international trade and financial bodies (and not just the EU), will gang up on a Labour government while the international markets undermine it, whether it imposes capital controls or not.
In another Brexit irony, the USA, China and the multinationals cannot dictate so easily to the EU, given that its size gives it leverage as a hugely lucrative market. Britain on its own simply would not have that same leverage. Legalistic and abstract arguments around “sovereignty” are a nationalist myth in a world market centred on regional integration around the big economic powers. The USA, China and the EU, itself the biggest market in the world, represent about half of world GDP between them.15
The Lexiteers are in denial about these facts. The Morning Star policy of using state aid to build large export champions while expecting no comeback in the form of a Trump trade war or being shut out of EU markets, is untenable. And even these writers recognise that other countries won’t just let Britain dump its subsidised exports on them.16
Grace Blakeley believes that the economic disadvantages of Brexit could be outweighed by other positives: through state aid, capital limits, democratic accountability and an alternative global trading system, one however that doesn’t yet exist. She rejects the charge that her perspective means “socialism in one country”, seeing it instead as “a space for a socialist government in the UK to ally with governments all around the world but particularly in the global south and socialist governments”. She doesn’t specify which ones, but given the regular cheerleading in the Morning Star for the Assad dictatorship and for other supposedly “socialist” regimes, the arguments about democracy do sound hollow.
In reality, the logic of Blakeley’s arguments points towards a nationally-centred Britain, dis-integrating from its natural regional economic sphere and opting instead for more scattered trade relations worldwide.17 This certainly does resemble the “socialism in one country” of the old Soviet bloc, and the model of a national, state-directed but “mixed” economy stage of development remains central to the Stalinist politics of the Morning Star. In reality, this would be a halfway house leading not toward socialism but away from it, and even more quickly toward stagnation and crisis, at least unless decisive moves to overthrow capitalism are taken at the very start.
There are other strategic silences in the Lexit argument. How about the economic repercussions of crashing out of the EU, hitting the industries and the jobs, wages and living standards that Labour hopes to improve? There are signs this process is already happening with investment leaving UK manufacturing for Europe.18 The pro-Brexit wing of the Labour left dismiss such claims as another “project fear” orchestrated by the elite, but their silence about a “Brexit dividend” says it all. It is dishonest to advocate Brexit and then to cover up its costs to those with illusions in it, whose livelihoods will be hit hardest.19
Then there are the political costs. Any Corbyn-led government would face difficulties from day one, but in a Brexit scenario it would face a near-vertical political curve. It would have to perch weakly on a Parliamentary Labour Party stuffed with “moderate” MPs likely to buckle at ruling class resistance, or to revolt against Corbyn’s limited policies in the face of a tanking post-Brexit economy.
Of course, socialists’ response in any scenario should be to argue for Labour to fight back with serious anti-capitalist measures, and for the labour movement to take direct action in defence of these measures. But why help to create a crisis that will make our situation more difficult? The idea that pro-working class reforms, never mind achieving socialism, will be easier outside the EU is a fantasy. The only certainty for an anti-neoliberal Labour government is that capital will obstruct it; and the only effective response is to prepare to defy capital.
The main enemy is at home
Labour in power will meet its most determined opposition from the British ruling class. The rich, the banks and big business will organise capital flight and investment strikes, and the media will be up in arms while the House of Lords and unelected judges strike down reforms. Sabotage can also be expected from the upper echelons of the civil service and the security services, not to mention the ruling classes’ agents on the far right, as shown by Cambridge Analytica’s skullduggery.
To put all of the emphasis on hostile forces abroad is effectively to disarm the struggle here; or as the old socialist slogan has it, “the main enemy is at home”. Of course, British capital will be supported from abroad; but the best way to combat that is not by legal challenges in EU or WTO courts, but by calling for solidarity with a mobilised workers’ movement here from workers across the world.
Continued membership of the EU opens up the perspective of pan-European mobilisations with workers in other countries, many employed by the same corporations and all subject to the same laws. That such actions are possible was proven on 14 November 2012, when general strikes across Europe on an ETUC day of action involved over ten million.20
The real lesson from Greece, crucified by the Troika (the EC, European Central Bank and IMF) is fundamentally different from that drawn by Lexiteers like Lapavitsas. The capitulation of the Syriza government under Alex Tsipras and finance minister Yanis Varoufakis in 2015 shows that the problem was not simply their stance of staying in the EU at any cost (a Lexit straw man), but the limits of their reformist strategy.
As the Troika’s bailout deadline approached, Tsipras and Varoufakis should have concentrated on rebuilding the strike and protest movement of 2012, and on mobilising Europe’s labour movements to break EU-wide austerity “from above and from below”. Instead they toured Europe’s capitals negotiating with finance ministers and presidents. If a Corbyn government followed this same strategy, in or out of Europe, it would face the same political collapse, albeit perhaps in slower motion.
Such an international perspective is crucial if Labour is to advance more radical policies and aim to make socialism permanent. Tribune editor McLaughlin however proposes a programme that sums up the narrow horizons and minimal objectives of the Lexiteers, “to get into power in the first place, and to stay there long enough to break with the free market orthodoxy”.
But “socialism” isn’t just the achievement of one or two terms of Labour government before the Tories get back in and reverse gear. It requires first and foremost a strategy to break the power of capital, by removing capitalist ownership and control over the “commanding heights” of the economy. That means the major industries and the banks being run under workers’ control and democratic planning and recasting society on radically participatory lines, centred on workers’ and consumers’ control.
While working-class political power may well first be achieved in a single country, such a social revolution could not possibly survive for long without international expansion. Yet, at the heart of the strategy both of the Labour left and of the Morning Star is a drive towards national isolation and protectionism. A similar strategy centred on “sovereignty” is laid out by Lapavitsas in our review on his book in this issue.21 In a world of huge multinational enterprises and global production chains, which Lenin saw as the starting point for economic planning, socialism must be international and must go beyond the straitjacket of national frontiers if it is to prove superior to capitalism.
Europe: integration or disintegration
A socialist future for Britain lies in a Socialist Federation of Europe. Its starting point will be a Europe-wide class struggle, taking over and extending the integration of economies (and thus of a Europe-wide working class) that the capitalists have already begun but cannot complete. To retreat into nationalism, which is the real content of Lexit, is to turn away from that perspective and that programme.
Lexiteers try to justify their retreat by presenting the EU as an “imperialist superstate”, as if Britain were an oppressed nation struggling for liberation. Besides its sheer hypocrisy, coming from within the oldest imperialist power of them all, this is simply not true. The EU simply is not even a state, at least not yet.22 Its economic integration is very obviously incomplete and even fragile, as its member states pull it in different directions. And outside of the Eurozone, neoliberal policies have advanced piecemeal and have avoided an outright assault on labour rights and on state ownership, because they could well cause a revolt.
The unelected EC and the European courts certainly do interpret EU law in favour of capital, but this would not be possible without the support of the EU’s national governments. Were a Corbyn-led government to fight against such policies and call on workers across Europe to oppose them with mass mobilisations and direct action, the impact could not fail to be huge.23
Overall, neoliberalism has been a programme for dismantling reforms that the working class won for itself in the past, and its policies have been imposed by national governments. The imprisonment of striking building workers, the dismantling of industry, the breaking of the 1984-85 miners’ strike, the privatisation of gas, water and electricity, all of these measures were imposed from Westminster, and not from Brussels.
The truth is that while many capitalists can see the logic of completing the integration of the whole of Europe into a single state, this remains an impossible goal for them. While capitalism outgrew the nation-state a long time ago, the capitalist class by its nature is a nationally rooted class, that inevitably pursues national advantages in competition with national rivals.
The international expansion of capital has necessarily begun to internationalise the working class, both in the sense of workers in different countries being employed by the same corporation, and through the migration of workers seeking employment in other countries. The Lexiteers however want to reverse this historically progressive development wholesale. That is why we characterise their outlook as being not just inadequate or muddleheaded, but reactionary.
UK manufacturing and services are highly integrated into EU states. Almost 40 per cent of UK exports to the EU go to other EU firms that then further process and export the final product.24 Manufacturing crises and the multinational corporations’ restructuring measures, like the recent announcements by Ford and Jaguar of up to ten thousand job losses, make the need for democratic, supranational solutions even more urgent. Combines of union representatives meeting across borders can help to coordinate a defensive struggle against cuts that the established union bureaucracies won’t; but only democratic, transnationally-planned production can resolve the underlying causes of capitalist crisis.
We need a socialist Europe to replace the market with planning, and thus to allow for the widest economic interconnectivity, productivity and technological advances. These could roll out the digital, robotics and artificial intelligence revolutions in ways that do not devastate labour rights and employment, and that take serious steps towards resolving the ecological crisis.25 Capitalism can’t do this, but neither can a “socialism” at the purely national level. We need to look back to 1917, and to socialist revolution as an international strategy, and not to 1945 and state-capitalist reform at home and Stalinist autarchy in Russia.26
A different road
The left needs to organise to ensure that Labour takes a different road. That means not just defeating the nationalist and anti-immigrant ideas that have gained a foothold in the last few years, or winning the arguments that capitalist “sovereignty” is a mirage in a globalised economy, and that Brexit is not an easier road to socialism, or even to better jobs and wages.
The Labour left needs an internationalist, class struggle policy, against the empty promises of the Lexit camp or the false friends of the bourgeois Remainers. The road to socialism is best pursued by remaining in the EU, by fighting for a second referendum to keep Britain in the EU and by forcing a general election, a policy already favoured by the majority of Labour members and voters anyway.
Even before coming to power, Labour can develop a Europe-wide movement against austerity and neoliberalism. Once in power, a genuine workers’ government can use its position to unite Europe’s working class in a mass revolt to tear down austerity, to put in place governments based on working-class power and, through revolution, to achieve a real progressive unity, the Socialist Federation of Europe.
2 In a November “People’s Brexit” meeting in London, RMT general secretary Mick Cash argued that “the EU is a bosses’ club”, and so “coming out of the EU will allow us to rebuild manufacturing, protect seafarers and nationalise rail”. (See https://www.rmt.org.uk/news/rmts-mick-cash-pledges-national-rail-fight-over-pay-cap/).
Labour MP Graham Stringer agreed: “If we want nationalised rail we have to leave. If we want to reverse Royal Mail privatisation we have to leave.” Bakers’ union BFAW and rail union ASLEF along with the RMT are the small industrial unions supporting Lexit, not surprisingly in domestic industries not engaged in export and in part relatively immune to a post-Brexit recession.
Besides the Morning Star and CPB (see https://morningstaronline.co.uk/article/h-lead-packed-peoples-brexit-meeting-demands-general-election), on the far left there is also the Socialist Workers Party and Socialist Party.
3 p. 22, Tribune Nov-Dec 2018 drivers
4 See The EU single market is incompatible with Labour’s manifesto by Jonathan White and Alex Gordon on 6 August 2017 (https://morningstaronline.co.uk/a-2ade-the-eu-single-market-is-incompatible-with-labours-manifesto-1) and Why Jeremy Corbyn is right on state aid by Jonathan White on 15 January 2019 (https://morningstaronline.co.uk/article/f/why-jeremy-corbyn-right-state-aid).
5 “We can also go further than the 2017 manifesto if we wish. For instance, we could support the growth of co-operatives through the tax system, take ourselves to the top of the league table on investment in skills, put workers on company boards, buy public stakes in private companies in a sovereign wealth fund, and build houses using public bodies – all within single market rules.” (See https://www.newstatesman.com/politics/staggers/2018/02/no-you-don-t-have-leave-single-market-renationalise)
6 Four and two times UK levels respectively (See http://www.politics.co.uk/comment-analysis/2018/02/27/corbyn-on-state-aid-fact-checked).
All bar three EU countries have state-owned rail freight services, and all bar one have state-owned companies providing passenger services, while in every member state the rail network is state-owned. (See https://d3n8a8pro7vhmx.cloudfront.net/in/pages/14074/attachments/original/1517301904/lexit_paper_finalPRINT_noembargo.pdf?1517301904)
In all there are over 800 wholly or partly state-owned companies, while the UK as the first and most neoliberal state has an unusually low level. (See http://renewal.org.uk/blog/eu-law-is-no-barrier-to-labours-economic-programme)
Even the 2012 Rebuilding Rail report sponsored by the RMT and other rail unions looking at the controversial fourth railway package concluded:
“Other EU countries have accommodated EU legislation whilst largely or entirely retaining public ownership of their railways, and the most recent proceedings at the European Court of Justice suggest that this is likely to remain the case in future….Despite arguments made at the time of UK rail privatisation, European legislation does not dictate that railways must be fully privatised. There is no requirement under EU legislation for railway infrastructure to be in private ownership. Nor is there any bar on train services being operated by a government-owned enterprise. Other EU countries have accommodated EU legislation whilst largely or entirely retaining public ownership of their railways, and the most recent proceedings at the European Court of Justice suggest that this is likely to remain the case in future… This is not a clear-cut area of law and comes down to individual cases in the European Court of Justice. It is clear that other countries have done much better than the UK at defending their domestic jobs and industries, by pushing the boundaries of the law.
“Every train that runs in France is built in France; 97% of trains that run in Germany are built in Germany; 90% of trains that run in Spain are built in Spain.” Bob Crow, General Secretary RMT
It seems highly unlikely that politicians in any other country in Europe with a domestic train manufacturing industry would have failed to find ways to award the Thameslink contract to a domestic manufacturing facility. The UK should adopt a similar approach.” (See https://www.transportforqualityoflife.com/u/files/120630_Rebuilding_Rail_Final_Report_print_version.pdf)
See also http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-internal-market-subcommittee/brexit-competition/written/69979.html and http://www.cms-lawnow.com/ealerts/2017/11/brexit-and-state-aid–can-the-wto-fill-the-gap
7 White and Gordon 2017; the point about developing “national, export-oriented champions” is repeated by White again in January 2019.
8 Corbyn stated a month later he wanted to negotiate exemptions from the directives pushing competition in public services and blocking intervention in support of industry (for example during the Steel crisis in 2016). See Jeremy Corbyn speech to Scottish Labour conference on 9 March 2018 (https://labour.org.uk/press/jeremy-corbyns-full-speech-scottish-labour-conference/)
9 “The state aid provisions contained within the Irish protocol (the so-called ’backstop’) illustrate the EU’s minimum expectations for the future relationship….the EU has required a set of level playing field conditions to be introduced if the backstop ever comes into effect, including detailed provisions on state aid. This indicates that any future agreement between the UK and the EU that removes tariffs and quantitative restrictions will require at the very minimum these state aid provisions… The Irish protocol states that the UK must continue to apply EU law on state aid in its entirety as part of the UK-EU customs union (European Commission 2018b). This includes the key treaty provisions on state aid, the GBER and the de minimis regulation, and the commission’s guidelines on state aid control. These rules will be updated automatically over time in line with EU legislation.” P. 16 (https://www.ippr.org/files/2019-01/1548088552_brexit-state-aid-jan19.pdf)
11 “In sharp contrast to the EU, the rules of the WTO on State Aid relate only to subsidies (strictly financial support) which are intended either to boost exports or to reduce imports.” (See https://www.jacobinmag.com/2018/05/corbyn-labour-eu-single-market-economic-policy)
12 “As we have seen, the definition of subsidies under the two sets of rules is largely similar. We have noted, however, that some subsidies – those granted under government direction or entrustment (as defined under WTO law) but not representing a cost to the government – may be allowed under EC law as not constituting State aid, while they are subject to the WTO disciplines. There is therefore a risk that recipients of such subsidies would find them countervailed or challenged before a WTO Panel. As we have also seen, the EC rules allow the Commission to authorise State aids, which may fall foul of the SCM Agreement’s provisions on prohibited or actionable subsidies. Particularly exposed to this risk is State aid granted ad hoc and authorised under Article 87(3) (a), (b) or (c) EC Treaty, i.e. State aid for major investments in assisted regions, for important projects of European interest, and rescue and restructuring aid.”
From The Interface between EU State Aid Control and the WTO Disciplines on Subsidies by Claus-Dieter Ehlermann and Martin Goyette (https://www.wilmerhale.com/-/media/881c469fad9f48779634e48f030483e2.pdf)
13 Against Gordon’s sweeping misquote, Labour’s manifesto is more limited and couched in legal terms: “Labour will champion the export interests of SMEs, ensuring all new trade agreements include a commitment to support their market access needs… We will create a network of regional trade and investment champions to promote the export and investment interests of businesses across the country.” (https://labour.org.uk/wp-content/uploads/2017/10/labour-manifesto-2017.pdf)
15 That is true also for right-wing Tory plans for reviving the Commonwealth that would, if it actually worked, see Britain as just one main player alongside Australia, Canada and India rather than as the British Empire 2.0.
16 “Remaining within the single market would tightly circumscribe the investment focus of the bank. All plans would have to be submitted to the Commission for approval and would probably face legal challenges from competitors if they could show that it was conveying selective advantage, distorting competition or affecting trade between member states.” (Ibid, italics added)
That’s why Labour’s aim for “a final deal that gives full access to European markets and maintains the benefits of the single market and the customs union” in reality amounts to cherrypicking freedom of movement of goods and services while regulating immigration and possibly capital flows, which even an EU stuffed full of left governments couldn’t accept without doing deep damage to itself.
Only transnational planning based on political federation could democratically balance such pressures. The same is true of the narrower question of state aid, as these rules are not simply pro-capitalist but aim to prevent states from bribing big businesses with subsidies to locate facilities in their territory or by slashing rights in the Social Charter, a race-to-the-bottom that occurs in the USA on a regular basis, with firms playing states off against each other to get the biggest tax exemptions and subsidies.
The USA can hold together because of its long-established central state, enshrined in a constitutional division of federal powers and state rights, and because this long-term set up has moulded state and national elites. The same dynamic unleashed in a weakly unified EU still based on nation-states would simply pull it apart, although of course in Europe big loopholes still give capital flexibility to profit, particularly in tax and wage laws.
This has of course privileged the biggest capitalist firms and banks of the major powers (just as it does elsewhere, for example the WTO disputes process where semi-colonies can’t mount the same teams of lawyers and economic experts to plead or press their case) but it has also given better terms than the smaller countries would have received.
So Ireland has boomed as a low-tax, business-friendly jurisdiction (sometimes going overboard, with the EU declaring that its tax breaks represented illegal state aid to Apple in 2016), while the lack of an EU-wide minimum wage has allowed lower-wage states with skilled workers particularly in the East to attract investment. Since the collapse of Stalinism in 1989 and particularly the 2004 enlargement of the EU, Eastern Europe has increasingly been the “workshop” or “assembly line” of Western Europe, with Slovakia now the biggest car producer per capita in the world, though as wages rise this trend has eroded, with investment shifting further South to poorer states in the Balkans for instance.
This has also allowed a few opportunities via the Posted Workers Directive for smaller businesses in poorer countries to provide labour in richer countries for lower wages, but has seen a massive reaction in Britain and France.
See https://www.bloomberg.com/news/articles/2018-04-04/wages-are-getting-too-high-in-europe-s-eastern-workshop and http://www.reuters.com/article/us-easteurope-economy-analysis/no-more-low-cost-east-europe-goes-up-in-the-world-idUSKBN1AA1RE
18 Despite a lower pound, 2017 saw the “highest-ever UK outflow” of Foreign Direct Investment, while a recent UK manufacturers’ survey showed a third had already seen a fall in investment as EU-based companies remove UK-based suppliers from their supply chains, crucially to avoid falling under the 40 percent EU content requirement.
Meanwhile the government’s 28 November analysis of hard Brexit showed a 9.3 percent drop in GDP, and automotive and chemicals sectors losing more than a fifth of output- so much for rebalancing the economy. Whether the figure is as high as this, there is no reason to doubt the general correctness of these studies, as they are supported by a host of 2018 studies including by the CEPR think-tank and Bank of England on the impact of Brexit repot a similar loss to GDP.
Modelling by the trade union think-tank CLASS shows a hard Brexit could mean a fall in wages of up to ten percent and huge loss in funding to Northern infrastructure projects.
See http://classonline.org.uk/blog/item/the-great-british-regression-brexit-and-inequality and http://www.euristaskforce.org/news/four-five-manufacturers-industrial-product-supply-sector-want-continued-regulatory-alignment-eu-brexit/
19 Or (as argued in the run up to the referendum) the threat of the TTIP free trade deal if we stay in the EU anymore. In fact as anti-Lexit left-wingers pointed out, Brexit would see Britain first in line for a US free trade deal as the Tories are now pursuing.
21 The Stalinist assertion that this is not a reformist programme is self-explanatory in contradicting itself: “The new party programme was not one of establishing a Soviet Socialist Britain but of establishing a People’s Democracy in Britain. As one of the sub-headings of the programme states: ‘People’s Democracy – The Path to Socialism’. It was the road to Socialism and so it did not envisage the immediate establishment of Socialism… The programme did not prescribe a parliamentary or constitutional road to socialism. The novel element in the British Road to Socialism in 1951 is that the notion of the utilisation of parliament in the transition to people’s democracy was introduced for the first time in a British party programme.” (See http://www.revolutionarydemocracy.org/rdv13n2/brs1951.htm)
Against the claim this is modelled on the experience of Eastern Europe after the war, this began and failed first in the 1930s as a socialist strategy because of its cross-class appeal to other classes and parties than those of the working class. It ignores that the Red Army had removed the state armed forces in the areas under occupation that became the Stalinist states, whereas the capitalist state’s armed base is very much alive and kicking in Britain and across the rest of the capitalist world in 1951 and today. (For more see chapter 4 of The Degenerated Revolution, http://www.fifthinternational.org/content/key-documents/-degenerated-revolution0)
As opposed to the reformist Stalinist strategy of the People’s Front and People’s governments, and a stage of people’s democracy before Socialism, the healthy first four congresses of the Comintern developed, through debate and discussion between Bolsheviks and European revolutionaries, the revolutionary tactic of the workers united front and with it the workers’ government as part of the immediate struggle for socialism. (See http://www.fifthinternational.org/content/workers-government)
22 In another silence the Lexit camp ignore military matters and pose their arguments almost entirely in economic terms, with Fortress Europe as their sole non-economic one to undercut a defence of free movement across Europe as a European privilege. But with Britain triggering Article 50 and leaving the EU, the main powers at its heart Germany and France have now moved forward to set up the Permanent Security Cooperation (PESCO) initiative with “legally binding commitments” among its 25 members. (See https://pesco.europa.eu/)
23 For instance, Macron’s opposition has reformed the Posted Workers Directive in a way that will largely block the ECJ’s most anti-union interpretations.
24 See https://www.open-britain.co.uk/labour_leadership_challenged_from_across_the_left_to_disown_lexit_myths and https://d3n8a8pro7vhmx.cloudfront.net/in/pages/14074/attachments/original/1517301904/lexit_paper_finalPRINT_noembargo.pdf?1517301904
25 Some 45 per cent of British jobs and 66 per cent of German jobs are estimated to be fully or partially replaceable by automation (45 per cent of German jobs fully).
“The stock of industrial robots in Europe has more than quadrupled in the past 25 years (from around 95 000 to over 430 000), with more than 40% currently located in Germany. While there is a divergence of views in the academic literature on the potential impact of technology on job creation vs. destruction, according to some studies, if existing new technologies were adopted in production processes, they could automate between 37% and 69% of today’s tasks (depending on the Member State), leading to a significant change in the set of tasks performed on the job in many sectors.”
From Online Executive Summary: Employment and Social Developments in Europe 2018 (http://ec.europa.eu/employment_social/empl_portal/publications/Esde2018/index.html)
26 Trump’s right-wing nationalist policies can work for a while in the USA, the world’s biggest national economy with the advantage of a huge domestic market, and his tax cuts for the rich and his deregulation make the USA more competitive relative to its rivals, and he can throw the USA’s superpower weight around to negotiate better trade deals. Nationally-centred left-wing policies in Britain will prove inadequate, while “socialism in one country” would ultimately see Britain economically decline further.