Four things Brexit means for the UK

When the EU referendum came around last year, I was conflicted over the vote if I'm honest. I could see the 'Lexit' case for voting to leave: the European Union is a neoliberal project with a serious democratic deficit. I have a great deal of time for the old Bennite arguments against the common market. However, it was also clear that the balance of forces were overwhelmingly right-wing, so any withdrawal from the EU would be shaped by the Conservatives and UKIP. In the end, I decided to vote Remain out of caution.

Many months later it's clear that the rupture was coming for some time. The problem was that the left was nowhere on the EU debate. You had a split between the Lexit camp, who were typically hard left, and the Remain camp, mostly left-liberals and reformist socialists. Both positions were reactive to the terms set by the right and its dominance over the question. The referendum itself was held by David Cameron for party political reasons. It was about the internal dynamics of the Conservative Party. Not about the future of the United Kingdom.

Without a clear position, the left could either side with the liberal wing of the establishment or the right-wing reaction to it. This was not a good place to be. I could have lived with Brexit if there was a strong left-wing government in place, or a chance that the right would lose power any time soon. Only under those conditions would the British government likely maintain an open immigration policy and pursue a radical programme to restructure the UK economy for working-class interests.

So where are we left now? As expected, I've been following the situation develop since the vote last summer and I've tried to consider the social and economic impact of Brexit carefully. Here are just a few thoughts on the unfolding crisis.

1. Brexit means the end of the UK

Despite the hopes of British nationalists, Brexit may mean the United Kingdom will cease to exist in the not-too-distant future. It was already possible that the UK would begin to fall apart over the next twenty years. The realignment of Scottish politics in 2015 shows that the conditions for a second referendum were already emerging, but the withdrawal from the EU has hastened calls for an independent Scotland.

Scottish independence is now a realistic possibility in the near future. If Scotland votes for independence in 2018 or 19, Theresa May will have to resign and the Conservative government will face serious questions over its credibility. They will go down in history as the party that literally broke the country in two. At least this could put the Labour Party on course to government (presuming the Blairites don't move to dislodge Corbyn). This is just one case.

Meanwhile in Northern Ireland, the republicans have gained a majority in Stormont for the first time. Ulster unionism is in crisis over corruption at the heart of government, and Brexit has stoked fears of a hard border arising between the North and the rest of Ireland. I wouldn't say Irish reunification is an imminent prospect, though it is clear that the UK cannot take Northern Ireland for granted. Even demographically, the Catholic community are likely to tip the balance towards Irish nationalism.

As for Wales, the situation is far more stable (for now) as the Welsh nationalists have yet to develop a strong constituency for independence. Unlike Scotland and Northern Ireland, Wales was very much for Brexit and the Welsh national question is not shaped in quite the same way. It's much more likely that the Welsh will remain tethered to the English, as the Scots and the Northern Irish break free. But this doesn't rule out Welsh independence in the long-term either.

2. Brexit is a disaster for the UK economy

As the pound continues to fall, the goods flowing into Britain will continue to rise in price and this is just after decades of wage stagnation and underemployment. Under these conditions inflation may well take a dreadful toll on working people, let alone people out of work. At the same time, the only way to generate growth would be to resort to an industrial strategy to bolster exports through state investment in the economy. This isn't going to happen. The Conservatives have spent 40 years dismantling industry and reorienting the economy towards finance.

For too long cheap labour has been a substitute for capital investment, as the British government has dropped its commitment to bolster the economy through Keynesian projects. Likewise, the Thatcher administration inflicted a historic defeat on the labour movement in the 1980s, from which organised labour has still not fully recovered. Without high levels of employment and high wages, the economy had a continuous need for demand and the only available means for this was to free up credit. This pattern looks set to continue.

The financial sector and the property market have become the core growth sectors, as services overtook manufacturing and old industry. Wealth became even more concentrated in even fewer hands than it has been historically. Yet it should be obvious that the debt bubble can't be inflated forever. Something will have to give. Another financial crisis or a property crash might do the trick. This is even with the European Union. Without the EU, Britain faces a situation where the strategy has already been ruled out by the political class.

3. Brexit is a disaster for migrants

Obviously, Brexit means that the British government will get to dictate the terms of inflows of EU migrant workers into the UK. Freedom of movement, as we know it, with the EU will change forever. The UK will still try to hold onto free movement with Ireland, possibly by introducing new mechanisms for regulating Irish migration onto the British mainland. This would be more sensible than sending British troops to the Irish border. Otherwise, the backdoor for EU nationals would be left wide open.

Many right-wing people voted leave because they wanted to close the borders. I suspect this will not happen due to simple economic factors: the UK relies on cheap labour. What is more likely is that the border controls will be adjusted to maintain a precarious workforce. The numbers may change, but not indefinitely. As the opening in the border narrows, the government would lose tax revenue from migrant labour and so would likely initiate greater austerity. Theresa May will have a new excuse for selling off the NHS, schools and pensions.

Expect more racist rhetoric. The calls for new pressures to be heaped upon migrant labour will only become more bold, and the Tories will pander to the xenophobes at every turn. VISA costs, repatriation and detention centres are just one front in this struggle. However, the aim will not be to reverse past immigration, but to shape future immigration to suit business interests. The divide and conquer strategy will continue to hammer the migrants already here and those who hope to settle here in the future. But this will help keep down British workers at the same time.

4. Brexit is a disaster for racists

Contrary to liberal hysterics, the threat of the far-right in Britain is marginal. UKIP has lost its raison d'etre, and Farage is off galavanting in the United States. The party's new leadership is incapable of seeing through the media's illusions of a white working-class thirst for fascism. As if UKIP ever had a chance of breaking through in Copeland or Stoke-on-Trent. The party's core support has always come from disaffected Tory voters, and even the former Labour voters it attracts passed through the Tories first. The real threat is that the Tory government is becoming UKIP to neutralise the threat of the party. This is far more serious than Paul Nuttall's antics.

Not that I would say the far-right is no threat at all. I suspect if Brexit doesn't pay off (which it won't) that the new far-right narrative will be that the Tory government "sold out". If immigration isn't totally restricted, the far-right will claim the EU is still violating everything we've held most often. Farage might even make a comeback with a new party. As people are hit by rising food prices and a shrinking job market, they will naturally seek out someone to blame. The usual nihilists and misanthropes will provide the scapegoats: immigrants, Muslims and the left. A populist upsurge is still a possibility in the future.

Reaction to Scotland's No vote.

So the votes are in. Scotland has voted 44.7% for independence and 55.3% to remain within the United Kingdom. Voter turnout was close to 87% in a display of participation greater than we have seen in any recent election. The EU elections in May drew 33.8% of the British electorate out of their homes to the local voting booth. It’s standard in UK general elections for turnout to be almost twice as high as in EU elections. Consequently, the protest vote looms large in one and not the other (at least usually this is the case).

It was said in the run-up to the referendum that Alex Salmond couldn’t lose either way: if it’s a ‘yes’ then Scotland becomes an independent state, if it’s a ‘no’ then Scotland will win more powers. Originally the proposed referendum was to include three options, not just yes or no, but the option of maximal devolution would have been on the table too. This led many to suggest Salmond was really pushing for greater powers. If Salmond was aiming for independence then this might not be the end of the story, as we have seen in Quebec where there have been two referendums on independence. The major issue for Whitehall is how they can prevent such an occurrence in the British Isles.

No wonder then David Cameron has raised the West Lothian question. He speaks of a ‘devolution revolution’ for the English and not just Scotland, Wales, and Northern Ireland. Endless bifurcation has its appeal to international capitalism as each entity can be picked off, its economy chiselled and its workforce disciplined. The appeal is to English parochialism, the same mobilising force behind UKIP, Powellism, and the EDL, can be seen as a move to strengthen the rightward trend of British politics through coalescence and triangulation. Boundary changes would have to be made in any large-scale constitutional shake-up in a country where such questions have been held-off for far too long. So devolution may not necessarily result in an automatic Conservative stranglehold in Westminster.

Decentralisation in a neoliberal world would suit Cameron and his party just right. The Conservatives are facing inexorable decline, having only increased their share of the vote by 3% in 5 years against the Brown government. It’s highly unlikely for any governing party to increase its share of the vote, even if you have the Liberal Democrats as human shields. Meanwhile, the Labour Party lacks any vision or impetus to stand up for its traditional social base. The bet may not be for a rejuvenated Tory Party, that fight may have already been lost. It’s not just that the social democratic model is rotting before our eyes; the old Toryism is going the way of the dodo too. In that regard, what is left but to fall back on the trilateral consensus and devolve the Union into a morass entrenching austerity.

As for the Scottish National Party, it was once the case that the left-right coalition (which composes the SNP) was set to break apart once they had achieved independence. It looks unlikely that will be the case as long as Scotland remains within the UK. Salmond will try to maintain the public services and welfare provisions in Scotland for as long as he can. Additional powers may help this, or hinder this, it’s difficult to foresee. It still is the case that the SNP is not a socialist party, it isn’t even a republican party, and it was willing to accept NATO, as well as international free-trade agreements, and the vanity projects of Donald Trump. I can see the ultra-left in Scotland pinning the blame on the SNP for not being pure enough and Salmond will rebuke this with the language of pragmatism.

This post was written as an immediate reaction to the outcome of the referendum on Scottish independence. It will be reproduced at Souciant later.

Scotland's Future.

In a matter of a few weeks Scotland will decide on its future. The Left seems to have lined up behind the Yes-side of the referendum on Scottish independence. We should be asking ourselves, what is the case for unionism here? Surely, there has to be a progressive case here. After all, the Union stood firm against the rising tide of Fascism in the early decades of the twentieth century.

First of all, it has to be affirmed that there is a fundamental principle – the right to self-determination – which is without question. If the Scottish people demand an independent sovereign Scotland then they are entitled to it. The English don’t have a right to impose a form of government not accepted by Scots over Scotland. This goes to the heart of democratic concerns.

What we might call ‘red patriotism’, or traditional revolutionary patriotism, as Hobsbawm called it, has its time and place. English nationalism was tapped into by both Winston Churchill and JB Priestley. The war against fascism coincided with forces vying for the future of the social order. The people who had seen the worst of the 1930s did not want to return to those days and wanted a better life. This is why in 1945 the national government under Churchill’s leadership helped to win the war, but the Labour Party won the election. It marked the beginning of three decades of social democracy.

It was in the Union that the Welsh and Scottish people found a voice in British political life, not through nationalist organisation, but through the opposition – the Liberals and Labour. It was only with the decline of the post-war establishment and rise of Thatcherism, coupled with the death of Empire, that the Labour Party pursued devolution. Then Scottish nationalism became a contender. This should not surprise us. So a vital part of the picture is the rise of neoliberalism.

The neoliberal context

The question of Scotland’s viability is not so uncertain. The country has a GDP per capita of over £24,000. No doubt Scotland would undergo economic reform in order to reorder the institutions which underlie its standing. The real issue is what exactly an independent Scotland will look like.

It seems plausible that an independent Scotland would be opened up to international forces and exposed to the full brunt of neoliberal reforms. This might even be the case if Scotland heads for greater integration into the European system. The power of monetary policy may still be held by Whitehall and this could constrain any government in its policies. Likewise it would be possible for corporations, and even small-scale businesses, to hold the state to ransom – threatening to disinvest the fledgling economy – to shift policy in their own favour. The English government could easily initiate a race to the bottom on fiscal policy with Scotland forcing down its rate of tax and expenditure.

The possibility of a flat-tax haven north of England shouldn’t be dismissed as we have seen the same thing happen in Ireland (where there always was a much stronger nationalist/republican case). Michael Portillo has described this as the Tory case for Scottish independence. He argues it would thrust Scotland into the cold winds of global competition and, by the looks of Brussels these days, we can see how independence may lead to greater neoliberal reform and not less.

This is a point that can’t be dismissed easily as the national takes shape within the international. Contrary to the claims of nationalists globalisation does not oppose nation-states, or even nationalism. Sovereignty of national bodies has long been embedded in a global economic context. Just as the freedom and sovereignty of the individual is not absolute, neither is that of the body national. Capital can easily exploit the proliferation of borders in a world already too bifurcated. This is the reason Scotland will remain within the EU and its currency will remain sterling after independence.

The prospects for distribution

We shouldn’t kid ourselves about the Barnett formula. It’s not the case that there is a ‘trickle-down’ of wealth from the financial colossus in the City of London; but there is a case for widespread redistribution within the Union. It may be said that the United Kingdom has a greater pool of tax revenues together and from the 1940s to the 70s there was a modicum of distributional change. This led to the workers’ share of GDP rising to a peak in the late 60s and early 70s. The battle to restore profitability to the system, firstly, by the Labour government of the late 70s and then by the Thatcher administration ultimately succeeded. Since then the workers’ share of GDP has stagnated while the bosses’ share has skyrocketed.

However, once independent, Scotland would not necessarily have access to capital if a programme of redistribution were secured. The Glasgow Media Group calculated that the top layer of income-earners in the UK – around 10% of the population – were sitting on around £4 trillion in wealth in 2010. The vast amounts of capital amassed over the generations and concentrated in southern English hands would largely remain in London. The potential for redistribution would be left stunted and Scotland would be on the receiving end of a self-imposed scarcity. Under such conditions it seems likely that the Scottish government would take the side of one class over another.

It can certainly be argued that the Union has done much to preserve inequality in Scotland, where the richest 10% now have 273 times as much wealth than the poorest 10%. The richest 100 men and women increased their wealth from £18 billion to £21 billion in 2012. Just in terms of land ownership there is immense inequality in Scotland. Out of the rural landscape, which makes up 94% of Scottish land, a little over 83% of it is privately owned. Out of a population of over 5.2 million people less than a 1,000 people control 60% of the country. It seems plausible that the social inequalities preserved in Scotland by the Union would remain and could potentially be deepened by independence. So the strongest case for Scottish independence has to be a socialist case and not a nationalist one.

Except the world situation seems to make a socialist Scotland unlikely. In the distributional struggle inside the EU the biggest sparks of resistance have been in Spain and Greece. The disenchantment elsewhere in Europe, including in the UK, has not translated into electoral change. This matters because Scottish independence could well open up a new distributional struggle in the country. In the absence of a mass movement capable of waging a fight for workers’ rights the conservative tendencies of the SNP may win in the end.

This article was originally written for The Third Estate on August 23 2014.