On Brexit, or Why the EU Ought to Go

Subin Dennis June 24, 2016

Image Courtesy: Jeff Djevdet


A quick note on Brexit from a Left perspective. Well, not just on Brexit.


1. The Economic Crisis continues to make its impact felt

The worldwide economic crisis that began in 2008 and which is still continuing is the single biggest driver of social and political change in the world today.

Periods of economic crises under capitalism are times of mass unemployment, and given the popular anger that such a situation produces, give rise to mass movements which polarise people into both the Left and the Far Right. As people seek answers to the deep livelihood issues they face, the far right tells them that their problems are due to some "other", such as immigrants or minority groups. The Left tells them that their problems are due to the systemic problems associated with capitalism, and that they need to unite. The political "centre" - such as Pasok in Greece, PSOE in Spain - goes bust (unless they reinvent themselves) because they don't have answers to the questions posed by the people. It is easier for many people to understand the explanation of the far right - it requires no application of the mind, after all. The explanation given by the Left, while being the correct one, is more nuanced and tougher to understand oneself and to convince others. So it is no wonder that many people readily take to the far right in periods of crises. Wherever the Left makes a determined, organised effort, they tend to make advances. This is what is happening in various parts of Europe, with the Left advancing in Greece, Spain, Portugal, Czech Republic etc., while Austria, Armenia, Serbia, Finland and Hungary have seen the rise of the far right. The far right is also growing stronger in the US, France and the UK. The Jeremy Corbyn-led Labour Party in the UK seems to be making an effort to turn towards the Left, while the rise of Bernie Sanders has sparked hopes for a new movement in the US.

Thus it can be seen that the latest developments are part of the continuing consequences of the worldwide economic crisis. It gave rise to movements such as Occupy Wall Street, stimulated Europe-wide mass protests following widespread austerity and the eurozone crisis, and became one of the catalysts of the uprisings in the Arab countries. It led to the slowdown in China which led to the collapse of commodity prices, which in turn led to the flare-up of popular anger against many governments in Latin America in the recent months. The rise of the Modi-led BJP in India is also directly related to the diminishing living standards which the common people faced as a result of high inflation, slowing growth and lack of job opportunities. In other words, the postmodernists and others who still think that political economy doesn't matter can go take a hike.

2. The European Union is an anti-people institution

(i) Neoliberalism is the LAW in the EU, enshrined in the EU treaties. Restrictions on the free flow of capital between member states and between member states and third countries are prohibited. And of course, the EU is a customs union, with no restrictions on the movement of goods and services within its borders, and with common tariffs with respect to other countries. There are severe restriction on fiscal policy for EU member states - as per EU treaties, their government deficit cannot be more than 3% of GDP, and the government debt shall not exceed 60% of the GDP - which limits their ability to increase government spending, to tide over economic difficulties, for instance. Things are worse for countries with Euro as their currency, as they cannot have an independent monetary policy either - they cannot print their own currency to spend, nor can they set interest rates. Eurozone countries do not have the option of devaluing their currencies to make their exports cheaper in situations where their imports far exceed exports, hurting domestic industries badly. All these mean that the inequalities between countries of the European Union continue to increase, pushing the economically weaker countries into crises.

The so-called free movement of people is applicable to the people within the EU, true. This is not a problem for capital, as it is a convenient method to keep wage rates low. There is, of course, no free movement into EU for those outside it. The flow of refugees into Syria and elsewhere (which is the direct result of the devastation inflicted on Iraq and Syria by the US and its allies, including European countries) is being curtailed by the EU through various means. Hence the term "Fortress Europe" used by the Left to denote the immigration policies of the EU. At the same time, the downward pressure on wages in a situation where there is austerity is taken advantage of by the far-right, which foments anti-immigrant sentiments.

(ii) The EU has been ruthless in imposing savage austerity, especially on countries in crisis such as Greece. Recalling its handling of the Greek crisis alone is enough for us to grasp the monstrosity of the institution. The deal accepted by the Syriza government last year included barbaric spending cuts (which would be quasi-automatic if the government fails to meet fiscal targets of generating a surplus), pension cuts and massive privatisation. The deal said that the government had to get the approval of the troika (European Commission, European Central Bank and the IMF) on all draft legislation in relevant areas before submitting it for public consultation or to Parliament. It even had to put in place a programme under the European Commission "for capacity-building and de-politicizing the Greek administration"! In other words, the democratic mandate and will of the Greek people would not matter any longer, and Greece was reduced to being a colony under occupation by the Germany-led EU.

(iii) Keen observers of the situation in Britain have noted that EU laws make it nearly impossible to implement even the kind of policies that are advocated by Jeremy Corbyn, such as the renationalisation of railways. The EU treaties and the verdicts of the European Court of Justice make the nationalisation of such key sectors on a nationwide-scale illegal.

(iv) The so-called free movement of people is applicable to the people within the EU, true. This is not a problem for capital, as it is a convenient method to keep wage rates low. There is, of course, no free movement into EU for those outside it. The flow of refugees into Syria and elsewhere (which is the direct result of the devastation inflicted on Iraq and Syria by the US and its allies, including European countries) is being curtailed by the EU through various means. Hence the term "Fortress Europe" used by the Left to denote the immigration policies of the EU. At the same time, the downward pressure on wages in a situation where there is austerity is taken advantage of by the far-right, which foments anti-immigrant sentiments. Meanwhile, Slovakia is set to take the Presidency of the Council of the EU, and its Prime Minister is somebody who last month stated that Islam has no place in his country.

(v) EU is ferociously anti-democratic. Its attitude towards Greece has already been mentioned. When the 'European Constitution' was rejected by the French and Dutch people in referendums in 2005, the very provisions rejected by the people were incorporated into the Treaty of Lisbon in 2009. This treaty was not taken to a referendum in France or Netherlands. There was a referendum only in Ireland, which rejected it. Then the EU said, "Wrong result. Vote again!". The Irish were bullied into ratifying the treaty in a second referendum.

All of the above means that even if a government committed to ending austerity comes to power, it cannot implement such policies.

3. Okay, what if some Left party or coalition wins the election in some EU country?

Any Left-led government would want to end austerity. But for the EU rules preventing the implementation of such policies to be bent in any meaningful manner by a country, either EU as a whole has to change, or the country has to come out of the EU.

Now the first option can happen only if a number of countries come to be ruled by parties which are committed to such change. But even assuming that such prospects exist, the election schedules of various countries are such that it cannot happen in the very near future. Therefore some Left party might end up coming to power in some country first, and could become the trailblazer or "test dose". But then the very prospect of ending austerity being anathema to finance capital, the coming into power of an anti-austerity party itself causes capital flight out of that country. This capital flight further destabilises the economy, by, among others, pushing up borrowing costs and lowering private investment and economic growth. In the case of countries like Greece which have high debt-to-GDP ratios, this would cause the ratio to rise, worsening the debt problem. The government, being unable to indefinitely violate EU treaties which forbid ending austerity, is unable to increase government spending.



Therefore, the first thing that any Left government which manages to come to power today, especially in a country which faces economic crisis, would be to impose controls over capital inflows and outflows (which might necessitate the nationalisation of banks as well) if it intends to save the economy from further worsening of the crisis. Once this is done, exit from the eurozone and EU logically follows as restrictions on free cross-border movement of capital is prohibited as per EU treaties.

4. Does this mean Brexit will make things better for the UK from the perspective of the Left?

Brexit will not mean Britain shall become socialist from tomorrow, or even that austerity will end in the country. Unfortunately, the leading champions of the Leave campaign belonged to the far right. The Labour Party leadership had supported the Remain campaign, which makes its position and the position of Jeremy Corbyn weaker (Note that Labour had been opposed to the European economic integration project until 1983). If the left within the Labour Party and the Left in the UK overall weakens, things will be worse off for the working class of Britain, with continuing austerity, and with initiatives like the Transatlantic Trade and Investment Partnership (TTIP) expected to gather pace.

5. What is most interesting will be the chain reactions that Brexit could set off.

There could be more referendums in countries such as Denmark, Netherlands, Italy and even France. There would be serious debates everywhere, including within the European establishment led by Germany, regarding the future of the EU. There are calls for another referendum in Scotland on independence from the UK, and for a referendum for a United Ireland.

Spain is going to polls on Sunday, 26 June, and Unidos Podemos, the Left coalition consisting of United Left (Izquierda Unida, led by the Communist Party of Spain - Partido Comunista de España), Podemos and other left parties, is widely expected to rise to the second position. Interestingly, Alberto Garzón Espinosa, the leader of the Communist Party, is the most popular leader in Spain according to opinion polls. If (it is a big if) they are supported by the Socialist Party, they could even form the government. A weakening of the EU could potentially be a shot in the arm for them, and even for the Syriza in Greece.

We are living in fascinating times. That much is for certain.



For Further Reading:

  1. Prabhat Patnaik (2010), "Dilemma in Europe", Frontline, November 6-19.

  2. Prabhat Patnaik, (2015), "Europe’s Moment of Truth", People’s Democracy, July 19, 2015 (An article written in the backdrop of the Greek crisis, in which the author argues that "Europe’s existing “public institutions” will need to be destroyed before new ones, appropriate for a democratic Europe, are put in place.")

  3. Jayati Ghosh (2016), “Societal involution”, Frontline, May 27, 2016. (In which the author outlines the material underpinnings of the rise of the far-right.)

  4. “Why the Morning Star supports a Leave vote” - Editorial by The Morning Star newspaper, which adheres to the programme of the Communist Party of Britain, 22 June 2016.

  5. Julian Jones (2016),“’Free movement’ in the EU actually means free exploitation” , The Morning Star, 22 June. (Article on issues concerning immigration and free movement of labour)

  6. Neil Clark (2016),“The Jo Cox tragedy: Why opposing fascism does not mean supporting the EU” , RT.com

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