George Kerevan sets out his socialist position in the context of the contradictions of capitalism
WHAT position should socialists advance regarding optimal trade arrangements with the rest of Europe, in the event Britain does quit the EU? Let’s leave aside the tactical debate on the efficacy of a second Brexit vote, or the fraught arguments concerning any valid transitional arrangements. Bottom line: what trade set-up is the least worst for Scots, English, Welsh and Irish working people post any Brexit?
This debate is as old as the hills. It goes back at least as far as 1847, when an international congress of radical economists, liberal intellectuals, trades unionists and left-wing activists convened in Brussels to discuss the arguments for European and global free trade. At that point in history, a triumphant British industrial capitalism was championing an end to protectionism everywhere. The cocky British industrial bourgeoisie had just succeeded in abolishing the infamous Corn Laws – tariffs on imported grain that protected aristocratic British land owners and kept the price of bread artificially high for the rapidly growing urban proletariat.
With the Corn Laws gone, bread prices fell. However, the industrial bourgeois class used this as an excuse to cut wages. Then and now, free trade proved a two-edged weapon. Its actual impact depends on circumstances and what class you are talking about. This inconvenient fact was pointed out forcibly by one delegate to the Brussels free trade congress – a certain Karl Marx. His conclusion was that free trade deals should be supported pragmatically by socialists. But only because they usually help capitalism spread, thereby, creating more revolutionary proletarians.
Modern socialists should imbibe Marx’s approach to so-called free trade. We are for it tactically because bigger markets are more likely to lead to economic expansion, more jobs and a stronger proletariat. Eliminating protective barriers also undermines the power of domestic monopolists, strengthening the leverage of the local working class. But this general approach has to be applied in the light of given economic circumstances and a given balance of forces. For instance, a genuine workers’ government might want to control import and capital flows, and so avoid foreign trade pacts that limited its ability to do so.
How does the current economic conjuncture influence capitalist trade policy? The neo-liberal era (c.1980 onwards) bulldozed away international barriers to the free movement of capital, labour, goods and services – so-called ‘globalisation’. This has led to the hegemony of US investment banks and world market domination by a tight band of American high-tech monopolies (Amazon, Google, Apple, Facebook) which make super-profits. European capitalism – still dominated by Germany’s unsustainable, high-cost luxury manufacturers and faded domestic banks – has retreated further behind EU protectionist walls. Rising Chinese capitalism has resisted the US onslaught by protecting its own, vast domestic market and building local rivals to the US technology giants behind these tariff walls – companies such as Alibaba and Tencent.
The rise of Trump represents a political backlash by sectors of traditional US capitalism which lack the technological superiority of the Amazons and Apples, and so are vulnerable to EU and Chinese protectionism. Hence, Trump’s new trade wars against China and Europe. Here’s the political contradiction. Once you start global trade conflicts, they do not end in greater free trade. Instead, tit-for-tat protectionist measures lead to a complete breakdown in the global market, the emergence of regional blocs under the hegemony of individual imperialisms; and ultimately to military clashes. This was the pattern in the run up to both World Wars. It is where we are destined in the 21st century.
Where does Britain fit in? In the short term, post-Brexit it will find itself alienated from Europe and treated with patronising contempt both by Trump’s America and Xi’s China. Result: British capitalism will be forced to launch a massive onslaught on worker’s rights and public services just to survive. The logical game plan for British capitalism is to turn Britain into a giant version of Singapore – deregulated, authoritarian and relying on semi-fascist English nationalist currents to demobilise working class resistance. All this will sharply circumscribe the room for manoeuvre of a Corbyn government imprisoned by its Blairite backbenchers. It is against this background, we need to test the pros and cons of any post-Brexit trade arrangements.
This analysis leads to the conclusion it would be political madness for socialists to ally themselves with those extreme elements of British capitalism pursuing a globalist, free trade model. Those Labour MPs or former MPs who sided with the Farage wing of the ‘leave’ campaign – like John Mann, Frank Field and Kate Hoey – have merely reinforced the slide towards a Britain where workers’ rights are almost totally abrogated. Besides, a ‘hard’ Brexit based on World Trade Organisation (WTO) rules is not what it seems. The big imperialisms, e.g., China and the US, have already forced the EU to concede so-called Mutual Recognition Agreements which eliminate routine border checks. Following a ‘hard’ Brexit, Britain would not have the clout to negotiate such bi-lateral arrangements.
Exactly what sort of post-Brexit arrangement best protects workers? Labour proposes negotiating ‘a’ new customs union for physical goods – as opposed to staying in ‘the’ present EU Customs Union. Assuming Europe accepts, this would leave existing cross-border supply chains tariff free, protecting British jobs. Of course, the phrase ‘a’ customs union is pure sophistry. The rebranding would allow Labour to say it had left the EU without changing anything as far as the British and German industrial bourgeoisie were concerned. It would also mean that Britain would continue to apply common EU tariffs against the rest of the world. So Britain would be forced to follow the line laid down by Franco-German imperialism in future global trade disputes. That’s a poisoned chalice.
However, Labour would stay outside of the Single Market because – in common with the Tory Brexiteers – it wants an end to free movement of people. The Labour leadership, thereby, capitulates to the prejudices of the most backward and racist sections of the working class and petty bourgeoisie. Unfortunately, on the continent, elements of Die Linke and France Insoumise take the same line as Labour against free movement. This plays directly into the hands of the anti-immigrant, extreme right which is gathering force throughout Europe.
There is an obvious progressive alternative: for post-Brexit Britain to remain inside the Single Market through membership – alongside social democratic Norway – of the European Economic Area (EEA). The EEA encompasses the free movement of goods, services, capital and people across the EU and other partner states. It is a free trade area but – crucially – not a customs union. Norway is, thus, free to have different trade arrangements with nations outside the EEA. The trick is that goods transiting Norway from the outside world into the EU are taxed by the Norwegians and the money passed on.
If Britain was a post-Brexit member of the EEA, physical goods would flow freely between it and the EU, preserving just-in-time supply chains and the jobs dependent on them. It would also eliminate the return of a hard border between Northern Ireland and Eire. Free movement of people would remain, though it is perfectly possible within the rules (as applied by Switzerland, and EAA member) to insist that European immigrants prove they have paid employment inside a minimum time period. EEA members handle trade disputes with the EU via a special independent court, not the European Court of Justice. Britain inside the EEA would even recover unilateral control over its farming and fishing grounds. The only barrier to this progressive solution is Labour and Tory hatred of free movement – a position aimed at dividing the European working class.
And this brings us to Scotland. As we all know, 62% of folk voted ‘remain’ north of the border, seeing Europe as a counterweight to the Tory government in London. It is incumbent on all socialists in Scotland to respect that decision, even if Britain quits the EU. And that is why the SNP Scottish Government has been arguing consistently since the publication of its Brexit White Paper in December 2016 that Scotland should have a bespoke solution even while remaining inside Britain, namely, that Scotland should stay inside the Single Market, even if England remains outside. There is no technical barrier to this. Scotland and England would remain a free trade area with a common external tariff. Goods passing from England through Scotland to an EU jurisdiction (either as entities or incorporated into Scottish manufactures) would be liable to any European taxes. But the Scottish authorities would take responsibility for collecting these tariffs and passing the money to Brussels (i.e. the Norwegian model).
Simultaneous Northern Ireland membership of the Single Market via the EEA would eliminate the border question both with the EU and Britain. In fact, it is difficult to see any other practical alternative short of Irish reunification. However, I remain ever sceptical of the Tories or Labour recognising the national democratic demands of Scotland and Northern Ireland, in respect of maintaining internationalist links with Europe.
Of course, the present EU treaties are aimed at defending a protected space for European capitalist exploitation. But creating a socialist Europe will not be advanced by dismantling the existing, collective social and democratic gains achieved by the European workers movement through the EU. That is why free movement must be defended. And why I, as a socialist, am committed to keeping Scotland inside the EEA. In this revolutionary sense alone, to paraphrase Marx, I am in favour of free trade.
George Kerevan is a member of the executive of SNP Socialists and former SNP MP for East Lothian (2015-2017).