Logics of Brexit and the Perils of “Owning the Economy”: Engaging with Watkins and Davies

“Own the economy, own business, and own the fact that you’ll be better off [by voting to stay].” This was the logic of the campaign to keep the UK in the EU in 2016. The Remain campaign monolithically aligned industry, service sectors like budget tourism and the City of London, American multinational capital, organized labour, organs of UK state (Treasury and Bank of England), IMF, OECD, G7, EU, President Obama himself behind the contention that their interests were coherent and aligned with those of the British people as a whole. It was the logic of “it’s the economy, stupid” – made manifest in the most crass form imaginable. The belief seems to have been that by coordinating every authoritative voice to trumpet the economic imperative, the case for Remain would become unanswerable. Brexit would be too scary to contemplate. Project fear would triumph.

In fact, the failure of the Remain campaign exposed “the economy’s” ambiguity in the current moment as a political terrain. “What’s the economy, stupid?” ought perhaps to be the question of the moment. The Remain campaign articulated one particular, monolithic answer. The economy is “the blob”. It is everything. You have no choice. EVERYONE says so. EVERYONE who is ANYBODY. The spectacular degree of alignment created a perfect target for populist attack. If you wanted to punish the entire elite of the last few decades with one vote here was your chance. They had all arrayed themselves in a compact, supposedly overwhelming mass, ready to be mowed down.

There was some awareness in the Remain camp of the risks involved. Characteristically, Chancellor Osborne gave voice to the unease that many felt but did not openly speak. Given the monolithic closure that Remain had achieved Osborne felt it necessary to remind journalists that Remain was “not a conspiracy. It’s called a consensus …the economic argument is beyond doubt.”

http://www.dailymail.co.uk/wires/pa/article-3592049/Business-leaders-call-Britain-leave-EU-escape-stifling-red-tape.html

What was revealed was the kind of fragile monolith that more canny political strategists, the kind of people working for Putin, try to avoid at any price. Never ever reveal the power structure in its entirety. To not only reveal the power structure in its entirety, but then to put it up for an in- out vote on a simple majority was an act of staggering naivety and complacency. This could be explained in terms of the backgrounds of the people in Downing Street, born to inherit power. More significantly, as Susan Watkins points out, it was indicative of the complacency bred by the utter quiescence of democratic politics in recent decades and the profound inertia created by Westminster’s first past the post system. https://newleftreview.org/II/100/susan-watkins-casting-off

Another effect of Remain’s strategy was that allies of the campaign had to choose to be in or out too. It was very difficult for anyone with a less than monolithic view of the social formation to support the official Remain argument. The most prominent case of this dilemma was Corbyn who argued tepidly for Remain whilst refusing the discipline of the Remain Front. His tepidness stemmed from the fact that at least some in the chain of interests were in fact clearly and powerfully aligned. The City of London backed Remain as heavily as it did because it knew that it had been highly effective in suborning the EU institutions and the threat of the referendum had since 2013 been a powerful weapon in bending Brussels to London’s will. https://corporateeurope.org/economy-finance/2016/06/how-cameron-delivered-victories-big-finance

Given how the Remain campaign set itself up, appearing alongside Cameron on a platform was not just a political sell out. It was endorsing the status quo as a power bloc. The more loudly Remain proclaimed the identity of interests between “the economy” and Europe, the more difficult it was to uphold the possibility that the EU could possibly be changed in a progressive direction.

That in turn made it tempting, especially for strong left-wing exponents of Brexit (Lexit), to argue that no self-respecting person could align themselves with this embarrassingly overt manifestation of underlying power relations. As Watkins put it with particular force: “a vote to remain, whatever its motivation, will function in this context as a vote for a British establishment that has long channelled Washington’s demands into the Brussels negotiating chambers, scotching hopes for a ‘social Europe’ since the Single European Act of 1986.” https://newleftreview.org/II/98/susan-watkins-oppositions

The irony is that both official Remain and those who espoused a Lexit vote as a protest vote or a matter of personal political ethics, overestimated the solidity of those power relations and underestimated the potential of plebiscitary nationalist politics to blow them up – a potential that the architects of the Remain monolith were about to discover to their cost.

In the face of the monolithic Remain strategy, what was the progressive case for Remain? There was the pale promise of a better EU. But above all there was the powerful case for avoiding the disastrous political and economic configuration that would emerge out of Brexit. Whereas an advocate of Lexit such as Watkins would argue that “the knock-on effects of a leave vote could be largely positive: disarray, and probably a split, in the Conservative Party; preparations in Scotland for a new independence ballot”, the progressive Remain rested on the analysis that Brexit would strengthen the political right a situation made even worse by the economic costs to be expected. If it was true that business interests were as closely allied with the EU as official Remain asserted, then Brexit would be a genuinely disruptive economic disaster. Even if it was true that under conditions of severe inequality the general interest was not identical with the progress of the “national economy”, loss of export markets and long-term stagnation would create serious problems. It wouldn’t just be profits it would be tax revenue, jobs and wages that would take a hit. A disaster would force desperate measures. The most desperate last resort would be to turn the UK into a gigantic offshore haven, to further slash welfare spending and dump wages. The UK would drift ever more away from “social Europe” towards a highly unstable, unequal, offshore feral capitalism. This was the warning articulated, for instance, by Adam Posen. http://blogs.ft.com/the-exchange/2016/06/22/the-dangers-of-an-offshore-britain/

This scenario was all the more worrying because some in the Brexit campaign – recruited from trans-Atlantic conservative intellectuals, libertarian business leaders etc – favored precisely this option. Their vision of Brexit was a Bannon-style assault on state structures. This line of Brexit politics is brilliantly analysed by Matthew d’Ancona already in June 2016. https://www.theguardian.com/politics/2016/jun/15/brexit-how-a-fringe-idea-took-hold-tory-party The risk was real, because even if Remain was preferred, disaster capitalism as a strategic Plan B was attractive to at least some bits of UK business. That tacit threat gave added urgency to those within the Labour party that went where Corbyn refused to go and threw their weight squarely behind the Remain Front.  “Capital is offering to play nicely. Let’s take them up on the offer and play nicely too. We are in no position to pick fights or appear difficult.” The frustration with Corbyn within Labour arose (amongst many other reasons), because he wanted to back Remain but refused to play nicely. Perhaps, if pushed hard a pluralist line in support of Remain might in fact have worked better. Labour voters were, for whatever reasons, the bedrock of the Remain electorate. But Corbyn’s independence was incompatible with the simplistic monolith that the Remain campaigners were determined to present and frustrating to those who were willing to sacrifice themselves to the imperative of unity.

Unadorned support for the disaster capitalism position did not represent a serious electoral threat in the referendum campaign. Only a small minority of voters would ever consciously support Brexit for this reason. So Remain’s worst case scenario was one of two things:

  1. the populist base was being cynically manipulated by big business for the purpose of opening the door to disaster capitalism. This might be on the model of the Tea Party or the Comintern’s reading of interwar fascism. One could also read this interpretation as the guilty conscience of the Remain monolith. Was the real energy behind Brexit, the same as that behind Remain i.e. some alignment of capital and political power, but in this case secret, illicit and all the more potent for that?
  2. An even more worrying scenario was that the populist “base” was not being manipulated or controlled by anyone. It was fully rogue. This is the “angry white working-class” reading in its purest form – the Brexiteer as the embodiment of the irrationality of the mob, the stereotype that Seymour has so effectively skewered. This figure of the irrational mob is the real nightmare of Davos. And for that reason, if for no other, also alluring for a certain kind of gauchisme. Something that threatens to mess the system up this badly has got to be preferable to the conformity of the “progressive Remainers”. Pace Streeck: why is it up to the Staatsvolk always been the responsible ones? If markets can panic, perhaps citizens should engage in a bit of emotional blackmail of their own. Be dangerous. Put the scare on the establishment.

The positions mapped so far, have been mapped basically from the vantage point of the Remain side. This yields, once again, a 2*2.

Pro-City Anti-City
Remain Official Remain Corbyn
Brexit Disaster capitalism “industrial policy”

What the 2*2 exposes is that the entire mapping of the forcefield of the Brexit debate offered by Remain was designed to exclude any reasoned debate about the bottom right cell i.e. the serious consideration of an economically based argument for Brexit, weighing the costs and benefits and arguing for an alternative economic model.

What would that look like? Presumably, this is where a revived left Keynesian “industrial” policy would fit. For Left/Progressive Remainers it was better not even to ask the question. First of all, they were persuaded – either through calculation or emotional or political conviction – that no attractive option along those lines existed outside the framework of the EU. And in any case, and more importantly, it was vain to imagine that it would ever be up to the Left to answer the question. Whatever harm Brexit would do the Tories, it would fracture the Labour party, sweep the entire political field to the right, energize the worst impulses in popular nationalism and the Tory party and diminish economic prospects and thus also the tax revenue available for progressive policy.

Since 23 June 2016, whatever one thinks of the economic case for Brexit, the political warnings of progressive Remainers have been massively vindicated. The political catastrophe that has followed Brexit means that we can postpone discussion of progressive options for the forseeable future. It is the Tories who will manage this crisis.

Some excellent, if rather morbid, analysis is already emerging of how they might do so.Amongst those offering interpretations of May’s government the most instructive have come from Will Davies. https://www.lrb.co.uk/v38/n21/william-davies/home-office-rules and http://www.perc.org.uk/project_posts/liberalism-after-brexit/

Davies provides a brilliant and illuminating account of the “official mind” of the May government. In his view it is displacing the culture of the Treasury and the Bank of England with that of the Home Office. The model they are developing is one of the “protective state” with an active management of social interests and a commitment to protecting certain groups against the impact of globalization. This is accompanied by bluster from May and Johnson about a “truly global Britain” emerging from the parochial fetters of the EU. More realistically it involves precisely the trade off that Farage outlined in early 2014. “If you said to me, would I like to see over the next ten years a further five million people come in to Britain and if that happened we’d all be slightly richer, I’d say, I’d rather we weren’t slightly richer, and I’d rather we had communities that were united and where young unemployed British people had a realistic chance of getting a job. “I think the social side of this matters more than pure market economics.” http://www.telegraph.co.uk/news/uknews/immigration/10555158/Id-rather-be-poorer-with-fewer-migrants-Farage-says.html

As Osborne has said with regard to May’s Brexit negotiating tactics, in putting freedom of movement and judicial sovereignty first, “the government has chosen – and I respect this decision – not to make the economy the priority”. https://www.theguardian.com/politics/2017/feb/01/george-osborne-uk-brexit-plans-do-not-prioritise-the-economy

So Brexit has produced an astonishing historical reversal. With Remain having deployed “the economy” as the ultimate argument of its campaign, it has now been explicitly relegated to second place in government priorities. Control of migration, legal sovereignty are more important than a few percentage points of GDP growth.

Or are they? The business lobbies have not abandoned the fight. The City is relentlessly driving home what is at stake. Promise of greater globalism and trade deals with the US to come, offer some kind of comfort blanket. Though it may turn out to be cold comfort indeed.

But the real anxiety that haunts the discussion is that the capacity to weigh costs and benefits might break down altogether. What if there is some catastrophic disorderly rupture in the Brexit negotiations? What if the clock runs out? What if British business finds itself in some dramatically disadvantaged position with regard to market access and financial regulation? For that scenario the UK Treasury holds in reserve a plan B: not the protective state but disaster capitalism . Chancellor Hammond has been frank about this. As he put it in January 2017:

“I personally hope we will be able to remain in the mainstream of European economic and social thinking. But if we are forced to be something different, then we will have to become something different. “If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term. “In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. “And you can be sure we will do whatever we have to do. The British people are not going to lie down and say, too bad, we’ve been wounded. We will change our model, and we will come back, and we will be competitively engaged.”. http://www.independent.co.uk/news/uk/politics/brexit-eu-chancellor-philip-hammond-welt-am-sonntag-uk-tax-haven-europe-a7527961.html

Two things are remarkable about this position. 1. The explicit way in which an entire “economic model” is put up for debate. 2. The fact that the choice is not argued for on grounds of principle or some future teleology, but as a bargaining contingency.

One could say that this tactical positioning is fundamentally at odds with the more principled vision of the protective state, the vision that Davies traces back to the Home Office. A contradiction and unresolved tension between the protective state and freebooting capitalism, would correspond to what we know about the makeshift nature of May’s cabinet and the chaotic way in which the post-Brexit government was assembled.

But perhape we get futher if we recognize that given that historical backdrop, the conditional form in which Hammond chose to lay out his strategy is one of the defining features of the May era. Many of her team are recent converts to Brexit. Theirs is a conditional commitment. “Given that the people decided …. given that we must now recognize that the cost and benefits of globalization are unevenly distributed … we are all for Brexit now”. Furthermore, what is the principle of governance that lies behind the assertion of sovereignty, the discrimination between desirable and undesirable immigrants, the new call for industrial policy? As Davies puts it, these preferences imply the willingness on the part of government to make acts of “conservative discrimination” a matter of routine. That is presumably what taking back controls means. At its most daring this is Hammond’s willingness to gamble – “If the EU plays nicely, we will play nicely too. If not, don’t count on us remaining “in the mainstream of European economic and social thinking”.” At its grimmest this conditional takes the form of May’s haunting warning delivered in her October 2016 speech to the Tory Party rally: “… if you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means.” It is striking that May did not chose to rebut cosmopolitanism by the opposite assertion: whether you know it or not, you are always a citizen of somewhere. Her denunciation was conditional, “if” and the “if” led not to another place that you must be the citizen of, but to “nowhere”. “If you believe you’re a citizen of the world, you’re a citizen of nowhere.” Coming from the former Home Secretary and now Prime Minister this was not so much a diagnosis of a pathological state of mind, as a menacing threat. If there is any branch of the UK government has the means to make you a citizen of nowhere it is, after all, the Home Office.

Conditionality and the threat of radical rupture is what May and Hammond’s threats have in common. That conditional and menacing “if” is the flip-side of the vision of the protective state. It is in the dialectic between the two that we may see the emerging logic of governance after Brexit.

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