Tuesday, 28 June 2016

A Radical Solution to the Labour Crisis

The centre-left and the radical left are going to have to find some way of either coexisting or cooperating. I won't rehash the terrible history of sectarianism on the left, but will just mention that the split between the German Social Democrats and the Communist Party was a clear enabling factor in the rise of Nazism.

Surveying the left across the West we find different manifestations of the same problem: a split between centrist social democrats and more radical leftists. Spain just had its second election in six months, one where the left in the form of Podemos was expected to overtake the centre-left PSOE. But unlike Pasok in Greece, Spanish social democracy is refusing to die. In the USA Bernie Sanders could not defeat Hillary Clinton, despite the broad enthusiasm, energy and grassroots funding he managed to raise.

And then there's Britain, where these two tendencies are embodied in one dysfunctional party. The broad centre-left of the Parliamentary Labour Party has struck out against the radical leadership of Jeremy Corbyn.

Both sides need to accept that they lack the popular backing and material resources to win alone. Radical support is concentrated in big cities and is often young, with some links to older workers with memories of long-dead industrial struggles. The centrists tend towards the older, wealthier working class and progressive, well established middle classes. What's missing is the classical organised working class, the disappearance of which is at the root of the split between the two sides.

While neither side can win alone, they cannot function as a single electoral party either. But if they fail to find some formula for coexistence we know the likely outcome: victory for the radical right.

So, here is a simple proposal for uniting the British left: first, radicals should support Jeremy Corbyn and encourage an open, democratic leadership election. We should do so while talking to the broad British public, promising to have our ship in order come a general election.

Secondly, we should accept it if Corbyn loses. I am inclined to resign my Labour membership in that case, but I will pledge to work in a non-sectarian way with people who remain. At the grassroots we aren't really all that intolerant. I'm sure we can continue to work across parties and outside them.

Thirdly, in the event of a Corbyn victory we should approach the centrists with a clear electoral offer: if the radical leadership loses seats at a general election, Corbyn will stand aside and, if we can, we'll field another candidate. We should also invite their input on crafting a Brexit negotiation package that will include an open immigration policy.

Fourthly, we will expand Labour involvement in anti-racism campaigns. We should devote increased funds to social inclusion and education in communities. Labour should be at the forefront of these campaigns.

And finally, if Corbyn is kept off the leadership ballot on a legal technicality, doesn't make the necessary number of MPs, or loses the election we accept it but begin work on forming a new party, which will take Corbynism out of Labour. This formation would seek to build campaigning alliances with other progressive parties and movements.

To be clear: none of the above proposals is intended as succour for those who wish to "heal the wounds in the Labour family." Instead each would allow the laying of the foundations for an eventual split. Only by formalising the de facto split which is already tearing the party apart can the two sides conceive of each other as equals - distinct sides with competing, equivalent claims that can be legitimately negotiated between. The split would in fact aid cooperation between the two sides.

The centrists could swat down each of these moves - this is after all about power. But there is little we on the left can do to alter the other side's sectarianism. We can reach out to them in full knowledge of the gravity of the situation. We may not be able to persuade them or even to function productively alongside them. But we should still try. If we are forced into fighting, we will have to do so.

The status quo is not on offer. The other side is too powerful to beat outright: they have almost all Parliamentary positions and most of the media. We have the grassroots and the (historically very weak) trade unions. We need to institutionalise our antagonisms, making explicit the two sides' goals, and finding a way to cooperate.

Allowing ourselves - the radical left - to become fully subordinated to the centrists again will only cost us in the long run. Labour will remain undemocratic and neoliberal whilst its vote shrivels further. We should seek to make the divide between the centre and the left explicit and to make it as collaborative as possible. If we can't win over Labour MPs, we should open up campaigning ground which is autonomous from the Labour Party but still willing to work with it. These ideas my be unrealistic. But the alternative is disaster guaranteed.

Saturday, 25 June 2016

What the hell just happened? Or how capitalism ate democracy and what voters finally did about it

"A failed parliamentary candidate and former commodities broker with a
penchant for casual racism is now the most influential man in British politics."

More than ever, economic power seems today to have become political power, while citizens appear to be almost entirely stripped of their democratic defences and their capacity to impress upon the political economy interests and demands that are incommensurable with those of capital owners.
- Wolfgang Streeck, The Crises of Democratic Capitalism

The dam of British politics has finally broken. In the madness of these last two days the media has provided a blitz of micro-narratives portraying the movements of the rich and famous as they react to events in real time - from David Cameron's last supper in Downing Street to Boris being booed by the incandescent London mob. Meanwhile social media has formed a torrent of rage, with accusations flying between rich and poor, the educated and uneducated, and the old and young. Yet none of this captures the enormity of what has happened.

Britain's integration with the EU is at an end; the UK may be finished as a functioning entity; Scotland is on the verge of leaving and Northern Ireland might like to follow; the Tory Party is in disarray (but will most probably pull through); and the Labour Party is about to disintegrate entirely. Meanwhile, the most influential man in politics is a failed parliamentary candidate and former commodities broker with no experience of government and a penchant for casual racism. To quote the esteemed German sociologist Wolfgang Streeck the "delayed crisis of democratic capitalism" has just caught up with British politics and brought the whole thing tumbling down. Understanding why this has happened will require looking at things in the broadest possible perspective and slowly honing in on the details. Of course, the story told here cannot nearly cover that why. But we have to begin somewhere.

It starts, as with all the big stories of capitalism, with a crisis. After the Second World War the USA funded the reconstruction of both Europe and Japan along capitalist lines. That era is sometimes seen as profoundly national: nationalised industries, capital controls, and labour market regimes, with suppressed finance. But it is important to remember that this was a world system established by the many tendrils of the American state for the purposes of globalizing American power. A global system was developed after the war and then was brought down at the end of the 1960s.

The United States helped redevelop the German and Japanese economies after World War Two, only for both to catch up and threaten the US's trade position in the global economy. Under conditions of intensifying competition in the 1960s, with labour able to demand higher wages and investment reaching the limits of its ability to raise productivity, the US suddenly ended the dollar's convertibility to gold. This began a decade of volatility, crisis, and civil strife across the West. Underlying many of the West's difficulties was the end of a wave of technological innovation that had helped drive productivity rates after the Second World War and enabled rising wages and living standards.

During the 1970s the official architecture of a regime of floating exchange rates was put into place by US institutions intent on maintaining US hegemony. Simultaneous with this was the unleashing of financial markets, with the end of US exchange rate controls in 1974 and the growth of markets in new-fangled financial products like derivatives.

Meanwhile, the US had been careful to integrate the German and Japanese exporting juggernauts with regional deficit trading partners. What would become the EU started life as a series of developmental trade agreements among states flush with US cash. That cash was then used to buy American goods and the dollars were repatriated to the US in a virtuous circle. Until of course the subordinate regions caught up with US capitalism and began to outpace it, with the US eventually becoming a deficit state (that is, importing more goods than it exported).

But throughout the crisis decade of the 1970s and into the 1980s the US was preparing what Yanis Varoufakis calls the "Global Minotaur", through which the US would use the dollar's reserve currency status to maintain its capacity to run deficits and finance imports, while Wall Street collected the profits of the trillions of dollars it recycled through the financial system. It was precisely because of the crisis decade that the energetic Chairman of the Ferderal Reserve Paul Volcker was able, in the early 1980s, to finalise the new system. Since Nixon had removed the dollar peg to gold, new fiancial products and new capacities of the US state-financial nexus began to blossom. The Volcker Shock hiked interest rates, causing a rush of foreign money into the US whilst dampening domestic demand and killing off inflation. In order for the domestic economy to cope with this, wages would have to fall and so Volcker and President Reagan embarked on a campaign to crush wages and to crush the unions that had extracted so much from capital in the 1960s and 1970s.

Meanwhile, in Europe, as the economists Leo Panitch and Sam Gindin write in their book The Making of Global Capitalism, European integration underwent a new lease of life "in the context of the continuing integration of European and American capitalism." First, Europe had been bound to the US by Bretton Woods. Then for years Europe floundered through various floating or semi-fixed currency arrangements. Finally, the makings of the euro were put in place with the foundation of the European Monetary System in 1979. The US turn towards deflation was quickly emulated by European economies such as Germany, which had always been sceptical of Keynesianism, and the UK, which was undergoing a monetarist revolution under Margaret Thatcher. Only France held out, with a radical Keynesian policy which would aim to socialise key sectors of the economy. However, France's Socialist leaders U-Turned in the depths of the early-80s global recession and in the face of the extreme deflationary measures being pushed, especially by Germany, but also by countries around the world.

It was the defeat of the French Socialist government, Panitch and Gindin write, which guaranteed a neoliberal order in Europe. Politicians like Jacques Delors promised to win over Europe to socialist policies even as they imposed austerity at home. A single market for goods and capital, which failed to integrate the key domestic political struggles over distribution on which democracy relied, was doomed to become a deflationary, apolitical order. As Varoufakis argues in his book And the Weak Suffer What They Must? this was a "Europe of the governments" not a "Europe of the people." No European consciousness could be fostered in conditions where key political demands had been taken out of the realm of democracy and put in the hands of technocratic experts.

For Wolfgang Streeck, politicians must arbitrate between two constituents, whose demands are in fundamental conflict with one another: voters and the markets. Since the end of the era of high growth in the 1970s, Streeck argues, these two sets of interests have become increasingly difficult to reconcile: "More than ever, economic power seems today to have become political power, while citizens appear to be almost entirely stripped of their democratic defences and their capacity to impress upon the political economy interests and demands that are incommensurable with those of capital owners." Yet today we find desperate voters, driven to despair by the collapse of their connection to "normal" politics, taking destructive measures.

Along with this new political regime, a new labour regime was imposed, which definitively ended the era of postwar class struggle. At the same time that the European Union was ending the era of national democratic politics, neoliberalism was ending any semblance of democracy in the workplace. But whilst destructive, the Thatcher-Reagan years also created  something new and disturbing. Paul Mason writes in his book Postcapitalism, "After 1979 the workers' failure to resist allows key capitalist countries to find a solution to the crisis through lower wages and low value models of production." Although there has, since the onset of neoliberlism in the 1980s, been an amazing wave of technological innovation, labour has been so definitively smashed that capital has not been driven to adopt that technology for productivity-driving ends. Instead technological innovation has simply eliminated good jobs, thus decimating skilled, unionised sectors, and encouraging the creation of low-end, unstable jobs in the services and "servant" sector.

Neoliberalism is sometimes viewed as an ideology and sometimes as a description of real processes happening across the economy. The truth is that it's a bit of both: it is the worldview which espouses the deepening penetration of markets into every facet of life, while the market itself is depoliticised and taken out of democratic control. It legitimises the twin processes of globalization and financialization. The former requires the integration and interdependence of states; the latter that an increasing number of activities once provided by the state be provided by the market and funded by growing debt. Underlying all of these secular transformations thas been a decline in productivity, a decline in growth and a massive increase in debt.

So to the crisis of politics and political representation in a neoliberal world. When you piece together the story about the transformation of global capitalism since the crisis of the 1970s, the link between neoliberalism, globalization, and the crisis of democracy becomes obvious. The European Union's in-built hostility to democracy is closely related to its hostility towards redistributive economic policy. The EU is constitutionally sceptical of meddling by social-democratic parties. Market management should be left to the experts. Because above all the EU and the world of globalized financial flows on which capitalist profits today depend is a world of experts. It needs to be aloof in order to survive. In other words, if you go about democratizing the EU it will collapse. Almost all the economic policies the EU enshrines in its treaties - not just the regulations, but the trade liberalization, the budgetary discipline, the privatizations and the price stability - are deeply unpopular. Yet they are also permanent, forever shielded by law from democracy

But this is just a symptom of the institutional world that global capitalism has created. Because in reality the policies of the EU are no different to the policies of any UK government of the last thirty years. The crisis of British democracy is linked to the triumph of the same kind of politics: the major parties converged following the onset of neoliberalism, the representative link collapsed, and with it voter turnout. In order to escape its 1970s crisis period, capitalism had to ditch the fiery democratic politics of the postwar era altogether. But neoliberalism would of course give way to yet another crisis: in 2008 the US mortgage system collapsed. It was no surprise that in a heavily financialized system built on debt, it was subprime mortgage defaults that triggered the meltdown. Decades of financial integration left German and French banks exposed. Those banks had also funded lavish spending in the south of Europe. In 2009 the combined exposure of German banks to the Greek, Irish, Spanish, Portuguese and Italian states totalled €704 billion. These losses were quietly transferred onto the backs of the most fiscally-stressed states in Europe.

The neoliberal financial paradise - in which huge surpluses could be lent to deficit states by German banks with no social controls or democratic oversight - led directly to the debt bondage of the poorest countries in Europe. Meanwhile, the German ruling class continued to benefit, having restructured its economy and bought off its unions, imposing harsh neoliberal wage restraint to keep its exports high. Financial experts have long bemoaned the excesses of German trade surpluses - ignoring the fact that Germany is simply behaving according to neoliberal type, free of any sense of solidarity with its allies and deflationary to the core.

In Britain the only institution that rivals the European Union for lack of trust is Westminster itself - and yet a majority of people has just voted to give Westminster more powers.!people did this in the vain hope that it will improve their social standing in a world that is openly contemptuous of them. The collapse of strong political identities of either left or right under neoliberalism has left a gaping representational void. In their place often violent, but also it must be said mutually supportive, cultural identities have emerged. Politicians have spent years blaming external meddling by the EU or foreign infiltration by immigrants for the breakdown of political and economic democracy. These two have become the key obsessions of people whose access to "normal" democratic politics disintegrated decades ago.

The fragmentation of the UK is rooted deep in the historical transformation of British and European capitalism under neoliberalism. It has ended up causing a profound constitutional crisis at both the national and supra-national levels. Now that the UK is leaving the EU it is highly likely that the British state will cease to exist in its current form. The secular processes which undermined democracy and imposed neoliberalism from above, and came to a head in the form of a deep economic crisis in 2008, may well end up finishing off two unions. Within a matter of years both the European Union and the United Kingdom, along with many of the institutions and political modes of representation on which they were based, may have ceased to exist.

Friday, 24 June 2016

Post-Brexit: Don't Mourn - Organise!

So this, it seems to me, is what's happened: almost everybody on the official and orderly side of politics got it massively, massively wrong. The list bears repeating: the bookies, the markets, the major party leaderships, the polls. Even Nigel Farage briefly thought remain had pipped it.

So personally I knew Brexit was possible. It's become a cliche to talk about "anti-establishment feeling." The point is, I knew it was possible, but never really believed it could happen. To put that assumption in context: someone of my generation has never seen a vote defy the advice of the establishment (or at least the bulk of it).

Well, now it's happened, but with the backing of the radical right and a rump of the Tory old guard. Outside of London everywhere in England has voted to leave the EU.

Nobody knew before Brexit what would happen if there was a Brexit. Astonishingly, after the fact, we know even less. But there's a few things we can predict and have to prepare for.

Firstly, and most pressingly, Britain's foreign born, migrant, and refugee residents and citizens: they will need solidarity and a sense of security. We must cede no ground to the anti immigrant right - that might be unpopular but it's absolutely crucial.

Secondly, when the negotiations begin, the left needs to press for every social protection it can, preferably with a clearly articulated alternative of its own. My feeling is the Tories will want to avoid an election, Cameron could still somehow remain PM. Not that it matters: there is no soft option here and we can't leave it to them to decide Britain's future. We need to challenge the shit jobs, low productivity, low investment, stagnant free market economy the Tories - Brexiters and Bremainers - have built and will continue to build. This means mobilising from below. Don't mourn - organise. It's what we should have been doing all along.

Thirdly, the political party stuff: Cameron's leadership might be under threat, but (contra the Lexit nonsense) the very most we'll get is a change of personality. Expect the Right to cohere around free market nationalism. The real damage may be to Labour's radical left leadership. If we can (and I'm not sure we can) we need to protect Corbyn and keep him in position. Corbyn's euro scepticism could serve him well - or he could be jettisoned pretty swiftly. It's too early to well. As far as we can we need to redirect anger from the current leadership onto the neoliberals, the ones who allowed Labour's traditional vote to move so far from it, offered them promises about immigration and then broke those promises continually, while neoliberalism itself hacked away at their living standards.

We need an alternative to what John McDonnell calls "Tory Brexit" - but that alternative needs to be electoral and it can only come from the present Labour leadership. If the radical leadership goes (which is now a real possibility), we'll have to change tack. Corbyn could be unseated; the English electorate could align definitively with Ukip; Scotland could very easily leave the UK. All of these scenarios are possible or likely - but none are as yet inevitable. Right now there is everything to fight for.

Most of all we need to remain loudly pro-immigration. Post-Brexit, immigration almost certainly won't fall. We need to be honest about our support for immigration and firm in pointing out the lies of the Brexiters and the promises they will now inevitably break. Then we can start to offer an alternative: a more interventionist state which will use investment to regenerate Britain's flagging regional economies and channel immigration to where it's needed.

The situation has changed, but this referendum was never our vote. Either way the right and racism was always going to win. The enemy remains the same - if a little bolder. We will remain internationalists, in solidarity with our friends and comrades in Europe and beyond, whatever the treaties or deals between our states say. So once again: don't mourn - organise.

Wednesday, 22 June 2016

What could a radical left government achieve inside the EU?

Yanis Varoufakis, ex-Greek finance minister and advocate of "creative ambiguity"
(Image credit: Jorg Ruger, Creative Commons License)

Since last year an authoritarian crackdown on immigration has been rapidly implemented in Hungary. Over the course of just a few days in the middle of September, Amnesty International reports, the Hungarian government declared a "crisis situation caused by immigration" and constructed a border fence with Serbia, it amended its Criminal Code and Asylum Law, established "transit zones" across the country for refugees, and adopted a resolution which declared that Hungary would have to "defend itself by any means necessary from waves of illegal immigration." Amnesty reports that Hungary had seen 161,000 asylum claims in those first eight months of 2015. Prime Minister Victor Orban had already said that he wanted to "preserve a Hungarian Hungary." The country's actions met with some criticism from European officials - and then nothing. Indeed the EU Commissioner for Migration, Home Affairs and Citizenship, Dimitris Avramopolous, might have "disagreed with the means used" by Hungary but broadly endorsed the project of protecting the EU's external borders.

Wind the clock back just a few months, and Europe's first government of the radical left is having done to it precisely what it promised to oppose: "fiscal waterboarding" in the then-Finance Minister Yanis Varoufakis's memorable phrase. The Syriza-led government had come to power on a watered-down Keynesian platform, promising to renegotiate Greece's debt to its external creditors and use the fiscal breathing space to relieve the worst drubbing of the last five years and hopefully put some steam in the domestic economy. Failing to heed the various warnings coming out of the EU institutions - notably Jean-Claude Juncker's ominious "There can be no democratic choice when it comes to the European treaties" - Syriza attempted to win the EU's favour and with it space to implement at least a few of its meagre reforms. Within a month the European Central Bank had cut Greece's monetary lifeline, scant liquidity had dried up, and the government was starving its own public services in order to continue servicing its unpayable debts. Eventually the banks were closed. Greece even defaulted on its prized debt repayments. The Greek people did indeed exercise a democratic choice during this time: the country voted overwhelmingly to reject the EU's austerity deal, come what may. But Syriza, faced with the prospect of creatively subverting EU law, caved.

The lesson couldn't be starker: starve migrants, deprive refugees of their rights, violate Schengen, and you'll be chided for your over-zealousness. Expect not to have to deprive your people of vital medicine, and you'll be wilfully crushed. But the lessons - if the left really wants to look - go much further than that. Syriza was starry-eyed about Europe. It had fully bought into the myth of pan-European cooperation and solidarity. Now we have seen the limits of that solidarity: as soon as it threatens the narrow interests of Europe's cartelised elites (the German export sector, its knuckle-dragging, fiscally-conservative political establishment, and the various bureaucrats who increasingly do their bidding).

Europe's new radical right has proved adept at dodging the EU. Hungary altered its constitution in 2013 to give Orban's Fidesz government greater sway over public institutions. Poland pulled a similar trick this year, passing a law which allowed the ruling hard-right Law and Justice Party to appoint judges to the constitutional court as well as heads of public media organisations. Europe responded by announcing a "preliminary assessment" of the moves under the EU's "rule of law mechanism." This would allow the EU to take action against the Polish state if "systemic threats" to fundamental EU values are identified. The mechanism, according to Deutsche Welle, is designed to go no further than preliminaries - who knows what happens after that. Article 7(1) TEU can do properly punish Poland, but this would require a four-fifths majority from the European Council. So it would seem that for the time being the EU is stuck with these authoritarian violations of its founding principles.

It is worth looking briefly at the behaviour of the big EU states too. Germany has consistently undercut the European Central Bank's annual target of inflation at or just below two percent. Germany does this through internal devaluation - essentially limiting wage rises through union and business backed agreements, which keeps job numbers high and exports competitive. But the arrangement threatens the stability of the European Monetary Union, essentially by plunging less competitive states deep into deficit while Germany maintains huge, socially and economically pointless trade surpluses. Germany had a record trade surplus in 2015, reaching 7.9% of GDP, a clear violation of the mandated six percent limit. This beggar-thy-neighbour policy helped trap deficit countries like Greece and Italy in a spiral of debt in the run up to the eurozone crisis.

This is among the reasons why France is permanently in the red on its public deficit. With low growth and a consistently uncompetitive economy, France is forced to borrow more, in direct violation of Europe's Growth and Stability Pact. France is projected to meet its budgetary discipline commitments by 2017, with its deficit falling to three percent of GDP. But the eurozone's commitment to price stability and low deficits, along with Germany's persistent beggar thy neighbour policies, practically guarantee that France will continue to struggle with the European Commission over its public finances.

Both Italy and Greece were openly in violation of the Maastricht criteria for public debt when they joined the eurozone, though the then-Greek government in particular had assistance from Goldman Sachs in taking some of its debt off the books. Italy meanwhile used a favourable currency swapping arrangement with JP Morgan in the 1990s to get more money into government hands. These swaps didn't appear as government liabilities and so helped scrub up Italy's public accounts. Yet because the eurozone was in a triumphalist mood, these deals were allowed to slide.

The EU is not a totalitarian super-state - "the EUSSR" - but a frequently cumbersome and self-defeating trade cartel with a state-lite administrative core. It cannot behave like a state and is frequently unable to enforce its own laws. Violation or creative subversion of its treaties is endemic. It is not democratic but nor is it particularly effective for that. A clear-eyed assessment of its internal structures as well as the balance of political forces across Europe suggests there would be much for a government of the left to play for.

The left has entirely different priorities to each of these cases, and would not be seeking to violate the rule of law, undercut other countries or cook the books on its public debt. But would the EU be able to come down any harder on a progressive government which took private industries into municipal ownership in the national interest? Article 176 of the Treaty on the Functioning of the EU (TFEU) commits signatory governments to the expansion of markets. But equally as Sam Fowles, a researcher in International Law at Queen Mary University London, argues here, Article 345 would allow an elected government to carry out its manifesto pledges with respect to nationalisation as long as a defensible case could be made. Legal complications aside the point is that there is a lot of room for manoeuvre here. As Jeremy Corbyn recently said to Sky News, "When the French want to change their agricultural policy they just do it." Ultimately, the wrangling over economic policy would come down to a propaganda battle rather than any particular legal mechanism for enforcing free markets. "It would be difficult," Fowles writes, "for the ECJ [European Court of Justice] to overturn a proportionately conducted, partial nationalisation considering that the fundamental law of the EU [Article 345] recognises the rights of the member states to do just that."

The EU would strongly dislike any such challenge - but that does not mean the challenge could not be successful. And the primary terrain of struggle would not be within the courts but rather on the streets and in people's homes. Indeed the radical left would seek to keep politics on the streets and far away from the anti-democratic, unworldly officialdom of the EU. During his brief period as Greek finance minister Yanis Varoufakis used a telling phrase to characterise how he hoped his negotiations with the Troika (the ECB, the EU and the IMF) would end up: a deal consisting of "creative ambiguity" or a "fudge." It is deeply unlikely that any government besides the Greek one would end up depending so heavily on full EU backing of its actions. A government of a much stronger country could undoubtedly have used the same techniques to better effect. Greece had been dealt the worst possible hand - with much of its debt and its sole source of liquidity concentrated in the hands of its enemies.

The Jeremy Corbyn plan should be both simple and elegant: borrow to invest in strategic industries (especially green); implement an industrial productivity and jobs policy; increase the minimum wage; clamp down on exploitative contracts and low wage employers; embark on a housebuilding programme; regulate rents and energy prices. The productivity gap between the UK and Germany was the worst since records began in 2015, with job growth outstripping the amount produced per labour hour. Only targeted investment, with the state playing the role of entrepreneur, can change that. These may be historically moderate - even common sense - proposals, but they will have to be fought for doggedly. There will be the usual pre-election movements against the pound, and doubtless some of the weakening will be fanned by the media talking up concerns about a Corbyn-led government. But there are reasons to be optimistic about the markets themselves: neither Corbyn nor his Shadow Chancellor are promising anything like the massive (failed) redistribution and nationalisation programmes that threw Labour governments of the past. Theirs is a plan to invest in the face of long-term, low investment rates. Markets can function as weapons of political elites - but they can also behave in their own interest. A National Investment Bank, buying up debt, funding major investment, and driving up productivity and technological uptake would stand to benefit capital. There is always the old adage that some devaluation could spur exports, while a little inflation won't cause armageddon. Corbyn's central enemy will be the British establishment, organised within the state and accompanied by a frenzied media.

A country which is not tasked with renegotiating onerous debt repayments, which has its own currency and central bank, which has power over its own fiscal and monetary policy and is not even committed to defending a specific exchange rate, would avoid much of the EU straitjacketing that fell on Greece. Make no mistake though, it would face others: a long-triumphant, deeply-entrenched establishment would still rebel against any form of redistribution. The EU would look relatively small fry - as long as the government in question was willing to employ some creative ambiguity of its own. If the radical right can get away with bullying refugees, the radical left can surely find ways of implementing its own programme, either behind the back of or fighting tooth and nail against the elites.            

Tuesday, 21 June 2016

European Union democracy is a near-impossible task - reform will be difficult

Jurgen Habermas: the singular representative of European Utopianism

Everyone is familiar with the criticism by now: the European Union ails under a "democratic deficit." No single fact about it is repeated more often across the whole of European politics. For those who wish to remain in the EU and reform it from within the extraordinary difficulty of the task is seldom acknowledged. Rarely is it suggested that the EU's democratic deficit is essential to its smooth (or not so smooth) running. Moves to democratize the EU are squeezed in two directions. Firstly, democratizing the EU would require further sacrifice of sovereignty and democratic initiative by member states - something those states simply will not tolerate. Secondly, the EU's high chiefs do not want democracy to intrude on its operations. As EU Commission head Jean-Claude Juncker once said, "There can be no democratic choice against the European treaties."

Juncker's famous dictum states quite honestly the long-felt conflict between the legal precedent set by the treaties and the democratic choice of the member states. This is nothing new, and believers in EU democracy have long since advocated a step-by-step advance beyond this legal formalism towards a substantial democratisation. But Europe cannot be democratised - that is, turned into a federal liberal state with real democratic powers - unless further powers are taken from the member states. The very structure of the political questions - democracy or bureaucracy? federalism or nation-statism? - militates against any change to the status quo.

Let's look a little more closely at the great advocate of EU democratic integration: Jurgen Habermas. The spirit if not the letter of Immanuel Kant is how Habermas once characterised his vision of future peace in global politics. At a time of crisis he counselled integration. The players in that bloody drama were a briskly assembled New Europe and an older, divided Core. The stakes were of course President Bush's invasion of Iraq in 2003. The very twilight of pomp, so difficultly adjusted to by Europe's once great powers, had invested the Core with a special kind of political self-awareness. This was, Habermas argued, to be mobilised for the defeat of Eurocentrism and enforced modernisation. Over a decade later such European misgivings count for little. Iraq is now not only a failed state but practically non-existent. A most bloody and brutally enforced modernisation, in the form of the fanatical IS caliphate, is wreaking havoc on the entire region. Europe, for all its hard-fought post-imperial wisdom, is once again nudged towards military intervention.

At that time Habermas called for peace through a telling paradox: "a global domestic policy" in the Kantian tradition. This common domestic policy can arise only from a joint experience of European peoples, fueled by a communicative and deliberative experience. More recently Habermas has expanded on his conception of a "global domestic policy", situating the kernel of world civil society nowhere other than its earlier battleground, Europe. It is through "constitutional law," Habermas argues in The Crisis of the European Union: A Response (2011), that the "political fragmentation in the world and in Europe", which blocks progress "towards civilizing relations of violence" within and between states, can be overcome. In Habermas's telling the constitutionalisation of law (by which he means, quite prosaically, the treaties so abhorred by actual Europeans) is made the friend of a de facto world society. It is only the tribalism of national elites which prevents world society's continuing development. Habermas supposes an identity between the world society of individuals and the international law which represents them, with domestic political elites cast as the recalcitrant villains.

The three components that can underwrite successful democratic integration are "first, the democratic association of free and equal legal persons, second, the organisation of collective decision-making powers, and finally, the medium of integration of civic solidarity among strangers." Later he frames these three as a "process" of legal persons coming together in a geographical space; a "distribution" of powers which "secures" collective decision making; and a "medium" of integration of civic solidarity. The former two are usually dealt with constitutionally in the areas of fundamental rights; the latter refers to the status of the "people" as a "functional requirement of the democratic process" - "to the political-cultural conditions for appropriate communication processes in the political public sphere." In short, though still in wholly abstract terms, the common European identity is founded in the European people who, through a communicative process, develop a common identity.

Crucial here is Habermas's assertion of identity between the treaties and the people. He finds that the treaties, along with the decisions of the European Court of Justice, "establish a direct legal relation between the [EU] institutions and citizens of the Union." Although the sovereignty of states is restricted under the law of the EU treaties, it is primarily as free citizens that Europe addresses the people, and only as subjects of the states whose sovereignties are circumscribed second. "For good reasons" nation states persist as protectors of certain civil rights. But both identities - "as an individual and as a member of a particular nation" - are figured into the "opinion and will formation processes" of European politics. No supremacy can take hold here, since popular sovereignty is from the outset "shared" between the two "personae."

Once the boundaries of a state can no longer contain the "constitutional community" a cross-border solidarity (necessarily mediatised) must "keep pace." The timidity of tribal national-political leaders who shirk the "risky" but "inspired" "struggle within the broad public" over allegiance to Europe, prevents the formalisation of the identity between constitutional law and the free citizens of Europe. Thus, Habermas finds the blame for the failures of Europe neither in the people nor in the European institutions as such, the identity between whom would play out quite naturally were it not for the real culprits: self-interested national elites bent on preserving their power.

From Habermas's perspective, however, it is difficult to explain the foundational act of post-war sovereignty sharing out of which the European Community developed in the first place. In what is basically a functionalist conception of the "pasifization" and "civilization" of postwar Europe via the treaties, the soon-to-be states of the Union committed to shedding some of their sovereign rights in order to meet mutual needs. They would maintain their monopoly of the means of violence, but pledge never to use them and indeed to share other crucial areas of sovereignty (taxation, trade, fiscal and monetary policy and so on). What could have caused self-interested national elites to establish such mutual processes of decision making? Here it is necessary to introduce a class basis to social analysis. The reason the states of postwar Europe were compelled to enter novel forms of treaty association was a newly powerful insistence by the European masses on a modicum of social peace. In the context of international American supremacy, meanwhile, the best that could be hoped for by European ruling classes was to reproduce the basis of their domestic power by restoring that peace without challenging American imperialism. Social reproduction within and between the European states bore a suddenly high premium.

As countless foreign interventions - from Kosovo to Libya - attest the European nation state has by no means been "pacified." The fact that European states no longer exercise their belligerence directly on one another (except in the case of the maladapted Balkans), does not mean they have any compunction about doing so to others. Moreover the damage wreaked by the supposed legitimacy of the treaties on smaller states - Greece, Ireland, Portugal, and so on - borders on more traditional modes of violence.

If the conceptual limit of the national elite is, in the final instance, the limit of the nation, then the concept is unable to capture the essence of power. In a simple hierarchy, each transfer of sovereign powers by national elites to European institutions appears as a surrender. This chimes with the conceptual distinction in Habermas's most important work (The Theory of Communicative Action [1981]) of a "system" of functional integration from a "lifeworld" of traditional social regulation: the former emerges out of the latter only where "functional specialisation" permits the delegation of "the authority to direct" into the hands of experts. Power is thus made commensurate with this "ability to direct" and the question of class domination is quietly sidestepped. It is in this conceptual setting that Habermas can conceive of the possibility of a democratic European future as issuing only from a deepening of the European institutions. Only these institutions, with their address to the European people as individual citizens, can rescue democracy by subverting self-interested elites. Habermas is in the end willing to concede that the "democratic deficit" of the EU is only resolvable by a radical deepening of EU powers, not by their reversal or their transformation.

However, Marxist class analysis takes a different, historical view of why the EU was founded and what exactly it meant for certain national sovereign powers to be surrendered. Postwar European history can be divided into two eras. In the first, starting from the early 1950s, integration figures as a process of reconstruction, with fixed exchange rates, some price controls, and social and capital protections and guarantees combining with rapid growth. In the second, starting in the 1970s, the means of integration slowly but profoundly changed - with leading economies much more focused on competition over free-moving capital. Now integration significantly internationalised production and capital movements where once it had attempted to suppress them. It is not that tribal elites have deliberately sabotaged organic processes of integration, maintaining tradition at the expense of modernity. Rather national elites - organised or statised "fractions" of the ruling class - have reoriented themselves to changing historical circumstances. As inflation and the internationalisation of capital eroded the postwar settlement, a new policy based on deflation and active liberalisation was developed.

Habermas would like the anarchic Hobbesian relations between states to be overcome by an identity of individual European citizens with European constitutional law - an emergent "world civil society" in Kant's phrase. But he he misses the social reality constituted by European capitalism itself. Indeed it seems that Habermas would like to banish from consideration the distinct rejection by European people of EU constitutions in various referendums. When we look at the dynamics of European capitalism itself we find, instead of a static division of national and supranational interests, class division between those who benefit from the internationalisation of capital flows and those who do not. The transfer of sovereign power to the EU by national states is not best conceptualised as national elites either virtuously forgoing their own power or resisting its further erosion, but as an evolving single system wherein power has been maintained in two historical phases, each time by opposite means. In this system of European capitalism the EU institutions operate with a specific "relative autonomy" from the particular states they mediate between. The EU does the dirty work - either of enforcing basic health and safety norms or of labour market deregulation - that national governments find unpalatable. That the EU is plainly a proto-capitalist state is proved precisely by the "relative autonomy" of its bureaucrats from competing interests; the precise nature of its relation to the fully developed states of European capital remains to be explained. Indeed this relation can only be fully understood as it develops historically.

What does all this mean for a putative "European consciousness"? It means simply that any consciousness that arises will do so dialectically - from political struggles across the continent and against the prevalent forms of institutionalisation and integration. The idea of Europe today finds its clearest political expression not in the posited identity of European citizens with the various treaties mandated by the the continent's rulers, but rather in their popular rejection. After all, nothing has so powerfully expressed a shared consciousness in Europe - from France to the Netherlands to Ireland and most recently Greece - as the common "No." Reformers would do well to remember: in the old slogan "within and against the state" it is the latter which should take precedence. If there is a progressive future for Europe at all, it will involve a protracted fight against its institutions.

The next piece will look at how a progressive government could defy the EU while remaining a member

Saturday, 18 June 2016

We should stand up and fight for free movement of people - immigration is not just a necessary inconvenience

Free movement of people is a right we should fight for. Migration is undertaken by millions around the world because it is the only way to avoid loss of livelihood through economic disaster or decline, not to mention those fleeing climate disaster, persecution or war. There is a clear reason to support free movement of people: in a situation where capital is free to move, people must be free to do the same.

But what about the countries immigrants go to? Much of the Leave campaign's argument in the EU referendum rests on the supposed threat to Britain of "uncontrolled immigration." But a recent report which analysed the effects of European Union migration by the London School of Economics - far from a left-wing propaganda base - made clear not only migration's benefits for the country as a whole, but also the lack of almost any local drawbacks. Drawing on data from a range of sources, notably the Labour Force Survey, the report concluded that even though the EU migrant population trebled between 1995 and 2015, almost no perceivable downsides emerged. In terms of raw economics, they found migrants made an obvious contribution to GDP: 78.2% of the UK's EU migrant population are in work (above the UK average). Moreover, because they are on average better educated than UK born workers and have the potential to earn more, they add to demand in the economy, spurring economic growth and creating more jobs than they take.

Immigrants from the EU are not on the whole taking jobs but making them. "Alongside increased demand that a rising population brings, greater movement of labour allows countries to specialize in what they are best at," they conclude. Half of all net migration to the UK comes from the EU and the people coming here are not taking jobs from the poorest. Nor are they placing undue pressure on services or placing any notable downward pressure on wages. Indeed highly-skilled migrants may contribute to productivity growth and drive up wages across the economy. The Migration Observatory does, however, argue that low-skilled workers in certain sectors do stand to lose. But this short-term loss can be offset by rising wages and rising employment in the long-run, both things that can be achieved through investment, an interventionist economic policy and a restored role for trade unions.
Britain has seen a 10% drop in median income since 2008. And the LSE report is equally clear as to where the blame for this should be placed: "The cause of the fall of wages is the impact of the Great Recession - not immigration." And as if that wasn't clear enough, when it comes to unemployment, the authors state: "There is absolutely no statistically significant relationship (positive or negative) of EU immigration on unemployment rates of those born in the UK." Again with the provision of public services, they note no increase in hospital waiting times other than those related to the government's squeeze on NHS funding. And finally housing: "Lack of access to housing has more to do with the falling supply of social housing." As the government plans yet another council house sell-off, it has spectacularly failed to meet rising needs. The root cause of all this is a government hell-bent on making the less well-off pay for a crisis caused by global finance and the collapse of the banking system.

Support for the free movement of people doesn't have to be a zero-sum trade off in which either foreign-born or UK-born residents get ahead at the expense of the other. It doesn't have to be seen that way because indeed it doesn't really work that way. The enduring tension between the nation-state, so necessary for supporting and subsidizing the inefficient capitalist system, and the global market, into which capital self-destructively over-extends itself, is not the fault of labour. The contradiction belongs in the final instance to the capitalist class and the system of gross inequality it creates. Global labour movements are not the cause of capitalist crises, but one of its few correctives.

Still, it will do no good to get starry-eyed about the European Union's labour movement policies. The EU is not really a free movement option: for years mainstream European politicians of both right and left have been lambasting the "failure of multiculturalism" (Angela Merkel) and the rise of "benefit tourism" (David Cameron) while calling for "a clampdown on illegal immigrants" (Nicholas Sarkozy) and "strict migration rules"(Tony Blair). Politicians of both the centre-left and centre-right have felt no compunction about blaming the poorest ethnic communities in their countries for social ills caused by their own regressive policies. Recently fences have gone up between central and southeastern Europe to prevent free movement; the ideals of the EU itself are violated by the agreement to deport non-EU migrants and refugees to Turkey; and most recently looming deals with criminal states like Eritrea and Sudan will put lives in extreme danger. For those outside the EU and increasingly for many within, the EU is an impregnable fortress, content to let people die on its borders and suffer destitution and inhumanity within. Within the EU's migration system - if the chaos, suffering and death that goes on across Europe can be called a system at all - the actual dangers are clear. Yet they are not in anyway dangers for "native" populations, but indeed for migrants and refugees themselves.

The costs of migration are almost always negligible while the gains are significant. However, the threat to migrants' lives from unsafe migration are clear. Punitive, negligent or even deliberately life-threatening migration policies solve nothing. Over three thousand migrants and refugees have drowned in the seas around Europe in the last year - yet people continue to come. Thousands more languish in pointless destitution in camps and on borders. But the retort goes that surely not everybody can move? Surely, by accepting those in camps, we are sending the wrong signal abroad? It is obviously true that not everybody can live in Northern Europe. But the answer to this is equally obvious: of course, free movement is only a good insofar as the choice to migrate is taken "freely." I use this word fully aware of its complexity, especially in choices like migration, which involve abandoning everyone you know and love and moving thousands of miles away from home. But we will only have conditions in which free choices can reasonably be made when there are no western-backed or western-imposed wars or murderous regimes; no globalised neoliberal state corruption in the world's poorest states, financial expropriation or resource extraction; no sucking of the economic life out of poorer states and into western-controlled tax havens. If you want to curb global population movements and all the destructive waste of human life that they presently entail, then campaign to end western wars, economic exploitation of under-developed countries and against climate change. Those who do not wish to talk about global war, capitalist economic exploitation and climate change, should remain silent about immigration.

It may simply be the case that some British people will never accept high levels of immigration and that they are irrepressibly against it. But throughout the history of postwar immigration there has been a political discourse attacking it. Neither Labour nor the Tories are guilt-free in this. Even as inward net migration has increased, mainstream politicians of all parties have pledged to reduce it and repeatedly betrayed their promises. This is one reason trust in politicians is so low and why that loss of trust is channelled through immigration. No party leader has ever attempted to deal with anti-immigrant sentiment or to sell free movement on its own merits because the only consistent way to do so is to simultaneously oppose the ravages of global capitalism itself. We must change that situation fast - or face the continuing rise of the racist and violent far-right.

Tuesday, 14 June 2016

The likeliest outcome of the EU referendum? A hike in anti-immigrant racism, whatever the vote

Corbyn must fight anti-immigrant racism

A majority of recent polls show a growing, if still shaky lead for the Leave campaign in the EU referendum. This is deeply worrying for Remainers: whatever people say about a swing to the status quo in the final weeks of a campaign, that simply hasn't happened this time - at least not yet. It seems that in this case, as with so much in politics around the world at the moment, normal rules no longer apply.

A few months ago I wrote that the left's argument about remaining in the EU was made with too many qualifications to cut through. In that I was right. But I was also wrong in that I declared, "Nationalism and Liberalism will carve up the debate between them." Let me stress, liberalism is nowhere to be seen in this debate. The choice is between two establishment-co-opted, right-wing nationalisms and the reason for this boils down to how the left's impotence - or rather its absence - has negatively impacted on the debate.

The EU referendum has turned into a regional, racial, and class vote which mirrors almost exactly the breakdown of results at the 2015 general election. A true blue Tory English south; a cosmopolitan Labour London; a solid centre-left showing in Scotland and Wales; and an English north split between Labour loyalism and UKIP. Balanced for turnout and population spread (and given the fact this is a simple yes/no vote, unlike the parliamentary voting system), this shifts the vote in favour of Brexit. What this means is that the seizure of the Labour Party leadership by the radical left since the last election has done little to create new cleavages in the electoral map. It also shows that most Tory supporters will be voting against the Tory leadership. In case of a Brexit vote, the big losers will be the leadership of the established UK parties - Labour in the north; the Tories in the south.

The 2015 election was the first time a long-gestating crisis in British politics bore tangible fruit: the collapse of the Labour vote since 2001; the collapse of wider voter turnout since 1992. The narrowing policy and ideology gap between Labour and the Tories led to a collapse of the traditional representative link between political parties and the voters who turned out for them. Finally, despite a parliamentary system that militated against it, politics fragmented. All over the country - and indeed most of Europe - voters turned to whatever alternatives they could find. That habit is showing no sign of slowing with this referendum: voters are choosing to vote against everything the perceived establishment tells them to do, and they are doing so along startlingly similar lines to last year.

The crisis in British politics, born of the victory of Thatcherism and New Labourism, was brought to boiling point not long after the biggest economic crash in postwar history and a series of violent global confrontations, all of which have, needless to say, brought death and instability to much of the globe. These twin crises have brought to the advanced heartlands of global capitalism the same morbid symptoms crisis always brings: an intensification of racism and other burning resentments. It is no coincidence then that immigration has become the single outstanding issue of this referendum. Labour and the traditional social-democratic left has not been able to fight anti-immigrant and refugee racism because the only intellectually consistent way to do so is to criticise global capitalism, the crisis policies of the neoliberal state and imperialist foreign policy. Blairism, indeed the entire social-democratic tradition, is unable and unwilling to do any of this. Indeed, while tacitly accepting the economic need for immigration, Blairism has been quick to attack immigrants when it has proved politically expedient.

Labour sneaked anti-immigrant rhetoric into the mainstream. In 2005 Blair boasted about reducing asylum claims faster than anywhere else in Europe and claimed he would "put in strict immigration controls that work." They didn't work - because the UK economy needs immigration and global population flows are complex things that are only becoming more complex with - well, all those wars we keep launching. Now anti-immigrant sentiment has become common sense and far-right racism a much more acceptable, though still peripheral, view. That tendency has reared its head again in the EU referendum as leading Labour Remainers from the right, panicking at the strong polling of the Brexiters, demand an end to free movement within the EU. These are the same tawdry, graceless manoeuvres that made Labour into a laughing stock under Blair and Ed Milliband and they won't win voters away from either the Tories or UKIP. The radical left leadership - basically Jeremy Corbyn and John McDonnell - have not been half as forthright in their defence of immigration as they ought to be. Indeed a defence of immigration is the only way the public conversation can be led away from the issue and towards the real causes of the stress on public services: the budgetary pressure on local government; the lack of revenue coming in to central government; the squeeze on NHS funding; the refusal to increase the pace of house building. Anti-immigrant sentiment cannot be ignored - and only a radical left leadership of Labour have the moral authority to fight it.

This brings us back to what happens after the vote. For the left the referendum itself is a purely tactical question: the choice between the cartelised, belligerent, authoritarian institutions of the EU on the one hand and the free market utopia espoused by elements of the British establishment on the other. Not forgetting, of course, the conduits of financialised capital which operate (and will continue to operate no matter what) between them. That choice has become clearer and clearer - there is no lesser-evil option, a Liberal soft option which will spare us the nastiness of unleashed nationalism. The intensification and increasing visibility of anti-immigrant sentiment which has resulted from Labour triangulation and establishment vilification of migrants and refugees is likely to be the awful legacy of this referendum whatever the outcome.

Here's my bet: a close remain victory will nevertheless see UKIP massively emboldened in the north, where they will replace the Tories as the second place to Labour and even overtake Labour in some constituencies. Anti-immigrant frustration, even of the quiet and simmering kind, will turn into outright racism. That racism is partly conjured by elites looking for a useful distraction but its base materials are a sense of powerlessness and a feeling that the ruling order is inevitable and unchangeable. It can only be quelled where there are meaningful attacks on and victories against the real source of wage repression, flatlining productivity, shitty jobs, decaying public services and infrastructure: that is, neoliberal capitalism.