THE slogan of the original American revolutionaries was “the world turned upside down”, after an earlier English ballad. Tradition has it that the British military band played the tune (ironically) when General Cornwallis surrendered to George Washington at the Siege of Yorktown, in 1781. That story may be a fable, but what is certainly true is that we find ourselves catapulted by Brexit into a very topsy-turvy world indeed.
Start with the global economy. The era of neoliberalism that began with Reagan and Thatcher is probably coming to an abrupt end post-Brexit. Not that life for ordinary folks is going to get any better much time soon, you understand. Neoliberalism and globalisation – they are the same thing – grew out of the smashing of the post-war trade union movement in the 1970s and 1980s.
That paved the way for a massive shift in the distribution of national income from wages to profits. Coupled with the fall of communism, this created the conditions for an investment boom in the internet and new high-tech consumer goods. This boom was funded via a new generation of global investment banks – hence the need for free movement of capital on a planetary scale.
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Fast forward to the present. The main beneficiaries of neoliberalism were US high-tech monopolies, the global investment banks, and a few Chinese and Russian billionaires. True, in Asia, peasants became urban workers and earned a bit more. And there were mobile phones and computer games for everyone to play with.
But, across the entire globe, ordinary folk found themselves working longer hours for flat pay; children got asthma from polluted air; consumer lifestyles were only possible by going into debt that forced you to work those long hours; over-sugared food made people addicted and obese; stress and anxiety-related diseases multiplied; and politicians started telling us there was no money to pay for pensions. There was, however, lots of money to bail out the banks in 2008 when greed nearly destroyed a deregulated (ie, neoliberal) financial system. Welcome to neoliberal austerity.
Popular, if often incoherent, opposition to this mad, mad system has suddenly boiled over into open revolt. Not enough revolt, in my opinion, but a line has been crossed. Brexit is one result. Here’s the problem: this revolt is in danger of being captured and subverted by forces that are just as opposed to the interests of ordinary folk as the big investment banks or high-tech monopolies.
Around the globe, there are groups of national capitalists outside the international supply chains, who have not gained very much from a neoliberal system. This bunch favour local trade barriers and state subsidies to protect their interests. In country after country, demagogic leaders are appearing who represent these local business interests – think Donald Trump, think Marine Le Pen, think Nigel Farage. Unfortunately, except in a few places like Scotland, the left has been too slow or too divided to channel popular opposition to neoliberalism and austerity. (The rise of support for Jeremy Corbyn in England is a belated example of this genuine, leftwing national resistance to neoliberalism.)
Rightwing forces opposed to neoliberal globalism are using Brexit to shift the economic agenda. Austerity (at least in its earlier, crude form) is out. In its place is a demand by local capitalist groups for the state to expand economic growth through pumping up domestic demand.
Brexit in the UK has provided a convenient excuse. In Japan, the neonationalist prime minister Shinzo Abe announced a “shock and awe” fiscal package worth $270 billion. South Korea has triggered $17bn in extra spending. And, in the UK, new Chancellor Philip Hammond has already dumped George Osborne’s plan to balance the budget in 2020.
In the EU, France and Italy have just stuck up two fingers to German austerity rules. If Trump wins in November, expect him to turn on the financial taps, regardless. Public investment in the US is at a 60-year low, even though New York’s main gas mains are 120 years old. Trump would also kill off the TTIP trade negotiations between the EU and US.
Don’t get me wrong. This surge in global spending has an upside. It will create jobs (especially in construction and steel) and provide much-needed infrastructure. But we still live with the contradictions of the global capitalist economy, which prioritises profit over social necessity. The neoliberal order needed dismantling, but replacing it with national trade barriers and economic rivalries smacks of the world conditions that preceded both the first and second world wars.
China is already devaluing its currency at a rate of knots to undercut the West. In such a world, especially led by populist demagogues, inflamed rhetoric can easily turn into genuine conflict – especially as much of any new domestic investment will quickly be captured by the arms industry.
How do we handle this new political era? Firstly, we have to recognise the changed political circumstances. In the UK, the Tory Party has regrouped quickly to stabilise its control. Of course, one can hardly call Theresa May a demagogue in the Trump mould. But it is dramatically clear that – with the appointments to her Cabinet of David Davis and Liam Fox, and the wholesale dismissal of Cameron’s cronies – an entirely different wing of English capitalism has seized control of the state machine.
For well over a century, British capitalism has been split over two irreconcilable strategies for its development. The City of London banks and major manufacturing firms with global supply chains have favoured free trade, free movement of capital, de-regulation, and an adventurous foreign policy to protect their interests abroad.
Another wing, largely based outside of London, wanted to pursue what (in Edwardian times) was called the “Prussian model” of development: state financing of massive re-investment programmes and subordination of the banks to industrial needs. Today, for the first time since the Second World War, this industrial wing of British capitalism has seized control of the state.
Economically, this spells rising inflation acerbated by a plunging pound. I doubt if Chancellor Hammond will be too worried as rising prices will eat away at the real value of the National Debt and real wage costs. However, he may require a new, more compliant Governor of the Bank of England.
For ordinary folk, it might seem that better economic times have arrived. But Hammond, Davis and Fox are no real friends of working people. In a world of increased economic and political rivalry, falling profit rates and rising inflation, the state will need to enforce labour discipline. One place a resurgent British state will try to make cuts is in long-term pension provision: expect the inflation link to pensions to be scrapped.
Now, in this new, uncertain economic world, is the time for Scotland to seize control of its own destiny. Seeking independence in these conditions is the very opposite of a plunge into the unknown – it is the only way to keep our own hands on the economic tiller and avoid other people’s wars.
Anyone who thinks we won’t run into a few waves is being naïve. On the other hand, navigating our own course means we can avoid the rocks.