Rethinking Brexit: A review of Costas Lapavitsas’ The Left Case Against the EU (London, Polity 2019)

As the overnight UK Supreme Court rules that the actions of Prime Minister Boris Johnson’s prorogation of Parliament was “unlawful void and of no effect”, Dr Wayne Hope re-examines the case to leave Brexit.

The Brexit/Remain divide is splitting the British political system. The Conservative and Labour Parties are internally divided. Since June 2016 the ‘leave’ victory has fractured Parliament. There is no consensus on how to interpret the referenda result or how to proceed with European Union negotiations. Popular cynicism about Westminster is deeply entrenched, ordinary voters and the political class inhabit different worlds. With Boris Johnson’s accession to Prime Minister the United Kingdom is fragile, the prospects of Sottish secession and a hard Irish border have never looked brighter. Yet, this is a misleading Anglophone picture, one must also acknowledge that the European Union (EU) is not in great shape either. The reasons why are explained in Costas Lapavitsas’ The Left Case Against the EU. 

His central thesis is that the purpose of European integration has radically changed over time. From 1957, the European Economic Community (EEC) – comprised of France, Germany, Belgium, Italy, Luxembourg and the Netherlands – functioned as a customs union, protector of West European agriculture and as a Cold War US alliance. Denmark, Ireland and the United Kingdom joined the EEC in 1973 after protracted negotiations. Back then, member states could, individually, enact autonomous macro-economic and social policies. Within each country, manufacturing and infrastructural investment, employment creation, counter-cyclical fiscal policy, welfare provision and tri-partite wage determination was the general framework. Meanwhile, a European-wide Parliament and justice system was gradually established. These arrangements can be seen as a social democratic class compromise between capital and labour, notwithstanding opposition from militant unions in France and Italy.

The election of Margaret Thatcher in the United Kingdom (1979) and Ronald Reagan in the United States (1980) changed the picture. Their principal backers – large corporations, banks, other financial businesses and the International Monetary Fund (IMF) sought to break the class compromise. This occurred with the failure of the socialist Mitterrand government in France during 1981. For Lapavitsas this was a fateful turn of events for the European left – “elected on a radical ticket of economic and social transformation, Francois Mitterrand was unable to sustain expansionary Keynesian policies in the face of opposition by banks and other established interests which generated downward pressures on the French franc” (p.7). Finance Minister Jacques Delors concluded that the future of social democracy lay with European supra-national institutions rather than European nation states. Lapavitsas argues against this, despite apparent evidence to the contrary. As President of the European Commission in 1985 Delors promoted the Social Charter of workers’ rights yet helped to initiate a neo-liberal takeover of the European Union. 

Of crucial importance here was the structural transformation of Europe itself. From November 1989, German unification and the collapse of the Soviet-Eastern Bloc opened up new investment opportunities for US and European corporations. They purchased old state enterprises and infrastructures at bargain basement prices and exploited newly available workforces. Subcontracted European labour thereby undermined the negotiating capacity of West European unions. Against this backdrop, the European union gradually expanded to include Austria, Finland and Sweden (1995), the Czech Republic, Estonia, Hungary, Latvia, Cyprus, Malta, Lithuania, Poland, Slovenia and the Slovak Republic (2004) plus Bulgaria and Romania (2007). There are now 28 member countries. Lapavitsas notes that the expanding EU conformed to neo-liberal rather than social democratic guidelines. Thus, the 1992 Maastricht Treaty further reduced the macro- economic autonomy of member countries. Supra- national policy criteria imposed control over national inflation targets, interest rates, public debt and deficit levels. Advancements in the European Monetary Union (EMU) enabled the creation of the Euro currency in January 1999.  

Maastricht also reformulated four EEC principles – free movement of capital, free movement of goods, free provision of services and free movement of persons. However, these freedoms were re-interpreted as individual rights which could be used against collective interests and (attempted) non-monetarist policy frameworks.

Since Maastricht, argues Lapavitsas, a European-wide class structure has taken shape – “…the privileged layers, including broad sections of the professional middle class with access to the media, the universities, research institutes and so on, have been closely attached to the notion that the EU stands for progress.” At the same time “the plebeian layers which were never in thrall to ‘Europeanism’ and have never accepted the notion that nation states should surrender sovereignty to a transnational entity have become more hostile and rejectionist toward European institutions” (p.128). European centre-left parties have ignored this class structure, identified with the ‘privileged layers’ and allowed far-right nationalism to circulate throughout the ‘plebeian layers’. 

The 2008 financial crisis and the forced immiseration of Greece less than two years later exposed the EU power structure. At the top an unassailable Troika – the European Council (EC) and the European Central Bank (ECB) in league with the International Monetary Fund (IMF) – have two paramount objectives. Maintenance of the Euro and protection for the loan portfolios of major investment banks (primarily those from France and Germany). They will not lend to afflicted debtor countries in east or southern Europe without strict conditionalities – privatisation, public service cuts, wage reduction, welfare contraction and removal of price subsidisation. Internationally, the EU is dominated by Germany. Their largest manufacturers benefit from the Euro and profit handsomely from the exploitation of precarious labour in peripheral countries such as Poland, Hungary, the Czech Republic, Slovenia and Slovakia. Correspondingly, skilled labour in these countries are attracted to the higher living standards of Germany and other ‘core’ member states.

In the preceding context, the European Court of Justice (EJC) legally supports large transnational employers rather than worker rights at the state level. Here, Lapavitsas cites articles from the Cambridge Law Journal and the Human Rights Law Journal (pp.116-117, 155-156). They show that major employers in the new member states could legally use low paid labour to fulfil contracts in ‘core’ EU states. In cases where aggrieved, unionised workers in those jurisdictions took lawful strike action employers resorting to ECJ provisions could mount effective legal challenges. This point is relevant to the ‘leave’/ ‘remain’ debate. In regard to Brexit negotiations, explains Lapavitsas, the EU “has insisted that if British capital is to have the advantages of the single market it must accept the jurisdiction of the ECJ and the four freedoms” (p.139).

The United Kingdom has played an ambivalent role in the EEC/EU story. Since 1945 continental allegiances have competed with stand-alone national traditions and the legacy of word-imperial authority. After membership of the EEC in 1973 the UK government withdrew the pound from the European Exchange Rate Mechanism (ERM) nineteen years later. As Lapavitsas observes, British ruling elites (financiers, merchants, landowners, industrialists) and the upper-middle classes have long been split over allegiance to Europe. For businesses, Conservative Party factions, professional organisations and families the determining factor is geographic self interest. From where does profit accrue? Where is my employing organisation based? Where do our funds come from? In given cases the answers to these questions might be, the European Union, North America the City of London or regional Britain.

Lapavitsas’ analysis clarifies the Brexit/Remain debacle and enables us to make some judgement calls.  Firstly, the 2016 Referenda result imposed a ‘yes/no’ binary on a complex situation. There were, and are, for example, radically different versions of ‘leave’. Hardline, ‘no deal’ Brexit factions within the English ruling class and the Conservative Party favour closer relations with US corporates (under the guise of ‘free trade’). Crudely, this means goodbye to Europe and a warm welcome to the Koch brothers. The socialist ‘leave’ position of regional Labour MPs, certain unions and Momentum activists defends workers’ rights against the incursion of post-Maastricht policy guidelines and ECJ prerogatives. On the other side, capitalist remainers, say, within the EU oriented business communities of Scotland and Ireland, the Social Democratic party and (until recently) the Conservative Party see the single European market as the UK’s economic future. Conversely, a left ‘remain’ position advanced by metropolitan Labour MP’s, the Guardian and Lapavitsas’ former Syriza colleague Yanis Varoufakis, regards the EU framework as redeemable. Expanding the European Parliament will, it is hoped, outflank the European Commission and strengthen the EU social chapter. On this view all ‘leave’ options legitimise parties of the racist right, neo-liberalism must be challenged by reforming the EU from within. 

Secondly, the likely economic fallout from Brexit has been greatly exaggerated by remainers. During the referenda campaign Chancellor George Osborne warned that a ‘leave’ result would bring recession, worsening unemployment and a run on sterling. None of this happened. By the end of 2017 British GDP was higher relative to its level during the Brexit vote. One year after the ‘leave’ result the pound did lose ground to other currencies but this was not disastrous. In fact, UK exports increased and the manufacturing sector was strengthened. Of course, the extreme ‘no deal’ scenario implicitly favoured by Boris Johnson and his acolytes will have sharp short term repercussions. However, the UK’s long term problems – rising private debt, financial fragility and a lack of public infrastructural investment – are not Brexit related at all. Rather, they result from quantitative easing – a monetary strategy engineered by the world’s central banks, including the Bank of England.  

Thirdly, Boris Johnson’s reckless antics are not just about Brexit per se. His coup within the Conservative Party, the proroguing of Parliament, the call for a general election, the tumult of protest and constitutional outrage all contribute to a sense of emergency which only the leader can fix. This is what Naomi Klein has called the ‘shock doctrine’. Amidst the pandemonium, which Boris Johnson and his advisors have created, that faction of the English ruling class who favour extreme neo-liberalism with an Anglo-American face are setting out their agenda.  

Fourthly, the prospect of Jeremy Corbyn as Prime Minister fundamentally threatens British and European ruling elites, despite their internal divisions. In the June 2017, general election Labour’s manifesto commitments to a nationalised railway network, a re-provisioned National Health Service (NHS) and a re-financed education system gained unexpected popular support. The envisaged employment of low interest money for the purposes of public investment rather than speculative profit made economic sense, as did the plan to clamp down on corporate tax evasion. This explains the relentless attacks on Jeremy Corbyn’s credibility from successive Conservative governments, Murdoch papers, the City of London as well as  supporters of the single European market ( former ‘Blairite’ Labour MP’s  and the liberal press establishment including the Independent, The Guardian and The Observer). To the hardline Brexiteers Corbyn is a subversive Marxist who is endangering the country. The various proponents of ‘remain’ stereotype Corbyn as a closet anti-European vacillator who cannot marshal MP support. In these circumstances his recent Brexit stance is understandable but flawed. Once Boris Johnson’s ‘no deal’ scenario is off the table Labour would fight their election campaign on a ‘Brexit-lite’ stance whereby the UK would support only certain elements of the EU framework – a customs union and formal commitments to worker rights and environmental protections. Upon gaining office Labour would put this position up against that of a standard ‘remain’ option on a referenda ballot. The people would then decide.

The problem here is that even ‘Brexit-lite’, if it prevailed in the referenda, would not please EU negotiators. As Lapavitsas has demonstrated, the EU’s formal commitment to worker rights is merely rhetorical because it is undermined by ECJ case law. If Corbyn wants to ditch the latter then Brussels will drive a very hard bargain. If ‘remain’ prevails in the referenda Labour’s manifesto will be impossible to implement. Just think back to the fate of Francois Mitterrand’s government in 1981, that happened before the imposition of Maastricht’s neo-liberal economic guidelines. In Lapavitsas’ view, from a working class perspective, national-democratic sovereignty can be the only basis for supra-national social democracy in Europe. The EU in its present form is beyond salvation.