Members of the European Union parliament vote in Strasbourg, December 2013. Photo: Frederick Florin/AFP/Getty.
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The EU has provided us with the best Europe we’ve ever had

Far from giving a voice to the people, the point of an EU referendum is to give a voice to a section of the Conservative Party.

We hear about the tactics of a referendum on membership of the European Union but little about the points of principle and substance that it raises. We need to look at these, too, otherwise we could sleepwalk into something stupid.

Why does David Cameron want a referendum on Europe?

That is simple. It is for the same reason as Harold Wilson proposed one in 1975: to deal with his divided party by appealing to higher authority. There is no popular demand for a referendum, but if you ask people in opinion polls whether they want to have a vote on EU membership, you can get a positive answer; if you backed a poll with a media campaign, you could probably get the same answer on many questions.

We have not seen large demonstrations demanding a referendum. Indeed, most voters do not care much about the EU: it comes somewhere between tenth and 15th in the issues voters list as important. Even for Ukip voters, the EU is not the most important question.

The big demand for a referendum comes from those in the Conservative Party who want to leave the EU but can’t see a way to get a majority in parliament for it. Cameron himself probably doesn’t want to take Britain out of Europe; hence his policy of trying to put this off until after the next election, in the hope that something may turn up.

Cameron’s position, though not noble, is understandable – it reflects weakness. It is less easy to understand why some in the Labour Party want to imitate it. Is it because they are afraid of the proposition that “the British people should have the right to choose”? This leads to a second question.

Are referendums a good way to make decisions?

This is also easy to answer: no. It is shameful that few political leaders are ready to say so. Democracy is not just about voting. It is also about debate and about responsibility.

Debate is necessary to understand complex issues. We invented representative democracy because debate is time-consuming and it is not practical in a modern state to assemble the whole population in market squares to debate issues. (In Athens the people were able to do this because citizens were few and they had helots and women to do the work.) Under the system of government “by the people”, the people choose the government and then hold it accountable when they don’t like what it does. If referendums are “more democratic” than decisions by parliament, why not make decisions about taxation or electricity prices by referendum, as has been tried in California (and then the lights went out)? When bad decisions are made in this way, who takes responsibility?

For years, both parties resisted calls for  a referendum on capital punishment because they feared there would be a majority in favour of it. Over time and through long debates, parliament became convinced by the evidence that capital punishment had no deterrent value and that innocent people had been hanged. Yet they feared that, in a referendum, the debate would be shallow and voters would follow prejudice rather than the evidence.

The referendum on the Alternative Vote (AV) showed how difficult it can be to generate a serious debate on matters that are important but complicated where mastery of the detail demands time.

Yes, but shouldn’t we decide constitutional questions by referendum?

We seem to be drifting towards this idea. Recently on the Today programme in a discussion about some question of British institutions (it may have been the size of the House of Lords), one of the presenters said: “But isn’t this the sort of thing we’d have to have a referendum on?” We don’t have to have a referendum on anything unless parliament decides to call one.

If we did decide that constitutional change required a referendum, we would have to start by defining what was and  what was not a constitutional question. Many laws – on race relations, capital punishment, the franchise and electoral systems, abortion – might or might not be part of a constitution.

Our present system of making no distinction between constitutional and other law gives us a flexible system. Usually constitutions are written as though they were going to last for ever; they never do. Some of the most important parts of the US constitution are in the amendments to it; yet now it seems impossible to secure further amendment. So the Supreme Court ends up doing a job that belongs in the political and not in the legal arena.

The sovereignty of parliament is a good principle because it allows maximum space for political decision-making and maximum opportunity for debate on issues  that are always complex. It is alarming  that no one, including those in the party  of Edmund Burke, seems ready to defend this principle.

In 1975 they did better. A powerful speech was made opposing the Wilson referendum by the new leader of the opposition, Margaret Thatcher. Since then parliament seems to have lost confidence in itself. So, we might ask:

What has gone wrong with parliament?

This is less easy to answer. There is a growing feeling of separation between the mass of the people and the so-called political class. The Conservative Party’s very obsession with the EU illustrates this. Far from giving a voice to the people, the point of a referendum is to give a voice to a section of the Conservative Party.

One reason why people feel less represented by the House of Commons is that the two big parties are less representative of the people than they used to be. In the 1950s the Conservative Party had three million members and the Labour Party one million, together with an organic link to a broadly based trade union movement. Both parties were social as well as political organisations. They reflected a society more sharply divided and less diverse than today’s; but between them they were representative of the population in a way that their successors today are not.

Having parties that are dominant (because of the electoral system) but weak (because they are disconnected from society) together with a chamber strong on party discipline and adversarial politics is not an attractive combination. It is only on the rare occasions when this breaks down – as recently over Syria – that we get a little of the thrill of democracy in action.

And so what is to be done?

We ought to understand democracy as an evolutionary process. We are lucky to have a constitution that makes change easy. Constitutions need to keep in step with an evolving society.

In the 65 years between 1880 and 1945 we went through several constitutional revolutions. In the 65-plus years since 1945, however, not much has changed, at least not compared to the vast and sweeping changes in British society.

An open debate is needed. My own answers would be to effect a change in the electoral system to make politics more competitive, and to make parties more open to influence from the voters. Add a House of Lords chosen by lottery, as juries are. This would require some thought and reorganisation. But it would give us two houses, each representing the people in a different sense of the term “represent”.

Churchill’s remark that the best argument against democracy is a three-minute conversation with the average voter is apposite as an argument against referendums: three minutes of conversation or consideration is no way to make sense of anything. But a representative sample of the electorate, free from party whips and debating issues that matter to ordinary people, would breathe new life into parliament.

While we are at it we should do something about the funding of political parties. The present non-system brings unhealthy relations with the few, and the distrust of the many. How about a system in which all taxpayers could allocate a tiny part of their taxes, either to the government budget of their choice – health, education, development, defence – or to a political party? Plus strict limits on donations.

The chances of such a radical programme are not great. Those in power often think that the arrangements which got them there must, ipso facto, be a good thing. Yet the renewal of states very often begins with renewal of institutions.

Such changes would be experiments. Put them in place for ten years, with a sunset clause; then debate them again. In the end, democracy is one long experiment.

But this is straying from the main subject.

Wouldn’t a referendum settle the question of the EU once and for all?

No. If that were the case, it would have been settled by the 1975 referendum – when two-thirds of the British voters elected to remain in the EU.

Those who want to leave now argue that we were tricked, or that Britain has changed since then, or that the EU has changed. These arguments will be available again whenever anyone wants to use them.

Is that all? No. We should also fear  the referendum because it might end in Britain leaving the European Union.

Probably some of those who tell opinion pollsters that they would vote to leave would think again if the question became real. But the conditions are different from those of 1975. The leading figures opposing membership then were from the fringes (Peter Shore, Enoch Powell, Tony Benn) and the media were almost unanimously in favour. Now we have had ten years of the drumbeat of media opposition.

Referendums are unpredictable – never a good way to govern a country – and we might end up out. That would be stupid.

Why?

In broad terms there are three ways of looking at the EU. On a practical level, the main product of the EU is regulation. There is good regulation and bad regulation; but there is no escape. No one is going to buy British products that do not meet inter­national standards. Those standards are set mostly by the EU or the US. If the UK wants to be at the table when the standards are  set it has to belong to the EU; otherwise it will have to follow regulations that someone else has made.

From the point of view of realpolitik, which is the usual British way of thinking about foreign policy, a permanent coalition of European states to which we did not belong is the nightmare of British policymakers through all the ages, as I think Douglas Hurd once said. Happily, today this would not be a coalition that would threaten British security, but it might be tempted from time to time to take economic advantage of the UK’s absence to organise things in ways that suited their interests and not ours. In fact, it would be a surprise if it didn’t. Ask Norway; or look at how the EU developed in Britain’s absence from 1956 to 1973.

Or, if you believe (as I do) that international politics does not always have to be about the balance of power, the EU (with its twin, Nato) is, for all its faults, a kind of political miracle: the most successful collaboration among sovereign states ever achieved. In spite of the mess of the euro, it is still admired and imitated on other continents. This is the best Europe we have ever had; and Britain, as an influential member, has been a force for good in it. Both altruism and self-interest tell us to remain.

These three perspectives – which are not contradictory – all point to one conclusion. Much in the EU needs to be fixed. With 28 sovereign states around the table, that will be a slow and clumsy process. But the euro crisis has brought a more sober mood and the advocates of unending integration in every area are a dying breed.

There could not be a better moment to work with others for a programme of reform. That would make sense. A referendum makes none. l

Robert Cooper worked for Javier Solana and Catherine Ashton at the EU until last year. He is a visiting professor at the London School of Economics and a member of the European Council on Foreign Relations

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.