The dinosaurs, right all along

The Inside Track with Martin Bright at the TUC plus Tara Hamilton-Miller

It's easy to sneer at the trade unions. Towards the end of his time in office, Tony Blair made an annual ritual of it, with his speeches to the gathered tribes of the TUC becoming ever more snide. The national press, relieved that it no longer has to take the unions seriously, now confines its reports to the latest excesses of the dinosaurs of organised labour (threats of industrial action, sit-down or stand-up protests during ministers' speeches). Sometimes editors send down their parliamentary sketch-writer to mock some more.

After spending a train journey down to Brighton with a carriage full of bullet-headed, corpulent, hard-man delegates, I was tempted to join in. Why is it that so many male trade unionists still play up to those old macho stereotypes?

Then there is the quaintly old-fashioned rhetoric. I sat through a transport debate where the talk was all of fat-cat profits, the evils of rail privatisation and "monsters like Branson trying to get his grubby hands on the maintenance side". I call it a debate, but everybody agrees on these things and, when you are involved in the serious work of "driving back the neoliberal agenda", the votes are unanimous. However, after clearing away a fog of metropolitan cynicism, I had a moment of clarity. Weren't these speakers right, after all? The language may have been crude, but the unions have been correct about rail sell-off all along. The privatised British rail network is a disgrace. When you examine Transport Motion 41, for example, it is entirely reasonable. "Congress rejects the failed free-market approach to public transport and calls for the General Council to campaign for the benefits of a fully integrated public transport policy."

I began to look at the conference through new eyes. What's wrong with heckling the Work and Pensions Secretary, Peter Hain, over the proposed closure of 43 Remploy factories, which provide work for the disabled? Nothing, particularly when the intervention led the minister to reverse, on the spot, a decision by managers to issue redundancy notices to Remploy workers.

And what has ever been wrong with campaigning for a minimum wage, flexible working hours and a fair deal for black, gay and disabled workers? These are all areas where the unions were the pioneers and the Labour government followed. So convincingly did the unions win the argument, that these ideas are now Conservative Party policy, too.

If truth be told, even Blair acknowledged the positive contribution of the trade union movement until he became so bitter that any opposition to his reform agenda was taken as a personal slight. I have kept his speech from the 2001 con ference, the one he never gave because it coincided with the 11 September terror attacks in America. I read it again this past week. The first three pages were a gushing encomium to the unions and the work they had done in helping Labour to a second election victory earlier in the year.

Cold war

In the six years since that undelivered speech, an industrial cold war has been fought. It has not developed into an all-out cataclysmic conflict, but it has always had the potential to do so. Gordon Brown was determined to put an end to this stand-off. For this reason he was bitterly disappointed with his reception at the TUC and angry that a personal message from Nelson Mandela was treated with apparent indifference.

So why did it go so badly wrong? Brown's determination to stop unions and constituency parties proposing motions at the Labour conference, "contemporary resolutions" that have the potential to challenge the leadership on policy, is deeply unpopular. But no one really believes this is a red-line issue when the conference is already all but neutered.

Matters were not helped by comments to GMTV by the Business Secretary, John Hutton, on the weekend before the TUC gathering, in which he said Labour politicians would no longer be "going into little huddles and smoke-filled rooms" to cut deals with union leaders. I understand Brown and his advisers spent much of their time in Brighton furiously distancing themselves from Hutton's comments. Although there are no longer any smoke-filled rooms, there were plenty of huddles and if the Prime Minister could have cut a deal, he would have been delighted.

But still this does not get to the heart of Brown's problem. Looking back at Blair's six-year-old speech, one phrase stands out: "Public sector wages are rising faster than private sector salaries for the first time in years." While this was the case, it was always easier for the unions to swallow the more unpalatable aspects of new Labour reform. Now things are different. With the new Prime Minister committed to keeping public sector pay pinned to 2 per cent, even previously loyal union leaders are talking about strike action. I know Brown spent several hours in Brighton in discussion with Paul Kenny, the general secretary of the GMB, who, in the words of one insider, was seen as "a paid-up Brownite helped into the job by Brownite influence". The talks came to nothing.

These are dark times for Brown, who knows that co-ordinated industrial action by the public sector unions over the winter would cause him considerable political damage. TUC backing for a referendum on the new EU treaty has caused him further frustration.

But if there is something positive to have come out of the past few days it is this: unlike his predecessor, Brown does not see conflict with the unions as an affirmation of his vision. His disappointment is genuine, and despite what Hutton says, the huddles will continue. The time for sneering is over.

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.

 

 

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