The masses smell blood

. . . on the Gurkhas, Gordon Brown’s tin ear, and penalty shoot-outs

I am sorry to rain on Joanna Lumley’s parade, but I have rarely heard such piffle as she and others offered in support of the Gurkhas.

As no MP dared mention, the Gurkhas are mercenaries. They don’t fight “for love of Britain and Her Majesty” (to use a soundbite favoured by their supporters), any more than South African cricket mercenaries play for, say, Leicestershire for love of the county’s fox-hunting denizens and rolling countryside.

The Gurkha regiment was formed two centuries ago when British troops invaded Nepal but found the fighters too much of a handful and therefore paid them to join our army. A 1947 agreement stated that a Gurkha soldier, if he joined the British army (many joined newly independent India’s army instead), “must be recruited as a Nepali citizen . . . serve as a Nepali citizen and [be] resettled as a Nepali citizen”. They were paid less than British-born soldiers – an obvious attraction to the Ministry of Defence – but the money was high by local standards.

None of this excuses Gordon Brown. As everyone knows, he has a tin ear for politics, and is like an orchestra conductor who thinks music consists solely of getting the requisite number of trombones and violins to play the notes in the correct order. He was right about the 75p rise for pensioners in 2000 (entirely consistent with established policy, which concentrated help on the neediest pensioners), right about abolishing the 10p tax band last year (an expensive and inefficient way of helping the poor, which should never have been introduced in the first place), and right about the Gurkhas.

In each case, however, he was wrong politically, because the right policy was hard to explain to the public and the wrong one easily simplified into potent slogans. The British are incurably sentimental, and the Gurkha cause was bound to stir normally anti-immigrant Tory MPs and newspapers, who adore dusky chaps as long as they are taking orders from whites.

***

While we are on Gordon Brown, I wish to clear something up about his chancellorship. The Institute for Fiscal Studies said the other day that he ran an unsustainable boom, with output 3 or 4 per cent above the economy’s long-term capacity. So he should have run “a much stronger fiscal position”. This is an academic version of David Cameron’s tiresome mantra that he should have fixed the roof while the sun was shining. But let’s get the metaphor straight. The people who failed to fix the roof were the Tories, who neglected schools, hospitals and other public services while North Sea oil flowed plentifully. Brown, therefore, had to rescue the NHS, education and so on with what his opponents call a spending “splurge”. The error lay not in the spending, but in the failure to raise taxes sufficiently to pay for it, perhaps by introducing a 50p tax on the highest incomes.

The people who stopped him were the same Blairites who now line up with the Tories to criticise Alistair Darling’s belated move to make the rich pay more.

***

When I contemplate the teachers’ unions and the Sats for 11-year-olds, I am reminded of Laurel and Hardy. What a fine mess they’ve got themselves into! We now have two unions balloting to boycott the tests and a third union threatening strikes if tests are scrapped (it reckons the teacher assessments that would replace them mean more work for its members). Of the other three unions, two cover secondary schools only and one always opposes industrial action.

Why do teachers need six unions (and that’s just for England and Wales) for a single occupation in a single industry? Most other unions now cover different trades and industries, so that Unite’s two million members, for example, include printers, lorry drivers, plumbers, engineers and many others working in both the public and private sectors.

The teachers’ unions once broadly represented different school types – grammars, secondary moderns, etc – but now seem merely to stand for different temperaments, with one union not liking children much (which, I suppose, is why it wants to keep the tests) and another pretending teachers are university dons. The effect of the unions’ slapstick is that schools are defenceless against a succession of meddling ministers, all of them, like the present Children’s Secretary, Ed Balls, desperate to make a name for themselves.

***

The star of the swine flu outbreak has surely been Nicola Sturgeon, Scotland’s deputy first minister and health secretary. There is something reassuring about that soft Scottish accent – I suppose it has to do with memories of Dr Finlay’s Casebook on television – and one feels that, thanks to her charm, good sense and calm but brisk manner, we shall all be safe from this new terror. Can we put her in charge south of the border as well?

Unfortunately, she belongs to the Scottish National Party but, since outsourcing is in fashion, I see no reason why our health arrangements couldn’t be delegated to the SNP. I would rather trust Sturgeon than
Boots, Tesco, Richard Branson or any of the other figures proposed to run the exciting polyclinics planned by New Labour in place of GPs’ surgeries.

***

No sooner had Rugby Union had its first penalty shoot-out on British soil – in a Heineken European Cup semi-final between Leicester and Cardiff – than the websites were full of fans asking if it was possible to have more of them, perhaps to settle drawn league matches. In rugby, as in football, the players hate shoot-outs, but most fans love them because they are simple, dramatic and, like the dolly catch in cricket, rich with possibilities for individual humiliation. There are many other ways of settling a drawn rugby match – by, for example, playing five minutes each way of seven-a-side. But I fear the Rugby Union authorities, a particularly stupid group of people at the best of times, have allowed the masses to taste blood and will not dare deny them the prospect of repeat performances.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

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.