The world after Bush

Former UK ambassador to the US, Christopher Meyer, predicts more continuity than change from the US

It’s fairly clear that Gordon Brown is waiting for a new president to set a pattern for British-American relations over the next few years. The signals sent from London have been those of cool distance from George W. Bush. Tony Blair’s "hug them close" approach is dead and buried, at least until January 2009 and the inauguration of Bush’s successor.

I cannot recall any American President attracting the obloquy abroad suffered by George W. Bush. From the very beginning it went wrong, with a French newspaper talking in 2000 of the “cretinisation” of American politics, a view widely held in Britain too. A brief comeback for his reputation, which surfed a wave of sympathy for America after 9/11, was rapidly aborted by hostility to the war in Iraq. There is nothing easier today than to raise a laugh in public at Bush’s expense (actually that’s not true – Don Rumsfeld is an even easier target). This is not the kind of leader with whom Brown wants to be intimately associated.

The near-universal disdain for Bush is a big factor driving the unusual level of British interest in the American elections. Of course, there is a lot else besides. Obama-mania has crossed the Atlantic. People are intrigued at the possibility of a woman in the White House. The absence of an obvious Republican front-runner has added to the spice. Then there is the joker in the pack: the possible third-party candidacy of New York Mayor, Michael Bloomberg, just when increasing numbers of Americans are registering as independent voters at the expense of the two big parties.

With a black and a woman in contention, there is on both sides of the Atlantic an expectation of change, big change, in 2009. This has driven all the candidates, Democratic and Republican, to resort to the rhetoric of change. But, as Michael Kinsley tartly noted in the New York Times, “change sounds dynamic without committing you to anything in particular. Any slogan shared by Barack Obama and Mitt Romney is going to be pretty meaningless.”

In Britain we would do well to temper our hopes for change after the passing of Bush. Let us assume, as the US Federal Reserve and Treasury do, that the American economy weakens further this year. Let us also assume – a more uncertain bet – that Iraq continues relatively quiet, with low American casualties, even as the “surge” recedes. Come election day in November the overwhelming concern of Americans will be the economy, with a particular focus on jobs and immigration. Globalisation and free trade are already seen as destroying, to coin a phrase, American jobs for American workers. On this analysis, “change” points to greater economic nationalism with the emphasis on “fair” trade at the expense of free trade. To borrow again from Kinsley, that would in reality be protection from change. For us in Britain it would be change for the worse.

But economic nationalism is not isolationism. The United States is too tightly enmeshed in the affairs of the world for that. It is one of the engines of globalisation. The next President will inherit more than 100,000 troops in Iraq and Afghanistan. Even Barack Obama does not promise a precipitous withdrawal from Iraq. The question is not, will Bush’s successor engage with the outside world, but how? Over the past 50 years or so, the US has sometimes acted abroad unilaterally, sometimes through international organisations, sometimes through bilateral treaties, sometimes in so-called coalitions of the willing. It has always acted against a hard-headed cost/benefit analysis of where its national interest lies.

The neo-conservative ascendancy was an ideological aberration from this “realist”, pragmatic tradition of US foreign policy. The gates were thrown open to it by the shock and horror of 9/11, something that we in Britain constantly underestimate in its personal impact on the President. Before 9/11 Bush’s foreign policy was settling comfortably into the traditional mainstream. Seven years later, with the neo-cons in retreat, Bush’s drive for a settlement between Israel and the Palestinians looks like a reversion to the pre-9/11 template. All this assumes, of course, that there is no terrorist attack on the US mainland in 2008.

Whoever wins in November, on the basis of what the main candidates are saying on Iraq - the issue which has most divided British public opinion from the US - there will be more continuity of policy than rupture. And consider this. What if, against the odds, Bush breaks the stalemate between Israel and the Palestinians? What if, against the odds, Shia, Sunni and Kurd in Iraq inch towards a new and durable settlement? What if Bush decides to engage directly with Iran?

None of this is unthinkable. If it comes to pass, won’t we want continuity, not change, from the next president of the United States?

Christopher Meyer will be a speaker at the Fabian Society Change the World conference on 19 January

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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