A lesson of the past few days is the danger of groupthink. Along with the major international institutions, the assembled might of establishment opinion – in the CBI and TUC, massed legions of economists and a partisan Bank of England – was confident that the existing order here and in Europe would be preserved by promises of unspecified reforms. Until around 2am on the morning of Friday 24 June, the bookies and currency traders followed the playbook that had been given them by the authorities and the pollsters. Then, in a succession of events of a kind that is becoming increasingly common, the script was abruptly torn up. A clear majority of voters had reached to the heart of the situation. Realising that the promises of European reform that had been made were empty, they opted for a sharp shift in direction. The consequences can already be observed: rapid political change in Britain and an accelerating process of unravelling in the European Union. The worldwide impact on markets and geopolitics will be long-lasting and profound.
There are sure to be concerted efforts to resist the referendum’s message. The rise of the hydra-headed monster of populism; the diabolical machinations of tabloid newspapers; conflicts of interest between baby boomers and millennials; divisions between the English provinces and Wales on the one hand and Scotland, London and Northern Ireland on the other; Jeremy Corbyn’s lukewarm support for the Remain cause; the buyer’s remorse that has supposedly set in after Remain’s defeat – these already commonplace tales will be recycled incessantly during the coming weeks and months. None of them captures the magnitude of the upheaval that has occurred. When voters inflicted the biggest shock on the establishment since Churchill was ousted in 1945 they signalled the end of an era.
Predictably, there is speculation that Brexit will not happen. If Britain can vote for Brexit, it is being argued, surely anything is possible. But those who think the vote can be overturned or ignored are telling us more about their own state of mind than developments in the real world. Like bedraggled courtiers fleeing Versailles after the French Revolution, they are unable to process the reversal that has occurred. Locked in a psychology of despair, anger and denial, they cannot help believing there will be a restoration of an order they believed was unshakeable.
As David Cameron confirmed in his speech in the Commons on 27 June, a second referendum is fantasy politics. Nor can the next prime minister – whoever he or she may be – renege on the implications of the referendum that has been held. There is much uncertainty surrounding exactly how Britain will leave the EU. Will Article 50 be triggered? Will Brussels impose punitive terms in any deal on trade? Is a “Norway-plus” solution, in which the UK remains in the single market while limiting the free movement of labour, actually feasible?
Whatever the answers to these questions, there will be no going back. The vote for Brexit demonstrates that the rules of politics have changed irreversibly. The stabilisation that seemed to have been achieved following the financial crisis was a sham. The lopsided type of capitalism that exists today is inherently unstable and cannot be democratically legitimated. The error of progressive thinkers in all the main parties was to imagine that the discontent of large sections of the population could be appeased by offering them what was at bottom a continuation of the status quo.
As it is being used today, “populism” is a term of abuse applied by establishment thinkers to people whose lives they have not troubled to understand. A revolt of the masses is under way, but it is one in which those who have shaped policies over the past twenty years are more remote from reality than the ordinary men and women at whom they like to sneer. The interaction of a dysfunctional single currency and destructive austerity policies with the financial crisis has left most of Europe economically stagnant and parts of it blighted with unemployment on a scale unknown since the Thirties. At the same time European institutions have been paralysed by the migrant crisis. Floundering under the weight of problems it cannot solve or that it has even created, the EU has demonstrated beyond reasonable doubt that it lacks the capacity for effective action and is incapable of reform. As I suggested in this magazine in last year (“The neo-Georgian prime minister”, 23 October 2015), Europe’s image as a safe option has given way to the realisation that it is a failed experiment. A majority of British voters grasped this fact, which none of our establishments has yet understood.
No single leader or party is responsible for the debacle of the Remain camp. It is true that gross errors were made in the course of the campaign. Telling voters who were considering voting Leave that they were stupid, illiterate, xenophobic and racist was never going to be an effective way of persuading them to change their views. The litany of insults voiced by some leaders of the Remain campaign expressed their sentiments towards millions of ordinary people. It did not occur to these advanced minds that their contempt would be reciprocated. Increasingly callow and blundering even as they visibly aged in office, Cameron and George Osborne were particularly inept in this regard.
Cameron’s decision to gamble his future and that of the UK on the referendum was unnecessary and has proved to be counter-productive. Lacking the actively pro-EU faction that existed in John Major’s day, the Conservatives have become thoroughly Eurosceptic. While many Tory MPs believe Britain should remain in the EU, very few are enthusiastic. The effect of the campaign was to widen party divisions. Doubtless Cameron imagined he could bind these wounds and exit gracefully from power at a time of his choosing. If his bet had paid off he might have gone down as a strangely colourless politician who hung on to power for an improbably long time using the arts he learned from Tony Blair, then departed leaving no lasting legacy and was soon forgotten. But the magic failed the disciple as it had already failed “the master”. A Burkean wisdom in events has delivered Cameron from oblivion and assured his place as the most spectacular bungler in British political history.
Following Cameron’s announcement that he will continue in politics as a back-bench MP, the scramble for the Tory leadership has become intense and opaque. There have been reports suggesting that Michael Gove – currently the pivotal figure in British politics – has thrown his weight behind Boris Johnson and may be seeking to include Osborne in the new government. Osborne has ruled himself out as a contender for the leadership. Johnson’s candidacy has a powerful momentum and if the timetable set out by the Conservative 1922 Committee is followed it is possible that he will be in 10 Downing Street by 9 September. Yet Johnson’s coronation is not yet a foregone conclusion. A number of others – including Nicky Morgan, Stephen Crabb, Liam Fox and Jeremy Hunt – appear to be thinking of running, and though it is difficult to envision any of these candidates in charge in the negotiations that Brussels is insisting must soon begin, their decisions will complicate the selection process. If what is wanted is a leader who can reunify the party and the country, Theresa May – who according to a YouGov poll has a lead over Johnson among voters for all parties other than Ukip as the next prime minister – must surely be a credible contender. What is certain is that a new Tory leader and prime minister will soon be in place.
No such clarity exists regarding the Labour leadership. Clearly Jeremy Corbyn must accept responsibility for Labour’s referendum debacle. Following Hilary Benn’s departure there was a mass resignation of shadow cabinet members and, at the time of writing, the party’s MPs have backed a vote of no confidence by an overwhelming margin. As Tom Watson – in some ways the pivotal figure in Labour – is reported to have told him, Corbyn has lost his authority among MPs. Yet it remains unclear how any coup mounted by MPs could succeed if, as he has repeatedly said he will, Corbyn turns for support to party activists, now the ultimate arbiters of Labour’s fate. The new rules for party membership and leadership elections framed by Ed Miliband (which were supported by the party’s Blairites at the time) may have created an insoluble problem for Labour.
It may not have been Corbyn’s much-criticised detachment from the Remain campaign that led to the haemorrhage of Labour voters to the Leave camp. On the contrary: what sealed Labour’s fate was more likely his only meaningful intervention, when he pointed out that there could be no cap on immigration as long as Britain remained in the EU. Leading Labour figures have denied adamantly that the party’s stance on immigration is central to the collapse of its working-class base. It was a complex of issues to do with de-industrialisation, they repeat, that led to mass desertion by Labour voters. There is some force in this, but it is essentially a way of evading an inconvenient truth.
Free movement of labour between countries with vastly different wage levels, working conditions and welfare benefits is a systemic threat to the job opportunities and living standards of Labour’s core supporters. Labour cannot admit this, because that would mean the EU is structured to make social democracy impossible. This used to be understood, not only on Labour’s Bennite left but also by Keynesian centrists such as Peter Shore and, more recently, Austin Mitchell. Today the fact goes almost unnoticed, except by those who have to suffer the consequences. Figures such as Gisela Stuart, Frank Field and Kate Hoey, who recognise the clash between EU structures and social-democratic values, are a small minority in the party.
Corbyn is not alone in passing over this conflict. So do his opponents, and this is one reason why it will be extremely difficult to reverse Labour’s slide. If Yvette Cooper, Andy Burnham or David Miliband had been leader, the referendum would still have ended badly for Labour. No doubt the campaign would have been handled better. But the message would have been the same – promises of European reform that European institutions have shown to be worthless. Labour’s heartlands were already melting away. A rerun in the north and Midlands of Labour’s collapse in Scotland is now a distinct possibility. Fear of this disaster is one reason Labour is unlikely to split. With over 40 per cent of the party’s voters opting for Leave, anyone who joined a new “modernising” party would be on a fast lane to oblivion. Only a radical shift from progressive orthodoxies on immigration and the EU can save Labour from swift and terminal decline. It is doubtful whether any future leader could enforce such a shift, as it would be opposed by most Labour MPs and by activists. Yet it is plainly what millions of Labour voters want.
Talk of realignment on the centre ground overlooks how the ground has shifted. Tory MPs who were Remainers will know that their party will become more Eurosceptic as members who defected to Ukip return to the fold. A cross-party attempt to thwart the referendum result on the grounds that it is not binding on parliament is unlikely to gain much traction. Against a background of popular mistrust of the political class, vetoing Brexit in the Commons could only worsen the country’s divisions and create a constitutional impasse. Even so, the Conservative majority is too small to ensure that Brexit legislation will go through smoothly. Whatever the Fixed-Term Parliaments Act may say, the next Tory prime minister may decide to call an early general election, possibly later this year, when Labour will still be in chaos.
Nicola Sturgeon’s demand for a second Scottish referendum – echoed in Gerry Adams’s call for a parallel vote in Northern Ireland – shows her lagging behind events, like the rest of the establishment. Leaving the UK to rejoin the EU makes sense only on the premise that the EU remains intact. But European politics is in a state of flux, and the EU more fragile than Sturgeon realises. Popular revolt against the EU did not begin with the British referendum. A clear signal was sent out by the result of a vote in the Netherlands in April, when voters rejected closer links between the EU and Ukraine. At present, demands for referendums are being made in a growing number of countries. Also, by no means all EU member states would welcome Scotland joining them. Spain would resist setting a precedent that would be followed in Catalonia. A vote on Scottish independence in the midst of this gathering storm could easily be lost. For that very reason it is far from certain that a second referendum will be called.
The dread of contagion that grips Brussels is well founded. If Brexit-style referendums were held in Sweden, Denmark or the Czech Republic, say, it is conceivable that the EU could survive. But if a single eurozone country threatens to follow Britain’s example the result will be an existential threat to the euro. Even the prospect of this could provoke a speculative assault on the currency that would make the misfortunes of the pound trifling in comparison. Already there have been ominous tremors. Europe’s stock markets have been hit far more badly by Brexit than London’s. As George Soros has commented, Italy may be on the brink of a banking crisis that could leave the Five Star Movement – which has long been critical of the euro and won mayoral elections in Rome and Turin just the other day – in power as early as next year. Contrary to establishment warnings and expectations, it seems that the shock of Brexit will be more damaging for the EU than the UK.
That is why the response to Brexit in Brussels may be a last-ditch spurt of further integration. Some may suggest that, with Britain on the way out, the EU will become a fully fledged transnational state. Yet with so many countries harbouring powerful anti-EU movements, any sudden move to greater integration will be self-defeating. In an attempt to shore up a failing status quo, the Brussels elite may end up destroying it.
The contradictions of the world-view shared by progressive thinkers and established elites are becoming acutely evident. There is constant talk about being in a time of unprecedented change. Globalisation is connecting the world as never before; our lives are being continuously transformed by disruptive technologies; old ways of life and hierarchies in society are fast dissolving . . . these are the ruling clichés of the age. What is striking is that they are deployed to prop up a failing ancien régime. Not only in Britain and continental Europe but also in the Unite States, the human costs of a broken form of capitalism have fuelled popular revulsion – a revolt that has produced a mood of hysteria and something like blind panic among bien-pensants who pride themselves on their judicious rationality. Brexit will be followed by the end of Western civilisation, they foam, while a Trump presidency would be a planetary catastrophe. A paranoid style of liberalism has emerged that sees disaster and demonic evil at every turn.
That there are dark forces at work in politics cannot be denied. This is palpably the case in parts of continental Europe, where far-right parties with roots in the darkest years of the 20th century have been inching their way towards government. No one with a sense of history can feel confident that liberal values are secure in Hungary, Poland or Austria. France faces a growing challenge from Marine Le Pen, and in Germany liberal freedoms can no longer be taken for granted. A country whose pre-eminent leader condones the prosecution of a comedian accused of insulting a foreign head of state – as Angela Merkel did earlier this year – cannot be relied on to protect freedom of expression. A semi-failed Islamist despotism makes an inauspicious partner for a liberal Europe.
The situation is different where liberal values are more deeply embedded. The new tolerance of anti-Semitism by sections of the left in Britain is an elite pathology: a disorder of the gibbering classes not the masses. Self-evidently Britain has some hideous flaws, but it is still a fundamentally decent country. The same is true of the US. There is much that is ugly and threatening about Donald Trump – not least his divisive attacks on Muslims. But it is the parties that have been in power for the past thirty years that have created Trump’s main constituency. His appeal is to casualties of the American economy that mainstream politicians have chosen to ignore.
For Romney-style Republicans, the anger of former artisans and much of the middle classes is the hopeless resentment of a bunch of losers – the useless 47 per cent who live off government handouts. For many liberals, the perplexity of these groups at finding they have no place in society expresses an intolerable sense of entitlement. Bernie Sanders has stood out in recognising the negative impact of immigration on workers who are already threatened by low-cost imports of manufactured goods – a break with liberal orthodoxy for which he has been duly attacked. But Sanders has conceded the Democratic nomination, and not many in America’s submerged classes are going to vote for Hillary Clinton. Whether Trump will be able to command the wider support he needs to win the presidency remains to be seen. If he does, the result might be another variation on American crony capitalism. Ending the Bush and Clinton dynasties and involving less interventionist foreign policies and a break with free trade, it would still be a major shift. But America has not always been a free-trading nation – far from it – and moving to a more historically normal stance towards the world would not turn the country into an authoritarian backwater.
Events like Brexit and the rise of Trump seem inherently improbable only if you expect the future to be like the recent past. Some such assumption underpins the polling techniques that have given such misleading forecasts. Rationalistic liberals look for errors in statistical methods to account for these failures – sampling mistakes, hidden biases, over-reliance on telephone or internet data, and the like. Yet a more fundamental explanation lies in the discontinuities of history. Politics is not like baseball – a finite series of well-defined contests whose outcomes can be used as the basis for calculations of probability. When the game changes in politics, the upshot cannot be captured in any mathematical formula.
If Brexit has come as a great blow to many who think of themselves as progressive, it is because politics is undergoing a regime shift – several of them, in fact, at the same time – that they have not perceived. Policies of quantitative easing that prevented a global collapse have inflated the value of financial assets while failing to generate much growth. Ultra-low and negative interest rates have damaged pension funds and punished savers. Especially in the US, large numbers have dropped out of the labour market. In metropolitan centres such as London these effects may be less severe, though there, too, prosperity is patchy, inequalities are deep and an entire generation has been shut out of the housing market. Sooner or later political blowback was inevitable.
Larger and longer changes are at work. The course of events over the past decades has not followed any progressive narrative. There is no detectable movement in the direction of internationalism or liberal freedoms. The Soviet Union collapsed only to be followed by an imperial hybrid: a mix of old-fashioned tyranny and illiberal democracy that can command more popular legitimacy than many Western governments. Post-Mao China embraced turbo-charged capitalism, but the long-awaited move to political reform did not arrive and Xi Jinping is reasserting party control. The EU responded to the close of the Cold War with a project of simultaneous expansion and greater integration, a hubristic ambition that has left European institutions weaker than they have ever been. Like the financial elites shown to be so pitifully short-sighted in the early hours of Friday morning, politicians and pundits who bang on about adapting to change have been confounded by changes that they believed could not happen.
Anyone who wants to understand the present will have to throw away the old progressive playbook. Cascading events allow for possibilities that do not feature in linear theories of history. One of them is that the antiquated British state will still be standing after the EU has fallen apart.
John Gray’s latest book is “The Soul of the Marionette: a Short Enquiry into Human Freedom” (Allen Lane)