The Demise Of Britain

The Eurozone Debt Crisis that has rumbled on for the last 18 months has focussed attention on the future of Europe. But, in fact, what has also been revealed over that period, and particularly displayed in recent weeks, is the extent to which Britain appears now to have been placed on a course to become a third or fourth rate power within the next two decades.

The way in which Cameron was completely dismissed by Sarkozy and other EU leaders, and the problems the Tories have with the majority of Eurosceptics in their ranks, not to mention its right-wing flank outside in the BNP and UKIP, are a symptom of that.

“You missed a good opportunity to keep your mouth shut!”

Sarkozy to Cameron.

The Tories have been arguing, since before the election, that they would use every opportunity to renegotiate their relation with Europe, and to repatriate powers to Britain from the EU. The problem is, as the above dismissive rebuke to Cameron shows, Britain has no leverage to bring about such changes, even with the current Eurozone debt crisis. Just as Britain's clinging to the idea of Empire in the 1950's led to it remaining outside the EEC, only to have to join later on less advantageous terms, so the decision to remain outside the Eurozone, and to seek opt-outs from various other EU legislation, has placed Britain in a similarly disadvantageous position. As Sarkozy also said to Cameron, according to the Telegraph,

“We’re sick of you criticising us and telling us what to do. You say you hate the Euro, you didn’t want to join and now you want to interfere in our meetings,”

This is the root of Britain's problem. As the saying goes, “He who pays the piper calls the tune.” At every opportunity, Britain has chosen to penny-pinch in its relation to Europe, seeking to excuse itself from contributing to EU collective funds. Its a bit like those people who always never seem to have their wallet with them, when they are in the pub! In fact, China, outside the EU, probably has more ability to influence EU decision making, than does Britain, because ultimately, if the EU begins to issue EU Bonds, backed by Germany, China will be more than willing to buy them on a large scale, as a means of diversifying its Bond purchases away from US Treasuries. Britain, is neither contributing within the EU, nor in a position to be a substantial purchaser of EU Bonds, in the way that China and other cash rich economies are.

Of course, the Eurozone crisis has led politicians of all sides to argue that Britain was right not to have joined the Euro, but this argument is crass.

Firstly, it is to assume that what has transpired with the Euro would have been exactly the same had a large economy such as Britain been part of it. It is also to fail to ask what would have happened with the British economy during the last 12 years had it been a member of the Euozone. But, more importantly it is to try to divorce Economics from Politics. The Euro is not simply a monetary project, but a political project, inextricably linked to the development of the EU itself. It is the fact that Britain is outside this development that means that its influence is necessarily diminished, and that its influence must necessarily become even less as time goes on.

The Tories themselves now argue that the Eurozone can only resolve its current problems if it brings about fiscal and political union. They say they have no objection to such a development provided they can remain outside it. But this is nonsensical. If the EU core, inside the Eurozone – and then those other EU economies outside the Euro, but who want to join – bring about fiscal and political union, then this means essentially the establishment of a new EU State, a United States of Europe. At best, that would leave Britain in the position of the Confederate States prior to the US Civil War.

The idea that Britain could simply renegotiate its relation to this EU state, in a way that would benefit Britain, is farcical. The EU was established as a means of European Capital being able to obtain for itself some of the same kinds of advantages of size that US Capital enjoyed from the US State. Europe may well have been in alliance with the US in the post war period, largely bound together in opposition to the USSR, but that did not change the fact that European Capital was in competition with US capital, and subsequently with Japanese, Chinese etc Capital.

That competition can be witnessed in the repeated conflicts over trade between Europe and these other economic blocs, the existence of external tarriffs on goods etc. The basic role of the State is to act to facilitate the reproduction of Capital within its borders.

If Britain was on the outside of such a State, then it could not expect to be treated any differently to the US, or China, or Japan. It would be a competitor, and therefore a threat to the EU State, and would be treated accordingly. The idea, put forward by some of the Eurosceptics and nationalists, that Britain could have the same kind of relation to the EU that Switzerland or Norway have is facile. Norway has a population of just over 4 million, or less than half the population of London. Its GDP, is $255 billion, ranking it 47th in the world.

Switzerland's population is 7.6 million, and its GDP $324 billion, ranking it 38th in the world. By comparison, the UK has a population of 62 million, and a GDP of $2.2 Trillion, ranking it 8th in the world. Not only would this make the UK a competitor to the EU, in the way that Norway and Switzerland are not, but it also means that the kinds of economic policies that can be adopted by countries with very small populations, are simply not practical for an economy the size of the UK.

Big Capital needs a single European State, but if it cannot win a majority of British people to that idea, then, as the rest of Europe, or at least its most important economies, move inevitably towards it, then Big Capital will simply give up on Britain, and relocate into that large EU State sitting on its borders.

Even those things that Britain gains from, at the moment, such as its role as a financial centre, would be destroyed, because there is no reason that an EU State would simply allow London to continue to play that role. Almost inevitably a new European financial hub would be established in Frankfurt, and London would be sidelined.

The consequence of that would be that the tendencies established in the UK economy, and which have always played a role within it would be accentuated, and, as they were, the consequences would be for an acceleration in the deterioration of the UK economy, and an increase in social conflict, as UK living standards fell precipitously. The French “Regulation School”, of Marxist economists, such as Aglietta and Lipietz, refer to “regimes of accumulation”.

They differentiate between what they term “intensive” and “extensive” regimes. The former essentially relates to economies where the production of Relative Surplus Value predominates, whereas the latter relate to economies where Absolute Surplus Value predominates. Absolute Surplus Value is created where Capitalists seek to squeeze more Surplus Value by extending the length of the working day, week, year or lifetime, or by increasing the intensity of work via speed-up. Relative Surplus Value is created when new methods and means of production are introduced that raise labour productivity, or reduce the Value of Labour Power by reducing the prices of wage goods.

Absolute Surplus value tends to be associated with economies that are at a lower level of development. Because wages are relatively low, the rate of growth is held back, because the scope for increasing consumption is limited by the inability of workers to increase their consumption. Growth instead comes from the reinvestment of profits into Capital goods. Relative Surplus Value arises, because the more Capital can reduce the price of wage goods, by higher productivity, by being able to access cheaper food etc. from abroad – as happened with the Abolition of the Corn Laws – workers can be paid less in money wages to still have the same real standard of living, which leaves a greater proportion of the working day, as free labour provided to the Capitalist. This opens the door to both an increasing standard of living of workers alongside rising profits. Because, workers become a more important market for consumer goods, the previous restrictions on growth of Department II, consumer goods, is relaxed, which opens the door to much higher rates of economic growth.

The classic manifestation of this is Fordism, which introduced much higher wages, and better conditions for workers as a quid pro quo for the routine and monotony of the production line, and which at the same time provided workers with the incomes with which to buy this increased volume of consumer goods. At a macro-economic level it is demonstrated by the establishment of the Welfare State. In the post-war period it was also manifest in the establishment of the idea of annual wage increases, which were linked to productivity improvements.

In fact, Relative and Absolute Surplus Value production have always operated alongside each other. Whilst, large companies in Britain, largely rely on the extraction of relative surplus value, there are still plenty of small companies that rely on the penny-pinching measures of Absolute Surplus Value, and even at a macro-economic level, Tory Governments, in particular, have been keen to protect small capital from the restrictions imposed by the EU, as well as more general measures such as the lengthening of the working day, the increase in the retirement age and so on.

What the Tory and Eurosceptic position reflect is that Britain has always sought to use various forms of Protectionism to defend inefficient British Capital against foreign competition. That is what lies behind the desire to opt out of the measures introduced in Europe that provide some minimum standards of workers protection. As I wrote the other day, Robert Winston, argued, at the weekend, on TV, that the Working time Directive had been disastrous for medical training in Britain.

But, this is a clear example. In truth, if the NHS is so bureaucratic and inefficient that it cannot manage to effectively train new doctors without them having to work 70 hours a week, then it is clearly time that a more efficient form of health service took its place! The same is true of all those other British enterprises, which cannot compete without paying British workers low wages, requiring them to work long hours, have fewer holidays, receive poorer if any Pensions, and so on, than their European counterparts. In short it is a demand by the Tories, and other bourgeois politicians such as Tony Blair, to protect inefficient British Capitalists by making British workers pay the cost.

The more that kind of Protectionism continues, the more British Capitalists will continue to sit back and make their profits in that way – not by investing, and raising productivity, but simply by squeezing British workers harder. It is a recipe for rapidly falling living standards, for increased social tension, and for the consequent falling even further behind of the UK economy. In just the same way that economies like India and China have developed quickly over a period of just 20 years to overtake Britain, so such a process of decline could see the British economy outside Europe become reduced to a third or fourth rate power over a similar time period.

It would inevitably intensify the desire of Scotland to seek the Norway type solution, by separating from the rest of Britain, and using what is left of North Sea Oil and Gas reserves, to finance its own development, and that in turn would further turn the screw on the English economy, once deprived of those resources.

Yet, the degree of nationalism within the Tory Party, and within large sections of the British population, including sections of the Labour Movement, its continued adherence to a “Little Englander” mentality, seems at present bound to drive the UK down this cul de sac to oblivion and irrelevance. Its not inevitable, but it definitely seems likely, unless a major change in attitudes is brought about. A large part, of this mentality is driven by the tabloid press, which in turn pumps out this reactionary nationalist crap, for its own economic reasons. It knows its audience of small minded people. Its aim is to sell papers, and if that means spewing out vile racist and nationalist garbage, claiming people were prevented from being deported because they owned a cat, and other such fabrications, then it will do so, just as it will organise campaigns against paedophiles, or hack into people's phones in order to solicit salacious stories.

The fact that it is not in the interests of Big Capital to go down this road, may be one reason that the biggest player in that market, the Murdoch Press, has come in for a sustained attack, and why it seems possible that other papers, such as the Daily Mail, may be next in the firing line. But, there is no absolute “Capital Logic”, which determines that this will be the case, just because it is what the dominant section of Capital requires. To argue that, which is what much of the Left tends to do, is functionalism not Marxism. How it plays out will depend upon class struggle, including class struggle within sections of Capital itself, as each jockeys for position.