Tories and The Customs Union

Tories and The Customs Union

Build That Wall 

Trump has his demand for a wall to seal off the US from the outside world; the Tories already have a huge moat around Britain, and seek to reinforce it, by imposing additional borders. Both are expressions of economic nationalism, of an ideology based upon isolationism and protectionism. Protectionism runs deep in the Tory Party. It split the party in the 1840's over Repeal of the Corn Laws. It reared up again, at the end of the 19th century/start of the 20th century, as the Tories fought it out with the Liberals. It reflects a basic dichotomy for the Tory Party. 

The historic base of the Tories was amongst the landowners and financial oligarchy. The landowners had an interest in protectionism of British agriculture, because high agricultural prices meant high agricultural rents. The financial oligarchy had close family and economic ties to the landlords, and as a rentier class themselves, living off interest, had a similar political outlook. But, the rapidly rising industrial bourgeoisie had an interest in scrapping the Corn Laws, because as well as meaning cheaper food, enabling them to pay lower wages, and thereby make bigger profits, it meant lower prices for all of the raw materials they used in production (constant capital). and lower prices for that meant a higher rate of profit. With the urban bourgeoisie having won the vote, following a long struggle, culminating in the 1832 Reform Act, their interests now came into direct conflict with those of the old landed and financial oligarchy. It split the Tory Party, and enhanced the fortunes of the Liberals that now became the clear political voice of the industrial bourgeoisie, pulling the industrial proletariat behind them. 

When that long proletarian tail, broke free from the Liberals, and created the Labour Party, it meant that, as the Liberals dwindled into insignificance, the bourgeoisie were led to pursue their interests via the Tory Party. But, that simply meant that these diametrically opposing interests of landed property, financial capital, and industrial capital had to confront each other within the party itself. 

In addition, the nature of capital itself became transformed. The big industrial capital, upon which the future of the economy depends, became socialised capital (corporations and cooperatives). On the one hand, this meant that the interests of this socialised capital – to maximise the profit of enterprise, available for reinvestment - and the interests of the financial oligarchy (share and bondholders) to maximise the interest paid to them, and to maximise the capital gains made from increases in asset prices, came into direct contradiction. This contradiction is the basis of the division between conservative social-democracy and progressive social democracy. On the other hand, the interests of the share and bondholders became inseparable from the interests of this socialised capital, which produced the profits from which the interest on its money-capital was derived. 

That big industrial capital depended upon a social-democratic state that created macro-economic conditions of stability via monetary and fiscal policy that facilitated longer-term planning and regulation, required for very large-scale, long term investment of capital. Conservative social-democracy defends the interests of the share and bondholders, i.e. of one form of property, fictitious capital, whilst progressive social-democracy promotes the interests of another form of property, real capital, in the shape of socialised capital. Ultimately, the former is subordinated to the latter, because without the expansion of the real capital, there is no expansion of profits, and thereby of the revenues, of the owners of fictitious capital. It also meant expanding the basic framework for such planning and regulation to an international level, with the creation of larger economic blocs such as the EU, as well as global para state bodies, such as the WTO, World Bank, IMF and so on. 

And, that emphasised the division of industrial capital between this dominant socialised capital, and the plethora of small privately owned capitals. In Britain, it is comprised of the 5 million small businesses, the market traders, the shopkeepers, the backstreet sweatshop owners, and so on. And, the interests of this small-scale, privately owned capital, backward looking, dependent upon low wages, poor conditions, lack of regulations, narrowly national focussed, is antagonistic to the interests of that large-scale socialised capital. 

It is that which has erupted repeatedly, in the last twenty years, over Europe. As the contradiction becomes more acute, the forces driving the Tory Party into a split intensify. Had the Liberals been a more significant political force, or some new party, as with the SDP, in the 1980's been formed, then the social-democratic wing of the Tory Party, representing the share and bondholders, and their representatives on company boards, would now have split, to join it, and it would have the overwhelming backing of the dominant section of the ruling-class. But, we are where we are. 

Hunting Unicorns 

And, because we are where we are, the solutions being proposed to get the Tories out of their internal conflicts amount to unicorn hunting. It has been suggested that if Theresa May had not imposed her red lines, at the start, she could have not only negotiated a deal with the EU, in which Britain could have a Norway plus arrangement, but that she could also have obtained a majority of support for such a deal, in parliament, as it would be backed by enough Labour, Liberal and SNP MP's, to outweigh any opposition to it from the ERG, and the DUP. In fact, there is no particular reason why the DUP itself should oppose such a deal. 

Such a Norway plus deal would mean that Britain would be a part of the Customs Union, in the same way as Norway and other EEA countries. But, in order to also deal with the question of the Irish border, and to meet the needs of that large-scale, multinational capital, it would mean that Britain would also have to be in the Single Market. Technically, this does not mean “remaining” in the single market, because Britain would leave it, at the point of leaving the EU, but, in reality, it would rejoin it again, instantly, as part of this new arrangement. So, this all sounds fine. Except it is not at all achievable. 

The reason that May set down her red lines, in the first place, is that that is what the Tory rank and file demands, as its version of Brexit. And, it demands that version of Brexit because the Tory Party itself is dominated by that plethora of small private capitalists that comprise the numerically preponderant mass of the ruling-class. As Engels described, in his later Preface to The Condition of the Working Class in England, the dominant section of capital, that which represents this large-scale socialised capital, is numerically small, and can only achieve political dominance with the aid of the votes of the working-class, which itself is the basis of the social-democratic states that were created at the end of the 19th century. The real representative of that social-democracy has always been the Labour Party, not the Tory Party, but recognising the reality that it is the large-scale socialised capital that is dominant, and upon which the state itself depends, the Tories, for the last century, have always themselves contained a social-democratic wing. 

In the 1920's, it was represented by Neville Chamberlain, who brought forward proposals for a welfare state. After WWII, as the socialised capital grew at a very rapid pace, all conservative parties themselves had to pursue such a social-democratic agenda. It is the peculiar conditions of the last 40 years that opened up the potential for those conservative parties, once more to become dominated by the interests of the small private capitalists, and their narrow, nationalistic agenda. I have described those peculiar conditions many times elsewhere, as they created the conditions, via inflating asset price bubbles, for the dominance of conservative social-democracy, until the crash of 2008, brought that period to an end. It is no longer an option, which has caused the political centre that held for forty years to collapse, driving the only potential solutions on to the ground of progressive social-democracy, leading towards socialism, or else to reaction. Brexit represents the attempt to resolve the current impasse, by a political counter-revolution, seeking to overturn the foundations of the social democratic state, and thereby to revert to an earlier less mature form of capitalism, constrained within national borders, and intent on furthering the interests of that plethora of small private capitals. 

May cannot agree to go down the route of a Customs Union and membership of the Single Market, because the Tory membership will not wear it. It will not wear it, because it is contrary to its fundamental interests, which have now become an existential issue for it. Every time May wandered away from her self imposed red lines, designed to meet the needs of the Tory membership, because she found it came into conflict with the requirements of securing even a withdrawal deal, that Tory membership, whose vanguard is the ERG, slapped her down, and forced her to come back inside those red lines. Each time she then had to dissemble and fudge, so as to get through the next day of discussions with the EU. As time ran out on her, and despite all of the claims that the EU would change its stance, it was May that had to capitulate, as the EU, itself necessarily stood firm. And, the consequence of that was that May lost the support of a third of her MP's, which meant that her botched deal was dead in the water. 

Last week, when some Tory Remainers in the Cabinet proposed reaching across to Labour MP's on the basis of an agreement to remain in the Customs Union, they too were slapped down, and they and May were told that the Tory rank and file would not wear it. They would all face being thrown out by the Tory associations. In parliament today, May having claimed to be open to some form of deal, was asked repeatedly if she would implement a decision by parliament to stay in the Customs Union, each time May pointedly refused to answer the question. She cannot answer, because her response can only be an emphatic no. Rather than agree to such a course of action, or even to hold a referendum, which she knows she would be likely to lose, May will call a General Election, as I predicted at the start of the year. 

A Red Unicorn Is No More Real Than A Blue Unicorn

Tory members could agree to membership of a Customs Union, and Single Market under certain conditions. The Tories insist on the need to be able to strike their own trade deals with other countries across the globe; they insist on being able to have regulatory divergence, to be free of the jurisdiction of the ECJ, and to end the right to free movement. In other words, if the Tories could have membership of the Customs Union and Single Market, so as to be able to continue to sell goods and services into the EU, as they do now, but without having any of the costs and obligations of membership, they would be fine with the idea. But, of course, there is no way that the EU, or any other organisation would agree to such an arrangement. The trouble for Labour is that this is also exactly the position they have tied themselves to, in their six tests, which demand such an impossible solution, as part of a requirement that Britain should have the self-same advantages outside the EU that it currently enjoys inside! 

The Tory Brexiters, at least, have the advantage, in rejecting such a solution, of recognising reality. The Tory Remainers also recognise that reality, which is why their proposals for staying in the Customs Union and Single Market, drop the insistence on being able to negotiate separate trade deals, ending free movement, being outside the jurisdiction of the ECJ and so on. Its because they drop all those things that the Tory rank and file would not wear such a solution. Blair-right MP's like Stephen Kinnock, also recognise that its necessary to drop all those impossible demands, which is why they promote an EEA/EFTA type deal, or Common Market 2.0. But, it is also impossible. 

Firstly, Norway and other EFTA countries have said they are not keen to have Britain join them, especially as they know it would only ever be a stop-gap solution. Britain's 70 million population, and diversified economy is significantly different to Norway's 7 million population, and dependence on North Sea oil and gas revenues to finance its economy. Secondly, such a solution leaves Britain bound by the rules and regulations of the EU, but with no say in formulating them. Why would any rational government do that rather than simply remaining inside the EU? Those that promote this solution are really being dishonest, because they know that it is only a stop-gap until such time as in a few years, they promote rejoining the EU, possibly even drawing the rest of EFTA into the EU at the same time. It is a similar dishonesty that leads Gove and other Brexiters to support May's deal, on the basis that once out of the EU, they would simply press for regulatory divergence, leading to a hard Brexit. 

The Tory rank and file, therefore, will not tolerate membership of EFTA, which keeps all of the aspects of the EU they seek to ditch, but denies them any say in decision making. The EU will not grant the UK any such deal that enables it to have a say, whilst continuing to strike its own trade deals and so on, as ridiculously proposed by Labour. So, the idea that some kind of lash up between the Tories and Labour could provide a way out, is simply not credible. The only way that would be possible, would be if a sizeable chunk of the Tories split, and joined with a sizeable chunk of Blair-rights that split from Labour, to create a new party, that then nominated its own Prime Minister, and then pursued this course. But, the Tory Remainers had their chance to do that, when Corbyn put down his motion of no confidence. The RINOS, failed that test miserably, and without the prospect of a sizeable Tory split, there is no prospect of the Blair-rights splitting either. They remember the SDP. 

RINOS Hit By ERG Bus

The way forward for May now appears clear to me. Having run down the clock, she now faces parliament taking back control to stop her No Deal Brexit. The logical progression of that will be that parliament will then legislate for another referendum. Tory Remainers, and Blair-rights will prefer such a solution for several reasons. In a referendum, party lines are crossed. They will seize control of the anti-Brexit agenda and campaign, marginalising all those that seek to put forward a remain and reform agenda. To the extent reform enters the dialogue they pursue, it will be a backward facing reform, focusing on further appeasing nationalistic sentiment, restricting the free movement of workers and so on. Secondly, a referendum means that the question of Corbyn becoming Prime Minister is avoided. Indeed, for the Blair-rights, to the extent that Corbyn is marginalised in such a campaign, the easier it will be for them to move against him afterwards, or to simply transform their pro-EU campaign with the Liberals and Tories, into some new centre party, in the manner of Macron's En Marche. 

May's answer to this is clear. Having run down the clock further, as the RINOS failed to move against her, and Corbyn continued to push his pro-Brexit stance, she will declare that there is no way forward on the basis of the current parliament, and so she will call a General Election. In that election, she will throw the RINOS under the ERG bus. Current polling shows 28% of voters would support a No Deal Brexit, but that hides the fact that around 80% of Labour voters are opposed to it, but 80% of Tory voters would back it. As a core vote strategy, for May it is a No Brainer. The likelihood is that May, who was nicknamed “The Submarine”, because she was invisible during all of the referendum campaign, was a Brexiteer all along, who only mouthed her support for Remain, as a tactical ploy as a member of Cameron's Cabinet, with her eye on a future leadership bid. Everything seen over the last two years suggests that her inclination is with Leave, and her willingness to shamelessly run down the clock towards a No Deal Brexit reinforces that belief. 

In a General Election, the Tories will be able to go into it, as a more or less unified Brexit supporting party. True the RINOS will have to bite their lip, and eat humble pie, but they, at least, will be able to claim that they were in favour of Brexit all along, after the referendum, only that they sought a different kind of Brexit. Labour will have no such luxury. If Corbyn came out to oppose Brexit following the announcement of a General Election, his late conversion to that position would be treated with well justified derision. In every debate, every doorstep discussion, his duplicity, wavering and incompetence, on the issue, would be impossible to avoid, and would give the Tories an open goal in every such encounter. If, on the other hand, Corbyn continued with his current disastrous position of arguing the need to “respect” the reactionary Brexit vote, he would face tens of thousands of party members going into open revolt, refusing to back his reactionary line, and arguing for stopping Brexit. To the extent that rank and file party members did not quickly remove him, or establish some new organisation such as a Socialist Campaign For Europe, they would end up following that steady flow of party members out of the party and into other channels, giving life back to the dead corpse of the Liberals, or resuscitating the Greens and other anti-Brexit forces. 

As Paul Mason has said, Corbyn must now change tack and come out to oppose Brexit. And, as I've said in my response to him, even waiting another two weeks is time we do not have.