Post-referendum, there has been a curious role-reversal in British politics. While the Tories have done their level best to avoid discussing the European question, it seems like Labour cannot stop banging on about Brexit. The latest spat began when Jeremy Corbyn criticised some of the more neoliberal aspects of EU membership. The backlash was immediate, with Owen Smith accusing his leadership rival of putting British jobs at risk, and others demanding that Britain remain a full member of the single market.
These reactions are in part attributable to the politics of the leadership election: scorn is now many Labour MPs’ default reaction to any Corbyn statement. But it also reflects some longstanding assumptions about the means and ends of the British Left.
Since the 1990s, the Labour Party has been dominated by those who believe that social democracy is not just compatible with but dependent upon a dynamic open economy. According to this theory, free trade and competitive markets drive economic growth at the aggregate level. Provided the beneficiaries of growth pay their taxes, this will mean more resources available to fund vital public services, and to distribute to those in greatest need. While globalisation generates both winners and losers, the assumption is that the winners will win by a big enough margin to more than compensate for the losers’ losses. Because the economy as a whole benefits from cheap imports from the likes of China, ample money can be set aside to ensure that manufacturing workers who lose their jobs will be supported in learning new skills, and finding new roles where they can be more productive.
This view is as laudable in its aims as it is ignorant of British political reality. In practice, those who have benefited most from the UK’s open economy have been extremely reluctant to accept the elevated levels of tax necessary to compensate their less fortunate fellow citizens. Financial services companies in particular have repeatedly emphasised how mobile they and their star performers are, threatening to relocate if faced with a tax burden that they view as excessive. Furthermore, the stigma that public opinion attaches to “benefit scroungers” makes it politically impossible for government to pay an adequate level of compensation to those who end up on the losing side of globalisation. This unholy alliance of big business and the small-minded kept both Kinnock and Miliband out of office, and unless it can be overturned no genuinely Left-wing leader will ever win a British general election.
Exit from the single market offers a once-in-a-lifetime opportunity for the Left to reconfigure the British political landscape. Without passporting arrangements that will preserve the pre-eminence of the City in the European market, our financial services sector will be far smaller and less influential. Moreover, free of the EU’s onerous rules on state aid, government can replace Britain’s Byzantine system of tax credits and benefit payments with an activist industrial policy that focuses on better jobs, better distributed across the country as a whole. By preventing the collapse of key industries and sponsoring new ones, government can revitalise the individuals and communities that have been left behind by globalisation. Unprotected, these people would be depicted as the dole scum of tabloid demonology; backed by the state, they become the hard-working families beloved by the British media.
Obviously, state intervention is no panacea. It means subsidising inefficient businesses, and constraining the investment and talent available to more productive sectors of the economy. It curbs the creativity of the market at the same time as it mitigates its destructive impulses. There is a danger that intervention becomes a safety net for obsolete business models and bad management, rather than a parachute used selectively to help individuals and communities transition to a more sustainable state of affairs. Nevertheless, used carefully and sparingly, it can be a more politically acceptable, more dignified, and more humane way of supporting people than the current benefits system.
Yes, maybe this is not as desirable as full membership of the single market, with an open dynamic economy coupled with a tax-and-spend state that ensures that the proceeds of growth are shared fairly across the whole of the country. But such a scenario is a political mirage. If a Labour government were negotiating Brexit with Brussels, perhaps it could simultaneously negotiate a new deal with the British people, places and businesses that have benefited most from the open economy that EU membership has entailed. Perhaps a Labour government could offer these elites continued access to the single market in exchange for a credible commitment to subsidise those who have been left behind. But with no prospect of a general election or an electable leader in sight, Labour MPs should focus on what they can achieve here and now.
The only thing that “Brexit means Brexit” means for sure is that things will have to change. Labour MPs need to snap out of their denial and develop a strategy, a clear understanding of what aspects of the EU settlement they want to preserve and which they would rather jettison. They must aim for the best possible access to the single market that is compatible with these objectives, rather than aspiring to Remain in all but name.
The Conservative majority is wafer thin, and the government remains deeply divided over when and how to leave the EU. Labour MPs could play a decisive role in shaping Britain’s European future for the better, while simultaneously revitalising their Party’s own electoral prospects. All they need do is to stop chasing an impossible dream, and start contemplating some unusual alliances. They could begin by teaming up with their own party leader.
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