‘Brexit means Brexit’ must not mean ‘keep calm and carry on’

31 August 2016

John Mikler - Associate Professor, Department of Government and International Relations, University of Sydney and Visiting Fellow with SPERI

The UK needs a long-term project of nation-building, not continuation with the neoliberal policy settings of the last 40 years.

The Brexit vote demonstrated what a strikingly divided country Britain is. Leave versus Remain voters tended to be divided along the lines of young versus old, educated versus less educated, and affluent versus poor. Voting patterns indicated divisions between the North versus the South, and England versus Scotland and Ireland.  In the case of Scotland the result of the vote is a renewed push for independence.  In the case of Ireland there is a real likelihood of violence if a harder north-south border is re-established.  The divisions express themselves in different ways.  Outside the parts of the country that voted strongly to stay in the EU, Remain voters whisper their anguish in public places.  Leave voters proclaim their delight, often expressing sentiments about preventing foreigners from taking advantage of British largesse.  A friend’s thirteen year old son, voicing disappointment about the referendum outcome, was warned to ‘be careful, you are in Leave territory here’.  As Diarmuid Maguire points out, if the grievances and divisions that led to the vote are left unaddressed they will potentially produce dire political and social consequences.

Photo by Marc Pell on Unsplash

The Leave voters want their country back (sovereignty), they want to be heard (democracy) and they want government in their interest (nationalism).  Fair enough, and I agree with Tony Payne, and indeed The Economist, that at the root of these desires is a rejection of neoliberalism and globalisation.  As Tony points out the two are not synonymous, although for many Leave voters it would seem they are, and they have found expression in a rejection of the EU.  However, the political embrace of neoliberalism has always been far less European than British, or more accurately English.  While its genesis was in the theorising of the most extreme neoclassical economists, and as public policy it was initially imposed in the 1970s by the repressive military juntas of Latin America, it did not enter the political mainstream until Margaret Thatcher declared that there was no alternative to the free market, and later that there was no such thing as society.  Thereafter, Ronald Reagan and his administration also embraced neoliberalism, but what the UK and US chose other countries still generally have had imposed on them.

I am over-simplifying my analysis for the sake of brevity, and obviously it is wrong to say that British society en masse embraced neoliberalism.  But the political and economic elites did, including the Labour Party to the extent that Margaret Thatcher counted Tony Blair and New Labour as among her greatest achievements.  And I would venture that most continental Europeans would indulge me and agree that as neoliberalism is not European, but British, this is a key reason why the UK has often been at odds with the rest of Europe.

What does neoliberalism mean to the British public?  One manifestation is train stations that are a riot of colours and uniforms due to the various private operators.  These change over the years as the operators come and go, while the exorbitant and incomprehensible pricing and aging rolling stock remain constant.  Another is the post-financial crisis politics of austerity, juxtaposed with actions like David Cameron going to Brussels, as a lobbyist for the City of London, to reject proposals for a financial transactions tax in favour of markets remaining ‘free’.  It means the NHS is constantly under attack.  It means the introduction, and increasing, of university tuition fees.  In short, it means support and benefits for the few at the expense of the many.  What academics in ivory towers call neoliberalism is, as Owen Jones points out, a darn good deal for the establishment if they can get away with it.  No wonder that when the crowd at a town hall event in Newcastle was told Brexit would depress Britain’s GDP, a heckler responded ‘that’s your bloody GDP, not ours!’  After 40 years of neoliberal policies and a neoliberal disposition on the part of British policymakers, I agree with Adam Morton that those who voted Leave essentially rejected ‘the policies of Thatcherism’.  As Adam says, with understandable passion, ‘I have seen my own hometown community ripped apart by decades of neoliberal austerity’.

Leave voters in such communities have had enough, and feel aggrieved that foreigners appear to apparently be succeeding while seeing no likelihood of improvement in their situation.  I cannot claim I share or have experienced their pain, but I think I can say that in expressing it they have missed their mark.  The effects of British policy choices since the 1980s that have so damaged and divided British society have been left without redress for too long, but with the blame laid at the feet of Brussels and foreigners rather than Westminster the danger is that the British Government will still not heed the need to do so.  As such, while there is a burning need for change the Leave intelligentsia deride Remain voters as ‘hysterical lefties’.  Everything will be fine seems to be the message, except that it isn’t and it won’t be unless there is nothing less than a paradigmatic policy shift away from neoliberalism.

If Theresa May’s pledge that ‘Brexit means Brexit’ essentially means ‘keep calm and carry on’, then the neoliberal policy choices made by the UK will now be imposed on it by the economic openness and policy settings that have shaped Britain for the past four decades.  The City will no doubt find new creative ways to do whatever it likes, and has been promised in advance that it will be bailed out if there is another crisis.  Like Google and Apple, I would not be surprised if the major London-based banking institutions find ways to claim they are not operating there to get around the inconvenience of the UK being out of the EU, perhaps managing to pay less tax in the process.  Foreign investors will probably demand more favourable treatment to offset the negative effects of the UK being less integrated with continental Europe, while the idea that trade with the Commonwealth will replace that with the EU is simply a matter of nostalgia. Britain’s credit rating has been downgraded and there is a 50/50 chance of recession.  In something of a double-whammy, having embraced neoliberalism Britain will find that the response of the market means that neoliberalism will now embrace it yet more fervently, while in policy terms the British Government will be forced to become an EU rule-taker (like Norway) rather than having a seat at the table where the rules are made.

The country is at a critical juncture.  Such times are an opportunity for the paradigmatic change required, and there are positive signs like Theresa May’s formation of a cabinet committee to oversee industrial planning.  If this presages a long-term strategic approach to the economy then it is a welcome development, but so much more is required. In fact, something of a revolution akin to that of Margaret Thatcher’s.  A re-embrace of strategic industry policy to start with, but also state investment in such areas as health, education, infrastructure, science and technology, and in regional development are necessary.  In short, a long-term project of nation-building and renewal, not continuing with the same neoliberal policy settings which were always more home-grown than EU-imposed.  The big question is this: are the political elites up to the challenge?  I hope they are, but with the Labour Party in utter disarray and doubts about the commitment of the Conservative Government to radical change, I fear Craig Berry is right his prediction that the result will be ‘austerity squared’.  If so, the divisions revealed by Brexit will worsen.

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