Brexit Is Central

The Conspiracy of Silence

The main parties have engaged in a conspiracy of silence over Brexit, during the election. The Liberals have relegated it to the back of their Manifesto, and EU membership as a far distant goal, much as the Left sects do with Socialism, as they pursue their immediate interests. The Greens are slightly, but not much, more vociferous in noting the damaging effects of Brexit, but it’s only the SNP and Plaid that really make more of it, rather hypocritically, given their own nationalist and separatist agenda. There is the Rejoin The EU Party, but its really an irrelevance to the election.

Yet, Brexit, and the need to re-join the EU, is, itself, far from being an irrelevance. On the contrary. It is central, which is why the main parties have engaged in a conspiracy of silence over it, because it exposes the thorough bankruptcy and duplicity of their polices and politics. It does not matter what issue is considered, whether the economy, employment, workers’ rights, taxation, the environment, migration, war, health and social care, education, science, transport etc., the damage done by Brexit, and the need to re-join the EU to resolve it, cannot be avoided.

Take the economy. It is 6% smaller than it would have been had Brexit not happened. That is a loss of £140 billion of wealth that could have gone to schools, hospitals, welfare, and raising living standards. It would have increased employment and so on. Nor has that damage ended. It will be a continuing and growing hit to the economy, for as long as Britain stays out of the EU, because it is the closest and biggest trading partner. By 2035, the economy will be more than 10% smaller than it would have been, equivalent to £311 billion of lost wealth, compared to had Britain remained in the EU.

All of the Brexiters claims about it enabling Britain to establish new markets on the other side of the world, epitomised by Truss’s speech about selling pork in China, were nonsense at the time, and proved to be such in what has followed.

The trade deals done did not even replicate those Britain had with those countries as a member of the EU, and necessarily so, because the EU, as the world’s largest single market has far more heft in trade negotiations than the relatively small British state. Its like expecting the corner shop to be able to negotiate as good a deal with suppliers as TESCO. In fact, the trade deals done with New Zealand and Australia, in desperation to be able to say a deal had been done, are very bad deals from a British perspective.

The Tories have tried to claim that the UK economy has done better than economies in the EU, but that is only in terms of recent growth, following earlier poorer performance. Moreover, there are specific reasons why EU economies have performed poorly more recently, though those reasons come down to self-inflicted wounds imposed as part of the imperialist conflict with Russia and China. The boycott of Russian oil and gas raised energy costs, and caused disruption for the EU on a greater scale than for the UK, which still has access to North Sea oil and gas, for example.

In addition, the EU economy is significantly driven by the powerhouse that is the German economy, and it has grown, in recent times, by its high value manufactured goods exported to China. But, as part of the growing global inter-imperialist conflict between NATO and Russia/China, increasing barriers to trade with China have been created, whose economy was also slowed by its imposition of lockdowns. With China facing restrictions on its exports, it has responded, in turn. Its notable that Germany has opposed the recent proposals to impose high levels of tariffs on Chinese EV’s into Europe, recognising the potential for similar restrictions on its own luxury cars exported to China.

Moreover, the data on, for example UK exports, is interesting, because of the role of the UK in relation to gold trading. Sky News’ Ed Conway has shown that the claims about an improved export performance since Brexit, put forward by Sunak, falls apart once you take the re-export of gold out of the figures.

But, the UK, outside the EU, has not escaped these rises in costs either. It not only took part in the boycott of Russian oil and gas, but, as the European agent of US imperialism, was in the vanguard of proposing it. The US and UK, of course, not only have their own domestic oil and gas production, but are home to the world’s largest energy companies, operating around the world, and benefiting from those higher oil and gas prices.

Similarly, Britain, that was only a few years ago touting Brexit as enabling it to divert its attention to the faster growing markets in China and the Pacific, has also tagged along as the poodle to the US in that developing trade war with China. However, despite it joining the Pacific trade partnership, it has been unable to significantly increase its exports to China and the Pacific, and lags behind Germany in that respect. So, the slow down in China, necessarily, affected Britain less than Germany and the rest of the EU, because it was smaller to begin with. That would still have been the case had Britain remained in the EU.

Indeed, the latest data shows that not only has Britain’s trade with the EU suffered, but so as its trade with other countries, because in order to produce goods that are sold to those other countries it is still reliant on components produced inside the EU, and Brexit has both caused delays in the supply chain, and raised the costs to Britain of those components, so that its prices to other countries have risen. Many other countries have shifted to buying from the EU directly.

The temporary effects of the recent boycott of Russian energy, and so on, are just that — temporary — but the damaging effects of Brexit are permanent, so long as it is outside the EU.

Fiscal Black Holes

In the proposals put forward by Labour and Tories, its clear that they both contain huge fiscal black holes of around £20 billion, to begin with, even before their miserly plans for additional spending are added, which, without additional taxes or borrowing, means more austerity, more cuts to spending, more real wage cuts for workers. Already, Starmer has made a point of saying that he will not pay doctors the 35% wage rise needed just to get them back to where they were in 2008! That is an indication of the attacks that workers can expect from a Blue Labour government, from day one, and is why workers need to organise now, in the workplace, in the unions, to resist the attacks of Starmer and Blue Labour. The unions should start, now, not only preparing for that industrial struggle, but also engage in the political struggle, inside the Labour Party, to get shut of the Tories like Starmer, Streeting and co.

The NHS is in a state of collapse, and what Starmer’s refusal to pay doctors means is a willingness for it to collapse even faster, as those doctors move into the private sector, or overseas. That is no problem for Blue Labour whose leading members like Streeting have bragged about privatising large parts of the health service, but others of whom are already openly connected to those private companies set to profit hugely from that privatisation. The corruption in the Tory party, as seen with the provision of contracts during Covid, will be nothing compared to that in Blue Labour, as these careerists and parasites force their snouts into the trough.

So, rather than the economy getting the kind of fiscal stimulus that the US has had in the last few years, the UK looks set for further significant austerity, taking demand out of the economy, and slowing it even further. However, there are contradictions, here, too, as I have set out before. For statists, the privatisation of the NHS, and other areas of state capitalism is significant, in its own right. However, the reality, in recent times, has been not only that such state capitalism failed to deliver for workers as consumers, but it was also even more oppressive and exploitative of them as employees, too. Despite the continued high levels of unionisation, it was in the state sector that governments used their power to hold down wages, and to impose cuts in pension provision and so on, whilst, in the private sector, rising demand, and consequent demand for workers led to rising wages and better conditions.

Blue Labour may well carry out its privatisation plans, but, its in those private companies that competition between them will, be intense for workers, more easily facilitating workers to get higher wages and so on, compared to Starmer’s declaration of war on them in the NHS. This is not the 1980’s, 90’s, or even early 2000’s, when governments could simply count on a working-class, on its knees to accept what was thrown at them without response.

Of course, the idea of growth stimulated by tax cuts was one tried by Reagan in the 1980’s, which turned the US from being the world’s largest creditor to the world’s largest debtor, as both its fiscal and trade deficits rocketed, leading to a spike in interest rates, and the world’s biggest ever crash in asset prices, in October 1987. The same idea was proposed on a much smaller scale by Truss, in 2022, with the same effect, and the swift removal of her government. That Fartage proposes to repeat that disaster tells us all we need to know about his agenda, and the extent to which he knows he will never be in a position to implement it.

Blue Labour has said it will not raise Income Tax, NI, or VAT, the biggest sources of tax revenues. Income Tax thresholds have already lagged way behind inflation, drawing millions of low paid workers into paying more tax, as a result of fiscal drag, so the scope for Blue Labour to raise tax by that method is also limited. It should be raising those thresholds to around £20,000 a year, so that no one on the Minimum Wage pays Income Tax or National Insurance.

Not raising VAT is defensible, because it is a regressive tax. Indeed, it should be reduced, not only for that reason, but for the reason that Marx set out in his programme for the First International. However, it produces so much revenue that to cut it would require significant tax rises elsewhere, or else a big reduction in state spending. The latter, of course, was the consequence that Marx sought, preferring that workers, collectively, organised their own social insurance and welfare, as part of the development of workers’ self government. But, given where we are, any such immediate reduction would be imposed at workers’ expense, without that workers’ alternative being in place.

The point is that Blue Labour, indeed any government, is not a free agent in raising these taxes, particularly Corporation Tax, or various forms of Wealth Tax, or taxes on assets and capital gains. This was part of the fallacy of Brexit/Lexit that leaving the EU restored national sovereignty and independence. It is the lie behind all forms of nationalism and talk of national self-determination, in the age of imperialism.

Blue Labour talk about raising tax revenues by removing VAT exemption on private school fees. This measure, even on Blue Labour’s estimates, raises pitifully little extra tax to fund the hole, even in current budgets. Its so little as to be essentially an accounting error. The global ruling class, likewise, would not be put off sending its kids to the top private schools by such an increase in costs, which, to them, would amount to pocket change. Indeed, by making those schools more exclusive, they would become even more attractive to the ruling class. However, those that will be deterred, and already are being deterred, are those sections of the middle-class, and even working-class, that send their kids to the less renowned private schools, in the hope of securing a better education for them.

Around 16–20% of current private students are estimated to be deterred, as a result of the increase in costs, with a consequent reduction in the estimates of how much tax will actually be raised. In fact, as those students then enter the state sector, the capitation means that the state will have to find additional sums to cover school budgets, leaving little net benefit. It would have been far better and more principled, to have just banned private schools, but that would really have meant, even on a tiny scale, taking on the ruling class, and its sources of power in society.

This small example of the limited scope of national governments, when it comes to taxation, is nothing, compared to the limitation when it come to the more significant forms of taxation on unearned income, and wealth taxes. The ruling class have always sent their children abroad to the best schools, to gain the benefit of access to foreign culture, and to network with the children of the ruling class of other countries, solidifying their common class interest against the working-class still mired in the idiocy of national life, culture and its limitations. Membership of the EU opened up that possibility for the children of the working-class too. Brexit, and the ending of free movement put an end to that as well, for British workers and their kids.

If Starmer wants to raise significant amounts of tax, even to finance his timid spending plans, ending VAT exemption of school fees will not cut it, and having ruled out Income Tax and VAT, that leaves, basically, Corporation Tax. But, if Blue Labour wants to grow the economy, it needs additional capital investment by corporations, not less. Increasing Corporation Tax means less profits available for reinvestment. Moreover, it will drive multinational corporations to move their activities out of Britain, and into the EU at an even faster pace than they have already been doing, as a result of Brexit.

The EU can get away with higher rates of Corporation Tax than Britain, because it is a much bigger market for those companies to operate in, and the other costs of that operation are much lower. The EU economy is seven times bigger than the UK, and so companies can operate on a larger scale, enjoying the economies of scale. Moreover, they do not face all the costs and frictions operating in that market that Britain faces outside it. So, the mass of profit and rate of profit is higher. Even with a higher rate of tax on that profit their mass of profit and rate of profit is higher than in the UK. That gives an incentive for companies to locate their production in the EU.

Even so, national governments inside the EU have been tempted to try to gain national advantage by introducing low rates of Corporation Tax. The Irish Republic did so, and successfully gained large-scale investment from tech companies like Apple. If allowed to continue, such beggar-thy-neighbour policies undermine the foundation of the single market. That is why the EU, as a single market that must increasingly move to a single fiscal policy as well as monetary policy — necessitating ever closer political union — intervened to stop that practice by Ireland.

Multinational companies can move capital from one national economy to another to obtain tax or other benefits, but they can’t move capital out of the EU as a whole, because it is simply too big a market, too important to their profits to do so.

Consequently, if Starmer and Blue Labour, and this applies even more to the more ambitious plans of the Greens, just as it did to Corbyn’s Labour, seeks to raise the tax revenues by increasing Corporation Tax, it will face an immediate capital strike, as well as an increased movement of capital from Britain to the EU, with a consequent slowing of the economy. Incidentally, this kind of social-democracy in one country approach also led to the failure of the Mitterrand government, in France, in the 1980’s. As with the reactionary notion of Socialism In One Country, it shows that no progressive solutions are now possible on a purely national basis, and hence, again, why Brexit and re-joining the EU is central.

Reactionary Nationalist Utopias

Of course, as I have set out previously, the idea of increasing taxes on large-scale capital is not only utopian, but itself reactionary, a reflection of a petty-bourgeois mindset. The progressive social-democratic approach would, instead, be to remove the right of shareholders to control capital they do not own, and to give that right to the collective owners of that capital, the workers in the respective corporations. Those workers would have no reason to export that capital. It would also make possible the taxation, not of the profits, but of any unearned income by share and bond holders.

However, again, to do so would mean to declare open class war on the ruling class. The idea that any national government, be it in Britain, France or anywhere else could do that without the global ruling class responding in kind is utopian. That global ruling class would throw all it had into removing such a government, and would inevitably succeed unless workers in other countries came to its rescue, and pursued the same course. Again, for Britain, that is inseparable from re-joining the EU, and a struggle with other EU workers for a Workers’ Europe. Commencing that struggle only after the ruling class has mobilised its forces is to invite disaster, as most recently, also, Greece discovered.

As I wrote at the time of the EU Referendum, the Marxist argument for voting Remain could not be that presented by Cameron, the Liberals or Blair, which was a bourgeois, social-democratic argument, based on national self-interest, i.e. the interest of British capital, and therefore, free trade and the rule of market forces. The Marxist argument, rather, was, and is, that to defend workers’ interests, be they British, French, German etc. workers, requires those workers to unite across the EU, as a European working-class to confront European capital. Removing outdated national borders is as important for that, in the age of imperialism, as was the removal of the old provincial barriers in the 19th century, so as to create the nation states.

As Lenin and Trotsky described, where Marxists joined with workers and peasants in those national revolutions, in the 19th century, and early 20th century, it was not because they supported, or had any illusions in that bourgeois-democratic, national revolution, but that they recognised that a large proportion of the masses did, and that the way too divest the masses of those illusions was to go through that struggle with them, to show that the only means of achieving even the limited aims of those bourgeois revolutions was by the masses creating their own independent organisations — parties, trades unions, factory committees and workers’ councils/soviets.

This is the basis and lesson of permanent revolution. It is the same principle as that set out by Lenin in Left-Wing Communism. We have no illusions in bourgeois-democracy or parliamentary elections, but a large proportion of workers still do, and so we relate to those workers in those elections, and in those parliaments. We stand our own candidates in elections on revolutionary platforms, exposing the bourgeois nature of the social-democratic and reformist workers’ parties. Where we are not strong enough to do that, we engage with those workers inside these parties, to do the same thing, and, where possible, to stand candidates under the banner of those parties, but on the basis of a socialist programme, for example, as with the Socialist Campaign For A Labour Victory, in 1979.

Where we get our own representatives elected to parliaments, we use that tribune again to expose the sham nature of bourgeois-democracy, and of the bourgeois workers parties. We refuse to engage in all of the parliamentary routinism and chicanery, and, instead, at every opportunity, use those positions to support workers engaged in struggle. Even when we have large numbers of such representatives, we refuse to join the government, or form a government, or government coalitions, instead adopting the position of extreme opposition. That is true even when we call on the reformist and centrist workers’ parties, the Stalinists and Anarchists, to form a Workers’ Government, and demand that it break with the bourgeoisie, and represent workers’ interests, as the Bolsheviks did in 1917, when they demanded of Kerensky’s government “Down With The Capitalist Ministers”.

In relation to the EU, we also know that a majority of workers do not, yet, understand the sham nature of bourgeois-democracy. Indeed, it is that fact that enabled the Brexiters to seize upon the democratic deficiencies of the EU, and, opportunistically, sell the lie that British bourgeois-democracy was an alternative to it. Some backward workers, and more or less the whole petty-bourgeoisie bought that lie, even though many of them quickly learned that they had been lied to, by Fartage and Johnson, as Brexit not only failed to deliver what had been promised, but led to one ill-effect after another on their lives. But, even for the majority of workers who were not taken in by that lie, and who voted Remain, they did so on the basis of another lie, the lie sold by Cameron, Clegg and Blair that the EU, as it stood, as a bourgeois-democratic, capitalist Europe, was itself the answer to their problems.

It clearly wasn’t, but what the EU, even in its capitalist form, does is to clear away a lot of the barriers that stand in the way of workers creating the solution to their problems. As Marx, Engels, Lenin and Trotsky described, even the creation of freer, more rational conditions for the development of capital is, itself, progressive, and facilitates the transition to Socialism. We are not petty-bourgeois, moral socialists, or “anti-capitalists”, seeking to hold back or reverse capitalist development. We do not see less mature forms of capital as preferable to its mature forms in the shape of monopolies and multinational corporations. Quite the contrary. These mature forms, as socialised capital, Marx explains, in Capital III, Chapter 27, are the collective property of the workers in those companies. They are the transitional form of property between capitalism and socialism. But, also, because of their size, and need to plan and regulate their production, they must also draw on all of those aspects of the encroaching socialist future that requires a close relation to the state, which must also incorporate this contradiction within itself.

The fact that these mammoth capitals must, themselves, burst out of the reactionary constraints of the nation state, becoming multinational and transnational companies, itself acts to unite the workers of these corporations across national borders. But, this same requirement drives the requirement to establish ever larger single markets, such as the EU, within the framework of a multinational state, which becomes the minimum adequate political form in the era of imperialism, just as the nation state was in the era of privately owned, competitive, free market capitalism. All of these features of imperialism, and of the multinational state are, also, features required by socialism.

The Collapse of The Neoliberal Economic Model, and of Conservative Social Democracy

So, just as we have no illusions in bourgeois-democracy or the bourgeois national revolution, being only moments in the transition to Socialism, via permanent revolution, yet go along with the workers in such struggles, on that basis of permanent revolution, so, too, we adopt that approach to the EU. We sow no illusions in its capacity to solve workers’ problems, but we go along with workers who do have such illusions, on the basis that, in the course of this struggle, we build workers’ unity across Europe, we posit workers’ interests to the interests of capital, across Europe, and we posit independent workers’ parties and organisations across Europe as the means to achieve it. In doing so, we draw out the logic that workers across the EU can only resolve their problems by creating a Workers Europe, on the road to a Socialist United States of Europe.

Of course, none of the main parties seek to get anywhere near such a condition, in which they would provoke the ire of the global ruling class. That is why they have already committed to such modest proposals, and why they have stated so vociferously that they will not raise taxes or borrowing. But, that does not change the fact that their current plans simply do not add up, as the IFS has set out. They must implement spending cuts, or raise taxes, or increase borrowing.

The ability to raise taxes has been discussed, but the position in relation to borrowing is very similar. Lloyds Bank has already warned them not to try to raise borrowing to meet the gap. Blue Labour, and to an extent the Liberals, have sought to blame the constraints on them on the Truss government. But, as I have set out previously, the rise in interest rates was underway long before that government. It is a global process, driven by the dynamics of the long wave cycle. A long, secular decline in global interest rates began in the mid 1980’s, as the annual average rate of profit rose sharply, and the supply of money-capital from realised profits exceeded the demand for it, for capital accumulation. It is what created the initial surge in asset prices.

That secular fall in global interest rates ended around 2012, and was presaged by the global financial crisis in 2008. It is only the extraordinary measures introduced by states and central banks, since 2010, as they sought to slow economic growth via austerity, and to boost asset prices by QE, that has subdued that dynamic, bringing its own contradictions and idiocies, such as negative yields on bonds, with it. The use of lockdowns between 2020 and 2023, to slow economies, as growth resumed after 2018, causing interest rates to rise, and asset prices to fall by 20% was another part of that idiocy.

The lunacy of Truss’s government gave the opportunity for the ruling class to slap down the petty-bourgeoisie that has been ascendant since the 1980’s. It used its power in global financial markets to hammer the Pound, and drive down UK bonds, sending UK interest rates higher. It was a soft coup against the government, showing just what a radical Left government would face. But, having carried out that coup, the Pound rose, and UK interest rates fell back. That those rates are again higher is not a consequence of Truss’s government, but of those underlying longer-term dynamics that are driving global rates higher as part of a long-term secular rise in interest rates establishes itself. Just as the secular decline in rates lasted for around 30 years, so too the secular rise will last for around 30 years, and these minor fluctuations are merely bumps on that upward slope.

Conservative social-democrats, and petty-bourgeois nationalists, such as those of Blue Labour, do not want to acknowledge that reality, because it undermines the whole of their strategy of the previous forty years, based on low interest rates, rising asset prices, and the illusion of wealth created from thin air, out of the rise of these asset prices, as the basis of debt collateralised on them. Rising global interest rates, induced by a rising demand for money-capital to fund capital accumulation, at the same time as the supply of money-capital grows more slowly, as rising relative wages squeeze profits, of itself, puts a further huge hole in the budgets of governments, simply to cover the rising cost of servicing their existing debt. So, any addition to that debt, by further borrowing, will result in government’s facing sharply rising interest rates. The right-wing, petty-bourgeois, populist government, in Italy, has already found that, clipping its claws, and, now, France is seeing the same thing, as the yield on its bonds rises sharply compared to that on German Bunds, even before Macron’s party loses control of the Assembly.

The idea that Britain could just borrow its way out of the problem is, then, simply not tenable. Ten years or more ago, Britain could have taken advantage of historically low interest rates, so as to thoroughly renovate its national infrastructure, and so on. That would have repaid itself, as it brought improvements in productivity, and so on. But, instead, the government imposed austerity, to slow the economy and slow wage growth, to enable asset prices to be inflated.

The idea that this problem could be avoided by simply monetising the debt, i.e. by printing money tokens to pay the debt, or to finance the additional spending shows a lack of understanding of what money is. It is to invite a repetition of the hyperinflation of the Weimar Republic, and elsewhere, when such measures are undertaken, and of what happened in the 1970’s and early 80’s. It is what happened on a smaller scale when liquidity was injected to cover the furlough payments and other costs inflicted due to lockdowns. The inflation that results simply increases money prices, and so the cost of inputs, rather than reducing interest rates, and acts like wear and tear of fixed capital, in respect of the money advanced by lenders. It means that they seek to compensate for that depreciation (Net Present Value) of their capital, by demanding higher nominal rates of interest.

Moreover, as already seen, lenders are more likely to lend to EU countries, backed by the ECB, than they are Britain, as its economic problems intensify, as a result of Brexit. It’s true that Britain can always print additional currency to pay back its creditors, but, in doing so, it devalues that currency, paying them back in “funny money”, just as when states used to reduce the gold content of the currency. Lenders simply respond to such measures by demanding even higher nominal rates of interest.

So, any incoming government will find that it has a hole in even the existing budgets that cannot easily be filled by either taxes or borrowing. That is why they use the magical thinking of “growth” to resolve this dilemma. But, as I set out earlier, and as the IFS also state, to rely on growth requires that you set out where this growth is suddenly to come from. The obvious quick answer would be to re-join the EU, but none of the parties dare speak its name, despite the fact that a clear majority of voters are in favour of it!

The only response they can give as to that is that the 2016 referendum voted for it, and for some unknown reason that decision binds us for all time!! That’s like deciding to drink from a bottle that you did not know contains poison, and then, discovering your mistake, assert that you must still drink from it, because that was the decision you had made, and so must stick with it!!!!

Making Workers and Real Capital Pay To Protect the Fictitious Wealth of Speculators

There are other ways of encouraging growth. As noted earlier, Ireland attracted multinational companies by offering low rates of Corporation Tax. However, that goes against the proposals of Blue Labour, Liberals and Greens to raise Corporation Tax. Moreover, any such attempt would be seen by the EU as a hostile act, likely to provoke a response that would not be favourable, and would be particularly problematic for a Blue Labour government trying to sell the snake oil of a “Labour Brexit” in which it would gain the benefits of EU membership without any of the costs or obligations.

Another measure that could be adopted would be to give a substantial, one-off, grant to local authorities to repair roads. This is literally, a shovel ready project that would pump a significant impulse into local economies, employing labour and creating demand for materials. It would generate a positive, feel-good response from voters. In addition, because such projects are capable of being completed in weeks rather than years, there is a strong multiplier effect, and the cost of the projects is quickly recovered, as well as giving a boost to national productivity.

However, the problem, here, as with many other such projects is that it arises at a time of existing relative labour shortages that have, themselves, largely, been created by Brexit, and exacerbated by lockdowns, and consequent effects on healthcare etc. Would local authorities be able to recruit the additional workers to carry out the work; would suppliers and contractors be able to recruit the labour they required? If so, at what cost in higher wages? Local authorities already lost workers, who have gone to higher paid jobs in the private sector. The economy is still suffering from the fact that for forty years, there was a relative shift away from wage labour in large-scale industry, to self-employment, and employment in small businesses, where productivity is very low, and that shake-out of that small private capital has not yet reversed, to provide the required labour supplies.

The response of Starmer in the health service is instructive. He has point blank said he will not meet doctor’s demands even to restore real wages to their 2008 level. So doctors are moving to the private sector, which Blue Labour doesn’t mind as it plans to privatise the NHS, in favour of all the private healthcare companies many of its MP’s and Shadow Ministers are associated with. But, many are also moving overseas. As a result of Brexit and the ending of free movement, which Starmer also will not reverse, its impossible to recruit the necessary workforce. Starmer makes pie in the sky promises to reduce waiting lists, provide more GP appointments and so on, but how without the doctors to provide it?

Moreover, the main reason that governments have not engaged in such obvious projects — the Tories could easily have funded and improved their approval by ensuring that all the potholes were filled over the last several years — not just in Britain, but all developed economies, but rather implemented austerity, was to constrain economic growth, so as to constrain employment and wages, to boost profits, and to constrain the demand for capital, so as to hold down interest rates, in order to avoid another crash in asset prices.

As with all developed economies, Britain’s slow growth in the last fifteen years has been part of a deliberate strategy aimed at holding back the demand for labour and capital so as to hold back wages, boost profits, and reduce interest rates to defend inflated asset prices. But, even with that deliberate policy by governments and central banks, the model of conservative social-democracy of the last forty years ensures that slow growth. There is no reason for the company executives who act in the interests of shareholders, rather than the company, to use profits to accumulate real, industrial capital, when using those profits to buy back shares, or buy the existing shares of other companies results in a greater return from capital gains. When the state underwrites that via QE, that is even more the case.

It is then only the smaller private capitals that have an incentive to fill gaps in the market, and to accumulate capital, as well as the capital in those newly industrialising economies. Hence the growth of the petty-bourgeoisie, on the one hand, and of China etc., on the other, over that period. So long as governments and central banks seek to keep interest rates at artificially low levels, so as to try to prevent another huge crash in asset prices, that will continue, thereby, further sharpening the underlying contradiction, and making such a crash even more inevitable, and on an even larger scale.

But, again, as 2008 demonstrated, when such a crash inevitably materialises — in 2018, as global growth and interest rates rose, asset prices fell by 20%, and last year, as, again global interest rates rose, asset prices fell around 20–30%, in nominal terms, and 40% in real terms, before recovering on the hope of slower growth and central bank rate cuts — it will require co-ordinated action on a multinational basis. Large economies, like the US — itself part of the larger bloc with Canada and Mexico — China, and the EU will be able to address that, but the relatively small UK economy will be left on the sidelines, and suffer as a result.

The problem for the UK economy is similar to that of emerging economies of being able to access adequate capital, leading to its description as a submerging economy. Its not that industrial capital operating in Britain does not produce enough profit to fund such real capital accumulation, but that the profit is diverted, by shareholders, and the executives acting on their behalf, into unproductive activity to buy back shares, hand money to shareholders in inflated dividends and so on. Former Bank of England Chief Economist, Andy Haldane, noted that in the 1970’s, dividends accounted for 10% of profits, and now account for 70%. Similarly, the rise in asset prices means that an increasing proportion of surplus value is tied up unproductively.

Land accounted for only 10%, after WWII, of the price of a house, but now accounts for 70%. That, also, impacts rents, meaning a large part of surplus value goes to fund higher wages to cover those housing costs of workers, as well as into tax to fund Housing Benefits, all of which drains profit that would, otherwise, have funded real capital accumulation, and, so, growth. Blue Labour’s plans to artificially boost housing demand by underwriting mortgage deposits, along with its proposals on planning reform, which, if they have any effect, would further boost demand for building land, only exacerbates that problem.

Moreover, even if the housing problem could be resolved by simply building more houses — it can’t because the problem is the price of those houses, which is a function of inflated land and asset prices, not supply per se — the consequence of Brexit is that there are insufficient skilled workers to build them. Nor is that addressed, certainly in the short-term, by training British workers. In the early 2000’s, as the effects of the onset of the new long wave upswing took hold, Britain also found itself short of skilled labour. Plumbers, electricians, joiners, bricklayers and plasterers could not be found for love nor money. So wages for such workers rose sharply, and as is normal in such trades, there was an even greater rise in the number that became self-employed, or started their own small business, taking advantage of the soaring prices that could be charged for such work.

Significant numbers of workers from other jobs, including teachers, trained to become plumbers etc., but, the consequence of that was, then, to mean that there was an outflow of labour from these other areas, creating new shortages. That was at a time when there was a greater supply of labour than there is now, because, at that time, there were still reserves built up from the previous period of stagnation and unemployment in the 1980’s, and 90’s. Even so, the solution to the problem came in the form of the immigration of the “Polish plumbers”. Britain saw immigration from the EU of 2 million workers, most of them young and already skilled. But, contrary to the claims of Fartage and other nationalists, the consequence was that the economy was able to grow as the frictions were removed, and unemployment also fell as the economy grew. Indeed, that growth is precisely what created the conditions for higher interest rates that sparked the crash of asset prices in 2007/8.

Racism As Cover For Austerity and Authoritarianism

Those that argued for Brexit, and more importantly those that voted for Brexit did so on the basis of hostility to immigrants. Its easy to see why, if you are a self-employed plumber, or run a small plumbing business, enjoying high prices for plumbing work, you will be hostile to an influx of plumbers. But, governments always find that economic reality imposes itself upon them. The Tories repeatedly claimed they would reduce immigration to the tens of thousands, and repeatedly failed to do so, because labour shortages demanded that immigration fill those gaps.

Rather than net migration falling, after Brexit, it has risen, and the 800,000 workers that entered the country in the last year did so on visas issued by the government, because those workers were needed. But, whilst Brexit, and the ending of free movement has not reduced the economy’s need for immigrants, it has prevented British workers gaining employment elsewhere in the EU. It has also made it much more difficult for pensioners to retire to Spain, Portugal, Italy, France and so on, itself raising the net migration figure for Britain, as people remain imprisoned, here, and, in respect of pensioners, become an increasing burden on the health and social care system, as well as occupying houses that could have been used by younger workers with families.

Yet, the extent of reactionary and magical thinking on behalf of Starmer and Blue Labour is seen, not only in his reliance on growth arriving out of thin air, but in the fact that this growth is to come whilst committing to never re-joining the EU, and to also reducing net migration. In other words, the same racist scapegoating of foreigners for the problems of British capitalism as utilised by Fartage, the BNP, Tories and so on. Of course, for a party riddled with systemic racism, Zionism, Jingoism and Islamophobia, its no wonder that Blue Labour adopts these positions with no second thoughts.

So, there is no policy issue at stake in the election that is separable from Brexit and the need to re-join the EU. Starmer continues to promote the delusion of a Labour Brexit, i.e. cakeism. He talks about renegotiation, but no such renegotiation is possible. The talk of side deals and agreements is possible, but it will involve further concessions by Britain, and all will be to its relative disadvantage precisely because of the greater power of the EU. The phyto-sanitary and veterinary agreement is possible, but it really means Britain, again, accepting EU regulations and the jurisdiction of the ECJ. In fact, in one area after another, where Britain proposed establishing its own regulations and regulatory bodies, it has had to more or less abandon them, because not only did the EU require conformance with its standards and regulation, but other countries, around the globe, did not recognise the new British standards. That is necessarily the case, because these countries are more concerned with their trade with the EU than with Britain.

There is, also, now, ridiculous talk that Starmer, when in office, will seek to re-join the single market. But, that, now, is not possible without re-joining the EU. The case of Switzerland is cited, but the EU has said it regrets that arrangement with Switzerland, and would not do it again. Moreover, the UK is not Switzerland. Although its market and economy is small compared to the EU, it is large compared to Switzerland. The EU has now said that no country can become a member of the single market without being a member of the EU, or EFTA. But, EFTA has also said it would not let Britain in, because of this problem that its economy is too big compared to the other countries in EFTA. So, the reality is that, if Britain wants closer ties to the EU, it will mean yet further concessions, further subordination to the EU, or re-joining the EU.

Any realistic policy seeking to increase UK growth, meanwhile, depends on that closer relation to the EU, and without growth, all the other policies, minimal as they are, cannot be achieved.

The final option, of course, is for any incoming government to balance the books by renewed austerity. But, this is not the early 2000’s, nor even the period after 2010. Across the globe, as relative labour shortages have arisen, even without workers needing to take industrial action, competition for labour, between firms, has raised wages, putting workers in a stronger position, and that has encouraged and facilitated workers in rebuilding unions, and, where necessary, engaging in industrial action. That, of course, does not mean that some workers have far from benefited from that general trend. Even in Marx’s day, it was the case that, even as wages rose in general, there were still paupers whose relative position, thereby, declined, and the absolute numbers of paupers themselves might rise. In those old decayed urban areas, the unskilled workers, the unemployed and sick, continue to suffer in misery, and their relative position falls, as the majority of other workers see a rise in their real wages. Its one reason the former are prone to fall under the spell of right-wing populists.

Often, it has been in the state sector where unionisation has remained strong, that workers lagged behind, as governments sought to implement their policies by placing the burden on those workers. That is why it has been in those sectors, or sectors nominally in the non-state sector, but dependent on state finance, such as the railways, that workers have had to take industrial action. The tailist and timid nature of the union bureaucracy has facilitated that as they have restricted industrial action to one or two day protest strikes, rather than all-out action. Inevitably, some state-sector workers have simply moved to take up better paid jobs in the non-state sector. The shortage of lorry drivers, for example, saw entire fleets of council bin lorry drivers recruited by haulage firms.

But, state-sector workers are unlikely to put up with these attacks, falling behind the private sector, and the inadequate response of union leaders for long. At some point, they are likely to pressure union leaders, were a Blue Labour government, even one in which so little expectation exists, were to try to impose further austerity. Indeed, its precisely this link of the unions to the Labour Party and the options it opens up, which is why Marxists must operate though it, to engage in that political struggle, irrespective of the ephemera of elections and electoralism.

The contradictions developed over the last 40 years have reached the point of crisis, Brexit has sharpened those contradictions and enhanced that crisis for Britain. That crisis is not a crisis of overproduction of capital, as in the 1970’s, but a financial and political crisis for the model of conservative social-democracy dominant for the last 30 years, based on asset price inflation. That “centre-ground” can no longer hold, as seen not just in Britain, but in the US, in France, Germany and elsewhere. The radical right-populist solutions, like Brexit, of the petty-bourgeois nationalists, have also demonstrated their utopian and reactionary nature, and also failed. It is down to workers, with the help of Marxists, to chart the future, and the road to international socialism.