A Viable Alternative

In the only newspaper that is allowed in the office of Jeremy Corbyn, Jonathan White writes:

No-one should really have been surprised that 50 Labour MPs took the first available opportunity to pledge their allegiance to the single market in Parliament. 

In a letter to the Guardian on June 22 many of these MPs had already set out their stall. Indeed some made it the number one issue in their local election campaigns. 

This was, and continues to be, an attempt to drive a wedge through Labour’s Brexit position. 

These MPs seek to peel off those sections of the British working-class who voted to remain, who rejected the dominant voices in the Leave campaign and who fear further economic dislocation as a consequence of Brexit. 

The rumblings about a new “Macron-style” centre party might become a reality but that must be the zero option for New Labour’s remaining careerists who will have the fate of the SDP in mind. 

Far better to leverage the threat of a split to change Labour’s policy. 

That’s why it’s important to address the arguments being made around the single market head on.

In their letter, the Labour MPs describe single market membership as being essential to British businesses and jobs. 

It’s true that low or no-tariff access to the EU market would be important but that only requires a free trade deal, not membership of the single market. 

And there are good reasons why export-oriented German industrial multinational companies would want such a deal. 

Britain is a major market for their goods. 

So a deal for low or no tariff access is possible, particularly with anti-EU and anti-euro sentiment growing across the EU. 

There is also a strong argument that membership of the single market has exacerbated all the worst features of Britain’s economy. 

Single market membership assisted in the bloating of the financial sector as US-owned investment banks exploited the “big bang” to turn London into a forward base for breaking into the EU market. 

Britain’s unusually rapid deindustrialisation was accelerated by British government monetarism in the early ’80s but it had rocket boosters put under it by the single market. 

Since 1978, Britain has lost more than 4.5 million manufacturing jobs at a pretty constant rate. 

British industries, oriented toward shareholder value and unwilling to invest in industrial modernisation or research and development, were unable to survive against German and French competitors. 

Single market rules forbidding any “state aid” that can be seen to “distort competition” have made it impossible to intervene to save jobs. 

The recent example of British steel in Port Talbot is a case in point. 

Renationalisation to protect jobs in a strategically vital industry for Britain was simply not possible. 

Britain’s economy is unbalanced, financialised and deindustrialised. Its workers have seen their wages eroded in value. 

They get by on precarious work and underemployment, while British businesses fail to invest and hoard corporate cash in the hunt for shareholder value. 

None of this was simply caused by the single market but membership of the EU’s free market club has helped launch us faster and further down this path. 

More importantly, continued membership would ensure that we remained locked into our economic death spiral. 

Labour’s manifesto was the first in decades to demonstrate an understanding of the issues facing our economy. 

It raised the issue of public ownership of our infrastructure, and presented a vision of active government stepping in to finance and plan strategic industries, to build more and better jobs. 

Single market membership would drive a coach and horses through this policy agenda. 

Remaining within the single market and the customs union would mean remaining subject to the EU-Canada Comprehensive Economic and Trade Agreement (Ceta) free-trade treaty, which allows companies to sue governments over any new law or policy that might reduce their profits in the future. 

It would also limit our ability to develop export industries within faster growing markets outside the EU. In the automotive industry, for example, ownership has been concentrated in the hands of foreign multinationals using Britain as a low-cost base of skilled assembly for products being sold in the EU, with the result that more than half our motor vehicle exports go to these more competitive, lower-growth markets.

Before we even get to that point though, we need major state intervention to rebuild integrated export-oriented industries and degraded economic infrastructure in Britain.

Given the way that British businesses are locked into the hunt for shareholder value, we need the maximum freedom to use public ownership and state investment in a strategic and targeted way. 

Public ownership is not impossible in the single market.  Indeed publicly owned companies own quite a lot of our railway franchises. 

But the principles of the freedom of capital and the primacy of competition in the single market mean that these companies are forced to operate within liberalised markets. 

Under the Gas and Electricity Directives or the Four Railway Package of Directives, for example, these sectors must be liberalised. 

Publicly owned companies can compete within them but any attempt to build a unified, coherent, strategic nationalised industry would be open to challenge by the Commission or competitor companies as restricting competition and the freedom of capital and consequently contrary to EU law. 

Labour’s proposals to use a National Investment Bank, working with publicly owned regional development banks, to rebuild regional economies would be similarly hamstrung.

It is, of course, possible to have publicly owned banks in the single market, but the ambition for the National Investment bank will only come to fruition if it is free to operate according to democratically agreed national priorities that benefit the British economy and its people. 

If its investments and plans are constantly being challenged as illegal state aid in contravention of competition, then it will fail before it has had any effect. 

Nor is this idle speculation.

In 2001-2, following a complaint from the European Banking Federation, the competition commissioner Mario Monti forced Germany to abandon state guarantees to its public banks on the grounds that they gave them an unfair advantage.

Even the massive injections of taxpayers’ funding and public guarantees gifted to the EU’s banks in 2008-9 were only permitted as legal state aid on condition that they were used to restructure them, strip out uncompetitive banks and return the rest to private ownership to avoid “distorting competition.” 

The EU might be nominally indifferent to the legal form of companies but it is quite clear that competition is the higher law. 

Finally, for trade unionists, Labour’s commitment to a restoration of collective bargaining was a massive shot in the arm after decades of being treated like an embarrassing poor relation. 

Yet continued single market membership would mean subjection to the authority of the European Court of Justice, the court that has handed down the Viking and Laval judgments which enable companies to establish themselves without reference to local collective bargaining arrangements — effectively licencing companies to go careering round the EU on “social dumping sprees.” 

EU law would also make it impossible to use the powerful lever of public procurement to enforce collective bargaining norms or basic labour standards throughout supply chains. 

Once again, the higher law of competition must prevail. 

The Labour MPs writing in the Guardian cite the EU’s so-called framework of employment rights. 

It’s true that some important rights have been embedded into British law through the directives on working time and part-time working. 

But these rights are academic without the power to enforce them. 

The best way to police workers’ rights is through collective representation and bargaining. 

Yet across the EU collective bargaining power is being deliberately undermined by the enforcement apparatus built up to police eurozone budgetary discipline. 

In Britain, collective bargaining coverage and union representation have collapsed, especially in the private sector. 

And as any worker on a zero-hours contract in a non-unionised workplace will tell you, in the face of the vast imbalance of workplace power, theoretical rights to equal treatment are literally worthless. 

The single market isn’t the only problem facing the British economy but it is a very big and very immediate one.

If Labour’s policy becomes to retain single market membership, it will mean abandoning much of the manifesto on which it fought the election.

It will also mean Labour turning its back on the project to present a viable alternative, not just to austerity, but to neoliberalism and on any aspiration to build a better, socialist society.