A fantasy of ‘Liberalism in One Country’[i]
Given that Brexit was an event imagined and delivered from within the Conservative Party, one of the most important analyses of it is Matthew d’Ancona’s examination of how the idea shifted from the party’s margins to its mainstream over the post-Thatcher era. Two things in particular stand out in his account.
Firstly, the political plausibility of Brexit rose as a direct response to Tony Blair’s dogmatic assumption that European integration was a historical destiny, which encompassed the UK. No doubt a figure such as Blair would have discovered a messianic agenda under any historical circumstances. But given he gained power specifically in the mid-90s, he was one palpable victim of the fin de siècle ideology (stereotyped by Francis Fukuyama’s ‘end of history’ thesis, but also present in Anthony Giddens’ ‘Third Way’) that the world was programmed to converge around a single political system.
Neo-conservative faith in violent ‘democratisation’ was Blair’s worst indulgence on this front, but a view of European unification (and expansion) as inevitable was responsible for inciting the Tory reaction within Westminster. Europe could have been viewed as a particular historical path, adopted in view of the particular awfulness of the European 20th century. Instead, in a Hegelian fashion, the idea of Europe became entangled with the idea of ‘globalisation’, and the conservative reaction was to refuse both.
Secondly, Tory Brexiteers view the EU as an anti-market project, which blocks economic freedom. This is also weirdly ahistorical. Firstly, the EU was established specifically to entrench the market as the organising principle of European coordination, as a way of preventing further war between France and Germany. When the Left complains that the EU is a ‘neoliberal’ institution that elevates the market above national democracy (see Wolfgang Streeck’s piece on this), this is correct. The Left should recognise that, in terms of its foundational goal, it’s been remarkably successful.
Of course it achieves the single market through a high level of bureaucratic and technocratic planning (such as anti-trust, standardisation, consumer protection), allowing it to be represented as ‘socialist’ by those who cling to a Victorian or anarchic idea of what the market should look like. But there is no contradiction between technocracy and market competition, indeed the latter has depended on the former ever since the rise of business corporations and market regulation in the final decades of the 19th century. David Graeber’s Utopia of Rules explores how this confluence of markets and bureaucracy works.
One of the many illusions on which Brexit is based, therefore, is that capitalism is a system that works in the spaces outside of regulation, and that regulation is consequently anti-capitalist. A more realistic view is that capitalism is regulation (of working life, product standardisation, consumer choice, of markets, credit etc), that has always depended on the state – tacitly in the pre-1870 era, but explicitly ever since. The idea that, say, pharmaceuticals, financial services or business services (all areas of some lingering success for the UK) thrive in the absence of rules is to ignore the copious ways in which it is only rules which make such industries possible in the first place. Moreover, the idea that markets can straddle multiple national jurisdictions without additional technocratic management is yet more magical thinking.
Paraphrasing Stalin, the utopia of Brexit might best be summed up as that of “Liberalism in One Country”. The ideal is of laissez-faire of the mid-19th century variety, which either destroys or disregards the ways in which this is no longer realistic. It also involves disregarding the sense in which Victorian laissez-faire was never Liberalism in One Country in the first place, but depended on empire and slavery, as Gurminder Bhambra has discussed in response to Brexit. Brexit is therefore fuelled by a combination of destructive and fantastical urges: aspects of capitalism which resist the ideal of Victorian laissez-faire must either be got rid of (such as EU membership itself) or simply ignored. The critical question is which aspects of contemporary British capitalism fall into the former camp, and which will fall into the latter one.
Brexit massively overshoots the mark
Brexit represents a reaction against various models and aspects of liberalism. ‘Lexit’ is promoted as a route out of neoliberalism. Conservative campaigners for Leave were reacting partly against the calculated advice and predictions of elite economists and business leaders, that Brexit would lead to recession and long-term decline. Most significantly, perhaps, Brexit was represented as a rejection of international multiculturalism and a reassertion of national difference.
All of these are refusals of dominant orthodoxies, with various histories. Lexitters want to overturn the dominant policy orthodoxy of the past 40 years, presumably so as to return to a more democratic capitalism or socialism. Leave campaigners were rejecting the dominant elite faith in economics, statistics and ‘facts’, that was a rising feature of politics over the 20th century. And UKIP et al were demanding a radical re-localisation of law, human rights and labour markets, so as to privilege indigenous entitlements.
The fear is that, in targeting these various aspects of liberalism, some of which are relatively recent, Brexiters have hugely overshot the mark: they have also turned the tide on one of the most basic principles of political economy, that prosperity is achieved through greater social and spatial interconnectedness. In seeking to overthrow policies and developments of recent decades, they’ve shot a hole in a program that dates the whole way back to Adam Smith in the 18th century. Despite the fact that few of our political classes (and even fewer of our civil servants) want this, Britain is about to adopt a strategy of national mercantilism that Smith was seeking to dissuade rulers from in 1776.
To put this another way, Brexit will result in a form of protectionism for the UK, whether it wants it or not. Protectionism can, of course, yield economic benefits and has been adopted by most rising industrial powers at key strategic junctures. It exists today, for example, in the way the United States pushes aggressive intellectual property rights in order to protect Hollywood. It helps rapidly developing and industrialising nations to catch up with others. But in order to make any sense at all, there has to be something worth protecting. What does Britain have?
Michael Porter’s 1990 Competitive Advantage of Nations includes a bleak table on areas of world-leading national strategic advantage. USA: Software, entertainment industries, micro-processors. Germany: machine tools, cars. Britain? Finance and biscuits. Like a dog refusing to give up its stick, we’ve staked our national pride on clinging on to things that nobody else much wants.
Two possible futures present themselves, one of which is socially regressive, the other of which is fantastical. The socially regressive one is that Britain regains a form of competitiveness through slashing taxes on mobile capital and social protections, such as the minimum wage, as has already been mooted by various Tories. This still seems likely to me, which makes Theresa May’s surprisingly social democratic leadership platform another likely example of post-truth politics in action (there is no manifesto or other mechanism to hold her to any of her ideas, and it is difficult to see that they could survive recession). This achieves Liberalism in One Country through diving headlong into the past.
The second is the Steve Hilton/Dominic Cummings fantasy, as discussed by Pat Kane, in which Britain hurls itself into some technologically expansive, anarchic, cyber-utopian future. Britain becomes a kind of experiment in new fusions of technology, science, policy and regulation, driven by entrepreneurs whose main ambition is to destroy the status quo. It revels in a post-truth landscape, busting the cartel of established scientific and business centres. According to this ideology, the only way to discover the new is to forcefully abandon the old, no matter how many accepted truths or values are lost along the way.
Smashing up the nation state is the first step towards smashing up vested interests in business, universities and cultural production. This is the vision of the ‘outer right’ – libertarian ideologists weaned on third-hand versions of Nietzsche and Schumpeter – who are quite content to view a nation as a laboratory to mess around in.
Three futures for economic liberalism
The key question is what happens when these various ideals collide with the reality of British capitalist society in the 21st century. The immediate fall-out has been ugly: a 500% rise in reported racial hate-crime, British researchers being dumped from European research projects and early signs of economic decline. But how might ‘Liberalism in One Nation’ work in real sociological terms? I think we can envisage it playing out differently in three strata of economic activity and social class.
Firstly, there are the businesses which lined up against Brexit, because they trade with Europe, value steady and generally reasonable market rules and don’t want politics to interfere with their investment strategies. The national ‘home’ of these businesses is often irrelevant, other than for tax purposes, and their place in Britain is often via foreign direct investment. It is difficult to imagine any aspect of Brexit that benefits these businesses. From the perspective of a multinational corporation, far from overthrowing the ‘burden of redtape’ (as Brexiters believe), Britain is now in the process of building a new wall of inefficiency around itself.
In economic jargon, the ‘transaction costs’ of locating in and doing business with Britain will rise permanently as a result of Brexit. Regulatory inefficiencies benefit one class of business only: the intermediaries and consultants who sell services in managing these transaction costs (a ‘Brexit management industry’ is surely going to arise, just like a Minister for Brexit). International capital will be greatly inconvenienced by Brexit, but that simply means that less of it will travel to or via Britain in the future. Global capitalism is fast and complex. By comparison, Britain has chosen to become slow and complicated. The Conservative Right is about to discover that, for multinational corporations located in Britain, there is one thing worse than being regulated by Brussels, and that is not being regulated by Brussels.
Secondly, there are those uber-elite individuals who still dwell in Blair’s fin de siècle bubble of a single open global society, including Blair himself. Blair has said that he cannot understand the rise of Bernie Sanders and Jeremy Corbyn. Presumably he is even more flummoxed by the Brexit vote, especially in how it sucked in quasi-Blairites such as Michael Gove. Blair’s myopia has many possible explanations. But one is that people like him do genuinely now inhabit a borderless, global space, in which laws, regulations and policies are only ever things to be viewed from above. They are never things to be forced into accepting.
Brexit may make London a less attractive destination for the global super-rich (the 0.001% or so), a class that includes Blair. This would be no bad thing. However, it should also be recognised that this class is defined partly by its ability to buy its way out of jurisdictional limits when it needs to. ‘Citizenship services’ mean that passports can be bought; ‘tax efficiency services’ mean that the mega-wealthy can avoid ever having to pay for local social goods; ‘family offices’ exist to manage the international affairs (houses, education, leisure) of super-rich families. So long as these services exist, decisions about national sovereignty and international law have relatively little effect on the freedom of the extremely rich. The extremely wealthy are Brexit-proof.
The worry must be that, in a stagnant economy, politicians will be tempted to formally recognise the privileges that this class possesses. This means accepting that they won’t pay their tax in full, granting them the residency rights that they desire, relieving them of inconvenient obligations to be transparent (of the sort the EU might have imposed, in relation to money-laundering, say). All of this would be in the hope that these people continue to spend time in post-Brexit Britain and splash some of their cash around.
Finally there is the class that has become known as the ‘precariat’, which will surely expand in post-Brexit Britain. The vote against immigration was really a vote against a multicultural precariat: the Eastern and Southern Europeans who do relatively low wage, low security work in the UK. We still don’t know the future of these migrants or how far their numbers will reduce in future. Given immigration tends to rise and fall in correlation to economic growth, perhaps Brexit will achieve reduced immigration after all.
But if there is further austerity, as George Osborne declared inevitable, that means more people forced into contingent forms of wage labour. This is where various elements of the Right currently converge, around the idea of increased employment through reduced workplace rights. There are various aggressive neoliberal aspects of the current Tory policy agenda that haven’t gone anywhere, with the Trade Union Act foremost amongst these.
All roads lead to the accelerated rise of digital elites
There is one emerging economic model that ties all of these strands together, satisfying regressive 19th century liberals, techno-utopian libertarians, communitarian conservatives, corporate elites and policy pragmatists equally. This is the cluster of platforms and services known as the ‘sharing economy’. These seek to push a rentier mentality into more and more corners of society, making the ownership of assets (homes, bedrooms, cars, capital equipment, free time etc) a the condition of an income.
The opportunities for the precariat to be administered and employed via digital platforms has only just begun to be explored, but have huge potential. This fulfils a liberal dream of allowing labour to find its ‘correct’ price in an entirely flexible, maximally liquid market, just as financial markets do for shares and bonds according to the Efficient Markets Hypothesis. I would expect this argument to gain new momentum over the coming years, advanced as much by those with a regressive fantasy of liberal Victoriana as by those with a techno-utopian fantasy of capitalist upheaval.
Outside of Nigel Farrage’s local pub, where people take pride in refusing to wear seatbelts and dreaming that their warm beer breaks EU rules, modern societies are never unregulated. The irony of liberalism after Brexit is that in sticking up two fingers to the regulatory power of unelected technocrats in Brussels, it probably hastens the regulatory advance of invisible and unspoken algorithms in Silicon Valley corporations. For Steve Hilton, happily resident in prosperous multi-cultural Northern California, surrounded by a coterie of venture capitalists and the anti-democratic digerati, his long-distance support for Brexit makes perfect sense.
[i] In this piece, I used ‘liberalism’ to refer to the political idea and project of organising economy and society around the idea of individual liberty. Philosophically, this dates back to the 17th century, and develops political traction from the 18th century onwards. Orthodox economists (and policy-makers informed by them) tend to work within a ‘liberal’ worldview, inasmuch as they work around assumptions of free, self-interested individuals, exercising choices for themselves. This understanding of ‘liberalism’ is in contrast to the American meaning of the term, as a centre-left, reformist policy agenda; it is also distinct from the specific agenda of the Liberal Democrat Party.