Treachery?

Is May’s White Paper really a “betrayal,” as the Brexiteers assert? Has May, a quiet Remainer before the referendum, conned her erstwhile cabinet colleagues with the red, white and blue rhetoric?

Steve Baker, the junior of resigned Brexit Secretary David Davis, interprets the White Paper as a stitch-up from the top. He argues that the Brexit office was a Potemkin village designed to distract people while the Cabinet Office’s Europe Unit got on with developing a soft Brexit plan. This is congruent with long-standing Brexit complaints that the higher civil service is an anti-Brexit fifth column. Indeed, they have long complained that effective control of the process of withdrawal has been ceded to this treacherous group.

The Brexiteers have a point. The civil service establishment is strongly loyal to the current arrangements. The same civil service intervened in a deeply partisan way in the Scottish independence referendum and played a critical role in engineering the first austerity coalition between Tories and Lib Dems. The idea that the Treasury’s hair-raising warnings about the costs of Brexit from the Treasury are ideologically neutral is nonsense.

But such laments conveniently overlook the reason May was able to impose this deal on her cabinet, and why she still has her job.

Davis and Baker claim they were never given a chance. But they were in charge of negotiations. They had a whole government department to work with. They had the chance to fight for their strategy and show it could work. It was Davis who drove the government claims that it could impose its own negotiating timetable and framework. It was Davis who insisted the “divorce bill” need not be paid. On all these points, he was humiliated.

And it was Davis who claimed that the government could get a hard Brexit without a hard border in Ireland, thus protecting the Good Friday peace agreement. No plausible solution was ever presented. He continually claimed that the issue could be put off until the end of negotiations, once the terms of exit were agreed.

Davis also claims, in a bitter farewell to his ministerial post, that far from there being no alternative, he had supplied Downing Street with a draft White Paper based on the prime minister’s speeches. He had eighteen months to do better than that. If his best gambit was cobbling together legislation based on May’s vacuous speeches, then he definitely blew it.

Above all, the reactionaries are failing because they are capitalist ideologues who don’t get capitalism.

Most businesses want to be tied down by EU rules, and Brexiteers just don’t see why. If middle-class “free market” ideology had minimal descriptive accuracy, that shouldn’t happen. Businesses should be queueing up for tax cuts and deregulation.

And if British capitalism is as globally important as the Brexit Right think, then China and India ought to have been eager to offer British businesses access to expanding export markets — as was necessary to support domestic austerity and wage cuts. In fact, India seemed mildly embarrassed by the approach, while China was politely indifferent.

Part of the problem is that British capitalism no longer exists in the way it once did. Earlier this year, businesses in the European Round Table of Industry threatened Theresa May with what amounts to an investment strike if she failed to secure a frictionless customs union. The fact that they could make such a threat demonstrates just how much the British economy is imbricated with the rest of Europe.

Likewise with the City, which centralizes financial flows across Europe, and which Brexit threatens to break up. And the EU would like to help this break-up along. When Chancellor Philip Hammond shot down the idea of slash-and-burn competition with Europe over taxes and spending, he was acting not just as an EU supporter but as a defender of the City’s interests in the cabinet. It is on the basis of the same class strategy that he has defended austerity and fiscal orthodoxy through years of stagnation.

So where was the new economic dynamism supposed to come from to make up for the loss of trade and investment? For a radical breach with the European Union to be plausible, a radical new growth strategy based on extensive state intervention would have been needed.

The EU seems to have understood this. For all that it has worried about “unfair competition” from UK tax cuts, it is also concerned about the “distortive effects of subsidies on investment, trade and competition.” Thus, the steel cage of special sanctions being devised for the United Kingdom in any future trade deal is intended to uphold “state aid” rules as much as anything else. One of the reasons why pro-EU Tories are so incandescently angry with Brexiteers is that they risk unintentionally creating opportunities for a future Corbyn government.

Secular Decline

This brings us back to the Tory crisis. To say that today’s crisis is the worst such since 1945 is both an overstatement and an understatement. The crisis has been long brewing. It reflects the secular decline of Conservatism in Britain, and a growing class divide between the elements of its coalition.

On the one hand, traditionalist authoritarianism is declining. On the other hand, the organized middle-class base no longer accepts the centrist agenda of the business-based Tory establishment. The result was a splintering of the right-wing vote over the last quarter of a century, culminating in the very forces which put Brexit on the agenda. May, to reunify the rightwing vote, had to tilt heavily toward “hard Brexit.” Thanks to the Corbyn surge in the 2017 general election, even this was not enough.

Had May stuck to her guns, she would have risked not only alienating her party’s class allies, but inflicting a much worse economic crisis than the ERM crisis in 1992. Even the relatively mild projections of the National Institute of Economic and Social Research forecast GDP loss of about 1.2 percent a year. The ERM crisis damaged the Tories electorally for the next twenty years. For the Tories to plunge an already stagnant economy into further misery would have been a death-knell.

May’s problem, however, is that having ultimately cleaved to what the Tory establishment sees as the lesser-evil, she still has no answers. And neither does Philip Hammond.

Answers to what? To the deep, structural crisis of capitalism in the United Kingdom. One doesn’t expect Tories to care about massive social inequality or wage stagnation, except as a potential law and order problem. But the economic model inherited from the Thatcher era is one characterized by a slump in productivity, dire rates of investment, underdeveloped infrastructure and transit, regional cycles of decline, and a housing market busting at the seams.

These are problems for the Conservatives. They are, apart from being impediments to British capitalist competitiveness, among the problems contributing to the fracturing of their electoral coalition. They are the problems to which the Right’s Brexit ideology is a pseudo-answer. And it is in the form of this Brexit dispute that these problems are once more prying apart the Tories’ fragile coalition.