Andrew Watt has written a passionate critique of my support for Brexit (“Progressive economists should support Remain not Brexit – a response to Steve Keen”), and it highlights a key feature of this peculiar referendum: people who normally find themselves on the same side in most economic and political debates have been divided by this referendum.
Andrew comments that he broadly agrees with my economic analysis on most issues, but vehemently opposes me here. Likewise, good friends like the heterodox economist Geoffrey Hogdgson; Ann Pettifor, who led the successful Jubilee 2000 campaign to cancel the debt of the world’s poorest nations; and Yanis Varoufakis, who knows a thing or two about the EU, all strongly support Remain.
But many other economic colleagues, such as Richard Werner, support Brexit as I do. Richard states his position this way:
The economics is clear: there is no need to be a member of the EU to thrive economically, and exiting does not have to impact UK economic growth at all. The UK can remain in the European Economic Area, as Norway has done, or simply agree on a trade deal, as Switzerland did, and enjoy free trade – the main intention of European agreements in the eyes of the public.
The politics is also clear: the European superstate that has already been formed is not democratic. The so-called ‘European Parliament’, unique among parliaments, cannot propose any legislation at all – laws are all formulated and proposed by the unelected European Commission! As a Russian observer has commented, the European Parliament is a rubber-stamping sham, just like the Soviet parliament during the days of the Soviet Union, while the unelected government is the European Commission – the Politibureau replete with its Commissars. (Richard Werner, “EU Basics – Your Guide to the UK Referendum on EU Membership”)
How can one issue divide people who are in agreement on so many others? Partly it’s because of the politically ugly fellow travellers one finds oneself with: the UKIPs and the Britain Firsts that put forward racist, anti-immigration arguments for Brexit. Better vote Remain than find yourself with such bedfellows—and there’s the concern that winning the Brexit vote might strengthen their hands in domestic politics as well.
These arguments support the Remain case, and I have to agree that if they were the only consequences of a Brexit vote, then I would be voting for Remain too. I was once proud of my home country Australia for have a multi-cultural immigration policy, and for recognizing refugees as such, and welcoming them in large numbers after the end of the Vietnam War and the collapse of Kampuchea. I despise its anti-“asylum seeker” rhetoric now, and abhor the measures it has taken to deter the tiny numbers who attempt to cross the Indian Ocean seeking asylum.
It’s also because any such change involves serious dislocation as a whole range of agreements between the UK and the EU are made null and void. Economic fundamentals would shift as well: as George Soros argued in The Guardian, it could also cause a serious fall in the value of the Pound (though there are possible positive economic consequences as well, as Werner argues here).
But the focus in my support for Brexit has not been on the consequences, social or otherwise, for the UK. It has instead been on the question of what would the UK be Remaining in, if Remain wins? In effect, I’ve posed myself a (Groucho) Marxist question: I’m in a club; do I really want to be here?
There my answer is a resounding no. And that’s not a vote against the club’s motto: I am as much for European unity as any of my
Here Andrew Watt (and Geoffrey Hodgson) call my views “politically naïve”.
@AndrewWattEU @ProfSteveKeen @JoMicheII @J_MoAGoGo @LaszloAndorEU
I too sympathise with Steve Keen's economics. But his politics are naïve.— Geoffrey M Hodgson (@g_m_hodgson) June 22, 2016
Andrew claims that the European Parliament (EP) has “real power”, and though the people don’t directly elect the Finance Ministers who gave Tsipras and Varoufakis such a hard time during the Greek negotiations, they are elected via their own parliamentary systems. “The Council of ministers”, he notes are directly chosen by their own national systems. Andrew argues his case as follows—and he makes statements I’ve put in bold below which I believe undermines his argument:
The EP is a democratic institution with real power…
I find it rather odd to call a finance minister like George Osbourne, whether one appreciates his policies or not, a “political appointee”. It is true that he is not directly elected. But then British finance and all other ministers never have been, and neither have their counterparts in other EU countries. Yet no-one complains that national parliamentary (or presidential) systems are “utterly undemocratic” as a consequence for the simple reason that ministers, however precisely they come to be selected, require the support of a parliamentary majority.
Moreover, the same basic system of appointment on the basis of an underlying electoral mandate applies to the EU Commission, the much-feared “unelected bureaucracy of the EU”. Britain’s Commissioner is appointed by the government of the day on the base of the mandate it has from British voters, as are his colleagues from 27 other countries. The Commission President was the pre-announced lead candidate of the European party (group in the EP) that received the most votes at the European election. Why is this undemocratic? The officials below them that staff the Commission are, of course, appointed, exactly as they are in any national government bureaucracy.
The European Union is a complex system with interlocking elements. It seeks to balance the one-person-one-vote with the one-country-one-vote principle. It is certainly not unimproveable in governance terms (but then neither are national systems). But it needs to be analysed in its entirety and cannot simply be dismissed as utterly undemocratic on the basis of a few (inaccurate) throw-away remarks about individual institutions.
“The EP is a democratic institution with real power”
Real power? Democracy? If so, it’s a peculiar form of both. Andrew links to a document that describes the structure of this power, and it states clearly that all the legislation this “Parliament” debates originates not with its politicians, but with the “unelected bureaucrats” in the European Commission. The Parliament can vote to amend any proposed laws, but it cannot propose them itself:
That may be described as quibbling—surely amending a law is as good as originating it? No, because the ideas that originate in the economic wings of the Commission will be driven by the Neoliberal-Neoclassical beliefs that have shaped the European Union from the outset—concepts like those embodied in the Maastricht Treaty and the Treaty of Lisbon that demonise government budget deficits, and enforce a truly naïve vision of free markets. You can’t amend these concepts, you can simply throw them out.
The EU document says this results in more centrist rather than left or right policies, but the centre they perceive is a Neoliberal fantasy of how economies should operate according to first year undergraduate economics textbooks, rather than a centre described by a realistic understanding of actual capitalist economies.
“It seeks to balance the one-person-one-vote with the one-country-one-vote principle”
Hmmm. Just how did that balance work out in the case of Greece recently? The Greek government voted for a government that wanted to end the austerity policies that had been imposed on them by “The Troika” of the EU, the
The Spanish have copped similar warnings about how any proposals to deviate from the Maastricht Treaty approach to economic management will be treated. Again it’s 100% Troika (though of course now the IMF is sensibly deviating from this consensus, leaving just the EU and the ECB in charge), 0% elected national governments.
The problem for the Greeks in that negotiation was that they could pose no credible threat to the Troika to shift the balance even 1% in their favour. Their economy was too weak to withstand the shock of moving to a different currency, which was the only way they could extricate themselves from austerity policies without the agreement of the Troika.
Yanis hopes to democratise the EU from within by requiring the meetings where real power is wielded—the Finance Ministers meetings and the like—to be televised. It’s an interesting proposal, but I simply don’t believe the EU will ever allow this, and they will use bureaucratic logic to evade the demands. The revolution may well be televised, but the EU Finance Ministers meeting will not.
The consequences of the EU/ECB approach to both economics and politics is I hope too obvious to need much elaboration. Several countries in southern Europe are experiencing outright Depressions, while growth is anaemic in the rest of the EU, and these economic failures are feeding the growth of racist nationalist movements in those countries.
So is this a club I want to belong to? No, and given an opportunity to vote to leave it, that’s what I’ll do.
I also see this as a chance to wield a credible threat to the power of the European Commission (and the real power behind the throne—Wolfgang Schauble) in a way that the Greeks could not. The UK can vote to leave, and while some economic dislocation is possible (though as noted, some heterodox economists like Richard Werner argue this would not be substantial), it is nothing like the chaos Greece would have faced if it tried to leave and had to create a replacement currency for the Euro to do so.
Though I have avoided formal politics all my life, I did have some experience of politics in my student days while successfully campaigning for the reform of economics teaching at the University of Sydney, and it taught me that in bargaining with people opposed to your ideas, you do need to have a credible threat to make them pay attention to your views. The UK is in a position to do that by voting Leave, and it would have far more impact that if it voted Remain. So I’m sticking with my Leave vote.
That said, I expect the Remain case to win, if only because the murder of Jo Cox will ensure that most of the many who won’t decide their vote till polling day will vote Remain because of that murder. I won’t be particularly disappointed by this outcome, but I won’t campaign for it either.
