Brexit and the divisions within the British ruling class

The British ruling class is divided over the Brexit issue. That much is clear. Not so obvious, though, is the underlying cause of this split.

Among the jingoistic fringe there is a hankering after the glory days of empire. Reared to believe that the sun was never supposed to set on Britannia, they have difficulties in coming to terms with former colonies, such as China, acquiring global status.

Nevertheless there is more to the internal class feuding than nostalgia for an era that all but the deluded few know will never return. Some, of course, wish to remain in the EU, but a different and more threatening cohort view Brexit as an opportunity to restore Britain to a position of prominence in the US-led imperialist world order.

In time the reality will become clearer, but for now this can be understood as a struggle between contending elements within Britain’s capitalist elite. This phenomenon, however, is not confined to Britain but is something that affects capitalism all round the globe. To a large extent, the conflict has come to a head as a result of the economic crash of 2008, which was essentially a crisis in the financial sector of capital.

The neo-liberal policies advocated by Hayek and Friedman and launched on a global scale during the Regan and Thatcher era removed most of the restrictions forced upon capital in the aftermath of the Great Depression and the Second World War. Free from all restraint, and encouraged by a deliberately cultivated narrative that greed is good, capital sought and found quick and easy profit in the financial services sector.

In the absence of strict state supervision, it was inevitable that rules were bent and prudence abandoned as new and risky financial instruments were created. In time this led to the sub-prime collapse in the United States, precipitating the global financial crash in which Lehman Brothers in America and Northern Rock in Britain fell into bankruptcy.

Of more fundamental significance was the fact that while much of capital focused on the services sector in general and the financial sector in particular, manufacturing was allowed to decline in many advanced industrialised countries. For a time the neo-liberal ideology of “small government” facilitated outsourcing and offshoring to cheaper centres of production.

At first the super-rich welcomed the process. They were not only garnering gigantic profits but were simultaneously witnessing the weakening of locally based organised labour. In time, though, a section of the ruling class in the United States and Britain began to realise that, over time, finance always follows production and resources, whether human or mineral. Moreover, they understood that, ultimately, power is dependent on control of a strong industrial and manufacturing base, with guaranteed access to raw materials.

In the long run, intellectual property rights can be acquired or duplicated, but the skill base necessary for the large-scale production of high-tech equipment requires a large and highly trained work force.

This realisation has caused powerful elements within the American ruling class to advocate and implement the country’s current foreign trade policy. Whether Donald Trump is the mastermind of this strategy or is only a catspaw for others is immaterial, as he uses his office and the power of the state in an attempt to revitalise and restore manufacturing in the United States. The objective may appear to be dictated by populism, but it has the parallel logic of maintaining and reinforcing America’s global economic superiority and capacity, vital elements on which military capacity is built.

Paranoia about the rise of China is therefore about more than anger at it for encouraging unfair trading policies. Their real fear is that China is developing an economy capable of competing with and eventually outperforming the United States and its allies.

It is no coincidence, for example, that Meng Wanzhou, the Chinese woman detained by the Canadian authorities at the behest of the United States, is Huawei’s chief finance officer. Meng’s company is the largest and most powerful high-tech business in China and is fast outpacing all others in the United States and Europe in the telecommunications arena.

Such a situation would pose a direct challenge to America’s expressed determination to remain as the pre-eminent world superpower, with the ability to enforce “full-spectrum dominance.” In a world in which sophisticated technology is now the dominant mode of production, the control of this is considered imperative by imperialism. Losing this contest would be to concede advantage to others; and imperialism never gives ground willingly to a potential rival, even at the risk of military conflict.

In ways there are uncomfortable echoes now with the decades before the First World War, when Germany’s economy began to rival, and in some industries to outgrow, that of Britain.¹

Nor is the threat of war something that is taken lightly or overlooked by the superpowers. A recent article in the Financial Times referred to the risks arising from the emergence of an alternative centre of power as the “Thucydides trap.”² In this article the writer mentions that five years ago the president of China, Xi Jinping, had identified this danger. He used the same historical analogy when urging a visiting delegation to tell the world that everybody had to work to avoid such a catastrophic scenario.

This is the dangerous global backdrop against which several of the leading Brexiteers in Britain are operating. Though the immediate fault line dividing the ruling class is between those benefiting from financial services and the wider manufacturing sector, this is not the whole picture. The dispute is not merely about profit and loss in the short to medium term. There are those who are determined to maintain the existing world order and at the same time to arrest Britain’s declining influence within it.

To do so they are intent on establishing a high-tech manufacturing base, and are willing to have this happen at the expense of the City of London. If Brexit occurs according to their design and under Conservative Party governance, Britain will remain a largely low-wage country but with a diminishing social wage and a constantly receding welfare safety net—in other words, not greatly different from Britain within the EU.

Clearly a left-leaning Corbyn-led government would create a very different set of circumstances and conditions; but powerful forces, both within and without the Labour Party, are working to prevent such an outcome.

Where Ireland may fall in this scenario is difficult to tell. It is important, nevertheless, to attempt to understand the dynamics underlying this situation. What we can say is that there is not a simple binary choice between Tory Britain and the EU. Both are wedded to the enforcement of neo-liberal economic policies, and both are committed to aggressive military expansionism. This will not change whether we have a “hard” or “soft” border within Ireland.

What is needed is a different and humane socialist world order. Our contribution, as a small country, to this sought-after development must be to create a sovereign workers’ republic—a republic free from British, EU and US imperialism and supportive of progressive humanity wherever it struggles for the good of all.

1. See Zoltan Zigedy, “A world in turmoil,” Morning Star, 27 November 2018.

2. This was based on an observation by the Ancient Greek historian Thucydides that the rise of Athens led to conflict with the established power that was Sparta. Gideon Rachman, “Thucydides’ trap,” Financial Times, 19 December 2018.