Prof John Weeks, with whom I have been cooperating on the Progressive Economy Forum, has published an article on Brexit on Brave New Europe.
All of it is worth reading. His first two themes are that Remainers got it wrong to suggest the major gains from being in are economic: he suggests they are political.
Then he suggests that the negotiation we are seeing is a charade between Barnier, who wants to be President of Europe, and various Tory leadership contenders.
And third, he suggests that behind the scenes there is another quiet negotiation going on that aligns the interests of capital so that we will Remain. His suggestion is that the power of German manufacturing and the City of London will require it in the end. This is what he has to say on the issue:
While the faux negotiators provide entertainment for the many, an agreement unfolds for the few out of the public eye. Two goals guide the behind the scenes negotiations. First, German manufacturing enjoys a massive trade surplus with Britain and aims to keep it (about £130 billion). Second, British banking capital, “the City”, seeks to maintain its status as Europe's largest financial and money laundering centre.
As even casual observers know, no important EU policy achieves agreement without support of the German government, and most important ambitions of the German government become EU policy. Analogously, under the present UK government no Brexit arrangement is likely to be agreed or not agreed without the approval of the City. An agreement, nominally between the British government and the European Commission, will be reached incorporating those two goals. This will occur perhaps by the end of this calendar year but certainly before the Article 50 deadline of 29 March 2019.
While we mere mortals fret over the Barnier/Davis cave shadows, the Brexit deal gathers pace out of sight, carried on by the eponymously anonymous bureaucrats in London, Brussels and Berlin. This deal will have little to do with the illusory “soft” and “hard” clichés and much to do with the financial and industrial interests that manipulate European politics.
Is he right? Can it really be the case that the political process is so captured that a charade can be presented to the public whilst behind-the-scenes an entirely separate negotiation takes place? I am not entirely convinced. Equally, I think it's an interesting argument that is worth watching precisely because if true then we all might as well pack up and go home and I should spend my time doing something else.
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To quote Prof. Weeks: “Remainers got it wrong to suggest the major gains from being in are economic: he suggests they are political.”
I’d say the referendum result shows this to be untrue. If the major gains were political they wouldn’t currently be on the verge of tearing both main UK political parties apart. I’m not sure membership of the EU has actually benefitted any of the parties across Europe totally committed to membership (but have helped those opposed).
I know what he means is that EU membership allows a lot of manoeuvring out of sight of the public but long-term I’d argue that won’t be a positive. The economic gains are easy to question but it’s hard to make a convincing argument that any member state would’ve been doing better economically if they had not joined. Very few failings can be attributed solely to the EU, the ordoliberal policies may be biting now but could easily be changed to set the EU and eurzone in particular free.
Aren’t you forgetting one MAJOR element..?
Apart from minor skirmishes (in comparison with WW1&2) Europe has been at peace for quite a goodly number of years now…!
I think some have been bigger than minor skirmishes
But we should also forget that so far no one has regressed to fascism either
But I say, so far
Think you may have omitted a negative in your response….?
What would such an outcome entail? What does it look like? A FTA Canada +++++ so we can have our cake and consume it. This suggestion confuses me more.
It’s an odd piece which I do not agree with. Weeks writes:
“As even casual observers know, no important EU policy achieves agreement without support of the German government, and most important ambitions of the German government become EU policy.”
So how then, does Weeks believe he can sell the EU to UK citizens as a positive, politically?
The EU works as an economic cooperation but it is unlikely that it can ever work politically. It is getting that balance right which is the key to its survival and Germany needs to recognise that as much as the UK.
I agree
I have always argued for the economics overall
I am confused: I wanted others to confirm my confusion was justified
It wasn’t economics that created Europe; it was history – the history of politics.
Perhaps Professor Weeks wish was father to the thought; I mean the wish to believe that somebody, somewhere can ‘manage’ this, and somehow this is ‘controllable’. Neither is true. “Control” is almost always an illusion; the aspiration of everyone in ‘power’ is at least to appear to be in control, but invariably this is in order to win or keep some advantage that is forever fragile.
I like John
I wanted to test if others share my doubts
It seems they do
“… the wish to believe that somebody, somewhere can ‘manage’ this, and somehow this is ‘controllable’”. My wish entirely – if only.
But now I’ve read Howard’s comment: “His main argument is that German manufacturing and British financial services interests have too much to lose from Brexit and they will ensure that we stay in.” I thought the implication was that a ‘good’ Brexit would be achieved. Brexit does have some benefits for a socialist government (see http://labour.org.uk/wp-content/uploads/2017/10/Alternative-Models-of-Ownership.pdf#page=1&zoom=auto,-274,848) but I can’t see how a good Brexit can be achieved.
Does he provide evidence of these behind-the-scene negotiations taking place? Does he have sources?
If so, then indeed let’s just all pack up being active citizens as well.
I’ll just go back to my Chomsky’s ‘who rules the world’,to try and make sense of it all…and despair, while hoping youngsters will start their revolution.
See? I just can’t not hope. It’s genetic.
Richard, it would appear you were making a positive difference some years ago or else you wouldn’t have been invited on to Sky to be ridiculed, as opposed to argued with of course, which neither Bolton nor Hodges could have managed, IMO. If all that effort on their part was theatre then who was the audience? Possibly you might not be making the difference you’d like to, but when people go out of their way to ridicule you, it’s a sure sign you’re having an effect.
I know….
I’ve got used to it
In a bizarre way….
I’m not sure what he means by EU membership’s benefits being political. That is unless he’s viewing the whole situation from the perspective of the capitalist elites in each EU nation.
Thomas Fazi and Bill Mitchell have made the case that the EU and Eurozone have bought elites political space between themselves and their electorates. We’ve seen it in Spain, Greece and now Italy: the electorate vote for an end to austerity and their elites ignore them and blame “the markets” for their woes and stir up fear with the help of the ECB, EC and IMF. Soon enough the democratic outcome of elections is overturned and a subdued populace sit there and suck up whatever shit is fed them by their masters.
That’s a political gain for the elites for sure. Without the EU the southern states’ elites would have been out on their ears long ago. Furthermore the northern exporting elites would have lost some of their tame export markets and hence their wealth and power would have declined somewhat.
Now if the UK had a better informed electorate and a stronger government we’d be able to exploit the greed of the exporting elites in northern Europe to get a good trade deal for all 65 million of us. Instead elements of our own elite will negotiate a deal that’s good for them alone while we’re all distracted by the BS in the news.
Blow the EU, a messy and corrupt lot. Restore the Hanseatic League. As a Norfolk man you might be very much in favour of that.
I suggest it too had its faults…..
If you see it in terms of baronial turf wars to keep control over the serfs to maximise extraction/predation then Professor Weeks is right. Why else would the ECB slow down its purchase of Italian government bonds for example to warn off the “populist” political parties in Italy from exiting the Euro?
https://real-economics.blogspot.com/2015/05/palast-on-robert-mundell-and-euro.html
http://bilbo.economicoutlook.net/blog/?p=39454#more-39454
http://neweconomicperspectives.org/2018/05/the-eu-commissions-in-house-bigot-invites-financiers-to-extort-italian-voters.html#more-11259
I think John is great and he could be right, but I don’t think he makes the case conclusively here. His main argument is that German manufacturing and British financial services interests have too much to lose from Brexit and they will ensure that we stay in. I’m not sure about that. I doubt that Brexit will have anything more than a minor impact on Germany’s trade surplus with Britain (this depends to an extent on the sterling-euro exchange rate, but one could argue that the current exchange rate already reflects market expectations of Brexit in March 2019). On the financial services, there are two counter-arguments: firstly, the other major European financial centres (e.g. Frankfurt, Paris, Luxembourg, Dublin etc) have an interest in the UK leaving the EU and London losing a lot of financial services business as they stand to pick up that business. Secondly, many of the key players in financial services are multinational companies who are quite capable of shifting their operations to other EU capitals if the London market “thins out” as a result of Brexit.
I tend to agree
I think John is creating reasons to hope that don’t (and I would rather did not) exist
That feels right to me. Companies reluctantly but quietly getting on with their relocation plans. The only alternative I can think of is that both Business and the EC are despairing of the utter incompetence and raving ideology of Mays government and are seeing if there is a way to somehow bypass them.
But very unlikely…
I fear that the City have got enough money to have offices in Luxembourg, Frankfurt and Paris and still operate under whatever regime in the UK.
For BMW or VW this maybe a little more difficult. But if city and motor trade objectives are not alligned then surely the D exporters have enough money to create financial stuctures to avoid many of the problems?
I suggest: call KPMG!
That, I fear, may be our problem.
Hi Richard. I’m not an economist or finance professional but have been following you for years because I resonate with your sense of service and willingness to operate out of mainstream.
What struck me in this piece were your words at the end: “ Equally, I think it’s an interesting argument that is worth watching precisely because if true then we all might as well pack up and go home and I should spend my time doing something else.”
Maybe the perspective that you’ve now been exposed to is part of an evolving dynamic you will now take into account. Many of us in other fields than economics are hitting up against things we hadn’t known. It requires us to rethink, reposition, and most importantly, include.
My question to you is one I ask myself in my work all the time: If you were to include this new possibility, how might it change what you do?
The world needs every authentic and service oriented leader in their field in these strange and challenging times. You are one of them. I would miss you if you packed up and went home.
Sarah-Jane
I am human: there are moments when I feel lack packing up
That happens on tax
On politics
And when straightforwardly wrong things are done – like the Scottish Growth Commission suggesting Scotland use sterling
WIll I actually pack up? No. Experience has taught me I am in a long game, where (for better or worse) my role is alrgely as a fermenter and communicator of ideas that are intended to precipitate change. At 60 I feel as though I have the chance to see a lot more change as yet, and with luck leave a little momentum for some more when I go.
There have always been set backs since I really began doing this, and so far I have never got quite waht I want. I may never do so. But what the heck? I was not put on this earth to leave it as I found it. So I will react to all changes and fund the new path I think can best effect tha change for the well being of most people, rather than promote the interests of a few.
I have no real idea why, quite young, I was persuaded that was my political philosophy but I have long thought being a twin made a difference. All children know deep down they are destined to leave their parents. But I always had a partner, and still enjoy the fact. It meant I had always had someone else to look out for. And someone who looked out for me.
Well, sadly I think the scenario that John Weeks sketches makes a great deal of sense.
Steve Maggs argues that no parties seems to be gaining anything much, but John says nothing about party politics. He just says politics.
Party politics both sides of the Atlantic has become a sham. Blair and Brown’s ‘Tory Lite’ regime spelled that out loud and clear to all but the tribally obsessed purblind. We have a two party system which feigns democratic accountability by taking ‘buggins turn’. The controlling influences are behind the scenes. We call it ‘The Establishment’ and In the US they call it the ‘Deep State’. It’s amorphous, but none the less real for that.
Since the power behind the throne rules the roost irrespective of which hue of government we ‘elect’ the difference has been purely cosmetic.
The political division is very firmly along the lines of the 1% keeping the 10% in clover in order to dominate the multitude. Globalisation has been political aswell as economic, possibly more so political; the entrenching of political power.
Marie Thomas threatens to return to reading her Chomsky. We could all do worse.
When we see a mess developing there are cries of ‘conspiracy theorists!’.
The conspirators claim ‘cock-up’. And the gullible buy into that because they can’t imagine being able to do it themselves, nor can they quite grasp the ruthlessness of the powerful. It’s actually quite an easy process. When the move is in the favoured direction you click the ratchet.
It’s like training a dog. It does things right randomly , but if you praise the behaviour you want you end up with a ‘good dog’.
It doesn’t mean you have to give up in despair, Richard. It means you have to play the same game and lock in advantage when it presents. In your case because you’re a smart arse, you are actually opening some of the cracks others can get wedges into.
Old ‘Milton’ Keynes made some crack about markets staying irrational longer than investors could stay solvent.
Politics is similar. The human tendency to resist change means that, like the frog, we will not get out of the bucket until the water gets seriously too hot.
You know as well as I do that the neoliberal economic orthodoxy model is entering endgame stage. It is inherently unsustainable and will collapse. But the bugger will stay teetering long after we think it should have fallen over.
It will require a bloody good push
I really struggle to see how they would sell this to the Great British public.
Leavers will be mad as hell they are not getting their devoutly-to-be-wished-for Brexit.
Remainers will be mad as hell at being put through all this trauma all for nothing.
Are the tabloids and the BBC in on this? How will they manage the volte face? They are still furiously peddling the meme that the EU is about to implode.
German industry, I imagine, is much more concerned about Trump’s doings, and as for the thinning out of The City, from what I have picked up from various places, that has already begun, just a trickle, but a steady one. Once gone, I doubt very much it will ever return.
Whatever hap[ens you are right – people are going to be as mad as hell
As someone once said – you ain’t seen nothing yet
(Dammit, I now have Bachman Turner Overdrive running round my head)
Richard, your wisdom, inspiration and dogged persistence is an example for future generations. It’s always worth reminding oneself of Margaret Mead’s now famous quote: “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”
I know some people like that
I’ve had the good fortune to join with some of them
It’s been fun
But I promise you, two teenage sons keep me very firmly grounded
I think the Weeks hypothesis rests on two fairly dubious assumptions. First, “Nobody could be that stupid”, there must be something “rational” going on somewhere. Maybe so, but I don’t think it is necessarily true. Second, the idea that power rests with the elite, not with the really stupid. Yes the elite can manipulate successfully, but it is imperfect control. Ultimate power rests with the idiots. I suspect the Brexit charade is the reality.
This “Another quiet negotiation” is twaddle.
The EU runs on process: rules and protocols defining how everything gets done.
It’s the only way that the different power centres of the Union – the Commission, the Parliament, the Council of Ministers and the individual member states – can interact and cooperate.
Any deviation, or hidden protocol, would result in uproar: and, like any policy initiative cooked up between Paris and Berlin, it cannot simply be ‘railroaded’ through and imposed on the Union: it has to go through the process, and each of those power centres gets a say.
They get a collective veto, even if its harder than it used to be for an individual member to exercise that; and the whole process runs on consensus-building.
The EU was designed that way.
Of necessity, it is bureaucratic: its outputs are regulations that must work across 27 different legal systems, maintain conformance and compatibility with the treaties and trade agreements with external parties, and avoid contradictions and conflicts with the existing body of regulation.
The process today, for Brexit, is that the Comission has provided a negotiation team, headed by Barnier, to negotiate a set of rules defining Britain’s future relationship with the EU.
The negotiators’ remit was defined by the Council and its output will require approval by the Council, the EU Parliament, and the member states.
At each stage of the Brexit negotiations, Barnier has consulted with and obtained approval from the key players of the EU process.
This is why M. Barnier spends so much time with Guy Verhoefstadt, and visiting the capitals of Europe, when he already has a full-time job heading the negotiations: the *output* of the negotiations, like any other regulation or policy, has to be approved by each of the power centres of the EU, before it comes into force.
There’s no way around that: there’s no secret government, because it or they would still need to get their ‘output’ past the same power centres, and into a set of usable regulations that the EU can actually put into practice.
There *are* back-channels. There are phone calls between heads of state; there are informal agreements and alliances within – and between – the powers of the EU.
But all of these exist to influence The Process. They are not an alternative process and they do not have the machinery to generate workable regulations, nor the power to railroad the power cenres of the EU: they are, quite simply, just another part of the process.
No-one’s going to pop up out of the Alice in Wonderland rabbit-hole imagined by Prof John Weeks, and tell the Council, the Parliament, the member states, and the UK, that the White Rabbit and the Red Queen have had a had a better way of doing it all along, and we’re all going to do as they say without going throughthe EU’s formal processes.
The only thing that the White Rabbit and the Red Queen can do, if they exist at all, is to throw a colossal spanner in the works: there may well be someone capable of disrupting the consensus, derailing the process required to generate and approve the exit agreement between the EU and the UK.
And the United Kingdom will exit the EU, by the automatic operation of law, at midnight on the 30th of March 2019, Central European Time.
Whether or not there is any agreed continuation of our trading arrangements and international treaties.
And that agreement, with all of its appalling complexity, can only emerge from the visible processes of the EU.
I have to say I think you are right here and John is not
The advantage of that is that I think it may blow away the ‘power elite really rule come what may’ argument
I have never been convinced by it
They would like ti to be true: it is not
That looks right to me. Try reading Ivan Rogers https://policyscotland.gla.ac.uk/blog-sir-ivan-rogers-speech-text-in-full/.