Brexit has become, as numerous commentators have pointed out, a historic crisis of the British state. In determining the future global position of British capitalism, it is comparable to the repeal of the Corn Laws in the 1840s and the two world wars.
But how does it affect global capitalism? Britain still has the sixth biggest economy in the world, and one that is peculiarly internationalised. After the destruction of much basic industry under Margaret Thatcher in the 1980s, the British economy revived as the European base of many transnational corporations and banks.
Some left Remainers argue that international capitalism wants Brexit. This is nonsense. All the major capitalist states opposed Brexit during the referendum campaign. Big banks and corporations operate here precisely to get easy access to the European Union (EU) market.
Even successful British capitalists who voted to Leave aren’t putting their money where their mouth is.
So the best option for international capitalism would be for Britain to stay in the EU. After initially rebuffing big business, Theresa May shifted her position. She has negotiated a withdrawal agreement designed to preserve as many economic links with the EU as possible—international capitalism’s second best.
What about the EU? It is a cartel of national capitalisms that reflects the interests of the most powerful member states, above all Germany and France. Brussels has taken a tough negotiating position over Brexit, for three reasons.
First, the remaining EU-27 states want to make an example of Britain to discourage other attempts at secession.
Secondly, the EU has been extremely successful at binding states seeking access to its huge market to its system of regulation. A former EU trade official told the Financial Times newspaper that association agreements between the EU and neighbouring states “are designed to turn EU regional partners into regulatory satellites”.
May’s exit treaty is closely modelled on the agreement between the EU and Ukraine. This incorporated the latter into the “European regulatory space” at the price of a civil war.
Of course, Britain is a much bigger fish than Ukraine. This leads to a third element in the EU stance, which is inter-imperialist competition among leading European states. France and the Netherlands, for example, are worried that Britain outside the EU will undercut them by offering international investors less regulation and lower taxes.
Hence the very tough provisions in the withdrawal agreement seeking to perpetuate a “level playing field” between Britain and EU member states. The Financial Times noted, “The most significant arrangements relate to state aid. Britain must establish an ‘independent’ authority to police public subsidies. But the UK authority must take ‘utmost account’ of Commission advice on all decisions, and can be overruled by Brussels or the ECJ [European Court of Justice].” This would have the additional advantage of tying the hands of a Labour government.
The consensus among commentators, pro- or anti-Brexit, is that the EU-27 were largely successful in imposing on a divided Tory government with a weak bargaining hand an agreement that subordinates post-Brexit Britain to the EU. But, from the perspective of international capitalism, Brussels may have overplayed its hand.
The deal is so bad that it may well be rejected by the House of Commons. The default result would be Britain leaving the EU on 29 March without an agreement. This is the nightmare option for international capitalism. It would disrupt supply chains connecting British plants to the continent and damage trading partners such as Germany and the Netherlands.
It might further shake already jittery financial markets. The City of London remains the world’s most important international financial centre.
Will the increasing probability of a no-deal Brexit put sufficient internal and external pressure on the EU-27 for them to make further concessions to Britain?
Brussels has bungled most major decisions in the past decade, so I wouldn’t hold my breath. But maybe May and even Jeremy Corbyn are gambling on this possibility.