Brexit: Are We Screwed Either Way?

In a new book, Union Jackboot, Portsmouth University visiting lecturer Matt Alford interviews the Plymouth Institute for Peace Research’s TJ Coles, an oppositional political commentator and author of The Great Brexit Swindle. The following is an extract from the book that examines what Brexit means for the UK’s political elite and for its ordinary working people.

The people voted to leave the EU. What’s next for Britain?

In order to understand Brexit, I think we have to understand the nature of the British economy and what the Brexiteers hope to achieve. Britain or more accurately London is basically ‘the money-laundering capital of the world’. Political economists think they can boost Britain’s GDP by inordinate reliance on the financial services sector, which unlike manufacturing not only doesn’t produce anything tangible – it produces dodgy financial products – its consumers are relatively privileged financial institutions, not ordinary citizens. We’ve long since moved from an agricultural and manufacturing base to an economic services base, hence the exclusion of ‘services’ from the Customs Union Bill. Britain’s Brexiting elites think they can have an economy whose major export is financial services and whose major employment sector is general services.

So Brexit is a battle between two factions of the mega-rich: the status quo neoliberals who support the EU and the ultra-neoliberals who want to make even more money outside Europe. Either way, ordinary people are screwed. If you’re a Brexit supporter, ask yourself if multi-millionaires pushing Brexit, like Jacob Rees-Mogg, have your interests at heart.

I should say first of all that neoliberalism is a propaganda term, but I don’t know what else to call it. It’s just a form of organised plunder. People confuse it with capitalism, which they see as simply maximising profit, which it is. But in order to maximise profit there have to be political conditions to allow that to happen. Neoliberalism sets those conditions. The main one is cutting back on social spending while putting public money into the pockets of big business. Some people call it socialism for the rich and capitalism for the poor. But it’s not ‘capitalism’. At the least you could call it an extreme form of capitalism.

But we certainly don’t have ‘capitalism’ as understood by the founders of the theory, like Adam Smith (1) and David Ricardo. (2) Capitalist corporations, according to this theory, would have to stand on their own two feet. What we have is state intervention in the economy, including subsidies and tariff protections – and the EU is part of this, but so are the politicians pushing to leave the EU. To make things more complicated, there’s no definition of ‘neoliberalism’. It’s a portmanteau of new and liberal, but it’s neither new nor liberal. It has its roots in nineteenth century British imperial economic policy, which caused a split at the time between the Tories and the Liberals, the so-called traditionalists and progressives. In reality, there wasn’t much difference between them. Both factions agreed that Britain should rule the world by force – the Liberal Gladstone with his ‘gunboat diplomacy’ and the Tory Palmerston with his similar ideology, for instance. (3)

After World War II, there was a kind of state capitalism – the Keynesian model. Since the ‘70s the Tories have been working hard to dismantle this. In fact, ex-Prime Minister Edward Heath wrote in his memoirs that he put Britain into the EU’s forerunner, the European Economic Community (EEC), as a way of undermining Labour’s nationalisation projects. That’s because the EEC started out as a kind of international capitalist model. It was Labour PM Harold Wilson who allowed the public to have a say on whether or not to continue membership of EEC. At home, the Tories and New Labour – which were also the Tories in many ways – increasingly deregulated the economy. Manufacturing shrunk by more than half, contributing to record unemployment particularly in the north and in the Midlands, which were the two main Brexit-voting regions. The public had to pick up the tab for the subsequent financial crises. Europe resisted this model somewhat until 1992 with the Treaty of Maastricht, which created the Eurozone and forced member states to meet economic targets.

It’s important to note that a certain faction of the Tory government begrudgingly accepted the political and economic reality of Britain’s membership of the EU but always harboured a desire to leave. Well, now they and their ideological predecessors are getting their way it would appear. In a nutshell, the EU gradually became more like the City of London – a deregulated financial economy that imposed crippling austerity on working people and relied on a large multicultural labour force to keep wages down. But Britain never really joined the EU. It didn’t adopt the euro because it wanted sovereignty over the pound. It refused to join the Schengen Area of free movement because immigration is a big issue among the electorate. It has record number of opt-outs from EU directives on everything from policing to immigration.

On specifics like neoliberal EU legislation to privatise postal services, the government cited EU directives as reason for privatisation. But that’s a con. The massive privatisation bonanzas occurred under Thatcher, before we signed Maastricht. There are plenty of EU directives that the UK has refused to implement. So our successive governments have also picked and chosen which directives they want to follow. Britain really has its cake and eats it too when it comes to the EU. But the public don’t get to hear about this because it’s not a topic of discussion on the liberal BBC. In the right-wing print media – the Daily Mail, the Express, the Telegraph and so on – the editorial policy on the EU is in line with the anti-EU faction of the Tory Party i.e. that Britain spends too much on Europe, is flooded with immigrants, and so on.

One of the serious consequences of four decades of neoliberalism is the growth of the financial sector, which by now accounts for 6.5% of GDP but is the biggest export economy with a £70 billion surplus. It’s also narrowly concentrated, meaning that just a few hundred corporations have a significant share of GDP. It’s a revolving door system, politically speaking. Theresa May came out of the finance world. More than 50% of hedge funds have donated to the Tories. After the financial crisis in 2008, the EU imposed a couple of directives – MiFID and MiFIDI II – which sought to constrain the actions of the financial services sector. The sector, which is mainly based in London – London being the least regulated European capital – balked at this and some of them signalled their intention to leave the EU. Given that the financial sector is one of the the main funders of the Tory party, the Tories have bowed to the bankers and hedge fund managers and initiated Brexit.

The Tories were moving away from Europe anyway. They began a series of studies into the feasibility of remaining in Europe and concluded that, while it was better to stay, they should ‘reform’ the EU, meaning further deregulation. The Tories’ 2015 election manifesto talks about ‘turbo-charging free-trade’. This coincided with the wishes of the hard-line, anti-EU faction, which consists of Nigel Lawson, Jacob Rees-Mogg, Boris Johnson and people like that. These are the political ultra-neoliberals and elements of the financial sector are the business ultra-neoliberals. We can call them the Lawson faction. Lawson had an article in the Financial Times saying that Brexit will enable us to ‘finish Thatcher’s revolution’. Is that what the Brexit-voting working-class people of Britain want, more Thatcherism?

But what about the status quo neoliberals? The corporations that broadly adhere to this ideology are represented by the Confederation of British Industry which enjoys a large, low-tariff market with the EU. Their political representatives are people like Michael Heseltine who support the EU politically. Call them the Heseltine faction. There’s a tug of war between the Heseltine and Lawson factions which has nearly split the Tory party in half. Credit to them for being so bloody-minded and keeping it together for so long.

But one of the biggest Brexit tragedies has been Jeremy Corbyn’s failure to capitalise on the mess. Corbyn is from a generation that saw – quite rightly – the EU’s forerunner and thus the EU of today as an engine to destroy nationalisation. I don’t think people of that generation on the left understand how far to the right the whole political spectrum has shifted. They have the romantic delusion that if we could only get out of the EU, we could invest in domestic manufacturing and industry. That’s not what neoliberalism is about. Before you can talk about tackling domestic manufacturing, you have to get the neoliberals out of your political party, be it Tory or Labour.
The Tories are full of them. The Tory party is nothing but neoliberals. This is why ex-Labour voters have migrated to UKIP.

These people are also under the delusion that UKIP represents working people. It’s former leader and main ideologue, Nigel Farage, is not only from the financial sector but, when he was leader, he openly talked about ‘free trade’ and ‘free markets’. Plus he’s buddies with Donald Trump who wants to do a ‘trade deal’ with the UK. This is exactly the same kind of neoliberalism we’re getting from the EU – more migration, lower working standards, poor wages, and so on – but on steroids. Working-class UKIP voters don’t seem to get that. Corbyn has failed to win these people back to Labour by failing to make an explicit point about the nature of the global economy.


(1) Economist J.K. Galbraith writes about the misuse of Adam Smith’s theories on what became capitalism by what Galbraith calls ‘free market’ ideologues. See his 1998 (Fortieth Anniversary Edition) The Affluent Society Boston: Mariner pp. 21-22, 26.

(2) Victor D. Lippit writes that ‘Ricardo believed that the competition over the economic surplus’ supposedly resulting from competition – competition being a facet of classical capitalism, ‘would be carried out between the landowners and the capitalists’ (2005) Capitalism London: Routledge, p. 108.

(3) E. D. Steele writes: ‘If there was so little to choose between Palmerston and Gladstone in their understanding of how free trade and security were related, Cobden’s doctrine of non-intervention definitely took second place to practical politics.’ (1991) Palmerstone and Liberalism, 1855-1865 Cambridge: Cambridge University Press, p. 201. Historian Dominic Green writes: ‘Palmerston believed in Free Trade and gunboat diplomacy, not territorial conquest’ (2008) Armies of God: Islam and Empire on the Nile, 1869-1899: The First Jihad of the Modern Era London: Arrow Books, p. 11.

Image used under a Creative Commons CC0 1.0 Universal Public Domain Dedication.