Saturday, 2 July 2016

Brexit - where next for Mankind?

It was clear that Britain's EU referendum marked a tipping point in world history, as will November's presidential election in the US.

Future generations will learn that from 2016 onwards, Things Changed. This year will go down in history as a year like 1914, 1939, 1945 or 1989.

1989 was the year that Poland held the (semi) free elections that ushered in the end of communism, setting in train events that culminated in the fall of the Berlin Wall. 1989 was also the year in which the Washington Consensus was presented - ten tenets of liberal economic policy intended to boost economic growth and lift billions out of poverty. The idea of a 'consensus' is in itself interesting. Beforehand, 'if you put all the world's economists end to end, they wouldn't reach a conclusion'. Now, they could; and all this as Francis Fukuyama famously published his essay The End of History?. 

Communism has fallen, economists have worked out how to get economies to work - that's that. Work done, Mankind!

The world we have known since 1989 has seen social and economic liberalism as the two dominant ideologies. To quote radical centrist thinker Professor Alan Wolfe, "The right won the economic war, the left won the cultural war." Free-market economics became the norm, while women's and minority rights, and political correctness permeated all levels of society.

What we saw in Britain last Thursday week was a massive correction to the above. The pro-Brexit vote was a reaction against economic and social liberalism, made most manifest in migration. "We need to be nice to people less fortunate than ourselves while giving employers unlimited access to cheap labour."

Analysis of those who voted 'Leave' showed that there was a greater correlation between having an authoritarian disposition (agreeing that 'children should obey' and 'capital punishment should be brought back' for example) than being rich or poor. Regions that voted 'Leave' included those that experienced massive influxes of Central and Eastern European migrants - and those that saw hardly any. What they had in common was summed up in the slogan 'Let's Take Back Control' - roll back economic and social liberalism. The 'control' that they believed had been taken away from the English people by do-gooding socialist councillors, grasping global corporations, self-interested elites living in the London 'bubble' and of course Brussels.

Brexit is but the same phenomenon happening in the UK as happened with the victory of PiS in last year's presidential and parliamentary elections in Poland; a rejection of social and economic liberalism.

This is a point made by Jacek Koba in a comment on my post of 22 June 2016. He mentioned a debate he was having with his students about European values being at risk: "In my book: liberalism, separation of church and state, democracy, freedom of expression, tolerance." Yet many of his students offered different values to those that he had cited: "Christianity, patriotism, tradition, loyalty, purity".

I believe that social liberalism is something for each voter to decide for themselves on the basis of their own individual conscience. But economic liberalism... Is there any alternative to the free market? Examples from around the world suggest there isn't. Look at Venezuela, Zimbabwe, North Korea. From populism to autarky, steering an economy from the president's desk is doomed to failure, hyperinflation, chronic shortages of goods, famine.

Is there an alternative to free-market liberal economics?

Yes. Free-market liberal economics subject to BETTER regulation. But who should regulate? Where is it best to draw up those regulations? Wherever it makes most sense to. Some a local level, some nationally, some at the level of the single market (be that Europe or the US). But above all, self-regulation. Corporations, greedy bosses, need to apply the brakes to their own egregious excesses, realising that they do not endear them to society, to their customers, to their suppliers, to their employees. Wisely-guided businesses will sustain, grow more slowly, but will not burn up in a blaze of destroyed value.

The idea of a Single European Market, to which businesses from all EU member states shall have open access, is predicated on that Market being subject to a single set of rules - social standards (such as working conditions), environmental standards (manufacturers of cheap electronics can't make them even cheaper by pouring cadmium into rivers) and consumer protection standards (cooling-off periods).

Now, if the Brexiteers are to have their way, the UK's (England's?) departure from the EU would be total. No common standards, no acceptance of Brussels regulation. So what will happen in the UK? Would the economy carry on being regulated? Working time, holiday pay, zero-hours contracts, bankers' bonuses, rent caps? Or would - as some Brexiteers want - the UK become a totally free-market neo-liberal haven, a Panama, where capital can screw down the worker without recourse to Brussels?

Without decent regulation (and indeed self-regulation), employees, consumers, citizens will get trampled on, inequality will rise, and unchecked inequality contains within it the seeds of backlash. Which is never pretty - as the Bourbons and the Romanovs discovered.

I fear that post-Brexit, neither the UK nor the rest of the EU will suddenly get their act together and become more effective, more innovative or more competitive.

Who then, shall be the driver of future economic growth?

The United States of America - whether or not it elects Trump. It will be people with a similar mindset to Elon Musk, Jeff Bezos, Larry Page and the late Steve Jobs who will lift the global economy into a new paradigm of growth, by inventing stuff that's unimaginable today and scaling it up. These miracles will not happen in sclerotic Europe or short-termist England. The Far East isn't yet innovative enough - and it's held back by collectivism.

The can-do, think-big mindset and sheer entrepreneurialism of America will sooner or later devise the next wave of technologically driven improvements to human lives that all consumers will need to have, and will be prepared to pay money to have. It may be in the field of healthcare, it may be further advances in IT. It may be, as happened in the post-war years, driven by technology emerging from the military, which made massive advances thanks to WW2 and the Cold War.

That is something I do not wish for.

This time last year:
Three hundred kilometres in a suburban train

This time three years ago:
Serious cycling

This time five years ago:
Outlets for creativity

This time seven years ago:
The day I stopped commuting to work by car

This time eight years ago:
Look up at the Towers of London

This time nine years ago:
Wild deer in the Las Kabacki forest

1 comment:

Anonymous said...

You've read Fukuyama's intelligent critique. Please stop quoting it out of context, years/decades later.

Pan Heniek i Pan Zieniek, czołem.