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British workers revolt against EU austerity, vote for Brexit

Establishment media ignore real story
By David Hoskins |
June 25, 2016
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Washington, D.C. – In a bold and historic move, British voters decided to leave the European Union (EU) on Thursday. In a 52% leave to 48% remain vote, the British people have struck a blow against the EU’s regime of austerity. June 23, the date of the British vote to exit the European Union (EU), will go down as the day that British workers turned their back on the anti-democratic and anti-worker EU.

The media have mostly trumped up the negative forces within the camp of leave voters, while ignoring the legitimate grievances of average British workers. The media is aware, however, of the historic nature of this vote. CNN called it “the single most momentous day in British politics since World War II.” The momentous nature of the vote is only reinforced by the fact that at its core the decision to leave represents working class people in a powerful (former) EU state successfully standing up against the imperialist machinations of predatory and foreign finance capital.

The decision to leave the EU is not without its contradictions. Unfortunately, not a few supporters of the decision to exit the EU were motivated by xenophobic and anti-immigrant racism. These forces are what the media chooses to focus on.

Resistance to austerity, bolstered by inter-imperialist rivalry, drove the British vote to exit the EU. These same trends may well be what undoes the EU if the British vote compels a wave of intensified worker resistance in other EU countries.

Economic stagnation and austerity drive British working class to resist EU rule

The EU’s program of austerity has driven British workers to exit the EU. European Union-administered austerity is more than just a set of temporary measures in response to the 2007-08 global financial crisis. Austerity is the long-term budget policy of the EU and is mandated on member states by the terms of the Maastricht Treaty. This permanent austerity policy exacerbated the 2007-08 global financial crisis, but is not purely a response to it.

According to The European Institute, a Washington DC-based policy group focused on transatlantic affairs, Maastricht criteria prohibit EU member-state budget deficits in excess of 3% of their Gross Domestic Product (GDP) or a national debt that exceeds 60% of the GDP. Member states are allowed to exceed these limits only in exceptional circumstances and for limited periods of time.

The Maastricht Treaty outlines three successive stages to economic and monetary union within the EU. The first two stages require the liberalization of the movement of capital and the convergence of member states’ economic policies. Britain was actually exempt from the third stage, which requires participation in a single currency, and the country has always used the pound sterling as its currency, not the euro, as a result.

The pressure to stay within the debt and deficit limits of the Maastricht Treaty created extreme budgetary pressure to cut services. This is true even in Britain, a country that was actually exempt from the fines and sanctions that usually accompany a member state’s violation of the debt and deficit ceiling. According to a 2015 Telegraph article, Britain had violated the EU’s fiscal rules as early as 2008 but was given time to reduce its spending as a result of the global financial crisis. In 2014, Britain’s budget deficit still exceeded 5% of its GDP, and the EU extended its surveillance of that country’s budget.

According to data from the New York Times and The European Institute, the British government had unveiled the country’s most severe public spending cuts in 60 years in 2010. Average government department costs were reduced by 19%, long-term unemployment benefits were sharply curtailed, and a decision was made to gradually raise the retirement age. In the process 490,000 public jobs were slated for elimination. All of this was part of a $130 billion (£83 billion) budget cut aimed at reducing Britain’s budget deficit, which then rested at 11.5% of GDP, down to 1% of GDP over the next five years.

This same scenario has played out to varying degrees in countries all across Europe. Spain reduced wages for public employees by 5%, eliminated 13,000 public jobs, suspended automatic inflation adjustments for pensions, and cut new child subsidies and regional funding in an attempt to reduce its budget from 11.2% of GDP in 2009 to 6% in 2011. When Lithuania implemented austerity measures to reduce its budget deficit, the measures included a two-year freeze in public sector salaries, public sector pension cuts of 11%, increased taxes on medicines and a decrease in parental leave benefits.

No country has suffered more under the EU’s austerity policies than Greece, where attempts to reduce the budget deficit cut public sector wages by more than 25%, cut workers’ bonuses, eliminated temporary workers’ jobs and significantly raised the retirement age. The International Business Times recently reported that the average monthly pension in Greece declined 38%, from $1484 a month in 2009 to $915 a month in 2015. The Greek crisis is exacerbated by the actions of German finance capital and the International Monetary Fund, which have been ruthless in imposing ever-increasing austerity on the Greek government as it struggles to pay back loans to private German, French and Greek banks.

This is just a snapshot of the austerity British workers see in their own country and in most countries across the EU. This is the austerity that British workers are fighting against as they free themselves from the EU’s punitive fiscal policies. The austerity and economic weakness of the EU drove the successful push by British workers to exit the EU and looks poised to drive resistance to the EU’s regime by workers in other countries in the future.

Inter-imperialist rivalry undermines European Union stability

The decision to leave the EU is not without its contradictions. While worker resistance to austerity is one factor in the decision to leave, the interests of British imperialism is another. In 1915, the Marxist theoretician, Russian revolutionary and future leader of the Soviet Union Vladimir Lenin penned an article titled “On the Slogan for a United States of Europe.” In it, he discussed the important question of the economic content and significance of a trans-European project on this level. Lenin wrote, “From the standpoint of the economic conditions of imperialism, i.e., the export of capital arid the division of the world by “advanced” and “civilized” colonial powers—a Unites States of Europe, under capitalism, is either impossible or reactionary.”

Lenin speculated that the inter-imperialist rivalries of the great powers of Europe at that time - Britain, France, Russia and Germany - would make progressive integration impossible and any sort of integration challenging. At the same time, he acknowledged that a United States of Europe was possible as a temporary agreement between European capitalists for the purposes of jointly suppressing socialist movements in Europe and protecting their imperialist interests against the United States and Japan.

The content of the European Union and the multiple forms of resistance to it reinforce Lenin’s view on the subject some 100 years after it was first articulated. Britain’s historic decision to exit from the EU, and the underlying causes driving it, demonstrate Lenin’s thesis that a United State of Europe, even in an undeveloped embryonic form known as the European Union, is certainly reactionary and may well be impossible as a sustainable project. Three of the four great imperialist powers mentioned by Lenin are major players in the EU. Only Russia is not in the EU.

From the perspective of many British capitalists, the interests of British imperialism rest more with the U.S. than with France and Germany, which dominate the EU in many ways. Britain and the U.S. are linked together through a “special relationship” rooted in a strong transatlantic military alliance and the substantial interpenetration of capital and reinforced by a long and storied shared political history. The Financial Times estimates in 2016 that U.S. companies are the biggest inward investors in Britain, having invested a total of $558 billion. According to this estimate, 7500 U.S. companies employ 1.2 million people, making the U.S. one of Britain’s biggest employers.

The Organization for International Investment projects that the United Kingdom is the single largest foreign investor in the U.S. with $449 billion in cumulative investments through 2014. This represents 15% of all cumulative foreign direct investment holdings in the U.S. According to figures from the Confederation of British Industry, British companies employed 943,500 U.S. workers. More than one in four jobs at British-supported companies are in manufacturing. Finance and insurance, information, and retail trade are the next largest industries with approximately 7% each of the jobs at British supported companies.

Viewed from this perspective, many British capitalists believe they have more to gain through an alliance with the U.S. to protect their interests against French and German capital than the other way around. The strong military alliance between Britain and the U.S. only reinforces this view. In 2012, U.S. President Barack Obama called the alliance between Britain and the U.S. “one of the greatest alliances the world has ever known,” according to the Guardian. Obama went on to list the ways in which this military alliance has advanced both U.S. and British imperialism through the anti-Soviet Cold War and the wars and interventions in the Korean peninsula and Afghanistan.

Contradictions between British labor and capital drive competing visions of EU exit

Pro-business nationalists and progressive worker forces have competing diagnoses of the problem and visions for a future outside the EU. Typically, the media have chosen to latch onto the reactionary drive to leave the EU in their reporting, not the progressive drive. The truth is complicated as contradictions between British labor and capital expose sharply different visions of an EU exit.

On the one hand, a substantial minority of British capitalists support Britain’s exit from the EU. According to reporting in the Telegraph, British Chambers of Commerce polling show that 37% of business leaders support leaving the EU, up from 30% last year, and 42% of small businesses employing fewer than ten people support the decision to leave the EU. 47% of National Federation of Builders members support exiting the EU. Pro-leave capitalists and their prominent political supporters intentionally stoke the flames of xenophobia in order to gain the support of conservative voters who hew to an anti-immigrant, British nationalist line.

The voices of this section of capitalists and British nationalists, which include the likes of far-right UK Independence Party leader Nigel Farage, have unfortunately dominated the media attention and tend to frame the exit as a Brexit (British Exit) that puts Britain’s national interests above “burdensome” EU economic regulations and liberal internal migration rules. Racism, national chauvinism, and conservative economic ideology motivate this section of the leave camp. These forces may dominate the media coverage, but they have a faulty diagnosis of what ails the European Union and an often-times dangerous vision of the path Britain should take upon leaving.

On the other hand, there are a large number of left voices that support leaving the EU. Left forces that supported the exit from the EU along progressive lines include the Communist Party of Britain, Communist Party of Britain (Marxist-Leninist), Communist Party of Great Britain (Marxist-Leninist), the RMT rail union, Trade Unionists Against the EU, Indian Workers Association (GB), Bangladeshi Workers Council of Britain, and more.

These forces are battling imperialism on two fronts. They oppose the machinations of other European imperialists, namely France and Germany, by leaving the EU even as they battle their own country’s capitalists in Britain, which is also an imperialist country. Progressive British forces have won this most recent battle against monopoly capitalism.

Now that the vote to leave the EU has succeeded, these same progressive forces will likely turn their struggle to clearly frame the debate and drive a campaign that forces British capitalists to rescind anti-worker policies. Instead of attacks on immigration, which may have some rise in the interim if the decision to exit the EU is accompanied with short-term economic disruption, an anti-austerity battle that takes on shortages in housing, declining wages and the deterioration of public services is the key to building a progressive future for a Britain free of the EU.

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