THE EUROPEAN CRISIS AND THE LEFT

ALAN CAFRUNY

Less than two decades ago the prospects for an ‘ever closer’ European Union (EU)
seemed virtually limitless. Agreement on a Stability and Growth Pact in 1997,
followed by the successful launch of the third stage of the Economic and Monetary
Union (EMU) in 1999, suggested that the establishment of the euro could underwrite
dynamic economic growth and preserve Europe’s distinctive social model while
extending the zone of democracy into central and eastern Europe. Closer political
integration was certain to follow ineluctably, while the new international reserve
currency would lay the basis for a broader European challenge to the American
superpower.
If the decision to adopt EMU was thus a result of many proximate factors
operating in both the geopolitical and economic spheres – not least the attempt to
contain a reunified Germany – it also served to consolidate Europe’s turn to finance-
led growth and neoliberalism. Neoliberal policies that had been introduced in an
Anglo-American context that was more susceptible to the calls for ‘freedom’ from
Margaret Thatcher and Ronald Reagan were justified on the continent in terms of
‘Europeanization’. The onset of the 2009 sovereign debt crisis posed an enormous
challenge for European leaders. As Chancellor Merkel proclaimed in 2011, ‘The euro
is much, much more than a currency. The euro is the guarantee of a united Europe.
If the euro fails, Europe fails.’1 Membership in the EMU had temporarily insulated
chronic debtor countries from currency crises even as it kept their borrowing costs
artificially low. At the same time, of course, it precluded devaluation as a means of
regaining competitiveness in favour of domestic austerity or ‘internal devaluation.’
Household debt in the southern periphery skyrocketed to offset the structural
current account deficit arising from the expanding German trade surplus while
German and other core-nation banks became massively over-exposed. Harsh
austerity plans – effectively socializing the debt and channelling public funds to the
banks – were imposed as the price of emergency injections of capital at punitive
rates. As the crisis spread to the north and east, the EU’s policies in response to the
crisis ironically transformed the region that had once been the heartland of the post-
World War II class compromise into the epicentre of global neoliberalism.
Widespread disillusionment and popular opposition gathered momentum,
culminating in the vote for Brexit in June 2016. The architects of ‘ever closer union’
now warned of an ‘existential’ crisis.

THE CRISIS IS PERMANENT

Since 1945 Europe has passed through two distinctive regulatory projects of
integration. The first such project, arising out of Europe’s post-World War II
economic and geopolitical predicament, sought to prevent another European war –
and consolidate the US-led hegemonic order – through the establishment of modest
forms of economic cooperation. While giving rise to the concept of supranational
integration, this project in fact served to buttress the European nation-states and
promote national economic development and political stability.2 The modest
supranational initiatives corresponded to the broad contours of the ‘embedded
liberal’ social-and Christian-democratic welfare settlements that became
institutionalized within the context of an organic US hegemony.3 The anti-
democratic features of the Union were inherent in the Treaty of Rome, but of
relatively little import when the main levers of economic and social policy remained
with the member states.
A second, neoliberal, project arose out of the crisis of the post-war Bretton
Woods system and was constitutionalized4 through three formative treaties: the
Single European Act of 1987, the EMU of 1993, and the Lisbon Treaty of 2009. The
project was based on the assumption uniting parties of the centre-right and centre-
left that a decade of stagflation and failed attempts at regional monetary
coordination after the collapse of the Bretton Woods system meant there was ‘no
alternative’ to national and regional neoliberalism. The neoliberal ‘relaunching’
greatly reduced national prerogatives without giving rise to the pan-European
democratic polity necessary to lend stability and cohesion to these radical
developments. The exit from the post-war settlement and entry into a monetary
union predicated on ‘competitive austerity’5 was facilitated by the gradual erosion
of working-class power as a result of growing unemployment, financialization, and
the opening up of the former Soviet bloc economies (and later China) with the
resultant abundant pools of cheap and unprotected labour. Already in 1985 the
highly influential European Round Table (ERT), representing the common interests
of Europe’s national capitalist classes, had called for a single currency but rejected
the Keynesian and fiscal stabilizers inherent in previous plans for monetary union.6
The EU responded to the crisis by introducing a set of radical neoliberal policies,
in essence reprising the structural adjustment policies that were imposed by the
International Monetary Fund (IMF) on much of the global south during the global
debt crisis of the 1980s. The rescue packages for Portugal, Ireland, Italy, Greece, and
Spain (the so-called ‘PIIGs’), were directed to protecting French and German banks.7
An authoritarian ‘fiscal compact’ (‘Treaty on Stability, Coordination and Governance
in the Economic and Monetary Union’) in 2012 limited the structural budget deficit
to 0.5 per cent, enforced by fines levied by the European Court of Justice. The
resultant harsh austerity elicited condemnation even by the US Treasury and
International Monetary Fund (IMF). In 2011 – no less than three years into the
global financial crisis – the European Central Bank (ECB) raised interest rates twice
even as Europe experienced deepening stagnation and mass unemployment. ECB
President Mario Draghi’s declaration in July 2012 that he was ‘ready to do whatever
it takes to preserve the euro’ brought the most acute phase of the crisis (for the EU
although not for Greece) to an end. In 2017 the member states of the EU collectively
returned to growth. The recovery has been especially pronounced in the northern
countries of the EU. In 2017 Germany experienced its lowest level of unemployment
(3.5 per cent) since 1980.
Notwithstanding these developments, the eurozone crisis has not ended.
Positive growth indicators need to be set against a long period of stagnation and
even negative growth rates experienced by many member states after the crisis
broke out in 2009. The region’s recovery has been both shallow and uneven, and the
return to modest growth was achieved in the context of a decade-long global boom
that appears to be coming to an end. Since 2008 global debt levels have risen to a
record high of 237 per cent of GDP, exceeding the level of 2009.8 US debt levels are
expected to increase dramatically as a result of the massive decrease in corporate
taxes signed into law in 2017, even as the Trump administration pursues an
aggressive strategy of financial deregulation.9 The IMF has concluded that the surge
in risky asset prices is reminiscent of the pre-2008 period. By April 2018 growth in
the eurozone slowed to 1.2 per cent amid signs that the effects of quantitative easing
were waning.10 Italy has experienced almost no productivity growth since adopting
the euro. With a debt-to-GDP ratio of 132 per cent, ‘The EU has no instruments to
cope with an Italian sovereign debt crisis. Italy is too big to fail and too big to save.’11
The structural problems of the eurozone have not been resolved.
Levels of inequality and poverty have increased dramatically during the past
decade and the crisis has brought about, in John Grahl’s words, ‘the slow death of
social Europe’.12 Since 2007 labour market insecurity has increased and welfare
state retrenchment has led to an overall decrease in security and protection. 13 The
European Commission (EC) estimates that 39 per cent of Europeans are now
engaged in non-standard and self-employed work, with a significantly greater risk
of poverty.14 55,000 private companies control massive supply chains, and hire,
transport, and house workers throughout the EU.15 In 2015, after having shrunk by
26 per cent since 2009, the Greek economy finally registered a primary budget
surplus. But since that time, it has managed a total growth rate of only 2.8 per cent,
and continues to stagger under 248 billion euros of debt (equal to 176 per cent of
GDP).16 The Central and Eastern European countries (CEE) have outpaced the
southern tier member states that have been subjected to the most draconian
structural reform programmes imposed by the ‘Troika’ (the ECB, EC and IMF). Yet
even in this region, trade unions have been gravely weakened and wages have failed
to keep pace with productivity increases. The experience of Romania is emblematic
of Europe’s east. Heavily penetrated by Western banks and German production
chains, Romania in 2011 deregulated its labour market in return for a 20 billion euro
bailout package from the IMF and EU. The new labour code, introduced under strong
pressure from the European Commission and US Chamber of Commerce, has been
‘catastrophic’ for Romanian society as it has reduced union membership, workers’
rights, and driven down wages.17
As the trend towards regional convergence has been thrown into reverse,
conflicts among Europe’s ruling classes have intensified. Divisions along the east-
west, and north-south axes are deepening, and the prospect of a ‘multi-speed’
Europe, effectively relegating the CEE and southern member states to semi-colonial
status, has been broached by the Commission and most powerful states. At the same
time, a growing ‘democratic deficit’ separates the administrative elites from the
European people. In this increasingly toxic atmosphere, right-wing populist
movements and parties with clear fascist tendencies have strengthened in many
countries, and have consolidated power in Hungary and Poland. Skillfully exploiting
the surge in migration following Angela Merkel’s decision to open Germany’s
borders in 2015, and resentment of centre-left and centre-right complicity with
neoliberal policies, they are strengthening in much of Europe’s core. In Austria and
the Netherlands, social democratic parties have suffered catastrophic defeats. In
Germany, the Social Democratic Party (SPD) returned to the Grand Coalition in
January 2018 after having received just 20.5 per cent in the parliamentary elections
of September 2017. The party fully recognized that a return to the grand coalition
might condemn it to further decline, but also feared that a new election would see it
lose second place to the neo-fascist Alternatives for Germany (AfD), which entered
the Bundestag for the first time on the strength of 12.6 per cent, and surpassed the
SPD in popularity in February 2018. In the French Presidential Elections of April
2017, Socialist candidate Benoit Hamon received just 6 per cent of the vote, while in
the subsequent May parliamentary elections the Parti Socialiste received just 29
seats, down from 280 in 2012. The Italian elections of March 2018 represented a
massive defeat for the Italian left and centre-left at the hands of the populist Five
Star Movement (M5S) and far-right Northern League.
In November 2011 Greece experienced the full force of what has aptly been
called ‘eurozone fiscal colonialism’.18 Having announced plans to conduct a national
referendum on the Troika’s bailout proposal, Prime Minister George Papandreou
was replaced by a ‘national unity government’ of ‘technocrats’ led by the unelected
former Vice-President of the ECB, Lucas Papademos when France and Germany
threatened to withhold financial support. The result was the wholesale
restructuring of Greek society and economy under the diktat of the Troika. By 2014,
as a result of a series of bailout agreements, the official level of unemployment had
risen to 27 per cent, and remained at 20 per cent in 2018. Youth unemployment
exceeded 50 per cent amid large cutbacks in social services and social provision,
including a reduction of the budget for health care by one-half, the dispossession of
Greek public assets, and the emigration of 400,000 Greeks, mostly educated youth,
since 2010.19 The rise of Syriza reflected widespread disillusionment with the two
main establishment parties of the center-left and center-right, Pasok and New
Democracy, and the inability of the Greek Communist Party (KKE) to elicit support
for a radical socialist strategy. In national elections of January 2015, Syriza came to
power, in coalition with a small nationalist party, with 36.3 per cent of the popular
vote. Neither during the campaign nor after forming a government did the party’s
leadership advocate withdrawal from the eurozone. Rather, it sought to achieve an
‘honorable compromise’ with the European institutions including decreased
austerity and debt write-offs through mass mobilization and appeals to the
European left for solidarity.
The Troika threatened to cut off liquidity to Greek banks if the government did
not submit to all elements of the bailout program. Syriza’s bargaining power was
very limited and there was very little evidence of European solidarity. In July 2015,
hundreds demonstrated in Berlin against austerity for Greece; by contrast three
months later 150,000 protested in Berlin against the Transatlantic Trade and
Investment Pact. In a referendum called by Syriza in July 2015, 62 per cent of Greek
voters rejected a new, harsher bailout package. However, Prime Minister Alexis
Tsipras and the Syriza leadership remained unwilling to exit the eurozone, a
strategy that would almost certainly have had massive destabilizing economic as
well as political consequences. Faced with the ECB’s threat to cut off liquidity, the
government capitulated to a new round of savage budget cuts, tax increases, and
privatizations of infrastructure in return for an additional 86 billion euros. After
expelling its radical wing, which had called for exit from the eurozone, Syriza
returned to power in September elections with 35.5 per cent of the vote, condemned
to preside over continuing austerity.
The Troika’s diktat applies not only to Greece but also to Italy, founding member
and third largest economy in the EU. In 2011 Prime Minister Silvio Berlusconi was
compelled to resign under pressure from Brussels and the financial markets in favor
of the ‘technocrat’ and former European Commissioner for Competition, Mario
Monti. A similar situation arose in May 2018, when in the throes of a new financial
crisis resulting from the establishment of the M5S-Northern League coalition
government, Italy’s president Sergio Mattarella vetoed the appointment of an
avowed euroskeptic, Paolo Savona, and sought to appoint a former IMF official and
advocate of austerity, Carlo Cottarelli, rather than the coalition’s choice, Giuseppe
Conte, as prime minister. This was despite the fact that the leaders of both the
Northern League and M5S had moderated their criticisms of the EU and euro.
Although Conte was eventually named prime minister, the statement of EU Budget
Commissioner Gunther Oettinger once again clearly indicated the limits of national
sovereignty and democracy: ‘My expectation is that the coming weeks will show that
developments in Italy’s markets, bonds and economy will become so far-reaching
that it might become a signal to voters after all to not vote for populists on the right
and left.’20

IS THERE A PROGRESSIVE WAY OUT?

Can the condition of permanent crisis be resolved through the transition to a
progressive European fiscal and monetary federalism within the framework of
existing European institutions? Given the widespread disparities within the
eurozone, there is general agreement that, at minimum, three fundamental reforms
would need to be adopted: first, the establishment of an EU budget with the power
of supranational taxation could allow for counter-cyclical policy as well as an
industrial policy. At the present time the EU budget is 1 per cent of EU GDP, and
national budgets are subject to strict fiscal controls. Such a budget would need to be
substantially larger, perhaps within the range of 5-7 per cent, as called for in the
McDougall Report of 1977. A second reform is the transformation of the existing
European Stability Mechanism, based in Luxembourg, into a fully-fledged European
Monetary Fund under supranational authority that would allow for the issuance of
Eurobonds and the mutualization of debt. A third reform is a genuine banking union
along the lines of the US federal deposit insurance corporation. These reforms would
lay the basis for a set of additional measures including corporate tax harmonization,
a financial transactions tax, and a social chapter. The end result of these reforms
would be a break with policies of internal devaluation and austerity in favour of a
progressive fiscal federalism along more or less left-Keynesian lines. Arising from
within heterodox and Keynesian circles, these measures have been advocated ever
since the Maastricht Treaty, most notably in EuroMemorandum, the annual report of
the EuroMemo Group.21
As the case of Greece showed, reforms of this scale inevitably lead to
confrontation with European institutions and a northern bloc of member states led
by Germany. Their realization would require either a substantially greater degree of
progressive federalist solidarity than was achieved during the Greek crisis, or else a
dramatic transformation of the very nature of German hegemony in Europe. The
former would entail at the very least a highly mobilized and pan-European labour
movement while the latter would require a transition from German ‘ordoliberalism’,
resulting either from enlightened self-interest or pressure from other states, most
obviously France. Yet, at the present time, none of these scenarios appears realistic.
 Franco-German Restoration?
The leading contemporary approach to eurozone reform centres around a
reassertion of Franco-German leadership, a strategy premised on the ability of
France to secure the conversion of German geo-economic power into a more or less
benevolent and at least bilaterally shared systemic leadership position. Following
his victory in the French Presidential elections of April 2017 and the success of his
political party En Marche in the National Assembly in May, Emmanuel Macron has
sought to reassert France’s traditional shared leadership status over the EU that has
been surrendered as a result of years of slow growth and mounting indebtedness.
His self-proclaimed ‘Revolution’ is essentially disciplinary and neoliberal. Having
achieved two decisive electoral victories over the Parti Socialiste, from which he
resigned in 2016, Macron has sought first to complete the domestic exit from the
post-war social settlement started by Francois Mitterrand in 1981: ‘I want to get out
of the status quo that was established between 1945 and 1970.’22 Sweeping reforms
are designed to appease the German Finance Ministry and, more broadly, German
ordoliberal sensitivities and resistance to a ‘transfer union’. Under Macron the
budget deficit was reduced to 2.6 per cent, leading to the cancellation of the
Commission’s ‘excessive budget procedure’ even as budget minister Gerald
Darmanin insisted that ‘the right deficit is zero’.23
Macron has launched a frontal assault on the French welfare state and an
increasingly divided and demoralized labour movement. In November 2017, he
used a ‘fast track process’ to diminish the authority of the National Assembly and
pass a set of anti-union labor laws that are more far-reaching than the El Khomri
labour decrees of 2016, deemed insufficiently transformative by Macron. Macron
then challenged the French National Railway Company (SNCF) unions, demanding
reforms in all dimensions of rail services, including working rules and pensions that
have been described by Le Monde as ‘the biggest change for the SNCF since its
founding in 1937’.24 Victory over the railway unions, and especially the militant CGT
(Confédération générale du travail), would reprise in France Margaret Thatcher’s
decisive defeat of the UK coal miners in 1984, the subsequent defeat of the remains
of the post-war settlement, and the consolidation of neoliberalism.
Macron has appealed to a resurgent spirit of ‘Europeanism’ which, as noted
above, has historically served as the rhetorical justification for neoliberal policies,
while simultaneously appeasing German ordoliberal sensitivities and consolidating
his domestic standing vis a vis the Rassemblement Nationale (formerly Front
National). Thus he proposed transnational lists in the European Parliament. By
pursuing a more militarist and Atlanticist foreign policy, including joint US-French
operations in Africa and culminating in French participation in US-led missile strikes
against Syria of April 2018, he has sought to demonstrate French political-military
leadership of Europe.
The confrontation with the rail unions represents a trial of strength that will
determine the future of France’s welfare state. Macron’s attempts to stoke
resentment against the rail unions by referring to ‘rail worker privilege’ has been
aided by the trend towards a two-tiered labor market that has been gathering over
the past decades, with precarity now already the fate of large numbers of French
workers, especially youth. Regardless of the fate of Macron’s grand project, Germany
has indicated that it will not make significant concessions with respect to the
eurozone. Following inconclusive national parliamentary elections of September
2017, which led to months of negotiations and the departure of hardline ordoliberal
German finance minister Wolfgang Schäuble, there was speculation that the new
government would respond favourably to Macron’s overtures. However, the new
Grand Coalition has moved significantly to the right, in no small part in reaction to
the performance of the AfD. The September elections demonstrated the weakness
of the German centre-left resulting in large part from their association with two
decades of neoliberal reforms, first under the Schroeder government and then as
junior partners in Merkel’s Grand Coalition. It appears likely that Germany will only
agree to an EMF that is primarily dedicated to strengthening budget discipline and
a relatively modest investment fund that falls well short of Macron’s more ambitious
plans. At the same time, the significantly watered down financial transaction tax
proposed by Macron has been abandoned alongside plans for a digital tax. Adding
insult to injury, Germany exerted considerable political muscle to ensure that the
European People’s Party (EPP), the centre-right grouping in the European
Parliament (EP), led the decisive movement against the Macron proposal for a
transnational list. Germany also conspicuously refused to join Anglo-U.S.-French
strikes on Syria. German support for ‘Europeanization’ is essentially rhetorical, and
predicated on concrete guarantees of ordoliberal policies and continuing German
authority.
In November 2017, EU heads of state convened for the first time in two decades
to discuss social questions. As a result, in March 2018 the Commission published
proposals for a Social Fairness Package that boldly declared: ‘Regardless of the type
and duration of their employment relationship, workers, and, under comparable
conditions, the self-employed, have the right to adequate social protection.’25 Yet in
ignoring the European Trade Unions Council’s call for a Directive, the proposals
were entirely in the form of recommendations, reliant on national governments for
implementation. As a result, the Commission thereby only confirmed ECB President
Mario Draghi’s admission in February 2012 that ‘the European social model is
dead’.26

German Hegemonic Transformation?

A second approach to progressive reform proceeds not from the logics of
progressive federalism or intergovernmental bargaining, but rather from the
possibility of benevolent German leadership. Can the structural interests of German
capital accommodate the developmental and political needs of the eurozone as a
whole? Could Germany as a matter of ‘enlightened self-interest’ reprise in the
eurozone a form of hegemonic leadership analogous to that played by the United
States in the Bretton Woods system? After all, the absence of eurozone reform has
potentially massive costs for Germany. Elite circles in Germany are well aware that
eurozone crisis is a ‘latent but chronic condition’27 and that a break-up would be
catastrophic. Not only would the failure of structural reform deprive German
industry of an undervalued currency, it also leaves the eurozone vulnerable to future
crises, imperiling the euro itself. By gravely weakening Macron, it would lay the
basis for a resurgence of the French far-right.
There is plenty of support for this scenario.28 Indeed, the strategy has been
advocated in some form almost everywhere but Brussels and Berlin, including in the
US Treasury and the IMF, which have strongly opposed German-led ordoliberal
policies. An underlying assumption among proponents of this scenario is that the
resistance to reform in Berlin is essentially intellectual and cultural, a reflection of
more or less intractable ordoliberal orthodoxy. Yet there are reasons to doubt that
Germany policy towards the eurozone is primarily a matter of ideology, and not
power and interest. After all, in 2003 Germany had no qualms about violating the
Stability and Growth Pact.
Does the German state have the power and resources to carry out essentially left-
Keynesian macro-economic policies necessary to stabilize the eurozone? Germany’s
incremental strategy of crisis management through bailouts and austerity has itself
been costly.29 The Bundesbank remains liable for massive contributions to the
Target2 credit system. The ECB has already bought large quantities of sovereign
bonds and is now carrying out significant asset purchases through its quantitative
easing. The mutualization of debt via the introduction of Eurobonds would
represent a significant new liability for Germany. The establishment of a debt
redemption fund – pooling debt over 60 per cent of GDP – would require significant
new spending, which explains why Germany has categorically rejected joint liability
in the form of a genuine banking union. Germany’s financial liability could also
increase substantially if it were to accept a European deposit guarantee scheme,
rejected in 2013 as an act of ‘brutal power politics’30 and perhaps even less likely
under the new Grand Coalition. Significant fiscal expansion – now prohibited under
Germany’s own balanced budget law – would increase debt and reduce the ability to
recapitalize Germany’s weakened banks. The moral hazard implicit in Eurobonds
would be likely to expand significantly the cost of these programmes.
The growing strength of the right in Germany as reflected in the September 2017
elections greatly strengthens political resistance to a ‘transfer union’. Reacting to
the formation of a Five Star Movement/Northern League coalition government that
will preside over a budget deficit equal to 130 per cent of GDP, the German weekly
Der Spiegel complained of ‘Moochers in Rome’. Matteo Salvini, leader of the Northern
League, responded that ‘Italy is not a colony, we are not slaves of the Germans or the
French, the spread, or finance’. In addition, Germany faces a host of longer-term
structural challenges including projected low growth rates far into the future,
population decline, years of low public investment and productivity, 31 and
migration. Germany’s vulnerability is perhaps illustrated most vividly in its core
automobile sector, challenged not only by Donald Trump’s threatened trade wars
but also by technological changes in automobile production that are reducing
Germany’s advantages and working to the benefit of China.32
These macro-economic and other realities indicate the tremendous difficulties
that Germany would encounter in seeking to implement a project of genuine
hegemonic leadership. The German commitment to austerity – even at the expense
of potential eurozone instability – does not ultimately derive from ‘vindictive
madness’,33 ‘abysmal ignorance’,34 or ‘prevailing addiction’.35 Rather, it is grounded
in the export mercantilist model that has served as the central organizing principle
of German foreign policy since World War II, as the German economy has become
‘structurally reliant on foreign demand for its growth’.36 Since the late 1990s,
German capital has pursued a strategy of relentless cost cutting and austerity in
support of this model. A succession of reform programmes and ‘employers’
offensives’37 undertaken by both the centre-right Christian Democratic Union
(CDU)/Christian Social Union (CSU) and centre-left Social Democratic Party (SPD)
dramatically decreased unit labour costs, especially after 2002 in conjunction with
fiscal austerity and ensuing Hartz IV labour reforms. Agenda 2010 resulted in
sweeping changes in unemployment protection and social assistance.
To this end, crucial stages of German manufacturing and commodity supply
chains have been relocated throughout central and Eastern Europe, thereby
enabling the German export model to maintain international competitiveness. 38
These supply chains illustrate an ‘astonishing continuity in the basic structure of
German capitalism’.39 Their size and significance indicate the vast scope of German
control over the European economy, and that the time for dual Franco-German
leadership has passed. Germany accounts for approximately 25 per cent of EU
exports and 30 per cent of European GDP. However, if the supply chains (which are
closely dependent on the continuation of the Schengen Agreement, allowing the free
flow of commodities across borders) are taken into account, the figures are
considerably higher.40 And this is further reinforced by Germany’s position as the
central hub linking Russian natural gas to Europe, a position it has thus far
maintained despite massive opposition from many EU member states, the
Commission, and the United States. The ‘export mercantilist’ orientation that has
governed Germany since 1945 has only become more pronounced and qualitatively
more significant in the context of the eurozone. In 2017 Germany’s trade surplus
was 234bn euros (compared to China’s 390bn euros and Japan’s 140bn).
The traditional link between export-led growth and expansion of the domestic
market based on increasing wages has been weakened, but it has not been
completely severed. In contrast to most other advanced capitalist states, the German
strategy of outsourcing has served to strengthen the domestic manufacturing base,
as primarily low-skill and labour-intensive production is located outside of
Germany. In his path-breaking analysis, Julian Germain has identified a ‘distinctive
complementarity between German foreign investment and domestic production
that sets Germany apart from its neoliberal peers and illuminates its austerity
course’.41 The euro has of course underwritten the extraordinary increase in its
export ratio from 26 per cent of GDP in 1998 to 46 per cent in 2016, facilitating an
overall export surplus of approximately 8 per cent.
By 2015 the United States surpassed France as Germany’s largest export market,
a position it had held since 1960. But Germany’s ordoliberal export strategy has also
generated increasing dependence on emerging markets, most notably China (15 per
cent of the revenue of the top 30 German companies is derived from their sales in
China), but also in the European periphery.42 In the latter case, this involves a
tendential transformation of the significance of the eurozone from ‘sales market’ to
‘supply zone’ that ‘relegates the eurozone to a subsidiary role as a regional
production center for German manufacturers’.43 At the same time, German capital is
deepening its ties with the Western Balkans, and especially Serbia. The ‘Berlin
Process’ and ‘Berlin Plus Process’ launched by Chancellor Merkel in 2016 are
designed ultimately to incorporate the entire region within the EU framework.44
Serbia and Montenegro have begun what will undoubtedly be lengthy accession
negotiations. All six have obtained visa-free travel and Stabilisation and Association
Agreements. Heavily dependent on the German economy, the Visegrad countries,
notwithstanding their populism and Euroscepticism, have strongly adhered to
German economic policy.45 For its part, Germany has sought to reduce EU pressure
on Hungary and Poland for violating EU policies on migration, refugees, and the rule
of law.
 All this provides the lie to the assertions repeated ad nauseam in mainstream
media that Germany under Chancellor Angela Merkel is becoming the new saviour
of the multilateral global trading order. Germany’s current account surplus with
most of the rest of the eurozone drains net savings from trading partners while
imposing a logic of austerity, slow growth, and internal devaluation. For the past two
decades the EU has grown at only 1 per cent per year; Italy has essentially stagnated
as its economy is 5 per cent smaller per capita that it was in 2001. In the first decade
of its membership in EMU, Italy lost 20 per cent of its export competitiveness; Greece
and Spain experienced worse.46 Although no saviour, at the same time German FDI
is a crucial source of capital for much of the rest of the EU; 50 per cent of German
FDI is undertaken in the eurozone itself. This is especially the case for the CEE
member states. The rise of German economic power and the resultant conflicts of
interests demonstrate that although there is clearly a European ‘business elite’,
there is strictly speaking no European ‘transnational capitalist class’.47 Yet, given the
absence of an alternative strategy and their continuing reliance on the German
market and (limited) financial support, there is little likelihood that subaltern
capitalist classes would prefer to exit the eurozone in favour of a resumption of
regional monetary rivalry. In the context of the weakness of the European left, they
are condemned to remain in what Magnus Ryner has aptly called the ‘ordoliberal
iron cage’.48

THE AMERICAN EMPIRE FRACTURED?

Germany’s export mercantilist strategy has provoked conflict with the United States,
most notably over energy policy and trade policy. In 2016 the US Treasury added
Germany to a list of countries engaging in ‘unfair currency practices’ even though
Germany does not have its own currency.49 In June 2018, the United States made
good on its threat to impose tariffs on EU exports of steel and aluminum even as
Donald Trump threatened additional protectionist measures against German
automobile exports. Yet this does not amount to anything like inter-imperial rivalry.
Precisely because it is so deeply inserted within the broader American global
imperium, German power is entirely ‘geo-economic’ and neither Germany nor the
EU have reduced their dependence on NATO as the continent experiences growing
militarism even in the context of a new cold war.50 Germany might in these terms at
most be designated as ‘sub-imperial’, as the regional power located within the
constellation of American hegemony.
That Germany is simultaneously powerful enough to pursue a regional strategy,
and yet lacks the capacity to underwrite a genuinely progressive alternative to
austerity, has ominous implications for Europe’s future. This is especially so given
the crosswinds blowing from across the Atlantic. The United States remains for
Europe – and especially for Germany – a crucially important export market. At the
present time, however, the Federal Reserve has begun to tighten monetary policy
and, as noted above, the Trump administration has placed Germany in the crosshairs
of its trade offensive. In December 2017, it passed a tax bill that is designed to
increase the profits and market shares of corporate America at the expense of
American workers, but also of European, and especially German, firms.51
Thus Europe is caught between an uncertain ‘America First’ offensive and an
ambitious ‘Made in China 2025’ project. When the Treaty of Rome was signed in
1957, the present member states accounted for 12 per cent of the world’s
population; the figure is set to decline to 4 per cent by 2060. The EU’s share of global
GDP is projected to decline to less than 20 per cent by 2030, and this will greatly
accelerate with the exit of the UK, the world’s fifth largest economy and second
largest contributor to the EU budget, in 2019. Nevertheless, for the time being the
transatlantic space continues to represent by far the most important region in the
world economy. It accounts for one-third of global GDP and one-half of global
personal consumption. US foreign affiliate sales in Europe in 2016 of $3 trillion were
greater than total US exports. 60 per cent of US imports from the EU comprised
intra-firm trade, a much higher figure than that for the Asia-Pacific nations. In 2017,
64 per cent of US FDI outflows went to Europe, with just 16 per cent to the Asia
Pacific region. Europe accounted for 70 per cent of the $3.7 trillion invested in the
US in 2016; its total stock of investment in the US is more than four times that in
Asia. The transatlantic economy accounts for 80 per cent of weapons-related
spending and 90 per cent of research.52
Is the EU destined to remain subordinated to an increasingly vulnerable but still-
powerful and unpredictable American hegemon? During the 1960s there was
considerable debate concerning the nature of the US-led transatlantic imperium.
Ernest Mandel concluded that European capitalism was gradually amalgamating
under the umbrella of the EU and therefore becoming a co-equal.53 Mandel’s thesis
was consistent with the assumption of a nascent transnational European capitalist
class that was thought to have re-emerged in the 1990s in the context of the
relaunching of the EU.54 The contemporary crisis of US hegemony has given rise to
similar assumptions.55 By contrast, Nicos Poulantzas was more sceptical of the
prospects for an autonomous European centre of accumulation. Focusing on the
implications of massive US FDI in Europe, the continuing dependence of European
export capital on the US market, US technological leadership, and the growing
significance of money-capital, he proposed the term ‘interior bourgeoisie’56 to
describe the continuing subordination – and fragmentation – of European capitalist
classes.
From the perspective of 2018 there can be little doubt that Poulantzas offered
the more prescient analysis, and one that remains relevant today. Europe’s second,
neoliberal, project of integration was carried out within the framework of Wall
Street and Washington and closely tethered to the NATO imperium.57 Despite the
considerable institutional and constitutional development of the EU, the neoliberal
project greatly reduced national prerogatives without giving rise to a pan-European
polity. Ironically, Europe’s greatest degree of geopolitical and economic autonomy –
albeit still sharply constrained by Washington – was achieved not in the post-
Maastricht era as so many had predicted, but rather in the post-1965 ‘empty chair’
era, which saw the expulsion of NATO from French territory, the development of
ostpolitik, and France’s momentary resistance to US monetary hegemony.
Germany’s political-military subordination to the American superpower finds its
complement in its reliance on the Euro-Atlantic economy. Notwithstanding conflicts
within the transatlantic space, the linkages binding it together remain deep and
comprehensive. Yet, Germany’s strategic dependence on exports into a world
market that is subject to growing financial instability and protectionism places both
Europe and Germany itself in a precarious position.

THE LEFT AND EUROPE

The misplaced confidence of official Europe in an ‘ever closer union’ was based on
an idealized and teleological narrative, reinforced by an academic establishment
that has been funded lavishly by the European Commission.58 This narrative has
ignored the substantive conflicts and contradictions among and within capitalist
classes and states that have shaped the EU since its inception. The institutions of the
EU are not politically neutral, but rather designed to further the collective interests
of the European capitalist classes, under the leadership of German capital. The most
common scenarios for reform within the context of existing treaties and institutions
do not correspond to the realities of Germany’s ‘sub-imperial’ strategy, let alone the
present balance of power among classes and states or the existing level of pan-
European solidarity.
What should be the left strategy for Europe? The left has not been able to take
advantage of the eurozone crisis. It has been unable to mobilize effectively against
austerity and has suffered a string of electoral defeats during the past year alongside
the ominous rise of far-right populist parties and movements. There are, to be sure,
also some positive trends and achievements to be set against this record. Austerity
has sparked the rise of numerous resistance movements throughout Europe,
including in France where Macron’s assault on the French welfare state has not gone
unchallenged.59 At the same time, the programmes of right-wing populists are
incoherent and ineffective; in most cases, notwithstanding campaign rhetoric, they
represent not a challenge to neoliberalism but rather its intensification in more
authoritarian form. The further growth of these parties is certainly not inevitable.
The performance of Jeremy Corbyn’s Labour Party in the general elections of 2017,
marked by dramatic surge in party membership, indicates considerable energy and
commitment, especially among British youth and draws obvious comparisons with
Podemos in Spain, Syriza in Greece, and even the 2016 presidential campaign of
Bernie Sanders in the United States. In France, Jean-Luc Melanchon’s France
Insoumise received 20 per cent of the vote in the first round of the April presidential
elections of 2017.
A radical-Keynesian (not to mention socialist) programme would certainly
encounter massive and undying resistance from the EU. The 2017 British Labour
Party election manifesto advocates a return to Keynesian policies of public
investment along with income redistribution, nationalization, and greater social
spending. These policies would certainly propel the UK into confrontation with
European and global capital, and certainly the EU institutions as well.60 However, the
Leave campaign was not waged on the basis of an alternative socialist or even left-
Keynesian strategy. It prevailed in large part as a result of racism and xenophobia,
greatly overshadowing a campaign for a progressive ‘Lexit’ that was very weak.
Brexit has empowered the most reactionary and recalcitrant fractions of the ruling
class and it is likely to facilitate even harsher neoliberal measures.
As Thomas Fazi and William Mitchell write: ‘Abandoning the EU provides the
British left – and the European left more generally – with a once-in-a-lifetime
opportunity to show that a radical break with neoliberalism, and with the
institutions that support it, is possible.’61 However, the experience of Greece
illustrates the great challenges that a victorious left party would face in
implementing a strategy of ‘socialism in one (European) country’ when European
capitalism is more tightly organized than ever within complex global production
chains and financial circuits. Syriza explicitly adopted a parliamentary path to power
based on remaining within the EMU, and clearly sought to obtain the support of the
Greek electorate on the basis of this strategy. Exit from the eurozone had potentially
ominous implications for Greek democracy for which the majority of Greek people
were unprepared. The economic consequences of exit from the EMU, moreover,
would likely have been devastating no matter how radical the government, how
careful the preparation, and how extensive the degree of popular mobilization. In
any case, it is not clear that a real threat of exit would have increased Syriza’s
bargaining power. German Finance Minister Schäuble is widely reported to have
favoured Greece leaving the eurozone.62
The case of Greece cruelly exposes the realities of hierarchy and power that lie
beneath the EU’s façade of equality and democracy. Member states cede crucial
aspects of sovereignty to the EU; the weaker the country, the more this is the case.
Moreover, EU treaty obligations greatly reduce the legal as well as political authority
of member states to carry out an independent industrial strategy. Public ownership
is not explicitly ruled out, but much harder in practice to establish. At the same time,
state aid and public procurement are subject to strict competition rules.
As Costas Lapavitsas asserts, ‘The internationalism of the left is unrelated to the
internationalism of the EU.’63 Yet, a strategy towards the EU should not divert
attention from the constraints posed by national power relations. Overemphasis on
technical mechanisms in relation to a strategy of Lexit reinforces illusions
concerning the possibilities of reforms in a single member state. The same can be
said of the reverse strategy of federal reform within existing EU institutions. The
Democracy in Europe Movement 2025 (DIEM2025), founded by Yanis Varoufakis,
Syriza’s former finance minister from 2012-15, illustrates the strengths, but also the
significant limitations, of federalism at the present time. Launched in 2015, DIEM25
seeks to establish ‘full-fledged democracy with a sovereign Parliament respecting
national self-determination and sharing power with national Parliaments, regional
assemblies and municipal council’.64 In 2018, it constituted itself as a transnational
political party led by a Coordinating Collective and Advisory Board, with local
chapters of Spontaneous Collectives. The party plans to contest the 2019 European
Parliamentary elections on the basis of transnational European solidarity. It self-
consciously sets itself against left movements that have advocated exit from the
EMU or EU, explicitly seeking to work within the framework of existing institutions
in order to bring about a ‘European New Deal’ comprising the aforementioned left-
Keynesian reforms. However, DIEM25 provides no compelling account of how the
balance of social forces at the present time could overcome the massive resistance
to such a program that would be mounted by all sectors of European capital and
European institutions. It overestimates – at least at the present time – the
transnational capacities and commitments of social movements.
Marc Boteng aptly characterizes the potential problems with both Lexit and EU
reform: ‘On the one hand, both lack ambition by offering de facto a better
management of capitalism. On the other, both downplay the importance of extra-
parliamentary action.’65 Membership within the EU or EMU is not the principal
impediment to a socialist strategy. This is obvious from the many experiences across
time and space since the 1970s of progressive governments whose Keynesian
macro-economic programs coupled with industrial policies brought them into
serious conflict, and ultimately defeat, at the hands of global financial markets. A
socialist island in a sea of European and Atlantic hostility would face massive
resistance at both the economic and geopolitical levels, quite possibly in the context
of a global financial crisis that is deeper than that of 2008. As the experience of Brexit
shows, ‘sovereignty’ in the contemporary world economy is largely mythical. This
underlines the importance of transnational solidarity. But it is absolutely clear that
any serious strategy for Lexit will need to arise from within an already advanced
process of socialist transformation, and not largely independently of it.

NOTES

1 ‘Merkel Says EU Must Be Bound Closer Together’, Spiegel International, 7 September 2011.
2 Alan Millward, The European Rescue of the Nation State, Berkeley, California: University of California
Press, 1992; Alan Cafruny and Magnus Ryner, Europe at Bay: In the Shadow of U.S. Hegemony, Boulder,
Colorado: Lynne Rienner Publishers, 2007.
3 Leo Panitch and Sam Gindin, The Making of Global Capitalism: The Political Economy of the American
Empire, London: Verso, 2012; Magnus Ryner and Alan Cafruny, The European Union and Global Capitalism:
Origins, Development, Crisis, London: Palgrave, 2017.
4 Stephen Gill, ‘European Governance and New Constitutionalism: Economic and Monetary Union and
Alternatives to Disciplinary Neo-Liberalism in Europe’, New Political Economy, 3(1), 1998.
5 Greg Albo, ‘‘Competitive Austerity’ and the Impasse of Capitalist Employment Policy’, in Ralph Miliband
and Leo Panitch, eds, Socialist Register 1994: Between Globalism and Nationalism, London: Merlin Press,
1993.
6 Bastiaan van Apeldoorn, Transnational Capitalism and the Struggle over European Integration, London:
Routledge, 2002.
7 Former Bundesbank head Karl Otto Pohl characterized the rescue package for Greece in the following
terms: ‘It was about protecting German banks, but especially the French banks, from debt write-offs. On
the day the rescue package was agreed on, shares of French banks rose by up to 24 per cent. ‘Bailout Plan
Is All About ‘Rescuing Banks and Rich Greeks’, Der Spiegel, 18 May 2010.
8 Bloomberg, ‘Global Debt at Record Level’, Business Week, 10 April 2018.
9 Federal Reserve Bank of New York, ‘Household Debt Jumps as 2017 Marks the Fifth Consecutive Year of
Positive Annual Growth Since Post-Recession Deleveraging’, Press Release, 18 February 2018.
10 Gavyn Davies, ‘The Mystery of the eurozone Slowdown’, Financial Times, 15 April 2018.
11 Wolfgang Munchau, ‘Eurozone Downturn and Lack of Reform Presage Existential Crisis’, Financial Times,
22 April 2018.
12 John Grahl, ‘Social Europe and the Crisis of the European Union’ in Johannes Jäger and Elisabeth Springler,
eds, Asymmetric Crisis in Europe and Possible Futures: Critical Political Economy and Post-Keynesian
Perspectives, New York: Routledge, 2015, p.168.
13 Sotiria Theodoropoulou, ‘Drifting into Labour Market Insecurity? Labour Market Reforms in Europe after
2010’, Brussels, European Trade Union Institute, March 2018.
14 Employment, Social Affairs, and Inclusion, Access to Social Protection, Brussels: European Commission,
13 March 2018.
15 Liz Alderman, ‘Europe’s Thirst for Cheap Labor Fuels a Boom in Disposable Workers’, New York Times, 11
December 2017.
16 IMF, World Economic Outlook, Washington, D.C., April 2018.
17 Aurora Trif, ‘Surviving Frontal Assault on Collective Bargaining Institutions in Romania: The Case of
Manufacturing Companies’, European Journal of Industrial Relations, 22(3), 2016.
18 Philippe Legraine, ‘Euro-Zone Fiscal Colonialism’, New York Times, 21 April 2014.
19 Stathis Kouvalikis, ‘Borderland: Greece and the EU’s Southern Question’, New Left Review, 110(March-
April), 2018.
20 Anne-Sylvaine Chassany, Tobias Buck, and Mehreen Khan, ‘EU Leaders Spar as Italy’s Crisis Deepens’,
Financial Times, 31 May 2018.
21 See, inter alia, EuroMemo Group, Euromemorandum 2018: Can Europe Still Be Saved? The Implications of
a Multi-Speed Europe, 2018; Joseph Stiglitz, The Euro: How a Common Currency Threatens the Future of
Europe, New York: W.W. Norton, 2016; Costas Lapavitsas et al., Crisis in the Eurozone, London: Verso,
2012; Heiner Flassbeck and Costas Lapavitsas, Against the Troika, London: Verso, 2015; Yanis Varoufakis,
Adults in the Room: My Battle with the European and American Deep Establishment, New York: Farrar,
Strauss, and Giroux, 2017. Prescient early critiques include Wynne Godley, ‘Maastricht And All That’,
London Review of Books, 14(8), October 1992; Paul De Grauwe, ‘The euro and financial crises’, Financial
Times, 20 February 1998.
22 Anne Sylvaine-Chassany, ‘Emmanuel Macron Seizes Moment to Take on French Unions’, Financial Times,
15 March 2018.
23 Anne-Sylvain Chassany, ‘Budget Chief Aims to Restore France’s Credibility in Europe’, Financial Times, 18
May 2018.
24 Dick Nichols, ‘France: Unions, Left Confront Macron’s Attacks on Rail Services, Jobs’, The Bullet, 29 March
2018, available at https://socialistproject.ca.
25 Liina Carr, ‘Widening the Social Protection Safety Net’, Social Europe, 1 May 2018.
26 Brian Blackstone, Matthew Karnitschnig, and Robert Thomson, ‘Europe’s Banker Talks Tough’, Wall
Street Journal, February 24, 2012.
27 Andreas Kluth, ‘When ‘More Europe’ Is and Is Not the Answer’, Handelsblatt, 26 April 2018.
28 See, inter alia, Mark Blyth and Mattias Matthijs, ‘The World Waits for Germany’, Foreign Affairs June 2012;
Simon Bulmer and William Patterson, ‘Germany as the EU’s Reluctant Hegemon? Of Economic Strength
and Political Constraints’, West European Politics, 20(10), 2013; Simon Bulmer ‘Germany and the
eurozone Crisis: Between Hegemony and Domestic Politics’, West European Politics 37(6), 2014; ‘Europe’s
Reluctant Hegemon,’ The Economist, 15 June 2013; Yanis Varoufakis, ‘Europe Needs a Hegemonic
Germany’, London: Zed Books Blog, 2013; Mark Blyth and Simon Tilford, ‘How the eurozone Might Split:
Could Germany Become a Reluctant Hegemon?’ Foreign Affairs, 11 January 2018.
29 Federico Steinberg and and Mattias Vermeiren, ‘Germany’s Institutional Power and the EMU Regime after
the Crisis: Towards a Germanized Euro Area?’, Journal of Common Market Studies, 54(2), 2016.
30 Spiegel International Edition, “Brutal power politics”: Merkel’s Banking Union Under Fire’, 16 December
2013.
31 Marcel Fratzscher, The Germany Illusion: Between Economic Euphoria and Despair, Oxford: Oxford
University Press, 2018.
32 ‘China’s Car Revolution is Going Global’, Bloomberg Businessweek, 23 April 2018.
33 Costas Lapavitsas, ‘To Beat Austerity Greece Must Break Free from the Euro’, The Guardian, 2 March 2015.
34 Heiner Flassbeck, ‘Das Arrogante Europa der Machtigen’, Makroskop, 15 July 2016.
35 Camilla Hodgson, ‘Soros on Europe: Everything that Could Go Wrong Has Gone Wrong’, Financial Times,
29 May 2018.
36 Simon Tilford, How to Save the Euro, Brussels: Centre for European Reform, September, 2010, p. 6.
37 Daniel Kinderman, ‘Pressure From Without, Subversion From Within: The Two-Pronged German
Employer Offensive’, Comparative European Politics 3, 2005.
38 International Monetary Fund, German-Central Europe Supply Chain – Cluster Report. IMF Multi Country
Report No. 13/263, Washington DC, August, 2013; Sam Gross, The German Economy Today: Exports,
Foreign Investment, and East-Central Europe. New York: Center for European and Mediterranean Studies,
New York University, 2013.
39 Julian Germain, ‘Beyond Geo-economics: Advanced Unevenness and the Anatomy of German Austerity’,
European Journal of International Relations, 31 July 2017.
40 France Strategie, ‘The Economic Cost of Rolling Back Schengen’, Paris, 5 February 2016.
41 Germain, ‘Beyond Geo-Economics’, pp. 13-14.
42 Ulf Sonmer, ‘A Great Wall of Against German Investment’, Handelsblatt, 24 May 2018.
43 Germain, ‘Beyond Geo-Economics’, pp. 3,18.
44 Antonia Colibasanu, ‘Germany Keeping an Eye on the Balkans’, Geopolitical Futures, 29 November 2017.
45 Beata Farkas, ‘Economic and Political Relations between Germany and Visegrad Countries in Turbulent
Times’, paper presented at ECPR General Conference, Prague, September 2016.
46 Leila Simona Talani, The Political Economy of Italy in the Euro: Between Credibility and Competitiveness,
London: Palgrave, 2017, p. 96.
47 Alan Cafruny and Magnus Ryner, ‘Alternative Perspectives on European Integration’, in Henk Overbeek
and Bob Jessop, eds, Transnational Capital and Class Fractions: The Amsterdam School Perspective
Revisited, London: Routledge, 2019.
48 Magnus Ryner, ‘Europe’s Ordoliberal Iron Cage: Critical Political Economy, the Euro Area Crisis, and Its
Management’, Journal of European Public Policy, 22(2), 2015.
49 U.S. Treasury, Foreign Exchange Policies of Major Trading Partners of the United States: Report to Congress,
Washington, Office of International Affairs, 29 April 2016.
50 Alan Cafruny, ‘The European Crisis and the Rise of German Power’, in Jäger and Springler, eds, Asymmetric
Crisis in Europe and Possible Futures.
51 Charles Wallace, Katharina Kort, and Donata Riedel, ‘Germans Fear Huge Loss of Jobs from U.S. Tax
Reforms’, Handelsblatt, 14 December 2017.
52 These data are compiled in Daniel Hamilton and Joseph Quinlan, The Transatlantic Economy 2018: Annual
Survey of Jobs, Trade, and Investment between the United States and Europe, Washington, D.C.: Center for
Transatlantic Relations, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University,
2018.
53 Ernest Mandel, Europe Vs. America: Contradictions of Imperialism, London: New Left Books, 1969.
54 See, inter alia, van Apeldoorn, Transnational Capitalism; Overbeek and Jessop, eds, Transnational Capital
and Class Fractions.
55 Hans Kundnani, ‘Leaving the West Behind: Germany Looks East’, Foreign Affairs, January/February 2015.
56 Nicos Poulantzas, Classes in Contemporary Capitalism, London: New Left Books, 1975, p. 164.
57 Panitch and Gindin, The Making of Global Capitalism; Cafruny and Ryner, Europe at Bay.
58 Magnus Ryner, ‘Financial Crisis, Orthodoxy, Heterodoxy and the Production of Knowledge about the EU’,
Millennium: Journal of International Studies 40(3), 2012; Alan Cafruny, ‘European Integration Studies,
EMU, and the Resilience of Austerity in Europe: Post-Mortem on a Crisis Foretold’, Competition and
Change, 19(2), 2015.
59 Nikolai Huke, David Bailey, Monica Clua-Losada, Julia Lux, and Olatz Ribera Almandoz, ‘Disrupting
European Authoritarianism: Grassroots Organizing, Collective Action, and Participatory Democracy
During the eurozone Crisis’, Brussels: Transnational Institute, April 2018.
60 Costas Lapavitsas, ‘Jeremy Corbyn’s Labour vs. the Single Market’, Jacobin, 30 May, 2018.
61 Thomas Fazi and William Mitchell, ‘Why the Left Should Embrace Lexit’, Jacobin, 29 April 2018; see also
Alex Callinicos, ‘The Internationalist Case Against the EU’, International Socialism, 148, 5 October 2015;
Cedric Durand, ‘The Workers Have No Europe’, Catalyst, 1(4), Winter 2018.
62 ‘Schäuble’s Push for Grexit Puts Merkel on the Defensive’, Der Spiegel, 17 July 2015.
63 Costas Lapavitsas, ‘A Socialist Strategy for Europe’, Catalyst, 1(3), Fall 2017, p. 61.
64 DIEM25 Manifesto, available at https://diem25.org/manifesto-short-version, 2018.
65 Marc Botenga, ‘Building a Different Europe’, Catalyst, 1(4) Winter 2018, p. 19.
 CORBYN AND BREXIT BRITAIN: IS THERE A WAY
FORWARD FOR THE LEFT?
COLIN LEYS

In Britain, the political reaction to globalization has followed two separate and
perversely interlinked paths. One was a reaction against the impoverishment of
former industrial regions of the country, exacerbated by the financial crash of 2007-
8, and against the right-wing response to this in the form of drastic cuts to public
spending and public services. The other was a reaction against the undemocratic
character of the European Union.
Of the two, it was anti-EU sentiment that was first tapped into and exploited. As
early as 1993 Nigel Farage, a wealthy commodities trader of uncompromising
neoliberal views, grasped the fact that the undemocratic elite character of the EU
offered a perfect focus for popular disenchantment. He left the Conservative Party,
helped to found the UK Independence Party (UKIP), and led it from 2006 onwards,
laying the blame not on globalization, but on the EU and on the large-scale
immigration from Europe (especially Eastern Europe) that membership of the EU
had made possible. In 2014 UKIP won the largest share (26 per cent) of the votes
cast in the UK elections for the European Parliament; and in 2016 a UKIP-inspired
campaign, with the potent slogans of ‘taking back control’ and ‘taking our country
back’, went on to win, narrowly but decisively, a referendum on EU membership,
committing the UK to leave the EU.1 The ‘Leave’ and ‘Remain’ votes did not follow
party lines: both the Conservatives and the Labour Party were split on the issue, in
different ways. With the referendum won, UKIP virtually disappeared, but both
parties – Labour as much as the Conservatives – felt it politically impossible not to
respect the result, confronting them equally with the prospect of losing support
when it came to implementing it.
The Conservatives, who had called the referendum and were in office, had to face
the problem first. After calling an ill-judged election in 2017 they lost their
parliamentary majority; from then on their survival in office depended on a small
group of hard-line ‘leavers’ in the cabinet and on Northern Ireland’s anti-EU
Democratic Unionist Party, while a majority of Conservative MPs were remainers.
This led to paralysis over their negotiating position with the EU and frantic efforts
to find compromise formulae, all of which the EU-27 negotiators had already made
it clear they would not accept. By March 2019, when Britain is due to exit the EU, it
seemed increasingly possible that no agreement would be reached, and that the UK
would lose its existing access to the EU single market and customs union, with
endlessly complex consequences for trade, production, jobs, labour markets, legal
rights and more. During the referendum these implications had not seriously figured
in the debates, but by 2018 they were all too clearly in view. The realization
gradually dawned that almost every aspect of life in Britain had become intricately
intertwined with the EU: the practical effects of leaving were going to prove so far-
reaching and costly that little else could be seriously attended to for years to come
after 2019, whichever party was in government.
 The reason why a left-wing political reaction to globalization, and to austerity,
came so much later was that until 2015 the Labour Party was complicit with both.
Tony Blair and Gordon Brown, its leaders from 1997 to 2010, had emptied it of
progressive purpose and democratic energy. They had ruthlessly converted it into a
party of business, run from the top in conformity with ‘the new reality’ of global
corporate power and American imperial rule.2 Membership fell and working-class
voters stayed at home. But unlike other European socialist parties, Labour was,
paradoxically, saved from electoral meltdown by the UK’s archaic first-past-the-post
electoral system, which makes it virtually impossible for new alternative parties to
win seats unless they are nationalists based in a distinctive region of the country.
Thus the Scottish Nationalist Party, and to a lesser extent the Welsh nationalist
party, Plaid Cymru, were able to take votes from Labour – in the case of Scotland,
reducing Labour to a single Scottish MP in the 2015 general election – by combining
broadly social-democratic socio-economic policies with a call for national
independence; but successive attempts to form a new left-wing party in England
(which comprises 84 per cent of the UK population) invariably come to nothing. 3 In
2015, seven years on from the financial crash, and after five years of Conservative-
imposed austerity, with mounting inequality and drastic cuts to social services,
Labour’s policies, dubbed ‘austerity lite’, were still broadly close to those of the
Conservatives; and in the general election in June that year the party barely
increased its share of the vote, at 31 per cent. Yet it still had a third of the seats in
the House of Commons. No left alternative could break its grip.
But at this point chance, and hubris, entered in. Under a rule change in 2014, the
Labour leader was in future to be elected by the party’s membership and any Labour
Party ‘supporter’ who had paid a fee of £3, although candidates for the leadership
still needed to be nominated by at least 15 per cent of the party’s sitting MPs. The
thinking was that these arrangements would ensure that only a ‘moderate’
candidate could win.4 When Ed Miliband resigned the leadership immediately after
failing to win the 2015 election, the new rules came into operation. The handful of
socialist Labour MPs who had survived the Blair-Brown years urged their colleagues
to nominate one of their number, Jeremy Corbyn, on the grounds that the party’s left
wing should at least be represented on the ballot. Just enough MPs, including several
who considered Corbyn to be an irrelevant idealist, agreed.5 But to everyone’s
astonishment he went on to win, with nearly 60 per cent of the 423,000 votes cast,
three times as many as his nearest rival. Most Labour MPs were dumbfounded and
outraged, and a year later, in June 2016, three-quarters of them signed a vote of no
confidence in him and called on him to resign.6 When he declined to do so they called
for a new leadership contest and supported a challenger. The members, however,
re-elected Corbyn with an increased majority.
The MPs had radically misread the views and feelings of the party’s rank-and-
file, and those of the great majority of the paid-up ‘supporters’ who also voted, but
they continued to believe that the wider electorate would reject Corbyn’s politics.
And when in 2017 the Conservative Prime Minister, Teresa May – convinced, like
them, that under Corbyn Labour would be decimated at the poll – called a snap
general election, observers and pollsters almost unanimously agreed that Labour
would be trounced. Then, one week into the campaign, Labour’s election manifesto,
For the Many, Not the Few, promising a complete break with austerity and wide-
ranging social-democratic reforms, was leaked to the press. And instead of the leak
damaging Labour, as the leaker presumably expected, the manifesto proved an
instant success.7 Labour’s campaign took off. In the course of the six-week campaign
the party increased its share of the vote from 31 per cent to 40 per cent, an
unprecedented jump.
It was not quite enough to win. But the Conservatives, with just 42 per cent, lost
their overall majority of seats and became dependent on the conditional support of
ten MPs from Northern Ireland’s far-right Democratic Unionist Party. They were
also wracked with divisions over Brexit, which they had brought about and which
promised further damage to the economy. A Labour government under socialist
leadership suddenly seemed a realistic possibility.
How had this come about? Was it a flash in the pan? The impact of the financial
crisis of 2007-8 had clearly altered the electoral calculus, but the predictably
relentless demonization of Corbyn by the mainstream media seemed likely to
gradually erode his popularity; and the opposition of most Labour MPs to Corbyn’s
politics seemed likely to mean that even if Labour were to win the next election,
Corbyn’s small team of like-minded MPs would find it difficult, if not impossible, to
pass any radical measures. The tasks of government would entangle them in the
established institutions of the state, bogging them down in struggles with reluctant
civil servants, cutting them off from the party membership and leading to
compromises – including those likely to be called for by trade union leaders worried
by any policy that might jeopardise members’ jobs – that would empty the project
of its radical potential; while the disinclination of investors to either invest or lend
would lead to a fall in living standards and drain away popular support. In a word,
was there any reason to believe that the idea of a ‘parliamentary road to socialism’
in the UK was any less illusory in 2018 than it had proved to be in the heyday of the
‘new left’ from the 1960s to the 1980s?8

THE REACTION AGAINST GLOBALIZATION

The main reason to think that a parliamentary route to socialism might have a better
chance in the twenty-first century than the in the second half of the twentieth was
that public dissatisfaction with the effects of globalization had finally begun to
crystallise into disenchantment with neoliberalism, if not with capitalism itself. But
until now there had been no left-wing outlet for this feeling equivalent to the right-
wing outlet offered by UKIP. Under Blair and Brown the Labour Party had been
committed without reservation to globalization. Labour’s de-industrialised
working-class ‘heartlands’ were seen as safe seats for New Labour MPs, not as a
massive challenge of economic and social regeneration. As Calderbank and
O’Connell noted,

New Labour’s strategists could barely conceal their disinterest in traditionally

Labour-voting, mostly working class electorates concentrated in the party’s safe
seats … Far from articulating the anger of communities ripped apart by Thatcher’s
de-industrialisation of Britain, high unemployment, rising drug addiction, and the
transformation of the labour market into a low-skilled, low-paid and often
casualised festival of exploitation, New Labour was welcoming the ‘benefits of
globalisation’, further deregulating the financial sector, levering private capital
further into the public sector … and welcoming Thatcher’s anti-trade union laws.
 What did it matter what the ‘core vote’ did? They’d likely vote Labour anyway,
since the Tories were even worse.9

In 2010, two years after the financial crisis had struck, Labour lost office to a new
coalition government of Conservatives and Liberal Democrats who embarked on a
programme of massive public spending cuts. The response of most Labour MPs to
the party’s defeat was to want to shift policy still further to the right. Ed Miliband,
who succeeded Gordon Brown as leader in 2010, opposed this, but was persuaded
by advisors to rely on the unpopularity of the Coalition’s austerity policies to win
the next election without risking an internal party battle to shift it to the left. And as
spending cuts led to the disappearance of tens of thousands of public sector jobs and
the social services they had provided, from social care to libraries, the pain was felt
everywhere, not just in the ex-industrial areas. Yet Labour’s vote barely increased,
and the Conservatives returned to power. Corbyn’s nomination thus finally provided
the first left-wing outlet for public disaffection. The result was his successive
leadership election victories; a massive influx of new members into the party (up
from just under 200,000 in 2010 to over 550,000 by the end of 2017);10 the
emergence of Momentum, a potent new organisation of left-wing Labour activists;
and the dramatic 2017 election advance.
Corbyn and his small group of left-wing MPs were as surprised as everyone
else.11 No one had tested the potential of the shift in public opinion that the response
to his nomination revealed. Perhaps the huge crowds that gathered to hear and
cheer him everywhere he went would lose interest. Perhaps public support would
fall short of what was needed to enable Labour to win the next election, not required
to be held until 2022. And if Labour did win the next election, would public support
be strong enough to allow the government to face down, in addition to resistance
from many of its own MPs, the predictably ferocious opposition of capital and its
media allies to even the mild social-democratic measures promised in the party’s
2017 manifesto – let alone anything that could lead beyond social democracy, to a
real challenge to capitalism? These were the questions the left now had to answer.
The idea of going ‘beyond social democracy via social democratic reforms’ – as
one member of Corbyn’s team succinctly summarised the project – is clearly in the
tradition of Eduard Bernstein’s ‘evolutionary socialism’, and is open to the
objections raised against it by a long line of critics, from Luxemburg and Kautsky to
Ralph Miliband and Leo Panitch.12 But although leading members of the team were
well aware of these debates, they were notably indifferent to them. Perhaps there
was no such route to socialism, but this could not be known in advance. The dire
state of British society and economy, the incompetence and opportunism of the
ruling class, the threats to peace and the biosphere, all presented an acute need for
action, and the public seemed readier for radical change than at any time since 1945.
There was an obligation to act, to make use of all the experience accumulated in the
previous hundred years, and to push the possibilities of socialist advance to their
limits.

THE PROJECT
The project was described by one leading activist as follows:
 The long run aim is to achieve a radical shift in the balance of power and the
balance of income and wealth, a political, economic and social shift. You then
work back to the steps to that end. A basic one is winning elections so as to be
able to make major changes that improve the lives of ordinary people. With
power, you have to make changes politically (democratising the state),
economically (de-privatising, democratising work and economic life), and
socially – a shift in the balance of social forces.
From this it follows that you must pass several major measures in the first term
of office. The measures must also contribute to shifting the hegemony – they must
be radical, and attract opposition – not reforms by stealth like Brown’s tax credits,
which are being undone, but like the minimum wage, which can’t be. 13 The
essence is for reforms to be radical but at the same time common sense.

The sophistication of this formulation is striking, with its blend of strategic and
tactical considerations, its integration of the struggle for hegemony – Gramsci’s ‘war
of position’ – with planning for the short term (the ‘war of movement’), and its
strong emphasis on democracy, both in the organization of the state and in the
struggle itself. All these elements are crucially important, and combining them in
this way has no parallel in the thinking of previous Labour governments; but what
is most distinctive to the Corbyn project, and most critical for the future, is the
commitment to democratization. From his initial decision to consider standing for
the leadership, through his refusal to step down when told to do so by the great
majority of Labour MPs, to the unprecedented success of his election campaign, it
was the support of thousands of people in the streets that was the key to Corbyn’s
success. This was partly due to his personality and style – calm, unassuming, honest,
likeable – but also to his conception of politics. Unlike some left-wing leaders in
other European countries, his appeal was ‘not centred on himself as a charismatic
leader’.14 He was always most at home among social activists and when speaking
with ordinary people, inviting them to contribute to party policy and to become
active participants in helping to get it enacted and implemented. He was ‘one of a
tiny handful of MPs who commanded near-universal respect among grassroots
campaigners … [He] had addressed so many rallies and meetings over the years on
such a range of causes that he could count on a bedrock of support from the off’. 15
And this marked his leadership as much after the 2017 election as before. A slightly
envious complaint by a senior colleague needing decisions on urgent strategic issues
was that ‘Jeremy is touring four days a week’.
Yet it was more than a personal preference: it was a point of principle, adopted
by the new left in the 1970s and 1980s and reinforced in reaction to the way top-
down party management of the Blair-Brown years had led the party to become
unrepresentative of its base, and eventually hard to distinguish, in important
respects, from the Conservatives. The big question for the next phase of the struggle
was how far this democratic commitment could be made normal and generalized,
both inside the party and in the party’s relations with the electorate, so that genuine
power continued to be exercised by Labour members and voters.

MOMENTUM
A key element in answering this question will be what happens to Momentum, a new
organisation of Labour activists that emerged from among the thousands of people
who flocked to campaign for Corbyn in his first 2015 leadership bid. The Labour
Party already had left-wing groupings, most notably the Campaign for Labour Party
Democracy, inherited from the Benn years; and it was the leading activist of the
CLPD, Jon Lansman, who now, more than 30 years later, played a key role in
capitalizing on the sudden availability of thousands of enthusiasts to create
Momentum.16 What began as a swiftly assembled election campaign organization,
using clever new online apps that allowed a local group of any size to start
canvassing, expanded with each successive electoral challenge. By spring 2018
Momentum had 41,000 paid-up members, a budget of about £500,000, and a paid
staff of twenty. According to Lansman, who became chair of Momentum’s National
Coordinating Group, Momentum members accounted for only some 2-3,000 of the
roughly 40,000 Labour members who made political activism a major commitment;
but the coordination provided by Momentum’s national office gave these members
a confidence and weight beyond their numbers, and the digital skills of the younger
members, especially, gave the organization a formidable social media impact.
As with other new left organisations in Europe, such as Syriza and Podemos,
Momentum comprised many different currents, from peace and tenants’ rights
activists to former members of the Communist Party, and it had some initial
difficulty in combining them. One tendency saw Momentum primarily as an internal
force to break the grip of the right-wing majority of Labour MPs and the party’s 400-
plus professional staff, many if not most of who had been appointed under Blair and
were also hostile to Corbyn; and to fight parliamentary election campaigns for
socialist candidates. Another tendency was focused on seeking to drive a cultural
change by integrating party membership with social activism. After some conflict a
constitution was adopted in early 2017 which went far to resolving these tensions.
Broad policies are laid down by the National Coordinating Group, consisting of a
large minority of representatives elected online by local members, plus a small
majority of nominated representatives of affiliated trade unions and other national
bodies (including the CLPD, for example). But within these broad policies, members
can choose their local priorities and organize as they see fit.
Much is unclear about Momentum’s long term potential, which its enemies are
inclined to exaggerate, and with good reason: for example, Momentum’s main inner-
party rival, the Blairite group ‘Progress’, had just 2,382 members in 2016, and 50 in
its youth section.17 The Labour right’s absurd denigration of Momentum as a gang of
Marxist fanatics and their idealist dupes intent on a ‘power grab’, and its constant
vilification in the mainstream media, attributed more influence to Momentum than
it really had, but it was a force to be reckoned with. Its mobilizing capacity and the
digital skills of its organisers had been crucially important to the left’s electoral
success in both the leadership elections and the 2017 general election. Momentum’s
organising techniques were gradually adopted by party headquarters, and when in
early 2018 a Community Campaigns Unit was established in the Leader’s Office with
a remit to organize in a key range of formerly Labour seats and a paid staff of field
workers, several of them were drawn from Momentum staff.
Momentum has also played a significant role in changing the party’s internal
balance of power by actively engaging in elections to party posts, as well as in
constituency elections. By late 2017 the National Executive finally had a pro-Corbyn
majority; the General Secretary and several senior staff officers had been replaced
by Corbyn supporters; while the Director of Communications, located in the
Leader’s office, had been a close supporter of Corbyn from the start.
Getting left-wing candidates adopted for winnable parliamentary seats was
much harder. Under Blair, the party’s National Parliamentary Panel had ruthlessly
excluded left-leaning potential candidates from being considered, bequeathing a
Blairite majority of MPs as the biggest immediate obstacle to the Corbyn project. 18
After the 2017 election new candidates needed to be selected in some 75
constituencies. About half of those selected were left-wing candidates backed by
local Momentum activists. All of these were in winnable seats; but even if all won at
the next election, the balance of forces inside the parliamentary party would not be
greatly changed. Securing support for socialist measures would depend on whether
public opinion moved more decisively in a socialist direction.
That is where Momentum’s outward-looking work, as summarised by its
national coordinator, Laura Parker, could be important:

Momentum is not an alternative policy-making organisation from the party. It

was born as a sort of praetorian guard for Jeremy – to get him elected and keep
him there. It shouldn’t be seen as rent-a-rally, but as an innovator, developing
new ways of campaigning. For example, promoting the discussion of current
issues like universal basic income and universal basic services, our job should be
to ‘stretch’ it – to go further, challenging the leadership, but in a sophisticated way
which is not provocative.
We should be working out the role of a party in the twenty-first century in
which so many people live precarious lives – on short-term contracts, struggling
with money and housing – but also much more fluid lives. People no longer grow
up reading just one newspaper, watching just two or three TV channels. How does
the party relate to this? People don’t have time to go to party branch meetings –
where is the return for doing that? They need to feel they can actually shape
politics – whether doing it from home on their laptop, or out on the street.
We have to be strong and focused so as to keep going after Jeremy goes – the
transformational agenda he has set out isn’t the work of just one parliamentary
term.

In practice this meant Labour activists engaging in local struggles of all kinds,
joining trade unions and social movement organizations, and making available
additional resources, such as videos, which Momentum’s central staff could provide.
The aim was not to try to make local struggles and initiatives into Labour-led
struggles and initiatives, but to make Labour as a party feel, and be seen to be,
behind them; and to link together struggles in different domains, from tenants’
rights to union rights to immigrants’ rights, and set them in the context of a broader
socialist vision of society.
In the long run this work would clearly be crucial to the democratization of
everyday life that the socialist project calls for, and would also be crucial for
maintaining morale and activity between elections. After Corbyn’s successful re-
election as leader in 2016 there was a distinct loss of excitement and sense of
direction among Labour activists which was only reversed the following year by
Theresa May’s decision to call a general election.
 Momentum’s value to the party was acknowledged, but whether its
independence would survive remained to be seen. It was not hard to imagine that at
some point in the future the party leadership’s interest in keeping control of policy
and priorities would lead it to want to curb the decentralized democratic culture to
which Momentum was committed.

WINNING ELECTIONS
For the left to move forward, it needs to show that Labour can win elections on a left
programme. If Labour had not dramatically improved its position in the 2017
election, Corbyn’s position as leader would have come under renewed threat, not
least from the trade unions, which had preferred even the unrewarding Blair and
Brown Labour governments to a Conservative one.19 Instead, the electoral gain in
2017 seemed to portend an election victory under Corbyn’s leadership next time.
But under the UK’s electoral system winning a parliamentary majority will be
extremely difficult. If Labour was able to raise its share of the vote from 40 per cent
to even 43 per cent it would not necessarily secure a majority of seats. Thanks to the
collapse of the Liberal Democrats’ vote after 2015, and the collapse of the UKIP vote
after the Brexit referendum in 2016, for the time being the electorate is highly
polarised between Labour and the Conservatives. Thus in 2017 Labour under
Corbyn won 40 per cent of the vote but secured only 266 seats; whereas back in
2001 Blair’s very similar share of the vote (40.7 per cent) had yielded 412 seats,
giving him a massive overall majority. That was because 27 per cent of the votes cast
in 2001 had gone to the Liberal Democrats, UKIP, and the nationalist parties, without
yielding them a corresponding number of seats, thanks to the first-past-the-post
voting system. Winning a parliamentary majority is also difficult because Labour
voters tend to be concentrated in big cities, piling up large majorities which under a
proportional electoral system would yield more seats. On top of this a revision of
constituency boundaries – necessitated by a planned reduction of the number of
MPs from 650 to 600, and due to come into effect at the next general election – is
expected, and was probably intended, to aggravate Labour’s problem.20
The Labour right argue that all this makes it necessary to revert to a ‘centrist’
programme capable of appealing to ‘swing’ voters in marginal constituencies.21
Momentum’s activists believe that these seats can be won if more young working-
class voters, who in the past have tended not to vote, can be mobilised to go to the
polls,22 and if older voters can be won back. That in turn depends on whether the
policies that had such appeal in 2017 can be developed and made convincing over
the years before the next election, and on the mobilizing efforts of Labour activists.
It also depends on whether the leadership proves able to neutralise the cynical
drum-beat of denigration by the party’s own right wing, amplified by the
mainstream media. Within the first few months of 2018 Corbyn was accused, first,
of having been a spy for Czechoslovakia, and then of being an ally of Putin (for
refusing to fall in line with the government’s insistence, without evidence, that Putin
had ordered the poisoning of a former Russian spy living in England), and finally of
condoning antisemitism. The press and the BBC unanimously gave top coverage to
this canard, alleging that the Labour Party was a hotbed of antisemitism and that
Corbyn condoned it. The (Conservative-linked, and nominated not elected) Jewish
Board of Deputies denounced Corbyn, and were joined in a public demonstration
against him outside Parliament by some prominent right-wing Labour MPs.23 Only
some online sources pointed to the lack of evidence for these claims, to the
deliberate equation of support for Palestine with antisemitism, and to evidence of
Israeli government efforts to encourage, and even finance, elements in the Labour
Party to reduce the chances of Corbyn becoming Prime Minister.24 The timing was
clearly aimed at influencing the impending local government elections in May, and
was credited with having prevented Labour from gaining control of at least one of
the two remaining Conservative-controlled councils in London.25
The charge that Corbyn had spied for Czechoslovakia was quickly disproved and
some observers thought it had backfired in his favour, but over time the cumulative
effect of such constant media smears could prove electorally damaging. Corbyn’s
transparent honesty was the left’s biggest electoral asset. If the right succeeds in
making him look less scrupulous, or naïve, or weak, it could seriously affect the left’s
prospects – already far from assured – of winning the all-important next election.
A final problem is Brexit. In opposition Corbyn was able to avoid taking a very
clear position, but Labour was no less divided on the issue than the Conservatives.
Any eventual agreement with the EU that permitted continued unlimited
immigration of EU workers to the UK would likely cost seats in Labour’s old
heartlands, which had voted massively ‘leave’, while the young voters whose
support had been so important in 2017, and educated middle-class Labour voters in
general, were predominantly ‘remainers’. Fashioning a policy on Brexit, above all on
immigration, that would not cost votes with both groups of supporters looked
extremely difficult. The prospects for socialist advance through the post-EU thicket
were, to say the least, hard to envisage.26

PROGRAMME AND OBSTACLES

Two days after Labour’s 2017 election manifesto, For the Many, Not the Few, was
leaked to the press, the Daily Mirror published an opinion poll which showed that

Renationalising the railways, the Royal Mail and the energy industry … each had
the support of roughly half the public, with only about a quarter opposed.
Seventy-one percent wanted zero hours contracts banned. Sixty-three percent
supported the radical idea of requiring any company bidding for public contracts
to adopt a maximum pay ratio of 20:1 between their highest and lowest paid staff.
Taxing the rich, for so long taboo in British politics, turned out to be a big hit.
Sixty-five per cent liked the idea of raising the income tax of those earning over
£80,000, including a majority of Tory voters.27

Ending tuition fees for students, lifting the austerity-driven pay cap for public
sector workers, protecting the state pension from erosion, and closing the gender
and racial pay gaps also found wide support. But as Alex Nunns noted, ‘the whole
was more than the sum of its parts. Taken together it painted a picture of how
society could be organised on fundamentally different lines. Its distinctive themes
were collectivism and universalism, after years of individualism and means-tested
entitlements.’28
Whether or not a majority of the electorate would come to see it this way
depends on how far the Labour leadership and Labour activists succeed in joining
the dots between the different elements in the programme and making them seem
no more than plain common sense. And if Labour won, how far the programme
would prove feasible would depend on whether the radical break with austerity it
represented, and the radical programme of social democratic measures it contained,
could be carried through in face of predictably intense resistance – from
shareholders and investors, the Conservative Party, the media, the City of London,
the Treasury and the civil service, the ‘deep state’, the US state, and NATO – in the
context of a corporate sector highly integrated with global markets.
Yet, given the ferocity of the assault on Labour that began to be mounted in early
2018, once the right had begun to reckon with the consolidation of Corbyn’s
leadership, it is disconcerting to read the 2017 manifesto and see just how
moderately social-democratic it was.29 Among its leading commitments were:

• to renationalize (de-privatize) water supplies, rail services, and the Royal

Mail and gradually renationalize energy supplies;
• to establish a national transformation fund to invest £250bn over ten years in
the national infrastructure, and a national investment bank to lend another
£250bn over ten years to regenerate and rebalance the economy;
• to restore workers’ legal rights and end super-exploitative employment
practices such as zero hours contracts and bogus forms of self-employment;
• to end university fees, restore maintenance grants for students, reduce school
class sizes, and extend free child care;
• to repeal the legislation which had broken up the national health service and
was increasingly privatising clinical services;
• to build 100,000 publicly-owned housing units a year and to control rent
increases in the private rental sector;
• to cover the cost of the promised investments and reforms by attacking tax
avoidance and raising taxes on corporations and higher paid taxpayers.

COMMON SENSE?
This was clearly a programme that could be made to seem ‘plain common sense’. It
offered to improve the lives of ordinary people in important ways that people cared
about, and included ‘landmark’ measures whose radical nature was clear and
aroused opposition (they were instantly denounced as Stalinist, economically
illiterate, incoherent and unaffordable). When implemented, they would symbolise
a new order. The tax increases to pay for them were to fall on corporations whose
tax avoidance had become notorious, and on the rich who had done well out of both
the boom and the crisis. And the long list of measures to restore workers’ rights
implied a significant shift in the social balance of power, potentially beginning to
restore working class confidence shattered by years of unemployment and trade
union decline.
There were plenty of omissions and weaknesses, some due to the speed with
which it had to be composed in conditions of a snap election. Sympathetic critics
pointed to whole areas of policy that needed far more radical measures, while others
noted the failure to follow through on Corbyn’s longstanding opposition to nuclear
power and nuclear weapons. This was due in large part to the determination of the
country’s largest trade union, Unite, to keep its members’ jobs in the nuclear
industry.30 Also missing was serious attention to the narrowing ecological space for
human life on the planet, which within at most two generations is liable to supersede
most other concerns. As Jeremy Gilbert has pointed out, the manifesto shows no
recognition that ‘what is required to avoid ecological catastrophe is a radical
reorientation of economic priorities away from the industrial capitalist obsession
with economic growth’.31
One crucial element in the socialist project that was also largely missing from the
manifesto was any significant move towards democratizing the state. There was a
promise to establish a Constitutional Convention ‘to examine and advise on
reforming the way Britain works at a fundamental level’, and a commitment to an
elected upper house of Parliament and to reducing the voting age to 16, but nothing
more concrete. There was no suggestion that there should be a written constitution,
to make the electoral system more democratic, or to end the exercise of
unaccountable executive power through the ‘royal prerogative’ and other archaic
institutions. There was nothing on ending the corporate capture of the state – the
downsizing of the civil service, the rampant influence of unregulated corporate
lobbying,32 the ‘revolving door’ between the senior civil service and private
corporations, or the corporate-style ‘executive boards’ that had been set up for each
government department, largely filled with private sector personnel.33 There was no
proposal to end government reliance on management consultancies whose main
clients are corporations, or on the undemocratic nature of the BBC, nominally a
politically neutral public service but in practice a key component of the capitalist
state system.34 There was no suggestion of ending subsidies to private schools
through which the rich constantly renew their dominant positions in the state and
corporate elites.
Still further from the agenda of the 2017 manifesto was any thought about new
forms of public ownership which could draw directly on the expertise and insights
of ordinary people, on the lines pioneered by the Lucas Aerospace shop stewards in
the 1970s and the London County Council in the 1980s, as urged by Hilary
Wainwright.35 Nor were there any proposals for the new forms of accountability at
all levels of the state and public services that are needed for a ‘public realm’ that has
been corrupted by spin and disinformation. But some important signs of more
radical thinking were provided in a speech by John McDonnell in February 2018 in
which he stated that when public infrastructure and services were returned to
public control, workers and service users would be put in charge:

We should not try to recreate the nationalised industries of the past. … we cannot
be nostalgic for a model whose management was often too distant, too
bureaucratic and too removed from the reality of those at the forefront of
delivering services. Taking essential industries away from the whims of the
market is an opportunity to move away from profit as the driver of investment
and hiring decisions. But just as importantly it’s an opportunity for us to put those
industries in the hands of those who run and use them.36

The capacity of the civil service to manage re-nationalized services was also
being reviewed, and the practicalities were being explored of not only establishing
a universal basic income but also of making other basic services, in addition to
education and health care, universal (i.e. free) too.
How far these ideas would be endorsed within the shadow cabinet, let alone the
parliamentary party, remained to be seen, but the will to go beyond the 2017
manifesto was clear. And even liberal commentators recognize that the degraded
version of a representative state that currently exists in Britain is responsible for a
catalogue of policy failures by successive governments, on a scale that the next
Labour government cannot afford.37

FEASIBILITY
In considering the overall feasibility of the manifesto programme, there would be
four main kinds of obstacle to overcome: the right wing of the parliamentary party;
the state; the mainstream media; and capital.
The most obvious and immediate obstacle was the hostility of a majority of
Labour MPs. If they stayed in the party and fought the next election on a manifesto
like that of 2017 they would have a formal obligation to support it in office, but they
would be tempted to sabotage its implementation if they could do so without losing
their seats through deselection by their local party members. Given the gap in
attitudes between so many MPs and the party’s membership, there is a strong case
for reintroducing mandatory reselection of all MPs, which had been secured by the
new left in 1979 but abandoned after the left’s defeat in the 1980s.38 The notion that
MPs are professional representatives with a lifetime right to their seats is clearly
incompatible with the concept of a democratised party. Corbyn, however, has ruled
out re-adopting reselection, evidently fearing that a direct confrontation with
Blairite MPs would consume energies in an intra-party struggle when extra-party
tasks had higher priority.39 Yet without it the leadership have few levers at their
disposal, and the active opposition of so many MPs remains the Corbyn project’s
most acute immediate – and indeed longer-run – weakness.40
Resistance from the state would take many forms. A general problem would be
the unconscious absorption by most existing public servants of a professional mind-
set geared to neoliberal values and processes.41 Moreover, the ‘New Public
Management’ and austerity have reduced the British civil service by a fifth between
2008 and 2017;42 and the senior (policy-making and implementing) civil service has
been has been hollowed out to the point where it lacks both planning and
implementation capacity.43 To implement the programme of de-privatization and re-
regulation envisaged in the 2017 manifesto, new kinds of civil servants and
managers would need to be recruited and trained. In short the state would need to
be rebuilt as an agency for implementing social democratic policies.
There are things that a well-prepared government could do before these
obstacles had to be confronted in office. Not all the manifesto’s economic measures
would need primary legislation, or even new spending. The railways, for example,
would revert automatically to public ownership as the private rail companies’
limited-term franchises ended. Ending university fees for students – a high-profile
promise, affecting half of the student age group – would also not necessarily cost
much more than the state-backed loans currently made to students to cover the fees,
since some 45 per cent of the loan total is not expected to be repaid. And one effect
of austerity – which was supposed to eliminate the structural deficit and has signally
failed to do so, while impoverishing millions of people – was to make ordinary
people aware that no official pronouncements on public finances could be trusted.
As a result the argument that spending on public infrastructure, regional
redevelopment, health and education services is ‘unaffordable’ can no longer be
relied upon to work.
 The shift of readers from print to online news and comment, and from major
broadcasters and newspapers to social media, could sometimes work to the
advantage of the left – the 2017 election has been described as the first ‘post-tabloid’
election, in which hysterical attacks on Corbyn by the Daily Mail and other right-
wing papers made no detectable impact. But over time heavily-funded social media
may also give an advantage to the right, so that the gross bias shown by the BBC as
well as the right-wing press remains a serious long-term handicap that needed to be
tackled. At some point the political cost of not confronting it could come to seem
greater than the cost of taking it on.
The fourth kind of obstacle – resistance from capital, both from the owners of
productive companies and from the purchasers of government bonds – is
predictable and impossible to deflect. The real economy is already weak from
decades of low investment, running an unsustainable balance of payments deficit
(now equal to 6 per cent of GDP), and consequently dependent on the foreign
exchange earnings of a global financial services sector (‘the City’), which has no
interest in the real economy.44 All these problems are likely to be made worse by
Brexit, which is widely predicted to reduce economic growth under even the most
optimistic scenario.45 Whether a Corbyn government would be able to borrow at an
affordable rate of interest, and whether corporations would resume investment in
the context of a determined social-democratic economic policy, were known
unknowns.
A Labour government could thus be faced, as a result of business hostility, with
recession, job losses, and an inability to deliver on any policies that entailed
significant costs. John McDonnell, the shadow chancellor of the exchequer (minister
of finance), stated in autumn 2017 that plans were in hand to deal with this
eventuality (understandably he did not indicate what they were).46 The logical
response to a refusal by companies to invest for long-term productivity growth
would be to impose capital controls and shift the direction of investment from banks
to the state, though this would have such severe consequences for the global role of
the City of London that it is hard to envisage.
Once again, a necessary condition of success would be understanding and
support from the public, which in 2018 was far from ready for that kind of challenge.
In a wide-ranging speech in June 2018 McDonnell outlined a coherent plan for state-
led economic transformation which he claimed had support from many people in
the financial sector. It included, besides state-funded regional investment banks and
a Strategic Investment Board, the possibility of making the Bank of England
responsible for helping to boost productivity (and not just controlling inflation), and
inducing the country’s ‘high street’ banks to shift their lending from real estate to
productive investment – in themselves hardly radical ideas, but nonetheless
signalling a decisive shift from neoliberal to social democratic thinking.47 But in spite
of its reasonable tone and feasible-sounding agenda the speech was not extensively
reported and most people still had no clear picture of what would be involved in
Labour’s plans for restoring the state’s capacity to manage the economy, or to
insulate some aspects and sectors from exposure to market forces and embark on
rebuilding the country’s capacity to export – a precondition of socialist
transformation. A further risk was that the trade unions – and not least Unite, which
occupied a strategic position in the party, besides having members in key sectors of
the economy – could withdraw their support if implementing a Labour
government’s policies appeared to threaten their members’ jobs in the short term,
even if the long term results looked to be beneficial for jobs in general.48

PREPARING FOR GOVERNMENT

In thinking about the challenges awaiting the Labour leadership if it does win the
next election, it is instructive to look at the experience of Syriza, which was carried
into office in Greece on a similar wave of anti-neoliberal sentiment in 2015 – only to
succumb, eventually, to the demands of the neoliberal ‘troika’ (the EU Central Bank,
the European Commission and the IMF) and accept an extreme version of austerity.
A leading Syriza activist, Andreas Karitzis, has argued that Syriza’s failure was
not due just to Greek voters’ unwillingness to give up the Euro, but also to failings of
Syriza’s own.49 At bottom, he argues, Syriza failed because it sought to create an
egalitarian social-democratic order by means of the existing system of
representation, and the existing state. Instead, he argues, the left everywhere needs
to focus on empowering ordinary people to opt out of the global economy, and
create a new kind of networked local economy relying on the know-how and
practical experience they already possess: otherwise they cannot avoid being
trapped in the constraints and norms of global economic forces.
This line of thinking is echoed by some leading activists on the Labour left, such
as Hilary Wainwright. But Karitzis also draws lessons of a more proximate kind.
Whatever vision of socialist advance a left-wing party may have, he argues, Syriza’s
experience shows that it needs to have a collective strategy for government, and not
leave it to individual prospective ministers to work out plans for particular sectors
in isolation. It needs to use the official resources made available to it as the leading
opposition party – amounting in the UK case to £6.4 m. in 201650 – to support this
collective work, rather than give it to individual shadow ministers. Ministries should
also be assigned to people with relevant skills or knowledge, and who have
connections to the social forces whose support will be needed to get things done.
The party needs to think through the problems involved in implementing policies,
with timelines for legislative and executive action and clear ideas about which
organs of the state or other bodies have the capacity to do what is needed: for this,
task forces with the needed mix of expertise and policy skills need to be set up. And
there needs to be an agreed policy for channelling state resources to social
movements to enable them to strengthen their capacity to both support new state
policies and undertake innovatory work of their own. And so on.
In 2018 the Labour Party was far from being able to meet these requirements or
develop such ideas. Preparing Labour for government was the remit of Jon Trickett
MP, shadow minister for the cabinet office. In early 2018, he did call on every
member of the shadow cabinet to produce their five priorities for government, with
a view to focusing minds on detail and implementation. There was also a strategy
group, consisting of Corbyn, MacDonnell, Trickett, and Diane Abbott, the shadow
Home Secretary, plus Seamus Milne, the party’s director of strategic
communications, and Andrew Murray, the chief of staff of the largest trade union,
Unite, who had been seconded to assist in the leader’s office during the 2017 election
campaign. But it did not seem to meet regularly and had no secretariat. These
arrangements perhaps represented the limits of the possible, though it was hard to
avoid the impression that more could have been done if the leadership had seen it
as a priority.
 WAR OF POSITION – HEGEMONY
The point has already been made that to get to socialism via social democracy calls
for a major hegemonic shift, but it is not clear that Labour’s new leaders have yet
addressed the problem of securing it. It is said that when Margaret Thatcher’s close
lieutenant, Sir Keith Joseph, first took office as Secretary of State for Industry in
1979, he gave his senior civil servants a list of key neoliberal texts, such as Hayek’s
Road to Serfdom, and told them to read them so they would understand the radical
shift in policy they were going to be expected to implement after 35 years of social
democracy. It is not obvious what would be on an equivalent reading list that
Corbyn’s team might give senior civil servants following an election victory. There
are no equivalent founding texts of Corbynism, and there has been no recent
equivalent of the long evolution of socialist thinking and planning that preceded the
election of a Labour government in 1945 (or of the 30-plus years of work by the
neoliberal think tanks and conferences built up by the followers of Hayek and
Friedman that preceded Thatcher’s election in 1979).51 There is not yet a widely
shared coherent ‘story’ that defines what is wrong and who and what is responsible
for it, which makes sense of people’s current experience and their remembered (i.e.
recent) past, and which implies a set of ‘obvious’ reforms.52
This means that the most urgent hegemonic task, necessary to make a socialist
agenda seem common sense, will initially have to emerge from practice. A Labour
government’s first measures would have to exemplify the common sense by being
popular and practicable and attracting ideological opposition – so that their
successful implementation would signal a decisive ideological shift, which the
leadership would have to reiterate and develop in every speech. The socialist
intelligentsia would have to flesh it out and argue for it in the widest possible range
of settings. Party members would have to articulate it in their daily interactions and
their work with local organisations, and trade unions would have to articulate it in
the way they framed their demands and in the way they supported other causes. In
early 2018, however, little of this was happening. The mismatch between the scale
of the task and the number of people so far mobilised to tackle it was undeniably big.
The most obvious and urgent need was for the leadership to find time to enlist the
active support of the much larger network of people with expertise and talent that
was potentially available to join in the task.

CONCLUSION: IS THERE A WAY FORWARD FOR THE LEFT?

The failure of most Labour MPs to notice that disillusionment with neoliberalism
had shifted public opinion radically to the left allowed a small group of socialist MPs
to take control of the party through the very mechanism – letting the members
choose the leader – that was meant to ensure that this could never happen. The left
now controlled not just the party’s policy but also its financial resources, swollen by
the addition of more than 350,000 new dues-paying members. It would take longer
to secure full control of the party’s professional machine, but that process had begun
too. Corbyn had a mandate from two-thirds of the party’s members, and the party
led by him had received a vote of confidence from 40 per cent of the electorate.
But the obstacles in the way of success were so great, and the team around
Corbyn was so small, that it was hard to be confident that they could win an election,
form a convincing government, and set in motion significant steps towards
socialism. In addition to the opposition of global capital and the steadily rising costs
of adapting the country’s infrastructure to global warming, changed economic
conditions resulting from Brexit could derail the most carefully planned advance
towards social democracy, let alone towards socialism.
Yet the circumstances were so volatile that it was not possible even to be
pessimistic with any degree of confidence. The quality and commitment of many of
those most actively involved in the Corbyn project was impressive. The
Conservatives might prove unable to change course and respond convincingly to the
public’s disenchantment with neoliberalism, and Labour MPs might finally stop
wishing they could elect another people (as Brecht famously put it) and start trying
to relate to the one that actually existed.53 The party might manage to resolve its
policy dilemmas, mobilize a wider cadre of socialists (or at least social democrats),
win an election, and take some decisive first steps into the post-neoliberal era. Or
2017 could prove to have been the project’s high point: not the beginning of a
transition to socialism but rather an early moment – if a historic one – in what is,
after all, likely to be a much more protracted transition than most of Corbyn’s
supporters ardently hope for.

NOTES

1 Technically the referendum was purely advisory, but after a majority had voted ‘leave’ no party dared
suggest it was not binding. An outstanding analytical overview is Anthony Barnett, The Lure of Greatness:
England’s Brexit and America’s Trump – Why 2016 Blew Away the World Order, London: Unbound, 2017;
although Barnett’s conclusion as to what should follow politically is unconvincing. For a succinct account
of the insoluble constitutional dilemmas which leaving the EU presents for the UK, see: Sionaidh Douglas-
Scott, ‘Brexit vs. the Constitution’, London Review of Books 24 May 2018, pp. 40-41.
2 In place of the original Clause IV in the party’s constitution calling for public ownership of the means of
production and exchange, Blair’s Clause IV called for ‘a dynamic economy, serving the public interest, in
which the enterprise of the market and the rigour of competition are joined with the forces of partnership
and co-operation to produce the wealth the nation needs.’
3 The left-wing anti-imperialist party ‘Respect’, founded in 2004, secured a handful of local council seats,
and one of its founders, George Galloway, successively won parliamentary seats in two different
constituencies in 2005 and 2012 respectively. But by 2016 its remaining leadership had joined Corbyn’s
Labour Party, and Respect had folded. Left Unity, founded by the filmmaker Ken Loach in 2013 with the
aim of uniting ‘all those who seek to authentically voice and represent the interests of ordinary working
people’, lost most of its small membership to Labour following Corbyn’s election as Labour leader in 2015.
On Left Unity and all attempts to form left-wing parties in opposition to Labour, see: Andrew Murray, ‘Left
Unity or Class Unity? Working Class Politics in Britain’, in Leo Panitch, Greg Albo and Vivek Chibber, eds,
Socialist Register 2014: Registering Class, London: Merlin Press, 2013, pp. 266-304.
4 The aim was to reduce the influence of both the trade unions and Labour activists, generally seen as being
on the left, by diluting it with the votes of the membership at large, who were considered loyal centrists,
and supporters, seen as even more so. When large numbers of new members joined (or in many cases re-
joined) the party to support Corbyn, the National Executive adopted a new rule excluding from voting
anyone who had not been a member for at least six months at the time of the vote. When this was
challenged the NEC spent a large sum defending its action in the courts, and eventually succeeded.
Support for Corbyn in the second leadership election would obviously have been still higher but for the
 disenfranchisement of these members. Supporters, however, who were not covered by the new exclusion
rule, also voted for Corbyn by a significant majority.
5 This account of Corbyn’s two leadership elections, and subsequent success in the 2017 general election,
is drawn from Alex Nunns, The Candidate: Jeremy Corbyn’s Improbable Path to Power, London: OR Books,
2018, a brilliantly written and well researched account. See also Richard Seymour’s shrewd assessment
in Corbyn: The Strange Rebirth of Radical Politics, Second Edition, London: Verso, 2017.
6 246,000 of the votes cast were cast by party members, of whom 49.6 per cent voted for Corbyn. The
balance of the votes cast were by paid-up ‘supporters’, a large majority of whom also voted for him.
6 The no confidence vote followed a failed ‘coup’ in which a large number of Corbyn’s shadow cabinet
resigned en masse, wrongly assuming that he would feel unable to continue. What lay behind both moves
was the fact that under the fixed-term-elections law passed by the coalition government in 2011, the next
election was not due till 2020. Labour MPs opposed to Corbyn therefore reckoned they had four years in
which to get rid of him. But after David Cameron lost the 2016 referendum on whether to remain in the
EU, he resigned. It was then immediately assumed that his successor, Theresa May, would call a much
earlier election to consolidate her position, and that with Corbyn as leader Labour would lose badly,
putting many Labour MPs out of a job. Getting rid of him suddenly became urgent.
7 The leak was traced to the office of the leader of the Labour Party in Scotland, Kezia Dugdale, an opponent
of Corbyn, and was judged to be a deliberate and notably extreme attempt to injure him (Nunns, The
Candidate, p. 312). Dugdale resigned as Scottish leader in August 2017. Her successor, Richard Leonard,
elected in November, supported Corbyn.
8 For the case against the parliamentary road to socialism after the defeat of the new left in the party in the
1980s, see: Leo Panitch and Colin Leys, The End of Parliamentary Socialism, London: Verso, 1997 (second
edition, with David Coates, 2001).
9 Michael Calderbank and Paul O’Connell, ‘Confronting Brexit’, Red Pepper, 20 March 2017, available at:
https://www.redpepper.org.uk/confronting-brexit.
10 Membership of UK Political Parties, House of Commons Library briefing paper Number SN05125, 1 May
2018, available at: researchbriefings.files.parliament.uk/documents/SN05125/SN05125.pdf
11 Nunns, The Candidate, pp. 62-63, 71.
12 See: Ralph Miliband, Parliamentary Socialism: A Study of the Politics of Labour, London: Allen and Unwin,
1961; and Panitch and Leys, The End of Parliamentary Socialism.
13 As Chancellor of the Exchequer in 2002, Gordon Brown introduced a new form of income support for all
families with children of school age, including those with annual incomes up to £58,000, and for families
with breadwinners on low pay. The support took the form of a reduction in tax liability. One of the first
austerity measures taken by the Coalition government in 2010 was to start cutting these tax credits.
14 Hilary Wainwright, A New Politics From the Left, Cambridge: Polity Press, 2018, pp. 34-5.
15 Nunns, The Candidate, p.128.
16 A key move was to ensure that the contact details of party members that were made available to Corbyn
for his leadership campaign remained in his hands after it, and could be used by Momentum as an
organisation ‘inspired’ by him.
17 Electoral Reform Services, Final Report of Voting, 17 November 2016, available at:
http://www.progressonline.org.uk/content/uploads/2012/08/Final-Report-of-Voting-171116.pdf. For
a list of inner party groups or factions in 2015, see Anoush Chakelian, ‘Labour’s Warring Factions: Who
Do They Include and What Are They Fighting Over?’, New Statesman 23 October 2015, available at:
 https://www.newstatesman.com. The other significant right-wing party group in 2018 was Labour First,
a pre-Blair group, mainly of MPs, dedicated especially to the Atlantic alliance and NATO; see
https://labourfirst.wordpress.com/about/2018: ‘Labour First is a network which exists to ensure that
the voices of moderate party members are heard while the party is kept safe from the organised hard left’.
18 Lewis Minkin, The Blair Supremacy: A Study in the Politics of Labour Party Management, Manchester, UK:
Manchester University Press, 2014, chapter 12.
19 Union support for Corbyn was mixed. Len McCluskey, the leader of the largest union, Unite, originally
backed the former shadow health secretary Andy Burnham for the leadership, but came out strongly for
Corbyn after Burnham threw away his chances. The strongest support came from a group of smaller
unions known as the Awkward Squad, with which John McDonnell had longstanding ties: the Public and
Commercial Services Union (chiefly professional civil servants), the Fire Brigade Union and the Bakers’
Union. Their general secretaries meet regularly with a further seven mainly smaller unions in a Trade
Union Coordinating Group. A different group called TULO/Trade Unions Together coordinates the twelve
unions that are affiliated to the Labour Party. Differences between unions and the Labour leadership
include Unite’s commitment to Trident, the country’s submarine nuclear weapons system, which Corbyn
has always opposed but has accepted as Labour policy as a necessary condition of Unite’s support.
20 See Boundary Commission for England, ‘2018 Review,’
https://boundarycommissionforengland.independent.gov.uk/2018-review.
21 See e.g. Luke Akehurst, the main spokesperson for Labour First: ‘We have nothing to lose – this is how we
can beat Momentum’, Labour List, 28 November 2017, available at: https://labourlist.org.
22 See Liam Young, Rise: How Jeremy Corbyn Inspired the Young to Create a New Socialism, London: Simon
and Schuster, 2018, especially pp. 57-64.
23 Ashley Cowburn and Benjamin Kentish, ‘Hundreds of People Protest Outside Parliament Against
Antisemitism in the Labour Party’, Independent, 26 March 2018. For a review of the issue by the BBC, see:
‘Jeremy Corbyn and Labour’s Anti-Semitism Row Explained’, 27 April 2018, available at:
http://www.bbc.co.uk.
24 On the distinction between anti-Zionism and antisemitism, see the former Appeal Court judge Stephen
Sedley, ‘Defining Anti-Semitism’, London Review of Books 39(9), 4 May 2017; on Israeli state involvement
recorded by Al-Jazeera, see: Alex MacDonald and Stephen Sedley, ‘Israeli Diplomat Worked Inside Labour
to Discredit ‘Crazy’ Corbyn’, Middle East Eye, 8 January 2017 (and on Middle East Eye’s affiliations see
https://en.wikipedia.org/wiki/Middle_East_Eye).
25 This was Barnet in north London, which has a large community of Jews. But in general the results of the
May 2018 council elections were not encouraging for Labour: Labour gained 65 council seats (half of them
in London) but lost 40. The Conservatives gained 62 and lost 54, and the Liberal Democrats marginally
increased their position at the local level, gaining 39 seats and losing 30, although half of the gains were
in just four councils – i.e. the gains did not signal a nation-wide Lib-Dem revival.
26 A strong left-wing case for leaving the EU is that its rules would make much of Labour’s 2017 Manifesto
programme impossible: see Costas Lapavitsas, ‘Jeremy Corbyn’s Labour vs. the Single Market’, Jacobin, 30
May 2018. Corbyn’s personal position was to support remaining in the EU and reforming it, as advocated
by Yanis Varoufakis, Syriza’s former minister of finance and leader of DiEM25 ((Democracy in Europe
Movement 2025).
27 Nunns, The Candidate, p. 313.
28 Nunns, The Candidate, p. 314. Given how far the Manifesto was from the thinking of most Labour MPs, it
is interesting that it was adopted with so little opposition. Part of the reason was that the election was
called at short notice, so there was no time for debate. Part was MPs thinking that, as the party was bound
to lose under Corbyn, his programme might as well be discredited too. Part was due to the final meeting
to approve the document being held the day after it had been leaked and proved popular. But more was
perhaps due to the fact that it drew on documents already prepared for the party’s National Policy Forum
in 2016, after Corbyn’s re-election as leader, and had been discussed in prior consultations with shadow
ministers; see: Mike Phipps, ed., For the Many: Preparing Labour for Power, London: OR Books, 2017,
pp.11-13; and Nunns, The Candidate, pp. 311-14.
29 The Labour Manifesto, For the Many, Not the Few, is available at: https://labour.org.uk/manifesto.
30 For proposals to strengthen the manifesto see Phipps, For the Many.
31 Jeremy Gilbert, ‘Leading Richer Lives’, in Phipps, ed., For the Many, p. 175.
32 Tamasin Cave and Andy Rowell, A Quiet Word: Lobbying, Crony Capitalism and Broken Politics in Britain,
London: The Bodley Head, 2014.
33 Aeron Davis, Reckless Opportunists: Elites at the End of the Establishment, Manchester, UK: Manchester
University Press, 2018, p. 126.
34 On the BBC, see Tom Mills, The BBC: Myth of a Public Service, London: Verso, 2016; and ‘Democracy and
Public Broadcasting’, in Leo Panitch and Greg Albo, eds, Socialist Register 2018: Rethinking Democracy,
London: Merlin Press, 2017, pp. 150-171.
35 Wainwright, A New Politics from the Left.
36 John McDonnell, plenary speech at the ‘Alternative Models of Ownership’ conference, De Vere Grand
Connaught Rooms, 61-65 Great Queen Street, London, 10 February 2018, available at: https://www.john-
mcdonnell.net/john_s_speech. The way this important speech was reported in the mainstream media
illustrates the extreme difficulty faced by the Labour leadership in getting heard. The only ‘broadsheet’ to
give it reasonable coverage was the online-only Independent. The BBC’s news coverage was limited and
negative; see: ‘John McDonnell: Labour Public Ownership Plan Will Cost Nothing’, 10 February 2018.
37 Anthony King and Ivor Crewe, The Blunders of Our Governments, London: Oneworld, 2014.
38 See Panitch and Leys, The End of Parliamentary Socialism, pp. 139-45. In the 1970s the aim of mandatory
reselection had been to make MPs more accountable to left-wing local party members and more likely to
resist pressure to toe the leadership’s right-wing line. Now the need was the opposite – to make right-
wing MPs more likely support a left-wing leadership. A tempting opportunity briefly suggested itself in
April 2018 when it was reported that a group of ‘centrist’ MPs were planning to create a new party with
£50m from a rich donor (Michael Savage, ‘New Centrist Party Gets 50m Backing To ‘Break Mould’ of UK
Politics’, The Guardian 8 April 2018). Any Labour MP joining it would automatically be deselected, and the
political eclipse of the 28 Labour MPs and their leaders who defected to form the Social Democratic Party
in 1981 seemed likely to deter most of them from joining in another such initiative.
39 Jon Lansman, as chair of Momentum’s national coordinating group, declared that Momentum would not
seek to deselect any MPs, but would not discourage local party members from trying to deselect their MP
under existing party rules (see Ashley Cowburn, ‘Momentum Chair: ‘Enthusiasm For an Alternative
Government Will Grow Stronger, Not Weaker’, Independent, 23 January 2018.)
40 Steps to ensure that at least right-wing MPs will not be able to prevent a left-wing candidate being elected
to succeed Corbyn were foreshadowed in proposals contained in a review of the party’s internal
democracy by Katy Clark, a former senior staffer in Corbyn’s office, details of which were leaked to the
 press in June 2018 (see Jessica Elgot and Heather Stewart, ‘Labour Proposals “all-but guarantee leftwing
Corbyn successor”’, The Guardian, 26 June 2018). The proportion of Labour MPs needed to nominate a
candidate would fall from 10 to 5 per cent. Another proposal was to have the leaders of Labour-controlled
local councils elected by party members. Under the Blair governments local councils were reorganized on
business lines with large powers vested in the leader, creating strong local fiefdoms which are often in
right-wing hands.
41 On this general point see Yanis Varoufakis’ insightful analysis in his account of the Syriza government’s
negotiations with the Troika, Adults in the Room: My Battle With Europe’s Deep Establishment, London:
Vintage, 2017, chapter 1.
42 Office for National Statistics, Statistical Bulletin: ‘Civil Service Statistics, UK: 2018’, available at:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/publicsectorpersonnel/bulletin
s/civilservicestatistics/2017.
43 In 2017 the National Audit Office recognised that the civil service can no longer do all that is needed for
the effective planning and administration of current policies (see National Audit Office, ‘Capability in the
Civil Service’, Report by the Comptroller and Auditor General, 24 March 2017, available at:
https://www.nao.org.uk/wp-content/uploads/2017/03/Capability-in-the-civil-service.pdf). The
Auditor General told MPs that ‘in many parts of government the capability of even acting as a prime
contractor is not necessarily there. That is not a fault, it is decision that a number of departments have
made over time’ (Richard Johnstone, ‘NAO Chief on How Civil Servants Should Write Submissions on
Outsourcing After Carillion’, Civil Service World, 25 April 2018). A short NAO blog is at
https://www.nao.org.uk/naoblog/stretching-civil-servants-capability.
44 Although the foreign exchange earnings of the City of London’s global financial and investment banking
services are a crucial offset against the UK’s huge trade deficit on goods, its activities have very little to do
with financing UK’s non-financial sector, and fund managers who do invest in the shares of UK-based
firms are focussed exclusively on their share price and rarely have any interest in their long-term
productivity plans. ‘The best way to think about the City … is essentially [as] an off-shore phenomenon,
half-way between a Caicos Island and an oil rig’ (Martin Taylor, the former chief executive of Barclays
bank, cited in Tony Golding, The City: Inside The Great Expectation Machine, second edition, London:
Prentice Hall, 2003, p. 5).
45 This judgment is disputed by advocates of leaving the EU, including the government ministers
responsible for negotiating it, but it is hard to find any convincing estimates that support their view. For
others, see a government analysis leaked in February 2018 by Paul Dallison, ‘UK Analysis Shows Big
Economic Hit From Brexit’, Politico, 7 February 2018; and a roundup of analyses: Shafi.Musaddique, ‘Cost
of Brexit: The impact on Business and the Economy in 2017 and Beyond’, Independent, 26 December 2017.
46 ‘Labour Plans For Capital Flight or Run On Pound If Elected’, Financial Times 26 September 2017.
47 The social-democratic nature of the proposals was underlined by McDonnell’s pitch to the business
audience he was addressing: ‘when we go into government, we want you to come with us, alongside
representatives from our manufacturers, our trade unions and wider civil society. There will be a seat at
the policy making and policy delivering table for you.’ His proposals were, he claimed, supported by many
people in the financial sector, and were not inconsistent with the thinking of the Bank of England’s
Governor, Mark Carney (see ‘A “new start” for Labour and the finance sector – McDonnell’s full speech in
the City’, LabourList, 19 April 2018).
48 Both Corbyn’s chief of staff and the party’s General Secretary came from Unite and were close to Unite’s
General Secretary, Len McCluskey.
49 Andreas Karitzis, The European Left in Times of Crises: Lessons From Greece, Amsterdam: Transnational
Institute, 2017.
50 ‘Short Money’, House of Commons Library briefing paper, 19 December 2016,
http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN01663.
51 The Mont Pelerin Society was founded in 1947. On the history of the neoliberal hegemonic campaign in
the UK see Richard Crockett, Thinking the Unthinkable, Fontana Press, 1995. Thatcher inherited a cadre
of capable young MPs, and some civil servants, with a shared neoliberal formation.
52 For a recent relevant discussion of the need to displace a dominant narrative with another one, see
George Monbiot, Out of the Wreckage: A New Politics For An Age of Crisis, London: Verso, 2017, chapter 1.
53 ‘After the uprising of the 17th June/ the Secretary of the Writers Union/ had leaflets distributed in the
Stalinallee/ stating that the people/ had forfeited the confidence of the government/ and could win it back
only/ by redoubled efforts./ Would it not be easier/ in that case for the government/ to dissolve the
people/ and elect another?’ (Bertolt Brecht, ‘The Solution’).