Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday, 24 August 2018

Why Brexit is a neoliberal project


Neoliberalism is generally associated with extolling the market, encouraging globalisation and generally being on the side of business. As Brexit will reduce the size of markets available to UK firms and therefore reverse globalisation in the UK, and is definitely not what most of UK business wants, how can it be neoliberal?

A good place to start is to go back to a discussion of what free trade means. Most people, and certainly most economists, would think that free trade means free to trade. Following that definition, harmonising regulations across countries which enables firms to trade much more easily in many countries is increasing free trade. The ideal is one single market, which is what the EU has achieved for goods and many services.

Many neoliberals would think that way. But others would see free trade as meaning free from any kind of state interference. The Single Market, with a court to judge whether its rules and regulations have been broken or not, does not sound free in that sense. Their ideal becomes trade that is as free as possible from any kind of state regulation. They do not want harmonised regulations, but the minimum amount of regulations.

If seeing free trade as meaning free from regulations on trade seems strange, it shouldn’t. If you look at how many neoliberals use the term free market that is exactly the what they often mean. If someone says that executive pay is determined by the free market, they do not mean a market free from what economists would call imperfections but just free from government interference. Unlike ordoliberals, neoliberals of this type would call a market with a monopoly producer free but a market where competition policy broke up monopolies as suffering from state meddling.

I had original thought that the Global Britain idea that Brexiters go on about was pure deflection from the awkward fact that Brexit would restrict trade. I think I was being unfair. Being true neoliberals Brexiters do not want to destroy trade, but trade has to be as regulation free as possible. Far better, therefore, for the UK to trade with the US or emerging markets that had weaker regulations than with the Single Market. The problem with the Single Market, from the Brexiters viewpoint, is that it locks in strong regulations of various kinds.

This helps explain why so many Brexiters also appear to be strong neoliberals. Brexit is like striving for a kind of neoliberal utopia, in contrast to other neoliberals like Osborne and Cameron who were prepared to compromise over regulations for the benefit of access to a bigger market. And just as neoliberals have no worries about tricking the public to vote for their utopia by pretending it was something very different, they also have little time for firms that cannot understand that what the Brexiters are doing will ultimately be for their own good. Politics as marketing, better described as deceiving of the public, is a common neoliberal trait.

The Brexiters are just one more group inspired by their own vision of neoliberal Nirvana. While Osborne and Cameron were prepared to settle for a small state, the Brexiters want that along with as few regulations as possible. Both obtain their vision deceitfully, and are prepared to inflict untold damage on the economy to get what they want. Like all good Leninists they believe that in the end (for Rees-Mogg 50 years) it will all be worth it. Which means if they get their way we will endure half a century of economic damage only to demonstrate their vision was just one more neoliberal fantasy





8 comments:

  1. I think this the wrong way round?

    Brexit was about leaving the EU, so surely the place to start to explain Brexit is with the EU.

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  2. It's impossible to overstate how completely false is this picture you paint.

    Far from being a neoliberal project, Brexiteers are pushing away from the ultimate neoliberal project, The EU. What they want is Little Englander nirvana, a return to colonial glories of the past, with them in charge, of course.

    Your failure to recognise these simple facts is damning.

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  3. This just equates neoliberal with libertarian, which doesn't seem right.

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  4. Who will own the copyright on products sold in the UK after Brexit? Business is free to buy from the cheapest source in Europe at the moment and sell to customers. Will the same apply after Brexit or will the authorised importer have an monopoly like Australia?

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  5. Ha, ha. Interesting distinction between "free trade" and "unregulated trade". But the neoliberal commitment to deregulation doesn't seem to apply to migration. (Correct?) How do neoliberals reconcilie their opposition to migration with their commitment to no government interference?

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  6. You are still neoliberal because you share assumptions about GDP growth being good with neoliberals. Thus you accept the neoliberal definition of value. A Venn diagram of you and neoliberals has too much in common. You are tainted because you concede a neoliberal theory of value. To liberate yourself from neoliberalism, reject the exchange theory of value.

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  7. Sorry this is pretzel logic. Neoliberals want free trade and globalization. Unfortunately this has been done for the benefit of corporations. Trading wth Europe may mean following their regulation. And China joining the WTO may mean they have follow WTO rules, but corporate led globalization has been about weakening labor and environmental standards while lowering tariffs. It has been about freeing corporations from national government control via trade agreements. Brexit is a special case.

    Neoliberal Nivana was the TPP Obama was pushing while Trump railed against bad trade deals.

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  8. I suppose that arguing over definitions is fruitless, but I continue to think the definition this definition of "neo liberal" confuses a basically libertarian position with a position that resists regulation and taxation only to the extent that they are employed to shift income away from the highest income classes.

    We may need a new word for a position that I think of as "neo-Liberal," one that uses progressive taxation and the market to the extent possible to achieve pro poor and -middle class growth.

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