On Europe Day, I just want to say, I don’t understand why the EU is so unpopular. I can understand why Tim hates it. He is a market fundamentalist. I can understand why Carl hates it. He is a socialist. But for 95% of possible near futures, neither Tim’s nor Carl’s prefered policies are likely to be enacted. Given that, it makes sense for these things to be done at the supranational level. There are going to be regulations, so they may as well be applicable across as many markets as possible to reduce transaction costs, even if this is suboptimal. Capitalism isn’t going anywhere, so we may as well extend the dignity of free movement to people as well as capital and goods too, even if there are localised costs.
In a second best world what is the rightist of leftist case for leaving the EU? The right will get different, but not less bureaucracy, the left will get the same amount of capitalism, but a slightly poorer working class at home and abroad. The EU is definitely a second best institution, as J Clive Matthews points out, of late it can barely lay claim to being a third or fourth best institution. However, even if the UK were outside the EU, and even though we are outside the Euro, we are little insulated from contagion on the continent. So from an international perspective as well as a local one it makes sense too much in. Without the EU, most of its institutions would be reinvented at the national level. These would be less efficient (or more inefficient) and equally frustrating. The public, and even these two clever bloggers, don’t seem willing to accept this basic truth. But there is a very good reason for the EU to exist.
My theory runs thus.
Trade unionism collapsed. One cause was active state action. Another was technological change. A final cause was a changing international division of labour. Thatcher and Reagan smashed unions because they were politically powerful opponents who would interfere with their plans to privatise their industries and to reduce redistribution. Before this though technology began to change, this is why union membership in fact began to decline under Jimmy Carter. This technological change, and the entry of Asia into the international division of labour meant that easily unionised industries left the developed world and were replaced with more piecework and more “professional” careers, which are less amenable to collective action.
Unions were never the most efficient way to protect worker’s long run wellbeing in any case. Productivity growth, increasing labour force participation and effective demand management are still the best answers to that. But, unions were good for protecting their members from their bosses. Bosses have always had more power than workers. Structurally Bosses have residual control when contracts stop specifying what happens next, this means power. On the other hand, workers are more precariously placed and will so agree to do things against their immediate interests to avoid intimidation or the sack. Unions can stand up where a single worker would be knocked down; a version of this is playing out in London at the moment.
Since unions no longer mediate employee employers relations, regulators and HR departments have taken their place. People demand “something be done” via regulation because they can no longer “do” themselves. The state, technology and trade have made unions, and therefore workers, significantly weaker in one way while giving them more power via the regulatory state in exchange. Technology and trade have made us better off, but there is a dynamic effect here which has driven up indirect intervention via regulation. All are directly linked to the EU and to the modern regulatory state.
Two thinkers are useful here, both called Karl.
Karl Polanyi pointed out that self-regulating markets cannot exist. They require regulating institutions, at the basest level the rule of law. In fact usually the turbulent winds of the market produce countervailing tendencies which blunt its force and institute it within broader social relations. Once upon a time, workers formed trade unions, today they demand “something be done” and are greeted with health and safety legislation.
Karl Marx was right too, the means of production define social relations. Regulations are not going anywhere until workers have more direct power over their workplace. This seems to point to flaws in Tim’s and Carl’s arguments. Leaving the EU would only change the configuration of capitalism’s supporting structures, and do little to reset any of the capitalist relations Carl dislikes, or revoke any of the regulations which grate against Tim.
The EU is a symptom. Fighting it directly will be no more effective than spreading lavender oil to ward against foul-smelling miasma of Tuberculosis.