Brexit: the Slippery Slope of Left Sovereigntism, from Modern Monetary Theory to Spiked.

An Ideology Now at the Centre of UK Politics.

Sovereigntism, the assertion of unique national sovereignty,  is at the centre of British divisions over Brexit.

In French  souverainisme has been used for some time to describe hostility to the European Union (“Doctrine des défenseurs de l’exercice de la souveraineté nationale en Europe”) expressed by parties and intellectuals from the extreme right to the left. There is even a party, “République souveraine” led by Djordje Kuzmanovic .

During the presidential campaign of 2002, Jean-Pierre Chevènement, who had founded the radical left  Centre d’études, de recherches et d’éducation socialiste CERES in the 1970s, had been a Socialist Minister in the first Mitterrand government, and served under Prime Minister Lionel Jospin, presented himself as the “man of the nation”, above  partisan cleavages. As an opponent of the Maastricht Treaty, Jean-Pierre Chevènement  appealed in the new millennium to a new Gaullism of the left. In many respects Chevènement can be seen a trail-blazer for the evolution of socialists from a kind of Marxism on the left of the French Parti Socialiste (CERES, responsible for the claims that they would create a “rupture” with capitalism) critics of Mitterrand’s ‘modernising turn’ in the 1980s (expressed on the journal En Jeu)  to, outside the Socialists, republican socialism (1992, Mouvement des citoyens (MDC),  to openly nationalist sovereigntist politics which calls for an aligmement of La France insoumise with these right-wing anti-globalisation ‘patriots’. In this vein in 2015 he participated in the debates organised by the hard right Debout la France.

 The former socialist has even endorsed a degree of protectionist economics.

Sovereigntism can in this career alone be seen as a major source of political confusionism.

It rests on the idea that there is an entity called the ‘nation’, and the people, which, like Rousseau’s General Will, exists beyond all the different classes and political factions of a country. Populism, the claim to strand for the ‘real’ people against the ‘elites’ who frustrate their will, out of the self-interest of the oligarchies. In place of international bodies such as the European Union,  a sovereign Parliament, can solve all the problems in the land, by exercising full power.

Left sovereigntism claims that the same machinery, if captured by the right party, can do what it likes. With power in the hands of a left Labour Party,a People’s Brexit, a Lexit,  can “Bring back control” to the people.

Sovereigntism blurs the political lines and leaves the way open to more resolute forces who occupy the same terrain, all claiming to “take back control”. It has helped open the door to,

Exclusive nationalism and nativism, identity politics, critiques of globalisation and internationalism, and calls for democratic re-empowerment of the demos have converged politically on a new locus of inflated territorial, indeed ‘border’ sovereignty, aligning the call of ‘taking back control’ on behalf of a radically re-defined community (‘we’) with a defensive re-territorialisation of power along existing fault lines of nation-statism.

Populism, Sovereigntism, and the Unlikely Re-Emergence of the Territorial Nation-State. Aristotle Kallis. 2018.

Red-Brown Spiked (Italy: Salvini speaks to the gut of the nation) writer Thomas Fazi is perhaps one of the best known people who have argued for a “progressive vision of national sovereignty“.

History attests to the fact that national sovereignty and national self-determination are not intrinsically reactionary or jingoistic concepts – in fact, they were the rallying cries of countless nineteenth- and twentieth-century socialist and left-wing liberation movements. Even if we limit our analysis to core capitalist countries, it is patently obvious that virtually all the major social, economic, and political advancements of the past centuries were achieved through the institutions of the democratic nation state, not through international, multilateral, or supranational institutions, which in a number of ways have, in fact, been used to roll back those very achievements, as we have seen in the context of the euro crisis, where supranational (and largely unaccountable) institutions such as the European Commission, Eurogroup, and ECB used their power and authority to impose crippling austerity on struggling countries.

In a book written with William Mitchell Reclaiming the State, Fazi has argued, as an uncritical notice on the Counterfire site states, that,

The authors suggest that the left needs to provide a powerful alternative to neoliberalism, based around the state reasserting its supremacy over markets, and using its monopoly power over currency creation to introduce policies that favour the great majority. The insights provided by Modern Monetary Theory (MMT) show how such an alternative strategy is possible for countries with their own sovereign currencies, but is not available for those who have ceded their power to supranational agencies (e.g. Eurozone nations who have relinquished monetary control and placed it in the hands of the ECB).

Fazi continues to push the line.

"Even national elites themselves, I think, are slowly realising the kind of Faustian Pact they've signed by relinquishing what are the essential planks of economic policy" – Thomas Fazi @battleforeurope on the importance of *national* monetary sovereignty https://t.co/0hGEp1I4Nr

— Colin McKay (@DerorCurrency) July 30, 2019

It is as plain that as Boris Johnson sets out the only actually existing Brexit plans, that ‘taking back control’ is a smokescreen for hard right attacks on rights and deference to the stronger – US – partner in any independent trade deals.

But what of this plan for monetary control?

Modern  Monetary Theory (MMT)  – this writer has attended lectures on it and read some of less technical materiel – offers at first sight an appealing alternative to financial austerity.

Now James Meadway, an left wing economist,offers some devastating criticisms of NMT. He also sheds light on the reactionary politics behind the idea, politics which help to explain by Fazi now appears  in  the Red Brown Spiked.

This is his case:

James Meadway Interview: “There are ways to end neoliberalism globally that are not progressive, and this will (increasingly) be the terrain the left is fighting on.”

James Meadway is a former advisor to Shadow Chancellor John McDonnell. Previously, he was the Chief Economist at the New Economics Foundation and he is currently writing a book on left wing economics. In his interview with this website, he outlines the principles of Corbynomics, discusses a Green New Deal and explains why he thinks MMT would be such a misstep for the left.

Meadway outlines with appealing clarity the economic strategy of the Labour Party.

John McDonnell summarised the aim when he said “we want nothing less than an economy that is radically fairer, more democratic, and more sustainable, where the wealth of society is shared by all.” As the Shadow Treasury team has developed that since September 2015, I’d say the principles are:

– A rejection of the neoliberal premises that private ownership and markets will always be the best way to organise society;

– A belief that deep changes are required for our economy to begin to move it in a direction that benefits the great majority, including making it more sustainable;

– The principle that ownership and control of productive resources are the decisive factors determining economic outcomes, and that both should be decentralised, democratic, and collective as far as possible.

Instead of rhetoric about elites and globalisation, Meadway  offers a basis for a critique of ‘neoliberalism’,

I’d argue this shift in production relations – transferring ownership and reasserting the power of capital over labour – is at the core of neoliberalism in practice, but it can sit alongside the continued provision of welfare and other “consumption” provision by the state, in one form or another.

Labour, he argues, has begun to tackle this with the first Manifesto under the new left leadership.

So to the extent that the 2017 manifesto aimed to restore spending cuts and improved public service provision, it was essential – the damage done by austerity since 2010 has been both appalling, and entirely unnecessary – but not radically transformative. To the extent the 2017 manifesto went further, and posed the issue of correcting the colossal error of privatisation, it was more radical, because it began the process of reversing forty years of neoliberalism, but it didn’t point at something beyond what is common enough across the developed world. Likewise, [Labour’s] £250bn National Transformation Fund would be a huge increase in public investment for the UK, but would move us to around the average level of investment (relative to GDP) of the developed economy OECD group. To a significant extent, Corbynomics is Make Britain Normal Again.

Furthermore,

The second, underlying even this, is the transformation of ownership. This is more than only correcting the mistakes of the past by reversing 1980s and 1990s privatisations: it means broadening the scope of collective – not government – ownership across the whole economy, from renewable energy production (which, given the technologies we have, will largely need decentralisation), to worker ownership, to areas that we’ve only just begun to think about, like data. There are huge opportunities here to break out of the zero-sum games that neoliberal capitalism is forcing us into.

The interview is recommended to anybody with a serious interest in Labour economic policies, proving some solid foundations have been built. 

The core of the interview is taken up by a critique of Modern Monetary Theory.

In an a earlier article in Tribune, Against MMT, Meadway stated,

Unfortunately, however, MMT’s reassertion of a number of macroeconomic truths has been swamped by its distinctive contribution to theory — which is a rehabilitation of what is known as chartalism. Chartalism holds that money receives its value fundamentally as a result of its use to pay taxes — that, in the words of leading chartalist Georg Knapp, ‘money is a creature of law’. This is dubious as a historical claim, since money has existed in many different forms throughout history, and only some of those forms have arrived with the stamp of the state — and dubious as a description of reality today, since most money is created by private banks when people take out loans, whose relationship to the state is (at most) indirect.

This is the crucial political aspect:

MT’s grand claim is that money derives its value from its ability to pay taxes and, therefore, governments can exercise ‘monetary sovereignty’ by setting the value of money as they see fit. But the economy is not an island, it cannot be isolated from others in this way. Trade matters, as do the financial relationships between different economies — and both of those will depend on the value of the different currencies that economies use. MMT understates the amount these relative values can vary over time. As anyone using the pound since the Brexit referendum will have seen, these variations can be quite large. Countries running a deficit on their current account (meaning, broadly, that they import more than they export, counting goods, services, and flows of income) like the UK — which has a deficit funded from abroad — will always be vulnerable to demands for foreign currency that they cannot immediately meet. This is a significant impediment to sovereignty.

Meadway  concludes,

Worse yet, in a country so profoundly and obviously overstretched internationally, with a major financial centre that we know to be a major vulnerability, MMT promotes a blasé indifference to the real relationships of power and patronage that sustain the world economy. To the extent that it disorientates activists, peddling simplistic monetary solutions to complex problems of political power, it is a barrier to a genuinely transformative Labour government. We need to build an organised and educated mass movement that can see the problems such a government might face. MMT cannot help us do this — in fact, it will hinder us in that mission.

Without pretending to grasp the technical details it is clear that McDonnell  would not have spent so much time consulting respected advisers on taxation reform if the Shadow Chancellor believed that using MMT would magic away the problems of raising revenue for Labour’s spending plans.

This is more in the line of the introduction to this post.

According to @meadwaj, stating a historical fact equals "praising the economic policy of Nazi Germany". They're getting increasingly desperate by the day. https://t.co/88gSOOQP6E

— Thomas Fazi (@battleforeurope) July 30, 2019

Meadway states,

There’s something I didn’t cover in Tribune, but the underlying politics of MMT are worth spending some time on. The core MMT policy agenda has strikingly little to do with the left: support for dollar dominance; indifference (at best) to redistribution from the rich through taxation (usually argued as taxing the rich being “unnecessary”); and labour market authoritarianism via the so-called “Job Guarantee”. There’s not much in here that is recognisably of the left, if we think the left is basically about freedom and equality – there’s quite a different political tradition at work.

This comes through in many different ways. For instance, Bill Mitchell and Thomas Fazi described it (in Reclaiming the State, p.10) as “tragic” that the left adopted the causes of anti-racism, women’s rights, and LGBT rights in the late 1970s. Worse, they claim this is as “equally tragic” as the acceptance of neoliberalism by parts of the left over the same time period. Now this is reactionary garbage, however you look at it, and should be firmly rejected – but it’s an important indicator as to where MMT is coming from.

MMT is not an authentic programme of the left; it’s a programme for economic nationalism that, currently, is trying to attach itself to the left. Historically, economic nationalism has arrived in left or right variants, and there has been slippage from one side to the other. So at different times MMT’s proponents have used different arguments to gain a hearing – claiming in the 1990s that a “Job Guarantee” would help drive down wages, for instance, whereas now they claim the Job Guarantee is a good way to deal with climate change. MMT advocates are reportedly advising Matteo Salvini in Italy, and Bill Mitchell thinks his government should “lead” other European countries. Mitchell and Fazi approvingly cite the monetary policy of Nazi Germany before the war in their book. I could generously call all this a bit slippery. There are ways to end neoliberalism globally that are not progressive, and this will (increasingly) be the terrain the left is fighting on.

Put simply, neither industry  nor money can be successful in modern attempt to create autarkies, worlds self-sufficient for themselves.

Does this monetary sovereignty lead to autocratic regimes?

That is far from established but it looks as if it lacks the capacity to perform the miracles Fazi and his side claim for it.

But as for slippery slopes, Fazi’s support for the Full Brexit, and now, collaboration with Spiked, shows he is already on one.

 

Responding to my @SocReview interview https://t.co/8Eqn5vj0xP, @billy_blog says his “Reclaim the State”, written with @battleforeurope doesn’t praise the economic policy of Nazi Germany and accuses me of fabrication. But the evidence is there in black and white, on p.187 1/2 pic.twitter.com/45R3Vv63Rg

— James Meadway (@meadwaj) July 30, 2019