The EU and "sovereignty"

The language of "sovereignty" is corrupt. It is the language of the Right. It may be unavoidable, but it is preferable, where possible, to speak of democracy instead.

Membership of multilateral organisations, from the EU to the WTO, does not weaken the "sovereignty" of any national state. That is not how it works. Inasmuch as sovereignty is the centralised authority of the higher echelons of the state, it has been strengthened by these bodies.

The EU is a fairly good example of how this works. The right-wing critique is that it is a liberal, cosmopolitan superstate, in the making. An unnatural, rationalist, bureaucracy replacing the national state. Many liberals accept this fantasy, placing a plus where reactionaries place a minus. (Human rights! Sustainability! Yummy wonderfulness!) Both implicitly accept the idea that the sovereignty of the national state is being reduced.

And what they say seems intuitively obvious. After all, EU law is superior to national law. Legislation which is initiated by the unelected Commission, has priority over legislation initiated by elected politicians. Moreover, the Court of Justice in Kerchberg has "judicial supremacy" in interpreting the law. That is a condition of EU membership. This looks like an erosion of state sovereignty.

But if you took that view, it would be hard to explain why national states should have willingly ceded that sovereignty, and why the peaks of the British state are today fighting tooth and nail to ensure that sovereignty stays ceded. Why would they passionately abridge their own power in that fashion? You can see why the right-wing nationalists end up spouting conspiracy theories about national betrayal, Soros, "cultural marxism" and so on. They're looking for a 21st century version of the "Judeo-Bolshevist plot". It's early days.

The issue is competition. To explain the state of today's Europe, one has to look at the challenges faced by large European businesses by the end of the Seventies. Profit rates were low, productivity was still low relative to the US, and Japanese competition was squeezing out European businesses. Organised labour was too strong, and states were over-burdened with democratic demands. Former colonial powers like Britain had failed in their alternative strategy of building economic relations with the old colonies. 

The single market, with a single currency, was the answer to this. It would give capital greater freedom of movement, allowing it to find the most profitable areas for investment. It would allow for economies of scale, building on the existing growth of interlocking directorates and regional networks of trade across Europe. It would discipline labour markets and keep a lid on wage demands. Monetary union would create a stable currency with low transaction costs and reduced prices for goods, to compete effectively in a post-Bretton Woods system. It would also, by tying the value of currencies to the Deutschmark, restrict the monetary policy of national states.

At this stage, European states were undergoing a neoliberal turn in policymaking, led by Thatcher and Kohl. The concept of "expansionary austerity" was an attempt by economists to theorise the practice of European governments, particularly West Germany, in the 1980s. 

One major exception to this trend was the election in 1981 of a Socialist government in France, with a Keynesian agenda. This government came to power after years of austerian government had driven up unemployment and weakened the currency. The government proposed public works, nationalisations, state investment in small enterprises, community infrastructure projects, 35 hour working week. Mitterrand was most interested in using postwar dirigisme to give French capitalism a competitive edge. Many of the left-wing parts of the programme were concessions to their Communist electoral allies.

At first, much of this agenda was achieved. Mitterrand implemented the spending increases and nationalisations that he promised. Growth and employment increased. But businesses no longer supported postwar dirigisme. Private sector investment remained weak. Financial markets punished the government's nationalisations and spending increases by dumping the currency. France repeatedly had to intervene to bail out the franc. Moreover, because it was a member of the European Monetary System (EMS, forerunner of the eurozone), it denied itself the control over its monetary policy that was necessary to sustain its policies. If it left the EMS, it would regain control over monetary policy instruments, but lose out in financial markets. Mitterrand returned to the austerity agenda of Giscard D'Estaing, and took it much, much further.

So, the major European institutions were formed by the emerging neoliberal orthodoxies: competitive markets, privatisation, fiscal discipline, tight monetary policy. But they were forged by decisions of state elites, especially those at the core of the emerging European system. The Single European Act, the Treaty of Maastricht, the Treaty of Amsterdam -- all reflected this commitment to market discipline. 

Subsequent rules introduced, such as the Stability and Growth Pact, commit member-states to ever more restrictive fiscal and monetary policies. Every year, member-states are expected to present their national budget to the European Council before it is considered by that state's parliament. It is evaluated relative to several criteria of competitiveness: if wage levels are uncompetitive, or pensions are seen as unsustainable, for example, they will be told to reconsider their programme. States with indebtedness of more than 60% of GDP, which is most EU states, are required to implement tough debt-reduction strategies, and can be fined steeply for not doing so.

If this looks like a loss of sovereignty, it is worth asking why state elites voted for these treaties and opt to remain in them. Even where, as in many poorer states, they reduce profitability and growth for their larger corporations. These policies were already supported by the largest sections of capital within member-states. They already had the support of the leading elements within the administration of each state.

The famous 'democracy deficit' of the EU is no different. It reflects the way in which national states were already being reformed along neoliberal lines. It is a mistake to think of neoliberalism as 'free market fundamentalism'. Apart from a libertarian fringe, most neoliberals don't believe in the unregulated market. They think markets need to be supported and protected by expansive state activity. They also think that state action is compromised by party-political competition. Hence, they seek to downgrade democratic institutions within the state and strengthen executive bodies which can 'impartially' enforce the rules and moral codes of a market order. 

The undemocratic nature of European institutions reflects patterns at work in national states: the strengthening of executive power, the weakening of party competition, the devolution of policymaking to unelected, privatised or semi-privatised bodies.

The EU, by circulating policy through closed decision-making centres before returning it to national states, makes it seem as if it's handed down from some remote, imperious god.

I doing so, it benefits not only the elites in national states who often formulate these policies in the first instance, but also the most powerful factions of capital. Those with regional linkages, interlocking directorates, capable of benefiting from economies of scale and transporting production to the most profitable sectors.

What’s happening with the Brexit Right is not a bid for more 'sovereignty'. They'd be happy to sign any number of undemocratic and restrictive multilateral agreements. UKIP have already said TTIP would have been signed already if the UK was not in the EU.

What they want is to reform sovereign power, not enlarge national sovereignty per se. The existing state power-bloc favours the largest businesses, above all those located in the City of London. These businesses have long accepted the orientation to Europe as the most efficient way to modernise British capitalism.

The Brexit Right would not be where they are if the European project of boosting competitiveness had been successful. European productivity, growth and employment are poor relative to the United States. Precisely because it can't be a 'federal superstate', it lacks the policy instruments and competitive advantages of the US.

In the context of an epochal crisis of capitalism, tied to a major crisis for the eurozone, this stoked the long-burning resentment of small-to-medium sized capital. Not to mention their allies, which include some big capitalist outliers, and some smaller sectors of the City. They want to reform the EU-aligned power bloc under the rubric of 'taking back control'. They want Hong Kong-style capitalism, with minimum welfare and maximum property rights. They want to reposition the UK in the international division of labour, with competitive advantages based on tax cuts, wage suppression and a friendly regulatory climate.

This is the material substratum for their volkish rhetoric about national sovereignty, in which the transparent and charismatic connection between rulers and ruled is guaranteed by racial and national belonging. It is not about democracy. If anything, the influx of democratic forces into the state would be a catastrophe from this point of view. It would weaken and compromise the power of the sovereign. It would tie up the decision-making power in all sorts of collective demands.

The Left's alternative to this cannot be, in my opinion, its own 'sovereigntist' discourse. The issue, for us, has to be democracy. The reclamation of policy instruments by a national state is of little use if all it does is strengthen the unchallenged and supreme power of the sovereign. What we want to do, if anything, is weaken sovereignty. Contra Trump and his apologists, contra Juncker and his, there can be no power which will not be challenged, no decision which is not amenable to democratic review.

Down with the sovereign, up with the democratic mob.

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