The UK’s position in the global economy is often not understood – it wasn’t in the run up to the Brexit referendum debates and it still isn’t. This failure is part of the reason why there is such confusion about how to deliver upon the demands of those who voted to leave – not least because regaining national sovereignty is next to impossible in today’s global economy, writes Jennifer Johns.
There remains great uncertainty in the aftermath of the UK vote to leave the European Union. Few seem to have a plan for what Brexit will look like and how the UK’s relationship with the outside world will take shape. But while the desire for sovereignty and to “take back control” were top of many voters’ list of reasons to vote to leave, the fact that we live in a globalised world where economies and trade supersede national boundaries cannot be ignored.
Much of the confusion about how Brexit will affect the British economy has resulted from the inability of those for and against it to acknowledge the realities of the position of the UK in the contemporary global economy. This failure to understand the realities of globalisation is partly why there is such confusion about how to deliver the kind of post-Brexit UK demanded by those who voted leave. But regaining national sovereignty is extremely difficult, if not impossible, in today’s global economy.
The interconnected world
The recent global financial crisis should have sent a powerful message. The degree of interconnection between places in the global economy has reached unprecedented levels and attempts to “unpick” these interconnections are highly problematic.
Globalisation is complex. It is no longer a case of “us” and “them”. Capital, goods and services flow within, between and across national borders – and the flow is uneven. It is often directed through key cities. So when we talk about flows of foreign direct investment between the UK and Germany, we are actually discussing flows of people and money between cities such as London and Berlin.
In fact, cities are the key drivers in trade. It is no surprise therefore that there were significantly higher votes to remain in the EU in cities such as London and Manchester. This is because these cities are points in the global economy through which trade, services and people flow. It is in these locations that we can most easily see the benefits of interconnection with cities in the EU and beyond.
Credit: Andy Sedg, CC BY-NC-ND
Outside of the major cities, the regions of the UK have experienced a downward shift in the scale at which economic activity takes place and political power is exercised. The national shift from manufacturing to a service-based economy has had a geographically uneven impact. Many manufacturing industries in the UK’s regions have shrunk or disappeared. This has not been helped by UK national policy which focuses on the financial services sector (predominately in London).
Globalisation’s disconnect
Globalisation has brought with it disconnection between the way that economies and their management have been simultaneously downscaled and upscaled. So, as well as the concentration of decision making in Westminster, there are also a number of decisions being made abroad that affect regions across the UK – the evolution of the European Union epitomises this process.
This upscaling of power is necessary. Many of the most important issues of the last three decades are shared across national boundaries – take for example environmental concerns. The formation of supra-regions begins with an acknowledgement of the benefits of removing trade barriers and having free movement of goods and services, which should create opportunities for all regions of the UK.
In fact, the best hope for deprived areas of the UK is not to place decision making squarely back in the hands of the UK government. This gives power back to the very institutions that created and exacerbated the regional inequalities seen in the UK today. Benefits such as investment in local enterprises and infrastructure, improvements in working conditions and levels of employment result from international engagement and cooperation.
Those who – justifiably – feel isolated and economically depressed should call for greater decision-making power at a more local level. Local power, combined with access to international resources and opportunities, can start rebuilding local economies. Globalisation makes this possible as cities and regions do not necessarily need to go via London for trade and investment. These connections are essential for local economies to compete in the globalised world.
But leaving the EU means leaving the hundreds of trade agreements the UK has with non-EU countries and also possibly the freedom of movement of goods and services there is within the EU. Until these are rearranged (which will take several decades), the UK’s constituent regions may struggle to access international markets. So the “take back control” rhetoric offers no solutions, only problems.
The UK government has consistently failed to articulate the rationale and benefits of upscaling in its relations globally (specifically in the form of EU membership), despite the economic benefits it has brought. It is not about the removal of national boundaries but rather an acceptance of how so much of what drives the global economy occurs outside of these strict boundaries.
Closer economic cooperation is the only logical response to globalisation and the best way to ensure stable growth. Indeed, the short, medium and long-term impacts of the Brexit vote will surely serve to provide the UK with a harsh lesson in the dangers of going it alone.
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Note: this article was originally published on The Conversation. Read the original article.
Jennifer Johns is Senior Lecturer in International Business and Economic Geography at the University of Liverpool.
Yes, the usual justifications trotted out for the current brand of globalisation.What is happening in almost all of the western democracies is a reigning paradigm which is essentially parasitic, but parasitic in such a way as to kill its hosts if the hosts do not resist total neo-feudalisation.The current strategy of allowing in an endless supply of cheap labour to replace the natives who cannot compete is unsustainable.The natives who are put out to pasture on a permanent basis in this scheme of things still breed.They are kept on drip-feed.The economically dis-enfranchised are set to continue to grow in number.The rich get richer, but eventually the country becomes ungovernable.Supposedly, if the poor buck up and cannot be contained, the rich will move on with their ill-gotten gains.It must be remembered, however, that the economy is only able to perform for the rich and well-off due to the law and order of a stable and civilised society.This is what the neo-liberal, or whatever the free enterprise privateers call their system of corruptive, extractive and invasive exploitation, system feeds on.Without law and order, however enforced, there is little or no opportunity to make money, except in weapons sales to contending armies set up one against the other by some big power still functioning somewhere.At the moment, if not pushed back and thrown out of our lives, this system will destroy the western democracies.
Let me take issue with “Benefits such as….improvements in working conditions…..result from international engagement and cooperation.”
For the last 20 years, the UK has had an effectively unlimited supply of working people, to a large extent because of the EU’s policies on free movement of labour. The result has been completely predictable- that pay has been held down and working conditions in many cases are terrible. Bad employers have tended to drive out good employers. Look, for instance, at the working conditions for unskilled people across the country, or the pay of a young scientist in London with a PhD and a year or two’s experience. Government attempts to deal with this working of the market through legislation are, and will be, doomed to failure and the law of unintended consequences. Bringing into some sort of balance the supply of, and demand for, working people, so that market forces restore the labour supply to a better equilibrium position is the only way that can work. If you look at the EU decision- makng process then it is unlikely that cooperation would be forthcoming, even if this analysis were accepted, which it is not. A country-by-country set of solutions is at present the only practical way forward. The UK will, I hope, be able to gradually adjust the flow of people, changing the balance of power between employer and employee so that hard-workng people, wherever they come from, will be treated decently by decent employers.
You say, “For the last 20 years, the UK has had an effectively unlimited supply of working people”. Most people would say that was a good thing. It helps an economy, a complex inter-related organisation to work well.
I buy something on the internet. It comes within 24 hours delivered by a smiling immigrant. I go to a restaurant and the waitress comes from Latvia. She is efficient, and friendly. I want some solar panels fitted on my roof. Some people who originated in the Caribbean fitted them and an electrician UK qualified and from Rumania and highly knowledgeable did the wiring. I spent money and paid VAT, couriers got business, internet retailers got business, restaurants got business, specialist firms got business. Are you seriously saying this is bad for our economy? Unemployment is 5%. Do you suggest it would be better if we had relied on the lower end of the UK labour force that would have said, “I am not lifting a finger unless you pay me a lot more money, and then I will do my job in the most unhelpful and bolshie way imaginable.”
Just remember that those people chose to come to our country and if our conditions are sometimes terrible that is our fault not that of the EU. I agree with your last sentence, but that is down to us, not the EU. Remember, it was the EU that showed more initiative in improving working conditions.
It must be very heartwarming to distribute largesse on a daily basis to the happy, smiling, peasantry. If you asked them abut their working conditions, you might find that the smiling delivery driver never knows how many hours he will be required to work each day, and is possibly driving his private vehicle without insuring it for commercial use, at his own financial peril if he has an accident. Maybe the friendly waitress will be sent home two hours early, losing two hours pay, if the restaurant is not busy on a Tuesday evening. Your ‘bolshie’ argument is a simple rhetorical flourish, no more: look up the ‘error of the excluded middle’.
I am not saying this is bad for ‘the economy’. Poor working conditions have largely been suffered by the young, the already poor and the underprivileged, and the gainers have been the better-off, who use internet-ordered delivery services and restaurants more frequently. I benefit myself. I am simply saying that our ‘sometimes terrible’ conditions are created by labour market forces that flow largely from EU policies, and the solution is now available, to moderate the results of those now-inappropriate policies. I note that you offer no solution.
As a brexit voter these are real concerns which are to some extent counterbalanced with greater independant longterm access to the global economy. However this narrow economic perspective obscures other equally important dimensions namely the social, the political, the ecological and the cultural.
Socially, people are struggling to get their needs met despite widespread lobbying to the governnent. In London alone there has been over 100 anti-austerity marches. However the response is more of the same, penalise the poor, enrich the rich. Consequently low end wages have stagnated for the last 15 years whilst high end wages have increased dramatically. The problem we have here is obviously selfish greed.
Politically, the people have been calling for more localisation and decentralisation whether through the Green Party, calls for more civic involvement in LEPs, Transition Movement, Local Furures – all of which have been active in local constituencies with some successful, most not. Why. Because greedy capitalist elites do not wish to share and fairly distribute collectively created wealth whether through taxation or higher wages.
Ecologically, there is major concerns that the UK is operating at an ecological overshoot of 2.6 planets which means if everyone in the world was consuming at the rate of the UK, we would need 2.6 planets. Economic growth and the neoliberal globalism that is currently perpetuating this ecological overshoot is inherently unsustainable but greedy capitalist elites who have no regard for the environment or have no regard for the destabilising effects of climate change do not care. Reinforced national borders is one protection against marauding capitalist elites. Do you need to organise with your street how you personally recycle and how you personally conserve your living space. Of course not. It is great if more do it but personal responsibility is key. Greedy capitalist elites have no regard for anything even their own personal space which they simply get others to tidy up after them if at all.
Culturally, the four economic freedoms relies upon social liberalism which seeks to create discontinuities with cultural traditions and is currently the main creator of a culture war. The effect is also felt globally with foreign interventionist policies that have created a cultural backlash against western liberalism which results in random suicide bombings. These conflicts are because greedy global capitalists have no respect for local cultures or traditions. Their only goal is to greedily acquire wealth and assets and cultural wars helps them achieve this.
So my question to you is how do the people globally rebalance the power relationship with greedy capitalist elites in order to enrich, preserve and conserve their local communities when these greedy capitalist elites have paid off international institutions, the eu, liberal/conservative national politicians, local councils and LEPs. Obviously you will not have an answer for this. But the only answer is to take back control by regaining political and economic sovereignty and then voting in a party that will represent local communities rather than greedy capitalist elites. Remaining in the eu simply means that the greedy capitalist elites can continue manipulating national economies as well as causing economic crisises without democratic accountability which is just how the greedy capitalist elites (and their supporters) wish it to be.
So your perception of the world is that it is “people” on one side and “greedy capitalist elites” on the other. How do you decide what you are? Are people who come from a poor background and then are successful in business or get a qualification that enables them to be successful, are they greedy capitalist elite people? Do ‘people’ not want to better themselves and give their children the good things of life? Do they escape being called greedy?
Your analysis is just heightening the growing divisions in society. I happen to agree that the difference between the pay levels of top people and ‘people’ is absurdly high but that is down to our unsatisfactory politics and nothing to do with the EU
I think anyone would know for certain if they are a greedy capitists. However to help ..
1. Will use tax avoidance schemes to refrain from paying their fair share.
2. Will tend to view society as a network of independant agents rather than as an interdependent whole.
3. Will view themselves as far superior to those that they rely upon for their wealth, i.e those that are actually producing their wealth.
4. Will be disconnected from the social, ecological and cultural impacts of their activities.
5. Will blame the poor for being poor.
6. Will be ignorant of the fact that opportunities are always in a relative state of scarce supply or if not will consider their privileged position as a result of their own efforts rather than being the result of a collectively constructed system.
7. Will tend to alienate themselves from lower classes.
It is all these traits that creates the ‘lived’ division between the haves and have nots, not the ability to identify these traits
The EU treaties and the corporate led EU commission has created a european-wide socio-political culture that promotes these traits rather than promoting a perspective that is underpinned by an interdependent and interconnected notion of society. Hence rather than a highly cooperative social market economy, the EU advocates a highly competitive social market economy (TEU Art 2). Consequently we have a European political culture that advances foremost the rights of individuals to take rather than advancing the responsibility of individuals to give. Hence we are creating ego-centric mentalities rather than eco-centric mentalities which you appear to agree with.
Why should an economic imperative overtake what people actually want?
Quite right. Why should *any* imperative overtake what people actually want? Why should protecting the environment overtake the easy, cheap consumption that people actually want? Why should mitigating climate change overtake the profligate use of energy that people actually want? Why should protection of refugees overtake the protection of their own comfortable lifestyles that people actually want?
What people want and what they need, or what is fair and right, are not always aligned. It is the job of good government to look after the bigger picture. Pandering to short-sighted or selfish “wants” is the sin of recent governments which has got us into this mess.
Enough of doing what ‘people actually want’; lets focus on doing what people need.