Brexit: globalisation and control

24/09/2016

To that extent, there is not even any point in writing for them, or attempting to educate them. All you get is the clever-dick response of the ignorati - people who do not even attempt to engage with the substantive issues.

At the heart of the darkness, so to speak, is that media-politico nexus which believes that "Brussels" is the law-maker supreme, and that Brexit will bring a new renaissance. Regulations by the thousands will be ripped up and burned in one vast metaphysical bonfire, opening the way to the vast sunlit uplands where free trade agreements hang from every tree.

At first sight, the essence of the problem is that these people don't have the first idea of how the world really works, in the context of a global system that is now so diffuse and complicated that even the specialists struggle to understand it.

The real problem, though, is that such people don't want to know about complexity. They have already fixed their narratives and they don't want them disturbed by mere facts – especially when they come from low-prestige sources.

Much of that narrative is fixed around the "deregulation" meme, so pervasive that it is taking on the character of a computer virus that blocks keyboard inputs. It renders void argument on any alternative, as shallow minds fixate on their idea of a bonfire of regulation.

Reading an essay in this book, however, one sees from authors Ronnie Lipschutz and Cathleen Fogul a different narrative, recounting how globalisation has destabilised any idea of national deregulation.

The book is: "The Emergence of Private Authority in Global Governance", edited by Rodney Bruce Hall. It has Lipschutz and Fogul telling us:

Nowadays, the greatest profits are to be found in the high-tech and information industries, in transnational finance and investment, and in flexible and niche production and accumulation. This means looking beyond national borders for ways in which to deploy capital, technology and design, and to gain access to factors of production in order to maximise returns on investment and secure entry into foreign markets.

Lipschutz and Fogul then remark:

… one obstacle to capital mobility and broader economic growth is the transaction and other costs that result from compliance with more than 100 sets of national regulations. From the perspective of global capital, it is preferable to deal with a single set of rules that apply to all countries.

Markets, they say, require rules in order to function in an orderly fashion. Thus, they add, there is a "central paradox", in that:

… while "deregulation" is the mantra repeated endlessly in virtually all capitals and by all international capitalists, it is domestic deregulation that capitals and capitalists desire, not the wholesale elimination of all rules. Selective deregulation at home may create a lower-cost environment in which to produce, but uncontrolled deregulation everywhere creates uncertainty and economic instability. Hence international regulation is relied on increasingly for keeping the global system together and working.

The great advantage of international regulation is not only that it reduces transaction costs of 190 different sets of national laws, such regulatory harmonisation also tends to "eliminate politics" from certain conflictual areas by shifting regulatory authority out of the domestic sphere and into the international one. There, "representative national and subnational institutions lack power and any ability to intervene".

In effect, the depoliticisation of regulation (inevitably stripping out democratic accountability) is a necessary function of globalisation – a feature rather than a bug, as the saying goes.

With that, one can quite understand the proponents of globalisation being less then enthusiastic about parading the anti-democratic nature of the regulatory processes. Furthermore, it should come as no surprise that the EU has served to conceal the origins of many of the regulatory products arising out of globalisation.

But now we are confronting Brexit, the extent of this deception is being exposed, and we are beginning to get some idea of what has been hiding behind the skirts of "mother Europe". It is perverse, therefore, that the anti-EU Tory Right are, in effect, working with the EU in obscuring the process of globalisation, either by ignoring it or pretending it doesn't exist.

To an extent, these people are trapped by their own rhetoric. Having cast the EU as the root of all evil – particularly in terms of "barmy rules" - they are then unable to adjust to the fact that, in many areas, their criticisms have been over-stated. If follows naturally that they cannot admit that that Brexit will barely dent the corpus of regulation to which they have so long and so noisily objected.

Given that one of the key slogans for the official Vote Leave campaign was "take back control", it is even more embarrassing for this grouping to have to concede that much of the "control" does not rest in the hands of their hated EU. Instead, it lies with a diffuse compendium of global standards-setting bodies, which will continue to operate long after the UK has left the EU.

What the Tory Right also fail to understand is that, apart from a tiny faction of the disaffected, no one cares very much who decides on the global standard for sugar in jam, or for ergot in flour. What does matter, as the Egyptians are finding out, is what happens when national governments go off the rails and get the policy wrong.

This is the territory we covered in Monograph 12, and which we explore further in our latest Monograph. But what we are basically saying is that, if we are going to manage Brexit effectively, we will have to come to terms with the role and effects of globalisation. Mrs May will then have to decide how to accommodate it in the post-Brexit environment, and work out a way of maintaining the momentum, while satisfying the aspirations of the rational Brexiteers.