By Nauman Sadiq
Is this not the international politics’ most significant coincidence that the Soviet Union was dissolved in December 1991 and the Maastricht Treaty that laid the foundations of the European Union was signed in February 1992? The basic purpose of the EU, it appears, has been nothing more than to induce the formerly communist states of the Eastern and Central Europe into the folds of the Western capitalist bloc by offering incentives and inducements, particularly in the form of the Schengen Agreement that has allowed the free movement of labor from the impoverished Eastern Europe to the prosperous countries of the Western Europe.
No wonder then, the Western political establishments, and particularly the US, are as freaked out about the outcome of Brexit as they had been during the Ukrainian Crisis in November 2013, when Viktor Yanukovych suspended the preparations for the implementation of an association agreement with the European Union and tried to take Ukraine back into the folds of the Russian sphere of influence by accepting a billions of dollars of loan offered by Vladimir Putin to Ukraine.
In this regard, the founding of EU has been similar to the case of Japan in the Far East. After the Second World War, when Japan was about to fall in the hands of the geographically-adjacent Soviet Union, the Truman Administration had authorized the use of nuclear weapons on Hiroshima and Nagasaki to subjugate Japan and also to send a signal to the leaders of the Soviet Union, which at the time had not developed their nuclear program, to desist from encroaching upon Japan in the east and West Germany in the Europe.
Then, during the Cold War, the American entrepreneurs invested heavily in Japan’s economy and made it a model industrialized nation to forestall the expansion of communism in the Far East. The revolutionary Marxist manifesto of the communal ownership of the modes of production had such an appeal among the dispossessed masses of Asia, Africa and Latin America that the capitalist “trickle-down” economics was simply not a match for it.
Eventually, the pragmatic Machiavellian strategists of the Western capitalist bloc had to invent democracy as a ground for intervention in order to offset the moral superiority and mass appeal of the communist bloc.
Notwithstanding, there is an essential precondition in the European Union’s charter of union according to which the developing economies of Europe that joined the EU allowed the free movement of goods (free trade) only on the reciprocal condition that the developed countries would allow the free movement of labor.
What’s obvious in this stipulation is the fact that the free movement of goods, services and capital only benefits the countries that have a strong manufacturing base; and the free movement of workers only favors the developing economies where labor is cheap.
Now, when the international financial institutions, like the IMF and WTO, promote free trade by exhorting the developing countries all over the world to reduce tariffs and subsidies without the reciprocal free movement of labor, whose interests do such institutions try to protect? Obviously, they try to protect the interests of their biggest donors by shares, i.e. the developed countries.
Some market fundamentalists who irrationally believe in the laissez-faire capitalism try to justify this unfair practice by positing Schumpeter’s theory of “Creative destruction:” that the free trade between unequal trading partners leads to the destruction of the host country’s existing economic order and a subsequent reconfiguration gives birth to a better economic order.
Whenever one comes up with gross absurdities such proportions, they should always make it contingent upon the principle of reciprocity: that is, if free trade is beneficial for the nascent industrial base of the developing economies then the free movement of labor is equally beneficial for the workforce of the developed countries.
The policymakers of the developing countries must not allow themselves to be hoodwinked by such deceptive arguments, instead they should devise national policies which suit the interests of their underprivileged masses. But the trouble is that the governments of the Third World countries are dependent on foreign investment, that’s why they cannot adopt an independent economic and trade policy.
The so-called “multinational” corporations based in the Western financial districts make profits from the consumer markets all over the world and pay a share of those profits to their respective governments as bribes in the form of taxes. Every balance of trade deficit due to the lack of strong manufacturing base makes the developing nations poorer, and every balance of trade surplus further adds to the already immense fortune of the developed world.
A single large multinational corporation earns more revenue annually than the total GDP of many developing nations. Without this neocolonial system of exploitation the whole edifice of supposedly “meritocratic” capitalism will fall flat on its face and the myth of individual incentive would get busted beyond repair, because it only means incentive for the pike and not for the minnows.
Notwithstanding, while joining the EU, Britain compromised on the rights of its working class in order to protect the interests of its bankers and industrialists, because free trade with the rest of the EU countries spurred British exports.
I am of the opinion that the British working classes overwhelmingly voted in the favor of Brexit, because after Britain’s entry into the EU and when the Schengen Agreement on abolishing the internal border checks between the EU member states became effective in 1995, the cheaper labor force from the Eastern and Central Europe flooded the markets of Western Europe; and consequently the wages of indigenous British labor force dropped and it also became difficult for them to find jobs because the foreigners were willing to do the same job for lesser pay.
Hence raising the level of unemployment among the British workers and consequent discontentment with the EU. The subsequent lifting of restrictions on the Romanians and Bulgarians to work in the UK in January 2014 further exacerbated the problem.
The biggest incentive for the British working class to vote for Brexit is that the East European workers will have to leave Britain after its exit from the EU, and the jobs will once again become available with better wages to the indigenous workforce.
Although the champions of globalization and neoliberalism all over the world are bemoaning the fate of the EU after Brexit, but the recent success of right-wingers all over the world: like the rise of Trump in America, the Brexit referendum in the UK, the success of Modi and his hardline BJP in India, the emergence of Buddhist extremists in Sri Lanka and Myanmar and the ascendancy of Islamic hardliners in the Muslim-majority countries, all of these are not the success of conservatism, as such. Conservatism is an outdated political creed which is simply not a match for the more refined liberal worldview.
The aforementioned reactionary anomalies signify only one thing: the failure of neoliberalism as a political and economic ideology. Social liberalism of ‘60s and ‘70s used to be an inclusive and egalitarian philosophy while neoliberalism, ‘90s-onward, with its exclusive emphasis on economic growth and elitist values, and without any regard for social justice and class equality, is losing its appeal among the masses all over the world.
In fact, politics has become such a comic business after the onset of neoliberalism and the so-called “globalism” that actual comedians, like Jimmy Morales, have won a resounding victory in the Guatemalan elections last year; similarly, the Italian comedian, Beppe Grillo’s, “Five Star movement” has also secured more than 100 deputies in the last Italian elections; and the biggest tragicomic of them all, Donald Trump, too, has been elected as the president of the US.
Notwithstanding, although the EU’s labor provisions ensure adequate wages and safeguard the rights of workers, but the British working class chose to quit the EU on the basis of demand and supply of labor. With East European workers out of the country, the supply of labor will reduce hence increasing the demand. The native British workforce can then renegotiate better terms and conditions from the owners of industries and businesses, and it will also ensure ready availability of jobs.
Regardless, instead of lamenting the abysmal failure of globalization and neoliberal economic policies, we need to ask a simple question that why do workers choose to leave their homes and hearths, and family and friends in their native countries and choose to work in a foreign country? They obviously do it for better wages.
In that case, however, instead of offering band aid solutions, we need to revise the prevailing global economic order; and formulate prudent and far-reaching economic and trade policies that can reduce the imbalance of wealth distribution between the prosperous and impoverished nations; hence, reducing the incentive for immigrant workers to seek employment in the developed countries.
Free movement of workers only benefits a small number of individuals and families, because the majority of workforce is left behind to rot in their native developing countries where economy is not doing as well as in the developed world, thanks to the neoliberal economic policies. A comprehensive reform of the global economic and trade policies, on the other hand, will benefit everyone, except the bankers, industrialists and the beneficiaries of the existing neoliberal world order.
More to the point, the promotion of free trade by the mainstream neoliberal media has been the norm in the last several decades, but the implementation of the Schengen Agreement in March 1995 that allowed the free movement of people between the EU member states has been an unprecedented exception.
Free trade benefits the industrialized nations of the EU, particularly Germany and to some extent the rest of the developed economies of the Western Europe; but the free movement of labor benefits the cheaper workforce of the impoverished Eastern and Central Europe.
The developed economies of the Western Europe would never have acceded to the condition of the free movement of labor that goes against their economic interests; but the political establishment of the US, which is the hub of corporate power and wields enormous influence in the Western capitalist bloc, must have persuaded the unwilling states of the Western Europe to yield to the condition in order to wean away the formerly communist states of the Eastern and Central Europe from the Russian influence.
Had there been any merit to the founding of the EU, the Western Europe would have promptly accepted Turkey’s request to join the EU. But they kept delaying the issue of Turkish membership in the EU for decades, because with a population of 78 million, Turkey is one of the most populous countries in Eurasia. Millions of Turks working in Germany have already become a burden on the welfare economy of their host country. Turkey’s accession to the EU will further open the floodgates of immigrant workers seeking employment in the Western Europe.
Moreover, Turkey is already a member of the NATO and a longstanding and reliable partner of the Western powers; while the limited offer to join the EU, as I have already mentioned, serves as an inducement to the formerly communist states of the Eastern and Central Europe to forswear their allegiance to Russia and to become the strategic allies of the Western powers.
Thus, all the grandstanding and moral posturing of unity and the equality of opportunity aside, the hopelessly neoliberal institution, the EU, in effect, is nothing more than the civilian counterpart of the Western military alliance against the erstwhile Soviet Union, the NATO, that employs a much more subtle and insidious tactic of economic warfare to win over political allies and to punish the adversaries that dare to sidestep from the global trade and economic policy as laid down by the Western capitalist bloc.