By Nauman Sadiq
There is an essential condition in the European Union’s charter of union according to which the under-developed countries of Europe that joined the EU allowed 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 condition is the fact that free trade only benefits the countries that have a strong manufacturing base; and free movement of workers only favors the under-developed countries where labor is cheap.
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 must have overwhelmingly voted in favor of Brexit, because after Britain’s entry into EU and when the Schengen Agreement on abolishing the internal border checks among the EU member states became effective in 1995, the cheaper labor force of Eastern 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 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.
Keeping in view the principle of reciprocity enshrined in the EU’s Charter that free trade should be made contingent upon the free movement of labor, 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, such global financial institutions espouse 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 trade partners leads to the destruction of the host country’s existing economic order and a subsequent reconfiguration, somehow, gives birth to a better economic order.
Whenever one comes up with gross absurdities such proportions, they should always make it contingent on the principle of reciprocity: that is, if free trade is beneficial for the nascent industrial base of the underdeveloped countries, then the free movement of labor is equally beneficial for the working classes of the developed countries.
The policy makers of the developing countries must not fall prey to such deceptive arguments, instead, they must formulate policies which suit the interests of their working classes. The only trouble is that the governments of the Third World are dependent on foreign investment and the global loan sharks, 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 owns more assets 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.
Although, the champions of globalization and neoliberalism all over the world must be bemoaning the fate of EU after Brexit, but the recent success of right-wingers all over the world: like the rise of Trump in America, the referendum in 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 ideology 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-onwards, 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 that actual comedians like Jimmy Morales won a resounding victory in the Guatemalan elections last year; similarly, the Italian comedian Beppe Grillo’s “Five Star movement” also secured more than 100 deputies in the last Italian elections; and the biggest tragicomic of them all, Donald Trump, too, is all set for a victory in November this year.
Coming back to the topic, although, EU’s labor provisions ensure adequate wages and safeguard the rights of workers, but the British working class chose to quit 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 the modes of production, and it will also ensure ready availability of jobs.
Notwithstanding, 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, family and friends in their native countries and choose to work in a foreign country? Obviously for better wages and reasonable working conditions.
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 the immigrant workers to seek employment in the developed countries.
Free movement of workers only benefits a small number of individuals and families, because majority of the 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 policies. A comprehensive reform of the global economic and trade policies, on the other hand, will benefit everyone, except the bankers and the beneficiaries of the existing neoliberal world order.
Finally and in the nutshell, I would contend that Brexit is actually a blessing in disguise for the EU as well as Britain. The latter always closely identified with the American interests and foreign policy, while France and Germany took the lead in managing the affairs of EU. After Britain’s exit from the EU, it will align itself more closely with the American policy; and the member states of EU too, in the absence of pro-US Britain, might be able to form a more cohesive and coherent union.