We need a Sustainable Fairness Doctrine to reshape our Economy. The EU is part of the solution, not the problem

By David Schoibl

This Coalition Government is led by a Conservative Party which acts as the political-wing of the Financial Services Industry and fails to tackle real problems. This has opened a space for the Europhobes in the Conservative party to call for an EU referendum vote, providing yet another diversion for the embattled bankers at the core of the world financial crisis.

In the UK public discourse is more reluctant to address the real causes of the economic crisis than in any other European country. Democratic politics in this country seems trapped in a stranglehold of the interests and networks of the financial services industry just like in offshore tax havens and secrecy jurisdictions.

The special constitutional status of the City of London – paired with the over-reliance of UK PLC on the unproportionate contribution by the financial services sector to the GDP – makes it difficult for politicians in this country to re-balance the British economy. The British economy needs a long-term strategic move away from its reliance on unsustainable financial services. It needs to move towards advanced manufacturing and an innovative knowledge- and skills-based economy. It cannot be mostly dependent on ‘financialized’ corporations which have to serve investor and shareholders’ requirements as these have lead to a focus on ‘the next quarter’ results, rather than long-term business sense.

The British economy needs to create opportunities for privately owned SMEs, worker and consumer co-operatives, which are empowered to focus on long term stakeholder value and not just the short term shareholder gain. We also need to stop the brain drain from the real economy to the City of London, where a highly qualified workforce can earn double, triple and x-fold amounts of money.

It is not surprising that the Vickers reforms to ring-fence high-street banking from high-risk investment banking were kicked into the long touch (delayed until 2019 now) and that this Conservative party resists the introduction of an EU-level Financial Transaction Tax (on these shores also know as Robin Hood Tax), which the European Parliament and the 26 other member state governments are in favour of. With more than 50% of donations to the Conservative Party coming from the Financial Services Sector, it truly acts as the political wing of the bankers.

As Ed Miliband said in his speech to Labour Conference ‘it is time to question old orthodoxies’. Neo-liberalism has died. The post-welfare-state Thatcher- and Reaganomics settlement has died with this crisis. It is upon our political generation to join the battle and fight for what a new, socially-balanced economic model will look like and how we can build a new fairness doctrine into this.

The relationships between societies, states and markets are in turmoil. So is the relationship between ‘the local’ and ‘the global’. Feeling threatened, we would like to re-organise ourselves around our own community, focus on the local, focus on what we know. But we fool ourselves if we think this is a solution.

We need a new fair and sustainable framework for how we want society and the economy that motors it to work. Importantly, this framework needs to work on a pan-national level, as the companies and markets which drive our fate (and whose greed has driven us into the crisis) have stopped being local or ‘national’ decades ago. We need to catch up.

The Occupy Wall Street, Occupy London, Occupy Frankfurt, Occupy … Movement(s) and the wide-spread sympathy for them far beyond the usual suspects demonstrates a breakdown in trust between the publics and their economic, intellectual and political elites in many countries. Citizens are watching the crisis unfold while the people who have caused the crisis are continuing like nothing has happened. Banks continue to pay obscene bonuses and blame politicians, the welfare-state, and institutions like the EU for the crisis to distract from the continuing shenanigans of the financial markets.

During the last three decades we have deregulated global markets and deregulated our national economies, trusting in the efficiency of ‘free’ markets, with the result of a massive increase in the inequality within and between societies. Today, the UK is once more one of the most socially unbalanced countries in the Western World. Democratic politics is the right tool to assert the power of the ballot over the power of the wallet. But while democratic politics is still focused on policies for the domestic political stage, capital was allowed to go global with only minimal regulation.

Financial services sector lobbying has played no small part in leading us up this path. The same interests try to make us believe now that the crisis is Labour’s fault, the EU’s fault, the Euro’s fault, the fault of overspending governments. All of this is a diversionary strategy, which most UK media outlets have readily helped to spread.

If we want to effectively re-regulate financial and commodities markets on the global level so they start serving societies again instead of the other way around, we need the structures and institutions of democratic politics to assert themselves on the global and European level. One such structure, which allows us to regulate markets on a pan-national level, watching the way these markets operate, is the European Union. In short if the EU would not already exist, it would urgently need to be invented.

Calling for a referendum to redefine Britain’s membership of the EU is utter madness in these circumstances and a colossal waste of parliamentary time.

What we should discuss instead?
An EU-wide referendum on an FTT, banker bonuses, a maximum wage.
Making the banks pay for the crisis they have created.
Drawing up a new framework for a decent capitalism, a new economic and social fairness doctrine, as opposed to the excesses of the indecent capitalism which we have seen develop over the last three decades.

All of this would be more fruitful and to the point. Whether in a referendum, in parliament, in the media and around the dinner-table in our social circles or families, let us discuss what is really at the heart of the problem and let us not focus on a proxy war against EU-membership.

Progressive forces need to use the momentum created by the Occupy Movements across the globe to question the old orthodoxies and facilitate the emergence of a new yet to be defined post-neo-liberal settlement. The battle between the out-raged (indignés) and the arrogant (bankers) has only just begun. If democratic politics and its institutions would prove to be unable to negotiate, facilitate and steer us through this confrontation and come up with new solutions, it would run the danger to be cast aside by a clash of these forces with unimaginable consequences.

There are no easy answers to the challenges we face. Foremost we need to find a way to run our economies sustainably. We need sustainability in environmental, social but also in economic terms.

This requires us doing things differently in domestic politics but also requires a new set of pan-national and global rules. As global consensus on these issues is difficult to come by, the EU as the world’s largest internal market is best placed and capable to be at the forefront, to set pace, to act as a platform which allows us to shape how we want to organize ourselves in the new global economy. The EU may be criticized for being bureaucratic and abstract, but in reality it has created the globally most advanced and most democratically accountable supranational decision making institutions and practices.

The EU has to be part of our solution to solve the crisis, and it is a mistake to see it as the cause of the problems.

If we want to curb the unhealthy dominance of the City of London, its global counterparts, and their combined lobbyists on public policy and if we want to strengthen the influence of civil society and the ‘real economy’, it is essential to re-regulate financial services on the EU level. Rather than taking power away from the UK, working with the EU will also help all those forces in the UK who seriously work towards a re-balancing of the UK economy.

Hence, let us not waste too much time rebutting the nonsense which will by aired by the europhobes on the Tory benches but also sadly from some of Labour’s backbenchers in Parliament on Monday October 24.

Let us focus on what people really care about, not what they are led to believe by financial services spin doctors and their political allies. Let us focus on a sustainable growth strategy, combating youth unemployment, ending austerity, which currently seems to be leading us back into recession, making financial services pay their fair share for the crisis they have caused, re-regulating the economy to prevent crisis like this to happen again.

Let us fight the upcoming elections in France, Italy and Germany and the European elections in 2014 on a progressive platform which recognizes the EU as a political space, a set of political institutions in which these policies can be fought for and implemented.

We socialists and social democrats need Europe to achieve our goals and Europe needs socialist and social democrat solutions.

David Schoibl has been Chair of the Labour Movement for Europe (LME) since 2010. He is an EU-citizen living, working and campaigning in London for more than 10 years and has been active in progressive politics for over 20 years. The LME is a campaigning organisation aiming to improve the quality of debate about Europe in the Labour Party, the wider Labour movement and the UK overall. The LME brings together MPs, MEPs, progressive sister organisations and activists from all over the UK, and put the case for Europe in Labour and beyond.

One Comment

  • David Schoibl talks a great deal about rebalancing the British economy. and yet the kind of mesure that would be needed to rebuild Britain’s industrial base – the only plausible means by which we could de-financialise our economy – would be in serious contravention of EU rules. We are at the point where positive government intervention – and yes subsidies – are necessary if we are to establish a viable alternative – FTT alone will hardly do the trick.

    David Shoibl also calls for a of europe wide referenda on policy issues. Yet, for votes to have any real democratic value, their needs to be some kind of unified public sphere encompassing those who are asked to take part – the prerequisite to any kind of unified debate. Other such an excersise is not means by which the people can exercise power, but is instead simply the aggregation of individual preferences. Now, Shoibl might declare himself a citizen of Europe, and I’m sure some Prospect wonks might take an interest in continental social democracy, but in the grand scheme of things, it is blindingly obvious that no such public sphere exists.

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