Archive | June, 2016

The EU and Democratic Control of Capitalism

21 Jun

I am extremely busy at the moment, finishing my book and giving talks in UK, but I just wanted to write something short in support of the UK remaining in the EU.

My view is that the essential problem of our age is a crisis of sovereignty:

Although in many countries (imperfect) democracy has been achieved at a national level, global capital runs the show at a global level.

Countries are not free to set tax rates and regulation as they choose, because multi-national corporations pit nation and against nation in a race to the bottom. Our economic sovereignty has been handed over the market. The only way to reverse this trend is international co-operation, though institutions such as the EU. The forces of aggressive international tax competition keep economically feasible tax rates artificially low. If countries were to co-operate rather than compete –what I call ‘fiscal solidarity’ – we could eliminate these forces, ensuring a vastly greater proportion of profits go to schools, hospitals, infra-structure and education.

It is true that this is not the direction the EU is currently going in, but visionary economists such as Thomas Picketty (in particular read this manifesto) and Yanis Varoufakis are campaigning for such a radical re-imagining of the EU project. We should remain in and fight for this vision.

In the aftermath of the second world war Europe and the US took small but significant steps moved towards the democratic regulation of capitalism, including (relatively) high income and business taxes and strong regulation of markets. It worked, and lead to the most rapid period of growth experienced in human history, the so-called ‘golden age of capitalism’. People got richer, society got more equal, the 60s happened.

Then came the Thatcher/Reagan ideology. The idea was that if we set capital free by cutting taxes and regulation, we’ll all get richer. The result was huge inequality, mass homelessness, and a string of financial crises culminating in the crash of 2008. The Global Financial Crisis should have been the decisive end of uncontrolled capitalism, just as the fall of the Berlin Wall signaled the end of state run communism in 1989.

But the lessons of the crash were not learned. And we are now living in scary times with people flailing wildly looking for answers outside of the mainstream, from UKIP to Golden Dawn to Donald Trump. The only solution in my view is to revert to the project of the post-war period: democratic control of capitalism. This project requires a radically re-imagined EU. A long shot, but I can’t see any other way forward.

This is why I’ll be voting remain.