There’s a lot of decent stuff in Jeremy Corbyn’s Build it in Britain speech: reduce the role of the City, provide better training. But overall, his prescription for improving British manufacturing it is not convincing, for two reasons.
Making the public sector buy British would expensive and not very effective – there are better approaches to industrial policy. Worse, the real political importance of this plan is that it is a new excuse (the old ones having shown themselves flimsy) for leaving the Single Market: don’t buy it, it is a poison pill.
The good stuff – the City, training – shows no evidence of understanding the deep institutional obstacles to achieving what he proposes, obstacles which for all its theatrical radicalism the current Labour leadership is not willing to face squarely (IMO, unwilling because doing so would spoil the theatre of revolution).
Here I’ll deal with the first item, and leave the City & training for a future post.Buy Britain” for the public sector can be very costly. A wise state planner can make good strategic use of state purchases, but so can inefficient or out-of-date suppliers protected from foreign competition by such policies. Take a look at the inferior and hugely expensive buses and trains of the United States (made in the United States due to buy-American requirements); ask yourself if you want NHS purchases of medicines and equipment to be restricted by a Build it in Britain policy; consider that state purchasing power is great in some sectors and not in others – at best, it’s a scattershot approach to industrial policy. Overall, it would be expensive and not very effective.
Corbyn fudges the problem of supply chain links to European markets. He wants to favor UK suppliers, but he also recognizes that British manufacturing needs to be part of the European system. He’s right to do that: Britain has less industry than it once did, but it has important positions in many, many European manufacturing supply chains. The great risk to manufacturing posed by Brexit is of losing those European links. So to make Build it in Britain halfway credible, Corbyn relies on continued membership in “a customs union”, which in his story would keep the European links intact.
With supply chains Corbyn is, as ever, downplaying the importance of the Single Market. Trouble is, the complexity of modern supply chain relationships – their dependence on common standards, on services and on the international mobility of workers – mean that the high value-added manufacturing Britain does now owes a lot to Single Market membership. Note in particular that services and manufacturing don’t operate in separate worlds – both go into the product a each stage, from design and engineering, to maintenance: supply chain relationships aren’t just about moving parts around. Leaving the single market would put a great deal of today’s manufacturing at risk.
The sort of aggressive domestic purchase requirements Corbyn is advocating are plainly incompatible with Single Market membership. Even worse, they would make it unlikely the UK could get a good customs union deal: why should the EU-27 allow the UK to remain under the umbrella of a common external tariff – no internal tariff – if the UK is then going to tilt the playing field for its own public sector purchases?
Buy Britain is incompatible with Single Market membership. I think that for Corbyn and his immediate circle, this may be a feature rather than a bug. They do keep looking for reasons to oppose Single Market membership. One excuse has been Corbyn’s apparently reluctant conversion to the cause of restricting the free movement of people – but that doesn’t convince, because free movement can be limited within current Single Market rules, Britain’s just never bothered; we have been told that his proposals for the nationaliation of industries would be threatened by Single Market membership but, again, this isn’t convincing, since European law does allow nationalisation.
On the other hand, an industrial policy based on preference in public procurement for UK products, not allowing EU-27 companies to compete on a level playing field with British ones – that’s a deal breaker, for sure. Bingo, no Single Market, no EFTA, “a” customs union of some sort: in short, hard Brexit. Build it in Britain is a poison pill for the Single Market. It is a way of selling Lexit to people who do not understand that it would not be a very effective industrial policy.
Numerous Corbyn supporters have tried to convince me that achieving distance from the EU is not his objective, that he campaigned sincerely for Remain, that his respect for the referendum result is tactical, that his belief in free movement of people deep and sincere, and that his aim is a very soft Brexit. At times this interpretation has seemed plausible, but if Corbyn’s positioning here is tactical somebody is being played, and one needs to ask whether it is the Brexiters (and Lexiters), or the Remainers.
Supporters of his have sent me links to speeches Corbyn made during the referendum campaign, as evidence of his good effort: I have to say they don’t convince. Put those against his entire anti-EU career before the referendum, and everything he’s done since the referendum – from his immediate call to immediately invoke Article 50, on through these empty reasons for leaving the Single Market and blocking internal debate on the party’s Brexit policy. It would be foolish to predict, on that basis, pro-European choices by this Labour leadership.
Why do they do this? It is, I think, some wishful thinking that forms the foundation of the Lexit view: that socialist revolution can be achieved at the ballot box within the Westminster system of government, but only if released from the constraints imposed by the European Union. The proposition that the EU is constraining Britain, with its feeble social welfare, poor provision of public goods, finance-dominated economy and extreme income inequality is being kept in neo-liberal bondage by the social market economies of the Continent, you can judge for yourself. Even more serious, though, is the error of looking to the Westminster system of government for a socialist revolution. That this system favours a short-term focus to government and, on balance, enhances the empower of capital over labour, is now well understood by political scientists. It is the unwillingness to face this problem, the willingness to be seduced by the promise of unchecked (if short-term) power upon receiving a parliamentary majority, that leaves the sensible parts of Corbyn’s industrial policy without any institutional foundation, and consequently without any prospect of successful implementation. I’ll come back to that in a future post.
For now, British supporters of EU membership have a problem. Opinion polls now show majority public support for Remain, but if a general election were called today neither major party – which is to say, no party with a chance of winning – would offer Remain as an option to the voters. I see Corbyn supporters advocating #GE2018: they want to force an election, one in which there is no Remain option. That is, simply, a strategy to force hard Brexit on the people. If you are a Corbyn supporter and don’t understand this, I’m sorry for you.