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INTRODUCTION: Special Forum on Brexit Part 2
Next to the final version; final published in Globalizations, (14):1, 2017, pp.99-103.
[1] School of Accounting, Finance & Economics, Leeds Beckett University, Leeds, UK
[2] Department of Political and Economic Studies, University of Helsinki, Helsinki, Finland
The present
Brexit was triggered March 2017 and is formally to be completed by March 2019. It seems
increasingly likely that the actual process of leaving the EU will be more protracted, extending into
the next decade. The British government seems to have been wrong-footed at every turn. The
decision made in 2013 to hold a referendum was never properly thought through and the Cameron-
led coalition of that time did not expect to have to fulfil this promise. The unexpected Conservative
majority government returned in the general election of 2015 followed, and the Executive
approached a referendum based on sharp divisions within Conservative ranks, but with a sense of
complacency. Remain never expected to lose.
Nothing since then has been normal, and that includes the result of the general election of June 2017.
Again, voters confounded received wisdom, eliminating the slim Conservative majority. Prime
Minister Theresa May campaigned based on strength of leadership and a mandate for Brexit, but the
campaign made little reference to Brexit and was undone by a failure to address discontent regarding
welfare and social policy after almost a decade of austerity. What it means to talk about mandates in
this context is deeply ambiguous. More importantly, an unstable minority governing party, dependent
on an unofficial coalition with a Northern Irish party whose concerns are parochial, leads
negotiations. Theresa May has lost credibility as a leader and members of her Party are positioning to
replace her. It remains the case whoever is leading the Conservatives that the UK government may
be unable to guarantee acceptance by Parliament of any agreed position with the EU, and that there is
a further potential of government collapse. New complications now compound an already
complicated situation.
The future?
Complications are many (see Morgan and Patomäki, 2017). The beginning of formal negotiations
crystallised what previously had seemed likely. The UK negotiating team, led by David Davis
accepted the EU stipulated sequence of negotiation (settling the guarantee of citizen rights and
establishing the liabilities of the UK vis-à-vis the budget etc prior to negotiation of the UK’s post-
Brexit relation with the EU). The UK government sought to represent this as a generous concession.
It is more accurately a conforming to standpoints already ingrained in reality, since the EU had
already set out its collective position (EC, 2017a, 2017b, 2017c). Once an EU27 position has been
agreed between members, the form of that agreement creates a clear and restricted scope to which its
Correspondence Addresses: Jamie Morgan, School of Accounting, Finance & Economics, Leeds Beckett University,
City Campus, Leeds LS1 3HE, UK. Email:; Heikki Patomäki, Department of Political and
Economic Studies, University of Helsinki, P.O. Box 54, Unioninkatu 37, Helsinki 00014, Finland. Email:
negotiators led by Michel Barnier must abide (and which is difficult to change). So, one might
describe the UK part as seeming capitulation based on either wilful misrepresentation or hapless
misunderstanding of what was possible. The EU for its part has a collective position but one should
not conflate this with unity. A collective position does not require background unity or coincidence
of all interests, merely agreement. Different members, for example, will compete to host EU
agencies (with attendant benefits) that can no longer be located in the UK; notably the European
Banking Authority (EBA) and the European Medicines Agency (EMA). They are likely also to lobby
to restrict London’s capacity to act as the main clearing centre for the Euro.
The collective position matters, since the EU’s fundamental position remains that it is not in the
interests of the coherence of the EU for the UK’s status outside of the EU to be relatively unchanged
in its relation to the EU. This is not the same as intent to hold or exercise ill-will, it need not be
considered personal. The central idea accords with a moral principle that is widely held: a non-
member of the Union, that does not have or adhere to the same obligations as a member, cannot have
the same rights and enjoy the same benefits as a member.
The idea of symmetry of rights and
benefits, on the one hand, and obligations, on the other, thus becomes an implacable institutional
constraint. In so far as it manifests in particular consequences as negotiations continue over the
coming years, what seems likely to also be revealed is the basic lack of leverage UK negotiators
possess. Negotiation, like social reality in general, is a process. However, agreement matters more to
the UK than to the EU, and formal deadlines for domestic changes to law within the UK and for
detailed negotiation with the EU are tight. Moreover, there remains basic ambiguity concerning what
the UK government actually wants and what it can achieve. Differences, dichotomies and simplistic
representations abound and the basic splits between soft/hard and left/right exits persist.
Martin Wolf, the economics commentator of the Financial Times, has argued in favour of a second
referendum after the Brexit negotiations.
In his view this would be the most legitimate thing to do
from a democratic viewpoint, given that the original vote between “remain” and “leave” was
between a known existing state of affairs and some unspecified future form, where different voters
could imagine their own preferred or non-preferred exits. The leave decision thus disguises
difference. Wolf goes so far as to suggest that the UK should pull out from the Brexit process. This
may be impossible, however. Many processes are path-dependent and become for-all-intents-and-
purposes irreversible. Whereas in June 2016 the “remain” option was clear, the same option does not
seem to be available to the UK anymore. Not only is a reversal constitutionally questionable within
the EU as currently structured, any reversal of policy may not include reinstatement of the UK’s
relatively privileged position of budget rebates and opt-outs within the EU. This conforms to recent
comments by Guy Verhofstadt, the European Parliament’s coordinator on Brexit, the French
president Emmanuel Macron, and other European politicians. As Verhofstadt stresses, the UK may
stay but only as an ordinary member:
Like Alice in Wonderland, not all the doors are the same. It will be a brand new door, with a
new Europe, a Europe without rebates, without complexity, with real powers and with unity.
(Quoted in Rankin, 2017)
The philosophical principle actually holds that every meaningful right has a corresponding duty of others to respect that
right (e.g. right to free speech means you cannot stop someone else from speaking things out loud that you oppose), or
duty of particular others to provide whatever that right promises to deliver (e.g. social rights vis-à-vis the state). The
version according to which those who do not live up to the same obligations as a member, cannot have the same rights
and enjoy the same benefits as a member, is analogical to the basic principle of (neo)liberal welfare state (e.g. you are
only entitled to unemployment or welfare benefits if you are actively seeking for work and have employment normally).
See Wolf’s FT interview of 16 June 2017 at;
see also his column (Wolf [2017]), which forms the starting point of the interview.
It remains the case as Wolf argues that the choice in the June 2016 referendum was badly defined.
Even slight changes in the framing of questions can result in different answers from the same people.
Moreover, as Table 1 below illustrates, it is relatively straightforward to demonstrate how
incompatible different leave-options can be. The basic principle of Brexit negotiations is that nothing
is agreed until everything is agreed; individual items cannot be settled separately. This opens up
possibilities for further twists and turns. If the UK government changes in the course of these
negotiations, Table 1 options D or B could change to C or A. Moreover, if no agreement is reached
by the deadline, EU Treaties will no longer apply to the UK. This is likely to mean a sudden collapse
of the countless collaborative ties between the UK and the rest of the EU. However, it is also
conceivable, though much less likely, that it could mean no Brexit after all, followed by negotiations
about the precise terms of renewed British membership and a new referendum in the UK. If Brexit
becomes real, it is probable that the UK will continue to pay its annual EU contribution
(approximately £13 billion annually) for the two years from 2020 and 2021. There will be a three-
year transition phase and the UK will have to renegotiate a large number of international treaties. The
Brexit process will drag on for several years and well into the 2020s.
Table 1: Four possible British exits from the EU
A. Retain close ties to the EU,
especially in terms of free
movement of labour/people
and human and social rights.
B. Retain close ties to the EU
especially in terms of the
single market in goods,
services and capital.
C. Use the regained autonomy
to rebuild democratic welfare
state in the UK independently
of the neoliberal regulations
and policies of Brussels.
D. Use the regained autonomy
to exploit maximally the UK
possibilities for benefitting
from tax and competitiveness
war against other states.
As has been made clear to the UK negotiators, the Brexit deal itself covers only the terms of exit; the
future relations between the UK and the EU will have to be negotiated separately. As has also
become immediately clear, the negotiation process is formalised in all senses, and so is far from the
more freewheeling approach that the UK government gave every impression that they expected to
pursue prior to the initiation of talks. The first phase consists of four rounds of talks each round to
begin four weeks after the last and up until a final round, the second week of October. The talks are
broken into three separate strands undertaken by different teams or working groups. Within each
four-week cycle the first two weeks consist of preparations by the working group members, followed
by a week of talks in Brussels (with Davis and Barniers in attendance), and then a week of reporting
back/consultation of each party with their relevant decision-making constituencies (the UK
government etc) before the next round begins.
However, the formality of talks is not quite the same as an over-determination of content. One should
note that the difference between the two soft exits (A and B in Table 1) has become blurred to the
extent that there is at least a tentative basis for some agreement to protect migrant EU citizens post-
Brexit rights if they have been resident at least for five years in the UK/EU. One should not confuse
the indifference with which this was met in the European Council with disinterest regarding this
offer. The Council is a forum for many issues, of which Brexit is now only one among those many,
and the Council is not the direct point of interface for negotiation, which remains the Commission.
Leaders, including the German Chancellor Angela Merkel, recognized May’s offer as an opening
position (see Rankin, Stewart and Boffey, 2017). The key question is whether the UK will remain in
the European Economic Area (EEA). On purely ideological grounds, one would expect Labour to
stress social and human rights and the Conservatives economic freedoms and free markets. Behind
this difference lie very different approaches to critique of the EU as-is. The Left has always
considered the EU as too neoliberal (the single market as a local expression of global capital) and the
Right, not neo-liberal enough (Delors’ social policy and stealth integration corroding sovereignty
where only an economic relation was envisaged, see Jessop, 2017; Worth, 2017). The EEA is a very
extensive agreement, however, and this would mean the endorsement of most of the EU’s apparatus,
deals and regulation without the capacity to shape EU-regulation in the future. A soft exit would thus
mean leaving the EU decision-making system, resulting in the UK becoming, in the main, a rule-
taker rather than rule-maker.
Clearly, this could make a hard exit (C and D in Table 1) attractive to some, but there are two very
different versions of it. The Conservative version of hard exit revolves around the regained autonomy
to maximally exploit the possibilities for benefitting from tax competition and broader oppositional
competitiveness approaches with other states (D). Tax reductions and other related measures
translate readily to austerity, implying cuts to public services and social benefits. The Left version of
hard exit aims at the opposite outcome. The point of hard exit would be to use the regained autonomy
to rebuild a democratic welfare state in the UK independently of the neoliberal regulations and
policies of Brussels (C). In so far as the EU represents an authoritarian project of neoliberal
integration, it is only possible to develop a democratic political system and a social-democratic
society outside the EU (e.g. Johnson, 2017). The Labour Party 2017 Manifesto takes a softer line,
however, stressing that the UK wants to retain as much of the existing EU agreements and systems as
possible. Should there be new general elections in 2017 or 2018 resulting in a Labour government,
the softness or hardness of Left Brexit would have to be resolved within the Labour Party. This
leaves unresolved a fundamental question: To what extent are different EU agreements and systems
compatible with the attempt to develop political and social democracy within the UK? Addressing
this would seem likely to manifest divisions within the Labour party no less deep than those that
afflict the Conservatives.
Failing forward or merely lurching?
We suspect that neither version of hard exit would be particularly successful even in its own terms,
albeit for dissimilar reasons. In many areas such as international trade the Conservative version (D)
is ambiguous, because it is not clear how the Conservative understanding of free trade and
competitiveness would be different from the currently prevailing EU policies. Clearly a radical
reduction of the UK corporate tax rate would go against the spirit of the Commission’s 2015
proposal for a Common Consolidated Corporate Tax Base (see Morgan 2016, 2017b). It would serve
to intensify an on-going race to the bottom and strengthen disintegrative tendencies in the European
and global political economy (Patomäki, forthcoming). Tax war against other states in Europe and
elsewhere is a zero-sum game, and in the context of financialization, which tends to decelerate
growth (e.g. Stockhammer, 2004; Treeck, 2009; Seabrooke and Wigan, forthcoming, 2018) and has
adverse fiscal multiplier effects resulting from austerity and increasing inequalities (e.g. Cynamon
and Fazzari, 2015), it can also be a negative-sum game between countries. This makes the world
system more susceptible to conflicts. An increasingly less benign international political environment
is unlikely to spell a successful future for the UK in terms of social progress, GDP-growth or
The Left version of hard exit, meanwhile, ignores the numerous subtle mechanisms and international
treaties and institutional arrangements that underpin neoliberalism and, moreover, is vulnerable to
the structural power of transnational capital (mediated by prevailing ideas and forms of agency, see
Bell 2012). While some economic, political and social progress can be achieved depending on
concrete circumstances by means of social democratic economic policies within the confines of a
nation-state, it is not easy to reverse the worldwide process of neoliberalization individually, i.e.
independently of what happens elsewhere and without collective actions and new or transformed
common institutions. The hard Left exit is constrained by other states’ policies and by the possibility
of capital exit. The more radical the Labour programme, the more likely it is that transnational
capital will resort to investment strikes or move elsewhere (consider France 1981-83 or, in a much
more partial analogy, the UK in 1992). Significant capital outflows would also have a major impact
on the exchange rate of Sterling. Although actors know what it is that they are doing, under some
perspective, they do not necessarily understand (all) the effects of their actions and policies, not even
retrospectively. The dynamic and systemic international (or transnational, regional, or global) impact
of the consequences of their actions can in turn have feedback effects, whether acknowledged as
such or not. It is, of course, important to approach the significance of Brexit from multiple
perspectives. In particular, one should not conflate a UK-centred focus with a UK-centric point of
view. What is occurring in the UK has context and is part of broader processes.
The new essays
Erroneous expectations, forecasts, and anticipations, like unintended consequences of actions and
policies, usually arise from false or misleading categories, prototypes and theories. Steve Keen is a
prominent post-Keynesian critic of mainstream economics and its consequences. Keen starts the
second part of our Brexit Forum with an explanation of why mainstream economists were wrong in
anticipating that a vote to leave the EU would have an immediate significant negative impact on the
British economy in 2016-17. Moreover, he argues that this failure is rooted in a deeper
misunderstanding that confuses the role of and possible reasons to engage in trade with an abstract
model of free trade, creating in turn a mis-specified underpinning for a discourse of globalization.
According to Keen, when assessing the consequences of economic foreign policy making,
mainstream economists rely largely on the theory of comparative advantage. The concept is so basic
because it is for many prominent economists an unquestionable commitment that identifies real or
serious economists. As Alan S. Blinder, a leading academic macroeconomist who has also served as
Vice-Chairman of the Federal Reserve Board, puts it:
I have long believed that one true test of whether a person is an economist is how devoutly he
or she lives by the principle of comparative advantage. And I don’t mean just preaching it, but
actually practicing it. (Blinder, 1998, p. 1)
Mainstream economists in general assume that international free trade is beneficial because of gains
from specialisation. This underpins basic arguments for free movement of capital and labour and for
factor equalisation and so has profound political implications for the policy space of states. And yet
the most affluent countries are also the most diverse and complex in their organization of production
and have rarely become successful by simply opening their borders (infrastructure, capital controls of
one kind or another and many other policies have mattered). Basing his argument on the results of
extensive empirical research, Keen concludes that “whether trade liberalisation causes a net increase
or decrease in productive capacity is a question of investment and effective demand, and not one of
relative efficiency (Keen, 2017a., p.**). Brexit, as currently presented has little to say about
constructive investment and effective demand. As Keen also notes economists failure to predict the
UKs better-than-expected economic performance since the June 2016 referendum is also in the
context of their general failure to forecast anything of importance, including basic features of real
economies, such as asset bubbles and financial crises -- which are features of, rather than accidents
that happen to, economies (Keen, 2017b).
Silke Trommer (2017) continues Keen’s theme of trade, but focuses on the reality of the UK’s
position in terms of trade treaties. She argues that post-Brexit UK trade policy autonomy is a pyrrhic
victory, and in many ways illusory, since the UK will be required to conform to existing institutions
even as it seeks to develop new terms of trade. Apart from the “absence of a clearly formulated
substantive post-Brexit trade agenda”, or any systematic account about the ways in which the EU and
UK positions on free trade may differ, there are a number of reasons why “Britain may find it more
difficult to push its own trade agenda internationally than is currently conceded in the debate (2017,
p.**). Current free trade negotiations are mostly not about direct or purposeful obstacles to products
crossing borders. Rather they concern market access to sectors of services, public procurements,
investment protection, and regulatory harmonisation. Free trade negotiations have become complex
and unmistakeably political. The UK’s relative importance in the world economy has declined and,
moreover, it lacks capacity to conduct dozens if not hundreds of negotiations simultaneously.
Fragmented and complex trade negotiations “produce commercial fragmentation and contribute to
regulatory clashes (2017,p.**). It seems unlikely that Brexit will turn out to be beneficial to the UK
in “free-trade” terms.
Leonard Seabrooke and Duncan Wigan (2017a) focus on the likely consequences for tax policy and
competition based on Brexit. They situate the potentials as a product of activity in global wealth
chains, a concept that builds but diverges from the well-known concept of global value chains
(Seabrooke and Wigan, 2017b). Firms and other actors seek to concentrate and protect income and
wealth from other claims and this sits in terms of a complex of rules and practices within and
between states. They set out the likely consequences of the hard Right exit (D), defined as a strategy
of relying on “highly flexible labour markets, light touch regulation and a hyper competitive low tax
regime (2017a, p.**). They argue that Brexit may provide scope for the UK to develop along tax
haven lines and so exacerbate trends in financialization. However, for this to benefit the UK in any
meaningful sense, a large number of factors would have to be taken into account as Brexit occurs:
Occupying space in global wealth chains requires a series of careful balancing acts between
making a tax offer attractive to mobile capital and maintaining sufficient revenue, designing a
low tax regime and staying within the boundaries of accepted practice established by
multilateral rules and norms, and between multiple, often conflicting, goals that Britain must
simultaneously pursue as it leaves the European Union. (2017a, p.**)
Moreover, this strategy will make the UK ever more dependent on the City of London.
It is important, of course, to emphasise that a hard Right exit is a gamble at the expense of other
states and the sustainability of the world economy. It would make world politics ever more
competitive and less benign for all parties. Jayati Ghosh (2017) takes up this collective theme. Ghosh
explores the causes of the “leave” outcome and draws implications for the possible and likely futures
of the EU as a whole. She does so based on a non-Eurocentric perspective: Across the world, people
have been watching recent political changes in developed countries with a mixture of bemusement
and shock (2017, p.**). Ghosh explains these developments first and foremost in terms of growing
inequalities and flat or falling incomes for the multitude in the industrialized North. Moreover,
labour market trends [i.e. flexibilisation] have contributed to feelings of insecurity among workers
everywhere (2017, p.**). These two developments are closely connected, since countries that have
encouraged the growth of part-time and temporary contracts experienced bigger declines in wage
shares. Relying on a large-scale empirical study provided by the McKinsey Global Institute, she
shows that many of those people suffering most from these developments are particularly liable to
blame foreigners and globalization for their problems. Moreover, during the euro crisis, the EU the
Commission and the leading member states, particularly Germany have insisted on strict adherence
to the rules and procedures that penalise (and so blame) member states in crisis. Empathy or
solidarity, which are supposedly soft features of the EU project, are notoriously absent; and the
tendency to localise blame (victimising those who may be victims) is stark. Clearly, the
consequences of policies of indifference can be counterproductive for those who pursue them,
resulting in popular disaffection that can easily translate into equally or perhaps even more
devastating responses than in the UK. As Gosh notes these responses “could even cause a
disintegration of the union (2017, p.**).
The unthinkable, of course, has to be thought in order to be designated as such. Moreover, what is
unthinkable is a moving issue that mutates as history unfolds. History itself provides useful points of
comparison to explore possibilities. Joachim Becker (2017) concludes our Special Forum by drawing
close parallels between the disintegration of Yugoslavia and the present centrifugal tendencies in the
EU. In Yugoslavia uneven developments and decentralised structures prepared the ground for the
intensification of conflicts in the wake of a debt crisis and several austerity programmes in the early
1980s. The story of the disintegration of Yugoslavia is surprisingly similar in several ways to what
seems to be occurring in the EU. This includes at the level of other-blaming rhetoric though there
are, of course, also obvious differences, and actual military conflict seems particularly unlikely. A
close parallel is that apart from Slovenia, the Yugoslav successor states have suffered from lasting
de-industrialisation. Nothing in world history every repeats itself in exactly the same way, but we can
still draw historical lessons by understanding the mechanisms that can be causally efficacious across
different geo-historical contexts. Uneven developments have been repeated in the EU. As Becker
Projects like the Single Market and the euro zone have deepened uneven development patterns
because they removed protective mechanisms from the peripheral economies without creating
sufficient compensatory mechanisms (like regional industrial policies). […] In late Yugoslavia,
likewise pro-Yugoslav tendencies tended to be relatively strongest in some of the urban
centres. And exclusionary nationalism took particularly strong roots in crisis-stricken rural
areas and small towns. (2017, p.**)
Becker’s analysis supports Gosh’s main conclusions that “only a more progressive and more flexible
union based on solidarity of peoples is likely to survive (2017, p.**).
For the UK, Brexit has become a reality that is weirdly surreal in its moment-to-moment
manifestations. It still carries a sense of unreality for many in the UK, and in terms of its possible
consequences continually provokes analyses that emphasise a kind of collective stupidity that has
been stumbled into, but from which no one seems capable of withdrawing. It seems highly unlikely
that any constituency is going to get what they thought they were voting for (see Morgan, 2017a).
Moreover, the Leave grouping that has dominated proceedings in recent months is now starting to
acknowledge that no one ‘votes to be poorer’, and yet the very terms on which ‘control’ was sold to a
voting public created this as a likelihood, if immigration dominated other economic concerns. This is
a circle that has yet to be, and may never be, squared by substantive policy for negotiation.
However, again one must not conflate a UK-centred problematic with a purely UK-centric focus of
concerns. Brexit is also part of broader processes. It is not hyperbolic to suggest that the survival of
the EU is still at stake in the longer term. The election of Macron may seem to have stabilised a
Franco-German axis at the heart of the EU and recent improved economic metrics across the EU may
provide grounds for an optimistic narrative in the press. However, underlying issues of inequality
and lack of democratic representation have not simply disappeared, and global tendencies for growth
to occur within unstable processes of financialisation have not been addressed. They are
institutionally ingrained. Currently prevailing modest reform proposals and tentative steps within the
existing EU Treaty framework may be too little too late to address underlying issues. This remains to
be seen. Without such changes European disintegration and broader global socio-economic crises
remain possibilities (Keen, 2017b). For these possibilities not to arise then more fundamental
changes are required (see three scenarios for the EU Patomäki, 2017; and forthcoming, ch 6). More
democratic and sustainable futures do not write themselves, they must be conceived and realised.
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Jamie Morgan works at Leeds Beckett University and is the former coordinator of the Association
for Heterodox Economics. He coedits the Real World Economics Review with Edward Fullbrook. He
has published widely in the fields of economics, political economy, philosophy, sociology and
international politics. His recent books include Trumponomics. Causes and consequences (ed. with
E. Fullbrook, College Publications, 2017); What is neoclassical economics? (ed., Routledge, 2015)
and Piketty’s capital in the twenty-first century (ed. with E. Fullbrook, College Publications, 2014).
Heikki Patomäki is Professor of World Politics at the University of Helsinki, Finland (since 2003).
He has also worked as Professor at the Nottingham Trent University (19982003) and at RMIT
University in Melbourne (20072010). In 2012, he was a Visiting Professor at the Ritsumeikan
University in Kyoto. Patomäki’s research interests comprise philosophy and methodology of social
sciences, peace research, futures studies, economic theory, global political economy and global
political theory. His most recent books include Exits and conflicts: Disintegrative tendencies in
global political economy (Routledge, September 2017); Suomen talouspolitiikan tulevaisuus (The
future of economic policy, Into, 2015) and The great Eurozone disaster (Zed Books, 2013).
... It remains to be seen if this is an issue that British policy adequately addresses. Brexit remains a complex problem (see Morgan & Patomäki, 2017). ...
Full-text available
In this brief article I explain why the expectation amongst economists that Brexit means Britain will experience significant economic losses, thanks to the reversal of the gains from specialisation, is incorrect. The background assumptions regarding comparative advantage are false and cannot inform real-world situations. However, this is not the same as to suggest Britain as a post-Brexit country will follow successful trade policies.
... This can be illustrated with a topical example. Although the process of British exit from the EU may look like a leap toward a world characterized by mere co-existence, what it has revealed is how deep and complex our inter-and intra-connections have become and how wide and comprehensive European and world-political agendas already are (see Morgan and Patomäki, 2017). It is utopian to think that relevant ethico-political concerns could be limited to mere co-existence of states. ...
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This chapter revisits the debate between Chris Brown, Mark Hoffmann and the author on the state-centric view and cosmopolitanism that took place quarter of a century ago. It first explores whether similar deconstructions would anymore be possible. Second, it discusses Brown’s ideas about global civil society, democracy and justice, particularly in light of world-historical developments since the early 1990s. While Brown has tried to overcome the dichotomy between the state-centric view and cosmopolitanism, this chapter examines whether the idea of universal ethico-political learning and its cosmopolitan implications might explain the divergence in our practical judgements. The chapter concludes by arguing that any area of activities in international relations and world society can be subject to normative debates and potentially democratic politics.
This concise study explores the period of uncertainty created by the EU referendum. This is an unusual situation conducive to natural experiment type approaches, given that one factor is overwhelmingly likely to be influential. The focus is the UK real effective exchange rate. we set out to measure the additional impact of the uncertainty surrounding the referendum. We distinguish this from the longer trend value of Sterling. The results indicate a sharp depreciation of Sterling with reference to its long term trend. We set out some of the possible context which may account for fluctuations during the referendum campaigning period. This can be distinguished from other longer-term factors likely to be previously responsible for trend depreciation, and also from the further sharp depreciation effects triggered by the referendum outcome. Our principal finding is that during the week of the referendum, up to the declaration of the result, exchange rate depreciation deviated from the long run trend by approximately 3.5 %, but the actual immediate effect on the exchange rate was an 8% depreciation. Over the period from the announcement of the referendum the exchange rate fluctuated markedly around its trend and one can also identify a larger effect based on the ‘wrong-footing’ of markets at the point when the outcome was announced.
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Whether we talk about human learning and unlearning, securitization, or political economy, the forces and mechanisms generating both globalization and disintegration are causally efficacious across the world. Thus, the processes that led to the victory of the ‘Leave’ campaign in the June 2016 referendum on UK European Union membership are not simply confined to the United Kingdom, or even Europe. Similarly, conflict in Ukraine and the presidency of Donald Trump hold implications for a stage much wider than EU-Russia or the United States alone. Patomäki explores the world-historical mechanisms and processes that have created the conditions for the world’s current predicaments and, arguably, involve potential for better futures. Operationally, he relies on the philosophy of dialectical critical realism and on the methods of contemporary social sciences, exploring how crises, learning and politics are interwoven through uneven wealth-accumulation and problematical growth-dynamics. Seeking to illuminate the causes of the currently prevailing tendencies towards disintegration, antagonism and – ultimately – war, he also shows how these developments are in fact embedded in deeper processes of human learning. The book embraces a Wellsian warning about the increasingly likely possibility of a military disaster, but its central objective is to further enlightenment and holoreflexivity within the current world-historical conjuncture. Table of Contents 1.Introduction: the world falling apart 2.Brexit and the causes of European disintegration 3.EU, Russia and the conflict in Ukraine 4.Trumponomics and the dynamics of global disintegration 5.Piketty’s fundamental inequality r > g: the key to understanding and overcoming the causes of disintegration 6.Conclusion: holoreflexivity and the shape of things to come
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The economic forces underlying Brexit—and the election of Donald Trump in the US—are similar, but they are also well advanced in many European countries, where much of the population faces similar material insecurity and stagnation. These frustrations can easily be channelled by right-wing xenophobic forces. To combat this, the EU needs to undo some of its design flaws and particularly its adherence to fiscal austerity rules. Only a more progressive and more flexible union based on solidarity of peoples is likely to survive.
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In this brief article I explain why the expectation amongst economists that Brexit means Britain will experience significant economic losses, thanks to the reversal of the gains from specialisation, is incorrect. The background assumptions regarding comparative advantage are false and cannot inform real-world situations. However, this is not the same as to suggest Britain as a post-Brexit country will follow successful trade policies.
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Contemporary populism is rooted in a crisis of legitimacy. Corporate tax avoidance by multinationals is one cause of that crisis. Although states tend to be increasingly formally committed to tackling avoidance, they do so in a system that promotes contradictory sets of behaviour. This tends to undermine attempts to solve the problem of avoidance unless a more transformative collective approach is taken. Ironically, despite its own democratic deficit, the European Commission has taken a leading role in promoting such a solution: the Common Consolidated Corporate Tax Base (CCCTB). In this paper, I set out the case for ‘unitary taxation’ based on the CCCTB and state some of its current problems. The problem of corporation tax raises a basic issue in terms of who is sovereignty for, and solving the problem provides an important contribution to legitimacy of both the state and the EU.
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One vision of a post Brexit Britain is of a political economy sustained by highly flexible labour markets, light touch regulation, and a hyper competitive low-tax regime. This article focuses on the tax element, evaluating the prospects of this vision’s realization on the basis of the attributes of the British political economy, the substance of the Britain’s new found freedoms and the forces at play in the European and international regulatory environment. Britain is seeking a smooth transition via a strategy of upgrading and expanding national position in global wealth chains (GWCs). Occupying space in GWCs requires a series of careful balancing acts between making a tax offer attractive to mobile capital and maintaining revenue, designing a low-tax regime and staying within the boundaries of accepted practice established by multilateral rules and norms, and between multiple, often conflicting, goals that Britain must simultaneously pursue as it leaves the European Union. With hard Brexit, Britain will pursue this vision, but these balances are likely to prove illusive.
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The Yugoslav and the present EU integration crisis display several parallels. In both cases, the integration models have proved to be unable to attenuate the uneven development patterns, and the state has been characterised by strong confederal elements. Deep economic crisis strengthened in both cases the centrifugal tendencies. The political discourse became increasingly dominated by the question ‘who exploits whom?’. While central authorities pursued policies of neo-liberal structural adjustment eroding its legitimacy among the popular classes, the republican authorities in Yugoslavia, respectively, the national governments in the EU tried to shift the burden of the crises to the others and strengthened their role during the crisis management. With the deepening of the crisis, constitutional reform became an issue in Yugoslavia. In the Yugoslav case, the various proposals proved to be irreconcilable. In the EU, a debate on its future shape has begun as well. This issue is highly controversial. In the EU, a key problem is the relationship between euro zone and non-euro zone states. Such an institutional divide did not exist in Yugoslavia. It is significant that the leading state of the non-euro zone group, the UK, is the first state to exit the EU. A key question is whether the EU has already passed the critical point where a deep reform is still possible.
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This article offers a theoretical framework to explain how Global Wealth Chains (GWCs) are created, maintained, and governed. We draw upon different strands of literature, including scholarship in International Political Economy and Economic Geography on Global Value Chains, literature on finance and law in Institutional Economics, and work from Economic Sociology on network dynamics within markets. This scholarship assists us in highlighting three variables in how GWCs are articulated and change according to: (1) the complexity of transactions, (2) regulatory liability, and (3) innovation capacities among suppliers of products used in wealth chains. We then differentiate five types of GWC governance – Market, Modular, Relational, Captive, and Hierarchy – which range from simple 'off shelf' products shielded from regulators by advantageous international tax laws to highly complex and flexible innovative financial products produced by large financial institutions and corporations. This article highlights how GWCs intersect with value chains, and provides brief case examples of wealth chains and how they interact.
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The Brexit vote was a singular event that is one symptom of a continuing organic crisis of the British state and society and a stimulus for further struggles over the future of the United Kingdom and its place in Europe and the wider world. This crisis previously enabled the rise of Thatcherism as a neoliberal and neoconservative project (with New Labour as its left wing) with an authoritarian populist appeal and authoritarian statist tendencies that persisted under the Conservative?Liberal Democrat coalition (2010?2015). The 2015 election of a Conservative Government, which aimed to revive the Thatcherite project and entrench austerity, was the immediate context for the tragi-comedy of errors played out in the referendum. The ensuing politics and policy issues could promote the disintegration of the UK and, perhaps, the EU without delivering greater political sovereignty or a more secure and non-balkanized place for British economic space in the world market.
The Leave camp and prominent Brexiteers typically present regaining political control over international trade policy after Brexit as one advantage of leaving the European Union. A newly autonomous UK government, so the argument goes, will be free to negotiate wide-reaching and ambitious trade agreements with the world and will not be restricted by the compromise-culture inherent in supranational, Brussels-based deliberations. In the absence of clear formulations of Britain’s post-Brexit trade political agenda, much of the debate remains hypothetical at this point. Yet, from a global governance perspective, it is clear that the institutional and legal architecture for international trade cooperation is currently fragmented. Given WTO negotiating deadlocks, the institutional strain resulting from parallel country-by-country negotiations, regulatory clash in the existing network of preferential trade agreements, and the UK’s new position as a middle power in the trade regime, this essay argues that Britain may find it more difficult to push its own trade agenda internationally than is currently conceded in the debate. With the global trade regime currently shifting back towards more power-based forms of international interactions, regaining trade policy autonomy post-Brexit may turn out to be a pyrrhic victory for the new trade middle power Britain.