Brexit and the question of sovereignty

According to some, and subsequent to Brexit, British sovereignty has been restored. The government has regained control over its own borders and can pick and choose how it deals with the rest of the world. This claim has been an obvious target for the pundits as in, what sort of sovereignty is it if the government will henceforth have to work with a diminished economy, which will limit its degrees of freedom? Trade will go on; has to go on. But now the United Kingdom will have to strike trade deals without the sheer market power that the EU was able to bring previously. In addition it has lost much of its attraction for multinationals as a site from which to access markets in what was once the rest of the EU. In other words, might the idea of sovereignty be more than a little deceptive?

John Agnew (2005) wrote persuasively about this long before Brexit. He pointed out how the orthodoxy of the coercive power of states within their territorial boundaries but not outside, was a myth. It was impossible to reduce the geography of state power in that way. Recognition of this had led to the suggestion that sovereignty might be considered de jure, as in the recognition of other states; or de facto, as in how effective a state was in drawing on its sovereign powers. His key conclusion was that this was a distinction to be rejected; all one had was sovereignty of the de facto sort. This was then demonstrated empirically before embarking on a discussion of the various spatialities alternative to territoriality through which states exercise their power.

I want to suggest a quite radically different approach to the state and sovereignty, that then puts Brexit in a new light. To start with, and taking my cue from Simon Clarke, there is a question of levels of abstraction. The state as we know it, is subordinate to the logics of capital, and capital is necessarily a global structure of relations. The state presupposes capital and not vice versa. Historically, capitalist practice was already well under way in England before the state stepped in and acted into law the illegal, ‘illegal’ under feudal law, that is, dispossession of the peasants. The voyages of discovery were in part funded by monarchies but their support was not necessary. The looting that took place created wealth that would then bring means of production and the dispossessed together. In short, the contemporary state can usefully be placed in the context of a mode of production of global extent that logically precedes it. Capitals draw on pre-existing state forms and then reconstruct them to their purpose, because at a certain point of their development, particularly in their relation with immediate producers, they find that they need it: in seeking to maintain their domination “capitalists use every weapon at their disposal and one such weapon is the state.” (Clarke 1988) In a later paper, he elaborated on these thoughts:

“Although the state is constituted politically on a national basis, its class character is not defined in national terms, the capitalist law of property and contract transcending national legal systems, and world money transcending national currencies. Thus the subordination of the state to the rule of money and the law confines the state within limits imposed by the contradictory form of the accumulation of capital on a world scale. However the political stabilization of the state has to be achieved on a national basis, which presupposes, in general, that the state is able to secure the expanded reproduction of domestic productive capital” (p.3: https://homepages.warwick.ac.uk/~syrbe/pubs/cse88.pdf .)

This might appear a bit cryptic. What he is saying for our purposes is that the state is a capitalist state because it operates within a set of constraints of global scope: world money and the capitalist law of property and contract which, respectively, transcend national monies and national legal systems. Production under capital works on a global scale in ways that we will all recognize, not least divisions of labor, trade, international money markets, and foreign investment; in fact given its contradictions and the drive to accumulate, it has to. Trade requires a money that can be trusted, whose value in exchange can be treated as relatively stable and not one subject to dramatic fluctuations. This has a history going from the gold standard, through the modified one of Bretton Woods, to what is today a dollar standard. A convergence in property law and contract then secures the possibility of foreign investment and lending on an international scale. Foreign investors want security, as do lenders. The capitalist interests keen on landing a foreign investment or a loan have to have an interest in property law; something now most obvious in the international competition around ‘business climate’ and the consultant discourse contributing to it.

One might argue that only with the most recent round of globalization did limits to state sovereignty become evident: subordination to a global market in national currencies, the creation of independent national banks to assure the investors, competition for inward investment, and so on. This is to underestimate the enduringly global character of capital. It never went away. Bretton Woods made things a little more manageable, but Harold Wilson in his first term of office as British Prime Minister recognized limits to what he could do when he had to devalue the pound; one of his ministers personalized it as a matter of the ‘gnomes of Zurich’ but what was at stake, and always had been, was a global structure of social relations with a bit more regulation than one has currently. Things ebb and flow and the class relation is central to that. As economies boomed in the postwar period, wage concessions were not so hard to make. From the ’seventies, on, though, things turned very sour and ‘globalization’ became seen as the way of curbing working class pretensions that were getting in the way of accumulation (Clarke 1990.) States remained as subordinated as they ever were, if now they used the anonymity of the world market as a cover for their activities as, fundamentally, capitalist: in short, auxiliary to a social relation that is global in scale.

But in the context of Brexit, I want to concentrate on something at the end of the quotation from Clarke: the state is subordinated to global forces, but its “political stabilization … has to be achieved on a national basis, which presupposes, in general, that the state is able to secure the expanded reproduction of domestic productive capital.” It is the ‘domestic productive capital’ bit that is interesting. In his 1985 paper on the geopolitics of capitalism, Harvey underlined the significance of the contradiction between capital’s necessary fixity and its necessary mobility. In order for production to occur there had to be a fixity of physical infrastructure and a supporting social infrastructure – relations of trust with other firms, including the banks, a class compromise, relations with the state – hard to transfer someplace else. Meanwhile, once value was appropriated, driven by the imperatives of cost competition, it would go where the prospects of extracting surplus value were enhanced, and that might not be at existing points of production. The obverse of this is that states, supported by ‘domestic capital’ struggle not just to defend against competition elsewhere, but to make sure that, given a shifting geography of uneven development, it is going to shift to their advantage. This is the importance of the power of the state: its ability to orchestrate and situate itself, regardless of any supposed sovereignty, to the advantage of, again, ‘domestic capital.’

So how are we to understand Brexit? After the referendum in 2016, Christakis Georgiou (2017) wrote a quite fascinating article on the history of British capital’s relation with the EU. There were indeed tensions that were becoming sharper. The Thatcher governments set a strongly deregulatory course for both financial services and manufacturing with some success. The federalizing impulse of the EU threatened to undermine this strategy. But nevertheless, and for the most part, British capital was not in favor of leaving the EU. The problem might be that in the British political process, ‘British capital’ or what Simon Clarke referred to as ‘domestic capital’ is no longer as significant as it once was. This is the argument of David Edgerton (2019.) His point is that in comparison with the other major European economies, the British economy has been very significantly transnationalized. According to figures he provides, in 2017 foreign-owned firms accounted for 34% of the turn-over of non-financial businesses and over 50% for manufacturing. This dramatic increase was subsequent to the opening up of the British economy, including the privatization of the nationalized industries, after 1980. His claim is that these are firms that have global production capacities. They are not national firms with a dependence on the British market and so with a major stake in the course of the national economy.

I think that this is part of the answer. There is also, though, a long history of international engagement of British firms that goes back to the days of empire. The comparative statistics are nothing but stunning. For the United Kingdom, the value of the stock of overseas investments is five times that of the gross domestic product. For France the equivalent statistic is about three times more. The German stock of foreign investment, on the other hand, is less than half the value of its GDP. Even what might pass for national champions are heavily committed to locations outside the United Kingdom. Half of Rolls Royce employment is elsewhere. Less than ten percent of Astra-Zeneca’s employment is in the UK. Why, therefore, is it important that the United Kingdom remains in the EU? States do indeed, as per Simon Clarke, play a crucial role in ‘securing the expanded reproduction of domestic productive capital’ but what if the firms with investments there are relatively indifferent to the state’s course of action?

 

References

Agnew J  (2005) Sovereignty regimes: territoriality and state authority in contemporary world politics. Annals, Association of American Geographers 95, 437-461.

Clarke S (1983) State, class struggle and capital reproduction. Kapitalistate 10/11, 113-130.

Clarke S (1990) Crisis of socialism or crisis of the state? Capital and Class No. 142, 19-29.

Edgerton D (2019) How Britain was sold. New Statesman. Available here: https://www.newstatesman.com/politics/uk/2019/11/how-britain-was-sold

Georgiou C (2017) British capitalism and European unification, from Ottawa to the Brexit referendum. Historical Materialism 25, 90-129.