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The situation in which we find ourselves now is highly reminiscent of the late nineteenth century when again there was an international financial system dominated by a single great power - in that case Britain - whose currency was accepted everywhere and which was pressing for the free movement of capital, goods, and services (all fields in which it enjoyed supremacy) but which was being challenged by a rising power - in that case Germany - which, learning from the British experience, had developed a better, more government controlled, economic structure. We have a similar confrontation between the USA, with the dollar still enjoying its status as universal currency, and China, 'driving massive changes in global capitalism through its use of fiscal deficits and planned devleopment' (Fazi and Mitchell, loc 3052). In the nineteenth century the word 'imperialism' was used and it was understood by for example J.A.Hobson, Rosa Luxemburg, and Lenin that the term did not just imply physical possession of the territory of other peoples but also, and more fundamentally, financial domination. It is not far removed from what we call globalisation. One thing missing from the picture however is any sense that there exists for capitalism a 'gravedigger' in the form of the working class.

In these circumstances a reaction in favour of national sovereignty was inevitable. But the reaction such as it has been felt in Britain is strangely contradictory. I have long argued that the instinct of detestation of the EU which produced the Leave victory in the Brexit referendum is essentially protectionist. 'We want our country back'. Yet the ideologues of Brexit - even Farage when he departs from the simple call for Brexit - are all wedded to the monetarist, free trade ideal, precisely the same ideal that is embedded in the current constitutional documents of the EU. They have framed the argument in terms of dismantling even the small measure of protection from the world outside the Europe that is provided by EU regulation - though even that has been largely broken by the recent free trade deal with Canada which includes a clause enabling Canadian firms to sue governments that introduce legislation judged to interfere with their commercial competitiveness.

Meanwhile the British left, which supports European integration in principle, found themselves defending the existing status quo in the face of massive, albeit very badly articulated, working class discontent.

Thanks to Gordon Brown, Britain managed to keep control of its own currency, hence the departure from the EU is easier for us than it would be for countries that have joined the Euro. It was noticeable during the Brexit debates (if they merit that term) that very few advocates of remaining in the EU proposed joining the Euro, and the requirement to join the Euro may well prove something of an embarrassment to the Scottish demand for membership of the EU in the event of an independence referendum. Regrettably the Labour manifesto in the 2019 election contained no reference to the arrangements Gordon Brown had made for the Bank of England - its independence with a mandate exclusively to maintain price stability through the management of interest rates (the same principle as the ECB). It is doubtful if the very ambitious programme outlined by Labour - most notably the proposals for a 'green industrial revolution' - would have been possible without closer government control of monetary policy. 

It is also doubtful if it would have been compatible with EU membership. The Maastricht Treaty includes:

Article 81, prohibiting any government intervention which may affect trade between member states

Article 121, which gives the Council and Commission a right to formulate the broad economic policy of any state.

Article 126 - disciplinary measures which can be applied to any government which goes beyond the permitted deficit level

Article 151, which requires that labour and social policies be subject to the need to maintain competitiveness

and Article 107, which prohibits state aid to strategic industries.

I'm assuming that the articles forbidding the ECB from financing public deficits only apply to the Eurozone countries.

I would like to finish by evoking the major proposition of what is called 'Modern Monetary Theory.' A talk I gave on MMT can be found elsewhere on this website though I don't claim to be a specialist in the field. If MMT were to become generally accepted then the whole history of the last fifty years which I've tried to outline here will appear utterly bizarre. What I've been trying to describe is a series of policies designed to constrain government spending. But what happened in 1971, when Nixon took the dollar off the gold standard, was that a major constraint on the ability of government to spend - the constraint imposed by the relationship between currency and gold - was removed. Governments were provided with the means to substantially increase spending should they so wish by the simple expedient that goes under the misleading but convenient expression 'printing money'. Adair Turner, former chairman of the Financial Services Authority (and former Director General of the CBI) calls it the policy that dare not speak its name, before going on to advocate a modest use of it under the term 'Overt Money Finance.' (9) MMT argues that this is actually how money is always produced and that all the rules and constraints, including talk of deficits, surpluses and balanced budgets, are all so much obfuscation. Government is much less reliant on taxes and borrowing than we think it is. It's a big subject to finish on but it's something Britain, controlling its own currency, could use and the Eurozone countries can't.

(9) Adair Turner: Debt, money and Mephistopheles - how did we get into this mess?, talk given to the Cass Business School, 6th February, 2013.

And it is something worth thinking about if we want to use our freedom from EU regulation to restore Britain as a country capable of providing for itself both in the field of manufactured products and of agriculture, not to mention taking on the huge challenge (and opportunity) evoked in the Labour Party Manifesto under the title 'The Green Industrial Revolution'.