25th November 2016
Was Brexit an act of self-protection?
The Brexit vote should be understood as ‘a form of social self-protection’ according to leading economist Ann Pettifor. Writing in the journal Globalizations, Pettifor has derided ‘the predatory nature of market fundamentalism’ in which self-regulating markets are left to govern themselves beyond the control of democratic regulations. Voting for Brexit, Pettifor argues, was a rejection of the ‘religion’ of the ‘dominant liberal finance narrative’ by the people that market fundamentalism has left behind.
On 23 June 2016, 17 million British voters determined that Britain should leave the European Union. In doing so, they flagrantly ignored the advice of dozens of leading economists and major financial institutions. Pettifor argues that this mistrust in economic expertise has its roots in the experience of the Great Financial Crash of 2007. The financial crisis was a ‘self-inflicted wound’ on the economy, whose consequent deflationary policies ‘imposed substantial costs on the real, productive economy where millions expect to be employed, whilst both enriching and protecting the rentier sector from oversight, penalties, and punishment.’ The financial collapse took a terrible toll on the productive economy whilst title-holders of money were strengthened.
The economic policies and theories that led to the crash – which pursued increasingly globalized, autonomous, self-regulating markets in finance, trade, and labour – were precisely what British voters wanted to reject. Resentment towards stringently liberal economic policies goes back to regulatory changes made in the 1970s by the Treasury and the Bank of England. These changes ‘served the interests of financial markets at the expense of UK industry. Re-regulating the British economy in favour of finance and enriching the 1% while shrinking labour’s share of income resulted in rising inequality and lit a still smouldering fuse of popular resentment. Resentment made most explicit in the Brexit vote.’
Brexiteers blamed economists and their misguided ideologies for current problems affecting large swathes of the UK population. Repressed wages, diminished public services, rising housing costs and shortages, and insecure employment have all come about as an indirect consequence of the policies pushed by ‘the mainstream economic profession.’ 40 years of such policies have led to soaring debts and financial crises. Brexit voters are right to recognize that these dogmatic policies have been ‘deleterious to their economic interests.’
But whilst Pettifor believes that people should be critical of the prevailing economic doctrine, rejecting it through Brexit was not the right decision. ‘I fear Brexit’s consequences in energizing the Far Right both in Britain but also across both Europe and the US. I fear the break-up of the UK, and the political dominance of a small tribe of conservative “Little Englanders”. They will diminish this country’s great social, economic, and political achievements.’
Ann Pettifor is a director of the think-tank Policy Research in Macroeconomics (PRIME) and is a member of Jeremy Corbyn’s Labour Economic Advisory Committee.