The EU is crippling our NHS It has allowed democracy to play second fiddle to capital markets

Lasting from 1944 until the early 1970’s, the financial system designed protected the great projects of national reconstruction from international financial speculation. Exchange rates were to be pegged to the value of gold, capital flows in and out of a country were to be limited and managed. During this period, there were no significant financial crashes. And Western governments, responding to their democratic mandates, were able to fulfil the wishes of their electorates unperturbed by the sort of financial speculation that might have undermined them.

In the UK, Clement Attlee came to power a year after Bretton Woods. He was the most successful Labour Prime Minister there has ever been, establishing the welfare state, the NHS and full employment. No Prime Minister did more for the poor and the vulnerable than Clement Attlee. He was dead against joining the EU. Total hero.

Compare and contrast what was possible for Attlee and what proved to be impossible for another socialist leader who came to power in the post-Bretton Woods era. François Mitterrand was elected President of France in 1981. French voters had rejected the austerity policies of the Seventies and Mitterrand set about preparing for a programme of government – increase in public spending, nationalisation of the banks, greater taxation of the wealthy and an increase in social security. The global financial markets reacted with horror and invested capital began rapidly to flee from France. This is precisely what Bretton Woods, with its strict capital controls, had protected the Attlee government against.

As the French crisis deepened, a heated argument broke out within the French cabinet between those who wanted to tough it out and stand up to the financial markets, and those who accepted that capital flows represented a new financial reality and that it was useless to resist them. It was a pivotal debate. Who was to be boss: democratically elected governments or capital markets? What was more powerful: one person one vote or one dollar one vote?

I owe the insight to the American financial journalist Robert Kuttner and the fascinating challenge of his 2018 book Can Democracy Survive Global Capitalism? For Kuttner, what he calls “the disgrace of the centre left” was its adoption of neoliberal economics as an unquestioned reality.

When asked about her finest achievement, Margaret Thatcher thought about it for a moment and then answered: “Tony Blair.” It’s a telling reply. With Bill Clinton and Tony Blair, the Left pivoted from a desire to manage and control capitalism to a full-on acceptance of neoliberal economics. The markets were king. Clinton and Blair disguised this surrender by reaching out towards identity politics and individual rights as the new marker of Left-wing identity.

So, why would the foundation of the NHS be impossible under the European Union? Well, the leader of the anti-Mitterrand group in the French cabinet was finance minister, Jacques Delors. It was Delors who derailed Mitterrand’s socialist plan, and it was Delors who was most responsible for the return to precisely the sort of austerity politics that the French electorate had rejected and the capital markets were demanding.

In 1985, Jacques Delors became the President of the European Commission (1985-1995) and he set about arguing for the European Union to adopt strict controls on national debt and the dropping of capital controls. His crowning achievement was the Maastricht Treaty of 1992.

Thank God we did not join the Euro. Because, as the people of Greece discovered to their cost, that was a tipping point in the balance of power between capital markets and democratic governments. But even outside the Euro, the abandonment of Bretton Woods style protections that shielded us against the power of financial speculation, the desire of socialist governments to introduce welfare reform would still be undermined by capital flight. A future Corbyn led government might yet discover this.

And here we come to the heart of the Left-wing case against the European Union. Personally, I believe it was Bretton Woods and not the European Community that was most responsible for post-war peace and prosperity – and the Maastricht Treaty was the final nail in its coffin.

For Maastricht inscribed neoliberal economics into the founding structures of the EU: capital was free to flow as it pleased, unrestricted by the democratic wishes of electorates. National governments were no longer allowed to run up debts, even if their electorates wanted them to. Democracy had to play second fiddle to capital markets. Under these conditions, the Attlee project would have been totally impossible.

The question of the EU and democracy is not just about its desire to overturn the wishes of the largest mandate this country has ever given to anything. It is a question about whether democracy can survive global capitalism. And if we do not leave on 31 October, the answer will surely be no.

“Basically there are two solutions” wrote the economist and philosopher Karl Polanyi in 1935: “The extension of the democratic principle from politics to economics, or the abolition of the democratic ‘political sphere’ altogether.”

---

Giles Fraser is a journalist, broadcaster and Vicar of St Anne’s, Kew.

giles_fraser