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20 March 2019

The UK needs an economic and constitutional revolution

A Speech of Hope must set out a vision for an open Britain that is a beacon of hope in Europe and beyond. 

By Yanis Varoufakis

The memory of past greatness can be debilitating for a people who feel they have failed to rise to a historic occasion.  We Greeks have been burdened by this sensation at various moments in our postwar history: in 1967, when we failed to prevent a military coup; or more recently in 2015, when we allowed the troika of the EU, the IMF and the European Central Bank to crush us. Brexit Britain is, today, wallowing in a similar sense of having betrayed both its past and its future. A “Speech of Hope” for Britain is now more necessary than ever as the country endures a humiliating impasse.

Polarisation and discord have been Brexit’s predictable consequences. However, there is something that binds together all strands of British public opinion: self-pity. Right-wing Brexiteers are perhaps the group most immersed in it. They crave “Empire 2.0” (a global, London-centred, mercantilist realm) and imagine themselves as an insurgency against brutish forces they cannot overcome. Pro-establishment Remainers strive to thwart Brexit, trading on the sad conviction that sovereignty is a luxury for an island constantly shrinking in global influence. Lexiteers imagine that Brexit may help them avenge the left’s comprehensive defeat at the hands of home-grown Thatcherism.

This self-pity is the foundation of the various groups doing battle in the shadow of Theresa May’s calamitous Brexit. A sense of helplessness hides under the epidermis of both Leave’s delusion of greatness and Remain’s illusion that revoking Brexit will fix everything. Bitterness and self-resentment ooze out of both left-wing and right-wing Brexiteers but, equally, out of the shrinking “radical” centre’s determination to restore Little Englandism for the many and Davos-like, globe-trotting financialisation for the few.

Now is precisely the moment when a credible blueprint for the future must be issued. A Grand Plan for Britain that overcomes Brexit and places it in its historical context. A visionary roadmap depicting a nation healing itself after a decade of austerity and an interminable, technical, procedural Brexit debate that has alienated Leavers and Remainers alike.

Here is an ambitious agenda for meeting four challenges Britain has hitherto not faced:

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Britain’s failed economic model
Since Margaret Thatcher’s wilful vandalism of British industry, the UK economy has relied on “the kindness of strangers”. No other European economy, except Ireland, has required such large infusions of foreign capital to make ends meet (the UK’s current account deficit widened from 3.8 per cent of GDP to 5.0 per cent in the third quarter of 2018). This is why Britain relies on cheapness: low taxes, low wages (which are not due to regain their pre-crash peak until 2025) and zero-hour contracts. If Britain is to move beyond this unholy trinity of low skills, low productivity and slow growth, a profound rethink of its place in the global econom is required.

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However Brexit is ultimately resolved, the Speech of Hope must therefore announce: (a) an industrial policy supported by a new public investment bank which, backed by the Bank of England, will soak up idle cash from the City of London and divert it to the green transition projects that are uniquely capable of creating high-quality jobs; (b) a public digital payments system, based on the tax office’s digital platform, that will not only compete with the private banks’ payments system but also enable the government to divert funds to communities and families without the fear that these monies will leave the country; (c) a wealth fund into which large corporations are required to deposit a portion of their shares (eg 10 per cent), the dividends of which will fund a Universal Basic Dividend – the first step to a post-capitalist order that allows all citizens to enjoy the fruits of automation.

Austerity, migration and Britain’s place in the world
Austerity damaged local communities and helped trigger a moral panic over migration. Free movement of people within the EU obscured the role of domestic spending cuts in curtailing public services and social housing, making an upsurge in xenophobia inevitable.

The Speech of Hope must set out a vision for an open Britain; a Britain that is a beacon of hope and light in Europe and beyond; a country that takes the lead in resurrecting the spirit of giants such as William Morris and John Maynard Keynes with practical proposals for a new Bretton Woods-style settlement and a world in which freedom and rights are reserved for people, not capital.

Democracy: Referenda, citizens’ assemblies, the electoral system and parliamentary sovereignty
There is a revealing paradox concerning referenda. Many of the advocates of a second Brexit referendum are typically opposed to such public votes, especially when they deliver the “wrong” verdict. The Speech of Hope must describe a future in which parliament and citizens’ assemblies work harmoniously, as they did during last year’s Irish abortion referendum, incorporating direct democracy into a revitalised parliamentary system. The Speech of Hope must also restart debate on electoral reform and the replacement of the UK’s antiquated first-past-the-post system with one that bridges the gap between the will of the parliament and the will of the people. Parliamentary process must also be revisited: throughout the Brexit process, the House of Commons has been denied adequate influence, including over the transposition of EU legislation into UK law.

The English and Irish questions
The sense of self-pity that drove Brexit, and is poisoning public discourse, is primarily English. Tony Blair’s incomplete devolution settlement made England the only nation of the UK without its own dedicated assembly or parliament. Combined with the devastation caused by remorseless deindustrialisation and the austerity imposed on the left-behind – and held-behind – areas of rural and coastal England, a majority of the English feel only disdain for a Westminster parliament that is unrepresentative of their hopes and fears.

The Speech of Hope must promise further devolution to create a new federal state. For instance, whoever delivers it must explain that the Irish “backstop” controversy is due to the incompleteness of the 1998 Good Friday Agreement. The tremendous success of ending the Troubles was achieved because London and Dublin abandoned their strict claims of sovereignty. Now is the moment to secure the peace with the formalisation of a post-Westphalian joint sovereignty arrangement between the UK and Ireland and, perhaps, one between the UK and Scotland too.

Who should deliver this sorely needed Speech of Hope for Britain? There is only one British politician who can do so credibly today: Jeremy Corbyn. 

Yanis Varoufakis is the co-founder of DiEM25 (Democracy in Europe Movement 2025) and the former finance minister of Greece

Click here to read the rest of our “State of emergency” series, featuring articles from writers including David Hare, Elif Shafak, and Colin Kidd.