Rather than a system based on the mutual impoverishment of workers, we must pursue one based on protection.
Coronavirus exploits the underlying conditions, or co-morbidities, of our bodies. It probes our immune system and preys upon our weaknesses. It works in the same way on our economy, society and polity, targeting poorer and older people, exposing our paralysed industrial capacity, the contracting out of necessities, and our overwhelming reliance on a centralised state, itself supported by an atrophied body politic and anaemic civic institutions. State and capital have both been centralised and our entire country is on debt-based life support.
It probes the same weaknesses in the international sphere. The fundamental alliance that has underwritten globalisation for the past 40 years – that between the City of London, Wall Street and the Chinese Communist Party – is fracturing.
Tensions between the US and China have been building since the financial crash of 2008, but the virus has intensified the scale of the rupture. Western capital can no longer rely on the US to champion its interests. America has its own underlying problems that are revealed daily. It has also contracted out its industrial capacity, mainly to China – in the production of medical supplies, textiles and electronics – and has no policy for its retrieval beyond bluster and blame.
Our inability to produce low-value face masks, rubber gloves and dressing gowns is the result of 40 years of a sustained policy based upon high rates of return to capital investing in China, which facilitated the deindustrialisation of what were once Labour’s heartlands. China pays its workers a quarter of UK wages and capital has moved to where production is cheaper and more reliable.
During the era of globalisation, the fundamental principles of statecraft, relating to the provision of necessities in times of crisis, were considered nostalgic, populist and dangerous.
The class coalitions underwriting our party politics were reconfigured last December around the issue of the nation state and globalisation, and the realignment took the form of Brexit. There were those who thought that globalisation could be best mediated through EU membership and those who preferred a sovereign nation state. The interregnum was resolved in favour of the latter.
At the basis of globalisation was the reassertion of the rights of capital and a corresponding diminishment of labour. The postwar settlement hindered and stymied the sovereignty of capital through all manner of controls and restrictions, which meant capital had to reach a settlement with a workforce that had strong institutional and political representation. This meant workers could negotiate pay, with guarantees of job security, pensions and benefits, through organising and the threat of withdrawing their labour. One of the foundational aspects of the New Right critique of the postwar settlement was that trade unions had crossed the line and were sabotaging both government and the economy. This is what had to change.
The victory of Margaret Thatcher in 1979 unleashed the City of London on the world. The deindustrialisation of the North and the Midlands was based upon relocating production abroad to places where the rate of return on investment was higher and faster because the workforce was plentiful, cheap and diligent. This was backed by the host state through sustained infrastructure projects and guarantees of continuous production.
The People’s Republic of China has refused to sign the protocols relating to freedom of association and democratic trade union organisation established by the UN since 1948. The International Labour Organisation has decades of examples of intimidation, violence and threats against those who tried to take industrial action in China. The use of the army against strikers is commonplace.
The benefits to capital that have flowed from its exploitation of Chinese workers are enormous. Less than 2 per cent of the retail value of an iPhone assembled in China goes to labour, while 58.5 per cent goes to Apple as profit. Workers endure 12-hour shifts and have just two days off a month. Conversation is banned on the assembly line and migratory peasant workers live in dormitories separated from their families. Above all, they are prohibited from forming their own organisations.
Deng Xiaoping, Chinese leader from 1978 to 1992, rightly regarded capitalist production methods as superior to those of socialism and pursued a partnership with Western capital that would ensure the modernisation of the Chinese economy and the continued domination of the Communist Party. At the root of this partnership was a mutual contempt for labour value. In comparison, Chinese labour was cheap and lacked independent institutions through which it could represent its own interests. The Western labour movement was effectively dissolved, as our identity as consumers was given priority over our role as producers.
As globalisation fractures, it is vital to develop a form of internationalism that is not based on the mutual impoverishment of workers but on the protection of their status. The postwar order was the great achievement of Labour internationalism, with Ernest Bevin as foreign secretary. The establishment of the particular institutions of the West German economy: the trade union representation in corporate governance and pension funds, the vocational regulation of the labour market and the decentralised regional banking system, were all established initially in the British zone of North Rhine-Westphalia before being established nationally with the constitution of the Federal Republic. This gave labour an elemental role in the governance of the economy and deconcentrated capital.
The decentralised German system has been far more effective in containing the virus and maintaining industrial capacity than our centralised model and there are huge strengths in the system that Britain championed abroad but did not adopt at home.
The relationship with China is already emerging as the dominant conflict of the post-coronavirus period. A variety of voices in the Conservative Party express concern on matters ranging from Huawei’s participation in the development of the 5G network to a Chinese firm buying British Steel. There is significant Chinese investment and access to Hinkley Point, and China has a strategic role in the development of our nuclear energy system and in the construction of HS2. At no stage is it mentioned that the increasing domination of China has been achieved in active partnership with Western capital and was based on political decisions taken over the past 40 years to diminish the power of labour in our economy and polity. While Britain pursued the mirage of the “knowledge economy”, China maintained a strategic industrial policy and the centrality of manufacturing, and this has led to our dependence on China in chemicals, medicine, industrial parts and technology.
When China first shared its awareness of Covid-19 in January, it banned domestic flights from Wuhan but kept international flights open. That, more than anything, turned a local plague into a global pandemic. The mayor of Wuhan is rewarded on economic performance and priority was given to the movement of people and goods rather than health considerations. Any familiarity with Soviet-era literature on cover-ups, confusion of function and avoidance of blame, alongside a merciless indifference to human suffering, as well as the rewards given for “positive news”, would recognise the forms characteristic of communist government rather than the distinctiveness of Chinese cultural traditions.
Understanding the origins of the virus and the conditions of its emergence are important if we are to contain its spread and mutation, and produce a cure. The Chinese government imposed a tariff on barley imports from Australia after the Australian government called for an independent investigation of the Covid-19 outbreak, which has now been supported by 116 nations.
The right cannot give an honest account of its complicity in the formation of the Chinese system, as the rewards it has reaped and the scale of investment has shaped its political economy for four decades. The employment practices of Amazon, with its surveillance of workers, ban on trade unions and preference for immigrant labour with fewer rights, are an indication that without resistance from union organisation, capitalism takes the same form.
The left has been compromised in two ways. The first by the mistaken faith in liberal globalisation that characterised the New Labour years. The Whig interpretation of history in which free trade naturally led to democracy and liberty was assumed to be correct. It was argued that no two countries with a McDonald’s had ever been to war, but India and China could refute that thesis. Bill Clinton expressed the view forcefully when he argued that China’s accession to the World Trade Organisation would lead to “faster and further” moves towards “greater openness and freedom for the people of China”. The opposite is true. Not since Mao has the Communist Party been in such a dominant position.
There have been undoubted benefits from this arrangement to capital and the consumer, but the substantive or foundational economy – the ways in which we work to satisfy our mutual needs within a bounded polity – was decimated, and with it the livelihoods of the working-class communities it sustained. One of the chief beneficiaries of the foundational settlement, our universities, have had their integrity compromised and face bankruptcy. Chinese students, spied on by their government’s apparatchiks and housed in their own accommodation, with lavish Confucius Institutes and research grants, have taken their toll. The domestic reckoning began with Brexit, but is only now being revealed in terms of productive incapacity and exposed supply chains.
There is another tradition on the left that relishes the possibility of a Chinese future. This belongs to those who give a central place to technology, in which democracy and particularity play no significant role. The ability of a rational administration to plan for long-term growth, without the selfish and short-term interests that democracy presents, leads to greater public benefits. Market globalisers and left accelerationists share this teleology and both are attracted to the Chinese model, which is a plausible template for global markets.
There are also those, like Martin Jacques, who give a central role to Chinese culture but do not specify how that is different from what the Supreme Leader says it is. Through famine, depopulation, forced industrialisation and the elimination of free association or expression, no force has been more hostile to Chinese culture than the Communist Party. That it now stands as that culture’s champion is not something we should respect. It is vital to understand that sovereignty lies not with the Chinese people or their state but with the party itself. It is the ultimate judge of value.
Workers of the world unite, you have nothing to lose but your supply chains.
This is the first of two possible futures that loom over the present crisis: Democratic accountability is eliminated from both a more powerful central state and large corporations, which come to base their legitimacy on science and rationality. They extend their domination of the economy and society within a global system of “frictionless trade”, in which profit and market penetration subordinate labour and the environment. Greater use of the internet through virtual meetings at work and a social life based on social media, and in which needs are supplied by Amazon, entertainment by Netflix and all other requirements by a downloadable app is a palpable reality. It is based on the elimination of place, association and politics by scientific rules and the automated satisfaction of needs and wants. A life both abundant and bare.
The second vision is based on the renewal of democracy and liberty embedded in local economies, in which our dependence on nature and other people are recognised. There is an important role for the state, based on the need for an industrial strategy, but it need not dominate if it is built around a decentralised network of national institutions. The localising of supply chains is a necessary complement to this.
The political decisions that are made as we emerge from this crisis will determine which way we go. Central to this is whether we embrace globalisation or internationalism.
The coalition between Western capitalism and Chinese communism is profound and will not evaporate. Both are committed to a rules-based system of trade in which democracy is subordinated to the freedom of movement of goods, services and money. Both subordinate labour to capital, and democracy to trading rights. Both are hostile to politics. China is a proxy for a form of domination by capital and the state that denies the power of association and labour as expressed through voting and free association, or the existence of society itself. The relationship with China will define our future, for it is the driving force of globalisation.
Internationalism, in contrast, is based on the mutual interest of workers to defy their dehumanisation and exploitation by capital through the means of democratic association and politics.
The Labour tradition is based on internationalism rather than globalisation. There are common interests shared between nations that Labour could pursue to bring democracy, class and place back into Britain’s relationship with the world. Part of that is to recognise that we could take a lead in bringing Russia into a Northern European trading bloc bound by a peace treaty, and heal the divide that has persisted since the end of the Second World War. It is worth noting that Vladimir Putin sent an effusive get-well card to Boris Johnson when he was in intensive care and that this was followed by further exchanges on VE Day. The war alliance is hugely resonant in Russia and could serve as the basis of a long overdue conversation concerning mutual interests.
Russia shares a border with China and its economy is marginal in comparison. It is increasingly sidelined by the new Silk Road, China’s emerging trade corridor with Asia, the Middle East and Europe. There is a space for Britain to work with Germany and France in bringing Russia into a trading zone bound by a mutual commitment to free and democratic trade unions. Germany is already bound to Russia through its dependence on gas supply. Peace with Russia would lessen our dependence on an increasingly belligerent and disturbed United States.
We could build a coalition of islands that are threatened by rising sea levels and fears of continental domination, in which the strengthening of democracy and mitigation of climate change are pursued. Hong Kong, Taiwan and Japan are islands in fear of Chinese domination and ecological evisceration. New Zealand, the West Indies and Sri Lanka are island archipelagos with links to the wider Commonwealth, which was conceived as a civic and trading association built around liberties and democracy. Globalisation is disintegrating and Labour has the conceptual resources to articulate and shape the emerging international order.
As a first step, the UK should make free and democratic trade unions a condition of any trade deal and build its alliances around that commitment. That gets to the heart of what globalisation has been about and allows the traditions of different nations and societies to find expression by rejecting the global system based on the alliance of capital with an administrative state and the degradation of society, workers, liberty and democracy.
Workers of the world unite, you have nothing to lose but your supply chains.
Maurice Glasman is a Labour peer and director of the Common Good Foundation.