Forest of Dean & Wye Valley

MARKETS NEED MORALS: the EU is a vehicle to achieve that!

In M. Davies on April 26, 2013 at 12:27 pm

At the liberal Democrat Party Conference in 2011, Vince cable said “We now face a crisis that is the economic equivalent of war”. The Prime Minister does not appear to share that sentiment. The price of that ignorance and petty illusions will be the loss of sovereignty, workers’ rights, and economic power.

The former Minister of Health, Aneurin Bevan asked two of the most candid and important questions for socialists throughout the world. Where does power lie? And how can the working class get it? This article will tackle the first. Today, lefties of all shades probably agree that markets need morals. What some fail to realise is that such a moral stance requires the power to make it happen. In the context of power in the 21st century, the EU is vital

However, the British Labour party is at a progressive crossroads. Twenty years of consistent pandering to innate nationalism by all political parties to the right-wing press has led to a toxic situation. The ocean of anti-EU sentiments and myths led by UKIP and confused Conservative Party MPs simply currying favour, is usually based around the costs of membership and the supposed attack on British sovereignty. Both arguments can easily be deconstructed.

Firstly, the cost of youth (16-24) unemployment in the UK was a staggering 1.5% of GDP in 2012. It is worth pointing out that the membership of the EU is well under 1%. The point here is that the moral issue of unemployment dwarfs EU membership, however, it is just as pronounced by the media and populists. Furthermore, without resorting to the benefits for Wales, or less fashionable statements such as the EU is the greatest peace project the world has ever known. An idea which I firmly believe is central to post-war security. Let’s turn to the nub of the issue for posterity and the welfare state. Power and money!

International regulations of financial and monetary frameworks occur at the International Monetary Fund, Central Banks, and the World Bank. Additionally, they are streamlined by the Bank of International Settlements and its accords. It is noticeable that they hardly receive any press coverage, and are framed as de-political institutions. They are highly political institutions. Moreover, the decisions they make are steered by credit rating agencies and hedge funds.

This can be seen in the post crisis prescriptions. It is now confirmed that the IMF failed to prescribe the adequate medicine. It now accepts that austerity is choking growth. Yet, the lack of growth affects our health service and job creation. Joseph Stiglitz points out that the creation of real jobs depends on 3 – 4% growth. This fact is masked in the UK by an increase in precarious work, such as part-time and temporary positions with the notorious zero-contracts.

Beyond jobs, the attack on the welfare state including the Department for Work and Pensions, under the guise of welfare ‘reform’ is another symptom of an attack on the most vulnerable members of society. The Chief Executive for the Association of Voluntary Organisations Sir Steven Bubb at a conservative party conference fringe argued that ‘’faith’’ was evident in the Health Bill. The economy requires ‘’2.2%’’ compound growth to sustain the current system”. However, we cannot foster growth without tending the landscape of power.

That landscape has changed over the past twenty years in most policy areas. The sociologist Zymunt Bauman has argued that we now live in a world where power is divorced from politics, which was the power to make decisions. This recognises the fragmentation of power in the world today. He says that “any true liberation calls today for more, not less, of the ‘public sphere’ and ‘public power’ … in order to enhance, not cut down individual liberty”. To enable that requires the left to accept the reality of international power, and institutions.

This is vital. In the long term there is absolutely no future for the welfare state in Britain when economic power is contingent on speculators such as hedge funds and credit rating agencies. This is due to their models which are firmly neoclassical, and, effectively, based on never-ending labour market flexibility and decadent notions of ‘competitiveness’. This proliferates the mushrooming of the ‘precariat’ and ‘flexible’ labour markets. This should, and must be resisted in order to prevent exploitation and the rise of the ultra-right parties.

This is where the EU is absolutely vital internally and externally. Internally through the Committee on Financial, Employment and Social Affairs which oversees the implementation of key policies such as the Robin Hood Tax. Their importance can also be seen in the monitoring of the Working Time and European Agency Directive which counters the drive to increase job insecurity and deepen precarity across Europe. But they are misunderstood mechanisms.

Sadly, the media have failed to report the actions of the European Parliament. Beyond those formal mechanisms, the external form of soft power delivered by being a member of the EU is priceless and essential. This is clear from negotiations at international global financial institutions and global forums such as the G8 and G20. Make no mistake. Without that influence, the rest of us will be paying more, working longer, eating less, and leading even more insecure lives. Working with socialist parties globally offers potential solutions.

Nevertheless, we are retrenching back to the old nation state under this government. This is an approach which will leave us no better off in an age of globalisation managed by neoliberal financial institutions. The British Labour party has a vital role to play in the construction of a socially democratic international economic order. Perhaps even in pioneering an international economic constitution for the 21st century which favours labour over capital.

Now that austerity has lost the political and social legitimacy it had. The left has the moral high ground and should repeat Karl Polanyi’s warning of ‘self-interest and ideology masquerading as good public policy and science’, with conviction and verve. As always, the greater issue concerns Aneurin Bevan’s second and troublesome question. How can the working class attain power?

  • Aneurin Bevan, In Place of Fear
  • Conservative Party Fringe: ‘What Will Doctors Do Now They Are Meant To Be Running The NHS?’
  • EUROFOUND Report NEETs – Young people not in employment, education or training: Characteristics, costs and policy responses in Europe: Available from:
  • Gordon Brown: Beyond the Crash.
  • Guy Standing. The Precariat: The new dangerous class
  • IMF Working Paper : Growth Forecast Errors and Fiscal Multipliers: Available from:
  • Karl Polanyi: The great transformation
  • Joseph Stiglitz: Freefall: Free Markets and the Sinking of the Global Economy.
  • Vince Cable’s speech to Liberal Democrat Autumn Conference Available from:

Mat Davies is Secretary and European Spokesman for Monmouth Constituency Labour Party. He is co-founder and Director of Employment and Social Affairs at Europe21, which is a young leader’s think-tank with branches in 5 countries including Wales. He writes here in a personal capacity.

  1. I doubt that very much.

    First let me offer some more original thought than Vince Cable’s

    “Just as the US now heavily uses smart bombs in warfare, it is becoming increasingly apparent that the equivalent is needed in aid efforts. It is not enough to spend, say, US$ 7 million dollars for five Tomahawk cruise missiles and then spend a fraction of that amount in building a peaceful community which does not merit targeting by missiles.:”

    I come from one of the leading activists for moral markets whose work began 16 years ago with a critique of laissez faire capitalism.

    Last year with the assistance of MEP Sir Graham Watson, I challenged EU commissioner Michel Barnier over the misuse of IP from a paper I submitted to the EU Citizens Consultation in 2008 .
    Back in 2004, with a proposal to seed community development funds for social enterprise development we’d approached the Labour government, The paper warned of the increasing risk of uprisings from those increasingly disenfranchised. We all know what happened in 2011.

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