Post-Britain: Does It Matter?

Commentary No. 401, May 15, 2015

In the middle of the seventeenth century, the United Provinces (more or less today’s Netherlands) was the hegemonic power of the capitalist world-system, which was then geographically smaller. Within this world-system, it was the wealthiest country with the most efficient industrial enterprises. It dominated the trade and finances of this world-system. It had the strongest military.

Then it started on its decline as a hegemonic power. And one by one it lost each of these advantages. To salvage as much as it could, it became the junior partner of Great Britain, an aspiring hegemon. The advantage that it held onto longest was its financial dominance. It held onto that until the 1780s. At that point one could have written a commentary entitled “Post-Netherlands: Does It Matter?”

The real question then for the Netherlands, as it is today for Great Britain, is for whom does it matter. If one studies the Netherlands since the 1780s, one will notice that it has remained one of the wealthier countries in the world. Life has been more materially comfortable there than for most countries in the world. But in every other way, the Netherlands became irrelevant. It has not been at the forefront of new technology. Yes, it has remained an important hub of world trade but by no means an indispensable one. It cannot impose its geopolitical preferences on other countries. Indeed, very few people even discuss the role of the Netherlands as a geopolitical actor. It has in effect faded into the background, coasting along as a minor beneficiary of the decisions of successive hegemonic powers – first Great Britain, then the United States. Great Britain has now reached the stage at which the Netherlands found itself in the 1780s, the stage of continuing relative wealth and definitive geopolitical irrelevance. The people most worried about this are Great Britain’s financial institutions, which until recently still were very powerful structures in the world-system.

The Financial Times, which serves more or less as the public voice of Britain’s financial elites, ran an editorial on May 5, 2015. Its headline was “After a famous win, the chance to restore the United Kingdom.” The “famous win” is of course the unexpected narrow but decisive majority earned by David Cameron and the Conservative Party in the recent British elections. The paper’s subheading of the editorial reads: “David Cameron’s task is to save the union and stay in Europe.”

The uncertainty is whether Cameron can accomplish the task. If he can he will extend the power of Britain’s financial institutions for another decade or so. But many people, in Great Britain and elsewhere, have other priorities. Saving the union means somehow keeping the Scottish National Party (SNP) from its announced objective of full sovereignty for Scotland. The SNP also did well, very well, in these elections. It won 56 of Scotland’s 59 seats in the British Parliament. It is hard to think of a more resounding endorsement by public opinion, especially since the SNP had won only six seats in the prior elections.

However, this does not necessarily mean that the SNP would win an independence referendum. But it does give the SNP much bargaining power with Cameron, and they intend to use it. They have in effect a three-step program: (a) obtain right away significantly increased devolution of power within Great Britain; (b) hold a preferably authorized referendum on independence, worded in ways that would maximize a positive vote; (c) become a sovereign state but remain within the European Union (EU) and of course the United Nations. Cameron, and even more his parliamentary delegation, want to minimize step (a), firmly resist the idea of step (b), and never arrive at step (c).

If this were his only political problem, Cameron might win easily the struggle with the SNP and “save the union,” but it isn’t. At the very same time, Cameron is under great pressure to quit the European Union, a so-called Brexit (or British exit). There are said to be 60-100 Conservative members of Parliament who simply want out. In addition, the party dedicated to British withdrawal from the EU, the United Kingdom Independence Party (UKIP), received 12.6% of the vote, to become Great Britain’s third party in voting percentages.

So Cameron also has an implicit three-step program, just like the SNP. Step (a) is to press the EU to “defederalize” further, allowing Great Britain to exempt itself from even more requirements of membership. Step (b) is to call the referendum he has promised the Conservative Party by 2017, but as late as possible. Step (c) is to defeat the referendum, and thus remain in the EU.

SNP’s step (a) of significant devolution immediately is unlikely, and step (b) of a referendum, any kind of referendum, even more unlikely, and hence step (c) of a peacefully-negotiated full sovereignty is almost a mirage. Cameron’s step (a) of further exemptions from EU requirements is unlikely because of strong resistance from other EU members, and notably Germany. Step (b) of defeating the referendum thereby becomes even more unlikely. And therefore step (c) of a Brexit becomes highly likely.

If these appraisals make sense, then the objective of Great Britain’s financial elite – save the union and remain in the EU – would be a win on the first and a loss on the second. What would happen then? Would the SNP continue its path of peaceful negotiations, or would public opinion consider moving more forcefully?

To see the consequences of a Brexit, we have to turn away from looking at Great Britain and look instead at the rest of the world. The EU is already in difficulty. Its eurozone is facing a possible Grexit (Greek withdrawal) which, if it occurs, could well lead to an unraveling of the eurozone altogether. In addition, public opinion in more countries than Great Britain has become less and less enthusiastic about the EU and parties calling for a withdrawal are gaining strength. And the EU is divided about how to respond to Russia’s reaffirmation of its political role in Europe, especially in relation to Ukraine. Adding a Brexit to this mix of difficulties might be just too much for the EU. The EU and the eurozone are a house of cards, which might simply collapse.

However, a further crumbling of the EU, a fortiori its dissolution, would have consequences throughout the world. The United States, no longer an unquestioned hegemonic power, already can no longer count on the military support of Great Britain, which for the United States is a quite untimely development. This pushes the United States, or at least President Obama, even more urgently to seek a deal with Iran. This priority of Obama in turn pushes Saudi Arabia even more actively to delink from the United States and pursue a de facto anti-Iranian alliance with anyone and everyone, as King Salman is making very clear. And this in consequence strengthens further the geopolitical reassertion of Russia, with China perhaps deciding to become a geopolitical power broker in West Asia.

And let us not forget the parlous state of the world-economy, despite insistence on all sides that the world-economy is overcoming its difficulties. This public optimism is another mirage that may not last too much longer. To go back to the beginning of this analysis, Cameron should savor his unexpected victory in the British elections because he (and Great Britain’s financial elites) may actually come to regret it – quite soon.