gracchusdixit

The decision of the British, or more precisely, the English, people to leave the European Union—a decision propelled by a surge of nationalism and anti-immigrant rage—has stunned the world.   Both the United Kingdom and the European Union are scrambling to come to grips with the consequences, global financial markets are reeling, and Britain’s Prime Minister, who staked the credibility of his government on this referendum, has announced his resignation.  The First Minister of Scotland, on the other hand, has declared that the Scots may, for a second time in as many years, vote to break away, not from the EU, but from the UK itself.  There is talk in Northern Ireland of doing the same, a prospect that, just 72 hours ago, would have seemed fantastical.

Apart from the tumult in the UK, the result of this referendum constitutes the most serious setback in the 50-year history of what is sometimes called “the European project.”  It is hard to imagine what that “project” will look like without the participation of the country that is Europe’s second largest economy, its foremost military power, home to its financial capital, and the closest ally of the United States, which is the sole guarantor of Europe’s military security.

The EU will probably survive this blow in some form, though even that is by no means certain.  What is certain is that it has been weakened fundamentally.  In particular, the self-confidence and authority of its governing elite have been shaken to the roots.  That elite is now putting up a brave front and threatening the British with vague talk of economic retribution—which would only make matters worse.  EU leaders may have been able to quash the poor and powerless Greeks, but they lack the means to similarly intimidate the British.  Indeed, they will never again be able to dictate to member states without the nagging fear that those states might, like the United Kingdom, pick up their marbles and pull out.   Right-wing nationalist parties in France, the Netherlands, and Denmark are already demanding their own referenda on EU membership.  More are sure to follow.

It is tempting to think of all this as a peculiarly British or European phenomenon.  After all, there has been tension between the island nation of Britain and continental Europe for centuries.  Concerning the EU, specifically, the British were never “all in.”  They didn’t abandon the pound sterling for the euro.  They refused to entirely subordinate British law to regulations issued by Brussels.  Above all, they remained, in cultural terms, stubbornly British rather than European.

However, there is far more to this political earthquake than a cultural divide between Britain and Europe or a political fissure between insular nationalists and cosmopolitan bureaucrats in Brussels.  It is nothing less than a culminating episode in the latest crisis to befall the global capitalism.  In the relatively short but turbulent history of this economic system, there have been many crises, each the inevitable result of the system’s inherent contradictions, each more lethal than the last.

The first of these near-death convulsions occurred in 1848, when the social and economic dislocations caused by the Industrial Revolution spawned another kind of revolution—political and violent—which engulfed nearly every country in Europe.  That revolution was suppressed, leaving capitalism triumphant, confident that it was unstoppable.

The confidence came to an abrupt end in 1873, when the first global economic depression gripped the world.  That depression lasted a generation, fueled the emergence of socialism as a major political force, and ignited a dog-eat-dog battle for economic survival among increasingly aggressive nations, all of them armed to the teeth.  The result was the First World War and, ultimately, the Russian Revolution.  Amidst the carnage, the imperial dynasties of Romanov, Habsburg, and Hohenzollern one by one went up in smoke.

The third major crisis was the “Great Depression,” sparked by the crash of global financial markets in 1929.  This time, the economic devastation was so severe that global capitalism came close to collapsing altogether.  In the United States alone, the stock market lost 90 percent of its value, automobile production dropped more than 75 percent, and four thousand banks failed.  The system was “saved,” if you can call it that, only by massive government intervention and, finally, by the Second World War, during which the economy of every major nation in the world was mobilized and all but nationalized.

The financial collapse of 2008 set off yet another global economic crisis, the fallout of which has yet to be resolved.  Insofar as we have “recovered” from this latest collapse, the recovery has benefitted a tiny fraction of the population.  This is not only the case here, in the United States, but even more so in Europe.  Britain’s decision to exit the European Union is merely a reaction, albeit a dramatic one, to this systemic failure—and to the sad reality that the EU has made things worse, not better.

The European Union began more than 50 years ago as a simple common market.  It quickly grew into something far more consequential: a community of shared values, dedicated to a common good.  It opened borders, ended ancient rivalries, and drew Europeans together for the first time since the days of the Roman Empire.  All this the EU accomplished peacefully, without conquest or coercion.

Two decades ago, however, this enlightened vision of the European Union began to slip away, overtaken by something more sinister and oppressive.  Inch by inch, treaty by treaty, the EU became an agent of global capitalism, dedicated, less to a common civilization and the common good, than to public austerity for the sake of private profit.  It became the instrument of its bankers rather than its citizens.

It was inevitable that the latest iteration of global capitalism would someday crack and crumble, as all its predecessors have done.  The irony is that the first crack should have appeared in Britain, where capitalism was invented 200 years ago.  Whether Britain will be helped or hurt, whether the European Union will survive, are comparatively trivial questions.  The more significant question is whether global capitalism will at long last learn from its mistakes.  If the answer proves to be “no,” then the latest crisis in its calamitous history may be the final one.