Brexit’s real global significance

To many American pundits and denizens of the policy community, Brexit represented an existential threat. England’s gullible voters and opportunistic politicians seemed to have eliminated Britain as a prime fixture of the U.S. foreign policy landscape. A surge of Euroskepticism across the continent was bound to follow and in the bargain encourage a nationalist revival while weakening NATO. A Europe in crisis would tempt Putin to reach farther into eastern Europe. Amidst this upheaval, Trump’s presidential candidacy was bound to flourish and feed the U.S. drift back toward isolationism. With American global leadership abandoned, the world was headed for exceedingly perilous times.

The Brexit hysteria has begun to die down. The EU stands, perhaps even reinforced by the British rejection (to judge from recent polls taken across the continent). Britain has never fit well with the European project at least as it’s understood on the continent. Even the Remain campaign defended the EU as no more than a convenient economic arrangement. The international system still turns with the same speed and frequency that it did before Brexit. Britain isn’t after all that important (except in the minds of American Anglophiles and Brits still living in the shadow of the empire). Financial markets have rebounded after the initial shock.

Only in Britain have the effects been predictably pronounced, above all in London. Its inflated real estate prices are on the downswing as foreign investors look elsewhere, and London’s financial sector begins to consider exporting jobs into the EU as a hedge against a split. The pound has deflated even as Britain’s political class self destructs, with party leaders either resigning or facing pressure to quit. Scotland and Northern Ireland are contemplating leaving the UK. But there is no rush to the exit. Indeed, the decision in favor of Brexit has not brought much of a rush to actually leave the EU.

Brexit does have global implications that the hysterics have largely overlooked. Its a reminder of the consequences globalization (or at least a particularly free market friendly version of it) has visited on two countries that have enthusiastically thrown themselves into its web. In the UK long-brewing popular disaffection drove the Leave vote. Communities and regions found themselves marginalized economically while London prospered. Feeling powerlessness and unrepresented, they vented their frustration against immigrants, Brussels, and their own politicians. The emergence of a large disaffected class of citizens is no less a feature of the U.S. political scene. Like the British, Americans have neglected welfare and allowed class and regional inequality to rise. Immigration has become the lightning rod for unhappiness over a system that creates ever greater economic and social distortions while failing to deliver for many on the promises of a good middle class life.

For striking evidence on the broad and deep-seated nature of these discontents on both sides of the Atlantic, see The Guardian articles by Daniel John Harris, “Britain is in the midst of a working-class revolt”; and by Rob Ford, “Older ‘left-behind’ voters turned against a political class with values opposed to theirs”; and the impressions on the U.S. side by Amy Walter in the Cook Political Report, “When Conventional Wisdom Gets Ahead of the Voters”; and by Susan Bee, Why Are Voters Drawn to Donald Trump? in The Atlantic.

None of this is new. Globalization in its full-throated version been around since the late nineteenth century. So too has the popular reaction against the economic destruction and social disruption that global forces have inflicted. Over a half century ago Karl Polanyi described what he called a double movement consisting of a rising tide of globalization and the reaction against it as those most hurt by creative destruction mounted a political resistance. Polanyi’s insight into the link between globalization and popular anger seems more pertinent today than when I called attention to it here five years ago. Neoliberals with their blind faith in the market may imagine they live in a world irresistibly shaped by economic forces. Anyone who wants to fully understand that world and the political resistance and social discontents that it generates should take a lesson from Polanyi.