Brexit – stumbling towards a “Final Say”

Apologies for the long delay in updating this series of posts on Brexit:

https://c21stleft.com/category/brexit/

Essentially the situation has not changed since my last post on 1 June:

https://c21stleft.com/2019/06/01/brexit-has-greg-sheridan-actually-noticed/

It is still clear that Brexit cannot run much past October 31 and either a general election or a second referendum must be scheduled by then to end it.

A “Final Say” referendum will end Brexit either before or soon after a general election. Delaying until after a general election would be welcomed by two of the four major parties now contesting UK politics, the Brexit party and the Liberal Democrats – both of which would gain a lot of seats from both the Tories and Labour. As the latter are the largest two parties in Parliament they are both trying to avoid a general election until after a second referendum so that Brexit has been resolved by the people first. The Labour leadership has been endlessly denounced as inept but so far they have skillfully avoided interrupting the Tory party as it tears itself apart and have not offered it any easy way out from the Dead-Ends it faces.

The failure of Parliament to resolve Brexit is the main basis for the rise of the two parties that lead the polarised debate between Leave and Remain – the Brexit party and Libdems.

https://en.m.wikipedia.org/wiki/Opinion_polling_for_the_next_United_Kingdom_general_election

A roadmap spelling out this reality was launched jointly last Tuesday by Tory and Labour MPs supporting Remain in a “Final Say” referendum:

https://www.peoples-vote.uk/new_report_-_a_people_s_vote_is_the_only_viable_and_democratic_route_to_end_the_brexit_crisis

Here is the full text, worth studying closely as the media prefers to focus on dramatic posturing about a “No Deal” or “Cliff-Edge” Brexit that has in fact already been blocked.

“Six Dead-Ends, One-Cliff Edge, Only One Way Out”: http://bit.ly/2Y87LtG

Labour will have to eventually allow the “Only One Way Out” – a “Final Say” referendum. But they have successfully prolonged the agony and can still to do so while the Tories continue to be disrupted by arguments between Major Tactical Blunder and General Confusion.

Neither of the two largest parties in the House of Commons admits the current reality yet. Labour’s current leader still hopes to be able to force a general election in September under more favourable conditions. The Tories are totally paralysed and incoherent and still pretending to believe in various wildly implausible fantasies concerning the magical powers and Brexiteer intentions of Alexander Boris de Pfeffel Johnson, aka Bojo who is about to be elected leader of their party.

Unfortunately I still see no sign of the Tory party waking up to the fact that it is still the largest party in the House of Commons and could introduce a referendum for Proportional Representation at the same time as the “Final Say” on Brexit. That would save them a lot of seats at the eventual general election and avoid the likelihood of becoming “extinct” as the Canadian Tories did after comparably disastrous blunders reduced them from a governing party to just 2 seats. More importantly it would open up UK politics a bit. But they are either astonishingly thick or very clear about the dangers of the public actually becoming engaged in discussing policy issues.

Bojo’s self-confessed lack of self control and death wish makes him ideally suited to the role of Tory party leader presiding over its extinction, but completely unsuitable as a Prime Minister.

https://en.m.wikipedia.org/wiki/Boris_Johnson

The Ham of Fate

http://gen.lib.rus.ec/fiction/?q=Seventy+Two+Virgins%2C

This means a lot of sound and fury signifying nothing can be expected over the next few weeks. I still would not rule out the possibility of Proportional Representation being taken up. The UK Parliament has now been paralysed by Brexit, with no working majority in the House of Commons for two years since the 2017 general election. That ought to be terminal for the famous “stability” and “decisiveness” provided by a two party electoral system.

Bojo received 114 votes of Tory MPs in the first ballot on 13 June. The top two candidates selected by MPs, Bojo and Jeremy Hunt are currently being voted on by about 160,000 party members. Surveys show that most of them would prefer Nigel Farage, founder of the UK Independence Party, but he is now CEO and majority shareholder of its successor, the Brexit Party Limited, trading as the Brexit Party.

https://en.m.wikipedia.org/wiki/Brexit_Party

Their second choice will be Bojo. The result has been almost certain since 13 June. For Bojo not to be one of the top two candidates the other two would have needed 115 votes each for a total of 344 Tory MPs but there are not that many.

According to the newspaper Bojo writes for:

“The winner, and new Prime Minister, is expected to be announced on (Tuesday) July 23. The following day, (Wednesday) July 24, Theresa May will speak at her final Prime Minister’s Questions before heading to Buckingham Palace to resign as Prime Minister to the Queen.”

https://www.telegraph.co.uk/politics/2019/07/21/tory-leadership-result-date-conservative-contest-race-tuesday/

The Chancellor of the Exchequer and other Ministers will resign to Theresa May on Wednesday before she resigns.

It is widely expected that Labour would then move a Vote of No Confidence (VoNC) against HM Government led by PM Bojo on Thursday July 24. That is not only the first but effectively the last opportunity until September due to a Parliamentary recess.

However there are some good reasons to not expect that, as explained here:

https://www.theguardian.com/politics/2019/jul/19/johnson-likely-avoid-immediate-confidence-vote-if-pm

Another reason it might not happen, not mentioned by the Guardian, is that it might not be possible if Bojo has not in fact become PM despite pretty well everyone assuming that is a foregone conclusion since he will be leader of the government party.

Two events that ought to occur might not occur, in which case Bojo does automatically become PM as the media currently assumes.

1. Not even two of the many Tory MPs intending to save their seats by joining the Libdems may announce their resignations from the Tory party before Bojo becomes commissioned as PM. If they did resign, the Tory party leader would cease to have even the pretense of a majority in the House and replacement of its leader should not automatically result in the new leader becoming PM.

2. The palace might not perform its constitutional function as outlined in Chapter 3 of Anne Twomey, “The Veiled Sceptre”.

https://doi.org/10.1017/9781107297845.004

See also a more recent study by constitutional experts specifically addressing the current situation:

Six constitutional questions raised by the election of the new Conservative leader

See also the consequences of the “Fixed Term Parliaments Act”.

https://publications.parliament.uk/pa/cm201719/cmselect/cmpubadm/1813/1813.pdf

See also related news report:

https://www.standard.co.uk/comment/comment/evening-standard-comment-may-s-last-decision-could-be-her-most-important-a4174446.html

It is widely known that Bojo does not command the confidence of the House, although not yet known whether anybody else does or whether he might still be the person most likely to do so as leader of a minority government composed of competing delusional fantasists and backed by a “Confidence and Supply” agreement from the Ulster Protestant “Democratic Unionist Party” (DUP)..

Despite being a Crowned Republic rather than a Constitutinal Monarchy, the palace does have to exercise its own discretionary powers to commission as PM the person most likely to command the confidence of the House.

In current practice, the UK Cabinet Manual suggests that the outgoing PM should advise who that person is and their resignation should not be accepted until the palace is able to choose a successor. But that is merely recommended because the idea of the staff of an antiquated hereditary Monarchy exercising a political discretion is uncomfortable.

https://www.gov.uk/government/publications/cabinet-manual

This proposal to eventually become a constitutional convention was drawn up by the Cameron government, which also undermined the foundations of the Westminster system of government by introducing Fixed Term Parliaments alongside Prime Minister’s not supported by the MPs of their party in Parliament and plebiscites such as the spectacular disaster for Brexit.

The Constitutional position in the UK is still that it is the independent and discretionary duty of the palace to decide who is most likely to command the confidence of the House. The discretionary exercise of this function by the local representative of the Crown has frequently been necessary in modern times in many countries as a result of no single party with a clear leader having a clear majority in the local legislature.

The point is that the government must be funded by supply from Parliament and a PM who is not most likely to secure that should not be commissioned. In the UK and most legislatures inheriting the Westminster traditions only the confidence of the lower House is needed for supply. In Australia and some States the upper house can also block supply and the Crown prerogative has also been exercised to commission governments that do not have the confidence of the lower house in order to maintain supply during a dissolution for elections. That is not relevant in the UK where the upper house has no say in supply and the Crown has no discretionary power to dissolve Parliament for general elections.

If Therese May continues to perform her duty as a Privy Councillor she would have to advise that she does not know whether Bojo can command the confidence of the House. Independently the palace should have reached that conclusion already.

One option would be to offer Bojo a conditional commission to test whether he has the confidence of the House.

That possibility is suggested by a constitutional expert in this news report:

https://news.sky.com/story/why-next-tory-leader-may-not-become-pm-on-wednesday-and-could-face-early-general-election-11768040

A better approach, suggested by other constitutional experts, would be for the outgoing Tory party leader and caretaker PM to move a “Humble Address” for the House to advise that Bojo has its confidence and should be commissioned as PM.

If either or those options is adopted it is still possible that Bojo would become PM. Sufficient Labour MPs desperate to avoid a general election.could abstain to counter the lack of support for Bojo from many Tory MPs.

Former Labour PM Tony Blair has just published an appeal for them to do so in the Times. Its behind a paywall so I have only looked at this description:

https://www.dailymail.co.uk/news/article-7271621/Tony-Blair-warns-Boris-no-deal-Brexit-catastrophic-demands-second-referendum.html

Ostensibly Tony Blair is urging Bojo to agree to a “Final Say” referendum between “No Deal” and “Remain. But his argument that the alternative of a general election would be taking advantage of Labour’s weakness is obviously aimed at a different audience.

Anyway, if a vote does not confirm that Bojo has the confidence of the House, no replacement for the current caretaker PM could be commissioned until the House does indicate to the palace who is most likely to have its confidence. There would be no 14 day time limit for negotiations as there was no VoNC.

There is now full coordination on blocking Bojo between Tory, Labour, Libdem, SNP and Independent MPs as shown by the list of sponsors of the amendment to block prorogation adopted with a 41 vote majority.

https://publications.parliament.uk/pa/bills/cbill/2017-2019/0425/amend/ni_execform_pro_ccla_0718.1-2.html

This remarkable nullification of the Executive’s power to prorogue Parliament was carried out by a complex ping pong process between the caretaker Government, the Speaker of the House, the Commons and the Lords. It indicates a very high degree of coordination, perhaps sufficient to be preparing for a cross party government. Certainly adequate for taking control of the legislative agenda whenever desired.

The amendments touch on the Royal prerogative and technically require a more specific “Queen’s consent” which was not actually announced to the House and might not be announced to the Lords before the Bill finally passes through on Monday 21 July.

https://en.m.wikipedia.org/wiki/Queen%27s_Consent

But when the routine Royal assent is promptly rushed through before Bojo becomes leader of the Tory party that will both complete the amended Bill becoming law and confirm that the caretaker government and the palace are fully coordinating measures preparing to deal with a loose canon at 10 Downing Street.

So there could be quite a bit of drama very shortly unless either rebel Tory MPs or the palace acquiesce.

If they do acquiesce there is likely to be even more drama for months, perhaps with billions wasted on preparations for “No Deal” and weird contortions as the parties dance around their mutual fear of a general election. But unless both parties actually do want to face the people with Brexit unresolved the only way they can avoid it is by a “Final Say” referendum. It would be up to Bojo whether he accepts being “forced” into that as PM or gets replaced by a cross party coalition government to do it. Potential PMs could be Hammond from the Tories or Keir Starmer from Labour.

If unexpectadly “Remain” loses again the UK would Leave the EU but I expect it would still end up having to remain in the EEA bound by the same rules and with no more say in making those rules than Norway or Iceland.

But any further drama full of sound and fury will still signify nothing.

Far more important is the long term effect. On the one hand the right wing nationalist forces in Europe have already given up on breaking up the EU because of the Brexit debacle and the UK now has a significant mass movement in support of ever deeper union, unlike any other country in Europe. On the other hand tribal divisions and bitterness have been intensified in the UK in a way that ultimately helps the ruling class avoid confrontation with a unified working class despite the hostility towards the establishment. There is quite a bit of research being done about that – eg:

https://doi.org/10.5964/jspp.v7i1.981

It is too early to see how this plays out in the coming global storm. But I have found watching the British right-wing damage themselves with Brexit much more cheering than watching the US right embed itself as the liberals continue talking to themselves.

Debunking Austrian Economics’ Socialist Calculation Problem

The ‘Calculation Problem‘ is what market economists commonly argue against socialism but there is no reason to be smug about economic calculation under capitalism. Communist workers could hardly do a worse job of allocating investment funds than do highly fluctuating interest rates and exchange rates produced by capitalist finance. And there are good reasons for thinking that economic decision-making would be far superior to that under capitalism. To begin with, the absence of ownership barriers would increase the scope for coordination, and lessen the scope for secrecy and deception.

* * * *

Reprinting this from David McMullen’s site, Simply Marxism. Originally published in May 2017. 

The so-called Austrian school of economics makes much of what they call the socialist calculation problem. They argue that a society based on social ownership could not have an effective price system and therefore could not have the decentralized decision-making we see in a market economy.

The claim was first made by Ludwig Von Mises in the 1920s. Really all he is saying is that transfers between enterprises using a decentralized price system must be market exchanges. Without explaining why, he rules out the possibility of such transfers occurring between socially owned enterprises where there is no exchange of ownership but simply a transfer of socially owned property from one custodian to another. I am thinking here of a transfer between a supplier and user of some component in production. Without predicting what will actually happen in the communist future we could easily imagine production units using decentralized pricing to determine least costs methods of production and assigning output to the highest bidder. We could also easily imagine such a system being ultimately driven by consumer demand.

Then we had the intervention of Frederick Hayek in the 1930s and 40s. He demolished the rather lame decentralized socialist model devised by the economist Oskar Lange. That model confines decentralized price adjustments to consumer goods while price adjustments for intermediate goods are carried out by a central agency that is keeping an eye on inventory levels. Hayek correctly points out the inadequacy of such an arrangement and how it does not represent a fully functioning price system. Discrediting the Lange model is all very well, but Hayek did not then go on to show that an economy based on social ownership would in fact be limited to the Lange model. In other words he did not show that there is something about social ownership that would prevent the use of decentralized price adjustment in the allocation of intermediate goods. So I think I can justly say that all that Hayek has done is refute a straw man.

OK now we come to the final version of the argument and this was developed in the 1980s by Don Lavoie of George Mason University. He conceded that a socially owned economy could have a price system but that it would not be a very good one. In his book Rivalry and Economic Planning, he contends that any price system under social ownership would be inferior to a market based one because it would be unable to reflect the discovery process that emerges from competition between market participants. According to Lavoie, it is important, in the presence of uncertainty, to have numerous participants trying out different approaches to problems, based on their own opinions, guesses and hunches. Those who come up with the best and most highly valued products using the cheapest methods win out in this competitive contest. I fully agree with what he is saying. However, if, as I contend, decentralized custodianship is an important part of social ownership, diversity of approach should not be a problem.

Under social ownership, it would still be very common for an individual enterprise or facility to be just one of many producing the same good or close substitutes and each of them would be free to try out different production methods and product designs. Some would be new entrants who were either existing enterprises moving into a new field with synergies or starts ups established by enthusiasts with ideas that the incumbents were not open to or capable of developing. This diversity would be greatly assisted by having numerous independent agencies being responsible for disbursing funds in each industry and making their own assessment of what were good investments. At the same time, enterprises would be free to choose their suppliers based on cost and quality, and would have to outbid other users of a resource or intermediate good. Discovering and adopting the best methods and products would of course mean that it would be common to see activities abandoned and enterprises closed or reorganized. So, the only real obstacle to a decentralized price system would be the absence of daring and conscientious custodians and this gets us back to the question of whether we can do without the profit motive. Can we do our best just because we enjoy the work and want to contribute? As I argue elsewhere this does not strike me as being all that fanciful if we are sharing high and increasing affluence and all the unpleasant work is performed by robots and computers.

So the calculation argument is not a separate argument from the standard one about whether we need the profit motive.

I think it is appropriate to point out that there is no reason to be smug about economic calculation under capitalism. Communist workers could hardly do a worse job of allocating investment funds than do highly fluctuating interest rates and exchange rates produced by capitalist finance. And there are good reasons for thinking that economic decision-making would be far superior to that under capitalism. To begin with, the absence of ownership barriers would increase the scope for coordination, and lessen the scope for secrecy and deception.

So to sum up. My basic point is that when it comes to economic calculation, communism will be able to do anything capitalism can and do a better job of it.

I have links below to a number of articles that go into more detail on this topic.

https://economsoc.files.wordpress.com/2014/04/re-opening-the-debates.pdf

https://economsoc.files.wordpress.com/2014/04/the-economic-case-for-social-ownership.pdf