Ted Grant

Common Market—No answer to the problems: Labour must press for United Socialist States of Europe

Source: Militant, No. 22, December 1966–January 1967
Transcription: Francesco 2009
Proofread: Fred 2009
Markup: Niklas 2009

The issue of the Common Market is becoming once again a burning issue for Britain and the labour movement. When it was raised by the Conservatives, when they were in power, raised to promote the interests of the giant monopolies, Wilson and the other Labour leaders offered vehement opposition. They pointed out that it would raise the cost of living enormously, crush the agricultural industry and lead to a lowering of the standards of living of the working class. They opposed it from a “nationalist” and “commonwealth” point of view.

Now, on this as on other issues, the leaders of the labour movement have reversed their position completely. The government has given “notice of intention” to apply for entry into the Common Market with their EFTA partners. What has caused the change a position?

British capitalism is in an impasse. The effort to maintain her position as the third world power has failed completely. Her production is stagnating. Every two years there is a balance of payments crisis. In previous articles in the Militant this question has been dealt with, and it is not the purpose of this article to deal with the question.

But capitalism is a world wide system in which the division of labour, particularly among the Western capitalist powers—and especially the European ones—has been enormously extended during the last twenty years. There has been an enormous growth of the productive forces—that is machinery, factories, technique—but capitalism is dependent upon the market. Meanwhile the historic role of capitalism, to develop the material forces for Socialism on a world scale has been amply fulfilled. Capitalism created the nation-state and the interdependence of world economy as one single unit.

However, it did it in a contradictory fashion. On the one hand the capitalist nations are dependent on one another. But on the other hand they compete against one another. The national markets of Britain, Germany and the other big states of Europe are too small for the huge combines, especially for the modern industries such as electronics, plastics chemicals, which require enormous sums in capital investment and large runs of mass production to get the maximum profit.

America has a huge continental market and thus her industries are threatening to overwhelm the industries of the European powers, which after the Second World War were reduced from a dominant position in world affairs to a secondary one.

Russia too has a continental market and, in addition, the advantages of a nationalised economy (despite the enormous cost of a dictatorial and bureaucratic control of production).

But the huge preponderance of America over Europe declined somewhat in the recent period as European production revived in the main European countries at a rapid pace. Germany and France, taking in tow the weaker powers of Italy, Holland, Belgium and Luxembourg, decided to try and combine their resources in the Common Market of the six powers, to create a third super power.

However the agreement to reduce tariffs gradually so as to create a Common Market, could proceed fairly rapidly only while production in all these countries was rising, and therefore there was a growing share for all the national capitalist vested interests. But already there has been a crisis in the “integrated” coal and steel Community, far more linked in common as a joint market than the other industries. Surplus capacity has meant a struggle between the different powers as to who was to shoulder the losses.

In addition there has been no political union, there are still the national armies, state machines, and the national capitalist interests which they protect. Hence the differences between Germany and France in foreign policy. As the “English disease” begins to infect the other countries, and the rate of growth begins to fall, while the rate of profit drops, the differences politically and economically will become aggravated. The Eurosyndical index of share values is now less than 15 percent above what it was on December 1st 1958. Some companies such as stores, insurance, paper, are far above this level, but vital steel, mining and textiles are 90 percent below!

The Times of 15th September comments:

“The great expectations of the early 1960s have been replaced by a feeling of frustration and of impotence when faced with the American giant...inflation, high rates of interest (as on a world scale); and investments will certainly fall down in the next few months and Europe will have to face a recession.”

In reply to the Common Market, Britain organised the Scandinavian countries, Austria, Switzerland and Portugal in a similar combination. But despite the increase in trade which resulted from the lowering of tariff barriers, this did not solve the problem for the giants of British industry. Britain is one of the countries with the largest number of monopolies and the greatest concentrations of industry and capital, especially in the most modern industries—which require huge amounts of capital to be in a competitive position on world and even home markets.

The Economist gives a list of industries which are expected to gain from Britain's entry into the Common Market; this includes ICI, heavy machine tools, heavy engineering, electronics, insurance and other giants. Small engineering firms, textiles and small industry generally would lose. Chambers, the chairman of ICI, made the point in a speech recently that modern industry by its very nature transcended national boundaries. It is the strangulation and frustration of the decisive sections of British capital in their search for markets, which dictate this tentative approach to the European Economic Community.

But even over the attempt to free world trade in the so-called Kennedy round, negotiations have been going on for years and there is dissention even among the “six,” let alone the other powers.

“Economic mirage”

Meanwhile on a world scale the position of the underdeveloped countries is steadily worsening in relation to the highly industrialised countries. Most of the underdeveloped countries are paying back half of what they receive in aid, in interest and profits on investment. This will have its effect on Britain in particular. Meanwhile more than half Canada's capital is controlled by American investments. With the weakening of the imperialist power of Britain, Australia and New Zealand look towards America rather than towards Britain. In the past period Britain itself has been a semi-satellite of America.

The economic and political impasse of Britain has turned the British government towards Europe in a desperate attempt to find a solution for its problems. The Economist remarks “Britain is moving out of the passive role into which it had recently been sinking, half forgotten on the continent, and this gives it a more dynamic diplomacy.”

At the same time the new science-based industrial revolution in America and Russia threatens to dwarf the attempts of Britain and Europe to hold their position on the world market. And the attempt to get in is taking place when in the words of the Financial Times “political Europe in the French view, no longer exists.” The French capitalists fearing the onset of recession or an even bigger slump than has taken place in the post-war period, are holding on to their gold, even though this brings them into loggerheads with their partners and with the other big powers. Debré, the Finance Minister in the French government, declared in Washington in September “A currency is the expression of a political authority—the power it can exercise or the trust it inspires. This, too, is valid just as wealth spells power to the individual. Economic strength is a vital ingredient of international political influence.” Thus the conflict between the franc, and the dollar and sterling.

British capitalism is trying to enter the Common Market too late to have any real effect on its economy. It is entering just at the time when Germany and France, the two principal powers, are looking towards Eastern Europe for markets. The economic malaise of the Common Market countries has its political reflection in the political crisis in Germany at the present time. “The economic miracle” has begun to disappear and its alleged inspirer has just been dropped.

But the problem of the interdependence of European and world economy, and the contradictions between them at one and the same time are expressed in the fact that while tariffs have been reduced, for the time being, while there has been an economic upswing, there has not been the so-called Europeanisation of capital. Different capitalist countries, especially America, have invested in the Common Market countries, as they have invested with each other, but there has been no amalgamation of capital as was dreamed of by the inspirers of the European utopia.

Socialism only answer

Company mergers between the Common Market countries face difficulties which make them almost impossible. Capitalists are interested in profits and unhampered and unrestricted use of their capital. There are so many legal, administrative or taxation obstacles that mergers never get off the ground. Any European-style company would still come under the different legal, administrative and taxation laws of the separate countries. International mergers would face difficulties many times greater. Thus the vested interests of the different countries stand in the way of a so-called united Europe.

But even the “union of national states” of de Gaulle faces the administrative difficulties described above. Britain has attempted to organise joint projects with France, such as the building of aircraft, and similar projects with other countries. But these are mere feeble attempts to get over the problem posed by the outmoded national states, which the growth of technique and production has rendered obsolete. British capitalism has raised the question too late. It has realised its weakness and hopes to solve its problem by a miracle. Even if they succeeded in entering the market, and this is extremely doubtful, as the Market shows signs of disintegrating at any severe economic difficulties, the problems of British capitalism would increase. The 380 monopolies, the banks and insurance companies would benefit or rather the dominant section of them would, in the short run, but for the working class neither entry nor non-entry would solve their problems or lead to an increased standard of living.

However the problem of an integration of European and world economy poses itself in front of the working class. The left in the Labour Party pose yesterday's solution of Wilson and the Labour government. The Communist Party poses a frenzied nationalism. But the problem of the Common Market raises the aspirations for the integration of a socialist Britain with a socialist united states of Europe. This would mean an international plan of production, democratically controlled, and undreamed of plenty for the peoples of Europe. How to get it? The first task for the British workers would be to achieve a socialist Britain and then launch an appeal to the workers of Europe and the world. A socialist democratic plan in Britain, with higher standards for all, and an international appeal would reverberate across Europe and the world. There is no road to the union of Europe except on a socialist basis, with full national autonomy, the abolition of tariffs, national armies and government state machines. That is the only “practical” solution. The capitalist road is the road to disaster and misery for the people of Britain and inevitable failure and collapse.