The issue of Brexit, namely Great Britain’s exit from the European Union, regards the age-old issue of what really drives the electorate: myths, real or imaginary identities, or short-term material interests?
For the great political science and philosophical school of Italian elitism, ranging from Pareto to Gaetano Mosca, the political mechanism is substantially identity-based.
As the Genoese sociologist and economist Vilfredo Pareto maintained, there exist six classes of residues that he positivistically listed as follows: the instinct for combinations; the persistence of aggregates or group persistences (regarded as the old ideals and political myths); the need for expressing sentiments by external acts (activity, self-expression); the residues connected with sociality; the integrity of the individual and last – at that time but not today, with the full obsession of primary instincts and urges – the sex residue.
With specific reference to derivations, the actions are not logically connected to the result, but they are always so in the conscience of those who take action.
Regardless of the political form of the State, democracy, oligarchy, totalitarianism, communism, both residues and derivations provide a logic to the pseudo-rational instincts and symbols which drive to action.
Hence, again for Pareto, the Brexit choice regards two myths: the myth of economic growth for those who still want the United Kingdom to remain in the European Union or the identity myth of the old British Empire, or the de facto UK extraneousness to European politics and economics, in short, to the myths which created the European Union.
These myths regard the end of the long European civil war, as, from the French Revolution (or from 1914) to the Second World War, historians such as Ernst Nolte or, from another political perspective, Enzo Traverso called it.
The myth of peace in Europe through the expansion of trade and domestic revenue, as well as the creation of another myth, namely the myth of Europe as new homeland.
Two geopolitical and economic myths in danger. Income growth is not recorded and will not be recorded for a long period of time. The European homeland entails the creation of rituals and symbols replacing the national ones, which has not happened yet.
But Great Britain is de facto alien to the logic of the European civil war: it certainly fought the two world wars, but with mindset, interests and heroism connected rather to its founding myths as autonomous Imperium.
Only to yield its global empire to the United States, so as to repay the credits granted for the war, namely to a country which had backed the war effort and participated in it significantly and, with the Cold War, had to keep the dual global confrontation with the USSR.
A translatio Imperii which, probably, has not been digested yet by British voters, at Pareto’s “residues” level.
In Gaetano Mosca’s opinion, the ruling class is the whole of hierarchies that materially or morally run a society.
Today, in a context of universal globalization, of Pareto’s residues and derivations which are all defined and expressed in the same symbolic languages, where are Mosca’s ruling classes within nations?
Can these ruling classes and “moral and material” hierarchies support the inevitably different needs, interests, myths of the various peoples, not yet united in a global large liquid mass?
In each EU Member State globalization has created asymmetric shocks which, managed by mediocre ruling classes, have been magnified in the individual nations, thus creating real transfers of sovereignty.
Needless to say, this is Italy’s case, while it is not the case of Great Britain which, during the years of Thatcherism, had followed a crash diet to participate in the defilé of globalization before it began.
This is also a central theme to understand Brexit from the philosophical and political viewpoint.
Hence is it currently possible to have cultural globalization applied to the development of political myths and their para-rational connection to interests?
Is a unified political myth otherwise possible – a myth which, for irrelevant details, is defined and expressed in the symbolic language of every country?
Yes, it is possible with specific reference to the myths of consumption, sexualized and reduced to instinctual images from the mass-media, but certainly not as regards the myths and modes of production, which cannot yet be universalized.
Suffice to consider the differences existing between the made in Italy craftsmanship and the Manchester-style factory.
In this regard, Geminello Alvi spoke of the standardizing and impersonal “Chinese ideal” of “capitalism”.
This is what I would currently call “Gaetano Mosca’s dilemma”.
Are today the ruling classes truly such and are they able to put myths and interests together?
The issue lies in establishing whether globalization entails a specific political mythology and its Mosca-style ruling class or not.
Let us revert, however, to Brexit in a strictly economic and financial sense.
Considering that foreign trade is the driver of all contemporary economies, Britain is no exception to the rule: exports, including financial products, account for about 30% of the British GDP.
The EU, however, accounts for over 50% of all British exports.
On the other hand, over 50% of UK imports come from the European Union, with over half of these imports coming from Europe which serves as “intermediate asset,” namely useful to produce other made in England goods and services.
About 10% of the total EU exports go to Britain, with a share of goods and services which is about 36% (for services) compared to 64% for manufactured goods.
Hence, in bilateral trade between the UK and the EU, trade issues are proportionately more important for Great Britain than for the rest (the rest?) of Europe.
Furthermore, within the EU, Great Britain is the largest user of Foreign Direct Investment (FDI), with about 50% of FDI coming from Europe and 30% from the United States.
Moreover, it is well known that, since the end of the British rule in Hong Kong – which Margaret Thatcher accepted in 1997, with the last Governor, Chris Patten, who burst into tears – the real financial boom of the London Stock Exchange has started.
The London Stock Exchange is the one which regulates (or owns) most of European financial markets.
A record achieved in spite of the EU and certainly not thanks to it.
British industrialists point to collapse scenarios, should Brexit be voted by the UK electorate.
The Confederation of British Industry (CBI) maintains that UK’s leaving the EU would lead to zero economic growth as early as 2017 and the following year.
Without a free trade agreement following Brexit within 2020, the British GDP might fall by 5% while, according to other scenarios defined by the City investment banks, the GDP would anyway decrease by 3% even with a new trade agreement with the former European partners.
The number and quality of British jobs would be particularly affected, with unemployment which would rise from the current 5.1% by additional three percentage points.
Over 80% of the companies associated with CBI believe that Brexit would be a disaster for the British economy, with an estimated cost of 100 billion pounds.
In many ways and to many extents, the opinions against UK’s stay in the EU are not less rational.
Obviously the UK exit from the EU would lead to the use of tariff barriers for British goods and services in the European single market, not to mention the difficulty in renegotiating the trade flows with the United States and China, after becoming an economy without the EU size, mass and volume.
Obviously the Brexit advocates know this and do not deny the data reported by those who support the British presence within the European Union.
There are the British contributions to the European budget, which are remarkable – and we can still hear the Thatcherite cry “we want our money back!” at the EU meeting of 1980, as well as the speech delivered by the British Prime Minister in Bruges in 1988, when she thundered against “the European super-State exercising a new dominance from Brussels”.
The UK contributions to the EU are certainly substantial: for 2015, they amount to as many as 10.4 billion pounds, with an increase equal to 1.3 billion pounds compared to forecasts.
However, they account for 0.5% of the UK GDP.
Hence, first and foremost, the UK would save on contributions, but the Brexit advocates think that the difficult action of reconciling the interests of 28 different countries could never foster the British economic interest in global trade negotiations.
Furthermore, the Brexit partisans believe that the UK exit from the EU would even foster the economy, since it would enable the British industry to avoid the EU countless laws and regulations.
Hence the UK would lose part of the EU-28 market but, by capitalizing on its ties within the Commonwealth, it could enter the new market-world, without the fetters and constraints, reins and restraints of EU regulations.
The Brexit advocates also say that if the large European market is designed – as maintained – to reduce prices, optimize competition and stimulate trade and economic competitiveness, this holds true only if all EU countries are economically identical and work to their full potential.
Otherwise for some EU Member States there may be – and, in fact, there are – forms of protectionism hidden in so many regulations which seem to benefit everyone.
In fact, considering data, Great Britain’s new growth has the same shape and the same pace as the United States, and not as Germany or the rest of the European Union.
As the Brexit partisans say: “It is Europe that needs us, not the opposite”.
And here the rationality of Pareto’s derivations meets the old mental residues of the Rule Britannia and the special relationship between the United States and the United Kingdom, two countries united by many interests and separated by a common language.
Here Great Britain’s traditional geopolitical obsession, namely Germany, comes back again.
For the Brexit advocates the EU real problem is not Britain, but precisely Germany.
Greece has very quickly turned into an export country through the collapse of imports.
And this is what Germany wants, because it has to manage its booming exports and it uses the EU as its domestic market, without anyone requiring Germany to reduce its trade surplus.
Hence, for the Brexit partisans, there is a geoconomic problem, namely Germany; a purely free-trade matter, namely the impossibility of really serving the interests of all 28 EU Member States; and, ultimately, the fiscal union – a subject matter never denied before – which never works to promote underdeveloped areas, as is easily demonstrated in the European context.
The British observers who support Brexit view the Union as a giant floundering in an irreversible crisis: in 1973, when Britain adhered to the EU, and many countries were not yet members, the European GDP accounted for 37% of the global GDP.
According to the most favourable estimates, in 2025 the EU will only account for 22% of the global GDP.
The countries which currently dominate the market-world are the United States and China; even the Commonwealth, as a whole, is larger and performs better than the EU.
In 2020, the workers/pensioners ratio will be 3 to 1 and in 2050 it will be 2 to 1 – namely impossible to sustain – due to technological backwardness, but above all to the generalized aging of the European population.
For the Brexit advocates, the mass of regulations and restrictions for goods made in the UK is hard to swallow and digest: since 2010 the EU has adopted 3,500 new laws which somehow relate to UK companies and their interests.
For Great Britain alone, the cost of bureaucracy amounts to approximately 4-5 billion pounds – and this cost is not comparable to the national contribution to the European Union.
Dysfunctional bureaucracy, always looking for a sort of “preferential clause” for some Member States, which generates an indirect cost of trade rules for Great Britain equal to 7.6 billion pounds per year.
And since the Lisbon Treaty entered into force in December 2009, the cost of regulations for British companies has amounted to 12.2 billions in terms of extraordinary standards.
Furthermore, the Brexit advocates argue that Great Britain’s weight within the EU has dropped sharply: in 1973, when the UK adhered to the European Union, it had 20% of votes, while currently the British government can rely only on 9.5 votes.
Again at financial level, the Brexit partisans do not want the financial transaction tax, the FTT based on the old Tobin Tax model, a tax enshrined in the EU regulations last January.
All the analysts who are in favour of Brexit, however, agree on a geopolitical factor: Europe’s irrelevance for Great Britain.
This geopolitical factor is connected to the opinion that the British strategic ideal is a balanced Europe, without a leading country, in which the role of power brokers, mediators and strategic leaders can be played.
On the other hand, the advocates of UK stay within the EU maintain that Brexit would diminish the role played by the London Stock Exchange on the rest of European financial markets, attracted by the Stock Exchange of Frankfurt or Paris.
Moreover, Ireland would pay a very high price for Brexit, considering it supplies 35% of British agricultural and food products, and it will also be affected by the British natural gas imports after Brexit.
Furthermore, Brexit impact on the pound could strengthen the Euro against the British currency, as is already happening.
In short, if Brexit occurs, the EU will lose a large economic market, the second of the European Union, over and above the euro area. It will become increasingly irrelevant at geopolitical level and, above all, it will point the way out to all dissatisfied EU countries, thus creating a likely domino effect which could lead to the end of the European Union or to its economic and political irrelevance.
But there is more: will Brexit – the full recovery of British sovereignty – favour the creation of a single European State to better manage strategic and economic emergencies, in addition to huge immigration flows?
Or will the union rely on a “United States of Europe” model and perspective so as to avoid the EU collapse, but at what pace and for which purposes?
Great Britain is an independent military power; it retains a seat in the UN Permanent Council and, regardless of Brexit, it has no evident interest in adapting to European strategic unification processes.
We could even think of an exchange, with which Great Britain avoids every discrimination against the City, in exchange for UK’s greater involvement in Europe’s collective security.
Not to mention the new tensions which would emerge within NATO after Great Britain’s exit from the EU.
If identity wins – which, as we have seen, is also based on rational grounds and arguments – we will have Brexit.
Conversely if, in the forthcoming referendum, we have an at least apparently “rational” vote, Great Britain’s exit from the EU will be avoided. At least for now.
Giancarlo Elia Valori * (@GEliaValori)
* Presidente della merchant bank “La centrale Finanziaria Generale S.p.A.”
– Presidente della “Cattedra sugli studi della pace, la sicurezza e lo sviluppo internazionale presso la Facoltà di relazioni internazionali della Peking University, nonché “professore straordinario” di economia e politica internazionale nello stesso Ateneo
– Honorable dell’Académie des Sciences dell’Institut de France