The Single Market is emerging as the key issuing facing UK decision-makers following Britain’s decisive vote in June to leave the EU.
It’s something that both the government and Britain’s main opposition Labour Party insist they do not want to ignore.
Some parliamentarians say the UK must stay within the Single Market, but others argue that’s impossible unless Britain accepts EU free labour movement. This has been rejected by UK Prime Minister Teresa May.
Everyone’s confused.
So what is the EU Single Market?
It’s defined in EU law and treaties that remove barriers to trade in goods, services and capital and obstructions to EU citizens working in other EU states.
It’s a free market programme that might appeal to radical liberals. But its essential purpose is to favour EU businesses and people against their non-EU counterparts.
It’s a protectionist measure and a radical extension of the EU’s original common external tariff arrangement. And it’s designed to promote the political integration of EU members states.
EU GDP now accounts for one quarter of global GDP. The Single Market therefore has global economic consequences.
It affects to varying degrees all 500m inhabitants of the EU’s 28 member states and every business and government in the EU.
Whatever its merits, there’s no doubt the EU Single Market programme is unprecedented.
But there is a historic parallel: the attempt made by the Soviet Union to create socialism in one country.
This is usually associated with Soviet dictator Joseph Stalin, but the idea originated in an article by Vladimir Lenin published in 1915 . It was entitled: “On the Slogan for a United States of Europe.”
Stalin cited to this to justify Socialism in One Country. These were policies designed to accelerate Soviet economic development. The goal was for the Soviet Union to overtake advanced capitalist states.
There’s the first parallel: the single market’s goal is to help the EU economy compete with that of the US and China.
It involved detailed management of trade and investment relations with international trade partners and centralised direction of the Soviet economy.
The common external tariff defines the frontier of the EU economy in a way that echoes Soviet policy. Like the EU does now, special deals were signed with specific states to reduce or remove tariffs and other obstructions to trade. But these were centrally controlled, just as their EU equivalents are by the EU bureaucracy.
The Common Agricultural Policy (CAP) is perhaps the EU initiative closest to Stalin’s. Every farm product is defined and regulated. Prices are set centrally and applied across the whole EU. Like Soviet farm policy, the CAP aims to promote large-scale production.
The Single Market calls for free trade in services (intangibles). Since these are indefinable, detailed legislation is required to facilitate management of myriad sectors. Ultimately, every EU service industry will be defined and regulated in detail.
This is exactly what Stalin’s Soviet Union did, though the penalties for breaching rules were draconian rather than punitive, like the EU’s.
Of course, the Soviet Union allowed free movement of capital within the country, though all of it was controlled by the state. There was a single currency, one exchange rate, a single interest rate and a single monetary authority.
Just like the EU Single Market.
And then were was labour. The Soviet Union controlled where people worked, but this was mainly to promote economic development.
Workers were directed to move from their homes to other parts of the Soviet Union.
In the EU, this decision is decentralised, but its effects are the same.
Since 1992, up to 20m people have moved from low-income EU countries to richer parts of the EU. The scale of labour movement in the EU now probably exceeds that seen in Stalin’s Soviet Union.
The justification is that it promotes higher long-term economic growth and, ultimately, income convergence.
Stalin would have approved.
The Single Market concentrates power into the hands of bureaucrats. The enormous amount of detailed regulation needed to deliver the Single Market makes that inevitable.
The Soviet Union too was controlled by a powerful bureaucracy based in Moscow.
The confusion about the Single Market in the UK is comprehensible.
It’s presented as a free market initiative, which isn’t, but it nevertheless attracts some supporters of laissez-faire economics.
It’s also presented as a way of promoting efficiency (which it also isn’t). This is why it appeals to liberal and social democrats who believe capitalism needs management.
Champions of the EU say it’s an internationalist project. No it’s not. It’s a Eurocentric one.
And it is a form of socialism, which is why some on the left like it. But it’s a particular type; one that caused vast human suffering and failed.
Stalin’s been dead 64 years. The bad news is that his spirit lives on in the EU Single Market.