Brexit: Command Economy – A Warning from History

Brexit: Command Economy – A Warning from History

Is it not wonderful to live in a democracy where the spirit of free enterprise and free trade is protected by the laws of a State within a legal system that has been shaped to prevent business being subjected to irrational and arbitrary decisions of government ?

By Joe Sweetinburgh, guest author

This article refers to the EU Repeal Bill vote in the House of Commons on 11th September 2017

The answer until last night was almost certainly “yes”. However, as of this morning such a description may no longer apply. This general freedom now seems to be in jeopardy due to an Executive that on the one hand proclaims the need for national sovereignty yet on the other hand is poised to reduce the sovereignty of the individual and businesses by conferring upon itself, powers to shape and dictate the terms of Brexit without reference to Parliament or the Courts by delegating the passing or laws and regulations to Secretary of States. History more or less tells us, Command Economies rarely work; in any event, the vote for Brexit was not a vote to increase powers of Government to interfere.

house-of-commons-pariliament-brexit-westminster-command-economyAt a time when invited UK business leaders have until now declined to put pen to paper and proclaim confidence in the UK government’s capacity to navigate the hurricane of Brexit safely, we may find that businesses, collectively as well as individually, take measures independently of government to avoid a very great uncertainty. Last night’s Common’s EU Repeal Bill (European Withdrawal Act) was remarkable for a number of reasons:

In the first instance there seemed to be the fear among many MP’s to do nothing other than vote for a Bill lest they undermine their chances of re-election. Whilst they recognise the flaws, they also fear that to vote for amendment would be held against them for having ignored “the will of the people”.

Logically, this takes us back to the question, “what was the will of the people?”

There was, of course, an Austrian who became Chancellor of Germany who often used that general allegation to first isolate, then imprison and ultimately kill critics who stood in the way of his private desire for war.

I doubt that one can go further than set out a few implied reasons and expectations concerning the Brexit Referendum; that the parties deliver an orderly process that will not negatively impact upon British business, jobs and prosperity? By now, I suspect that for those in either the pro-Brexit or anti-Brexit camps, the penny has dropped that Brexit is not achievable as a completed process within 2 years. It is a huge menu that may take 20 years to digest. Ironically, Brexit will have to adopt the incremental approach that built the European Union, by moving from one sector to another sector. So far the great qualitative failing of Brexit has been that it has been driven by emotion and the clock instead of objective assessment and justification, which ironically is another EU concept.

It is not difficult to predict that Brexit will fail in its current form. Some of the reasoning may be unpalatable and politically incorrect. Few businesses would bestow on executives who have failed to plan strategically (due to the absence of any plan at all), even greater powers to dig themselves out of the hole of their own making. It is true that one could hold out Churchill as example of someone who came eventually made good post Gallipoli, albeit not for Poland where by the war’s end by one tyranny was exchanged for another.

Only by assembling the best minds across parties and across malleable ideologies, can Britain hope to come out of Brexit as a single political and economic entity. Ironically, it was this line of thought that had engaged the leading politicians and economists post World War One to move towards an ever greater political union within Europe by adopting the German unification process.  This process employed Customs Unions as a first step  to a level of prosperity and living standards that any population would surely not wish to throw away through Armed Conflict.

The risk of allowing executives who even among their own support base seem to be unable to attract much in the way of confidence is in all probability due to the corruption of good government due to the British electoral process. All that counts is making promises that secure votes. Performance or indeed non-performance in office is not decisive, there will always be a nice comfortable job to move on to, once out of office. Therefore the most important and immediate damage to the reputation of the British democracy is now the relegation of the corporate Board (Parliament) and the Courts (Judiciary) to inconsequential bystanders on the Brexit process.

HMS-GB-Brexit-sail-ship-boat-trade-politics-diplomacy-eu-command-economy-01The Task Force to rescue HMS GB will almost certainly be fall to UK business where the capacity to maintain a level of affluence will accrue through seeking out  new international markets.  This is the fundamental factor that Government and protagonists of Brexit now utterly depend upon. An understated consequence of the EU funding that Brexit brings will be that wherever the Brits go for trade agreements, the EU go.

By implication Brexit puts the EU and GB into direct competition for international trade.

The greatest irony which is neither highlighted, nor flagged in a tragedy of non-cooperation is that an  accusatory finger is pointing to the failure of successive British governments to gets its own house in order.  That fact remains that the scope for extended legal challenge before the ECJ. From a lawyer’s standpoint, this curious Bill to incorporate EU law that is already incorporated into the British Legal system deserves closer scrutiny.  Only one point needs to be mentioned here to indicate the impossibility of the task in an atmosphere where relationships between the protagonists are less than cordial.

Until such time as there is agreement between the Member States that execute and ratify the settlement to leave, the “negotiation” process and any issue that may arise on state or private level, will still remain within the jurisdiction of the ECJ to determine and bind GB. There is no good reason to politicise that unpalatable fact as an attack on British sovereignty yet it is simply a fact of how the Treaty has always worked. Nor is there any point in enacting something that requires the British Courts to oust the jurisdiction of the ECJ other than by EU and/or ECJ consent. Quite apart from the concept of British government inviting the judiciary to depart from all international legal standards, the right to trade freely and under the rule of law is somewhere that citizen and British business have been before.

Mrs Thatcher’s targeting of Freddie Laker, the doyen of competition and enterprise with the Protection of Trading Interests Act 1983 is the classic example of how government will take expedient measure against one of its own and pretend that the damages was merely a friendly fire incident. Laker’s success presented a direct commercial threat to US Airlines and US Aircraft manufacturers by developing a low cost market that hit traditional flight margins, aircraft orders and price. The Regan – Thatcher axis conspired by way of this Act to oust a Court’s jurisdiction to hear Lakers well founded complaint. Moving a few decades on, we do not see the same rationale applied to the protection of domestic business, when it comes to Amazon, Google or You Tube destroying sectors by imposing changes on the operation of copyright and supplier terms.

Business will always seek to find ways to achieve its commercial goals irrespective of government especially when government is considered weak or inept. Business, like water, will find the caveats to run its course.  If push comes to shove, where trading conditions are neither certain nor correct, the incentive for business to move the centre of its operations to locations that can offer certainty will only increase. An open and predictable legal system that offers the chance of fair costs proportionate with final legal adjudication is all part of the picture. Once business starts to look, there is the inevitable likelihood that it will come across better propositions in other places. The only silver lining may be that some of those better propositions enhance the existing operation where it currently sits.

lady-justice-ECJ-european-justice-brexit-economyFrom my own standpoint, Brexit will not oust the jurisdiction of the ECJ; it will simply “oust” the almost automatic inclusion of English Law and English Courts as the exclusive governing law of the contract and place to bring any dispute. At present, Continental jurisdictions offer better legislative and procedural protection for copyright holders than the GB by providing a harmonized framework that the extra-territorial reach of US legislative provisions to promote the likes of Google – You Tube has harmed immeasurably.

Great Britain is now at the crossroad.  Business has to look abroad to offset the possible consequences of contraction that will almost certainly flow from the disruption that even a friendly Brexit would cause. Whatever the Brexit stance – the direction of travel remains exactly the same – it is now time to penetrate long ignored markets.

Winning and securing new business is not always simply confined to the technical proposition and its delivery. Anywhere from the invitation to pitch to the closing of an order, may be decided on the basis of who we like and/or trust. The absence of the perception of a patronising or superior governmental attitude needs to be factored into the approach of the sales force at the frontline. At the moment the British government is immobile  in a “ phoney war “ of rhetorical skirmishes. It is unlikely that those within government will be able to moderate the intensity of a bad decision made worse by the absence of planning and the unrealistic raising of expectations in the campaign to secure the “leave” vote.  Even more unlikely is the survival of a government that has to constantly look over its shoulder at those from within its own ranks.

The credibility of British business is almost certainly to be dragged into the mix. Therefore, there is no time like the present to invest in finding new opportunities by building new relationships that will survive a purely political conflict that is set to weigh down British business for decades to come.

BBC 7th September 2017: “The government’s White Paper says there is “no single figure” for this, but that there are believed to be 12,000 EU regulations (one type of EU law) in force, while Parliament has passed 7,900 statutory instruments implementing EU legislation and 186 acts which incorporate a degree of EU influence.

The total body of European law, dating back to 1958, is known as the Acquis Communautaire.

It binds all member states and in 2010 was estimated to consist of about 80,000 items, covering everything from workers’ rights to environment and trade”


Joe Sweetinburgh is a Music and TV Entrepreneur acquiring licensing music, programmes and films contents across borders which he has done for over 30 years