When British voters stand in polling booths on June 23 and decide whether to stay in the European Union, it will be a rare moment of calm after a numbing cacophony of warnings from both sides. For months, we have been confronted with a stream of contradictory projections on the implications of a British exit from the EU. Unless you’re an econometrician with a lot of spare time on your hands, how on earth can you make up your mind?
In the end, it is likely to come down to a judgement call based on the same motivations that have long driven people to stick with groups or go their own way. As our guide through this process, let’s turn to one of the most extraordinary intellectuals and self-doubting economists of the past century: Albert O. Hirschman.
Before he was an academic, Hirschman helped thousands flee from the Nazis during World War II, contributed to the Marshall Plan, and pioneered development policies at the World Bank. Instead of economic models populated by fully rational people, Hirschman was intrigued by puzzles of unexpected failure. His most famous work, Exit, Voice and Loyalty, sheds new light on the road to and after a potential Brexit.
Off the rails
Hirschman put forward the idea that members who aren’t happy with an organisation, can either exit or try to change its course by voicing their qualms – clearly relevant as we approach the EU referendum. Whether you go ahead and leave comes down to how easy that exit will be; it is considerably less costly to leave a Scrabble club than it is to leave your family, your street gang, or for that matter your vast politico-economic union some 60 years in the making. The easier the exit, the less likely you are to bother voicing your concerns.
The political economist demonstrated his theory using the hippie movement and corporate shareholders, but the original idea occurred to him while riding trains in Nigeria. They were in a lamentable condition, precisely because the people most likely to voice their concerns were the first to switch to buses and trucks. Exit was just too easy, and nothing changed.
The UK is now cast in the role of the frustrated Nigerian commuters, who had to consider whether to cut their losses or argue for improvements for the benefit of all. Exiting the EU, however, involves bigger costs than simply buying another ticket.
According to Hirschman, the appeal of exit not only increases with the level of discontent about the organisation, but also with the creeping feeling you are unable to change it. In the UK we find both growing unease with the EU and a perception of impotency to change it.
A lot has been written about the EU’s democratic deficit. Some bemoan that the European Commission isn’t democratically elected, whereas others point to the elected European Parliament, national ministers, and heads of state. Considering the complexity of a system that accommodates 28 member states, EU law making has actually become laudably transparent and accessible.
The nub of the matter for the UK-EU disconnect is an ill-informed public. Britain’s path to European detachment has been paved by a dismissive domestic media. Europe is now learning the hard way that you can’t unify a continent through laws and institutions – a form of shared identity is indispensable. Ideational integration should at best precede and at least accompany formal economic integration.
Discourse should mean constructive dissent. Not only does Hirschman say that members of an organisation who feel suffocated are likely to exit, he also argues that breathing room for dissent usually improves performance. The EU surely depends on grand visions and zealous europhiles, but the sacred pursuit of an ever closer union might have undermined the EU’s cause. Taking deviating voices more seriously and allowing for more skirmishes should be the motto of the future.
Hirschman, in the most underappreciated part of his work, posits: “loyalty holds exit at bay and activates voice”. Now, the idea of British loyalty to the EU is perhaps a dream of the future, but there is no escaping the EU whatever the referendum decision. Hirschman’s book considered the ramifications of exiting public goods – economists’ lingo for things you can’t wholly divorce yourself from, such as clean air or national defence.
Consider the classic example of parents deciding to send their children to private school. They exit the public system, give up the opportunity to change it from within, and arguably undermine it at the same time. The quality of public education, however, will continue to impact the life of the parents and their children. A complete exit is impossible.
Brexit would mean giving up the ability to change the EU from within. And yet the EU would, like a public good, continue to affect Britain on many levels. This simple insight cannot be emphasised enough. The referendum is just as much an issue of influence from within or influence from without, as it is one of weighing the benefits and costs of the exit process. It bumps up against the understanding of national sovereignty voiced by Boris Johnson, Michael Gove and the like. To cite The Economist: “If sovereignty is the absence of mutual interference, the most sovereign country in the world is North Korea.”
Regardless of what the British path upon leaving the EU would look like, the country would find its room for manoeuvre considerably diminished, and at a time of distinct economic uncertainty. The likely post-Brexit models under discussion share the same quality: exposure to the EU remains fairly stable, but influence plummets. Against this backdrop, Hirschman’s reflection sounds like a warning: “Once you have exited, you have lost the opportunity to use voice, but not vice versa.”
This applies on some level whether you are fed up of using the trains in Lagos or putting an X on a Brexit ballot paper in 22 days time. Hirschman’s theories help us understand how and why we choose to belong to a certain group. In the aftermath of German reunification, Hirschman was pleased to see his ideas on “exit and voice” gaining popularity as explanatory keys. One ought not to put words in the mouths of the dead, but it’s doubtful he would have appreciated a similar spike in citations after June 23.