European capitalism has entered a new and unpredictable phase of its protracted crisis. The British referendum has caused havoc in the EU, the United Kingdom, the Conservative Party and the Labour Party. All are in turmoil.

In the aftermath of the global financial crisis, the illusion of ”social Europe”, an egalitarian continent-wide welfare state, was shattered by the campaign of austerity, culminating in the savage punishment of the Greek working class.

“Free movement of people” has become the hollow phrase of an EU that tear-gasses refugees at its razor-wire borders. The continent is now infested with preening, confident neo-fascists and extreme right wingers. Promises that free trade and global economic integration would lift living standards have been exposed as lies many times over and the experts who made the promises shown up as liars.

“I think people in this country have had enough of experts”, said the shrewd Tory Michael Gove, just before his political triumph in the Brexit campaign. The British Conservative Party, the 200-year-old organising centre of the British bosses, is caught in a trap of its own making. Its ruling class leadership is desperate to remain within the EU, but now have to negotiate Britain’s departure. Its members, overwhelmingly nationalist and feeling victorious after the referendum, stand poised to defect at signs of hesitancy or betrayal, with the far right UK Independence Party standing ready to welcome them.

The Tories’ discredited ruling clique now face a chaotic leadership contest and the difficult task of satisfying the competing wishes of their activists, British bosses and the enraged European technocrats, while finding a way to retain a central role for British capitalism on the world stage. “I love this country”, said prime minister David Cameron, announcing his resignation after the shock result, his voice cracking with the strain. “And I feel honoured to have served it.” But he has served the ruling class badly, and must resign in disgrace. His referendum, a factional ploy, has derailed the international strategy of the British ruling class and left its preferred ruling party at risk of a split.

The ruling class demands that Britain keep its border open to European migrants if it wants to remain part of the European free trade zone; Tory shopkeepers demand closed borders, backed by the Brexit mandate. Break the party or break Europe – or break both? This is the choice faced by the competitors in the coming Conservative leadership race. “The country is sailing into a storm”, wrote the Economist, “and no one is at the wheel”.

The integrity of the United Kingdom has been badly undermined. Its break-up, in the short or long term, is a real possibility. Pro-EU Scottish voters (62 percent Remain) are being nudged towards breaking with Britain by local bourgeois opportunists, as are those in Northern Ireland (56 percent Remain). Working class voters may seize the moment of Tory weakness to terminate their centuries-long subordination to Westminster. The Union Jack, which has waved over genocidal, imperialist carnage on every continent for 215 years, may soon be consigned to the ash-heap of history.

“Dare to dream that a dawn is breaking over an independent United Kingdom”, crowed UKIP leader Nigel Farage after the referendum. But the United Kingdom may be entering its twilight, hastened by the referendum Farage championed. “If the British leave Europe, people will have to face the consequences”, warned Jean-Claude Juncker, president of the European Commission, prior to the vote. 

Juncker knows about inflicting punishment for defiance. When he was prime minister of Luxembourg, Juncker helped turn his tiny nation into a global titan of tax avoidance, where the rich stashed billions, safe from redistribution into domestic health, education or welfare programs. As president of the European Commission, he oversaw the all-out assault on Greek workers, who voted against austerity in 2015: the money power of the European Union was used to drive through wage cuts, pension cuts, privatisations and a gross assault on workers’ rights to organise, in a country already ravaged by years of economic disaster and austerity.  The brutalisation of Greek workers was meant as a warning to any who dared exercise their democratic rights against the wishes of the European ruling classes.

But Juncker and his EU were defied. Britain voted to depart. Now the EU, anti-democratic tool of austerity and continent-wide class warfare, might also fragment. For now, it has no obvious strategy that does not risk inflaming its internal crisis. Far right parties, surging across Europe, are pushing for their own national referendums. The British and European bourgeoisies retain all their economic and coercive might. For now, their rule is secure. But their institutions are falling into disorder. 

What caused this? Many have agonised about the origins and meaning of the vote. Was it a wave of racism, or a working class rebellion?

The Leave campaign was led by arch-reactionaries such as Farage and former London mayor Boris Johnson, who whipped up racist hatred against Muslims and Arabs, Poles and Romanians, while claiming that migrants were to blame for job losses, low wages and collapsing welfare services. Polling indicates that hard core racists and Tory lunatics overwhelmingly voted Leave. But there is much more to the story than this.

Much more significant is the high Leave vote in Labour Party strongholds – the industrial towns, the north of England and the south of Wales. Those places have a long history of working class struggle, of organised courage and resistance, of left and socialist politics. And they have a tragic history of betrayal, defeat, decline and unemployment; they are communities ravaged by decades of neglect.

It is unsurprising that many of these workers believe immigration has contributed to their unemployment and underemployment, their low wages, their run-down hospitals and overcrowded schools. That is the story that has been told to them for decades by the vile British bourgeois press, but also by the right wing leaders of the Labour Party, who have called for “British jobs for British workers” and in 2015 made “controls on immigration” one of their five “election pledges”.

Nobody should be surprised that a melange of confused and right wing ideas exists alongside legitimate fury at the dismantling of working class communities and the trashing of their lives. But racism is not the whole story. In polls, 42 percent of Labour-supporting Leave voters said they considered immigration at worst a “mixed blessing” or generally a force for good.

Overwhelmingly, working class Leave voters expressed a hope that social services and employment conditions would improve as a result of Brexit. Those desires, and the depth of hatred that led those workers to disobey the instructions of all the high-and-mighty bankers, politicians, economists and business societies, must be respected – even if the ideas that sit alongside them must be confronted.

The vote is not a cause for despair. Despair will challenge neither racism nor austerity. Nor is the vote a cause for uncritical celebration. The working class Leave voters who saw UKIP as the only party that spoke to their anger may listen more attentively to worked-out far right racist politics in future. The political legacy of Brexit is not settled: it is something to be actively contested. The left has to combat the racism and embrace the anger, turn the rage of the dispossessed into struggle against their oppressors.

The vote revealed enormous potential and enormous danger: deep bitterness, class anger and defiance, merged with backward and confused ideas about who to blame. What sort of politics can untie this knot and organise the fight against the bosses and Tories who rule austerity Britain? Not the anti-democratic politics of those cosmopolitan Europhiles who have spent the days since the referendum strategising how to overcome the troublesome outburst of democracy and restore calm and peace to the bourgeois order. Liberal barrister Geoffrey Robertson, writing in the Guardian, suggested that members of parliament should simply ignore the referendum result.

Others have proposed holding more referendums until the stupid voters get the answer right. Pro-EU demonstrations have attracted thousands of “enlightened” Londoners to cheer the Tory small business minister Anna Soubry. They chanted “No more hate” while showering adulation on a member of the ruling party: the anti-worker, pro-austerity, racist, imperialist, anti-migrant Conservative Party. There is nothing progressive in demonstrations that present ruling class thugs as heroes of the oppressed, nor in the anti-democratic sneering at ignorant Leave voters.

Many organised workers, racially oppressed people and young people voted Remain because they were disgusted by the racism of the Leave campaign. These are understandable sentiments, but they too are bound up with contradictory and reactionary ideas, just as much as those of the much mocked Leave voters.

Deference to economic technocrats and “experts”, appeals to the power of ruling class institutions to protect the vulnerable, adulation of “progressive” bosses and Tories, fear of breaking the commands of the powerful: these are right wing sentiments that must also be challenged. This liberal elitism allows fascists to posture as the authentic tribunes of popular sentiment, and ruling class oppressors to claim they are the protectors of the needy and defenceless.

Neither Farage nor Juncker are allies in the battle for workers’ rights, for equality, for the dignity and freedom of all the exploited, British-born or migrant. Britain needs a revival of popular, democratic, anti-rich and anti-racist politics: socialist politics that accepts the anger of workers and organises their unity in struggle against their real enemies – the bosses who exploit them and the state that torments them.

The immediate future is unpredictable. It is possible that stability may be restored quickly. But the structural roots of this crisis are deep. The shock referendum result has thrown the ruling class into disorder and revealed, alongside the dangers, immense opportunities for a reshaping of the political landscape in favour of the left.