The electoral success of a political party depends on many factors. But the most important one is the correct reading of domestic developments and how they are connected to global economic and political trends. Parties must understand both of these environments when developing their campaign strategies.

The British economy is characterised by the dominance of financial services and the crisis of the welfare state. Underpinning this has been 40 years of neoliberal British government policy, promoting privatisation, deregulation and competition. The manufacturing sector has shrunk to just 11% of GDP.

An economy dominated by services has remodelled the country’s entire social and economic life. It has increased inequality – substantially reducing wages for low-paid workers and promoted flexible and precarious employment. Meanwhile, budgets for public provision and investment have been cut.

The leaders of the Labour Party, Jeremy Corbyn, and shadow chancellor John McDonnell, have captured this domestic reality well. It brought the party closer to people and increased its membership massively. Polls in February 2016 showed the party to be neck and neck with the Conservatives.

But things changed in the run-up to the Brexit referendum of June 23 and have gone from bad to worse. When British prime minister, Theresa May, called the snap election on April 18, her party had a lead of more than 17 points. This is because the Labour Party has failed to correctly read the “external” environment it finds itself in. This is the disaffection of British society caused by the crisis of globalisation and European integration.

The new global context

Finance-led, neoliberal globalisation has undermined the capacity of the nation state to redistribute wealth for all levels of society. Under globalisation, state intervention has consistently favoured private business, financial services and privatisations.

The EU epitomises globalisation in that it transferred to unaccountable, supranational institutions the key public policy instrument of monetary policy. Countries within the eurozone cannot control their currency to make their economies competitive (something Germany has greatly benefited from), resulting in higher debt. It is the poor and the working classes that have suffered as a result.

Since the global financial crisis, however, the global political economy has structurally drifted towards a new protectionism. There has been a contraction of global trade; the rise of various trade barriers; and a resurgence of nationalist movements that often blame immigrants for their country’s problems.

So globalisation and European integration failed the working classes, destroying the jobs and security that many previously relied on. The subsequent crisis then failed them further, with austerity making their economic and social situation even worse.

Capturing the mood

The conservative establishment in the US captured this trend quite well. Trump snatched the initiative from the Democrats to win the presidency by reaching out to disenfranchised working class voters.

In the UK, both the Conservatives and the Labour Party made the strategic mistake of ignoring these global and societal trends and the degree to which they affect people’s daily lives. Thus, both parties’ official stance in the build-up to the Brexit referendum was to align themselves on a pro-European platform against British society. They lost.

Since then, Theresa May has corrected her party’s mistake by waving the banner of a “hard Brexit” and calling a snap election to reinforce her leadership ahead of Brexit negotiations. The Labour Party must respond to this smart move in kind.

Many Remain supporters hope that Labour will stand up against hard Brexit and adopt a pro-EU strategy, even launching a campaign to this effect. But this is more likely to benefit the Liberal Democrats, which is the clear pro-EU party. It is also a party without any solid critical positions against the dismantling of the NHS and privatisation policies.

A victorious campaign for Labour must include a direct and ruthless critique of the EU’s authoritarianism. After all, it imposed a set of unbearable austerity measures and cuts that turned the local poor and unemployed against immigrants, who are wrongly believed to be the source of the problem.

Alongside this critique, Labour must pledge to immediately introduce the socialist elements of EU law upon withdrawal – the pro-labour, pro-migration, pro-environmental and pro-human rights legislation. But it can do so within the sovereign site of the British democratic parliamentary system.

So instead of offering lukewarm support for the EU’s human and workers’ rights treaties, a viable UK opposition would embrace a socialist Brexit, all the while instituting and even enhancing the elements of EU law that protect British workers. This way Labour can align with British society against the EU in order to advance British democracy and all those disaffected by the neoliberal policies espoused by the Tory government.

When it comes to accessing the single market, this is not really a matter of debate in Westminster. Access will not be decided in London but in Berlin, the real seat of EU power in this time of crisis. And Germany wants a “hard Brexit” because it cannot break the rules it created and transplanted across the EU. The Conservative Party appears to recognise this and is ready to give the people the Brexit they want, all the while implementing its right-wing agenda and dismantling the welfare state.

The Labour Party cannot go against the tide of de-globalisation and expect to win. It must adapt its policies to the new constraints and develop its pro-social and pro-working class agenda within them.

Read more posts by Vassilis Fouskas on The Conversation