The socialist case for nationalisation

Port Talbot steelworks, photo Grubb (Creative Commons)

Port Talbot steelworks, photo Grubb (Creative Commons)   (Click to enlarge: opens in new window)

Nationalisation is back on the agenda. The crisis surrounding Tata steel has demonstrated that the market cannot secure the future of the industries vital for the economy. Nor can it provide the jobs that communities rely upon.
The Tories have been shown to be out of touch with the majority of the working class on this issue when Business Secretary Sajid Javid said that “nationalisation is not the answer”. A YouGov poll shows that 62% of people think that it is the answer.
Paul Callanan looks at what the arguments against nationalisation are and what socialists say to answer them.

It would place an unreasonable burden on the taxpayer

This is a lie. And what’s more, as the Panama papers show, it is one made up by people who don’t even pay their taxes.

The cost of the government taking over Tata steel would be £1.5 billion a year according to some estimates. This is only the case if it is bought by the government at the market rate. They don’t have to do that. The bosses at Tata have shown that they are not capable of running the company and that they don’t care about what happens to the workers.

A private buyer would take massive government subsidies to take the company on. We say that it should be nationalised with compensation only paid to shareholders on the basis of proven need.

The cost of industries like Tata going to the wall would be enormous to the workers and communities that rely on them. It would mean people paying no tax and claiming benefits as a result of unemployment.

Privatisation of previously nationalised industries in the 1980s brought destruction to communities and cost the taxpayer dearly. During this period government spending on welfare rose on average 1.1% a year. Unemployment rose to just over 4 million in 1984.

Research has found that each person in Britain could save £250 a year in gas, water, electricity bills and rail fares – all previously nationalised utilities – if they were taken back under public ownership. In real terms water bills have gone up by 51% since privatisation. Travel fares have risen by 24% since 1995.

The government could rule that infrastructure and transport projects only buy their steel and other materials from government-owned enterprises. It would be an investment on which society as a whole would see a return.

Wasn’t nationalisation tried before? It didn’t work

Yes and no. In the period of 1945-75 one-fifth of the British economy was state owned. This included coal, steel, transport, civil aviation, phones, electricity, gas, water, road haulage and trucking – a whole range of key sections of the economy. World War Two had seen economic devastation across the world. Most industries were bankrupt by the end of the war and could not be revived on the basis of private ownership.

Added to this, working class people who had fought in the war had come home and were not prepared to go back to the hunger, cold and poverty of the 1930s. The whole of Europe was convulsed by revolutionary movements. Nationalisation came as a result of huge pressure from the working class who saw it as a step towards socialism.

However, capitalism managed to cling on and relative political stability ushered in the biggest upswing in its history – the “post-war boom”. Workers experienced the biggest increase in living standards ever. Between 1950 and 1965 workers’ wages rose by 40%. Unemployment in the same period averaged just 2%. Workers’ conditions were also boosted by strong trade union organisation in the workplace. By 1980 trade union membership stood at around 14 million.

What was missing from the nationalised industries was any workers’ control and management. In Britain they were controlled by ministers and civil servants from Whitehall who acted in the interests of capitalism. This did result in bureaucratic mismanagement and waste. It also meant that these industries were not responsive to the needs of working class people and communities. Elected committees of workers’ representatives, the local communities and the government would have meant a democratic plan for production could have been drawn up. This would have enabled production to be focused on what people needed. It would also have made nationalised industries more responsive to changes in the economy when a new crisis began in the 1970s.

Ultimately nationalisation was ended by the Thatcher government. Thatcher was a disciple of neoliberalism and free markets. She represented the interests of the ruling class who were determined to smash working class conditions. Under Thatcher and her successors industries were sold off to big business in order for them to reap huge profits. The deliberate running down of the coal industry resulted in the heroic miners’ strike in 1984/85 against the closure of nationalised mines.

The consequences of rampant privatisation are still being felt today. People see it in sky high gas, electricity and water bills. It is seen in the marketisation of the NHS and dodgy PFI deals; and in the proliferation of insecure work and the scourge of zero-hour contracts.

There is growing support for nationalisation among the working class. Over 70% of people support the nationalisation of the railways, 68% and 67% would renationalise energy companies and the Royal Mail respectively. And a whopping 84% believe that the NHS should be fully nationalised.

Didn’t the government nationalise the banks? And we’re still being ripped off

Oliver Twist banks - Please sir, can I have some more?, photo

Oliver Twist banks – Please sir, can I have some more?, photo

Indeed they did. The collapse of Northern Rock in late 2007, and then AIB in America just weeks later, was the harbinger of the worst crisis capitalism has faced since the 1930s. When Northern Rock collapsed, the Labour government under Gordon Brown rushed to its rescue. This move was supported by the Tory opposition and its leader David Cameron. Contrast this with his present government’s attitude towards a possible takeover of Tata.

This was followed by bailouts (cash handouts) and the government taking stakes in a number of banks including Lloyds and RBS. In effect these ‘nationalisations’ meant the government paying off the banks’ debts and leaving the profits in the hands of the bosses.

Eventually the banks were partially sold off allowing someone else to reap the benefits of public ownership. Last summer George Osborne sold off the government’s shares in RBS at a £1 billion loss to the taxpayer.

We have argued since the outset of the crisis that it is not enough to take a stake in the banks only to hand them back at knockdown prices. The banks should have been fully nationalised under democratic control. This way the banks could have been used in order for working people and small businesses to get access to cheap loans. This would have to be done alongside a raft of other measures to take key sectors of the economy into public ownership.

Ok, but it wouldn’t work anyway in a modern high-tech economy

This argument was most prominently trotted out by Yvette Cooper when she said nationalisation “would not help young people trying to build an app”. As well as being wrong, this argument is also disingenuous.

While working class people do benefit from new technology, it is also used by the ruling class to drive down wages and conditions. For example, the way Oyster technology is being used on London Underground to close ticket offices and sack workers.

This is because in the hands of big business, technology is being used to maximise profit rather than improve the lives of the majority.

Take the taxi app Uber where people can order mini cabs from their phone at cheap prices. This is fantastic in theory. But in the hands of profiteers it is undercutting drivers for other companies. Taken into public ownership the technology could be used to help aid the planning of cab services – dividing out the work, sharing out routes etc. This increased capacity to share information opens up possibilities right across the economy.

Also taking those companies that provide platforms for building the apps into public ownership would create huge potential. At the moment there are three platforms for building apps – Apple, Android and Windows. The code used for these platforms is incompatible with each other which means that often app builders have to produce three apps to do the same thing. While there is some open source code that can be accessed for free, most of it is controlled by market forces and at a cost.

Nationalisation of the mobile phone and tech companies would make it possible to make all code open source, allowing the builder to access all of it for free. The publishing platform could also be then used without charge with the three platforms made compatible.

New technology and the mechanisation of production have the potential to enhance the lives of working class people. It could mean that people get more leisure time. But in the hands of big business this potential will be, at best, only partially realised and at worst completely lost.

If you did that then wouldn’t the rich simply take their money elsewhere?

Whenever the arguments are raised for measures that would improve the lot of working class people this argument is dragged out. ‘If we tax the rich to pay for services they’ll take their business elsewhere’; ‘if we nationalise industries the rich will move their money abroad’. It is of course true that capitalists are only interested in defending their profits and will do it by any means necessary.

But there are measures that can be taken to prevent this from happening. When Syriza took power in Greece at the beginning of 2015 the potential for a flight of capital was raised. The Socialist Party argued at the time that the Greek government would need to nationalise the key sectors of the economy if it was to avoid the catastrophe that was eventually inflicted on the Greek people.

Alongside that we argued for capital controls to be introduced that would stop the rich from removing all their money from the country. The government could also take control of imports and exports. This would prevent people from using exports as a cover for getting their money out of the country.

Ultimately, the rich wouldn’t be missed. They owe their position to their ownership of factories, shops, restaurants etc. But they do not keep production going – workers do. This is what makes strikes so effective. Workers can bring workplaces, industries or even countries to a standstill. This has an effect on profit, hitting the boss where it hurts the most – in the pocket. If your boss or CEO went on strike for the day, would you notice?

We called on the Greek government to take these measures in tandem with a call to the working class in other crisis and debt-burdened countries to fight for the same. On this basis, a confederation of socialist states in Europe could have been on the agenda.

International free trade means that the rich can move their money where and when they please. But in a socialist world where would they move the money to?

Well, I can see the point of it as a temporary measure, when key enterprises are failing

This idea has been raised by Labour shadow chancellor John McDonnell as a solution to the Tata steel crisis. Basically the state can save the industry and wait until a viable private buyer is found. This is a profound mistake.

The steel crisis won’t go away unless more far-reaching measures are taken. International competition means that buyers will continue to look for the cheapest product. In this case it is China dumping cheap steel in Europe as prices plummet domestically. Even if the government takes control for a long period problems like this will continue to persist. That is the (il)logic of free markets.

A private buyer would then simply take the companies and asset strip, ie sell off the profitable parts for personal gain. We support nationalisation but on this basis it would be, at best, a reprieve.

Society and the economy can only emerge permanently from the present crisis on the basis of a complete break with the logic of capitalism.

During the Russian Revolution of 1917 the working class took over the factories. This was organised through elected bodies called soviets. These soviets were organised at the level of the shop floor which then elected delegates to local, regional and national soviets.

In October 1917 the soviets, led by the Bolshevik Party, overthrew the capitalist provisional government which had taken power after the Tsar was overthrown in February that year. With soviets as the state, they were able to nationalise the commanding heights of the economy under democratic workers’ control and management. The working class was able to democratically plan the economy to meet the needs of everyone.

Ultimately, because of Russia’s poverty and isolation and the civil war and invasion of imperialist armies, bureaucratic layers under Stalin were able to usurp the power of the soviets and institute a vicious dictatorship. Yet even without democratic planning and with the bureaucratic waste and stagnation under the Stalinist bureaucracy, the USSR became a world super power.

During the 1920s and 1930s, the USSR’s economy and living standards advanced in ten years by levels that it took 100 to achieve in the advanced capitalist countries. Unfortunately the bureaucracy leeched off that wealth in the form of privileges and acted as a fetter on the further development of society – eventually leading to capitalist restoration.

Power in capitalist society is not exercised by elected representatives of the people. It is in the boardroom where power really lies. We stand for nationalisation to put that power in the hands of working people, not as a temporary fix whenever the capitalists find themselves in a hole. We would nationalise not just steel in Britain but the top 150 monopolies that control the wealth and resources in society. And we would also put the economy in the hands of those that produce that wealth.

Socialist nationalisation would include having elected committees to run every workplace. In turn these would elect representatives to be on committees that would form regional and national government. On this basis the whole of society would be able to take part in drawing up a plan for what industry should produce.

Breaking with capitalism in one country would be a huge step forward but not enough. But an appeal made to workers in other countries to carry out the same would gain a huge response. Socialist nationalisation across the world would allow planning not just on a national but an international scale.

Capitalism can no longer develop the economy and harness advances in science and technique to the benefit of all in society. The bosses and their political servants have no solution to the crisis that is destroying the lives of millions. The situation at Tata steel is but one example of this. It is only on the basis of democratic socialist nationalisation and planning that working class people can find a way out of the crisis and liberate humanity from poverty and inequality.