Sensible Social Ownership.

I am no mad fan of nationalisation for its own sake. There are some things government has proved bad at, like education in England, or the provision of medical care rather than the funding for it.

However, it is time to ask why we don't have some sort of social control of utilities, transport, and energy. It is also time to ask why we have the private sector providing police services, collecting information about the public, and getting hugely rich off of what appear to be rubbish contracts to manage the affairs of the people electronically. Even Her Majesty's Revenue and Customs is now legally lowering its own liabilities by outsourcing to a companies like Mapperley, Cap Gemini and Capita.

The standard justification in England is that the way the UK outsources some of the core businesses of government to the 'private finance initiative' meets several requirements. It is meant to lower public borrowing, and therefore interest rates. It is meant to make companies more efficient. It is meant to expose the provision of services to private competition. It is meant to save the people money.

Except it does not. The interest on the national debt is now as great as spending on the army. Public sector borrowing is climbing very near to the forty-per cent of GDP mark. Vast swathes of private industry depend upon the government underwriting their loans and also, in the case of train companies, on subsidies.

If a measure of price change were used that shows how much the average family spends on bills for essential services as well as on taxes, we now spend out more of our incomes than in 1979. Here's a file of the RPI on pdf format that you can look at yourself.

If you happen to be a commuter, do you really think that you are getting the best service?

'Europe would never allow renationalisation' is another call we sometimes hear from the anti-social ownership crowd. Apparently, if we interest the commission in national affairs, they will end up breaking up the NHS and banning government control of private firms.

What nonsense. It is fundamental to European law that companies that exercise powers that others might not--like gas companies, water companies or energy companies that can come into your home or compel you to pay their charges--are implicitly state bodies. They are also natural monopolies. The thing to do is to have them controlled by elected or representative commissions, like the BBC is. They would not, in that context, be against European law at all.

Even some economists who favour the market see the sense of regulating natural monopolies in a way that sets price and incentives. To my mind, however, this is unnecessarily complex. Why have the pretence of a market when you are organising something for a bigger purpose? Commission-based control works for US baseball, why not British trains?

We should also revisit the issue of cooperatives and worker-owned businesses. They work in some places, not others. Like the UK's last coalpit (at the time of writing). Or, for a while, the John Lewis stores and Lucas aerospace in England. John lewis, which is a department store chain owned by its staff, beat the Financial Times 100 companies in terms of performance last year.

This month, the Spanish completed yet another link in their massive, high-speed, forward looking rail network which uses a state company backed by government money openly to co-ordinate others on tight contracts. The Germans pursued rich tax dodgers, with intelligence agencies--the way JFK pursued cartel-operating steel bosses in the sixties. In a typical American variation on industrial policy, the American army continued the development of airships, which are vital to a low-supply high-price oil future.

Britain? We moaned a bit, bought some secrets off the Germans and grudgingly, if sensibly, nationalised the unproductive 70% of a failed bank because Barclays would like us to and Barclays provides billions in PFI funding. Not, of course, that I am implying any undue influence, duress or any sort of backstairs shenanigan went on at all.

Oh, and we took over the debts of metronet, which was a company that was set over the London tube network. It promptly set up all number of other small companies it owned, overcharged itself so that the government had to subsidise it, and duly collapsed.

We should all get off our knees, identify what civil servants or elected commissioners could control better than management consultants and pension fund shareholders, and work with trade unions to make it a reality.

The world economy is changing and getting colder and colder by the day. The credit with which Britain has sustained its Alice in wonderland national finances (and to be fair, I have enjoyed on my credit cards) is coming to an end. This country should put itself into a position where it pays off debt, cuts down loans and subsidies to the private sector, and controls even if it doesn't own those things that are the people's business.

That makes sense. Have a look at the campaign for public ownership, and then, well, come on in--the water's fine!


Graham said…
I agree with your broad premise on this issue. Thatcher set the scene for the private sector to grow fat on privatisation of our assets and Labour has followed suit. It is a gravy train, and no-one seems to give a damn!
On your point about cooperatives, to my mind this route was what the old clause 4 was all about, but most people seemed to think it was about state ownership, rather than mutual ownership.
On a point of fact, I believe that Tower Colliery was the last deep mine in the UK, and it has only recently closed due to the seam being exhausted, following years of successful operation as a worker co-operative. I'm a strong advocate of the co-operative business model, and as such I'd be keen to learn of your exmaples where cooperatives have not succeeded (let's not get into the top-down Benn co-operatives, which never had a chance and were not real co-operatives at all).
Martin Meenagh said…
Hi Graham, thanks for reading. I meant the line to cover those circumstances where cooperatives have not worked, though broadly I think that failure depends either upon bad faith or the need for a large amount of capital. So, for instance, in the Phillippines, India or, spectacularly, Albania and Haiti a few years ago, fraud brought down co-ops. They are open to pyramid-scheme type financing. I wonder, Lucas Aerospace apart, how well they would work in industries that required a combination of sales generation and long lead-times for research. I also suspect they wouldn't be that great a model for schools, though I may be wrong in that.

Equally, though credit unions are underused in this country, such cooperative forms (along with the old building societies) used to be a valuable stabilizing force in this country and its a shame they are gone.
It's a shame about the UK coal industry. I'm half-convinced of the peak oil theory, and in any event think that demand for energy supplies is soon going to escalate beyond any reserves for hydrocarbon, so a country with 85% of coal reserves intact is going to have to reopen the mines. What a lot of human devastation and waste was involved in Thatcher proving her point with them though. It won't be easy to relearn all the skills or find the men who can go down underground and know what they are doing so easily again.

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