BARRING major upsets, it is probable that there will be a Labour government within the year. Though there will be general relief at the ending of 18 years of Tory rule, many people on the left hold no great hopes that the New Labour government will tackle the problems of poverty, unemployment and insecurity. New Labour has given early warning, even before coming to office, that it intends to make no major changes to the existing economic system, no major interference with the free market, no increase in state direction of the economy, no inroads on the power of big business and the multinationals, no curbs on the City speculators, and no increase in public spending. So how are the problems of poverty, unemployment, insecurity and the collapse of the welfare state and infrastructure to be tackled?
Within a few years, Blair’s New Labour government will have exhausted any credit it will have enjoyed, as the problems it promised to tackle will remain unresolved. Massive disillusionment will set in. In the absence of any credible socialist alternative, the danger is that this disillusionment will lead to apathy or a new lease of life for Toryism, or the strengthening of reactionary, racist and fascist movements. By the same token, the obvious bankruptcy of free market capitalism, whether administered by Tories or New Labour, will present an opportunity for the reversal of the long retreat of the socialist left, and for a renewal of support for socialist solutions to society’s problems. But this will only happen if socialists are able to develop and present a feasible and realisable alternative.
It will not be enough for the left to bemoan Blair’s abandonment of any socialist or even specifically meaningful policies; not enough to speak in general terms of the need for radical and socialist policies. The left, both within the Labour Party and outside, must elaborate a feasible alternative programme in specific terms. It must spell out concretely what should be done by a socialist government, not in the distant future, but in the actual present. To quote Alec Nove, it must define a "feasible socialism" conceivable in the lifetime of a child already conceived. And having done so, it must campaign within the trade union and labour movement for such a programme.
The first step, however, is to seek to regroup the scattered forces of the left around such a programme. Disagreement as to whether to remain in the Labour Party or work outside it need not be an obstacle. If agreement on policy and a programme of demands can be achieved, those who wish to campaign for it within the Labour Party should be free to do so, while they and others in the Socialist Labour Party or other organisations could still work together in the trade unions and other milieus for these agreed policies and demands.
A Feasible Alternative to Existing Capitalism
It would be utopian to imagine that a fully developed socialist society could be established overnight. The best we can hope for is to begin the transition to such a society starting from where we are now. Given the globalisation of the economy, it is also evident that such a transition cannot be successful on a narrow national base, but requires to be carried out on at least a European scale. Therefore the programme outlined below must be campaigned for and applied within at least the European community, and as much as possible beyond Europe.
It now seems to be generally acknowledged, except by die-hard Stalinists, that the top-down, bureaucratically run command economies of the Soviet Union and its satellites were neither socialist nor viable, and that top-down bureaucratic nationalisation, as introduced by the postwar Labour government in Britain, is not the final answer either. State ownership in and of itself is not socialism, especially in the absence of political pluralism and democracy.
A general consensus seems to be emerging that while some strategic industries and services may well be best administered centrally, the whole of the economy need not be state-owned. Cooperatively-owned, democratically self-managed autonomous enterprises liaising with each other through market mechanisms, and with local communities and interest groups having an input, might be a better form of "social ownership". (See, for example Pat Devine’s Democracy and Economic Planning, the Common Ownership After Clause Four conference held in Manchester in September 1995, discussions in the Red-Green network, and Alec Nove’s The Economics of Feasible Socialism.)
Overall planning at the macro level to ensure environmentally friendly and sustainable growth would be conducted through a democratically-agreed national and/or regional plan financed through a publicly-owned banking network.
Outlined below are proposals for such a programme around which I believe the left could unite. It is not intended as a final word; it is put forward as a basis for discussion. Amendments and criticisms are welcome. It comprises three main strands: the democratisation of economic life at the grassroots, overall planning and co-ordination, and the democratisation of the state.
Democratising the Economy
A number of different forms of ownership and control are appropriate.
Firstly, some industries and services, because of their very nature and/or monopoly position, operate best as centrally-administered large interrelated units, for example, the railways, energy generation (gas and electricity) and the oil industry. They should be taken back into public ownership. However, unlike previous nationalisations, there should be provision for worker/employee representation and participation in management decisions, and also a meaningful participation by the users (gas and electricity consumers, passengers) in decision-making. The exact method of representation of employees, users and other interested groups (for example, localities in which the enterprises are located) would need to be worked out in detail, as well as procedures for reconciling or mediating conflicts of interest.
Secondly, firms not suitable for state-owned centralised administration and employing (say) over 50 people could operate as cooperatively-owned autonomous self-managed enterprises engaging with each other and consumers through market mechanisms. The boards of these self-managed enterprises would be composed of elected representatives of the stakeholders, that is to say, the workforce and, where appropriate, other groups affected by their operations (for example, local communities and residents whose environment might be affected by the operations of the enterprise). This might be done by allocating seats on the management board to local residents’ associations, local authorities and community groups. The management boards, thus constituted, would appoint and employ professional managers, technicians, accountants, etc. These enterprises would aim to be commercially viable and self-financing. The allocation of profits to further expansion or distribution among the stakeholders (the workforce, local communities, etc) would be decided by the management boards, subject to discussion and ratification by the stakeholders.
We should say to Tony Blair and other politicians who talk airily about a "stakeholding society": "Fine, let’s turn these soundbites into reality. If you are serious about stakeholding, give real power to the stakeholders – the workers and local communities. This is how we propose to do it. What do you propose?"
What should happen to the existing owners? We need to distinguish between private owners and shareholders, that is to say, capitalists on the one hand, and institutional shareholders such as pension funds which represent the savings and contributions of ordinary working people on the other. As far as the capitalists and fat cats, whose wealth results from the past and present exploitation of workers, share options and the like, are concerned, it could be argued that outright confiscation might be natural justice. However, in an attempt to minimise opposition (and opposition from the rich and powerful is inevitable) and in return for acceptance of these measures and cooperation in the change-over to a democratic stakeholding economy, a Labour or socialist government could offer compensation in the form of changing existing ordinary shares into bonds or debentures paying a fixed rate of interest payable out of profits.1
Nevertheless, in order to placate small and medium shareholders and isolate the really rich, this form of compensation would be justified. A really serious socialist government would say to big business: "The choice is yours. Either you accept the will of the majority and get some compensation, or you oppose and sabotage it – and get nothing!"
Obviously, the detailed elaboration of a legislative programme will need to be worked out with political organisations and trade unions calling on the specialised expertise of economists and lawyers. But that itself is by no means sufficient. A top-down imposition of such democratisation of industry would not work unless the mass of the working class itself was imbued with a consciousness of its necessity, prepared to struggle for it, and prepared to participate in its functioning. This is why a campaign at grassroots level, within the unions and on the shopfloor, among office workers and supermarket employees, etc, is necessary.
In the 1960s and 1970s the Institute for Workers’ Control coordinated the activities of trade unionists and shop stewards in pushing the idea of workers’ control. A revival in some form of such a campaigning body should be considered. It could be called A Campaign for Social Ownership and Real Stakeholding. It could also provide a framework in which socialists and greens within the Labour Party, the Socialist Labour Party, the trade unions, the green movement and other organisations could work together. A start was made in September 1995 at the Common Ownership after Clause Four conference, which was co-sponsored by a number of organisations, and also attracted some Red-Green Network activists. This should be built on, and, if possible, liaison established with similar movements in Europe and elsewhere.
Thirdly, pension funds and insurance companies must be democratised. A large proportion of shares are owned by institutions such as pension funds and insurance companies, and represent the savings and contributions of millions of working people. These could well remain in the hands of these funds and companies, but they need to be democratised. Detailed proposals for democratic representation of pension contributors, existing pensioners and the insured, and how to fit them into the new economic structures, need to be worked out with the help of experts in these fields.
Again, action and legislation at government level need to be supplemented by campaigning by pensioners’ organisations, trade unions and local communities.
Finally, privately-owned firms employing less than 50 people would continue, but would be obliged to recognise trade unions, measures against unfair dismissal, etc. Self-employed builders, craftsmen, shop keepers, etc, would also continue to operate.
One of the problems that will have to be addressed is how the activities of a multitude of autonomous enterprises producing for a market can be reconciled with rational economic planning.
The abolition of capitalist ownership and control and its replacement by social ownership is itself a great step forward. But it will not resolve the anarchy and planlessness associated with market forces. For example, if we have several autonomous enterprises producing the same commodities, that is, competing with each other in the market, just as under capitalism, some will be more successful, others will go to the wall, and we will end up with new monopolies (although these will be cooperatively owned), while the workforces of the failed ones will become unemployed. Some sort of overall regulation of the different sectors of industry would need to be enforced to prevent this, and to regulate the optimum number and sizes of the different enterprises.
What happens if due to technological progress leading to increased productivity, there is overproduction of a particular product? Do the members of the cooperatives decide to halve the workforce, that is, sack half of themselves? Or amalgamate with similar enterprises, and dispense with half of their combined workforce? Or what? Obviously, the rational solution is for all workers to benefit from increased productivity by a general reduction in working time, thus giving all increased leisure time without a drop in material consumption.
Obviously, some sort of co-ordination and regulation within each branch of industry or economic sector to set the overall size of the sector and the optimum number and sizes of enterprises will be necessary. Devine suggests in his Democracy and Economic Planning that "negotiated co-ordination bodies" for each industry or sector, made up of representatives of each enterprise (plus other interested groups) could carry out these functions. Within the set parameters, enterprises would still be autonomous, relating to each other and the public via market mechanisms. This would be very different from the detailed central control of all such activities that operated in the Stalinist command economies, and which spawned a huge and corrupt as well as inefficient bureaucracy.
Similarly, at the level of the economy as a whole, the relations between the different industries and sectors, between capital goods and consumer goods, and between these and social services, health, education, etc, would be determined by the allocation of major investment and finance through an integrated state budget at national, regional and local levels.
A Publicly Controlled Banking and Investment Network
This co-ordination can be achieved through the overall control of major investment at regional, national and international levels. It would be the duty of the elected state institutions to work out the social priorities according to which society’s resources would be deployed: how much in gross terms of society’s production should be earmarked for personal consumption, new investment, health services, pensions, public transport, education and so on. The overall costs having been estimated, the state budget then allocates the required finance. For example, if it is decided that new hospitals or schools are needed, the necessary finances are allocated for this. The contracts for building the hospitals and schools, providing the equipment, etc, are tendered for by autonomous enterprises. These would then liaise with their suppliers via market mechanisms.
Thus the state, rather than profit-driven private finance, would determine the overall allocation of resources and new investment on the basis of social needs – and this includes determining the overall level of economic activity to ensure full employment.
Control over the allocation of investment capital between economic sectors and regions must be taken out of the hands of private capital, and vested in democratic society. This is essential if unplanned and chaotic economic activity with its booms and slumps, social inequalities and destruction of the environment is to be replaced by activity driven by social priorities.
The obvious way to do this is by taking the banks and major financial institutions into public ownership, establishing an investment bank or network of banks at national and regional levels to provide the necessary finance for the public services referred to above, and credit and finance for the autonomous enterprises.
Again, here we need to be realistic and not utopian. The transformation of the existing financial institutions, with their myriad connections with the global market into a publicly-owned and accountable system will be a complex task. It will not be accomplished simply by socialist commissars marching into boardrooms and "taking over", and installing a committee of bank employees. A serious socialist movement will need to enlist the assistance of academics, economists and other experts in working out a feasible programme of transformation.2 That is why, even now, a serious socialist movement must try and establish a dialogue between workers and sympathetic academics.
Under capitalism productivity increases lead to unemployment as competing firms "downsize" in order to increase dividends and undercut competitors. In the proposed set-up, increased productivity should result either in increased leisure for all, or increased production of other needed goods and services, or assistance to poorer developing countries – or a combination of these. This would be possible because the overall level of production and how it would be distributed among various sectors would be determined by overall planning at the macro level through the allocation of finance by the publicly-owned or controlled banking system.
In contrast to the discredited rigid command economies of the now defunct Stalinist regimes, the detailed interrelations between autonomous enterprises would be regulated by market mechanisms – but within the general framework set by the overall plan.
Public Ownership or Merely Control?
Economic policy in Britain during the Second World War provides an example of how it is possible to combine effective planning of the economy with market mechanisms. Physical controls on the use of resources (steel and raw materials) were imposed so that firms could only secure these commodities if their use was essential to the war effort. More significant was the establishment of state control over capital investment. Thus a firm was only able to secure finance from the banks for expansion of its productive capacity by applying to the Capital Issues Commission, which only granted authorisation if this was considered essential to the war effort, or necessary for the meeting of civilian needs within the overall parameters set by the War Cabinet. Similarly, the building of a new factory or the closure of an existing one had to be authorised, and was sanctioned only if it fitted in with the needs of wartime production. Despite the destruction by bombing, the U-boat blockade, and the strains of war, the system worked – even though the banks and industry remained in private ownership.
This prompts the question as to whether the complete taking of the banks and financial institutions into public ownership is necessary, or merely the sort of public control of capital investment and resources that existed in wartime. However, the vital difference between the situation that existed during the Second World War and the future situation envisaged is that during the war the controls were exercised by a capitalist government (albeit with Labour participation) pursuing a war in defence of British capitalism, and that therefore the capitalists accepted these controls. It is unlikely – to say the least! – that such acquiescence would be forthcoming in the event of a socialist government imposing such controls. Much more likely are attempts at sabotage, destabilisation and military conspiracies. Nevertheless, acting from a position of strength, a future socialist government could buy off, minimise or split the opposition by telling the capitalists: "Either you accept the will of the majority, cooperate and retain some profits – or face expropriation."
Beyond National Boundaries – The European Dimension
The globalisation of the economy and the international division of labour make it impossible to resolve problems on a purely national basis. This is why the policies outlined here must be fought for and implemented on an international scale. It would be utopian to expect that socialist governments could come to power simultaneously all over the world. However, the progress towards an integrated European Union with a common currency and central bank, and eventually an integrated state comprising most of Europe, does make feasible and conceivable the implementation of a socialist programme on a European Community scale.
That is why we must be pro-European and in favour of a common currency. However, this does not mean accepting the Maastricht convergence criteria which are deflationary, and which would lead to further erosion of jobs and welfare. In this context we must support the campaign by European MPs such as Ken Coates and other British and European MPs for rejection of these criteria, and for using new financial instruments for borrowing and investment such as the European Investment Fund, and the establishment of a European Public Sector Borrowing Requirement to create the 15 million jobs target of the Delors White Paper on growth.
Side by side with this, a coordinated campaign by the European trade unions for a continent-wide reduction in average working time must also be part of the campaign against unemployment – as well as an all-European trade union and shop steward campaign for social ownership. To this end the perspective must be the development of an integrated movement on a Europe-wide scale to campaign for these policies.
The Environment – A Red-Green Alliance
Marxists have traditionally condemned capitalism because it acts as a fetter on the development of the productive forces. It was thought a ceiling above which they could not rise had been reached by the 1930s or even earlier. Since the Second World War, there has been a dramatic increase, and despite recessions there is no sign that a ceiling has been reached. Instead, it has become apparent that the untrammelled development of capitalist industrialisation threatens an environmental disaster. This and the exhaustion of non-renewable natural resources may impose limits and constraints on acceptable industrial growth. It is this realisation which has prompted the world-wide development of Green movements. It is becoming increasingly apparent that it is the unplanned and chaotic nature of profit-driven capitalism that stands in the way of a rational use of resources, and sustainable and environmentally-friendly economic development.
The proposals outlined here for overall economic planning through public control of all major investment and for community participation in local enterprises should therefore appeal to the Greens.
An example of how such policies could link with the concerns of Greens and environmental campaigners is the problem caused by the proliferation of private car ownership. This causes atmospheric pollution, destruction of the environment due to new road building (the Newbury by-pass conflict), traffic jams, etc. The obvious solution is the development of an integrated bus and rail public transport system, and the reduction of the number of cars on the roads. At present this comes up against two obstacles. The profitability of public transport is obviously not sufficient to attract private capital. And right wing governments intent on curbing public expenditure will not finance or subsidise public transport. The other obstacle is the vested interests of the car industry. Reducing the number of private cars threatens a loss of profits for motor manufacturing firms, and a loss of jobs for car workers.
Both these obstacles disappear if all major capital investment is socially controlled through a publicly-owned or controlled banking system which directs investment according to a democratically worked out integrated transport policy. Once the desired mix of rail, bus and private car transport and the appropriate road and rail network to go with them has been worked out, the necessary capital investment and finance is provided through a national or European investment fund.
If this integrated transport policy also involves the loss of jobs in the motor car industry, the plans would include the creation of alternative jobs or a general reduction in working time, or a combination of both, with the necessary finance for alternative employment being provided through the public banking and investment institutions.
Another example of how public control over the allocation of capital could help solve environmental problems would be the allocation of finance for research into and development of alternative sources of energy, for example, wind and wave power to replace fossil fuels. At present this does not attract private finance.
The Democratisation of the State
The "state" has been mentioned several times in the sections dealing with overall economic planning. What sort of state is envisaged?
Marxists have argued that the state is the executive of the ruling class. From this premise the conclusion is drawn that socialism cannot be achieved using the existing state machine; that this state machine will have to be replaced by a "workers’ state".
Certainly the existing state machine has inbuilt obstacles to the achievement of socialism – for example the fact that parliament has no real control over the cabinet, which can declare war, introduce a state of siege, etc, without parliamentary approval, the House of Lords, the royal prerogative, etc, etc. A radical restructuring of the state machine to widen democratic control and initiative from below is obviously necessary. But this does not mean that socialists cannot or must not use existing institutions. So long as parliament is still relatively freely elected, and so long as alternative structures have not arisen naturally, as a result of social movements, it is ludicrous for socialists to talk of "destruction of the state machine" and its replacement by non-existent "soviets".
When the Tory Heath government was forced to resign by the miners’ strike in the 1970s, even the most militant miners accepted as natural that the government to replace it should be decided by a general election. As long as parliamentary democracy exists and is accepted by the mass of the working class and middle class, socialists must have the perspective of winning a socialist majority in parliament. True, we must be aware of the possibility, even probability, that reactionary forces would attempt to subvert an elected socialist government by military coup d’états, etc (as in Chile), and that in any case a socialist majority would have to undertake a radical transformation of the state machine – democratisation of the armed forces and police, stricter control of these forces, etc. It is quite possible that the scenario might be a re-run of the English Civil War of the seventeenth century with Parliament versus the modern Royalists in the course of which a New Model Army and new popular institutions would develop. But this does not justify rejecting the "parliamentary road" in advance, or calling for non-existent soviets as if the Russian revolutionary road of October 1917 had universal application.
Instead, a realistic and feasible set of measures to transform the existing state structures in Britain and Europe, including the structures of the European Community, must be worked out side by side with the economic policies and demands outlined here.
These new structures should encompass political plurality and open government, and enable input from grassroots level in decision making, with maximum decentralisation and devolution of power downwards consistent with overall planning. More detailed proposals need to be worked out.
This document does not deal (except insofar as they are subsumed in the economic proposals) with other aspects of policy – on education, health services, pensions, armaments, foreign policy, aid to underdeveloped countries, etc. All these should be the subject of other documents and discussion.
Some Thoughts on Compromise
Discussing the transfer of enterprises to social ownership, the possibility of compensation for existing shareholders was considered. The possibility of control of the banking system as an alternative to outright nationalisation has also been considered. Reference has also been made to the fact that something similar to the wartime control of material allocations and capital investment, might work even if private ownership of large parts of industry and banking were retained. All these would represent a compromise with capitalism. I can imagine such talk might arouse the concern of some comrades. Let us be clear. Of course we would prefer not to have to make these compromises. But in some circumstances compromises may be necessary in order to weaken or neutralise the opposition of big business and its supporters, to win wavering elements to our side. If the opposing forces are evenly balanced, and a drive for outright defeat of the reactionary anti-socialist forces is too costly in human and material terms, then we should be prepared to say to the owners: "Look, if we can reach agreement, we are prepared to offer or increase compensation if you agree to social ownership; we are even prepared to leave you in ownership if you will agree to accept our directives on how the resources are to be used, and our priorities and directives on how and where your capital is to be invested. If you cooperate, well and good. If you don’t and you sabotage our measures, then we shall be forced to take over completely."
This, in fact, was the attitude first adopted by the Bolsheviks. A very clear exposition of the Bolsheviks’ thinking was given by Trotsky in an interview with the American correspondent E.A. Ross:
"Is it the intention of your party to dispossess the owners of industrial plant in Russia?"
"No", he replied, "we are not ready yet to take over all industry.... For the present, we expect out of the earnings of a factory to pay the owner five or six per cent yearly on his actual investment. What we aim at now is control rather than ownership."
"What do you mean by ‘control’?"
"I mean that we will see to it that the factory is run not from the point of view of private profit, but from the point of view of the social welfare democratically conceived. For example we will not allow the capitalist to shut up his factory ... because it is not yielding him a profit. If it is turning out economically a needed product, it must be kept running. If the capitalist abandons it, he will lose it altogether, for a board of directors chosen by the workmen will be put in charge.... By sticking to this principle you can keep up the existing industrial outfit. But in some branches – say the making of motorcycles or tractors – new factories are called for.... Where will the money come from that will build these new factories? We can impose on the capitalist to whom we allow a dividend of five or six per cent on his capital the obligation to reinvest in some industry – a part, say, 25 per cent – of what he receives."3
As we know, this attempt at neutralising the opposition of some capitalists and winning the cooperation of others was abandoned when the compromise was rejected and civil war unleashed. But there is no reason in principle why such compromises should not be offered in future.
Let us suppose that a socialist party has come to power (in Britain or any other advanced capitalist country, or even in several within the European Union) on a programme similar to the one outlined here. It has an electoral majority and the support of a mass movement encompassing a majority of the politically active working class and a fair section of the professionals and academics. It is meeting with opposition from the right, which may, if pushed, escalate into outright sabotage and military conspiracies backed by foreign powers. The cost, both material and human, of meeting and defeating this head-on would be high, and the outcome uncertain. In such a situation, a socialist government might justifiably attempt to implement the compromises mentioned above in order to defuse some opposition, win over waverers, and isolate the hard core reactionaries. This would be from a position of strength, backed by an active popular movement, and combined with measures to dismantle the undemocratic and reactionary features of the state apparatus (for example the House of Lords and the royal prerogative), and replace them with popular-based institutions. From such a position of strength the reactionary forces and big business would be given the choice: "Either you accept the democratic will and cooperate with the measures enacted, or else we shall be forced – with popular backing – to expropriate you completely. We prefer the easier way as this will obviate human suffering; the choice is up to you."
Such compromises, backed by mass support, would be very different to the retreats and "compromises" offered by Tony Blair before the fight has even begun; compromises and retreats on which no forward-going movement can be based, and which, in fact, discourage any popular mobilisation for anything at all.
To Sum Up
What has been proposed are a publicly-owned or controlled banking system and public control of all major investment funds, and some state-owned centrally-administered utilities and industries, with the rest of the economy to consist of cooperatively-owned autonomous enterprises (with community as well as worker participation), small privately-owned firms, and the self-employed. Overall planning will operate at the macro level ensured by the public control of major investments, and within this overall framework market relations between enterprises and between producers and consumers. There will be the democratisation of the existing state structures.
Obviously, not all problems and conflicts of interest would be eliminated. But concentrations of private wealth and power would have been eliminated, and all would participate in decision-making through a combination of local democracy within each enterprise and each industry, and overall democracy at local, regional, national and eventually international level. Devine calls this "negotiated co-ordination". One would not claim the programme outlined here will establish a fully socialist society rather than one in transition (this raises the question of exactly what is meant by "socialism"), but at least it would be a better society than the present one. More importantly, it can present a feasible alternative as a platform around which the left and Greens can regroup.
1. One of the arguments of the New Labour leadership against committing themselves to renationalisation of the privatised utilities and railways is the cost of buying out the existing shareholders. This is a false argument since the exchange of the existing shares for interest-paying bonds does not involve any actual transfer of money. This, in fact, is what happened when the 1945 Labour government nationalised the railway companies. Shares in the railway companies were simply exchanged for transport stock paying a fixed interest. Left wingers at the time complained that this was too generous, since the private railway companies had not paid out any dividends since the First World War, and the interest payments were an intolerable extra burden on the nationalised railways.
2. The prospect of professional economists – whose job is to justify and help run the present system – assisting in its socialist transformation may, at the moment, seem ludicrous. But in a situation in which the existing system is obviously unable to function, and a feasible alternative has been embraced by millions who have brought a radical and socialist government to power, then a fair number of these "bourgeois experts" would be won over, and would be prepared to cooperate with the new regime. Was it not Marx who said that under some circumstances sections of the propertied classes "would rally to the proletariat", on condition, of course, that the proletariat was serious in its intentions.
3. "A Talk with Trotsky", The Independent (USA), 9 March 1918; reprinted in A. Richardson (ed), In Defence of the Russian Revolution, London, 1995, pp.185-7.
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