Thursday 25 January 2024

Why socialists call for nationalising the 'commanding heights' of the economy

Nationalisation, the taking of major industries, utilities and banks and out of the hands of private profiteers and into public ownership, to be run under democratic workers’ control and management, has always been a cornerstone of socialist ideas. 

This article also appeared - with improved editing(!) in the Socialist No.1261

Marx and Engels explained in the Communist Manifesto how, to bring an end to capitalist crisis, private ownership of industry and commerce needed to be replaced by state ownership. In Britain, reflecting the influence of Marxism on the pioneers of the labour movement, the demand for public ownership was widely supported as the way to build a better, socialist, society. 

A 1911 book containing the ILP's "ABC of Socialism"

For example, the Independent Labour Party adopted an “ABC of Socialism” which explained that "The fight against private ownership of land and capital, the fight for Socialism, for the nation's control of its own resources, is the last fight in the age-long struggle of humanity for freedom ... That is Socialism: The nationalization of the land and of the means of producing and distributing wealth; and the organisation of industry as a civic service under public ownership and control for the benefit of all, instead of, as now, under private ownership and control for private profit".

In 1918, the Labour Party adopted the famous ‘Clause 4’ of its constitution. It called for “the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service”. That ‘socialist clause’ remained in place right up until 1995, when Tony Blair finally managed to persuade a Special Conference to ditch any reference to common ownership, as part of his drive to turn ‘New Labour’ into a fully pro-capitalist party.

Whereas the original adoption of Clause 4 had been taken under the influence of the Russian Revolution successfully abolishing capitalism in 1917, its removal came in the wake of the collapse of the nationalised, planned economies of the Soviet Union and other Stalinist states. Their demise dealt a powerful blow to the idea that nationalisation could provide an answer to poverty and exploitation. Instead, a triumphant capitalist class asserted even more vociferously that private ownership and the ‘free market’ was the only way to run an economy. That capitalist ideology took a firm grip of the leadership of former workers’ parties, like Blair, across the globe. 


Many capitalist governments had already embarked on mass privatisation of previously nationalised industries, with Margaret Thatcher leading the way in Britain. But what has been the outcome? Water privatisation has seen bills rocket by 40% above inflation, while firms dump raw sewage in our rivers and lakes, yet pay out billions of pounds in dividends to shareholders. Our fragmented, privatised railways have similarly seen fares soar but services decline. The big energy firms are being subsidised to maintain their profits while millions struggle to heat their homes. Instead of being run to provide a universal service, the postal regulator Ofcom is proposing that privatised Royal Mail might only deliver letters for three days a week in future.

But the main capitalist parties are still wedded to privatisation. Outrageously, it’s now being pushed as the supposed solution to the critical state of the NHS. Labour’s shadow health secretary Wes Streeting is talking about a Starmer Government “holding the door wide open” to the private sector. But workers – and the middle-class too – know from bitter experience that NHS privatisation will, once again, just see the private profiteers put ‘greed before need’. 

So, while Labour politicians may have bought into the idea of privatisation, a clear majority of Britons polled by YouGov in 2022 agreed that public transport, water, energy, social care, and the NHS should all be run in the public sector. That was even the most popular opinion expressed by Conservative voters. 

So, in contrast to the claims of Starmer and his pro-capitalist crew, the manifesto pledges in the Corbyn-led Labour 2019 manifesto for public ownership of rail, mail, water, telecoms and power, and to reverse privatisation in the NHS, were popular demands with most voters. 

Corbyn’s critics warned that the cost of compensating shareholders made renationalisation unviable. The bosses’ CBI put on the frighteners by calculating the cost of buying back rail, mail, water and energy as being almost £200bn! But these fat cats have already made a killing at our expense, why should we pay them a penny more? The Socialist Party says that compensation should only be paid where there is a proven need, for example to safeguard workers’ pension investments or small shareholders. 

But Corbyn’s nationalisation demands were actually still quite timid compared to those raised by the left-wing of the Labour Party, including by Militant, the forerunners of the Socialist Party, under previous Labour Governments. 

1945 and 1974 Labour Governments

In 1945, pushed forward by a working-class demanding real change at the end of World War Two, Labour was elected with a landslide majority, promising to nationalise the ‘commanding heights’ of the economy. As well as launching the NHS and a massive council-house building program, a fifth of British industry was nationalised, including gas, coal, electricity and steel, as well as the Bank of England. 

But, in reality, this was not socialism but the state acting as a prop to capitalism. The wealthy former owners of these nationalised firms were generously paid-off. They were happy to be given the cash to switch to profiteering from the real “commanding heights” that remained in capitalist hands - in the manufacturing and financial sectors, as well as exploiting cheap-labour globally.

The firms brought into state ownership were largely unprofitable essential basic industries that capitalism was happy to see the state take responsibility for. They continued to be run like private companies, without the working-class having any genuine control or management. As the ongoing Post Office Scandal has shown, a nationalised firm that still follows capitalist business methods will operate just like any other cut-throat private company.

But the post-war boom couldn’t remove that stubborn idea from workers’ minds that putting ‘people before profit’ required taking firms out of the hands of the profiteers. In response to the 1974 Labour Government caving into the pressure of big business, the ‘Tribune’ Group of Labour MPs proposed an “Alternative Economic Strategy”. A key element, still echoed by what remains of the Labour Left today, was a plan for selective nationalisation of perhaps 25 manufacturing firms, and to gradually extend state ownership over different sectors of the economy. 

Tribune argued that this core of state-run nationalised firms would act as competitive encouragement to force private capitalists to invest, thereby creating jobs and boosting economic growth. But ‘Militant’ correctly warned that the capitalists would only invest if they knew they could sell their products into profitable markets.  More fundamentally, ‘Militant’ warned that if the capitalists concluded that a left-led government was serious about seizing its profitable assets, they would use their majority control over the rest of the economy, including the banking and finance sectors, to sabotage it and bring it down.  

Chile and France

That sabotage had already been played out in the most brutal way in Chile where the Allende government had sought to compromise with capitalism, including over the speed and extent of nationalisation.  In contrast, the most militant workers occupied factories, especially where employers were sabotaging production, and demanded workers’ control of the whole economy. Allende’s attempts to placate capitalist reaction were answered by the 1973 military coup.

In 1981, the Parti Socialiste in France was elected to power on a left programme promising radical reforms and partial nationalisation. But French and global capitalism went on the attack and within a few months the reforms went into reverse. The Parti Socialiste eventually became so infamous for its austerity policies that its support collapsed to just a few per cent.

Socialists need to learn the lesson that any attempt to gradually nationalise our way to socialism will be blocked by capitalist reaction. Instead, a socialist government would need to bring under public ownership all the major monopolies and banks that dominate the economy. That would be about 150 companies in Britain. That wouldn’t be the only step needed to stop capitalism trying to crush such a transformation, a mass mobilisation of workers in defence of its government would certainly be needed too, but it would strike a serious blow against any attempted economic sabotage.

Neither should nationalised companies just be left in the hands of their previous managers. They must be run under democratic workers’ control and management. That means much more than just having some seats on the board for workers to be consulted over how the company is run. It means that workers should have real control over the day-to-day running of their workplace, over working conditions and hours, over production methods and initiatives. These steps, alone, would lift the dead-hand of top-down management and enable the insight and creativity of workers on the ‘shopfloor’ to both reduce workload and improve productivity.

Such democratic measures should be enacted in any individual firm that is nationalised. For example, in Port Talbot right now, nationalisation of Tata under democratic workers’ control and management is the only way to save jobs, stop the devastation of the local economy, and implement a transition to green steel production. Only nationalisation can ensure that economic and environmental needs are put first. A global capitalist corporation like Tata is only ever going to prioritise what is necessary to maximise its profits.

But democratically-run nationalisation of the 150 or so ‘commanding heights’ of the economy allows so much more than just protecting individual industries. It is the key to implementing full democratic planning of a socialist plan of production for the whole economy. 

A socialist plan of production

A socialist plan would put an end to the anarchy of capitalist economics, dominated by the need to generate short-term profit and, increasingly, by financial gambling rather than investment in useful production. It could put an end to the waste of unemployment, identical competing brands, inbuilt obsolescence, arms spending, and the luxuries of the super-rich. It could harness all the best elements of existing commercial planning for the benefit of society as a whole, instead of being used to work out what adverts to put on your phone or how best to avoid paying tax.

Workers’ control and management in the workplace would be part of a wider system of workers’ democracy, agreeing local, regional, national - and international - plans and priorities. Such a system would allow mass participation in genuine democracy, rather than just the chance to put the occasional cross on a ballot paper.  ‘What transport and energy policies, nationally and globally, should be followed to urgently act on climate change?’ ‘How should housing needs best be met and where?’ ‘How wide a choice of consumer products should be provided? Which ones need to be better quality?’ ‘What investment is needed to switch from unwanted to wanted production?’ All of these questions, and more, could be worked out on the basis of a democratically agreed socialist plan of production, a plan that could then be applied in practice thanks to the nationalisation of the major banks, companies and corporations.

It was the lack of such a democratic input that led to the collapse of the centrally planned economies of the former Soviet Union. These states were run as top-down dictatorships without genuine workers’ democracy. Their privileged leaders erected statues of Lenin to pretend they were “communists” but ignored what Lenin had insisted was required for a socialist state: for elected representatives at every level, subject to democratic recall at any time; for their pay not to exceed the pay of the workers they represent; for workers’ control by all, “so that all may become ‘bureaucrats’ for a time and that therefore nobody may be able to become a ‘bureaucrat’ ”. Those are the ideas that a genuine workers’ democracy would be based on.

The Socialist Party stands for a socialist plan of production that meets everyone’s needs, based on public ownership combined with democratic working-class control and management. Achieving that would at last allow all the hopes and dreams of generations of socialists and working-class fighters to finally become a reality.

As Marx’s co-thinker, Friedrich Engels, wrote in ‘Socialism: Utopian and Scientific’, “With the seizing of the means of production by society … anarchy in social production is replaced by systematic, definite organisation. The struggle for individual existence disappears. Then, for the first time, humanity, in a certain sense, is finally marked off from the rest of the animal kingdom and emerges from mere animal conditions of existence into really human ones”.

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