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British Labor Party Conference: Models of public ownership
« on: February 11, 2018, 06:02:31 AM »
British Labor Party Conference: Models of public ownership

by Michael Roberts
I have just attended a special conference called by the British Labour Party to discuss models of public ownership.  The aim of the conference was to develop ideas on how a Labour  government can build the public sector if it came into office at the  next general election.

The centrepiece of the conference was a report commissioned by the Labour leadership and published last autumn called Alternative Models of Ownership (with the word ?public? strangely omitted).

Labour?s finance spokesman, John McDonnell (and ?self-confessed?  Marxist) presented the key ideas in the report which had been compiled  by a range of academic experts, including Andrew Cumbers of Glasgow University, who has written extensively on the issue of public ownership.  And Cat Hobbs of Weownit gave a compelling account of  the failures and waste of past privatisations.

In many ways, McDonnell?s speech was inspiring in that the next  Labour government under Jeremy Corbyn and McDonnell  is genuinely  dedicated to restoring properly-funded and resourced public services and  reversing past privatisations of key economic sectors made by previous  Conservative and Labour governments in the neoliberal period of the 30  years before the Great Recession.

McDonnell and the report emphasised a range of models for future  publicly owned assets and services: from cooperatives, municipal  services and the nationalisation of key sectors like health, education  and utilities like water, energy and transport ? the so-called ?natural  monopolies?.

As the report makes abundantly clear, the privatisations of the last  30 years have clearly failed even in their own professed objectives:  more efficiency and higher productivity, more competition and greater  equality.  It has been the complete opposite.  UK productivity growth  has slumped, and, as many studies have shown (see my recent post), privatised industries have not been more efficient at all.

They have merely been entities designed to make a quick profit for  shareholders at the expense of investment, customer services and  workers? conditions (pensions, wages and workload).  Indeed, the theme  of privatised water, energy, rail and post in the UK has been ?short-termism? ie boost share prices, pay executives big bonuses and pay out huge  dividends instead of investing for the long-term in a social plan for  all.

State-owned industry is actually a successful economic model even in  predominantly capitalist economies.  The Labour report cites the fact  that the share of state enterprises in the top 500 international  companies has risen from 9% in 2005 to 23% in 2015 (although this is  mainly the result of the rise of Chinese state companies).  The history  of East Asian economies? success was partly the result of state-directed  and owned sectors that modernised, invested and protected against US  multinationals (although it was also the availability of cheap labour,  suppressed workers?rights and the adoption of foreign technology).

As many authors, such as Mariana Mazzacuto have shown, state funding and research has been vital to development of  major capitalist firms.  State owned industry and economic growth often  go together ? and Labour?s report cites ?the seldom-discussed  European success story is Austria, which achieved the second highest  level of economic growth (after Japan) between 1945 and 1987 with the  highest state-owned share of the economy in the OECD.? (Hu Chang).

The report also makes it clear that there should be no return to old  models of nationalisation that were adopted after second world war.   They were state industries designed mainly to modernise the economy and  provide basic industries to subsidise the capitalist sector.  There was  no democracy and no input from workers or even government in the state  enterprises and certainly no integration into any wider plan for  investment or social need.  This was so-called ?Morrisonian model? named  after right-wing Labour leader Herbert Morrison, who oversaw the  post-war UK nationalisations.

The report cites alternative examples of democratically accountable  state enterprise systems. There is the Norwegian Statoil model where  one-third of the board is elected by employees; or even more to the  point, the immediate French electricity and gas sector where the boards  of the state companies were ?made up of four appointees from the  state, four from technical and expert groups (including two to represent  the consumer interest and four trade union representatives.? (B Bliss).

All this was very positive news and it was clear that the audience of  Labour Party activists was enthused and ready to implement an ?irreversible change towards worker-run public services.?   (McDonnell).  The aim of the Labour leaders is to reverse previous  privatisations, end the iniquities of so-called private-public  partnership funding; reverse the out-sourcing of public services to  private contractors and take the market out of the National Health  Service etc.  That is excellent, as is their willingness to consider,  not just the faulty idea of a Universal Basic Income (UBI) as a social alternative to job losses from future automation, but also the much more progressive idea of Universal  Basic Services, where public services like health, social care,  education, transport and communications are provided free at the point  of use ? what we economists called ?public goods?.

However, the issues for me remain the ones that I first raised in considering ?Corbynomics? back when Jeremy Corbyn first won the leadership of the Labour Party in  2015.  If public ownership is confined to just the so-called natural  monopolies or utilities and is not extended to the banks and financial  sector and to key strategic industries (the ?commanding heights? of the  economy), capitalism will continue to predominate in investment and  employment and the law of value and markets will still rule.  Labour?s  plan for a state investment bank and state-induced or run investment  spending would add about 1-2% to total investment to GDP in the UK.  But the capitalist sector invests nearer 12-15% and would remain  dominant through its banks, pharma, aerospace, tech and business service  conglomerates.

There was no talk of taking over these sectors at the conference.   That was not even talk of taking over the big five banks ? something I  have raised before in this blog and helped to write a study, on behalf of the Fire Brigades Union (and which is formally British Trade Union Congress policy).  Without  control of finance and the strategic sectors of the British economy, a  Labour government will either be frustrated in its attempts to improve  the lot of ?the many not the few? (Labour?s slogan), or worse,  face the impact of another global recession without any protection from  the vicissitudes of the market and the law of value.
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