The wrong battles

Progressive politics should be looking to the future, not trying to nationalise the private sector

The Labour party has been having a row about the role of the state, markets, and the profit motive since Queen Victoria was on the throne. Early radicals and socialists had an instinctive distrust of a strong state, which they associated with repression and restrictive legislation – from laws banning ‘sedition’ to the Taff Vale judgement designed to strangle trade unions. Later, some socialists fell in love with the state, seeing the Soviet Union as a ‘new civilisation’. Labourism has always trod a difficult path between liberalism, social democracy, cooperation, municipalism, syndicalism and myriad other ‘isms’.

There have always been those who talk a good game on state control and ending the market. It has always been a way of signalling virtue on the left to claim to want to nationalise everything, from the railways to the local sweet shop. Harold Wilson was scornful of those who wanted to make Marks & Spencer ‘as efficient as the Co-op’. In 1960 Aneurin Bevan denounced ‘those who appear to threaten the whole of private property but who in practice would threaten nothing; they are purists and therefore barren’.

There were plenty of purists in Warwick the other weekend, when Young Labour conference voted to nationalise everything, including Greggs, the bakery chain. Leaving aside the economics of putting civil servants in charge of distributing millions of steak bakes to the nation every day, there is a question about how and why this policy came about. Anyone with any knowledge of youth sections in the Labour party knows they are often used as outriders by the dominant faction. Today, that happens to be the neo-Bennites, with their shopping list of companies to seize, withdrawal from Nato, destruction of Israel, and the rest. So it is a reasonable assumption this is what Jeremy Corbyn’s supporters want to do if they form a majority government.

Is there a progressive case for markets? If there is, now is a good time to make it, as the Labour party sleepwalks into support for Soviet-style state control, when the food on your supermarket shelves would start to dwindle because some civil servant in the ministry of food forgot to send an email.

Markets, properly regulated to avoid unfair excess, remain the most efficient way to distribute most goods and services. Labour has always believed this, even before the party’s constitution called for ‘a dynamic economic, serving the public interest, in which the enterprise of the market and the rigour of competition are joined with the forces of partnership and cooperation to produce the wealth the nation needs.’ All public services in the United Kingdom rely on private sector suppliers, from the railways to building council houses. The National Health Service buys its equipment and drugs from the private sector and we do not have state-run factories making ambulances or aspirins.

The profit motive for private goods delivers incentives to innovate new services and products. The absence of the profit motive delivers sclerotic services, moribund products, and stultified and corrupt bureaucracy. Alec Nove’s classic The Economics of Feasible Socialism analysed the failure of the Soviet Union, its centrally-planned economy, and argued that social justice requires a market economy. It was not the Soviet Union which invented all the devices you love, it was Apple and Microsoft. It is not the council which delivers your Friday night takeaway or cuts your hair. It is the private sector, where, by the way, 26 million people go to work, compared to five million in the public sector.

There is nothing inherently socialist about state control. In health and education it is right and works. However, the melding of one with the other is the classic error of muddle-headed twentieth century socialists who ended up sympathising with Russia, China, North Vietnam or North Korea, where trade unionists were banned and political democracy crushed under the wheels of tanks. Successful post-war socialist parties, for example the German Social Democratic party, disentangled ends and means and clearly distinguished themselves from the communists. ‘So viel Markt wie möglich; so viel Staat wie nötig’ is their famous slogan: as much market as possible, and much state as necessary.

The great lesson learned in the 20th century was that when you confuse ends with means, and fixate on a single, simplistic, transferable solution, in this case nationalisation, then you end up down an ideological rabbit hole unable to address the real needs of the age. This was the point made by the great revisionists, from Anthony Crosland to Tony Blair, a tradition currently drowned out inside Labour by the noisy chanting.

Labour in the 1950s argued about whether to nationalise the sugar industry, instead of addressing Britain’s post-colonial role. Labour in the 1980s argued about whether to nationalise shipbuilding, instead of addressing Britain’s post-industrial economy. Today, as we face life beyond Brexit and live through the greatest revolution in technology since the steam engine, there are some who want to argue – even if jokingly – about nationalising Greggs. It speaks volumes about the sorry state of Labour.

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