E.P. Thompson, the great historian of the English working class, famously warned of the need to rescue our labour movement forebears from “the enormous condescension of posterity.” Today, with Jeremy Corbyn poised to take over the leadership of the Labour Party on a wave of popular acclaim, we can appreciate Thompson’s injunction all the more. Virtually the entirety of the Westminster political class and their hangers-on in the house-trained media have lined up to denounce Corbyn – and the economic ideas he represents – as a ridiculous throwback, a ghost or revenant from Labour’s troubled past who must be exorcized in order that the party may again, as a famous manifesto once put it, face the future. Centrist technocrats always fetishize the future – “our comfort zone,” as Tony Blair has proclaimed it – not least because, unlike the past, it holds no dangerous lessons. “History teaches,” Gramsci wrote, “but it has no pupils.”
In the last few weeks the struggle has been joined, not only for the future direction of the Labour Party but also for the recovery of historical memory. An ideological ice age is coming to an end, but as the neoliberal permafrost breaks up we should expect great efforts to preserve the power of the economic narratives that have served our masters so well for the best part of four decades. Every myth and threadbare cliché is being dusted off and put to service by a shrieking commentariat unnerved by the prospect of a major breach in the ruling consensus. The Daily Telegraph, abandoning earlier – and childishly obvious – attempts at reverse psychology, now editorialises that Jeremy Corbyn must be stopped, not least because “he offers a return to the 70s when he imagines Britain was happier and more equal. Those who struggled to bury their loved ones or climbed through piles of rubbish during the Winter of Discontent remember it less fondly.”
First, the evidence shows that Britain actually was a happier and more equal place in the 1970s. 1976, according to the New Economics Foundation, was the happiest year on record. And while the Winter of Discontent has become the stuff of legend, it was (as John Medhurst has documented) to a large degree a propaganda device manufactured by the right-wing media. For example, there were in fact only two instances (one in Liverpool, the other in London) of bodies being kept on ice because of strike action. Derek Jameson, the editor of the Daily Express at the time, admitted to politically motivated fabrication: “We pulled every dirty trick in the book. We made it look like it was general, universal and eternal, whereas it was in reality scattered, here and there, and no great problem.” (Medhurst, 2015, 2-3)
Brush away the surface vitriol directed at Corbyn and much of the opposition stems from outrage at his temerity in challenging perhaps the most important edict in the neoliberal canon, the automatic superiority of the private over the public. This is especially true when it comes to the ownership of capital. In this credo, public ownership must always be less efficient than private ownership. But even a cursory glance at the record (contemporary and historical) shows that the army of hacks parroting this line haven’t the faintest idea what they’re talking about. In the words of Richard Pryke, whose massive Public Enterprise in Practice pioneered the disinterested survey of the economics of the nationalised industries, the belief that they underperformed “is a dogma which arose during the first and most difficult years of public ownership, and has lived on to become a serious obstacle to rational inquiry and rational conviction.” (Pryke, 1971, 443-44)
For the newly re-emergent British left, stumbling blinkingly out into the sunlight after long hibernation, today’s heroic attempts to overhaul an ossified politics must be accompanied by deep substantive challenges to the official version of history. Only in this way might we regain access to the vast accumulations of learning and experience that once made up the political economy of everyday socialism. There are reasons why, time and again, new generations of activists return to and rediscover the appeal of particular institutional forms and approaches. Not everything has to be created anew, and a careful sifting of the past will uncover powerful lost traditions and practices for the remaking of society and the economy.
Public versus private ownership
Before turning to the matter of a renewed programme of public ownership, it is worth dispelling the most obvious myth peddled about its economic performance. For this we need to clarify the actual historical record of public ownership, principally in the United Kingdom but elsewhere as well.
The nationalisations of the postwar Labour government brought the Bank of England, coal, steel, civil aviation, and all the major utilities into public hands. This was conducted in the teeth of vehement political opposition, including interventions on behalf of the British private sector by the United States government. Nevertheless, by 1951 Labour had reorganised large chunks of British industry and assembled a public sector workforce of 4 million, 18 per cent of the total. A fifth of the economy was in public hands, with the government sector responsible for a third of net fixed capital formation (Saville, 1993, 37-60). It remains today the most radical economic programme ever implemented in Britain. Unfortunately, highly partisan interpretations of the decades that followed, up until the Thatcher privatisations of the 1980s, form the basis upon which widespread claims about the relative merits of public and private ownership in the United Kingdom largely rest.
There is no doubt that the political economy of nationalisation in Britain bequeathed a problematic legacy for the left. There were major drawbacks to the form of public ownership adopted. Responsibility for delivering Labour’s nationalisation programme fell to Herbert Morrison, who on the strength of his experience with the London Passenger Transport Board in the 1930s favoured a model of large, top-down, centralised public corporations at arm’s length from democratic control. This dismal managerialism was a far cry from popular calls for worker self-management, while the centralisation involved had the malign effect of supplanting older and more plural traditions of municipal and cooperative ownership (Cumbers, 2012). Just as significantly, the policy framework within which nationalisation took place compromised the profitability of public firms from the outset.
To begin with, nationalisation in Britain largely took the form of “lemon socialism,” extending for the most part to industries that had not been particularly profitable in private hands, and for which their owners were richly compensated. HM Treasury doled out £2,555,000,000 to the former owners of nationalised companies, an extraordinarily generous sum (as was recognised at the time) given chronic underinvestment across the board, with the steel industry only a partial exception. The failure to incorporate industrial democracy into nationalisation had a particularly debilitating effect upon political support among workers, as Raymond Williams pointed out, with public firms reproducing, “sometimes with appalling accuracy, the human patterns, in management and working relationships, of industries based on quite different social principles.” (Williams, 1965, 330)
To make matters worse, government policy dictated their subordination to the needs of private industry in the form of unrealistically low pricing of outputs. This meant that the nationalised industries provided large and continuous subsidies to the private sector, making them in effect “sinks” that disguised the poor performance of the British economy overall while reinforcing existing industrial power relations (Cumbers, 2012, 20). The result was low profitability, an altogether inadequate measure of their overall performance, but one that fed into widespread perceptions of inefficiency and bureaucratisation and eventually made them sitting ducks for privatisation.
And yet, for all their problems, the data on the performance record of the nationalised industries simply do not bear out such negative verdicts. There are significant methodological difficulties in making comparisons between public and private firms, especially when it comes to profitability, which analysts have found to be a not particularly illuminating metric. Profits are strongly affected by prices, and (as noted above) public sector firms were often subjected to price controls and related interventions – imposed both to hold down prices as part of wider counter-inflation policies and to provide hidden subsidies to private industry. As a result, academic studies aimed at making public-private comparisons have tended to adopt measures other than profitability as an index of efficiency, especially total factor productivity.
Robert Millward, Professor Emeritus of Economic History at the University of Manchester, is perhaps the dean of economic historians working on comparisons between public and private enterprise. A comprehensive 1983 survey of the evidence by Millward and his colleagues, Public Sector Economics, offered as its first conclusion that “there is no systematic evidence that public enterprises are less cost effective than private firms.” (Millward et al, 1983, 258) In the energy sector, for example, none of the cost studies examined supported the argument that public electricity providers had higher unit costs or lower productivity than private firms (ibid, 244). Of course, as was acknowledged, the data and time series then available were limited. But Millward’s later work using additional data has confirmed his earlier conclusions. In fact, remarkably, it appears that the nationalised industries actually outperformed both the rest of the British economy and their privately-held equivalents in the United States:
“On the new evidence, the British total factor productivity growth record in most of the nationalized industries was significantly better than that of their U.S. counterparts and better than that in the whole of the British economy. To be more specific, the average annual rate of total factor productivity growth from 1950 to 1973 was higher in Britain than in the U.S. for airlines, electricity, gas, and coal… The proposition that privatisation in Britain led to an improvement is contradicted by a comparison of these figures with those for 1973-1995, when the growth rates for airlines, gas, and electricity were lower… The state enterprise in Britain compared favorably in productivity growth with comparable sectors in (the more privately owned) U.S. industries and with the privatised regimes which followed in Britain.” (Millward, 2011, 24-27)