Frontline Index





Commanding Heights
Socialism and Nationalisation

The financial crisis has seen George Bush bailing out the banks and Gordon Brown’s government threaten to nationalise the entire banking sector. But the results are likely to be far from the vision of collective ownership put forward by socialists. Gregor Gall considers what socialist nationalisation would look like.

We are witnessing the beginnings of another capitalist slump, with all the deprivation and misery that will cause for workers and their families. Neo-liberalism has been ideologically holed below the waterline and is listing badly. But it – and capitalism for that matter - will not be sunk of its own accord. We have witnessed massive state intervention to save capitalism from itself and from the actions in particular of one section of capitalism. This action – notwithstanding the price to be paid by workers for a crisis not of their own making – may stabilise in the longer term the economic foundation of capitalism. Or it may not. But without deliberate collective action on the part of workers who are imbued with an alternative vision of how society and economy can be organised to fully meet their needs and those of humanity, capitalism in one form or another will continue.

The key point here is that socialists must develop the means of turning events like the coming slump into an opportunity. Recessions and slumps in themselves do not become opportunities unless socialists have the means, resources and wherewithal to take advantage of these events and set the motion of history moving in a different direction. To move from where workers’ consciousness is to where it should be – where we want and need it to be – requires that we outline a strategy that is able, when implemented, to build the capacity and consciousness of workers to struggle collectively so that they can encroach upon the control of capitalists and capitalism as well as that of the capitalist state. Such a strategy can be based on ideas and activities which prefigure a socialist society by providing not ‘islands of socialism’ in a sea of capitalism as an autarkic (self-sufficient) solution but demonstrations of the vitality and virtues of collective provision based on need and not profit.

It is the contention of the argument presented here that socialists can use the arguments for – and the creation of - public or social ownership of different aspects of the means of the means of production, distribution and exchange (and the necessary and attendant systems of support like education and health) to provide concrete pointers as to what a future socialist society could look like and how it could be arrived at. This article will concentrate primarily on how workers can start to envisage this process by examining the issue of ‘industrial democracy’. But before moving to this, a more general argument can be made which relates to the current period.

The use of public money to stabilise the financial system in the hope of stabilising the economy has been carried out by the British government and others without placing any stringent conditions on the banks to change their behaviour and practices in return for this money. This more than any other feature – given the size of the bailout and the nationalisation of debt rather than of the profitable parts – has rankled with people. Consequently, there is an opening for socialists to make the case that the expenditure of public money on private institutions demands something in return like some form of control over these institutions to both safeguard the ‘investment’ and to ameliorate the worst effects of the bank’s practices – in other words, to stop private entities called companies and run by private, unaccountable individuals being allowed to decide the fate of many others in many aspects of their lives. This could be achieved by some form of democratic control. It is not a huge jump from here to say that where any public monies are spent, there should be forms of democratic control. For example, in health and education as well as the railways (because they receive huge public subsidy), the credible argument can be made there should be direct and meaningful forms of popular control over, and involvement in, these institutions. Obviously, the practice of appointing lay school boards/governors does not meet this criterion while the proposal to have the direct election of health boards in Scotland may go some way towards this. The means of direct elections provides an opportunity – rather than a guarantee – that the current monopolisation of the political process by establishment political parties, the business lobby and the professional classes can be circumvented. The key connection being made here is several-fold – an immediate demand of the times can be linked to an extension of popular control over the provisions of services that are manifestly important and meaningful to their users, namely, the mass of citizenship. So this article will now turn to use the same logic of the argument for extending popular control to the workplace.

Industrial or workplace democracy

Workers in Britain experience and are subject to a fundamental lack of democracy in the places where they work (and where they spend a considerable period of their lives). While there are some limited forms of political democracy through indirect representative institutions such as parliament, there are no corresponding bodies for providing for ‘industrial democracy’. Moreover, those representative political institutions do not exercise much influence over the workplace – they choose not to because of the voluntaristic tradition of industrial relations in Britain and because of the way that parliament was fashioned to leave the economy essentially under private control and in private ownership. Consequently there is no workplace democracy (traditionally referred to as ‘industrial democracy’). Moreover, because there is a lack of democracy at work, where goods and services are produced, distributed and exchanged and decisions are made over these matters, there is also an absence of economic democracy. Consequently, there is a sizable democratic deficit. Of course, workers have traditionally sought interest representation directly at work through collective bodies - labour unions - but unions are heavily dependent upon others parties, namely employers and the state, for acceptance, legitimacy and recognition, so workers have no automatic, inalienable or inviolable rights for exercising some form of control over their working lives at work. Furthermore, labour union power ebbs and flows because of movements in labour and product markets as well as union strategies.


Nonetheless, it is generally conceded in the liberal democratic thought that workers should have a right to participate in the making of decisions that affect their working lives. What prevents the realisation of this are two phenomena. First, there is the sense in which only token appreciation is given to this part of the liberal democratic worldview (which of course is not the only worldview of the ruling class to hold sway). Second, and more importantly, is the imbalance in power between labour and capital (with the state being far more a creature of capital than labour) where there is a fundamental antagonism of interests between the two. Indeed, it is the fundamental reason why token appreciation seldom leads to any action of substance in this area.

In Britain, this imbalance has historically taken the predominant form of ‘voluntarism’ or ‘collective laissez-faire’ in the employment relationship, where capital and labour are left, largely unhindered, to regulate their own affairs and their interaction with each other. This occurs as a result of the employers’ and state’s wishes. Employers, given their superiority in power and resources and the interests they have, are happy to be able to manage their organisations, and to regulate their relationship with their workforces, as they see fit. In general, they oppose state intervention in industrial relations. Concomitant, the perspective dominating state thought is keen to support this choice of non-regulation as a result of the belief that interfering with the managerial prerogative is detrimental to economic efficiency and wealth creation. Traditionally, many unions have also favoured this system, fearing the consequences for their freedom to act as they choose from the actions of the capitalist state, particularly in periods of union strength. Of course, there are a number of important provisos to this characterisation of union perspective concerning overturning the Taff Vale judgement of 1901 through the Trade Disputes Act 1906 and the demand since the late 1980s for a positive right to strike. Nonetheless, the general picture remains true - of voluntarism dominating the manner under which industrial relations and the employment relationship are organised in Britain. In essence, employers, with the consent of the state, are given a free hand in how to determine their employment relations. This can be mostly easily seen if a comparison is made with the corresponding situations of other nation-based capitalisms in Germany, the Netherlands or Sweden (but that is not to suggest that state intervention in industrial relations is necessarily progressive for the motivation and nature of the intervention are critical in determining the outcomes).


What has brought this issue of the abject lack of institutional workplace democracy back into sharper relief than at any time in the last few years has been the de facto full or partial nationalisation of some large financial institutions as a result of ‘new’ Labour’s response to the financial crisis of capitalism. Given the nature of nationalisation as part of the post-war settlement and Labour’s critical part in establishing this, a number of aspects come into view. Because of Labour’s historical association with the labour movement and unions, it has often been assumed that i) nationalisation was – or should have been - an aid to creating the institutions of workplace democracy, and ii) subsequently Labour was predisposed to the creation and extension of workplace democracy through action to establish new institutions in the workplace and enterprise. This was not the case in terms of worker directors – with only the Post Office and British Steel witnessing these in a mild form. Neither was it the case with the Royal Commission on Industrial Democracy (the Bullock Report) established while Labour was in office between 1974 and 1979. Party policy may have said one thing but party leadership in government did another. But it was the case in terms of party policy from 1979 until the early 1990s when the opportunity of opposition more easily afforded radicalism in policy and there was relative move to the left with the rise of Bennism. The upshot of this is that for some there is latent sense that these nationalisations by a nominally Labour government should be accompanied by the setting up of instances of the institutions of workplace democracy. In other words, state control and state run units of capitalism are not assumed to be value neutral because the state is held to be a tool to regulate capitalism under a popular common sense version of social democracy.

That they have not happened should come as no great surprise to the socialist left but that does not mean the issue has no wider significance for the left and workers. The first point that needs a wider airing is that Brown and Darling’s terms for the bailouts have not been not stringent no matter how much the bankers howl, testifying to the underlying rationale for them – saving capitalists and capitalism from themselves rather than workers from capitalists and capitalism. (That does imply that the state should not have acted to prevent financial turmoil and economic contraction because workers do suffer from these when capitalists also suffer from them.) So the bailouts have not been ‘socialism for the rich’ as some of the media and left have described the actions but state intervention to support and defend markets and neo-liberalism which in some ways has been not dissimilar to the fundamental basis for the nationalisation of post-war settlement. The difference has been that there has been no need to respond to organised popular social demands of the kind that led to the establishment of the welfare state back then.


The second point is that the absence of demands from the union movement for industrial democracy to be instituted as part of the wider quid pro quo terms of the bail outs is marked. Unions like Unite and the GMB have only called for no redundancies or repossessions and an end to the bonus culture and offshoring (although Unite has been happy to support bonuses for all staff upon the repayment of the Northern Rock loan money). Unite then went on to launch a Social Contract for financial services by which is preposed that it must be recognised as a key stakeholder, job security for finance workers, limiting outsourcing and offshoring, protecting finance workers’ terms and conditions of employment, and giving the union a role in a new regulatory regime via regulatory bodies. Other unions have called for financial aid to the poor and more money for public services. While appropriate in terms of marking out a wider agenda and for the constituencies of particular unions (finance sector/non-finance sector), their timidity reflect both ideological drift and tactical considerations – making demands from within ‘the tent’ that are not to extreme to be dismissed. So not one union has said, for example: ‘Our price for supporting the bailouts are worker directors or public representatives on the board in each bank that takes public money’. But underlying both ideological drift and tactical considerations must surely be the implicit recognition that unions within and without Labour are in little position to enforce their demands.

Yet if both union and left renewal are to begin, then such demands for workplace democracy cannot be junked – only to be introduced at some later, more favourable date in the future. This would be an abdication of responsibility and indicate a poor understanding of the role of unions as forms of agency. At a time of political flux, and with talk of the need amongst the ruling classes of a new financial regulatory settlement, now is the time for demands to start circulating. But the essence of the demand for industrial democracy must be fashioned in a way that takes account of the legacy of discredited past nationalisation – vis-à-vis economic inefficiency, poor service provision, control by civil servants and the like – and links into popular mass consciousness by being ahead of it but not too far ahead of it. If this balance of both leading and following – that is articulating, focusing and organising ideas and sentiments - is not struck then progress will not be made. The left would do well here to study the experience of the RMT union as the leading union which has successfully championed the demand for a return of the railways to public ownership with debate on what form this should take. In a pamphlet produced jointly by the Scottish Socialist Party and RMT in 2005, a model of a future structure of ownership and control for the industry was outline which showed some innovative thinking in terms of the role of railway workers and the travelling public.


So in terms of what ideas and demands to advance we have a few to choose from. At the bottom end, we have the continental European version of compulsory consultation, where management is obliged to engage with workforce representative on issues outside the normal ambit of collective bargaining. But consultation is not negotiation and it is not a serious positive infringement on the right to manage in the workplace or make executive decisions on investment and strategy. Next come co-determination or workers’ participation where workers have a stronger say in how businesses are run at all levels. But having a say is not tantamount to having parity of influence and power. Decisions may be vetoed but this is vetoing decisions of capitalists rather than taking the initiative to take pro-active decisions on socialising the purpose and outcomes of the enterprise’s activities. After that the next levels would be workers’ control where managers are fully accountable to workers or where workers become the managers through self-management. In any of these cases, it would be wise to consider what role the citizens and consumers of these goods and services should play so that potential conflict between consumers and producers is productively and consensually managed.

For workers’ participation to be effective and meaningful, its scope must be both of considerable depth and breadth. Depth concerns the degree or extent of influence over any one issue while breadth refers to the array of issues that are subject to participation. Not only must this be true at the shopfloor workplace level but it must also be true at the higher internal levels within organisations such divisional, headquarter and parent levels. If it is not, then workers will find that in attempting to exercise joint control over issues at the shopfloor level, they are acting within a framework already set out by senior management, thus reducing their ability to act as they wish. Another pre-requisite is that participation for workers is based on their collective involvement organised through permanent, independent and democratic collective associations. This is because it is only through workers combining with each other that they can increase their power resources to represent their interests.

Although making the choice of what to demand must be a matter for of democratic and collective discussion within the labour movement, three points would seem to be incontrovertible. First, whatever goal is chosen, it should be allied in the first instance to the extension of collective bargaining where in the banks that have been give bail outs, collective bargaining has been narrowed down through the use of performance-related pay and eroded and superseded by consultation through partnership deals. Second, more time was spent in this article examining participation because while problematic in many ways, it would seem to be the level at which such demands could be pegged at the moment. Finally, for the demand for industrial democracy to strike as deep a chord with as many workers as possible, it should be part of a wider vision of socialising and democratising the economy through some kind of alternative economy strategy.

Endpoint: building capacity

An underlying premise of this article has been that we will not see in Britain anytime soon the kinds of factory occupations and takeovers that have been witnessed in a number of Latin American countries in the last decade. Consequently, the perspective has been one of trying to examine the issue of gradual, encroaching control on the capitalist economic system. Thus, the issues concerning what type of participation is preferable as well as having a dose of realism about them too – whether for industrial democracy or popular democracy in general - should focus on those which maximize depth and breadth, support rather than undermine existing working class organizations and are not self-limiting. This last point is very significant for the left must favour those means and mechanisms that raise upwards the collective aspirations, consciousness and capacities of workers to go beyond where they currently are in order to make headway towards the creation of a socialist society. In this sense, the mechanisms would have a transitional capability. Consequently, mechanisms that are self-limiting should be rejected in favour of those that are potentially self-expanding because the key objective is to develop workers’ capacity and consciousness to struggle collectively for greater control over management and employers (and thus - and then- state and society). For example, we should not argue for or accept worker representatives on public bodies and company boards which are restricted by issues of confidentiality and commercial sensitivity from communicating with, and taken instruction from, their constituencies on the issue which arise as a result of being in the bodies and boards. We should argue for rotation of these posts and that the office holders are recallable and act as delegates not representatives so that while these are instances of indirect democracy, they are not instances of distant and indirect democracy.

Gregor Gall is Professor of Industrial Relations at the University of Hertfordshire