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History Shows That State Capitalism is Not the Solution for the UK Working Class.

Jeremy Corbyn outrider and Labour MP Clive Lewis has been quoted by Workers Liberty as saying a shift from austerity and neoliberal capitalism to (or a return to) welfare-state capitalism would be a gain for the working class.


Few on the Left would deny that taxing the rich, free education, a NHS, well-funded schools, social housing, higher wages, public services would be real and important improvements, for the working class as opposed to the Tories dark, dystopian future. But they would be short term gains and doomed to failure.

The Great Depression which resulted from the 1929 Wall Street Crash crippled demand across the Globe. The only way Capitalism could reboot itself via world war. This “allowed” the state to take control of the economy and plan it rigorously and centrally; a command economy was established. In the UK this involved mass nationalisation of industry and the infrastructure such as rail and the docks. This was achieved by running a deficit five times what it is today and by raising taxes which was partly offset by increased wages.  The Nazi threat was defeated by running a planned economy.

But once hostilities ended it was a different matter for Capitalism. The Labour Government which was elected in July 1945 persuaded the voters to stick with nationalisation so key industries such as coal and steel remained in public hands. Then with much arm twisting and gnashing of teeth by the the British Medical Association (“I had to stuff their mouths with gold”, said Health Minister Nye Bevan) the National Health Service opened it’s doors in July 1948.

Happy days. But not for long. The Capitalists had already met in July 1944 at Bretton Woods in New Hampshire to ensure the future of their system would remain intact in the long term. However far the sands had moved as workers saw the benefits of a planned high wage, high skill economy (just look at the revolution in tech that came about) the Capitalist class were in no mood to give substantive ground to logic.

The whole reasoning behind Bretton Woods was to ensure the flow of capital and free markets this ensuring the hegemony of the USA in the second part of the 20th Century. The IMF and World Bank were touted as new institutions to spread wealth. Instead they became instruments to make the richest continent on Earth in terms of raw materials compliant due to huge debt. Africa’s chances were ruined first by colonialism, and then by being forced into debt for the privilege of becoming “independent” client states.

In the UK the effect was Labour enforcing static wages, a continuation with rationing and the implementation of an Austerity Budget in 1947 by Sir Stafford Cripps. A chronic reliance on the USA led to the abandonment of any pretence of Socialism at home, and an ill conceived war abroad in Korea. Just six years after being buried in an electoral landslide Churchill was back in Number Ten.

You would expect Churchill to have rolled back state ownership. Not a bit of it. The Tories were not displeased as all that had changed was who managers in the Nationalised sector answered to. Bureaucrats had replaced the old owners. Such was the consensus that the Beeching Report which decimated the railways was ordered by Home’s Tory Transport Minister Ernest Marples and implemented by Labour’s Tom Fraser. The excuse for closing over 1,071 miles of track and scores of stations was that they were “uneconomic”. The raison d’ etre for state capitalism was the same as privately owned companies; profit first.

By the 1970’s state capitalism was a grotesque parody of how a successful economy should be run. Industrial relations were at a nadir. State car maker British Leyland epitomised the gulf between management and the Unions and is the subject of Jonathon’s Coe’s novel, “The Rotters Club” (2001). Such were BL’s problems that Tony Benn was forced to appoint South African hardman Sir Michael Edwardes as CEO. Mass sackings followed and shop steward Derek “Red Robbo” Robinson became a caricature bete noir of the rabidly right wing Tory Red Top tabloids of the time.

Sir Peter Parker was appointed British Rail Chair by Labour in 1976 but his tenure was marred by a series of strikes and poor relationships with his staff resulted from an inability to take advice from those delivering the services. Similarly Sir Iain McGregor was brought in by Thatcher to sort out first the steel industry, and then infamously coal was butchered during the terrible 1984/5 dispute and it’s aftermath.

State capitalism will always fail because once you place the profit motive in the driving seat conflict arises between managers who have Ministers breathing down their necks (as a pose to shareholders) and workers who are alienated from the process and see every concession given in poor grace. A parallel can be drawn with what trade unionist James Connolly said about Irish independence; “If you remove the English army tomorrow and hoist the green flag over Dublin Castle, unless you set about the organization of the Socialist Republic your efforts would be in vain. England would still rule you. She would rule you through her capitalists”.  Replace “England” with “bosses” then the point is made.

Lewis and many on the Labour Left have the best intentions but unless you are prepared to actually take the power away from whoever owns, or controls the means of production and put it in the hands of the workers to ensure things are run with the good of the people as a first priority then Cameron is absolutely correct that the Labour Left are just taking us back to the bad old days of state run capitalism. Don’t let’s eulogise that BR, BL, the NCB or British Steel were halcyon days of a socialist economy. They weren’t.

But there is hope and it’s called Socialism. The Corbyn surge, and indeed the rise of Democratic presidential hopeful Bernie Sanders show a nascent desire for change, and that Capitalism isn’t cutting the mustard. Don’t let’s get led down the blind alley of mitigating things by putting well intentioned people in charge of running state industry or services. We must be bold and agitate for real change, not just well meaning tinkering with a system that is illogical, chaotic and unplanned.


About dermotrathbone

Writer and co author "Through Red Lenses". Activist Unite the Union, Save Our NHS Hull. Fan of Yorkshire County Cricket Club, Hull FC, Munster and Ireland Rugby. Views are mine alone and may not reflect the organisations concerned.


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