Nationalization—a Professor’s Misconceptions (1973)

From the December 1973 issue of the Socialist Standard

One of the problems in expounding Socialism is the persistent myth of “clever” men whose endorsement of other views is impressive to many people. Eminent scientists have followed the zig-zag Communist line; philosophers and mathematicians are found to be Catholics, racists or advocates of capital punishment. The common sentiment is that these opinions are given authority by learned men’s holding them, because someone with all those letters after his name cannot be a fool.

Can he not? In fact the opposite is true remarkably often. To the degree that a person has specialized in some field, his ignorance of others can be so acute as to take away the sense of his specialist knowledge. A classic example is that of Sir James Jeans, the most eminent astronomer of his time, who held religious beliefs so crude as to be comical. The “clever” are not exempt from fear, petulance or prejudice, or the propensity for putting material interests first. Harold Nicolson’s diaries show how a scholarly man’s thoughts may go when he wants a peerage, or under pressure from people round him. The whole idea of learned men who are superiors to the rest of us is a fallacy, a meritocracy-version of “God made them high and lowly, and ordered their estate”.

Higher Authority

In the October issue of The Freethinker, Professor Antony Flew lays down the law about Socialism. To give the background first, the September issue had an article by Professor Flew on the currently-fashionable Karl Popper. This was criticized in a letter by R. W. Morrell, who wrote:

Professor Flew seems to labour under the impression that nationalization has something to do with socialism, and that the criterion by which to judge the political colour of a party is its attitude to the issue. As a self-declared Popperian, he dislikes ‘sweeping’ social change; but is nationalization really ‘social change’, sweeping or other wise?

Professor Flew’s reply is as follows:

Mr. Morrell says: ‘Professor Flew seems to labour under the impression that nationalization has something to do with socialism . . .’ Yes, so I do. So clearly did those who wrote clause IV into the constitution of the British Labour Party. So clearly do all the Communist Parties, who make the implementation of Clause IV a first step after seizing power. So clearly do those who are now dominant in the Labour Party, and who disagree only on precisely how massive an extension of public ownership to propose in their next election programme.

If Mr. Morrell wishes to use the word ‘socialism’ in such a way that nationalization is not a necessary condition of socialism, that, indeed, it has nothing to do with it at all, then the very least he should have done was to indicate what sort of glory he wants to make the word refer to. It is hard to be condemned for not following Mr. Morrell’s eccentric usage when he does not even tell us what it is.

What has to be noted is how the conviction of learned authority works. Every “expert” believes there are other, higher experts — presumably, at the end, a supreme expert before whom nobody may speak. Professor Flew does not consider answering the point. Instead, he refers to the authority of the Labour Party’s Clause IV, the Communist Parties, and “those now dominant in the Labour Party”; to say anything different from them is mere “eccentric usage”. However, there is a much greater eccentricity in his own approach. In the September issue he attacked Marx and “socialism”. Yet Marx’s writings make abundantly clear what Socialism is, and that it is not nationalization. Are we to understand that the learned Professor criticizes what he has not read?

Where's this Better World ?

Professor Flew does speak of concern to “change the world for the better”. It is possible to look at nationalization in that light, without recourse to its economics. People get their definitions of Socialism wrong, but all associate it — however vaguely — with equality, freedom and production for social needs instead of profit. One ought first of all to ask if nationalization achieves any of those things, as a means to judge whether it has “something to do with socialism”.

On that basis, the policies of the Communist Parties can be dismissed immediately. In their model state, Russia, almost all industry is nationalized; personal and political freedom are minimal, the working class has a very poor standard of living and privileged sections have the fat of the land. Some industry was nationalized also in Nazi Germany, and that did not “change the world for the better”.

In this country, the same questions can be asked about the well-established models of nationalization: the Post Office, the railways, the coal industry, the .electricity and gas undertakings. Are workers better-off and more secure in these concerns? On the contrary, all pay poor wages and in recent years have got rid of large numbers of employees. An item in The Guardian on 27th September said:

At a recent Cabinet meeting, according to Field, Ministers were discussing the effects of Stage Three, and the low paid. Somebody asked who exactly were the low paid; nobody round the table knew. Lord Rothschild’s Think Tank was asked to find out, and present a paper on it within two or three days. Among other things that Rothschild came up with was the (fairly well worn) conclusion that it was the Government which was, directly or indirectly, the largest single employer of low paid workers.

Nor is there any benefit to the workers as “consumers”. Each enterprise is bound, as much as it would be in private hands, to compete in the market and try to make a profit. The prices of the commodities produced reflect the general level of prices. Is not Professor Flew ever curious as to why this “socialism” is indistinguishable from capitalism?

Control and Compensation

The purpose of nationalization and the public utility corporations is not to abolish or weaken capitalism but get it to function better as a whole. The last words have to be stressed, because they explain the arguments which take place over any project for State control. Generally, an industry is nationalized when its efficiency is vital to the rest of capitalism, and private groups either are an obstruction in themselves or cannot handle the costs of necessary developments. So far from seeing it as a threat, capitalists are always prepared to consider nationalization so long as their interests — that is, their property incomes — are acceptably arranged-for. What the capitalist loses is control, but not ownership.

Thus, every nationalization scheme includes “compensation”, the exchange of direct shareholdings for State bonds or the securities of whatever corporation is set up. This was done in the post-war Labour government’s nationalizations, and its necessity was reaffirmed in a Labour Party statement Industry and Society in 1957:

It may be that public participation in a private firm can be secured through State investment in it. Where public ownership is extended, full and fair compensation will of course be paid.

Of the present proposals by “those now dominant in the Labour Party”, the Fabian Society has published a pamphlet on housing nationalization called The End of the Private Landlord. The suggested financial arrangements are:

Instead of the standard practice of compensation at market rates, the group proposes the issue of irredeemable but marketable stock whereby landlords would receive the equivalent of a fair rent minus some deduction for management and repairs.

(“Guardian”, 10th September)

This would reproduce what happened in the nationalization of the railways in 1947, where the shareholders were relieved of huge capital expenditures they would have had to make to attain the “fair” level agreed in the compensation terms.

Ownership and Equality

But where do these incomes arise, to be paid to people who — it is said — have ceased to own? They can be provided only from the exploitation of the working class and the production of surplus-value. Nothing, in fact, is altered. The capitalist may have been removed from direct participation in industry and commerce, but he remains the effective owner in that they are conducted as before for profit and interest: which go to him. Professor Flew refers to “those who wrote Clause IV into the constitution of the British Labour Party”. They were more aware of what they were doing than he is. The 1918 statement Labour and the New Social Order spoke of “the progressive elimination from the control of industry of the private capitalist” (our emphasis); nothing about eliminating ownership.

So nationalization has nothing to do with Socialism, but is one form of capitalism. Reformers, attracted by inaccurate phrases like “public ownership”, have seen in it a means of obtaining more equitable distribution under capitalism. How unlucky they have been is shown by facts repeatedly given by Labour spokesmen, when they are in opposition. On 27th September Michael Meacher wrote in The Guardian:

. . . four out of every five households have less than the average income, and only one-fifth have more, largely because in the richest 1 per cent there are some exceedingly rich individuals. If we were as tall as our incomes, they would be 10 miles high whilst most people would be dwarfs.

And in September Lord Shinwell, asked in a television interview what had been achieved in his seventy years as a Labour politician, said: Nothing. There were still the rich and still the poor — just the same.

Socialism, unlike those Professor Flew cites as authorities on it, is concerned first and foremost with ownership, simply because that is the foundation and changing-point of every social system. Capitalism exists on the basis of private or limited ownership of the means of living. From that, all the apparently ineradicable problems of our present world arise. Socialists know, however, that they can be eradicated: by establishing common ownership as the basis of society. The obstruction to it is ignorance — including what a 19th-century essayist called “the ignorance of the learned”.

Robert Barltrop