Workers as shareholders (1986)

From the December 1986 issue of the Socialist Standard

In preparation for the next general election the Tory Party is popularising the idea of worker-shareholders as part of that party's long-held vote-catching conception of a "property-owning democracy". From the earliest days of capitalism the rich and governments have always urged the workers to work hard, be loyal to their employers, live prudently, save money and never get into debt. The advice also included warning them to put the money in a safe place such as the Trustee Savings Banks or. in 1861. in the newly established Post Office Savings Bank. The one thing they were advised not to do was to enter the risky field of company shares.

But times change and the advice also. Every inducement is now given to getting into debt by buying on credit. Working hard and being loyal to the employer remain, but nowadays this calls for more sophisticated methods. At all times the motives behind the advice have been the same. Workers who followed the advice would, it was thought, be better profit-producers for their employers, would be less likely to fall into destitution and become a burden on the rates.

In the middle of the nineteenth century few workers were able to save anything. British capitalism was booming but the wages of most workers were at bare subsistence level. Only skilled workers could put anything by. But it was only out of their own resources that any workers could make provision for sickness, unemployment and old age, or the cost of funerals. What provision some workers could make was through membership of the Friendly Societies and trade unions. (This and other information will be found in Paul Johnson's Savings and Spending: The Working Class Economy in Britain 1870-1939).

As Paul Johnson says, few workers even troubled about what they would live on in old age because they did not expect to live long enough Only the trade unions had provision for unemployment but as late as 1911 Lloyd George reckoned that not even ten per cent of the working class were covered for it. As the trade unions grew in membership and effectiveness, in the second half of the century. wages steadily increased and savings also. Between 1870 and 1914 the number of depositors in the Post Office Savings Bank and Trustee Savings Banks grew from 2,500,000 to 11,000,000. Yet in 1911 it was reckoned that the total assets of adult workers were only £11.10p a head — just enough to cover two months' unemployment or sickness.

Since 1945 conditions have altered in various ways. The purchasing power of workers' take home pay (after deductions of PAYE and NI contributions) has continued to increase and is now well above the level of 1938. Workers' savings have grown but the ownership of accumulated wealth of all kinds remains highly unequal. The Royal Commission on the Distribution of Wealth and Income, in its report in 1975, found that the top twenty per cent of adult population owned seventy-eight per cent of the wealth and the bottom eighty per cent of the population only twenty-two per cent of the wealth. One new factor has been the payment of £10,000 million redundancy pay to workers who have lost their jobs, producing the somewhat novel feature of unemployed workers having, for a time, cash at their disposal. It is against this background that the Tory Government launched its programme for a property-owning democracy. This included a change in the law enabling council house tenants to buy their houses at prices below the market rate. The Tory Election Manifesto 1983 said. "There are a million more owner-occupiers today than four years ago".

Other items in the Tory programme have been encouragement to companies to introduce "profit sharing" to their workers and schemes to increase the buying of shares by workers. In the "privatisation" of British Telecom and other nationalised industries shares have been issued at prices below market rates, with preference to employees to buy shares. The result has been that those who acquired shares saw an immediate big rise in their stock-exchange price. According to the British Market Research Bureau the proportion of individual shareholders among the adult population has more than doubled in the past two years, to about 16 per cent. The British Telecom share issue is reported to have attracted about a million investors who had never owned shares before, including a large proportion of the firm's employees.

The latest government scheme (still in its discussion stage) aims to encourage companies to make agreements with their workers to have part of their wages related to the ups and downs of profits. Instead of an agreed wage of. say, £10,000 a year (£192 a week) there might be a basic rate of £8,000 (£154) plus a share in profit. In an average year the profit share would be £38 which, with the basic £154. would give £192 as before. If profits rose, the total would be above £192 but in a bad year the worker would receive only the basic £154. The inducement to the worker would be that some part (half has been suggested) of the profit element of pay would be exempt from PAYE deduction, worth about £5 a week to a worker on average pay.

The advantage to the employer would be that the workers would have an interest in co-operating to produce maximum profits and avoid strikes, and would make it easier for the employer to adjust costs in times of bad trade. Instead of having to try to reduce wages, the fall in total payments to the workers would be automatic, in the terms of the agreement. However the supposed effect of the scheme to which the government attaches most importance is that it would, in the governments view, encourage employers to take on more workers and thus reduce unemployment, instead of having to pay £192 a week to additional workers the employers' commitment would be only the basic rate. £154. Only if profits again increased would the employer have to pay more than that.

The scheme has received a very mixed reception. The Confederation of British Industry is lukewarm about it and the largest employers' organisation, the Engineering Employers' Federation, is hostile. The Federation doubts whether it would change the workers' attitude towards their employers and whether it would have any effect in reducing unemployment. Among the objections raised to the scheme by employers is that the unions would counter any fall in the profit-related part of wages simply by claiming an increase of the basic rate and that the workers would resist the employment of additional workers because it would mean sharing the profits among a larger number, reducing the amount going to each worker. In spite of the objections, present indications are that the government will go on with the scheme.

The TUC is sceptical and the attitude of the Labour Party is not yet known. But about worker shareholders the Deputy Leader of the Labour Party. Roy Hattersley, has come out in favour. "The extension of employee shareholding . . .  is wholly consistent with the aims of socialism. It is also in the interests of the economic success and social cohesion of the country" (Observer 16 March 1986). Whether or not the government really believes that their various schemes for a property owning democracy will make any difference to the way capitalism operates, it is certain that they will feature prominently at the next general election, in confrontation with the Labour Party's attempts to revive the lagging popularity of nationalisation by giving it the new name "Social Ownership"

The Labour Party will claim that, in selling the nationalised industries to raise revenue and to make possible a reduction of income tax, the Tories have been guilty of a profligate misuse of "public property". The Tories will retort that a Labour government, with its plans for a vast increase of government expenditure, will have to raise income tax drastically and that employee share ownership “is the truest public ownership of all" (Tory Election Programme 1983).

The Tories will make the most of the Labour Party's declared intention of government action about the shareholders in British Telecom. At present the holders of shares in British Telecom and other privatised industries are seeing a big increase in the stock exchange price of their shares. A Labour government will offer to these shareholders the option of selling the shares to the corporation only at the lower price paid for them, or of having Consumer Bonds which will not carry voting rights.

Of course, by the time the election comes round the stock exchange price of British Telecom and British Gas shares (under the impact of increased competition) may have fallen below the present price. But if the stock exchange prices keep up to the present high level, the Tories will represent the Labour Party's taking over of the shares as an act of "robbery of the workers' savings".

The Tories will not have forgotten what happened at the general election in 1931. The Labour government had collapsed, with the Labour Prime Minister. J. R. MacDonald and his Chancellor of the Exchequer. Philip Snowden, joining a National government with the Tories and Liberals. The Labour Party lost heavily in votes and seats and political commentators said that a major factor in their defeat was a broadcast by Snowden asserting that if a Labour government were elected it intended to "rob the Post Office Savings Bank" in which the workers had their savings.

Edgar Hardcastle

Never trust a Trust (1993)

 

From the November 1993 issue of the Socialist Standard

The government has recently announced that thirty more district health authorities are to become self-governing in the fourth wave of trusts, and that the remainder will follow suit within two years.

The National Health Service enjoys considerable public support and attempts to return to private medicine have to be carried out cautiously whilst protesting vociferously that there is no such intention. But despite this cautious approach at least three-fifths of all self-governing trusts have run into financial difficulties. And in August, four London hospitals announced that they were going to cancel routine operations for the rest of this financial year. With seven months to go, from the date of these cancellations, to the next financial year, the waiting list for treatment will continue to grow, with pain and discomfort for patients.

The financial difficulties experienced by the health service trusts is only to be expected as an internal market does not put any more money into the system but costs considerably more to administer it. Whilst administrative costs have risen sharply to cope with the extra paperwork many newly-qualified nurses have been unable to obtain jobs and others have been given temporary contracts, only to find themselves unemployed three or six months later.

Despite the greater technological expertise required for modem nursing, the number of qualified nursing staff fell by 5.2 percent between September 1990 and September 1991 according to the Department of Health. But unqualified staff have increased by 17 percent. (Nursing Times. 1993, no.7)

The increase in total staff has been necessary to compensate for the removal of student nurses from the wards into colleges for the Project 2000 training courses. This change from traditional training methods has been introduced to improve academic standards and technical knowledge but also to pay students less by giving them grants instead of employing them as salaried workers.

Despite the dearth of jobs, financial hardship and the prospect of unemployment at the completion of training has led to a 5.5 percent wastage rate for Project 2000 students compared with 4.7 percent for students undertaking traditional training (Nursing Times). While the government juggles with the figures and nurses find out the hard way that professional status counts for little in the job market, the waiting list for treatment has increased by 60,000. A number of hospital trusts have changed nurses’ patterns of shift work, worsening their conditions of service and reversing some of the hard-won gains of the last thirty years. The Bradford Hospital Trust announced up to 300 redundancies shortly after it became a trust.

During recessions the bargaining power of workers is weakened and they are vulnerable to attacks upon their living standards. This will always be the case while capitalism lasts because trade unions tackle effects and not causes. Thus, any gains made during booms will be attacked by employers when there is a surplus of labour during a slump.

The government has repeatedly stated that it wishes to reduce public expenditure. Indeed, public health service employees have been held to a 1.5 percent pay increase this year (equivalent to a pay cut after allowing for inflation), and a proposed wage freeze for next year.

At first glance it seems curious and inconsistent to try to reduce expenditure on the one hand and to increase it on the other by opting for a system of management which is much more expensive. But a consideration of the ideological and political motives underlying the formation of the National Health Service and the reasons for the attempts to dismantle it show that both courses of action are consistent with capitalism’s priorities. When Henry Willink, Conservative Minister of Health in the wartime Churchill coalition government presented the 1944 White Paper setting out the proposals for a unified national health service, free at the point of use, centrally funded and administered by Local Authorities it was because it was recognized that after the sacrifices made by the working class in fighting a lengthy war to protect the capitalists’ interests they were not prepared to accept a return to the heartbreak conditions of the 1930s. It was also recognized that, with an acute shortage of labour, a reliable health service would be needed to conserve workers’ health in the critical postwar years of reconstructing industry. It was also necessary to provide concessions to blunt working-class militancy as strikes would have placed British capitalists at a disadvantage with their competitors.

A centrally-administered health service was more efficient and cost effective than the fragmented, piecemeal provision of health care which had hitherto been available in the 1930s. But by the 1980s, capitalism’s priorities had changed. A worldwide recession had reduced the capitalists’ profits making less money available for social programmes; a large pool of unemployed labour had weakened the power of the trade unions and made it no longer necessary to conserve the health of all the workers. The National Health Service now represents a cost against production that the capitalists would prefer to see drastically reduced if not abolished.

The NHS is an institution welcomed by the working class and its abolition, however desirable from capital’s point of view, is politically damaging, therefore, the moves towards replacing it with private services have been gradual. Laundering, catering and Portering services have been contracted out private companies in the last few years with reduction of staff, lower wages and poorer working conditions in the majority of cases.

Once all district health authorities become self-governing trusts it will be possible to break the power of the trade unions by dismantling the Whitley Council which negotiates health service employees’ pay. The trusts will be able to set their own pay and conditions which will lead to further downward pressure on wages. And with each trust being independent and no longer part of a nationally administered service then a national strike by health service employees over a dispute in an individual trust would be considered to be an illegal "sympathy" strike. Also with an internal market in place it will be possible for a hospital trust to break a strike by sending patients to other hospitals.

It has been claimed that the internal market, with buying and selling of health care on business lines, can make the most efficient use of resources and expertise by sending patients to other hospitals for services which may be in short supply in their own areas, but the 60,000 increase in the waiting list for treatment shows this not to be the case. There is a consultation process between health districts, regional health authorities and the public at each trust application but the public’s response is not disclosed by the Department of Health. We can be certain that if the public’s response to hospital trusts was enthusiastic then this would be widely publicised and trumpeted as a vindication of the government's policies. The secrecy surrounding this information is an attempt to conceal the lack of support for their plans. The announcement by the Government that it intends all health districts to become trusts within the next two years makes a mockery of the so-called consultation process and makes the public meetings little more than a declaration of intent.

In addition to the plans for NHS trusts, the 1989 White Paper Working for Patients (sic) provides for a range of optional extras such as single rooms, television and a choice of meals for those who wish to pay for them which will create a two-tier system with only basic amenities being provided for the poor and better services being provided for the not-so-poor.

A visit to any of the older district general hospitals will provide evidence of expensive refurbishment having been carried out on some of the surgical wards whilst, in many cases, even basic repairs are not carried out on the geriatric wards, reflecting capitalism's attitude to non-producers. Obviously, the majority of elderly patients will be unable to pay for "extras’' out of their pensions. A return to Victorian values, particularly the Victorian workhouse, is beginning to look an unpleasant reality for the poor and needy.

The government’s policies have caused problems for the mentally handicapped. Dr David Tod, President of the National Association of Fundholding Practitioners, told the Conservative Party conference in October that he cannot accept any more mentally handicapped patients in his practice without extra funding (Independent, 9 October).

The proportion of pay which general practitioners earn from the number of patients that they have on their books has been increased from 46 percent to at least 60 percent and this has, predictably, led to a reluctance to treat patients requiring a lot of medical care. There is no doubt that further attacks will be made on the NHS and that the present cumbersome structure is being set up with a view to selling it off to private speculators in due course. For the poor, only the most basic provision will be retained, and the mentally ill will continue to swell the ranks of the homeless as long-stay hospitals continue to be closed without adequate alternative care being allocated.

But the attacks on the NHS provide an object lesson to those who wish to reform capitalism. The reforms were gained only after years of struggle, implemented when it was no longer in capital’s interests to obstruct them, and are being reversed when it was no longer expedient for capital to accede to workers' demands and a recession makes it difficult for workers to resist the encroachment upon their living standards. Nothing less than the complete overthrow of capitalism and its replacement by socialism can prevent this happening to reforms over and over again.

Carl Pinel

Public and private (2025)

From the September 2025 issue of the Socialist Standard

The recent scandals involving the once public, and now privatised, utility businesses such as those of water, rail and gas/electric have once again reopened the age-old debate between those on the left who favour public ownership of the utilities (and much else) and those on the right who think that privatisation is the only answer to the continuing travails of these services. Perhaps it might be in order to take a deep breath and look at the historical, ideological and even psychological origins of these unlikely political allegiances.

Human beings have long loved dualities in the attempt to understand the world and private/public takes its place alongside capitalist/socialist, worker/capital, reform/revolution, democracy/autocracy among countless others within polemical discourse. It is only recently that I’ve encountered any objection to this intellectual tradition courtesy of a young relative of mine claiming that she is ‘non-binary’ in her sexuality. Having long thought that man/woman was never a satisfactory duality in the first place I was not surprised by this revelation but it does serve to show the lasting power of this ideological mechanism to both inform and provoke. I won’t go into the historical origins of left and right ideological designations but their lasting allegiance to public or private capitalist economics respectively is surprising.

Nationalisation (state ownership) has a long history and we can be certain that the rich and powerful would not put their hands deep into their pockets to pay a tax that made this possible unless they could see some financial advantage. In 1858 the British state took over the East India Company to save it from the disastrous implications of the Indian Rebellion of the previous year which endangered British imperialism and the massive profits that it made for the parasite capitalist class.

In 1871 that well-known ‘socialist’ Otto von Bismarck embarked on massive state investment and control of many industries including railways, mining, agriculture, road building and, of course, the military. Needless to say that this was done, not to improve working conditions, but to accelerate German industrial development so that it might compete on the international stage both economically and militarily whilst simultaneously making unimaginable profits for his Junker supporters. Ironically Bismarck was also known as a ‘state socialist’ as well as a ‘state capitalist’ because of his introduction of a ‘welfare state’ which was supposed to blunt the increasing popularity of socialism. To do this he consulted the traitor Ferdinand Lassalle who had come up with the crackpot theory that the bourgeois state was politically neutral and could be used by the proletariat to reform capitalism until socialism was achieved. To this day leftists still use this as a programme for socialism, conveniently forgetting that it was instigated by one of socialism’s greatest enemies.

Because of these historical contradictions we have ended up with an unholy mess of Orwellian definitions of what socialism, capitalism, state capitalism, state socialism, democracy, public, private, etc. really mean. In the popular mind we can safely say that many believe socialism to be state ownership of industry and that capitalism represents ‘private’ ownership. The fact that sometimes the exact opposite is true represents the internal contradictions of capitalism and its subsequent ideological claims which, in our tabloid sound-bite media, is way too complex for their narrow political agendas. Remember that mainstream political parties are effectively PR organisations for the continuation of capitalism and have no interest in historical, economic or political truth. To celebrate the meaninglessness of it all we have two wonderful British examples: public schools are private schools and companies that go ‘public’ are secretive private enterprises with a veneer of public transparency.

The concepts of public and private predate, of course, the vicissitudes of contemporary political debate. The right to a ‘private life’ is a rather new social concept given that our species is intensely social and has lived communally for aeons. There have been many who have had to operate under secrecy for religious and ideological reasons but this is rather different since all those in power suffer from degrees of paranoia and are always suspicious of privacy in others. Hypocritically these same people are always the first to claim the right to privacy and secrecy under the name of national security.

So what does privacy really mean? Is it the need to separate yourself from others due to the shame that accompanies sexual preference or corruption or criminal intent or is it a basic human need for occasional solitude so that the contemplation of the ‘self’ can occur? True introspection is rare so it’s reasonable to suspect that the right to ‘private property’ and the bourgeois cult of individuality lie more at the heart of the contemporary concept of privacy. Your wealth is due to your own efforts and has nothing to do with the exploitation of the labour of others. This is the lie at the centre of the concept.

Privacy, with its modicum of ‘control’, militates against the reality of interdependence, the recognition of which is our only hope as a species. Individuals and their families locked up in their mortgaged jerry-built houses with security cameras and an inbuilt fear of ‘the other’ are infinitely more insecure than those who live in communities of mutual aid and respect. Divide and rule is one of the strongest propaganda tools available to the tiny parasitic elite that rule us so don’t be fooled that state ownership is public ownership because the state only exists to prevent those who create wealth from accessing it. Any state-owned business will be systematically underfunded to keep the taxes of the rich at a bare minimum with all of the subsequent industrial unrest that this inevitably causes.

We are sometimes told that ‘socialist sects’ should all join up in a mass coalition to have more power but it doesn’t matter a jot how much power you have if you are ignorant of the origins of your ideologies and the true nature of capitalism whether it’s in traditional bourgeois form or of the state capitalist incarnation – neither can, or will, improve your life.

Wez.

Labour in sickness and health (2025)

From the July 2025 issue of the Socialist Standard

We are told the NHS is a ‘national treasure.’ That it was built by socialists. That it belongs to us. That if we just had the right funding and the right managers, it could be restored to its former glory.

But we know better. The NHS is often cited, especially by those still enthralled by the Labour Party, as an example of ‘socialist’ legislation passed during the 1945–1951 Attlee government. Even people who now admit Labour is not socialist cling to the NHS as proof that it once was.

Let’s be clear: the NHS was never socialist. It wasn’t created to empower workers or take profit out of care. It was built to keep the workforce functional – to patch us up and send us back to work. A healthy worker is a productive worker – and a productive worker generates value for the boss. That’s why the capitalist class signed off on it. Not out of compassion. Out of calculation.

Sure, there was high-minded rhetoric at the time. Aneurin Bevan, considered the founder of the NHS, said: ‘No society can call itself civilised if a sick person is denied medical aid because of lack of means’. And William Beveridge, architect of the welfare state, said: ‘A revolutionary moment in the world’s history is a time for revolution, not for patching’. Later he stormed the barricades of the House of Lords as he became a Liberal peer.

The real context was fear. The ruling class had just dragged us through mass unemployment and a world war, and it now faced an angry, armed working class returning home. It saw what had happened in Italy. Reforms were made not to end capitalism but to save it from social and industrial unrest.

Bevan once asked: ‘How can wealth persuade poverty to use its political power to keep wealth in power?’ He blamed the Conservatives, calling them ‘vermin’. But take the party labels off, and the question becomes sharper. The problem isn’t just the Tories. It’s a system that ensures poverty exists in the first place.

Bevan couldn’t see that. For him, the enemy wore a blue rosette. For us, the enemy is the wages system, the class system, the profit system. That’s what’s killing the NHS. That’s what’s killing us.

Now, 75 years on, they’re not even pretending. The NHS has become a marketplace. Drugs are bought from profit-hungry pharmaceutical firms. Cleaning is outsourced to contractors who cut wages and corners. Just this month, a scandal was revealed over botched cataract operations performed by private clinics cashing in on NHS contracts.

We used to joke the NHS was held together with duct tape and goodwill – now they’ve outsourced the duct tape and privatised the goodwill. They say this is a Tory problem. But what has Labour done?

Wes Streeting – dubbed ‘Wes the Rat’ by campaigners – is Health Secretary and says he’s ‘not ideological,’ which is odd for a politician. He wants to ‘use spare capacity in the private sector’. He calls patients ‘customers.’ He says the NHS is no longer ‘the envy of the world’ – not because it’s been gutted, but because it hasn’t been modernised. That’s code for markets, contracts, fragmentation. The same failed model, just rebranded.

Starmer campaigned in 2020 on ending NHS outsourcing. That pledge disappeared like a junior doctor’s lunch break. Now it’s all about ‘outcomes,’ ‘efficiency,’ and ‘value for money’. In his worldview, health is a product, not a right.

He’s cited NHS England as an example of excessive bureaucracy, duplications, and inefficiency. NHS England’s functions are now being absorbed into the Department of Health and Social Care. The transition will take about two years – less time than it takes many trans people to get a first appointment on the NHS waiting list.

Around 9,000 jobs are being axed in the process, as AI systems take over. One of the main tech firms involved is Palantir, a data analytics and armaments contractor with deep ties to the American MAGA state.

Palantir’s NHS involvement began with a £1 (one pound) trial contract in March 2020, part of the pandemic response. Then came:

• July 2020: £1 million contract
• December 2020: £23 million, two-year deal
• June 2023: £25 million contract
• November 2023: £480 million for the Federated Data Platform (FDP)

Now, the NHS is locked in.

Palantir was co-founded by billionaire Peter Thiel, a Trump backer who once called the NHS a ‘monstrosity’. The company built software for the US Immigration and Customs Enforcement agency (ICE), the CIA, and for predictive policing systems. Its platforms – Gotham and Foundry – have been used for deportations, drone strikes, and surveillance. The CEO, Alex Karp, bizarrely refers to himself as a ‘socialist’ and a ‘neo-Marxist,’ despite running a firm helping military and police forces worldwide. He studied the Frankfurt School and Marxian philosophy but now says Western tech should serve national power and defence. In his book The Technological Republic, Karp argues that declining interest in Western civilisation has left tech without ‘patriotic duty’. Palantir, in contrast, builds tools for ICE and the US military – showing where its duty lies.

This company now runs NHS data infrastructure. There was no public debate. No vote. Just a quiet, technocratic handover, sold as ‘integration’ and ‘efficiency’. It sounds like an IT upgrade. In reality, it’s a power shift – from public stewardship to corporate control.

Palantir claims it doesn’t own the data. Maybe not. But it owns the system. The architecture. The infrastructure. That’s vendor lock-in – like getting a free coffee machine and finding the pods cost £12 each and are only sold in Texas.

This isn’t reform. It’s enclosure. The same old privatisation, dressed up as innovation. And the outcome? A two-tier system. A burnt-out workforce. A public service run like a business where care takes a backseat to cost-cutting.

They say the NHS is free. But people pay for it – with taxes when they pay them, with our labour and with our time. It’s not free. We are. Free to wait. Free to suffer. Free to die while shareholders get dividends and algorithms determine care.

The Socialist Party stands for more than better management or fresh branding. We advocate the abolition of the wages system. The end of profit in care. A world where there are no customers, no contracts, no markets – just people, meeting each other’s needs.

Health is not a service. It’s a condition of freedom. The NHS can’t be saved. It must be superseded – by a system where care is not rationed, outsourced, or monetised. Where no one waits, no one pays, and no one profits. That’s not utopian. That’s socialism. And we’re not asking for it. We’re organising for it.

A.T.

Sting in the Tail: Suffer the little children (1996)

The Sting in the Tail column from the July 1996 issue of the Socialist Standard

Suffer the little children

Stephen Dorrell, the health secretary, is expected to order health regions to give more priority to paediatric intensive care beds after reports that numbers have fallen dangerously low.

In one of the worst cases, Nicholas Geldard, aged 10, died from a brain haemorrhage last December after being taken to four hospitals and across the Pennines in a snowstorm because no bed could be found for him.

Mr Dorrell’s action could be less than compassionate, however, for according to the Sunday Telegraph (19 May):

“He will also expect at least 33 of the beds to be opened by the winter, when demand is at its highest and to avoid any scandals in the run-up to the general election. ”

This is another example of the cynical contempt the Tory Party and its "Torygraph" supporters display towards the health care of the working class.

Ways of seeing

The 60th anniversary of the Spitfire, one of Britain’s World War Two aircraft, had one Jonathan Glancey rhapsodising over its “beauty” in the Independent (8 May).

He informed us that the Spitfire was “one of the most beautiful machines made”. It was “glamorous, romantic, balletic”, and in case we still hadn’t got the message:

“The spirit of the Spitfire is deeply embedded in our culture, a machine that somehow speaks of cricket, the sonnets of Keats . . ."

All this tripe about a machine designed to kill and destroy, a weapon in British capitalism’s struggle to hold onto its empire, markets and place as a world plunderer. Can something like this really be beautiful?

For us, a kidney machine or even the humble washing machine, which at least reduces drudgery, are far, far more beautiful than the Spitfire and every other instrument of death and destruction.

Utopian “Socialists”

The syllabus of the Socialist Scholars Conference held in New York City in April had 42 speakers listed to speak on 11 subjects under the general heading "Two Cheers for Utopia—Re-imagining Socialism".

This looked promising; after all, when scholars get together to talk about “socialism" they invariably mean schemes for patching-up capitalism through programmes of reforms. Could this really be a conference to discuss genuine socialism?

Even more promising was the statement in the syllabus that:

". . . we believe a little utopia is precisely what our society needs. "

Alas, further reading revealed that for these scholars “Re-imagining Socialism" amounted to such “outlandish” proposals as a guaranteed income, opposition to privatisation and welfare cuts, etc.

This is utopia? Compared to our vision of a classless, moneyless, worldwide society of production for use, the imagining of the SSC is very limited indeed.

Spot that tune

The terms of reference of the Hearing committee of inquiry into the future of further education in Britain spell out what the inquiry’s priorities will be.

The terms emphasise the need for universities to provide graduates with the skills required by industry, and although the need to be internationally competitive gets ten mentions, scholarship gets only four.

Anyone who is shocked by such priorities should remember that this is capitalism, and what is good for business will inevitably come first. This is why a committee dealing with education draws five of its sixteen members from business.

The fact is that the cost of education is borne by our masters, and isn’t it still true that who pays the piper calls the tune?

What Sid wasn’t told

Remember Sid? He was the creation of the ad-men in the Tories’ campaign to persuade your ordinary punter to buy shares in the privatised industries in the hope that ever-rising dividends and share prices would bring him to love the capitalist system.

Of course, Sid wasn’t told that owning shares in a company didn’t mean it would never sack him, and far from having a say in company policy he wouldn’t stand a chance against the big institutional investors. Now, the directors want shot of him altogether because he is a “costly pest” (Independent, 14 May).

Yes, lots of Sids did buy shares, about £ 1,000 worth on average, but mostly they flogged ’em, took the money and ran—in 1987 British Gas had 4.4 million shareholders but now has only 1.7 million.

Sid was only the front-man in yet another foolish attempt to achieve the impossible—making capitalism operate in the interest of the vast majority.

Hanson hits out

Lord Hanson, multi-millionaire turned social pundit has penned a blistering attack on “destructive journalism” in an article in the Spectator (16 May).

The noble lord writes “Destructive journalism fosters the believe that politicians routinely evade the truth and break their promises."

Politicians telling porkies? We are shocked at the suggestion. Broken promises? Tut, tut. What calumny.

But Hanson is really upset at what is written about businessmen: “They are castigated for seeking profit, damaging the environment and much else besides.”

As if businessmen would stoop so low, me lord!

Proper Gander: The maxim of maximising (2025)

The Proper Gander column from the March 2025 issue of the Socialist Standard

In The Prophets of Profit, a five-part documentary on Radio 4, the BBC’s Business Editor Simon Jack ‘tracks how a simple idea became so powerful and why it shapes all of our lives today’. This idea is a common approach to running companies, and its ‘prophets’ are economist Milton Friedman and his successors. Being a radio programme, there aren’t any visual distractions to the words spoken by Jack’s interviewees or his explanations of the technicalities of commerce, which are more detailed than most documentaries bother with. However, this makes it harder to discern that buried underneath the talk of ‘maximising shareholder value’, ‘creative destruction’ and ‘equity-based compensation’ are the practicalities of goods being made and used by people.

The series takes 1970 as its starting point, when Milton Friedman’s article ‘The Social Responsibility of Business is to Increase its Profits’ was published in the New York Times. Clear from the title, Friedman’s ‘simple idea’ is that the main aim of corporate executives is to encourage profits, and any responsibilities a company has to wider society are covered by the wealth it generates. The documentary describes his influence through economists such as Michael C Jensen and Bill Meckling, who went from ‘disciples of Friedman to preachers for a new muscular brand of shareholder supremacy’, according to Jack. They, and those they inspired such as ‘corporate finance specialist’ Don Chew, believe that businesses have been held back by legislation and placing too much emphasis on cultural and environmental concerns or perks for staff such as pension schemes.

Chew quotes the view that ‘we’ve reached the point where every corporate interest is represented except for shareholders in the corporate boardroom’. To ‘correct’ this, executives should focus on directly maximising the value of shares, and this would lead to a better return on capital for shareholders than investment in wider issues. A sympathetic government would support this approach by minimising tax rates, regulation and legislation. Techniques to enhance share value which became popular through the 1970s and 80s included firms borrowing more to finance targeted growth, and ‘using cash generated by the business to buy back shares from existing shareholders so they can go and invest the proceeds in new industries’. Chew brags that Americans in particular have become adept at squeezing money out of failing organisations and in to growing industries, so the loss of one company means a boost to others. This is one application of ‘creative destruction’, a concept popularised by political economist Joseph Schumpeter, but which was earlier critiqued by Karl Marx. Those with an optimistic view of capitalism would say that overall this can lead to economic equilibrium, ignoring the hardships workers face when on the wrong end of ‘creative destruction’.

Maximising shareholder value also supposedly creates an equilibrium by being the most effective discipline to mould a well-run company for all, generating taxes for governments to spend while making innovative, decent products and happy workers. With this view, we’re expected to believe that wealth will trickle down to where it deserves to be. The series covers some of the actual consequences of the drive to raise shareholder value. Michael Jensen advocated ‘equity-based compensation’: executives being paid in shares to give them additional motivation to improve the company’s coffers. He didn’t foresee that many would be paid with salaries and bonuses as well, leading to a massive gulf between their income and that of most workers, nor that firms involved in scandals during the 2008 financial crash tended to have executives motivated by ‘equity-based compensation’. And as explained by economist Sir John Kay, a short-term focus on generating wealth can have disastrous effects, such as when crashes of Boeing’s 737 MAX aircraft were blamed on prioritising profits over investing sufficiently in safeguards.

The series uses the late-80s privatisation of the water industry as an example of Friedman’s ideas being put into practice in the UK. Michael Howard, the Tory Minister who oversaw this says that when owned by the state, the water industry had to compete for funding with other institutions such as the NHS. He claims that since privatisation, investment in the sector has always been higher than it was beforehand. However, in the ten years that Macquarie Group Limited owned Thames Water, it didn’t invest any of its own money in the business, which was sold off when in debt, with prices to customers subsequently raised. Sharon Graham, the General Secretary of Unite, is in favour of renationalisation, saying that water privatisation has led to poorly run services while shareholders have taken £72billion. As illustrated by Howard, though, being state-owned doesn’t mean that industries will be adequately resourced, or effectively managed either.

The impetus to maximise shareholder value has also led to ‘wasteful’ exercises such as American vehicle manufacturers buying steel from China rather than from more expensive local producers. This led to a decline in the American steel industry, which President Trump has said he’ll address by imposing tariffs on metal imports (presumably leading to ‘creative destruction’ elsewhere). Another example of Trump contributing to a change in what methods are seen as enhancing shareholder value is his dislike of ‘wokeness’ enabling companies such as Meta, Amazon, Walmart and McDonald’s to ditch their ‘diversity, equity and inclusion’ programmes.

The Prophets of Profit is timely in being broadcast during a shift back to the directions preferred by Friedman and his followers, especially in the USA. Much of episode four is an interview with Paul Polman, who took the opposing stance when he was Chief Executive of Unilever during the 2010s. Investing in staff and green programmes didn’t prevent Unilever’s returns to shareholders quadrupling in value during the decade Polman was in post. Maximising shareholder value was still the priority, though. This doesn’t really change, even if the most profitable approaches to achieve it alter over the years. The resurgence of Friedman-esque policies is a reminder that supposedly responsible business practices such as safeguards, regulation and workers’ rights can be lost as soon as they stop being compatible with the interests of the capitalist class.

Mike Foster

King Coal makes a comeback (1995)

From the February 1995 issue of the Socialist Standard

State capitalism, just as the Socialist Party predicted all
 those years ago, has been a pathetic failure as far as workers’
 interests are concerned. Now private capitalism has 
returned to the mining industry

At midnight on 30 December British Coal’s 15 remaining deep mines in England passed into the ownership of RJB Mining, a privately-owned company with shares traded on the Stock Exchange.

The government had prepared the way for this change-back to private ownership by crushing the NUM, closing down all unprofitable pits (and not a few not-profitable-enough ones too), and watering down the safety regulations in this notoriously dangerous industry. Now RJB Mining hopes to be able to make sufficient profits by exploiting the remaining 8,000 or so miners to be able to pay a dividend to its shareholders and pay off with interest those who loaned them money to buy what was left of the industry.

Considering that for years the nationalisation of the coal mines had been top of the list of the miners’ union's demands the actual moment of denationalisation passed off without any fuss. There were no strikes, no sit-ins and no demonstrations.

When the mines were nationalised — forty-eight years previously, on 1 January' 1947 — it was a different story. Then the miners did celebrate the ejection of the private owners, a particularly vicious and vindictive lot who had been responsible for grinding them into the dust after the failure of the 1926 General Strike. A notice was stuck up outside every pit in Britain proclaiming “This colliery' is now managed by the National Coal Board on behalf of the people”.

British capitalist class

This wasn’t true of course, as the miners were soon to find out. The Coal Board’s job was to manage the pits on behalf of the British capitalist class as a whole. At first this meant producing as much cheap coal as possible for the rest of British industry. Later this meant producing cheap coal for profit in competition with other fuels like oil. At no time did it mean production to meet people’s needs. Not one lump of coal was ever produced to be given to a pensioner to stop them dying of hypothermia. As many thousands did throughout the period of nationalisation.

Working conditions did improve somewhat, but wages remained a bone of contention. How could they not, since the more the miners obtained in wages the less of what they produced remained as profit? A profit that was needed to pay compensation with interest to the former owners as well as to invest in new machinery and equipment.

The whole period of nationalisation was marked by conflicts over wages — from the illegal strike at Grimethorpe in 1947, through countless local disputes, to the successful national strikes of 1972 and 1974, to the heroic but doomed year-long national strike which ended in failure ten years ago this month.

State capitalism

Ironically, it was the Coal Board and not the NUM that first recognised that nationalisation had nothing to do with socialism. In 1968 Lord Robens, a minister in the Labour government that had nationalised the mines who was appointed NCB chairmanin 1961, told a NUM weekend school:

"I do not believe that in 1945 those of us who were nationalising these industries would have done it with so much enthusiasm if someone had told us then that they were going to turn into state capitalism ” (Times, 1 April 1968).

Someone did tell them We did. This is what we wrote in our 1945 pamphlet Nationalisation or Socialism ?:

“Only when industry and transport, etc, are owned and democratically controlled by the whole community can service to the whole community be a reality. Nationalisation or State Capitalism is not the solution of the problem. ”

It took the leaders of the miners' union ten years longer than Robens to realise the truth. It was not until his retirement in 1976 that Dai Francis, the Secretary of the South Wales Area of the NUM. was prepared to admit that "there was no difference between the old . . . coal owners and the National Coal Board. They were now turning it into state capitalism ” (quoted in H. Francis and D. Smith The Fed). Former NUM General Secretary Will Paynter hit the nail even more squarely on the head when, surveying three decades of nationalisation, he noted that “progress from private enterprise capitalism to state capitalism does not change the fundamental status of workers in society ” (The Miner, November-December 1977).

No doubt this explains the lack of reaction by the remaining miners to the return of the coal industry' to private ownership. They had learned by bitter experience that state capitalism was no better, if no worse, than private capitalism, so that a change from the one to the other wasn't worth getting worked up over.

Profitable basis

Socialism does indeed involve the management of industries "on behalf of the people”. But this was not what nationalisation did do, nor, as we pointed out in 1945, what it was able to do. Nationalisation represented the purchase by the state of an industry from its previous owners and the appointment by the state of a board to run it on a profitable basis with the workers remaining excluded and exploited wage and salary' earners.

Privatisation, on the other hand, represents the resale of an industry to private capitalists for them to run for their own private profit instead of it being run by a state board for the benefit of the capitalist class as a whole. As far as the workers are concerned, it makes no fundamental difference.

For industries to be run as a public service in the interest of all, they must first all be taken into common ownership at the same time, and without any compensation being paid to the previous owners, and they must be made subject to the democratic control both of those working in them and of the community in general. Such genuine common ownership is something quite different from nationalisation, or state ownership.

Production for profit will come to an end and there will be no exploitation, no property incomes either in the form of dividends or of interest on compensation or other government bonds, and no wages system. Instead, people will be able to cooperate to produce what is needed on the basis of the principle “from each according to their abilities, to each according to their needs".

This is what socialism is and it hasn’t yet been tried. It is high time that it was.

Adam Buick

Running Commentary: Free speech (1985)

The Running Commentary Column from the December 1985 issue of the Socialist Standard

Free speech

The ruling class in South Africa has imposed new censorship laws preventing foreign journalists reporting the current unrest and violence. The editor of the liberal (by South African standards) Cape Times, Anthony Heard, is to be prosecuted for publishing an interview with the banned leader of the African National Congress, Oliver Tambo, under a section of the Internal Security Act which prohibits the printing, publishing or dissemination without government permission of "any speech, utterance, writing or statement'' of a "banned'' person. Heard did not seek permission to publish the interview since he considered the public have a "right" to be informed about matters of importance. What he will discover is that in capitalism workers do not have "rights" except those legal rights granted by their political masters. Such legal rights are neither absolute nor inalienable. If the capitalist class feels that its interests are threatened by such "rights" as freedom of speech, a free press, freedom of movement or freedom to demonstrate then they will be suspended through Emergency Powers legislation, internal security measures or in the interests of "national security".

The white ruling class clearly feels itself under threat from the black nationalist movement, hence the tightening of the screw. But does it really believe it can conceal for long the contradictions inherent in the apartheid system, and the cruelty, poverty and inhumanity perpetrated in the name of white supremacy?

Race laws

Twenty years ago, in 1965, the first legislation was passed which attempted to outlaw racial discrimination in Britain, since when a number of other Acts have extended the scope of race relations law. So what is the position of blacks in Britain today?

As is well known, and as the Policy Studies Institute confirmed in its report Black and White in Britain, blacks are still relatively disadvantaged: they tend to live in worse housing than white workers, receive lower pay, get the worst jobs and are more likely to be unemployed. Increasingly they have been the victims of racial attacks and violence.

Various reasons have been given for this failure to improve the state of race relations but none has even begun to address the real problem. That is that it is impossible to legislate to change people's attitudes. They are shaped by the conditions of society in which we live. In capitalism conflict and competition between workers is inherent: competition for jobs, houses and other "scarce" resources. It is not surprising therefore that those who lose out in that competition frequently give vent to their frustration in the form of hostility towards blacks as an identifiable group.

No amount of legislation can change such feelings. What is needed is the recognition amongst all workers, men and women, black and white, that we do have interests in common, that transcend racial, cultural or gender divisions, but those interests will never be fully realised so long as capitalism continues. What we don't need is another piece of legislation outlawing racial discrimination; what we do need is democratic, political organisation to abolish the root cause of racism—capitalism.

Queen’s speech

Although the next general election is probably another two years away, it looks as if the government's campaign has begun in earnest. Its programme for the new session of Parliament, outlined in the Queen's speech, includes a Bill to deal with Public Order (likely to be a big vote-catcher given the hysteria whipped up over events on miners' picket lines and in inner cities); more privatisation to raise money for tax cuts; further "de-regulation", including the removal of restrictions on Sunday shopping, a limitation on the activities of Wages Councils so that workers under 21 will no longer have their pay protected, more private management of council housing estates; and changes in social security benefits.

What will this programme of legislation mean to workers? Is there anything to persuade us that the government is indeed acting in our interests?

Sunday shopping

Although some people might think that unrestricted opening hours are in workers' interests. we should remember that the shop-workers' union. USDAW, at least, is opposed to such a change. They fear that it will lead to their already badly paid members working much longer hours without the benefit of overtime rates. It becomes clear whose interests the proposed change is designed to serve when "Open Shop", the pressure group in favour of Sunday trading, lists among its members such giant retailers as Asda. MFI. Habitat/Mothercare, W.H. Smith and Woolworth.

Social security

The review of the Social Security system was intended to look for ways in which benefits could be "targetted" on those most in need, or at least that's the story we were given. The changes are likely to affect pensions. supplementary benefit, support for the low paid and housing benefit. A report published recently by the Policy Studies Institute (The Examination of Social Security) states that if the government s plans go ahead, some of the neediest and most disabled claimants will actually lose money.

Privatisation

The government expects to realise £10 billion from its sale of British Gas. It also plans to sell off shares in airports owned by the British Airports Authority and introduce "commercial management" into the naval dockyards. All this, it is hoped, will not only provide some spare cash for tax cuts, but also give people the opportunity to buy shares in companies presently legally owned by the state. If the workers weren't conned by the Labour trick of nationalisation. then maybe they can be duped into believing that they can have a real stake in the capitalist system of society by buying a few shares. The truth is very different. It makes no difference to the working class whether the means of production are privately owned or state owned; whether or not we own a few shares, workers will never have access to the wealth that we, as a class, collectively produce. Plans to give tenants some say in the management of council estates are part of an attempt to create the same illusion. Who wants to be part of a "property owning democracy" when the only property we own is a tower block slum?

Public order

The proposed changes to the law relating to Public Order will give the police greater powers to restrict marches and demonstrations. and to decide how many people should stand where on a picket line. A new offence of "disorderly conduct" will be created and the old common law offences of riot and affray will be tightened up (no doubt because of recent failures to secure prosecutions of people charged with these offences). These changes will mean that the legal rights of workers to protest, demonstrate and picket will be curtailed.

So the Queen's speech seems to have left out one important statement. It should have read as follows: "My government will continue to support absolutely the capitalist system of society which concentrates ownership and wealth in the hands of the minority capitalist class, at the expense of the working class who produce all wealth through their labour. My government will continue to support the police force and the other coercive machinery of state, which acts to protect the interests of parasites like myself against any perceived threat by the workers".

Janie Percy-Smith

Universities Challenged (2011)

From the September 2011 issue of the Socialist Standard

The Government White Paper on Higher Education (HE) entitled ‘Students At the Heart of the System’ has created controversy since its publication in the summer. As the new academic year begins, we take a look at its likely impact.

The White Paper is to form the basis for a new Higher Education Bill in 2012, after the current consultation period ends in a few weeks time. In truth it is the latest in a rather long line of papers and reports setting out a future for HE in the UK since the 1960s. In particular, it follows in the footsteps of the Robbins Report of 1963, the Dearing Report in 1997 and then – most recently of all – the Browne Report of 2010 commissioned by the Labour Government.

During this time, HE in the UK has seen developments that have been similar to those affecting university sectors in many other parts of the world. In particular, there has been a massive expansion in student numbers  – impelled by, among other factors, the conversion of former polytechnics and colleges of HE into what are sometimes termed the ‘post-1992 universities’ and the increased government funding that then allowed them to rapidly expand. There has also been a significant expansion in vocational HE beyond traditional areas of engagement like teaching, law and the ministry. This has been reflected in the growth of what some have considered to be more esoteric subjects like sports management and herbal medicine, and particularly in the development of Business Schools, which only grew to be of any significance in the UK in the 1980s but which are now commonly one of the biggest discipline areas in universities of all kinds.

Unsustainable

The previous Labour government famously set a target of 50 percent of school leavers going on to study at university and while this has never been reached, decent enough progress was nevertheless made, prompting some to complain of a ‘dumbing down’ of entry standards. In 1955 less than 5 per cent of school leavers went on to study in HE, a proportion that had risen to 12 per cent by 1980, to 19 per cent in 1990 and then to over 35 per cent for most of the years in the last decade.

This growth, like many things in the market economy, has happened for a reason. As capitalism has developed and its operations have become more sophisticated, the working class of wage and salary earners who operationally run capitalism from top to bottom have needed to have a different and often more developed set of skills than was required, say, a hundred years ago. While the economy of course still needs production workers, miners and other manual and physically skilled staff, capitalism has developed a vast administrative apparatus around buying and selling, the service economy and the state sector which is needed to ensure that this all runs smoothly.

Figures from the Office of National Statistics have shown that the percentage of workers in the UK employed in manufacturing and construction fell from around a third in 1983 to just under 20 per cent in recent years, confirming a long-term trend. At the same time there has been a significant growth in the service sector, in particular. This has necessitated government encouragement for more young people to seek out the type of education and skills supposedly provided by a university education. The problem has been that in doing this, the government has created a huge amount of additional expenditure to be funded out of general taxation, and as we have seen on a range of fronts in recent times, state expenditure tends to have its limits – especially as the burden of taxation has ultimately to fall on the profit-generating sectors of the economy (i.e. the private sector).

As more and more students have entered HE the cost of their tuition as well as contributions towards their living costs have become too burdensome for the state. This has over the last two decades led to periodic attacks on what many students of earlier generations took for granted. These attacks have included the removal of the right for students unemployed during the holiday periods to claim benefits for this, through to the full-scale assaults on the student grant system and the highly controversial introduction of tuition fees (with students loans to pay for them) mooted under John Major’s Tory government but carried out by Labour under Blair.

In this respect, the Government White Paper is but the latest in a long line of initiatives with a common thread and a common purpose.

Main features

There are several aspects to what is proposed currently and little if any of it is genuinely new. Indeed, what is most striking about it is how it usually develops existing approaches or applies other approaches already implemented by government in other fields. The main features of the proposals in this respect are these.

• Increase debt and reduce (or disguise) the burden on taxation. This is a continuation of what occurred under Blair and Brown when tuition fees and student loans were introduced.  The approach this time is more radical (if radical be the right word) as tuition fees will rise hugely from £3,375 to between £6,000 and 9,000 a year, depending on institution. This is to make up for the fact that in England at least (Wales and Scotland will stick to variations on their existing systems for now), the funding that government gives to support student tuition is to be removed almost completely. This will happen to all subjects except those already in receipt of higher levels of subsidy from the Higher Education Funding Council for England (HEFCE) because of their elevated cost levels e.g. science subjects, medicine and engineering. To achieve this change, a modification of the student loan system is to be introduced whereby those earning over £21,000 after graduation will begin to pay back their loan through the taxation system with interest charged at RPI plus 3 per cent. In many respects, this is becoming ever more like a disguised graduate tax, with the advantage for the government that those leaving the country after they graduate will still have to pay it back. Like most taxes – whether disguised or not – it  will eventually mean that wages will have to rise, other things being equal, so that people can pay it, in this way cutting into employer’s profits in an indirect and more subtle way.  Furthermore, the attitude of government to the huge (and about to become even bigger) student loan book is also revealing, as they estimate that the amount borrowers will be liable to repay will have risen to £70 billion by 2016-7. Few seemed to have noticed that the government has just asked Rothschilds to develop a plan for ‘how to monetise the loan book’ including ‘selling [the loans] outright to financial investors, or selling loans to one or more regulated companies set up to manage the loans’ (White Paper, p.24). Clearly the recent financial crisis and its causes has been forgotten already.
• Outsource/privatise where possible, introducing ‘competition’. Until recently, the only private-sector university in Britain was the University of Buckingham, though now BPP University College of Professional Studies (owned by the Apollo private equity group) has acquired taught degree awarding powers and others are lining themselves up to be granted university status. This is in part an attempt to provide competition so that existing universities don’t all charge fees at the higher end of the permitted range (as most are proposing to do at present) while being a philosophical nod in the direction of ‘free markets’. The main problem here is that fears about the quality of academic provision declining in these circumstances have some substance. The proliferation of so-called ‘degree mills’ in countries like the US and Canada has long been an issue (where students can effectively buy a degree) and the largest private university in the world by most counts, Phoenix University, Arizona, has seen its applications plummet in the last two years because it has been subject to legal action by no less than 10 Attorney-Generals in different states over its ‘deceptive practices’. Coincidentally, and perhaps unfortunately, it is also owned by the Apollo private equity group.
• Increase links between the universities and the private sector, binding the two ever closer together. Again, this has been happening for years and it is standard practice for universities to check when they are validating new courses that they meet the needs of relevant employers. However, the government is concerned by the recent decline in ‘sandwich years’ for students with business and in internships, and wants to see these encouraged. It also wants to see the links between research and private business developed and commercial opportunities exploited to the full. Interestingly, postgraduate courses already receive little by way of HEFCE funding and have had higher fees to make up the difference as it has long been assumed that much postgraduate study is sponsored by employers (something the government would like to see extended to undergraduate study too, wherever possible).
• Target state support rather than universalise it. Student grants to help with living costs will be targeted at the poorest families only and the old education maintenance allowance for 16-19 year olds studying before they get to university is to be abolished on the grounds of cost. Similarly, HEFCE funding is only likely to remain for those high-cost courses that students couldn’t otherwise pay for themselves out of their loans, and which employers would be reluctant to sponsor as this wouldn’t be appropriate or they would be too expensive, such as medicine, veterinary science, etc.
• Set up a complex regulatory framework to oversee it all. The Browne Report had recommended uniting HEFCE, the Quality Assurance Agency for HE (the university academic quality watchdog) and two other related bodies into the one organisation dealing with the oversight of HE. This will not happen now, and the complexity of the proposals, the loans, the targeting and the new entrants to university status means that the regulators will clearly have their work cut out.

The devil is in the detail

The details of much of this could change and probably will, but the general trajectory is clear: a business-led HE sector; an expansion of vocational courses; students in debt for most of their lives, wedded to wage-slavery just to pay off their loans (and that before any consideration of mortgages and likely personal debt). As there are over 120 universities currently in the UK it is likely that some will go bust (and the government has explicitly stated that it will not ‘underwrite’ the finances of the existing HE providers), especially given the likely falling away of full-time student numbers consequent on higher fees. And the drive for ‘efficiency’ in the HE sector will be pushed ever harder, with the government setting up the Diamond Review into how universities can be run more efficiently (if this doesn’t entail recommending that universities ‘outsource’ much of their central services like Finance and Human Resources it will be a surprise).

The most obvious and predictable effect of these changes is likely to be a move away from full-time HE by 18-21 year olds, reversing the decades-old trend for more school-leavers to go to university. The precise extent of this is likely to depend on the buoyancy or otherwise of the job market, with those who can often choosing employment and relevant training over university and a lifetime of debt. It is also not difficult to predict a rise in the coming years of students studying part-time and flexibly alongside their employment, in many cases linking one to the other through programmes of negotiated work-based learning, for instance (another one of the growth areas in HE in recent times) where people receive academic reward for their personal learning in and through the workplace.

A sane society

It is clear that many potential students have already been put off university for life. But of course, as the old saying goes, it doesn’t have to be like this. Education should be available for those needing it and people shouldn’t expect to have to commit themselves to a lifetime of drudgery to pay for it either. Indeed, there is nothing intrinsically wrong with studying a subject like history or art simply because you are interested in it, but this has become more difficult in recent years and will now be more difficult still as pressures from business and through the job market dictate that students have to study what will make them employable.

Nevertheless, one of the more interesting developments in the last ten years or so has been the whittling away of some of the old snobbishness and elitism that has existed in universities across the country. An unintended consequence of the rise in vocationally-oriented courses has been that some have discovered that what is often called the ‘knowledge capital’ of society exists mainly outside the Ivory Towers. To many professors this is a frightening concept that challenges their very legitimacy as ‘the experts’. But experiential learning – that is learning by doing, typically in the workplace – has started to come into its own, along with reflection on how people work and learn together this way. The deliberate division between learning passively in a seminar room or lecture theatre and learning through doing has sometimes been necessary but when reinforced systematically as has been the case in HE until recently it became a strangely lopsided way for an education system to operate – the ‘University of Life’ is indeed a valuable and important place and universities were in denial about it for quite some time. Stripped of the functionalism required by employers and the market, this could be a useful educational development.

We can certainly add to this that a co-operative society of the future would seek to ensure that a university education would be genuinely meaningful – not just for the participants but for society as a whole, being finally freed from the narrow constraints of the market and money, loans and liabilities. Situated within a society of common ownership and with common purposes for the dissemination of wealth and happiness it could indeed, finally, be part of a rounded University of Life.

Dave Perrin

These Foolish Things: It takes your breath away (1995)

The Scavenger column from the June 1995 issue of the Socialist Standard

It takes your breath away

Orimulsion is a cheaper fuel for electricity power stations. It is based upon bitumen and is imported from Venezuela. Since it has been used at Merton power station, near Ramsgate, asthma attacks in the area have quadrupled. Because it is cheap there are plans to introduce it at a number of other power stations.

So what's new?

They throw the most lavish parties. Last year they air-freighted more than £13 billion in cash into the country to satisfy the popular demand for foreign currency. Their offices are already extravagant temples to Mammon. But now Russia's bankers want more.

With the Kremlin’s help they arc amassing enormous political power. In short. Russia's new plutocracy can boast of wealth and influence to rival the Medicis or the Rothschilds. Sunday Telegraph 16 April.

Current account

In the first five years of private operation, the regional electricity companies accumulated £1 billion surplus funds, instead of reducing charges to customers. Professor Stephen Littlechild, the highly-paid regulator appointed to prevent such excesses, either knew nothing about this or chose not to take any action. Whichever was the ease, he was useless.

The Thatcher nightmare

House prices have fallen by 25 percent in real terms since 1990 and experts believe that they have much further to fall. Over a million people in Britain arc caught in the negative equity trap, where they currently owe an average of £7.000 more in mortgage repayments than their home is worth on the market. Apart from the debt burden, this makes it extremely difficult for them to move house. During Margaret Thatcher’s rule, with her campaign for a “home-owning democracy” and income tax relief on mortgage interest payments, house prices doubled in seven years. Now the market is swinging back again.

True Brits

National Grid, the electricity transmission company being privatised, has avoided paying almost £2m in tax by setting up a financial arm in Dublin.

The company ladled £160m of its cash flow into the tax avoidance scheme before the government stepped in to make the arrangement less attractive.

A National Grid spokesman yesterday confirmed the existence of the "special purpose” firm and defended it as: “a tax-efficient way of managing the company’s money which is our duty on behalf of the shareholders. It is part of our treasury function, and normal practice for UK companies that have big cash flows” Independent on Sunday, 2 April.

The Scavenger

Socialist Sonnet No. 149: Water’s Utility (2024)

From the Socialism or Your Money Back blog

Water’s Utility

‘Water, water, everywhere, nor any

Drop to drink.’ Rain falls freely to earth,

Yet water is not free; so what is it worth?

A fortune to a water company,

Feeling free to pollute rivers and lakes

With sewage in all its variety,

Product of our effluent society.

Consumers pay the bill, while capital takes

The dividends. So, what nature provides

Becomes a commodity by and by,

To profit those who’ll control the supply

As long as capitalism abides.

‘Nor any drop to drink’ safe to say

Unless the drinker can afford to pay.

 D. A.

Cooking the Books: Uninvestible (2024)

The Cooking the Books column from the May 2024 issue of the Socialist Standard

That was the word used by Chris Weston, the CEO of Thames Water, to describe how the business was regarded by its shareholders in the absence of the water companies’ regulator, Ofwat, allowing an increase in the price charged to customers (Times, 29 March).

It’s an odd word, not to be confused with ‘uninvestable’ (with an a) which refers to some item of value that cannot be invested because it cannot be money-capital. ‘Uninvestible’ (with an i) refers to a project which those with money-capital won’t invest in.

Last year the US Commerce Secretary said that businesses had told her that China had become ‘uninvestible’ because it was too risky due to interference from the government there. In the case of Thames Water it is simply a euphemism for ‘not profitable enough’:

‘Thames Water Plc said its £18.7 billion ($22.7 billion) plan to strengthen its finances won’t get funding from investors unless the regulator changes the rules to allow fatter returns. The UK’s largest water company said delivering on its full business plan, published belatedly on Thursday, rests on getting £2.5 billion additional equity from shareholders for 2025 to 2030. However, it warned that investors can get better returns in UK gilts and investment grade corporate bonds. It called on the Water Services Regulation Authority, Ofwat, to make significant changes to the rate of returns allowed for regulated water companies. (…) Thames Water called for a “material move up in the allowed rate of return” set by Ofwat in its initial guidance’ (Bloomberg).

There is little sympathy from other capitalists for the shareholders (one of which is, ironically, the Chinese sovereign wealth fund). Jacob Rees-Mogg, a capitalist as well as an MP, tweeted:

‘Thames Water ought to be allowed to go bankrupt. It would continue to be run by an administrator, the shareholders would lose their equity but they took too much cash out so deserve no sympathy and the bond holders would face a partial loss. This is capitalism, it won’t affect the water supply.’

Monopolies such as the essential utilities —there can only be one national grid for electricity, gas or water — present capitalism with a problem. If left in private hands, the capitalists who own the distribution system are in a position to hold the rest of the capitalist class to ransom by charging a monopoly price. The way the other capitalists found round this has been either nationalisation, where the state runs the industry keeping prices down, or regulation, where the state imposes a limit on the amount of profit that the privately owned utilities can make.

Historically, the US chose regulation while Britain chose nationalisation until, that is, the Thatcher government in the 1980s switched to regulation. One reason for this switch was to attract outside capital to invest in them, which made the change as much ‘internationalisation’ as privatisation. This part worked, as illustrated by the fact that, besides China, another of the owners of Thames Water is a Canadian pensions fund.

With regulation, the private owners are not in a completely weak position as they can, if they are not allowed to make enough profits, simply walk away, as the owners of Thames Water are threatening to do.

There is a lesson here for the future Labour government whose plan for growth relies on offering private capitalist enterprises an incentive to invest in some project by the state part-financing it. These enterprises, too, will be in a position to put pressure on the government by dubbing some project uninvestible unless they are allowed ‘fat returns’.