You can't control what you don't own

If there's one lesson of the banking crisis and bailouts of 2007-09, it's that 'you can't control what you don't own'.

Today the government implores the banks to lend more to businesses and to constrain executive bonuses, but to little avail. Perhaps the irony is that we do still own large stakes in several banks. Indeed if it were not for the various guarantee schemes that underpinned UK banking, we would have ended up owning most of them as they fell like dominoes. However, the ownership model devised was arms-length, temporary, and was in reality the privatisation of public money rather than the nationalisation of private assets (or liabilities).

The New Labour government had introduced the market further into areas such as welfare, education and health, had part-privatised the London Underground, and more of the civil service than the governments of Thatcher and Major combined. But here it was facing the possibility that its golden child - the finance sector - was about to collapse.

In 2007, what struck LEAP was the lack of debate about public ownership. What really sent the message home clearly for me was this press release from Unite, the union that represents Northern Rock staff, from 20 November 2007. It sets out a six point 'Charter for Northern Rock' the sixth point is "To retain Northern Rock as a UK listed company".

I don't use this example to in anyway demean Unite, but simply to highlight how little issues of ownership and control were being discussed and debated in the labour movement.


Today, Southern Cross - which owns 753 care homes across the UK - remains on the verge of collapse. The 2011 GMB Congress asked 'If private equity and the private sector are places fit for the care of our elderly, our most vulnerable and our most dependant?' Indeed.

A new debate is starting up about media ownership in the wake of the News of the World hacking scandal. With energy and supermarket prices both rising above inflation to enable gratuitous profiteering, the demand for public ownership should be made.

Earlier this week it was also revealed that Virgin Trains received £40 million in public subsidy, and paid out nearly £35 million in dividends. The case for rail re-nationalisation is overwhelming.

It therefore seems an opportune time to publish free online for the first time LEAP's 2008 publication Building the new common sense: Social ownership for the 21st century (you can buy a hard copy here).

The pamphlet looks at different forms of public ownership from the Morrisonian post-war model to workers' co-operatives.

Download chapter by chapter

• Preface by Andrew Fisher
• The Case for Industrial and Economic Democracy by Gregor Gall
• Why we need a culture of social ownership by Rosamund Stock
• The economic case for worker-owned co-operatives by Jerry Jones
• Telecommunications of the future under public ownership by Maria Exall & Gary Heather
• Rail privatisation - a failed experiment by Bob Crow
• The Growing Case for Social Ownership by Gerry Gold
• The Campaign for Social Ownership in the 21st century by John McDonnell MP

Convention of the Left

The Convention of the Left recall conference in Manchester on Saturday, January 24 “Capitalism Isn’t Working – what is the alternative?”, met in the shadow of confirmation that, after six months continuous contraction, the UK economy was officially in recession and heading in the direction of depression.

As more than 180 delegates and individuals gathered - socialists and anarchists, trade unionists, environmentalists, democrats and those who favour direct action - they were confronted from the outset of the discussion with the global economy in free-fall.

The sudden sharp economic downturn since the September Convention, and a succession of failed bail-outs, served to dispel the myths of a stand-alone crisis in the financial sector that could be resolved by a new regime of regulation and a programme of government spending funded by increased taxes, and ever more debt.

News that car production in December had fallen to half the output one year earlier and Honda had doubled its two-month UK shutdown added to a mounting sense of the possibility of recession giving way to a complete economic collapse and gave a new urgency to a vigorous discussion, which I introduced on behalf of LEAP.

However carefully prepared, many proposals crafted in advance proved inadequate for the sudden and sharp deterioration. Almost as quickly as they were raised, calls for pressure on New Labour to pursue a growth agenda, for previously radical-sounding programmes of demands to nationalise the banks, to build resistance to job cuts, for a Green New Deal, for doubling of jobseekers’ allowance and slashing rents, all began to look too weak for the new turn of events, on a scale unprecedented, and therefore unexpected by most.

As the oil price plummeted to new lows, undermining the campaign for a windfall profits tax on energy companies, much of the discussion on the climate crisis revolved around the TUC’s proposals for a Just Transition and how to resolve the conflicting objectives of solving the energy crisis by preserving and creating jobs in coal and nuclear power, whilst moving to a low-carbon economy.

As the day progressed, stronger, bolder proposals began to dominate, coming together in agreement of the need for a coherent strategy to establish a socialist economy.

Beyond fighting to preserve jobs and hence the employment contract, which is being broken everyday as redundancies accelerate, ideas for were put forward for extending existing forms of collective ownership and creating new ones, based in the communities.

Suggestions like using unsold Jaguar/Landrover vehicles as the basis for community transport came together with the necessity not just to oppose the global corporations, but to transfer their resources and those of the privatised bus, and train companies into socially-owned enterprises, democratically controlled and managed by committees of workers and transport users.

The Convention’s own open democratic processes were tested and survived a challenge to its stated policy of broad and inclusive unity rather than campaigning for a new party. A vote to move on from a short discussion about the idea of a new party was carried by more than two to one.

A new steering group was elected with nominations from a range of organisations, and strengthened by a new sense of direction, the Convention decided to invite the absent cooperative movement to join the group.

The Convention provided a timely and valuable opportunity to bring together a wide variety of previously disparate strands. Hopefully, it will be followed up and developed through local Conventions.

Nationalisation - in whose interest?

Gregor Gall
(A version of this article first appeared in the Morning Star)

State intervention and nationalisation are both back with an incredible bang. Suddenly, TINA – there is no alternative – to the free market looks as hollow as Brown's promise to end the cycle of boom and bust. Indeed, state intervention has been used to back up the so-called free market. Taxpayers', not private, money has been ploughed into doing this.

It just goes to show that in this age of globalisation and neo-liberalism the state and market regulation are still very important to capitalism, particularly when it is facing financial and economic meltdown.

The downright annoying aspect is that the bailouts we've seen here and in the United States are nationalisations by the right and for the bosses. If they were carried out at the behest of the left and for the workers, taxpayers and citizens, they would look entirely different.

So sure the senior management was changed when Northern Rock was nationalised but one set of capitalist managers was replaced by another set. The same will be true of Bradford and Bingley. The nationalisations were not to safeguard jobs or workers' conditions or people's savings but the financial system in Britain upon which capitalism and profits heavily depend.

If the left is to make headway right now, we must start getting our ideas about public and social ownership out into the media, into union members' heads and onto people's radar screens.

We need to start off with what public and social ownership are not. We're not calling for a return to the age of nationalisation, where civil servants ran the industries in undemocratic and unaccountable ways. Jobs were not safeguarded and services were often poor. We're also not calling for a situation of a command economy where the centre dictated what was produced without consulting the consumers and the localities.

The lessons we've learnt are that whilst coordination and planning are needed, we should have decentralised structures that allow participation and that the process is one of bottom up democracy not top down diktat.

One model of social ownership, for say, public transport (buses, railways, ferries) would be that the boards of management consists of a third of seats allocated to representatives from the travelling public, a third from the workforce and a third from the local authorities. Here there would be a balance between producer and consumer interests.

The issues to be resolved here would include whether the unions would be the only representatives of the workforce, whether businesses would be entitled to seats and whether local authorities are closely connected enough to be the genuine representatives of the public at large.

Another model would be that all members of the board of management would be elected directly by citizens and those wishing to be board members stand on platforms of representing workers', business and passengers' interests and so on.

These are all issues which we can explore in more depth later once we have won the debate on the need for public or social ownership. The key thing here is that the primary purpose of these services (including financial services) being in public ownership would be that they are run on the basis of social need and not private profit.

What this means is that the constitution or articles of association of these organisations would be changed from the objective of pursuing private shareholder interests to providing services. The organisations would not then have to be concerned with chasing profits, market value, market share or being taken over by a rival.

The banks would then operate under this system by creating social justice and social inclusion by keeping open wide branch networks (with one in each community), practice safe lending, work by the principles of ethical investment and return surplus back into their operations to increase service provision.

The way in which the left can do this is by questioning each and every action of the government by saying 'Whose interests are being served by this?', 'Whose money is being used for this?' and 'If public money is being used, where is the public control?'

There is a role for left MPs in laying bills before Parliament to put organisations into social ownership instead of allowing this Labour government to remain the bankers' friend by doling out hand-outs to them.

The unions need to use their influence inside and outside Parliament to support these moves. Rather than being overly fixated on windfall taxes and curbing bonuses, they could tackle the underlying causes – rather than just the symptoms – by supporting social ownership. The odd call for public ownership of the utilities needs to be made writ large.

In New Zealand, after a period of brutal Thatcherism in the 1990s, the left-leaning coalition government has made moves to start to bring back some services (rail, air) and sectors (banking) of the economy back into state control. This may not be exactly what we are after but it does show that our calls are not going to be silent cries in the dark if we pitch them in the right way and loudly enough.

One good starting point is a new pamphlet just published by the Left Economic Advisory Panel which is part of the Labour Representation Committee headed by John McDonnell MP. It's called 'Building the new common sense: social ownership in the 21st century'. It has contributions from RMT general secretary, Bob Crow, and former Morning Star economics editor, Jerry Jones, amongst others. Copies can be bought for £3 either online at www.l-r-c.org.uk or by sending a cheque payable to 'Another World is Possible' to LEAP, PO Box 2378, London, E5 9QU.

It’s common sense! - Review of the new LEAP pamphlet

• Review by Mary Partington, which first appeared in the October issue of Labour Briefing.

New Labour's unprecedented assault on the public sector through privatisation and PFIs combined with their refusal to repeal the anti-trade union laws has set back the debate around social ownership years.

UK industries, workplaces and public infilstructure have become more and more unaccountable. The recent collapse of Northern Rock and the Metronet consortium on the London Underground show that the Government was only willing to spend public finance industries or services in order to bail out ventures that have not succeeded within the market. The public took on the risk involved in these projects without any democratisation of either structure. In the meantime the shareholders of Northern Rock and Metronet have, over the years, pocketed huge profits. Nevertheless, these examples – as LEAP Editor Andrew Fisher points out – obliterate the Government's own rhetoric that the market is always more efficient and therefore better.

Building the New Common Sense - Social Ownership for the 21st Century is a useful contribution to reigniting the discussion about the state and the role of workers in exercising control over their workplaces and society. From Gregor Gall's essay on the importance of workplace democracy to RMT General Secretary Bob Crow's piece on the public ownership of the railways, the pamphlet provides a space for alternative arguments about how democratic public ownership is more efficient in providing the needs of society. Rosamund Stock's essay is particularly valuable. She argues that the key component of public ownership is the collective culture of democracy. It is not enough to talk simply of nationalisation or co-operatives, we have to have industries and services that are fully democratically accountable.

As with other LEAP projects, this pamphlet doesn't claim to hold the definitive answer to one clear question. It is an inclusive and discursive contribution to promote rational and informed analysis of how society is run, in whose interest and how it could be run better. These are exactly the sort of intelligent discussions we need to foster.

• To obtain this 28 page pamphlet, send a cheque for £3, payable to Another World is Possible, to LEAP, PO Box 2378, London E5 9QU or order online from the LRC website.

New LEAP pamphlet out now!

This pamphlet is published at a time when the economy is faltering, and there is an urgent need to reconsider the role for workers in exercising control over their workplaces and their employers. With the recent collapse of Northern Rock and the Metronet consortium on the London Underground, the role of the state and public ownership has also been reignited.

Contributions in this pamphlet include: Gregor Gall looks at industrial democracy, RMT General Secretary Bob Crow considers the model of public ownership best suited to the railways, while CWU Executive members Maria Exall and Gary Heather argue the case for taking the telecommunications industry back into state control. Rosamund Stock argues that we need to create a culture of social ownership, while Jerry Jones considers what an economy based on social ownership would look like, and Gerry Gold considers how we might get there.

The conclusion by John McDonnell MP argues for a debate about how a campaign for social ownership can be fought.

You can order a copy of this 28 page pamphlet for just £3 (inc. p&p) online at http://www.l-r-c.org.uk/payments/default.asp#LEAP, or send a cheque for £3, payable to 'Another World is Possible' to: LEAP, PO Box 2378, London, E5 9QU.

A policy error too far

It’s good to see praise for the work of contributors to LEAP such as Andrew Fisher’s warm welcome to Graham Turner’s new book The Credit Crunch. But, in the spirit of comradely debate, here are some comments which show that Graham’s book raises as many questions as it answers.

The book correctly chastises the mainstream press for failing to address the underlying causes of the massive accumulation of debt that exploded in the sub-prime crisis of 2007 and the credit crunch that followed, and he is right to say that this is “out of fear that the contradictions and flaws with the economic philosophy they have espoused will be exposed”. Graham is right again in his critique of the neo-liberal philosophy of unrestricted free trade which has dominated the global policy agenda for the last period.

It’s also true, as Andrew points out, that Graham talks about the growing power of the corporations during the period of globalisation. But there’s hardly a mention of it in the main parts of the book, and any deeper analysis of the underlying causes of corporate growth is absent. Rather than tracing the ballooning of credit and debt as the necessary expression of, and complement to the relentless expansion of capital, as is shown in my book, A House of Cards, Graham’s subsequent interpretation claims the whole problem is the result of policy errors by governments.

While others have traced the growth of a global network of transnational corporations which have transformed the role of national governments, and some even, like Leslie Sklair, have shown the development of a transnational capitalist class, Graham tends to take an anti-historical view, preferring to see the world as it was when Keynes lived and breathed. His is a macroeconomic world of nations competing in a system of more or less free markets. If only they’d followed the interventionist theories and advice of the economist and Lord John Maynard Keynes, governments could have kept the corporations under control and sustained a nice balance between corporate power and workers’ interests.

Graham’s account of the historical build-up to the current crisis takes in the 1920s and 1930s Great Depression, but leaps over the Second World War and the destruction of capital made necessary by the investment frenzy that led to overproduction and the 1929 crash. The creation and elimination of surplus productive capacity is an essential component determining the boom-bust trajectory of the capitalist economy and Graham sidesteps this question.

In my view, seeing the present crisis as a result of “policy errors” is itself a profound error. Policy-makers and corporate power represent a division of labour within the capitalist system as a whole. The globalisation process propelled them into each other’s arms, transformed the roles of the IMF and World Bank, institutions created at the post-second world war Bretton Woods to manage relations between nations (in which Britain was represented by Keynes, but largely sidelined by US interests), and created a process which led to global institutions like the World Trade Organisation. All now became subject to legions of corporate lobbyists serving the self-developing expansion of capital. If mistakes were made their origin actually lies in the accumulation process of capital itself, an objective process reflected in the heads of policy-makers obliged to serve its interests.

Graham’s proposal to rebalance the power relationship as a way of keeping profit levels high assumes that governments are in control, when they are patently not. It’s why he ends his book with a despairing hope. Even as domestic and commercial property prices tumble around the world, Graham’s hope is that central banks and governments can prevent the debt-induced collapse of asset prices by issuing even more credit. He calls it ’quantitative easing’. In my view, this policy is not only unrealistic but also ties us into the retention of the fundamental, exploitative relationships of capitalism as the biggest economic disaster of all times looms. That indeed would be a major policy error when a bold leap to social ownership as the solution to the crisis seems a more progressive way forward.

There Is An Alternative

To its credit, the conference provided a rare opportunity for a good number of concerned people – mostly politically active already - to raise a broad range of different ideas and proposals in response to the rapidly escalating crisis. Many, but far from all, saw the urgent need to end corporate power and establish 21st century models of social ownership. Some were for a return to Keynesian economics looking for ways to get the economy back in control through improved systems of regulation.

But it seems that ordinary people understand the immediacy of the global economic crisis of capitalism better than many political activists because working people are struggling every day with rising prices for food, shocked every time they fill up with a tank of petrol or heating oil, with mounting debts, lower wages and redundancies. Evidence is mounting of a new imminent implosion in the financial system, beginning with the biggest US mortgage lender Countrywide, that will reverberate throughout the world, whilst in the UK, Bradford & Bingley heads the sick list. Its effects could be many times greater then the 2007 credit crunch which broke the property market leaving millions here and abroad facing repossession. The coincidence of all these facts of daily existence with a mounting political crisis in Britain adds up to an even greater test for political campaigners.

It can seem difficult to identify immediate “practical” solutions to recession plus inflation, especially when the market state and client governments like New Labour have neither the capacity nor the political will to intervene. Any action they take in one area makes things worse elsewhere. Providing tax breaks for North Sea oil producers, for example, can only deepen the ecological crisis. The environmentalist Jonathon Porritt summed it up pretty well in his blog earlier this month. “So, food security is back on the political agenda. Climate change is omni-present. Peak Oil is rising. The credit crunch is the new player on the block. Resource wars are looming. Rainforest destruction just won’t go away. Species loss is as bad as ever, but no one cares – for now. Water shortages are chronic. But much, much more worrying are the linkages between all these notionally ‘separate’ phenomena. The synergies, feedback loops, interdependencies. At long last, people are starting to make the connections – and are even beginning to link all those separate symptoms back to their root cause: today’s literally insane notion of getting richer by trashing the planet and screwing the poor.”

We’re in a period of history in which no amount of tinkering can solve the big questions. So we’re obliged to work on the development of ideas that link to immediate problems but raise the spectre of radical socialist transformation.

For example, on the energy crisis, the case for social ownership of power generating and oil corporations increases daily. This essential resource should not be left in private hands or market forces. In the interim, the state could slash prices and subsidise energy through the scrapping of Trident and foreign wars. To save energy, public transport fares could be reduced drastically and services reorganised so that people could get to and from work without using their cars. Rail and bus networks would then be taken back into public ownership.

Food prices could be frozen and steps taken towards bringing the supermarket chains into co-operative ownership, ending their profiteering at consumers’ expense. People threatened with repossession should be allowed to stay in their homes pending plans to convert everyone’s mortgage debt into something more affordable and less of a long-term burden. Speculating in commodities and currencies should be blocked and a programme of turning private sector finance into mutual, co-operatively owned enterprises launched.

The big question of questions looms: Who on earth is going to implement such a programme? New Labour? You can’t be serious. The Tories or Lib Dems? To ask the question is to answer it. The apparent political impasse only poses in a sharper way the spectre already mentioned, that of a break with the capitalist present and a leap into a socialist future. It’s difficult to conceive of but it’s an eminently practical solution given the prevailing view that There is No Alternative. The real challenge out of the Leap conference is to create the leadership and organization needed to bring such policies to fruition. The urgency of achieving this cannot be overstated.