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From Labor Action, Vol. 10 No. 13, 1 April 1946, p. 4-M.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The record of the British Labor Party government in domestic affairs has not received as much attention as its record in foreign policy, if only because the latter has been such a flagrant continuation of Churchillian imperialism. But a number of highly interesting questions arise with regard to the Attlee government’s domestic policies; and one of them, the problem of nationalization of industry, we shall briefly examine here.
The Labor Party government has promised to nationalize several basic industries, such as coal and transport; it has already “nationalized” the Bank of England, in a way we shall describe later. Nationalization, as outlined by the leaders of the LP government, means that the government takes over and runs the given industry while reimbursing the capitalists, often at a rate higher even than the face value of what has been taken over.
Does this, then, mean that socialism – willy-nilly, partially, hesitantly – is being built in England? Does it mean that the LP reformist government is, contrary to the predictions and expectations of the Marxists, capable of bringing socialism to England, and through strictly parliamentary means at that? We believe the answer to these questions is No and we shall briefly show why.
First let us note the limitations of these measures? In a speech in Canada, Herbert Morrison, a member of the Attlee cabinet, bluntly stated that the bulk of British heavy industry would not be nationalized during the rule of the Labor Party government. He made it clear that only those industries on the verge of bankruptcy, those unable to shift for themselves (that is, make a profit for their owners) would be even considered for nationalization.
The second limitation: the LP government promises “fair compensation” to the capitalists in all cases of nationalization. As the British Trotskyist magazine, Workers International News, writes about this matter:
“What this ‘fair compensation’ means can already be clearly seen from the example of the recently published bill for the nationalization of the Bank of England. The shareholders of the Bank of England hold an amount of stock with a nominal value of 14,553,000 pounds. On this stock they have for the past 22 years been receiving an annual dividend of 12 per cent. These shareholders will receive as compensation from the Labor Government bonds to the value of 58,212,000 pounds, i.e.; four times the NOMINAL value of Bank of England stock. These government bonds will bear an annual interest of 3 per cent – in other words, the Bank of England stockholders will go on receiving the same incomes as they have done in the past. No wonder that the news of the government’s proposals have brought about a rise in the selling price of Bank of England stock.”
The third and most important limitation is in the complete lack of any proposal for workers’ control of those industries to be nationalized. Presumably they will be run on the same basis as the Bank of England: the same directing personnel retained, the same methods, the same policies. The state is to own these industries; but if the workers themselves do not control both the state and its executive agencies in the nationalized industries, they will benefit precious little.
This is a far cry from genuine socialism, isn’t it? Most industries are to remain in the hands of private capitalists. Those that are nationalized are only the industries which private capitalism has brought to the verge of bankruptcy and which do not promise to be very profitable in the future. And the LP government merely helps those capitalists along by “compensating” them, so that they retain their wealth, their ability to invest in other industries and to exploit labor. Thus far, only the Bank of England has been “nationalized.” But it was already a semi-governmental institution; now that it is nationalized, and its stockholders properly “compensated,” its directing personnel remains the same and its function as a financial servant of British capitalism continues. And the joint stock banks, the great insurance companies and the Stock Exchange continue under the ownership and control of private capitalists.
These are the limitations of the nationalization program. It has nothing in common with socialism. But, aside from its limitations, what is its significance?
British capitalism, we should remember, is in a terrible fix. It has come out of the war on the verge of bankruptcy, its resources depleted and its prospects for recovery slight. On the one side, it is pressed by Russia’s threat to its near eastern empire. On the other side, and even more fundamentally, the United States is driving it out of market after market.
The British cannot compete with the superior productive efficiency and capacity of the United States. To cite one example: America with 600,000 miners produces 500,000,000 tons of coal each year; Britain has 700,000 miners who produce only 200,000,000 tons of coal. From 1939 to 1943, the output of coal in Britain fell 16 per cent. This situation, which makes Britain unable to compete with United States imperialism on the world market, is due to the fact that England was the first major power to become industrialized on a large scale. This head start made it possible to build the Empire; but it is now the cause for the decline of the Empire, since the late comers like Germany and the United States were able to utilize the most modern developments in technology and thereby bypass Britain.
This economic inferiority with regard to the United States is to be further aggravated as a result of the forthcoming loan from the U.S. to Britain. The price which Britain will pay for the loan will be the surrender of the only two defenses she has yet found against American imperialism: the sterling bloc and the Empire preference system. Thus British capitalism moves from contradiction to contradiction. It must modernize its obsolete plants and mines. The only way it can get the necessary capital to do that is to borrow from the U.S., but to do that it has to weaken further its economic position and help strengthen the very rival to compete against whom it desires to modernize its industry.
Which way out? There are three main possibilities. First: overthrow capitalism and strike out on the socialist road. But that the reformist LP government will not and, by its very nature, cannot do. Secondly: establish a fascist dictatorship which would squeeze wages and thereby make things easier for the British capitalist class. That at the moment is impossible, for the British workers are too strong and there is no substantial fascist movement in England. Thirdly, patch up the capitalist system a little more. And that, willy-nilly, is what the LP government is doing.
That is the true significance of the nationalization program. When one sector of the capitalist economy becomes obsolete, incapable of yielding profit, and without prospect of a profitable recovery under private auspices, then the capitalist state as a whole takes over that part of the private economy, all the while conveniently “compensating” the former owners. The capitalists deprived of their former holdings are enabled to invest in new and more profitable ventures. The state bears the expense of running and renovating the obsolete industries – and that means that eventually the workers pay for it through higher taxes and lower wages.
That it is, ironically enough, a Labor Party government which directs and initiates this program does not in the slightest degree invalidate the idea that this program has as its OBJECTIVE result the continuation and buttressing of capitalism. One cannot sit on two stools at once for an indefinite period. The reformist Labor Party government having rejected the perspective of socialist revolution, has no alternative but to try to patch up, to bolster here and there the crumbling capitalist economy of England. The British program of nationalization, then, has nothing in common with socialism; on the contrary, it has as its purpose the perpetuation of capitalism.
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