INDUSTRY AND SOCIETY
'The capital is there; and so is capitalism. The waning factor is the capitalist.'—A. A. BERLE, The 20th Century Capitalist Revolution.
IT might have been thought that the Socialists, 'encouraged by this waning of the capitalist, would make further efforts to end capitalism as well. Not at all. Their intention is not to end capitalism but to become capitalists too. After all these years they have discovered that the right thing to do is not to attack capitalism but to cash in on it. The average Socialist might be forgiven for finding all this rather bewildering.
The party's pamphlet Industry and Society begins with a statement of the five major objec- tives of public ownership—reduction of unearned income, new spirit in industry ('co-operation and fellowship in place of the competitive struggle for gain'), the exercise of economic power responsible to the nation, facilitation of economic planning, and higher productivity. It then states, with a straight face, that the nationalisation of the basic industries has 'substantially realised' these objec- tives. But Labour in this pamphlet evinces a remarkable reluctance to repeat these triumphs it a wider field. It analyses the structure of private industry and discovers that there are five hundred or so dominant firms. These are too big to be run by their owners, the shareholders, who do nothing save collect the dividends and capital gains, and their capital comes largely from un- distributed profits not from the market. It is upon these companies that the Labour Party has its eye. It does not want to nationalise them; it does not even want to control them or appoint direc- tors to their boards. It merely wants to buy some of their shares so that the State can have dividends and capital gains just like the ordinary investor.
Whatever the merits of this idea, it plainly has very little to do with the traditional objectives of public ownership. It would reduce the amount of unearned income, but it would achieve none of the other objectives that were enumerated earlier. It would not even reduce unearned income very greatly—at any rate for quite a long time. The funds from Labour's State Superannuation Scheme will be the chief source for the State's purchase of equity capital, and these funds would not be very large in the first few years of the Superannuation Scheme's existence.
Having spent a good deal of time explaining the separation of ownership from control in industry, the pamphlet says 'the case for the nationalisation of [long-distance road haulage and iron and steel] is as powerful today as it was when our pro- grammes were first drafted.' The case for the nationalisation of steel never was very strong and some of the members of the Labour Govern- ment were opposed to it, but, if the argument of the pamphlet is correct, it is now non-existent. If the ownership of industry is, so far as control is concerned, irrelevant, what on earth is the point of the State owning the steel industry?
Apart from this obeisance to the traditional but no longer believed-in deity, Labour says it will nationalise 'any industry or part of industry which, after thorough inquiry, is found to be seriously failing the nation.' The corollary of this is that any nationalised industry which after thorough inquiry is found to- be seriously failing the nation, should be denationalised. What Labour seems to have in mind is that firms in some industries should be nationalised and act as a pace-maker for the others. In practice, this would mean that a firm's directors would be sacked and replaced by generals (of whom there will soon be a plentiful supply) and the firm would soon be bringing up the rear. General threats of nationalisation may be comforting to party stalwarts, but they are disturbing to industry.
The document must, of course, be considered less as a contribution to political theory than as a contribution to party unity and to winning elections. There it little doubt that nationalisation is a vote loser. Therefore no new industry must be marked out for execution. On the other hand, many of the party faithful, regrettably, still stick to their faith, therefore steel and road haulage must be sacrificed to them, and incantations about the virtues of nationalisation—`public ownership occupies a necessary and important position'— cannot be dispensed with. The early prophets favoured public ownership because they wanted to control industry. Now public ownership of shares in industry can be safely ventured just because, ownership will not bring control. One of the reasons for public ownership which used to be given was that without it industry would not obtain sufficient capital. Now one of the reasons for public ownership is that industry has got enough capital of its own : it no longer needs the capitalist and therefore Socialists can step in.
However much these modifications of Socialist doctrine may delight the rationalist, the pamphlet does represent a substantial retreat from doc- trinaire Socialism and therefore a substantial advance for the Labour Party. 'The Labour Party,' says the pamphlet, 'recognises that, under increasingly professional managements, large firms are as a whole serving the nation well. Moreover, we recognise that no organisation, public or private, can operate effectively if it is subjected to persistent and detailed intervention from above. We have, therefore, no intention of intervening in the management of any firm which is doing a good job.' This is very good news indeed. A Government purchase of equity shares would obviously in time bring great dangers of the overmighty State. But there is no particular objection to the State becoming a minority share- holder in industry; and there is in fact quite a lot to be said for it. The renationalisation of steel and road transport is unfortunate and unnecessary, but Socialism cannot be buried in a day. Little is gained by vague threats of nationalisation of particular firms; but provided this were done on a genuinely empirical basis it would do little harm and could conceivably do good. Much the same could be said of Labour's proposals as a whole. They will not do much harm. They should on that account be warmly welcomed—though not, pre- sumably, by the lunatic fringe of the Labour Party.
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