Is private enterprise possible in a post-capitalist economy?
By Phil HearseAt the end of the Left Unity founding conference last November, Richard Brenner of the Class Struggle platform (aka Workers Power) jumped up with a ‘point of order’ which turned out to be – to no one’s great surprise – not a point of order. We were, said Brenner, about to vote on a statement of draft aims which said there could be private enterprises in the economy we wanted . Therefore we were declaring our allegiance to a ‘mixed economy’ – and therefore we were declaring our support for capitalism! A more perfect example, of chop logic could not be imagined. Worse the post-conference issue of Workers Power promised that this ‘fundamentally reformist formulation’ had to be defeated ‘however long it takes’. (1)
A mixed economy, in the sense that everyone has used the term for the past 50 years, refers to a Keynesian-type economy in which some important industries are nationalised. Britain until the Thatcher epoch was a classic example, with at various times the water, gas, electricity, coal, rail and steel nationalised. In 1968 British Leyland and Unipart were nationalised and in 1969 British Telecom. Bus and coach companies and road haulage were also nationalised as well as airlines, airports and air traffic control. Nuclear power, docks and canals also came under public ownership. Of course the creation of the NHS was in a sense a form of partial nationalisation of previously privatised health care, and the first nationalisation after 1945 was the Bank of England.
Socialists do not accept that this led to a mixed economy in the sense that it was part capitalist and part socialist. The economy continued to be capitalist with the nationalised industries trying to ensure stability of supply and cheap prices of essential raw materials for private industry. But there were significant gains for working class people in this: it marked a dramatic change in pay and conditions in some industries (coal being the classic example), it facilitated unionisation and it made prices for working class basics like gas and electricity subject to public control and therefore subsided prices – as anyone will tell you who knows the least bit about what happened to the previously nationalised industries under Thatcherite privatisation.
Privatisation of the utilities since Thatcher has turned them into giant machines for hoovering up working class (and many petty bourgeois) incomes in the service of finance capital. Privatisation of the utilities was a major defeat for the working class. While the big privatisation battles were going on the 1980s and 1990s only the ultra-left (now right wing) eccentrics of Living Marxism (sole proprietor F. Furedi) considered this to be of no interest to the working class.
These nationalisations and the partial gains they made for the working class were the fruit of the 1945 Labour victory and the application of social democratic politics in a society traumatised by the 1930s and the Second World War. But of course the socialist millennium they were not. And this showed that social and political power cannot be measured in terms of the percentage of the economy nationalised.
Does Left Unity want Keynesian capitalism?
Just listing the extent of previous nationalisations shows us how far we have travelled towards what 40 years ago would have been an unimaginable laissez faire free market. Today we are a very long way from going beyond neoliberalism, let alone creating a post-capitalist or socialist economy. Some might think it a bit bizarre that a focus of debate right now is the precise arrangement of a socialist economy, since we are lights years politically or chronologically from conquering working class power in Britain or any other major advanced capitalist country. In Britain the working class and the left are very much on the defensive and Left Unity is a long way from even a nation ally significant electoral intervention.
Since there has never been a successful transition in an advanced capitalist country it would be foolish to pretend we know everything about how such a process might unfold. However there are obvious parameters which a socialised economy would have to conform to, for the simple and obvious reason that there is no ‘Chinese wall’ between economic and political power and the numerous examples in history where the bourgeoisie and their allies have used control of decisive sectors of the economy to destabilise and overthrow left wing governments.To effect a successful transition to socialism would require the decisive sectors of the economy would have to be under public ownership. Probably in Left Unity there will be differences about what exactly this means. The Left Unity statement of aims adopted by the conference says:
“to win a mandate to govern and introduce radical and fundamental changes in British society based on our belief in the benefits of cooperation and community ownership instead of the chaotic competition of capitalism; universal human rights, internationalism and peace; social, political and economic equality for all in the fullest sense, without which true democracy and mutual respect cannot flourish; a democratically planned economy that is environmentally sustainable, within which all enterprises, whether privately owned, cooperatives or under public ownership operate in ways that promote the needs of the people and wider society; an inclusive welfare state which operates on the principle that each will contribute to society according to their ability to do so, and society will in return meet their needs.”
The Left Unity platform adopted at the first conference says:
“We are socialist because our vision of society is one where the meeting of human needs is paramount, not one which is driven by the quest for private profit and the enrichment of a few. The natural wealth, productive resources and social means of existence will be owned in common and democratically run by and for the people as a whole, rather than being owned and controlled by a small minority to enrich themselves. The reversal of the gains made in this direction after 1945 has been catastrophic and underlines the urgency of halting and reversing the neo-liberal onslaught. (My emphasis PH)
It seems pretty clear: Left Unity wants to get rid of capitalism and replace it with a socialised economy. So what would a socialist society have to bring into social ownership? My opinion is probably pretty maximalist for some in Left Unity, but here goes.
In an advanced economy like Britain, social ownership would have to be extensive. Obviously the banks and the finances houses including insurance companies and (especially) the Bank of England. Second all the major utilities, including those now owned by foreign capital. All the supermarket chains (which have a decisive role in the economy), all the other major retail chains, the big pharmaceutical companies, phone and technology companies, oil, food and drink, auto, transport, major leisure and tourism chains, engineering, internet and computer technology companies. In other words hundreds of major corporations which control the major decisions about the way the economy runs.
Socialist planning would require this basic level of ownership and to impose it would require a huge mobilisation of the working class and its allies. This prospectus by the way wouldn’t be acceptable (to say the least) to any section of the bourgeoisie or its political representatives. They would regard it as prefiguring an anti-capitalist revolution. But even in this scenario, what about smaller companies, corner shops, small garages, family-run cafes, manufacturers with just four or five workers and the like? Are they all to be nationalised?
Gaitskell accused the Left of wanting to nationalise
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After Labour’s 1959 election defeat Hugh Gaitskell and the Labour Party right wing started an offensive against Clause 4 of the party’s constitution which promised:
“To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.”
Gaitskell rhetorically demanded in his conference speech “Are you saying we should nationalise every little local chip shop?” The right answer of course was “No!” The argument “you socialists want to nationalise everything” is a demagogic and absurd argument used by the political right.
In post-capitalist economy there would likely be a variety of forms of ownership, including co-operatives and private small firms. Of course all enterprises, including the privately owned, would have to conform to basic standards of pay and conditions, health and safety and planning and investment guidelines.
To take one example: there are thousands of small corner shops. Their owners are part of the traditional petty-bourgeoisie. To picture most of them as irrevocable class enemies of the working class and exploiters is childish and silly. Many of these shop owners have incomes below those of the average skilled workers, indeed thousands of them totter on the edge of poverty. They are generally exploited by big capitalist suppliers, the banks and landlords who siphon off the major part of their income (2). In fact in a post-capitalist economy many of these smaller enterprises would need cheap credit provided by state banks to stay afloat to provide their essential public service.
Maybe, it is difficult to tell from where we are now, many of these small enterprises would choose to band together as co-operatives if the technical and geographical situation permitted. But we should not exclude a priori that these enterprises remaining private could be functional and efficient – much more efficient than the bureaucratic nightmare of trying to nationalise and plan all these distribution units.
It is difficult to give a simple reply to what would happen to the self-employed, because self employment covers a variety of quite different social situations. A lot of self-employment is really concealed unemployment or underemployment, and the reality is quite often people living off their redundancy pay, trying to maintain their dignity and hope, trying desperately to keep a small business going. Many of them go bankrupt. Even those who don’t go bankrupt often struggle to make ends meet. Tens of thousands of self-employed people would probably jump at the opportunity to work for socially owned enterprises or co-operatives and give up their fictitious small business status.
Some other self-employed people are free-charging ‘experts’ or ‘consultants’ whose function would disappear with capitalism and who would need to be given gainful employment in a socialised or collective enterprise.
The statement that “You can’t control what you don’t own” is correct at the level of the economy as a whole, but does not work at the level of every individual enterprise. Provided you have control of the central banks and major industries, provided you can stipulate prices, wages and control the amount of the surplus retained for investment, you can actually control – in every significant way – small businesses you don’t own. In short, the existence of some private enterprises does not equate to a Keynesian mixed economy/capitalism and it is false to pretend it does.
Politically the traditional socialist position has been that the petty bourgeoisie can be pulled either behind the working class or the capitalist class. A programme which tells all small businesses that we intend to expropriate the lot of them is one that will drive them all into the hands of reaction. “A Stalinist command economy is coming your way” is surely not the best way to win over the sections of the petty bourgeoisie exploited by big capital!
Well trodden ground
There have been over the last 30 years long and detailed discussions about the plan and the market, including the role of private enterprise, money and prices, in a post-capitalist economy (3). It is impossible for a broad socialist party like Left Unity to take a position on these detailed debates. Indeed the positions taken in major documents of Left Unity have to encompass a range of views and represent the political consensus achieved to date.
But it has to be said that the existing left in Britain has discussed these questions. For example the Socialist Party (neé Militant Tendency), traditionally the most prominent advocate of the “nationalisation of the top 300 (subsequently 250, then 200 etc) monopolies” never once questioned that there would be small private enterprises in a post-capitalist economy. Indeed it is difficult to find any significant organisation of the British left that has accepted that any small-scales enterprises equals capitulation to capitalism. Why accept the false caricature aimed at the left by our right-wing opponents?
Timing
We have been talking about a post-capitalist economy after the working class has taken political power. Socialists in the Marxist tradition have generally had much greater ambitions than that – a society of abundance, the suppression of the market and money (and hence commodity production), a classless society, the direct appropriation of goods and services by the associated producers. Few outside the further shores of anarchism believe that you can get there instantaneously, on the morrow of an anti-capitalist transition. The rhythm and timing of a more general socialisation of the economy cannot be predicted in advance.
There has never been a socialist transition in an advanced capitalist country and the creation of a general blueprint or model is impossible. Second it depends on the tempo and outcome of the class struggle. Lenin of course reflected that the Bolsheviks had been rushed into nationalisations by the obstruction of the bourgeoisie and the impatience of the workers when ideally a slower rhythm might have been less disruptive.
The crucial thing, as a tendency called Workers Power (!) should know, is not the precise percentage of the economy that is nationalised, but the question of power.
Notes
1) The post-conference issue of Workers Power says:
“The ‘aims’ of Left Unity are now defined as “to win a mandate to govern and introduce… a democratically planned economy… within which all enterprises, whether privately owned, cooperatives or under public ownership operate in ways that promote the needs of the people”.
This explicitly sees winning power in the language of parliamentary elections and sees planning in terms of managing a mixed economy of public and private enterprise. It is worth remembering a point Ken Loach made at the May 11 conference “you can’t plan what you don’t own”.
Even 1950s Labourism with its (evasive) talk of nationalising “the commanding heights of the economy” was clearer than this “mixed” economy of private, public and cooperative sectors. If we want to plan it, we must own it, and to own it, we must expropriate the exploiters.
The implications of all this cannot be fudged. This fundamentally reformist formulation must be removed from our aims however long it takes to do it.”
2) This doesn’t exclude that sections of the petty bourgeoisie can be exploited by big capital and exploit their own workers at the same time.
3) See for example
Alec Nove: http://digamo.free.fr/nove91.pdf
Ernest Mandel: http://www.marxists.org/archive/mandel/1986/09/planning.html
Diane Elson: http://newleftreview.org/I/172/diane-elson-market-socialism-or-socialization-of-the-market
Catherine Samary: http://fileserver.iire.org/nsr/NSR7.pdf
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4 comments
4 responses to “Is private enterprise possible in a post-capitalist economy?”
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Absolutely. Demanding the abolition of all private economic activity is nonsense and impossible to achieve.
People demanding it, and demanding that Left Unity adopts such an extreme and Stalinist position, are ultra-leftists, idealists and believers in some abstract but perfect future, rather than advocates of socialism in reality.
Do they propose a Ministry of Hairdressers and Barbers, for example?
tbh i see the state as more managing the grander plan of the economy while leaving space for private enterprise. For instance while the health service should be state owned i see no problem with private institutions playing a part if a private company can man the ambulances more efficiently without reducing wages/staff levels etc then i have no issues with them collecting the savings as a bonus.
we need a real link between profits generated and earnings but how to organise it and is the state a fit body to do it?
Chris, I think you are quite right about the nature of so much self-employment under neoliberal capitalism; I well remember the sector mushrooming as Thatcher’s destruction of ‘lame duck’ manufacturing got underway and this happened again after the 2007/8 crisis; I was one of a couple of million who managed – for a time – to find some work related to what I had been doing pre-redundancy in 2009. For some, perhaps most people, self-employment is merely a different brigade within ‘the reserve army of labour’; so, for most people in it, is part-time work.
That army seems never to have been more varied or dynamic than it is now, with so many people working for periods in the ‘Z sector’ (zero hours contracts, agency work, psychologically / physically damaging work) and then either getting dumped or, understandably, needing some respite for a period. I am so pleased we passed the Manchester motion (number 5 in the Conference Booklet)) on 29 March, which calls for LU to “develop a high profile identity linking together all groups affected by this restructuring of the workforce – zero hours workers, agency workers, low paid workers, benefit claimants, young people and un-unionised workers”. Z for Zorro!
It follows that, so long as socialism cannot provide full employment, some people will want to stay or become self-employed, not necessarily permanently. If you believe in the absolute right of human beings to work to ensure our own livelihood, then this cannot, morally, be proscribed.
But, as you point out, this need not and should not be outside state regulation. But what form should this regulation take?
My starting point would be a society based on production for need. Corner shops and market stalls represent the very local retailing of goods produced a long way down the production & distribution chain; it has very tight margins for delivering a small-scale retail service to the less mobile and time-poor. However, the heyday of the corner shop is some decades behind us and many are now part of family-owned or corporate chains, while the big supermarkets now deliver bulk groceries direct to the home to online shoppers. Since we will inherit a capitalism that has got this far, it would seem to me that there will be no need or demand for corner shops under socialism and this may well apply to market stalls, too. Basic foods sufficient to keep body & soul together should be provided free to people, anyway, and distributed to your door as the supermarkets do now, but free of charge.
Similarly, I cannot think of anyone I know who likes dealing with self-employed people who come into your home to decorate, fix the plumbing or the electricity or something similar. Not only are you wary of being ripped off by the variable quality and costs involved, but you always feel pressured to pay in cash. Whatever happened to direct works, where employed workers with an apprenticeship and working to monitored standards and regulations did this kind of work? As with corner shops, I can’t see any demand for this and would make building repairs freely available to everyone under socialism.
As you say ‘consultants’ of one type or another mostly work for corporations and large public sector outfits that have downsized in order to buy in certain types of work and remove it from being an ongoing part of their payroll. There is no need for them – under socialism and a society based on providing needs, they become a false economy.
What you haven’t really gone into is the small business. Legal firms and the like will have no place in a society in which justice is no longer part-commodified and access to it is no longer related to wealth, but what interests me the most is the idea of entrepreneurship. Yes, the Tories periodically talk airily about this, but genuine entrepreneurship has been more or less squeezed out of the market by their support for big capital. Banks don’t lend to entrepreneurs any more.
I am thinking of those 18th century innovators who were part inventor and part talented at putting people and things together in order to make their ideas happen – Watt, Crompton, Newcomen etc – as well as many of those who followed, taking the means of production forward, improving technology. No, of course, technological progress was never neutral within the context of capitalist society, but no socialist society could move forward without it. Big R & D departments can do only so much, but good ideas don’t just come from them; they come from workers who are engaged in production and can see better ways of doing something or see something else that can be produced by a few alterations to the way production is set up.
For a few months after being made redundant, I did assessment reports for regional development agencies on the race equality implications of proposals for funding they had received from would-be entrepreneurs, in response to the RDAs’ guidance on what sorts of proposals they would fund. One of these was to do environmental refurbs on older houses that produced fuel poverty; others were looking at developing the application of nano technology; one was on building a conference centre. It struck me that, with some adaptations, a socialist society could use this model in order to put entrepreneurship to the service of society and I still think there is something in that. The issue then becomes – what do we do with people who are good innovators but not so good at working cooperatively within a workers’ coop, knowing what we do about the links between genius and the autistic spectrum? My conclusion is that here has to be space for both workers coops and private businesses to be formed to do develop technological advances, both regulated and accountable to the people through what remains of the state. The private sector ones would be licenced to operate as a business up to the point where either, they have succeeded and the project is passed onto a larger publicly-owned organisation to roll out, or it is passed on because further work needs to be done. Either way, the small businesses are barred from growing into large capitalist concerns and transparently monitored to ensure that this does not happen.
The fact is that human beings have always thought about how to improve things and entrepreneurship is something that can be taken up by socialism just as it was by capitalism. In fact, capitalism has more or less parted company with it, if the truth be told, and socialism is capable of providing a much better context in which entrepreneurship could flourish.
Sorry – Phil not Chris!