Vesting Day (In Praise of Nationalisation)

On Behalf of the People: With the privatisation of state assets back in the headlines, it is useful to recall why privately owned industries were nationalised in the first place.

IT’S ONE OF THOSE PHOTOGRAPHS that capture history in the making. Taken by a proud mineworker on 1st January 1947, it records the erection of a large wooden sign outside the gates of a grim and grimy British coal mine. The sign says: "This Colliery is now managed by the National Coal Board on behalf of the People."

Thousands of miners’ lives had been lost to lung disease, gas explosions and cave-ins. The miners’ unions had been forced to engage in some of the most prolonged and bitterly contested industrial conflicts in British history. But at last, after a century-and-a-half of constant struggle, "Vesting Day" – when the proprietary interest in Britain’s coal industry was prised from the fingers of its private owners and vested in public hands – had dawned.

At the little colliery of Berry Hill, near Fenton, in Staffordshire, a group of miners posed for a formal "Vesting Day" photograph. The broad grins beneath the cloth caps bear testimony to the enormous hopes working people all over the world had invested in the nationalisation programmes of their Socialist and Labour parties.

Just a year earlier, and half a world away from Fenton, five thousand trade unionists had marched through the streets of Wellington in support of the New Zealand Labour Party’s long-delayed promise to fully nationalise the Bank of New Zealand. Many of the marchers wanted to go further. They had only to glance at their party membership card to be reminded that Labour’s succinctly formulated political objective was "the socialisation of the means of production, distribution and exchange".

But what did that mean? What was nationalisation/socialisation supposed to achieve?

At the most basic level it was intended to lift the burden of private ownership from the shoulders of the men and women who laboured in its service. Returning a healthy dividend to their shareholders all-too-often obliged private industrialists to extract more effort from their employees for less reward. Health and safety considerations were similarly subordinated to the owners’ over-riding imperative to increase the rate of return on capital. Public ownership was – at the very least – intended to construct a solid floor under the workers’ wages and conditions.

But that was just the beginning. The workers in nationalised industries also hoped to play a central role in their management. To "socialise" production was to break down the artificial hierarchies separating those who made the decisions from those who carried them out.

Socialisation was also intended to broaden radically the definition of who held a legitimate interest in the nation’s mines, factories, warehouses, shops and offices. "Stakeholders" in these enterprises were said to include not only the workers, their families, and the local community, but also those who worked in the civic, cultural and agricultural infrastructure which sustained them.

Nationalisation would thus allow democracy, hitherto reserved for the ballot-box, to flow inexorably into the workplace, where, the socialists insisted, it has always been needed most.

The historical experience of nationalisation fell well short of the millenarian hopes of the 1940s. Only the most basic expectations of the process were fulfilled. Because, although the State generally proved to be a better employer than the private capitalist, it opted to run the nationalised industries in exactly the same fashion. The strict division between "the bosses" and "the workers" endured, and the latter’s vast store of knowledge about the enterprise’s operations remained as under-utilised in the state-owned industries as it did in the private sector.

In New Zealand, the nationalised industries did acquire an unintended – but important – social dimension by being used by successive governments to absorb large numbers of workers who would otherwise have found themselves unemployed. By soaking-up this surplus labour, the State protected New Zealand society from the manifold curses of mass unemployment: domestic violence; child abuse; family break-up; juvenile delinquency, alcohol and drug addiction, and rising crime-rates.

The great post-war wave of nationalisations was finally broken by the countervailing force of the neoliberal revolution. By the late 1980s, in New Zealand, all publicly-owned entities had been forced to abandon their fiscally unsustainable "social" functions and become profit-making "State Owned Enterprises". Operated as if they were privately-owned business, the new SOEs were required by the Treasury to deliver market-determined rates-of-return to their "share-holding ministers". All of the state-owned banks and insurance companies; the nationalised telecommunications sector; the state airline; and the publicly-owned railways were privatised.

The neoliberal justification for privatising state-owned industries has always been that the private sector, on balance, is more productive. That being the case, it makes more sense to cash them up and use the proceeds to retire government debt.

The miners photographed outside Berry Hill Colliery in 1947 would probably agree. Collective exploitation is clearly a contradiction in terms. Fairness seldom turns a profit. And the coal-master’s girth was always inversely proportional to their own.

This essay was originally published in The Press of Tuesday, 1 February 2011.