In a Marxist view of the world, capital owners are not just disparate individuals, who all do their own thing, and who have little in common with one another. They are a social class, and in a Marxist perspective, a social class has agency of its own. Its members act collectively, to further their own class interests.
So for them, the issue of nationalisation and privatisation is not about the relative efficiency of the public and the private sector. It’s about class power. Nationalisation is not about reducing train fares or energy bills by a few pounds. It’s about reducing the power of “the capitalist class”, and transferring that power to “the working class”.
Of course, so far, state ownership has not been particularly “empowering” for ordinary people, neither in mixed economies like 1970s Britain, nor in fully socialised ones like the Soviet Union. This is a point which most Millennial Socialists would readily concede. But they would insist that public ownership could also take completely different forms, that it could mean genuine democratic control, with mass public participation. It has just never been properly tried.
They are wrong. But it’s a point that the remaining defenders of the market economy need to address. Which is what I’m doing in this book.
I am reminded by this quote from that Marxist ideologue Adam Smith:
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Why doesn’t it work then? Because without the power of government people aren’t really very good at this kind of thing. With the power of the government they get VERY good at it. The ability to crush interlopers with the threat of the bureaucracy or the courts is the only hope of maintaining cartels.
(FWIW, the Mafia are pretty good at cartels too, for much the same reasons.)
Of course the idea that nationalization somehow empowers the public to control the industries completely belies any sense of reality. It is just a different kind of “capitalist” in charge, with a currency managed differently that dollar bills.
As it always is, before too long, sinister, Machiavellian Napoleon sits in the house and dedicated, patriotic Boxer ends up in the glue factory.
They had a worker’s co-operative at Triumph motorcycles in the 1970s. It was going really well until that evil capitalist Bloor stepped in and messed it up.
The key thing is competition and innovation not so much capitalism per se. Ultimately it’s about incentive.
“Ultimately it’s about incentive.”
Government run operations tend to produce perverse incentives that have a habit of producing bad outcomes. So the incentives have to be the correct ones presumably. In the case of Triumph, everyone involved had an interest in the success of the company but it still didn’t work that well. I don’t know enough about it to speculate as to why that was.
The correct incentives are essential, a pre-requisite in fact, but it is not just about incentives, it is also about expertise. Many a company run by passionate, creative people still goes bust because they were not good at one or more essential skill required to run a company profitably.
The trouble with nationalised companies is that the going bust part is a matter of political will (i.e. allowing it to go bust by not injecting yet more taxpayer money) rather than just a matter of running out of incoming cash to keep the lights on & the staff turning up.
‘But they would insist that public ownership could also take completely different forms, that it could mean genuine democratic control, with mass public participation. ’
Democratic control = State control.
Where the means of production is privately owned and directed by the State to serve the interests of the State, Fascism exists. – Karl Marx.
Workers’ co-operative. So Jeff, you have a great idea to improve productivity, reduce costs, pass on savings to consumers. And this involves what now? New processes, automation and reduction of the work force. Right lads. Show of hand, who votes for Jeff’s idea?
You can actually download the entire book for free!
I did so, and i like the few pages that i have read so far. WRT to this:
I suppose that one must read the entire book. At least, i am not yet able to point to a page or section where Niemietz explains why “they” are wrong.
Actually, one can find an answer in The Road to Serfdom; but one needs a lot of determination to make it through Hayek’s prose.
Or one can refer to the Iron Law of Oligarchy once again, and argue that “genuine democratic control” is a pipedream: control is always exercised by a minority.
In a true capitalist system, this minority is the capitalist class.
In the current system, most of this minority is the managerial/administrative class and (probably to a lesser extent) the political class.
The advantage of a true capitalist system is that the incentives of its ruling class (the capitalist class) are more closely aligned with those of the people.
@Stonyground
Government run operations tend to produce perverse incentives that have a habit of producing bad outcomes.
It depends on your definition of “bad”. If by “bad” you mean produces shitty products for hugely inflated prices, sure you are right. If by “bad” you mean “not corresponding to the thing that was promised” you’d also be mostly right*. However, if by “bad” you mean “producing bad results for the people in charge” you’d be completely wrong. The goal of all government programs is twofold: get politicians re-elected, and grow and expand the budget and power of government departments. One need only look at the result over the past 100 years to see that it has, in those terms, been a roaring success.
The incentives are only “perverse” if you are not aligned with these two goals. Otherwise they are really quite effective in achieving their actual ends.
[*] I say “mostly” because sometimes the things promised are delivered, for example, “saving the coal mine” are actually delivered, supported by massive over-subsidization. Often for a short while, but there you go.
Fascinating read.
Snorri, thanks for heads up that the book was available. I’ve downloaded and am maybe 10% through.
I’ve often wondered whether self described “socialists” are using the word in the same way as “we” do.
My view is “No, they are probably not.” The socialists of today are not advocating for seizing the means of production – they’re not saying that the local artisan bakery should be taken over by the state.
I think that, if they really thought it through, what they want is free enterprise, and for people not to be discriminated against because of gender/religion/sexuality etc. With – crucially – a solid safety net underneath.
We can argue about the morals of who pays for the safety net. That’s valid.
There’s an education piece to be argued for, certainly.
There’s not an argument to be had, I feel, that people arguing for a safety net are full throated Marxists. I feel that drives people away, let alone being untrue.
Demoocratic socialism is no more sane than any other form of socialism – for example a referendum on the price of bread (or free bread for all) is no more sane than government “experts” deciding the price of bread.
As for Worker Cooperatives – they have been pushed since J.S. Mill (that corrupter of liberalism, in everything from the philosophy of the human mind to the large scale private ownership of land), but they have not been particularly successful.
I have nothing against worker cooperatives – but they should not be given artificial advantages, and when they fail their failure should be honestly admitted (not blamed on “capitalist conspiracy”).
As for Marxism – it dominates the modern world.
Everything is put in terms of “exploitation” and “oppression” – the education system (the schools as well as the universities) and the “mainstream media” (especially the entertainment media) are dominated by Marxism – but the WORD “Marxism” is normally avoided.
@John B:
Where the means of production is privately owned and directed by the State to serve the interests of the State, Fascism exists. – Karl Marx.
I thought Fascism as a term only came about in the 1910s, long after Marx had died.
Ted, are you suggesting that a ‘quote’ somebody finds lying around on the floor of the internet might be – gulp – not entirely genuine?
“Democratic socialism” is a mealy-mouthed mess of a term (not a critique of you for using it, a critique for those who invented the term!).
Socialism, as proven in the USSR, Cuba, China and elsewhere, cannot “flourish” (term used advisedly) in true democracy. It’s inherently reliant on not being able to vote out the government.
Also, it’s a term that I truly don’t know what it means! It means different things depending on which link you click on; and most of them send me recoiling in horror. It can’t mean “Socialism achieved through democracy rather than violent revolution”, since that can’t be achieved. Or at least, can’t be maintained. So it cannot mean that!
It can’t mean voting on the price of bread, since that is so self-evidently stupid (again, be clear: I’m aware that you haven’t invented that usage, but that others invented it in *ahem* “good faith”). So it cannot mean that!
Just call yourselves Socialist and at least have the courage of your convictions. Don’t pretend otherwise.
However – what I was talking about above is that I believe (or, maybe merely hope and will end my days tragically disappointed) that a majority of younger people who call themselves “socialist” are misunderstanding the term drastically and dangerously.
I believe that, to only take a couple of examples, millenials are concerned about not being able to buy a house, and huge debts from University – two things which did not apply to us (in the UK) who are above 40. I don’t think that’s controversial – house prices have risen way beyond wage inflation, and so have University costs.
One can argue that university costs are now realistic, but that doesn’t really help the individual whose university debt is more than the price I paid for a 3 bedroom semi (duplex, I think, US-readers) in 1999. Why should they care?
I think that to them, socialism means greater controls over “Big Corp”. To us, we (some of us) believe that Corporatism and Crony Capitalism are not capitalism and free markets, and also believe in addressing it – but not by greater controls, but by reducing corporate welfare.
Then, they believe that socialism is the NHS and unemployment protection. This will be contentious, but: I don’t think it really is – or at least, if it is, I think it’s one that we will have live with. It’s an aspect of socialism, for sure, and it’s one that “we” would rather eradicate in favour of private solutions.
However: in my heart of hearts, I have come to accept that we won’t eradicate it, not within the foreseeable future. I just don’t say a way from here to there that will be accepted by the electorate.
What I don’t believe: That if you sit down with the younger generation, your “millennial socialists”, and explain that socialism involves governments owning factories, companies, offices; all the way down to the local artisan bakery and craft brewery, that your young lad or lass will say “Yep. I totally agree with that.”
I just don’t think they realise.
That’s not even a criticism of them, not really. How many people really, really think this stuff through? Not many, I’d wager. By the time you’ve worked ten hours, got home, cooked dinner, answered some more work emails, played with your kids and whatever else you need to, how many people are researching politics rather than watching Game Of Thrones? Bread and circuses, maybe.
I believe that what most people want, if really questioned, is free enterprise, with a safety net.
Is that truly 100% Marxist? No, it isn’t. Does it have elements that align with Marxism? Maybe. But realistically, we’re not going to eradicate the safety net. No UK government is going to do that. It’s a surefire way to being destroyed.
So what happens? We take these kids that want free enterprise (if they thought about it, and if we educate them) and a safety net, and we call them “Marxists!”. They react by saying they’re not, they’re “Socialists”, because they don’t really understand what socialism is, and then they stop listening, and go about their business believing that they’re socialists.
Then what happens?
They vote for a political party that calls itself socialist, because they think that all Socialism is is believing in a safety net and opposing corporatism.
Mission accomplished for us, right? We’re continually driving kids that are most likely sympathetic to our cause, if only we’d take the time to explain it properly and stop putting them in the same bucket as Marxism, towards Jeremy Corbyn.
Yay!
(Am currently living out of a hotel in Corby, for work reasons, bored out of my skull. Apologies in advance for long screeds. Thank you for coming to my Ted Talk)
Anyone talking about nationalisation equalling democratic control really ought to read and inwardly suggest this, also from Comrade Niemeitz.