As companies around the world sack workers and close their doors in response to economic crisis, Jasmine Ali demonstrates the importance of the demand for nationalisation
“State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”
—Frederick Engels, Socialism, Utopian and Scientific
As the global financial crisis threatened economic collapse, governments around the world promised trillions of dollars to try and keep banks and companies afloat. Many governments have propped up firms with bail-outs and introduced stimulus packages in the hope of kick-starting their economies.
After 30 years of neo-liberal mantra that the market is the solution, these actions have reopened the debate about the role of government in the economy.
Stark questions have been posed for workers, unions and the Left in Australia about what type of response is needed to defend our living and working conditions. The recent closure of ABC Learning centres and the sacking of 1800 Pacific Brands staff are just small examples of the way workers are bearing the brunt of market outcomes in Australia.
Now, the threatened closure of Solar Systems at Abbotsford in Victoria (see p7) poses the question of nationalisation even more sharply.
If the choice is between factory closures combined with job losses, and state support, socialists unequivocally call for nationalisation.
But crucially the demand for nationalisation must be linked with calls for no compensation for big business, guarantees of jobs and for the industry to be placed under workers’ control.
While the call for nationalisation poses an alternative to letting the free market rip, the significance and impact of any demand for nationalisation depends on the strength and ability of workers to fight and resist the job cuts.
Although demands for the nationalisation should be raised and collectively fought for, it is important to recognise that without workers control, nationalised production nonetheless retains its capitalist character. Within the labour movement we should be under no illusion that state control is, by itself, a step towards socialism.
State control is not the solution
The state is often understood as a neutral body, mediating tensions between capital and labour.
However, in reality, the capitalist state has always played an active role in structuring and creating the best conditions possible for capital accumulation and exploitation of the working class.
The development of the modern state has gone hand in hand with the rise of capitalist economic production. Both the state and capital emerged in a complex relationship, both influencing the development of each other. While there have been changes in the way in which states have structured and intervened in the economy, the underpinning drive to develop and maintain capitalist social relations, and the economy, remains the determining factor.
Early Marxist thinkers such as Frederick Engels warned socialists of the dangers of thinking of the state as an active player in the transformation of capitalism, “The more the state proceeds to the taking over of productive forces the more it actually becomes the national capitalist…The capitalist relation is not done away with. It is rather brought to a head.”
Despite such warnings, however, capitalism and socialism have been wrongly identified as particular economic systems—capitalism with private ownership; socialism with state ownership and control.
Right-wing Republicans and shock jocks have ridiculously labelled US President Obama a socialist for proposing a health scheme with some state involvement. Peter Costello happily labels Kevin Rudd a socialist for advocating a degree of state intervention into the economy.
But states have many times in the past built or taken control of railways, electricity production or health and education systems precisely as a way of providing resources, investment or services that benefits the capitalist system as a whole.
Socialism has also been associated with the bureaucratic state control of Stalinist Russia. However, while private property was mostly banned, Russian workers were confined in a giant prison camp and just as with market capitalism, investment in heavy industry and military production took place at the expense of workers’ living standards.
The revolutionary socialist tradition sees things in terms of “socialism from below”. Socialism is not a question of state control versus private control, but a question of social relations—who actually controls the state. Whether socialism exists is not an economic questions but a political one—do workers actually democratically control production?
From this perspective, the enemy is both free market capitalism and state capitalism.
Reponses to crises
There have been three general responses to the economic crisis.
Firstly, the global financial crisis has been understood by sections of the Right as merely an unfortunate aberration of neo-liberalism. For example, Michael Stutchbury, economics editor of The Australian, constantly argues to wind back the stimulus package and warns that re-regulation of the market could kill the goose that provided the golden egg of globalisation.
Secondly, after two decades of being told that there is no alternative to the “free” market, the crisis is showing that states have a role to set some rules to regulate capitalism in order to better ensure the maintenance of the system itself.
This “social democratic” perspective that has been picked up by leaders like Kevin Rudd and generally entails the adoption of Keynesian measures such as spending packages for certain industries and one-off cash injections to stimulate individual consumption. Rudd’s version of a “social democratic” programme is however a far cry from the classical idea of social democracy with its principle of wealth redistribution and its prioritisation of public spending on social services.
The third understanding of the crisis, on the far left, is that the current crisis is the most recent expression of the periodic instability inherent in the capitalist economic system.
Calls for nationalisation are not merely a defensive demand for workers facing jobs losses, but can pose more fundamental questions about who will pay for the crisis and who makes decisions about how our society is run.
‘Bailouts’, protectionism and nationalisation
It is important to clarify that nationalisation is something distinct from the assistance given to banks and companies by governments in the US, the UK or Australia. This assistance has injected billions of dollars into dying companies in order to avoid outright collapse—something politicians have praised as a move to a more “regulated” economy.
Yet, these “take-overs” have not been done in the interests of providing a service or public utility, but rather remain totally controlled by private hands.
The case of the British government providing billions of pounds to Northern Rock bank, is a clear example of government “bailouts” rather than nationalisation. These bailouts take over or guarantee the banks’ debts in order to maintain the banks’ operations. In fact it is a type of compensation to business owners.
Similarly in Australia, Rudd has given billions to car manufacturers, with no guarantees of jobs or demands to transform operations to more ecological sustainable transport.
Nationalisation does not mean promoting a type of nationalism, similar to that we have seen in the recent flurry of proposals to “Buy Australian” as a response to job cuts.
Unlike protectionist measures, which suggest that Australian workers have some common interest with Australian companies, the demand for nationalisation clearly exposes the fact that the real enemy is at home. The call to take over an industry is a direct challenge to the power of business owners, who often walk away from bankrupt companies with increased salaries, whilst workers are left in the lurch.
At the same time, nationalisation of industry potentially holds the government accountable to the interests of the public and the workers in the industry.
Why we support nationalisation
The nationalisation of particular industries must be about changing the present function of businesses and financial institutions in order to run them for social need rather than private profits.
Nationalisation can weaken the direct economic and political power of the ruling class by weakening the control of the capitalist class over the state machinery.
To the extent that there is some separation between the state which is a creature of the capitalist class but not directly controlled by it, working class activity and mobilisation can drive a deeper wedge between the state and the capitalist class.
For example, Egyptian leader Nasser’s nationalisation of the Suez Canal in 1956, which came as the result of heightened political mobilisation and militancy, contained within it an anti-imperialist content by challenging British imperial control in the region.
Even in more modest instances, activity in the workplace and a political fight to demand nationalisation brings the working class into direct conflict with the state. The demand for the Rudd government to nationalise ABC Learning or Solar Systems directly raises the role and priorities of the Rudd Labor government.
The more demands that are placed on the government, the less the state is able to pose as the neutral or “impartial” arbiter in class struggle.
Moreover, demands, and, even more sharply, a real fight, for nationalisation opens up the potential for more fractures and conflicts within, and between, the ruling class and state.
This is shown clearly by the open hostility to nationalisation expressed by the capitalist class.
So, whilst nationalisation can be, and is, sometimes a necessary measure for the ruling class to maintain and expand the economy, when connected to and being forced from below, it has the effect of compromising the power of the ruling class, increasing the conflicts within the ruling class and above all bringing workers into conflict with the state.
The Rudd government could have nationalised ABC Learning centres and saved hundreds of jobs and provided hundreds of affordable child care places.
Similarly, the Labor government has given billions to the car industry with no guarantee of jobs or anything else—effectively subsidising big business while workers work short time and jobs are cast onto a rising heap of unemployment.
A publicly owned auto industry that produced ecologically sustainable cars would provide jobs as well as reducing carbon emissions.
Nationalisation, therefore, lays the basis for challenging the dynamic of the capitalist system—to defy the logic of the free market and run services and production in the interests of ordinary people.
It sends a message to the bosses and the Labor government and provides the beginning of a class response to the crisis—no firm should go under, no jobs should be lost because of the irrationality of the market.
Most importantly, the demand for nationalisation, backed up by class struggle, exposes the madness of the capitalist system and increases the confidence of workers to fight and the consciousness that ultimately we have to fight the system itself.