The social ownership hoax

Labour Briefing no. 36, 28 January 1987, p. 8

Transcribed or corrected by hand from the printed page.

Thatcher's privatisation offensive has benefitted from the unpopularity of existing nationalised industries.

Although opinion polls have shown majority opposition to privatising gas and water, most ordinary people do not strongly believe any nationalised industry represents their needs and interests.

Last year's Party Conference document on "social ownership" seemed to propose a radical and innovative alternative to both "old fashioned" nationalisation and '80s privatisation. In fact the "social ownership" proposals are a hoax, a right-wing move masquerading in radical colours.

For years the hard left inside the Party has been the most vehement critic of the defects of nationalised industries inside a capitalist society. The left was the first to point out that these bureaucratic monoliths served the interests of capital at the expense of ordinary people.

Now these same arguments are being deployed by the centre and right to justify an abandonment of any kind of nationalisation.

What exactly is "social ownership" put forward in the paper by David Blunkett and industry spokesperson John Smith, and so eloquently sold to last year's conference?

Scrape away the rhetoric and you find a combination of two specific proposals: employee share ownership plans (ESOPs) and workers co-operatives. Both are linked with the proposal to establish a National Investment Bank under the next Labour government.

ESOPs would amount to giving government money (through a National Investment Bank) to companies which give workers voting shares. This has been presented as a cunning, innovative mechanisim for diversifying the ownership and control of British industry. In reality, it cannot possibly work.

Most companies in receipt of money from the NIB will already have numerous existing shareholders, and in most companies a small group of shareholders will own the bulk of the shares.

Giving workers voting shares will not, in most cases, really affect the ownership and control of companies.

Suppose a company runs the risk of being taken over by the workers through being "ESOP-ised"? Its existing owners will investigate every possible alternative form of financing rather than accept cash from the National Investment Bank, and as long as the banks are busting a gut to lend money, as they are at the moment, most will come up with an alternative.

The recent Guinness affair shows that capitalist owners have immense resources to fiddle the books to prevent worker share-holders becoming a majority.

Employee Share Ownership Schemes would in fact turn out to be much simpler and more mundane affairs than they appear in Blunkett's fantasies. Workers would, own few company shares and thus "participate in the profits" of the company concerned — just as is proposed by Liberal plans for "co-ownership", or for that matter in most privatisation plans, which throw a few shares to the workers as a sop.

What about worker co-operatives? Surely they are a progressive step? Potentially they are. But the whole history of capitalism since World War II shows that worker co-operatives can never be anything more than marginal to a capitalist economy, unless of course they are backed by immense reserves of finance, enabling them to compete on equal terms with existing capitalist concerns.

Are we really to belive that under a Kinnock-Hattersley government huge reserves of investment are going to be mobilised to build a gigantic worker co-operative sector of the economy? There is no such proposal in the Blunkett-Smith document. Besides, such a move would have to be made in the teeth of the opposition of industry which doesn't want its existing markets interfered with, and incidentally in the teeth of opposition from those very financial institutions which are supposed to be putting money in the National Investment Bank.

An important worker co-operative sector can be built, but only within an overall socialist plan for the economy which includes a nationalised financial sector.

The problem with the existing nationalised industries is that they were nationalised not as part of a move towards socialism, but rather to strengthen and rationalise the existing capitalist economy. The industries which were nationalised during the 1945-51 Labour government, with surprisingly little opposition from the capitalist class, were those (like the railways) considered to be inherently unprofitable, yet whose continued existence was necessary for British capitalists. Proposals that there be an element of industrial democracy in the nationalised industries were vigorously resisted by the Attlee government.

It is hardly surprising that the nationalised industries which emerged from this process took precious little notice of the rights either of the workers within them or of the needs of their consumers.

Socialists must avoid giving the impression that their conception of socialism is "200 National Coal Boards" — a caricature used by the LCC and Marxism Today ideologues. There is a notion of "social ownership" which is neither tinkering on the margins of the economy, nor promoting bureaucratic monsters. The socialisation of major industry, under workers' control, guided by a democratically-decided national economic plan.

Such a proposal is perfectly compatible with workers' co-operatives, local planning initiatives, and indeed a private sector of small and medium-size enterprises.

The fight for this alternative begins with the fight against privatisation and for renationalisation of privatised industry. It includes the fight for workers' control and for the opening of the books to expose the capitalist swindlers. And, above all, it needs a fight for the nationalisation of the banks and finance houses, without which any socialist planning is a pipe dream.

transcribed from the page image, 2 Nov 2026; spelling as printed (mechanisim, belive). Mismatched quotation marks as printed are regularised to straight double quotes: the paper opens 'old fashioned" and 'social ownership" with a single mark and closes with a double. "Workers would, own few company shares": the comma after would appears in the scan but may be a speck. By-line "By Phil Hearse" at the head of the second column. Complete on the page, no jump. The scan is low resolution (about 135 dpi) but every word was legible on zoom. Left out: the spread banner "No compromise with capital!" across pp. 8–9 and the foot banner "Break with capital! — Nationalisation under workers' control!" (section furniture over this and Jack Dobermann's piece, not this article's headline); the photo of Standard Bookbinding with its caption (Melanie Friend); Jack Dobermann's "City scandals open the debate" alongside.