Paul Foot

Birth of our power

(November 1992)

From Socialist Review, No.158, November 1992, pp.6-8.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The pit closures demonstrate the madness of a market driven by profit, while millions go cold and hungry. Paul Foot argues that the only solution to the chaos lies in a different sort of society

All through the summer, so he tells us, The Rt Hon Michael Heseltine PC MP ‘agonised’ about a problem. He could identify the problem in three monosyllables; too much coal. There was too much coal at the pitheads and too much coal at the power stations. It was beginning to encroach like a vile black plague into the delightful countryside of the type where Mrs Heseltine is inclined to hunt. Obviously this was wasteful and something should be done about it.

After a final few days climactic agonising Mr Heseltine came to his lonely decision. Coal mining should cease, preferably altogether. That, he calculated, was the only realistic way to stop the surplus coal menace.

Heseltine’s ancestors were South Wales coal merchants, so he knows a bit about the industry. But his thinking on the subject is dominated not so much by his experience as by his belief in the ‘market’. The ‘market’, he believes, is the best way to match what people make to what they need. If nobody needs coal, he calculates, they will not buy it. And if they don’t buy it what on earth is the point of producing it?

Let us test that argument against the facts about power supply. With one exception (Drax) every one of the coal fired power stations in Britain is producing less electricity than a year ago. Even Drax is producing at only 75 percent capacity. Every electricity company is distributing less electricity than a year ago.

Are people turning to an alternative? No, they are not. Less gas is being distributed too. Are people saturated with heat and light? Are old people, for instance, sweating so much in their homes at the start of winter that they are turning off the heat? Are factories and offices going at such full blast that they are switching off the lights and the machinery? Exactly the opposite. At a time when there is a glut of power capacity, the need for heat and light has never been greater. Miners and power workers are sacked while the old and poor freeze in their homes and yearn for jobs which would drive the factories and light the offices.

There is a very simple solution to the problem which tortures Mr Heseltine so. Coal could be given away to the pensioners. Power prices could be brought down especially for the unemployed. Hey presto! Cold people would be warm again and the black threat to Mrs Heseltine’s hunting grounds would be removed in a trice!

But no. The market insists that before anyone can get hold of any of these surplus services they must pay the market price. That puts flight at once to the notion that the market matches production with need. For in a society like ours where there are a few rich people, many poor people and some others in the middle, the ‘symmetry’ of the market is twisted and corrupted into the opposite of symmetry. Things are made which are not needed; things that are needed are not made; and even when things are produced which are needed, like coal and power, they go to waste because by the laws of the market there are not enough people with enough money to whom those goods can be sold.

Thus the market system which pretends to balance what is produced with what is needed becomes just a mechanism to further extend the imbalances and inequalities which led to its corruption in the first place.

NOTHING demonstrates the crude class nature of the market more sharply than the recent developments in the power industry. For 40 years after the war Tories everywhere were infuriated whenever they turned on a light. The light came on, it worked, it served its purpose, and the electricity industry everywhere made a handsome surplus. What enraged the Tories was that no one in their class made a direct profit from it. The profit went back into the industry, which was publicly owned. The same applied to electricity’s main competitor, gas, and to water. The ultimate achievement of the Thatcher experiment in pure free enterprise – the crock of gold at the end of rainbow for innumerable Thatcherite yuppies – was the privatisation of all three utilities.

Aeons of parliamentary time were taken up with complicated bills to restore these industries to private enterprise. Millionaire accountants like Cecil Parkinson and John Wakeham, both since ennobled, wallowed in the rhetoric of ‘setting the utilities free’. Nearly half a billion pounds was doled out to stockbrokers, merchant bankers, city solicitors, estate agents and public relations mandarins to ‘advise’ the ministers and the new private companies.

What was the result? The old public gas monopoly was turned into a new private gas monopoly. Electricity generation was carefully parcelled out to two huge monopolies, Power-Gen and National Power. The 12 public electricity distribution companies were transformed into 12 private electricity distribution companies, run by exactly the same people and in exactly the same way as before. The regional public water companies with monopoly franchises to supply water in their areas have been changed completely into private regional water companies with monopoly franchises to supply water in their areas. Prices of all these commodities have risen almost exactly at the same pace as in the past.

The only difference is that the new monopolies are not answerable to any elected authority and provide the most lavish largesse for their top executives and shareholders. John Baker, a bureaucrat who ran the CEGB at £76,000 a year is now an ‘entrepreneur’ who runs National Power for £347,911 a year, plus share options. In the first full year of trading the electricity companies paid out more than £300 million in dividends to private individuals, funds, trusts and banks. Almost at once the market went into another spasm of greed. The new companies, using special powers given to them by Parkinson and Wake-ham (powers which had been specifically denied to the old nationalised companies) started to fund new gas fired power stations. The chief effect of this ‘dash for gas’ was to increase the overcapacity of power supply by a fantastic 25 percent.

Was the purpose to make electricity cheaper? All the evidence suggests that the new gas fired electricity will be more expensive than the coal fired kind in the short term and much more expensive in the long term. How, in this disciplined and consumer conscious market, can billions of pounds be spent on increasing power, when there is apparently too much of it already, and into the bargain make it more expensive?

First, because the investors in private electricity want to collect a dividend from their share in the new gas stations, there is no dividend from nationalised coal. Secondly, the gas fired stations provide the new power vampires with a source of power supply where the unions are not half as strong as in the pits. So the market works against its own logic, increasing overcapacity and raising prices, solely in order to shift the balance of the fight against the workers.

This is also the only explanation for the greatest absurdity of all in the privatised power market; the subsidy for the nuclear industry. If the coal industry had the £1.3 billion subsidy dished out by the government for its unprofitable and dangerous nuclear power stations, coal could be given away free, delivered free and in abundance to every power station and every home, and still make a profit.

Why does a free market government dish out such huge handouts to an industry which produces higher prices and which will, as the US developers of nuclear power have discovered, never make a profit for everyone? The answer is that it provides a source of power where the unions are weak and the workers regimented by secrecy laws and an internal police force. All the realities of the ‘market’ contradict the claims made for it. All expose its only purpose; to enrich the rich and to ensure where possible that that enrichment is not spoiled by organised trade unions.

IN THE LAST FEW months the last of the claims for the free market has also been exposed. In 1989 Nicholas Ridley, the Tory who dreamed up Thatcher’s highly successful plans to break the unions in steel and coal, boasted that during his time in office throughout the 1980s the free market had worked. The average family in Britain had increased its standard of living. This was due, he said, to free enterprise as promoted by the Tories.

Now Ridley says exactly the opposite. ‘Poor people are losing their jobs,’ he moans on television. The great free marketeer casts around desperately for an alternative economic strategy – low interest rates, perhaps even a little government investment. Ridley’s lament is taken up with much more enthusiasm by the forgotten Keynesians of the 1980s.

Keynes had a brilliant solution to the free market. He identified the market’s problem as the gap between what people get in wages and the prices they pay. Why not, urged Keynes, employ a lot of people making things they couldn’t buy – like schools and hospitals and weapons? Why not, he asked satirically, pay people to dig holes and fill them in again? The wages they were paid would fill the crucial gap! Capitalism’s problems could be solved by a lot of well meaning and intelligent economists (like John Maynard Keynes) in high office!

These views electrified the Labour Party. The three Labour governments after the war based their policies on Keynesian ideas. Each of them ran up against the same problem; rich people were not prepared to pay the taxes for the necessary public works. A mighty class revolt stopped the policy in its tracks. Each successive Labour government achieved less than its predecessor and Keynesianism was discredited.

In the Thatcher years the Keynesians were out of fashion. Now they are staggering into the light again; William Kegan of the Observer, Wynne Godley, the Cambridge economist, even Governor Bill Clinton. Spend on public services, they all say. Build up the infrastructure. In the wake of the terrible disaster that was Thatcherite free enterprise some of them get a hearing. In general they are met with the same despair which greets the free marketeers, the same political hunger for an alternative which has not so obviously failed.

LISTENING on the evening of Black Wednesday to Labour Party leaders stammering their replies to That Awful Question – what would you do instead? – I couldn’t help remembering the famous Sidney Webb phrase which still, as far as I know, appears on Labour Party cards. ‘The common ownership of the means of production, distribution and exchange.’ The problem with the free market and the Keynesian solution to it is that all economic activity is owned and controlled by a small class whose only purpose is to enrich itself at the expense of everyone else. There is absolutely no ‘solution’ as long as that control continues.

There can be no social solution to the anti-social problems of an anti-social system unless die economy is owned and controlled by society. How can an economy be planned? How can a government even decide on priorities of production unless it owns and controls that production?

These were the ideas which convinced so many people in the first half of this century about the case for socialism. In the second half of the century that case has taken some hard knocks. The Labour governments in which so many socialist hopes were invested strengthened capitalism. In Russia a society calling itself socialist was increasingly exposed as a monstrous tyranny, where the workers were exploited every bit as cruelly as anywhere else.

Socialism got a bad name. Labourites and Stalinists defined their socialism only in terms of state control and a planned economy. They cut from socialism its essence, its control from below and its accountability to working class democracy. The liberating and revolutionary element of socialism is its ability to unleash and mobilise all the human energies which a class society cramps and corrupts. Without that element ‘socialism’ was no better than what George Orwell called ‘a mean state capitalism with the grab motive left intact.’

The only socialists who survived the collapse of Stalinism and the cretinism of Labour were those of us who opposed and exposed both and linked our socialism inextricably to the struggle for it. For us socialism was not some paradise or Utopia, distant and unimaginable. The seeds of the new society were being sown all the time before our eyes, in the struggle against the old one.

When that struggle is weak and low, so is the appeal of socialism. But when, as so miraculously in the last few weeks, the apathy and despondency of the people at the rough end of society are suddenly dispelled, when masses of workers start talking of their anger, their hopes and dreams, then That Awful Question comes again; what would you do instead? Our answer is the same as ever; the same workers’ power which can win a strike or stop a law can seize control of the means of production, distribution and exchange and, by planning them, run society to the advantage of the many, not the few.

What seemed idealistic and preposterous only a few weeks ago suddenly doesn’t seem so unlikely.


Last updated on 27.11.2004