Chris Harman

Thinking it through

The private thoughts of ...

(December 1990)

From Socialist Worker Review, No.137, December 1990, p.9.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

THE QUESTION of privatisation causes enormous confusion on all sides.

It was one of the slogans of the political right that caught on internationally during the 1980s. It was not just taken up by governments of the political hue of Thatcher’s in Britain. The social democrat and Labour governments in countries like Spain, Australia and New Zealand pressed ahead with it, and so have the ‘Peronist’ Menem government in Argentina and the Collor government in Brazil. In the last year it has been espoused by all the major governments of Eastern Europe, including Gorbachev’s in the USSR.

The result has been considerable disarray on the left.

Support for a powerful state sector used to be one of the hallmarks of both social democracy and Stalinism internationally. This meant not only taking it for granted that the Eastern states were somehow socialist, but also identifying with the state sector in Western and Thud World countries. So it was, for instance, that after British Leyland (now Rover) was nationalised in the mid 1970s, leading shop stewards argued that workers had to work their hardest in order to make such a ‘socialist’ company viable.

The spread of privatisation is then seen, logically, as a series of defeats of ‘socialism’, and the denationalisation of industry as the hallmark of counter-revolution, by both left and right, East and West.

However, the idea that nationalisation equals socialism is one of those ‘common-sense’ notions that socialists themselves should challenge.

The classical political economists of the bourgeoisie, writing in the late 18th and early 19th centuries, took it for granted that capitalist industry was privately owned. So did Karl Marx when he wrote Capital in the 1860s.

But within 20 years enormous changes were already taking place which challenged that assumption. In Britain the Post Office was nationalised, in Germany the railways, while in Japan and Tsarist Russia the state set up the first large scale industries.

These changes led Engels to protest at those who used the term ‘private capitalism’ and to say that if nationalisation equalled socialism, then the German dictator Bismarck was a ‘socialist.’

By the end of World War One intervention in and ownership of industry by capitalist states was on such a scale as to lead Trotsky to write:

‘The statisation of economic life, against which the capitalist liberalism used to protest so much, has become an accomplished fact ... It is impossible to return not only to free competition but even to the domination of trusts, syndicates and other economic octopuses. Today the one and only issue is: who shall hereforth be the bearer of statised production – the imperialist state or the victorious proletariat.’

For the next 50 years such predictions were vindicated again and again. Mussolini’s Italy set up the two great state corporations that play an enormous role today, ENI and IRI. The German Nazis imposed a state monopoly of foreign trade and expropriated the Thyssen empire. State owned industries were in the forefront of industrialisation in Latin America. In Britain inter-war Tory governments nationalised the electricity grid and the two national airlines. In France de Gaulle’s first post-war government nationalised the giant car firm Renault and in most of the newly independent countries of Asia and Africa there were huge nationalised sectors.

There was nothing socialist about such state ownership. But it did enable social democrats and Stalinists alike to claim that capitalism could be peacefully changed into a rational, planned system. This was why much of the left was so disoriented by the shift, from the mid 1970s onwards, away from nationalisation to renewed privatisation.

But why did the shift take place? In part it was a result of an ideological change within ruling classes. The renewed onset of economic crisis in the mid 1970s sank the belief, associated with the inter-war liberal economist Keynes, that state intervention could produce a slumpless capitalism. Suddenly the old dominant pre-1930s ideology of the ‘free market’ with no state intervention made a comeback. Apologists for capitalism used it to claim there was a magical remedy for crisis, ending the strangling of ‘enterprise’ by the state.

This reassured them that their system was not doomed and it provided them with an excuse to try to raise profit levels by attacks on social benefits.

Sections of the nomenklatura in Eastern Europe are using the ideology of privatisation in much the same way. Leaders like Yeltsin have found they can appeal to managers and workers alike by blaming the economic crisis not on the hierarchies of exploitation inside the enterprises, but on the way in which formal ownership has been in the hands of the state and not private individuals.

Meanwhile, privatisation leaves effective class power in the same hands as before, as the Czechoslovak minister of privatisation, Dusan Triska, recently made clear:

‘The winners will be the same people who won under the old system ... The directors of the former state companies along with illegal currency dealers and other operators ... We have to be blind to this injustice.’

Once privatisation has taken place, it can fulfil yet another ideologically important function for the ruling class as a whole. As long as ownership of capital is centralised through the state, there is a central focus for all the demands of those who suffer under the system. Privatisation helps governments evade responsibility for the suffering caused by economic crisis by blaming everything on impersonal market forces.

The free market economist and mayor of Moscow, Gavril Popov, said as much in an article he wrote in the summer:

‘If we cannot soon denationalise and privatise property, we will be attacked by waves of workers fighting for their own interests. This will break up the forces of perestroika and put its future in question ... We must speed up changes in the forms of ownership ... We must seek new mechanisms and institutions of political power that depend less on populism.’

Finally, apologists for the system sometimes argue that privatisation is an integral part of the creation of a thoroughly international capitalist system, since it replaces ownership by national institutions with ownership by an international class of shareholders. So it was that a Financial Times editorial recently complained about Renault beginning to build up a multinational empire while remaining in the hands of the French state.

None of this, however, should lead anyone to believe the trend towards privatisation is remorseless and that opposition to it is always a sign of opposition to capitalism as such. State ownership can still often provide the means capitalists turn to maintain accumulation in important sectors of the economy – especially during a period of global crisis.

Even the Thatcher government kept unprofitable firms in state hands until it had succeeded in pushing through closure and redundancy programmes on such a scale as to make them attractive to private capital. And the Bush government carried out what was probably the largest single act of nationalisation ever when it took over the thrifts – large saving institutions – to stop them going bust.

If this is true in the West, complete privatisation is impossible in Eastern Europe. The state is going to have to hang on to major, unprofitable industries, for the time being at least, if only because there will be no private bidders for them.

Meanwhile, in Scandinavia, Austria and the southern European Community countries state capitalism is still very much a fact of life, as is shown by the results of ‘privatisation’ in some other countries: Argentina’s airlines passed into the hands of a state owned Spanish firm, the British microchip company Inmac was taken over jointly by firms owned by the Italian and French state, and nationalised Renault is likely to buy a large chunk of the Czech car firm Skoda.

Privatisation is often a cloak used by ruling classes who want to increase the level of exploitation and suffering as they move from nationally based operations to internationally based ones.

But that is no reason for socialists anywhere to line up in opposition to it with the old state capitalists, particularly as they still have important functions to fulfil for the system. Instead we have to counterpose genuine social ownership to both.

Last updated on 29 May 2010