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International Socialism, Summer 1965


Editorial 1

Labour’s Tightrope to Nowhere


From International Socialism, No.21, Summer 1965, pp.1-2.
Transcribed & marked up by by Einde O’Callaghan for ETOL.


The Government, like its leading Conservative opponents, can only view the proposed nationalisation of steel as a superb irrelevance to the problems of British capitalism. Wilson certainly needs to guard his Left flank, and the Left has set its heart on nationalisation, on banging back the shuttlecock to the Conservatives – whatever that nationalisation means. To prove he is honest, Wilson has hurried to prepare his proposals – presenting them quite unnecessarily in a White Paper. The response has been such that we will probably not hear much more about steel nationalisation now: the coming General Election will cut that embarrassing Gordian Knot. In the short space left to this session of Parliament, Wilson will want to show the paces of his more vote-catching horses.

But a certain section of the Labour Left has been serious, arguing that efficiency, the size of investment needed to begin a new steel plant, cannot be expected of the present industry in private hands. Thus, the pace of world competition demands the rapid spreading of all innovations if competitors are to survive. In the United States, one corporation, US Steel, produces more than the entire output of the German or the British steel industries. Russian State planners have directed that a single new steel plant requires a minimum output of eight million tons annually for optimum efficiency. The total output of all plants in Britain’s largest steel combine, United Steel, barely tops three million tons per year.

It might be argued that the relatively small home market in Britain is served most effectively by relatively small-scale producers. The export market however demands large-scale units and their lower-cost production. At the moment, the industry retains the home protection given it by the 1931 Government; the notorious ‘restrictive practices’ of the industry (recently ‘condemned’), sanctioned, indeed initiated and sustained by the joint public-private control agency, the Iron and Steel Board, makes this industry the classic case of corporatism. The resulting high prices operate directly on exports, Wilson’s Achilles heel. Richard Thomas and Baldwin, the last steel company from the last attempt to nationalise that remains under State ownership, recently explained their low profit record as due to the fact that home prices for steel strip are £17 per ton higher than prices in the world steel market. In 1959, when RTB began the construction of its Spencer Works, its export prices were £7 a ton higher than home prices.

By contrast, in the seven years between 1957 and 1946 (which include a recession), Japan’s steel output has more than trebled to over 40 million tons per year – and this in a country with no indigenous iron ores and poor-quality coal deposits. In Britain, where the industry is amazing its bosses by reaching 26 million tons this year (a record), reliance on low-grade ore is supplemented with imported richer ore; yet the industry has failed to provide adequate harbour facilities to accommodate the huge modern cost-reducing ore-carrying ships.

Readers of this journal need no catalogue of the failures of capitalism, whether in under-production or competition, lack of co-ordination or ramps to co-ordinate so that minimum production fetches the maximum price, sheer waste or inefficiency in the most primitive sense. But the grounds on which the Labour movement is supporting steel nationalisation (where it is supporting) are sometimes composed of two inconsistent, indeed, contradictory motives.

The union motives are based on the need for job security. They point to the interwar unemployment and occasional postwar short-time working; nationalisation is a threat to the bosses – to be an effective threat, it needs to be taken out of its woolly sheath from time to time and brandished. The Labour Party and its Left-wing pressure groups see nationalisation as the key to a more prosperous and efficiently expanding economy, or as the last unclaimed peak of the commanding heights of capitalism. Yet, the change envisaged by the Government is no more than a paper one – ownership is transferred, but the reform of the administration is largely postponed; nationalisation as at present described cannot even meet the motives which currently inspire it. When it does begin to measure up to one of the motives, it will contradict the other – when reform begins, rooted in the ethos of capitalist efficiency (spelling out the logic of what private managers of the industry have already begun), the industry will be purged of many of its small and medium-scale plants; expansion will follow the pattern of the new Rotherham cold rolling mill where an annual output of 120,000 tons employs a mere 25 men per shift. Nationalisation for efficiency means, if the projected National Steel Corporation follows the practice of the National Coal Board and British Railways, closures and redundancies. It might be argued that the changes will be handled more sympathetically than by private industry – but the workers will have to continue to strive to get the best possible bargain. The contradiction could only be solved with a genuine socialist policy to take over industry as a whole. The policy of nationalisation has to be supported even if, as at present, its implementation will only further cement the marriage of State bureaucracy and capitalist power. But there should be no illusions about what is intended. As contemplated by Wilson and Brown, by an excited share market eagerly anticipating a ludicrously high compensation offer, and by senior managers facing no loss of jobs, pay or status (except with a golden handshake), nationalisation represents a State investment to shelter the industry from the storms of the world market, a means to rationalisation so that ‘Britain’ can do German, Japanese and American steelworkers out of a job, and an excellent way of releasing the private capital frozen in the steel industry. Private steel can only survive with home prices so high that domestic consumers will start buying abroad – thus private industry in general will get through nationalisation a guaranteed supply of cheap steel, just as at present it gets cheaper railways, cheaper education, cheaper power.

The managers of the new industry will not diverge from the class of which they are members – there can be no island of socialism in the midst of capitalism. They will certainly demand autonomy, perpetuating a new scale of irrationalities and failures to co-ordinate their interests with wider social needs, and, in centralisation, they will have a whiphand much as Beeching had against the railwaymen. The White Paper itself hints at the reintroduction of price competition in the industry, with all that that implies for the workers and for the abnegation of social planning. Nationalisation is not synonymous with socialist freedoms and priorities, nor does it necessarily generate these things: the history of the past two decades surely demonstrates that. The working class can only achieve its real objectives and the controls which will make them effective if it organises to impose its collective will on the nationalisation of steel. Without this, it is no more for socialists than a rush to nowhere.

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