Asked & Answered: Is municipalisation of industries reactionary?

Sir,—Is it not a fact that at the present stage of economic development, and from a Marxian standpoint, Municipalisation etc. of industries is reactionary ? —because municipalisation to a certain extent eliminates competition, thereby postponing the necessity for scrapping comparatively out of date machinery, which must necessarily retard the installation of labour saving machinery. Anything which retards the installation of labour-saving machinery must necessarily retard the Social Revolution.
“R. T. (New Zealand.)”

It is, of course, a matter of little importance to the Socialist whether industries are “nationalised” or “trustified.” In either case they are at present controlled by capitalists for the benefit of capitalists, and in either case these must be dispossessed by the workers before the people can reap the benefit. But the idea put forward by our correspondent that competition is essential to industrial advance is a fallacy. The elimination of competition is in itself a labour-saving device. Moreover, in almost every instance in recent times where combination has followed acute competition, the immediate result has been a great saving of waste by centralising management and distribution, and, more important still, inefficient works have been closed down, out-of-date machinery scrapped, and more highly developed labour-saving plant and machinery have soon been introduced, with the single object of securing higher dividends. This has been the case from newspapers to motor-busses, and from cigarettes to cement.

And the combine, trust, or State department has the means, the incentive, and the power to experiment with new methods, and to instal and utilise labour or wages saving devices in a way and to an extent that would be utterly impossible to the smaller competitive firm.

If, then, we have a word of condemnation for municipalisation, it is not because it eliminates what is called competition. Municipalisation fails because in many cases it stands in the way of the scientific organisation of production.

This is not to say that municipal undertakings do this in every case, or that their equipment is not up to date. On the contrary, their ordinary items of machinery and plant compare favourably with private firms, whether waterworks, gas-works, tramways or electricity works. But where municipalisation fossilises a political boundary in industrial organisation, and tends to retard the fuller and more efficient organisation of an undertaking by trust or State, it baa to be condemned as reactionary.

The tramway systems could be much more efficiently and usefully managed and worked over much larger areas than is permitted by the present local boundaries. Compare the ramifications of the London motor-bus combine with the number of separate tramway systems of greater London. Indeed, the Londoner travelling to the extreme east of his native town by tram had, until recently, good cause to regret the limitations of municipalisation each time he crossed the territory of a fresh council and had, perforce, to change trams. Only lately has the compromise of a few through cars on one or two routes been arrived at.

Notwithstanding such working arrangements (which only minimise public inconvenience without securing the economy of combination), the wastefulness of separate management and working are inherent in municipal enterprises of that nature. Economic development, indeed, may be expected in the long run to burst its municipal bonds; in which case it will cease to be reactionary only because it ceases to be “municipal.”

In certain cases, moreover, nationalisation also must be reactionary in the sense of putting political and uneconomical barriers to industrial organisation. This will be remedied only by International Socialism.

But with regard to municipal undertakings this fact is very clear, particularly in the case of electrical works. Electricity can be very much more cheaply generated in bulk and distributed over wide areas than it can be separately managed, generated, and distributed in each petty borough. In all cases, therefore, we point out that municipalisation is reactionary, not because it eliminates competition, but on the contrary because it puts political barriers to industrial development.

It must not, however, be supposed that we are greatly concerned. The matter has chiefly an academic interest to the Socialist. Economic forces will shape our ends, rough hew them how we will. It is not our business to go out of our way to hurry on the development of capitalism. That will go on in spite of us. We require all our energy to propagate Socialism and organise the workers for its realisation. But the facts regarding municipalisation usefully show the humbug—or ignorance—of that horde of pseudo-Socialists who call it “Municipal Socialism,” and hail it as a short cat to the New Jerusalem.


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