Nationalisation’s problem child

The British Post Office, oldest of the Nationalised industries and at one time the favourite child of the enthusiasts for Nationalisation, is now under heavy fire. Its critics can find nothing good to say about it: the charges are too high; postal, telegraph, telephone and counter services are all said to be bad and getting worse. Correspondence to the Press and questions in Parliament are full of complaints of delayed transmission of letters, too few collections and deliveries, telephone waiting lists, wrong numbers and overloaded lines, parcels held up or strayed and so on.

Some of the criticisms are reasonable; most are wrongly directed; and some are simply dishonest, like the tongue-in-the-cheek Editorials about the discontinuance of Christmas Day deliveries, in newspapers which in England this year missed publication for three days on end. The same newspapers, most of which were sold at a Penny in 1939 and now cost fourpence for a smaller issue, think they are entitled to condemn the letter rate although at fourpence it is less than three times the pre-war penny halfpenny. The critics have their suggested remedies, including straight denationalisation, splitting the posts from the telegraphs and telephones, and handing both over to boards like those operating the railways and mines. In the meantime the Post Office itself has its organisation under independent critical examination, and the Parliamentary Committee on Nationalised industries also has the Post Office on its agenda.

All of which must make sad reading for the older enthusiasts for Nationalisation in the Labour Party and ILP, who campaigned for years on behalf of the Post Office as the best of all possible organisations, as the guiding light for all-round State ownership and indeed as the example of Socialism itself. Only the SPGB is not, and never has been, in these struggles over issues totally irrelevant from the Socialist standpoint. The Nationalisers were wrong at the start, and the developments of capitalism have overwhelmed them, made nonsense of their prophesies and reduced them to their present state of confusion. ‘

Some Nationalisers never imagined that Nationalisation had anything to do with the Socialist aim of getting rid of capitalism and inaugurating a Socialist system in which the means of production would be the common property of society and in which goods would be produced and services operated solely for use, without rent, interest and profit, without buying and selling: for them Nationalisation was merely a way, a supposedly better way, of running capitalism. They thought it would be so efficient and profitable that it would compete private enterprise out of existence and be universally accepted as the normal form.

The late A. Emil Davies. Chairman of the Railway Nationalisation Society was one of these. In his The State in Business, first published in 1914 and issued in a second edition in 1920, he thought his battle was well on the way to victory. One of his beliefs was that “it is apparently only a question of a year or two” before the American Government would take over the American telephone companies. Not only have the American telephones not been Nationalised (well over half the world’s telephones are still operated by private companies) but the battle-cry of the de-Nationalisers in Britain is “Why can’t we have a telephone service as widely developed and efficient as the American?” But it really has little to do with the sterile controversy about the supposed merits and de-merits of State versus private capitalism. Much more important is whether, as in America, investors’ money has been readily available for telephone development, or whether, as in Britain successive governments, until quite recent years, were not able or willing to provide it. Russia, for the same reason, is even further down the scale of telephone development but in Brazil the opposite is true. The private company has not been able to raise money from investors and the Brazilian government, as reported in the Times (23.12.65), is nationalising the telephones precisely in order to speed up expansion.

What nearly all the critics of the British Post Office forget is that in a quarter century of inflation and rising prices, Nationalised industries were no more able to operate profitably without raising charges than were private companies. They also overlook the fact that in a period of low unemployment, and of absolute shortage of labour in some areas, the Post Office, like other services requiring Saturday and Sunday work and awkward attendances, cannot well compete with five-day jobs, often better paid, in factories: the Post Office had no such problems when unemployment ranged up above the million level.

Some of the early campaigners for Nationalisation, unlike the “non-political” Emil Davies, thought they were striking a blow for Socialism. Because they could not see early success in winning over the working class for Socialism, they supported State enterprise because they thought it would provide a simple centralised organisation easy for eventual incorporation into Socialist society. Their error was in forgetting that the work of gaining a Socialist majority was not helped but made more difficult by the confusion they created.

They were driven into one contradiction after another. Having claimed that Nationalisation is Socialist and that the Post Office form of it is the proper one they had to explain away how it was that Tory and Liberal Government nationalised the telegraphs and telephones and that it was Gladstone (at that time Tory Chancellor of the Exchequer) who in 1844 got Parliament to pass the first Act giving the Government power to nationalise the railways.

They failed to understand the role Nationalisation played in capitalism, and that it is one of the ways in which the general body of capitalists protects their interests against sections of their own class who, through monopoly or through concentration in the most profitable areas and neglect of the others, hold the general body to ransom. Gladstone in 1844 understood this quite well. The railways, as the most efficient means of transport, were indispensible to manufacturers and traders, and Gladstone’s Act was meant as a threat to them that unless they refrained from exploiting their monopoly the Government would take them over. Posts, telegraphs and telephones presented a special aspect of the same problem. Private organisations were quite willing to operate in the profitable urban areas but had no interest in providing the nation-wide service which industry and commerce needed. Churchill had the same idea in mind in 1943 when he spoke of ‘‘a broadening field for State ownership and enterprise, especially in relation to monopolies of all kinds” (Times 5.4.43).

The same purpose, that of protecting the interests of the general body of capitalists, is aimed at in America by the anti-trust laws and by the Government’s control over telephone and other charges through the Federal Communications Commission, and in Britain by the anti-monopoly laws and laws against re-sale price maintenance.

But capitalist interests are divided and the sections adversely affected by anti-monopoly laws or by Nationalisation fight back. The manufacturers of telephone equipment have long campaigned to get the telephones freed from direct government control. They believe that the desire of governments to use the Post Office as a means of raising revenue has been a cause of starving the telephones of money needed for expansion and that if this control were removed a big new demand would open up for their products: they look with envy at the much greater telephone developments in USA and elsewhere.

In the Nineteen-thirties they found allies in the leaders of the Labour Party who also turned away from Government department Nationalisation. So then we had Lord — then Mr. Attlee, a former Postmaster General and later to be Labour Prime Minister, discovering that the “socialist” Post Office was “the outstanding) example of collective capitalism” (New Statesman 7.11.31). The campaign was led by the late Lord Morrison who advocated a form of organisation like that in the Port of London Authority though he had himself in 1923 described the same PLA as “a capitalist Soviet . . . the constitution of which is thoroughly objectionable from the Labour and Socialist point of view.” The late Mr. Lees-Smith who had been Postmaster General in a Labour Government, also, in 1931, wanted “the Post Office, or at least the telephones under a public corporation like the Port of London Authority.” He, like Attlee, had discovered that this was “the latest development in socialist theory.”

Post Office Act, 1961

The Post Office survived that campaign to get it away from direct governmental and parliamentary control but in recent years, following the setting-up of the Boards for railways, mines, gas and electricity, steps have been taken in the same direction for the Post Office.

The Post Office Act 1961 was intended to make the Post Office into a “commercial undertaking,” and free it to a large extent from the direct financial and other control by the Exchequer. Now further changes are likely, thus completing, a series of adaptations of the Post Office to the needs of capitalism; from the earliest phase when it was an organisation for conveying “the King’s Posts,” and the period when it was simply a means of raising revenue for the Government; and the era after the Penny Post of 1840 in which the purpose was both to raise revenue and to be a communications service for industry and commerce.

It is at present required to aim at an 8 per cent. profit on invested capital, but always some profit has been expected. As a Select Committee ruled in 1888 “it is most likely to continue to be conducted satisfactorily if it should also continue to be conducted with a view to profit, as one of the Revenue yielding Departments of the State.” (Which has its echo in Russia to-day where the economist Leontiev, wrote in Pravda of “the commonly accepted necessity of a sharp increase in the role of profit as the most general indicator of the effectiveness of a factory’s work”—(quoted in the Observer 4.4.65).

It was one of the illusions of the early Labour Party and ILP advocates of Nationalisation that when the government took over an industry they would have access to enormous profits and could benefit the workers by paying above average wages to their own employees and by reducing charges and running the industry purely as a “public service” without profit.

The idea was encouraged by the original intention to take over the industries without compensation and as late as 1925 this was still being debated at an ILP conference where it was opposed by, among others, Attlee and by Dalton who was to be Chancellor of the Exchequer. The dilemma they were in was that the Government which confiscates one lot of investments will immediately find that capitalists will cease to invest in any other security liable to confiscation, and a government administering capitalism constantly needs to raise money from investors. Having then decided that they must compensate the former shareholders they ran into the next dilemma—that when they have a declining industry on their hands they still have to meet the compensation payments. In private hands the investor in, say, a coal mine simply loses his money if the mine goes bankrupt, but the government’s liability to meet interest payments on the Government stocks given to former mine owners continues even if all the mines are closed.

As regards the supposed possibility of helping the workers through lower prices (even if the lower prices had been practicable) the Labour leaders overlooked the fact that wage levels themselves largely follow price movements. And the idea of paying Government employees more than other workers was equally remote from reality.

In short their understanding of the only means of achieving Socialism — by the conscious act of a Socialist majority displacing the capitalist social system was as lacking as their real understanding of how capitalism works. So it took over forty years of experience to land them in the present position, of having abandoned all their early ideals and misconceptions only to accept instead all the traditional rules about how capitalism has to be run.

As far as they are concerned the idea of there being a real alternative to capitalism, a Socialist social system, is gone and forgotten.


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