Category: Socialism

August 16th, 2016 by geoffhodgson1946

Corbyn-Watson-May

 

Geoffrey M. Hodgson

“This, from the always measured g. m. hodgson, shows Labour’s existential crisis in horrifying detail” – Susan Wilde

“The revolutionary road: excellent sober distillation of Marxism/Leninism/Trotskyism/socialism; rights v insurrection” – Rich Greenhill

“A very good summary of Labour and Trotskyism” – Gerry Hassan

“Another fantastic article!” – Lily Jayne Summers

Labour Deputy Leader Tom Watson has produced evidence that Trotskyist groups are joining the Labour Party, or are planning to do so.1 This has created a big internal row. Some Labour members welcome this influx, just as Jeremy Corbyn opposed the expulsion of the Trotskyist group Militant in 1982.

John McDonnell, the Labour Shadow Chancellor, is an admirer of Trotsky. Corbyn once called upon the USSR to rehabilitate the Russian revolutionary.2

Corbyn-Tariq-AliTrotskyists are socialists who believe in the common ownership of the means of production. This goal was stated in Labour’s Clause Four from 1918 to 1995, so why shouldn’t Trotskyists be allowed to join Labour?

Trotskyists differ from the devotees of Mao Zedong or Joseph Stalin. Trotskyists do not describe the murderous regimes of Mao’s China and the USSR as socialist. They promote themselves as anti-totalitarian, and they might seem much more democratic than other Marxists.

So why shouldn’t Trotskyists be allowed to join Labour?

The Parliamentary versus the Revolutionary Road

There is a prominent negative answer to this question. It raises profound differences of strategy. As Neil Kinnock (who did the party a great service by kicking out Militant in 1985) said in a speech to the Parliamentary Labour Party in July 2016:

‘In 1918 in the shadow of the Russian revolution [Labour members decided] … that they would not pursue the revolutionary road – it was a real choice in those days. They would pursue the parliamentary road to socialism.’

According to this view, Labour members and revolutionary Marxists share the same aim – socialism – but they differ on the method of getting there. Labour follows the parliamentary road; Marxists choose the revolutionary road.

Robert Owen

Robert Owen

There are big problems with a part of this argument. Socialism was defined by Robert Owen and Karl Marx in terms of common ownership of the means of production and ‘the abolition of private property’.

But at least in practice since 1945, Labour has been less and less devoted to this goal. Finally, the goal of ‘common ownership’ was removed from Clause Four of the Labour Party Constitution in 1995.

Labour now says that it is a ‘democratic socialist’ party but defines this not in terms of common ownership. Instead there is a goal of social solidarity, believing ‘that by the strength of our common endeavour we achieve more than we achieve alone’, and in a society ‘in which power, wealth and opportunity are in the hands of the many not the few’.

Arguably, such a goal might be achievable in a reformed capitalism. But Trotskyists, like all Marxists, are emphatically against capitalism.

What Trotskyists and the post-1995 Labour Party Constitution mean by ‘socialism’ are very different. The divergences between Labour and Trotskyists concern different ends, as well as different means.

But Corbyn’s election as Leader by over 59 per cent of the membership in 2015 shows that the traditional definition and goal of socialism in the Labour Party is far from dead and buried. Under Corbyn’s leadership, Labour could return to its pre-1995 goals.

Tony Blair

Tony Blair

Ironically, by getting rid of the traditional ‘common ownership’ version of socialism in 1995, but retaining the word ‘socialism’ in an attempt to invest it with a different meaning, Tony Blair provided legitimacy for any later attempt by classical socialists – including currently by Trotskyists and Corbynistas – to restore Labour to its original colours.

Within Labour today, because of this legacy, everyone from Trotskyists and Corbynistas at one extreme, through Owen Smith, Neil Kinnock and then on to Tony Blair at the other extreme, is obliged to call themselves a ‘socialist’. But there are massive silences and huge disagreements on its meaning.

Labour becomes less capable of discussing fundamental differences of goal, but clings onto the illusion of the fundamental goodness of something called ‘socialism’. Labour’s problem of entryism will never go away while the s-word continues to cast its spell. The word itself is an invitation for those who propose the common ownership of anything to join.

The Totalitarian Politics of Class Struggle

There are other fundamental problems with Marxism in general, and Trotskyism in particular. First, Marxism rejects the supreme values of the Enlightenment.

For example, Frederick Engels in Socialism: Utopian and Scientific, saw these Enlightenment values as ‘nothing more than the idealized kingdom of the bourgeoisie’ with its ‘bourgeois justice’, its ‘bourgeois equality before the law’ and ‘bourgeois property … proclaimed as one of the essential rights of man’.

Liberty-Equality-FraternityMarxists do not see the French Revolutionary principles of liberty, equality and fraternity as a potential achievement for all, but the rhetoric of the rising capitalist class in the class struggle against the old feudal order.

After playing their progressive historic role, Enlightenment ideas are seen as ‘bourgeois’ ideology, which now serves to repress the working class.

Marx saw socialism as the class destiny of the proletariat, which by overthrowing capitalism would emancipate humankind from inequality and exploitation. Socialism was not validated by an appeal to justice or rights. Instead it was grounded on ‘material’ and ‘economic’ developments within capitalism that were leading to growing internal crises and the rise of the proletariat.

Marx rejected all appeals to rights or justice. He bypassed the issues of morality and justice by focusing on the real social forces allegedly leading to socialism. But neither the driving forces of history nor the supposed destiny of a social class make this socialist future just, or morally right.

Karl Marx

Karl Marx

By shelving the discourse on rights, in favour of the scientifically-clothed rhetoric of proletarian destiny, all versions of Marxism – including Trotskyism – are on the slippery slope toward totalitarianism.

When rights are no longer universal, and no-one has the protection of an independent legal system, the any action that is deemed ‘counter-revolutionary’ or ‘against the interests of the working class’ gives the accused no effective defence. The prosecutors monopolise the interpretation of guilt. Arbitrary punishment can follow.

The rights of critics and dissenters have to be protected, by their formal recognition and the autonomy of the judiciary. Unless this is done, any criticism can be crushed.

Trotsky was wrong: the roots of totalitarianism do not lie principally in the personalities of brutal, power-hungry individuals such as Stalin, but in Marxism itself. As Leszek Kolakowski suggested:

‘Marx’s anticipation of perfect unity of mankind and his mythology of the historically privileged proletarian consciousness … were responsible for his theory being eventually turned into an ideology of the totalitarian movement: not because he conceived of it in such terms, but because its basic values could hardly be materialized otherwise.’

Violence versus Parliament and Law

Laws get in the way of revolutionary struggle. Hence, along with their dilution of the notion of rights, Lenin proposed that all laws should be abolished.

20081115Mexico7BellasArtesWriting in 1918, Lenin described the desired ‘dictatorship of the proletariat’ as ‘rule based directly upon force and unrestricted by any laws. The revolutionary dictatorship of the proletariat is rule won and maintained by the use of violence by the proletariat against the bourgeoisie, rule that is unrestricted by any laws.’ Trotsky supported Lenin in this and most other respects.

Consequently, a fundamental problem with Marxism is its failure to support the universality of human rights. Human rights apply to all, as in the majestic 1948 United Nations Declaration of Universal Human Rights.

Instead, Marxists see social advancement as a matter of ‘class struggle’ where one class must seize power and remove rights from another class. Lenin and Trotsky went one step further: they argued that this struggle for proletarian power must override the rule of law.

The Second Congress of the Communist International took place in Russia in 1920. Under the leadership of Lenin, one of its resolutions mentioned ‘bourgeois parliaments’ and declared:

‘The task of the proletariat consists in breaking up the bourgeois state machine, destroying it, and with it the parliamentary institutions, be they republican or constitutional monarchy.’

198102yMexCit4BellesArtesThroughout his life, Trotsky defended the decisions of the first four congresses of the Communist International, which took place when Lenin was alive and before Stalin seized power.

Trotsky added his own idea of ‘permanent revolution’, involving civil war, even in a parliamentary democracy:

‘Socialist construction is conceivable only on the foundation of the class struggle, on a national and international scale. This struggle … must inevitably lead to explosions, that is, internally to civil wars and externally to revolutionary wars. Therein lies the permanent character of the socialist revolution as such, regardless of whether it is a backward country … or an old capitalist country which already has behind it a long epoch of democracy and parliamentarism.’

Conclusion: Hands Tied Behind their Backs

Those in Labour wanting to fight the battle against entryism have two hands tied behind their backs.

Socialism1First, by hanging on to the word ‘socialism’, after abandoning its original meaning, it is difficult to exclude those who are more genuinely socialist in the classical sense of common ownership. Labour’s obligatory (but now shallow) rhetoric of ‘socialism’ is a green light for socialist entryists of all kinds.

Second, Labour has long-ago ditched the politics of class struggle, but it retains a notion of class partisanship in its very name. It was formed historically to represent the interests of the working class. It was built upon the trade union movement. Labour itself is a class party.

Labour_PartyOf course, Labour in practice has put aside the notion that it is speaking for one section of society only. But its name remains a problem, both for broadening its appeal and for barring the more energetic and extreme exponents of working class representation and power.

Of course, to achieve its goals, Labour is pledged to working through parliament, rather than through revolution. This is a very important difference. Many Marxists are still devoted to insurrection. Labour clearly is not. With this one big foot it can kick back. But its two hands are tied.

Labour still has much outdated baggage to deal with. Even if it staves off Trotskyist entryism – which now seems unlikely, at least while Corbyn is Labour Leader – it still will have a number of big problems. It will need to find and package a new identity for itself, which is suitable for the twenty-first century.

Retaining an unconvincing redefinition of ‘socialism’ and calling itself ‘Labour’ will not do.

Labour needs to come to terms with the fact that both classical socialism and class politics are untenable. It has to put democratic and progressive Enlightenment values at its centre, and reconfigure itself for the challenges of the twenty-first century.

 

16 August 2016

Minor edits: 17-18 August 2016

 

Endnotes

 

  1. Note that I refrain in this article from estimating the scale or impact of Trotskyist entryism in the Labour Party. They are not central to my argument here. For evidence of both (and of Corbyn’s links with the IRA) see here. At least currently, entryists into Labour are probably few in number, but it is a well-established fact that a few determined people can influence many thousands.
  2. In 2010, McDonnell attended an event commemorating the 70th anniversary of Trotsky’s assassination and has praised the ‘importance’ of his ideas (Riley-Smith 2016a). In 1988 Corbyn demanded from Parliament that the USSR should ‘give complete rehabilitation to Leon Trotsky’ (Riley-Smith, 2016b). Nothing wrong with that, but its shows the way he leans and who he chooses as friends.
  3. Personal note: I was a critical and wobbly Trotskyist from 1968 to 1973. I re-joined the Labour Party in 1974 and left it in 2001. The photograph below shows me (not then a Trot) visiting Trotsky’s house in Mexico in 1981, where he was murdered in 1940. It is a moving and impressive place.

 

198102yMexCit6TrotskyHoGeoff

 

References

Crick, Michael (2016) Militant (London: Biteback Publishing), esp. pp. xvii–xviii.

Kolakowski, Leszek (1977) ‘Marxist Roots of Stalinism’, in Robert C. Tucker (ed.) (1977) Stalinism: Essays in Historical Interpretation (New York: Norton), pp. 283-98.

Lenin, Vladimir Ilyich (1967) Selected Works in Three Volumes (London: Lawrence and Wishart), esp. vol. 3, p. 49.

Marx, Karl and Engels, Frederick (1962) Selected Works in Two Volumes (London: Lawrence and Wishart), esp. vol. 2, p. 117.

New Park Publications (1977) The Second Congress of the Communist International, 2 vols (London: New Park), esp. vol. 2, p. 52.

Riley-Smith, Ben (2016a) ‘Labour Entryism Row: John McDonnell Attended Celebration of Leon Trotsky and Praised ‘Importance’ of his Ideas’, The Telegraph, 14 August. http://www.telegraph.co.uk/news/2016/08/14/labour-entryism-row-john-mcdonnell-attended-celebration-of-leon/.

Riley-Smith, Ben (2016b) ‘Jeremy Corbyn Called for a “Complete Rehabilitation” of Leon Trotsky in Parliament’, The Telegraph, 16 August. http://www.telegraph.co.uk/news/2016/08/15/jeremy-corbyn-called-for-complete-rehabilitation-of-leon-trotsky/

Sparrow, Andrew and Jones, Harrison (2016) ‘Secret Recording of Kinnock’s anti-Corbyn Speech to MPs – In Full’, The Guardian, 6 July. http://www.theguardian.com/politics/2016/jul/08/secret-recording-neil-kinnock-jeremy-corbyn-step-down-speech-to-mps-in-full.

Trotsky, Leon D. (1962) The Permanent Revolution and Results and Prospects (London: New Park), esp. ch. 10.

Watson, Tom (2016) ‘Tom Watson Sends Corbyn “Proof of Trotskyist Labour Infiltration”’, The Guardian, 10 August. http://www.theguardian.com/politics/2016/aug/10/tom-watson-sends-corbyn-proof-of-trotskyist-labour-infiltration

 

Posted in Common ownership, Democracy, Jeremy Corbyn, Labour Party, Left politics, Liberalism, Nationalization, Robert Owen, Socialism, Tony Benn, Tony Blair, Uncategorized

August 10th, 2016 by geoffhodgson1946

Bertrand-Russell-quote-fools-wise-men-quote

 

Geoffrey M. Hodgson

 

‘This is a thundering good read’ – Peter Smith

‘The best article I’ve read for a while’ – Karen Bradley

‘Brilliant on why socialism isn’t “obvious”’ – Robbie Hudson

‘Very informative & sobering. Highly recommended’ – Jan Davies

 

 

One thing in British politics is very obvious: Jeremy Corbyn and his followers are very keen on something they call socialism. But this word has migrated in meaning since it first appeared in English in 1827. So it is reasonable to ask what they mean by it.

I’ve tried. I got lots of vague answers.

So let’s go to Corbyn himself. In 2015 he was reported in the Mirror newspaper as saying that socialism ‘is an obvious way of living. You care for each other, you care for everybody, and everybody cares for everyone else. It’s obvious, isn’t it?’

I fully appreciate that the Mirror is an unsuitable forum for a detailed account of the workings of the future socialist utopia, but unfortunately I have little else to go on. Apart from some gestures in favour of nationalization, and some sentimentality for the pre-Blair version of Labour’s Clause Four, I can find no fuller account of what Corbyn’s ‘socialism’ means.

Yet we are told twice (in one short quote) that it is ‘obvious’.

Corbyn-socialismHere is my own confession: fifty years ago I believed that socialism was ‘obvious’. Eventually I was persuaded otherwise. Initially, it was not my growing awareness of the horrendous consequences of the socialist experiments in Russia, China and elsewhere that jolted me.

My comrades and I saw these deformations as unfortunate results of Stalinist bureaucracy plus Western hostility. We believed that a different, ‘democratic socialism’, was possible.

What persuaded me that socialism is not ‘obvious’ was a consideration of how such a system could work, in detail and in practice. How would production and distribution be organised? How would dispersed information concerning production and distribution be gathered and processed? How would resources be allocated? Who would decide? How would trillions of dispersed decisions be somehow processed by democratic committees? How would less-devoted workers be incentivized or persuaded to work harder or with greater attention to detail? What incentives would exist to encourage innovation and change, especially when everything had to be referred to some democratic council? And so on.

Once you begin to ask these difficult questions, socialism becomes much less ‘obvious’.

Numbers and incentives

Some version of socialism might work on a small scale. Cooperation can work in small groups, based on close, inter-personal interactions. Humans have co-operated in this way, in families and tribal units, for many thousands of years.

Bruegel_PeasantsNobel Laureate Elinor Ostrom studied the management of common-pool resources – such as medieval common land, fisheries or agricultural irrigation schemes – and showed how they can be effectively managed by relatively small local communities.

Their small size allows participants to monitor each other, to ensure that necessary tasks are carried out and that the interests of the community are served.

Enforcement mechanisms range from praise to punishment. Within these relatively small and cohesive groups, trust and targeted sanctions are mechanisms for encouraging cooperation, reciprocity and compliance with social rules.

But these mechanisms depend on a degree of familiarity with one another. Big problems emerge when we move from tribal to large-scale societies. These began to develop about twelve thousand years ago. Our natural and cultural dispositions to cooperate and to help one another had to be supplemented by other mechanisms.

In larger societies, face-to-face, trust-based mechanisms to sustain cooperation are relatively less effective. When we move from communities of a hundred or so, where it is possible for everyone to know everyone else, to communities of thousands or more, then interpersonal trust and reputation are much less successful with large-scale interactions, and they have to be supplement by other incentives and constraints.

Crowd

The increase of scale can create incentive problems that can be overcome in smaller communities. Many socialist experiments involved collectivisation. But when thousands of people are brought together, and rewards are shared, then there is less incentive to make the extra effort, because the rewards from that additional work would be hugely diluted.

This problem was illustrated dramatically in China. After the Communist Revolution of 1949, agriculture was organized into large collective farms. Farmers had little incentive to improve productivity, other than by threats and bureaucratic bullying. Risky innovation was unwise. Productivity remained low and often there were shortages of food.

Mao Zedong died in 1976, opening up the possibility of reform. In 1978 some peasant farmers decided to withdraw from collective farms and take responsibility for production at the household level, where the household (instead of the collective) received the revenue from its sold output. Individual households had much greater incentives to work harder and to innovate.

After decades of slow growth under Mao, China’s explosive economic growth began with those changes in rural areas. As a result, unprecedented millions were lifted out of poverty. China’s spectacular economic growth began when agriculture began to pass into the private control of the peasants after 1978.

This book by G. M. Hodgson elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by University of Chicago Press in January 2018

While interpersonal interactions can engender cooperation on a small scale, and they continue to do so in families and small communities, in large-scale societies other mechanisms and incentives are necessary. Economic history teaches us that modern dynamic economies depend on markets, competition and a large private sector, as well as an effective state.

CaringCorbyn is right: it is very important that we care for one another. But in terms of practical input, we cannot care equally for everyone. We can care more readily for those close to us, who we know well: our family, our friends and our workmates. But extending our caring to society as a whole becomes more of a political and less of a personal project. We need caring governments, but the practical extension of caring from the personal to the political is neither obvious nor easy.

The need for countervailing power

A simplistic response would be to suggest that we elect a government that is staffed by well-meaning individuals. But to different degrees, almost everyone is corruptible. Even the uncorrupt have their own biased agendas and priorities.

balance1There is a need for rules, monitoring and countervailing power. If all economic power is concentrated in the bureaucracy of planners, then will be no effective alternative power that can countervail.

Even if politicians are competent and well meaning – lots of them are – they still face the problems of dispersed knowledge and uncertainty in modern, large-scale, and highly complex economies.

Consequently, relatively little can be planned from the top. Solutions to real-world, nitty-gritty problems are rarely ‘obvious’. There is a need for both humility and experimentation. We need to try and see what works and learn from mistakes, rather that rushing headlong towards what seems obvious.

The survival of democracy depends on a dispersion of real economic and political power. A healthy, pluralist polity depends on a pluralist economy, with multiple centres of autonomous decision-making. This means a system of private enterprise, as well as a political system with checks, balances and power that can be held to account. The state can and must also play a vital role in the economy, but not to the extent that it smothers private enterprise and initiative.

There is a large and fascinating analytical literature on the problems involved in classical socialism, and I cite a few works on this below. There is not the space to go into it further here. These works are not all written by neoliberals. But intelligent neoliberals – despite their limitations – are often worth reading. Although there are disagreements on approach and detail, the general conclusion is that large-scale socialism cannot work effectively and democratically. This analytical conclusion is corroborated by the historical experience of stagnation in innovation in Soviet-style regimes.1

The ‘obvious’ roots of fanaticism and intolerance

The ‘obviousness’ of socialism empowers its supporters with enduring energy and even fanaticism. If socialism is ‘obvious’, how do we explain the failure of other intelligent people to get on board? If they are not stupid, then they must be acting out of personal malice or greed. They must have sold out their principles in some way. Or they are just plain nasty. When socialism is seen as ‘obvious’, its opponents are regarded as stupid or evil.

The perceived ‘obviousness’ of socialism fuels both fanaticism and intolerance. Because the solution to the problem is ‘obvious’, there can be no doubt. There is no need to experiment, to seek wise counsel, or to listen to critics. Those that deny the obvious are deluded, corrupted, or in the pay of those that gain from the existing system.

Kennedy-RobertThe great American politician Robert F. Kennedy once said:

‘What is objectionable, what is dangerous about extremists is not that they are extreme, but that they are intolerant. The evil is not what they say about their cause, but what they say about their opponents.’

We have seen this elsewhere, in the brutal fanaticism of religious zealots, as well as in the murderous tragedies of twentieth-century socialism under Stalin and Mao. They all shared in common the absence of doubt, the certainty of redemption or victory, and the confidence in their own righteousness.

It is deeply saddening that the once-great British Labour Party has been taken over by people who think that their aims and long-term solutions are ‘obvious’. Once the zealots take over, there is no way back. The party is then trapped in a vicious circle.

A diminished vote in an election is a success because it is seen as a big vote for a purer socialism. When Labour lost the 1983 election on a socialist manifesto, with the lowest share of the vote since 1918, Tony Benn greeted the result as a triumph for socialist ideas.

Momentum1Even small successes – such as winning elections to parish councils – feed frenzies of celebration. All acknowledged failures are blamed on others, such as the ‘mainstream media’ or the ‘traitors’ within.

With an ideology where no possible event can falsify the ‘obvious’, the doubters are purged. The wise give up. The fanatics win.2

Fanatics are immune to reason or evidence, until they begin to appreciate the necessity of doubt, and to favour a real world where the doubters are not shunned, but valued and protected. As John Stuart Mill and others pointed out long ago, recognition of the possible fallibility of all judgement, and of the need to protect those that criticise or dissent, are the cornerstones of modern liberal democracy.

Touting socialism as an ‘obvious’ solution empowers a fanaticism that can crush all traces of liberal tolerance, which is essential for democracy within any political party, as well as within the political system as a whole. Corbyn’s victory in the 2016 leadership election marks the point of no return for Labour. It is beyond the beginning of the end. Labour is now dying. Thoughtful radicals must go elsewhere.

 

10 August 2016

Minor edits – 11-13 August 2016

A version of this post was published in the i newspaper on 11 August.

 

More comments on this post:

‘A gloomy but sadly very acute and perceptive analysis’ – Helen Salmon

‘Definitely one of his best, and the best thing I’ve read all week’ – Tom Atkinson

‘Excellent article on the anti-democratic nature of seeing one’s views as “obvious”’ – Francis Hoar

‘Brilliant piece on why “obvious” socialism leads to intolerance (and doesn’t work either)’ – Colin Talbot

‘Thank you so much for your still small voice of reason: it is worth its weight in gold amid this chaos’ – Elizabeth Jones

 

End Notes

  1. A recent contribution of mine on the socialist calculation debate can be found here.
  2. After publication, Colin Williams kindly pointed out that the Russell quote that heads this post – although widely attributed to him and close to other similar quotes by Russell – cannot be found in this exact form in Russell’s works.

 

 

Bibliography

Hayek, Friedrich A. (1944) The Road to Serfdom (London: George Routledge).

Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Hodgson, Geoffrey M. (2016) ‘Some Limitations of the Socialist Calculation Debate’, Schmollers Jarhbuch, 136, 2016, pp. 33-58.

Lavoie, Donald (1985) Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (Cambridge: Cambridge University Press).

Mill, John Stuart (1859) On Liberty (London: John Parker & Son).

Nelson, Nigel (2015) ‘Jeremy Corbyn: If I Don’t Win Labour Leadership I Can Always go Back to my Allotment’, The Mirror, 25 July. http://www.mirror.co.uk/news/uk-news/jeremy-corbyn-dont-win-labour-6138128.

Nove, Alexander (1991) The Economics of Feasible Socialism Revisited (London: George Allen and Unwin).

Ostrom, Elinor (1990) Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge: Cambridge University Press).

Steele, David Ramsay (1992) From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation (La Salle, Illinois: Open Court).

Zhou, Kate Xiao (1996) How the Farmers Changed China (Boulder, CO: Westview Press).

 

Posted in Common ownership, Democracy, Jeremy Corbyn, Labour Party, Left politics, Liberalism, Markets, Politics, Private enterprise, Socialism, Tony Benn

July 30th, 2016 by geoffhodgson1946

 Paine-T-quote

 

Geoffrey M. Hodgson

 

Once upon a time, all socialists saw the ‘common ownership of the means of production, distribution and exchange’ as their primary aim. Many die-hards still do.

Others now focus instead on reducing inequalities of power, wealth and income. Some past or present contenders for leadership of the UK Labour Party, including Yvette Cooper and Owen Smith, have argued that the party’s aims in Clause Four of its constitution, should be rewritten to give greater emphasis to equality.

Smith has gone even further, to declare that Labour should focus on ‘equality of outcomes’ and not simply equality of opportunity. He proposed a wealth tax and an increase of the top rate of income tax to 50 per cent. Jeremy Corbyn’s leadership team claimed that they had already adopted these policies.

Liberty-Equality-FraternityGiven the huge and growing inequalities within modern capitalism, this focus on inequality is a positive move. But concern about inequality has never been confined to socialism. Ritual incantation of the aim for a ‘socialist’ future within the Labour Party may divert attention from measures that can be implemented within capitalism and without widespread common ownership.

We also need to look at the basic drivers of inequality within capitalism. We must consider what can be done, within this system, and short of some mythical socialist future.

The practicalities of trying to reduce inequality within capitalism have to be addressed. If higher taxes are part of the solution, then somehow, in a democracy, people have to be persuaded to adopt them. Additional measures to help reduce inequality should be devised.

Furthermore, talk of ‘equality of outcomes’ is ill-advised. Are we really going to give everyone the same income and wealth, thus removing incentives for creativity and hard work? Is the communist utopia – ‘from each according to his ability, to each according to his need’ – practical, or even desirable?

The aim should be to dramatically reduce inequality, not to eliminate it. Incentives for hard work and enterprise should be retained.

Shifting the focus from common ownership to the reduction of inequality is an important step forward. But the analysis of causes, and the design of policy, have to be much more sophisticated.

The problem of inequality

At least nominally, capitalism embodies and sustains an Enlightenment agenda of freedom and equality. Typically there is freedom to trade and equality under the law, meaning that most adults – rich or poor – are formally subject to the same legal rules. But with its inequalities of power and wealth, capitalism darkens this legal equivalence.

Richard Wilkinson and Kate Pickett showed multiple deleterious effects of inequalities of income and wealth. Using data from twenty-three developed countries and from the separate states of the United States, they observed negative correlations between inequality, on the one hand, and physical health, mental health, education, child well-being, social mobility, trust and community life, on the other hand. They also found positive correlations between inequality and drug abuse, imprisonment, obesity, violence, and teenage pregnancies. They suggested that inequality creates adverse outcomes through psycho-social stresses generated through interactions in an unequal society.

PrintAlthough economic inequality is endemic to capitalism, data gathered by Thomas Piketty in his Capital in the Twentieth Century, and by me in my book entitled Conceptualizing Capitalism, show that there are large variations in measures of inequality in different major capitalist countries, and through time. The existence of such variety within capitalism suggests that it possible to alleviate inequality, to a significant degree, within capitalism itself.

But first we must be clear about the drivers of inequality within the system. What are the mechanisms within capitalism that exacerbate inequalities of income or wealth?

Some inequality results from individual differences in talent or skill. But this cannot explain the huge gaps between rich and poor in many capitalist countries. Much of the inequality of wealth found within capitalist societies results from inequalities of inheritance. The process is cumulative: inequalities of wealth often lead to differences in education, economic power, and further inequalities in income.

Do markets create inequality?

To what extent can inequalities of income or wealth be attributed to the fundamental institutions of capitalism, rather than a residual landed aristocracy, or other surviving elites from the pre-capitalist past? A familiar mantra is that markets are the source of inequality under capitalism. Can markets be blamed for inequality?

In real-world markets different sellers or buyers vary hugely in their capacities to influence prices and other outcomes. When a seller has sufficient saleable assets to affect market prices, then strategic market behaviour is possible to drive out competitors.

Would more competition, with greater numbers of market participants, fix this problem? If markets per se are to be blamed for inequality, then it has to be shown that competitive markets also have this outcome. Unless we can demonstrate their culpability, blaming competitive markets for inequalities of success or failure might be like blaming the water for drowning a weak swimmer.

To demonstrate that competitive markets are a source of inequality we would have to start from an imagined world where there was initial equality in the distribution of income and wealth, and then show how markets led to inequality. I know of no such theoretical explanation.

Markets involve voluntary exchange, where both parties to an exchange expect benefits. One party to the exchange may benefit more than the other; but there is no reason to assume that individuals who benefit more, or benefit less (in one exchange) will generally do so. And if some traders become more powerful in the market than others, then its competitiveness is reduced.

The sources of inequality within capitalism

So if markets per se are not the root cause of inequality under capitalism, then what is? A clear answer to this question is vital if effective policies to counter inequality are to be developed. Capitalism builds on historically-inherited inequalities of class, ethnicity, and gender. By affording more opportunities for the generation of profits, it may also exaggerate differences due to location or ability. Partly through the operation of markets, it can also enhance positive feedbacks that further magnify these differences. But its core sources of inequality lie elsewhere.

Rich on BeachBecause waged employees are not slaves, they cannot use their lifetime capacity for work as collateral to obtain money loans. The very commercial freedom of workers denies them the possibility to use their labour assets or skills as collateral.

By contrast, capitalists may use their property to make profits, and as collateral to borrow money, invest and make still more money. Differences become cumulative, between those with and without collateralizable assets, and between different amounts of collateralizable wealth. Even when workers become home-owners with mortgages, the wealthier can still race ahead.

Unlike owned capital, free labour power cannot be used as collateral to obtain loans for investment. At least in this respect, capital and labour do not meet on a level playing field, this asymmetry is a major driver of inequality.

The foremost generator of inequality under capitalism is not markets but capital. This may sound Marxist, but it is not. I define capital differently from Marx and from most other economists and sociologists. My definition of capital corresponds to its enduring and commonplace business meaning. (Piketty’s definition is also similar to mine.) Capital is money, or the realizable money-value of collateralizable property. Unlike labour, capital can be used as collateral and the loan obtained can help generate further wealth.

Because workers are free to change jobs, employers have diminished incentives to invest in the skills of their workforce. Especially as capitalism becomes more knowledge-intensive, this can create an unskilled and low-paid underclass and further exacerbate inequality, unless compensatory measures are put in place. A socially-excluded underclass is observable in several developed capitalist countries.

Another source of inequality results from the inseparability of the worker from the work itself. By contrast, the owners of other factors of production are free to trade and seek other opportunities while their property makes money or yields other rewards. This puts workers at a disadvantage. Through positive feedbacks, even slight disadvantages can have cumulative effects.

None of these core drivers of inequality can be diminished by extending markets or increasing competition. These drivers are congenital to capitalism and its system of wage labour. If capitalism is to be retained, then the compensatory arrangements that are needed to counter inequality cannot simply be extensions of markets or private property rights.

These ineradicable asymmetries between labour and capital mean that ultra-individualist arguments against trade unions are misconceived. In a system that is biased against them, workers have a right to organize and defend their rights, even if it reduces competition in labour markets.

The relevance of Thomas Paine

Contrary to a widespread myth, Thomas Paine (1737-1809) was a liberal rather than a socialist. There is no support for common ownership in his writings. Instead he support private enterprise and a market economy.

But over two hundred years ago, he set out arguments and methods for reducing inequality. Paine recognised that ownership of property was vital, to provide incentives for the generation of wealth and to provide a means for its fairer distribution.

Paine argued for an inheritance tax, but balanced this by a grant to each adult at reaching the age of maturity. In this way, wealth would be recycled from the dead to the young, providing greater equality of opportunity across the board. Paine also advocated welfare provision and a guaranteed pension for those over 50.

Much of the wealth in Paine’s time was in land. Land and buildings are immobile, and can be readily assessed and taxed. But capital is fleet-footed and covert: it can be easily moved around the world or hidden in foreign accounts. Land ownership is still highly concentrated in a few hands, along with much additional wealth.

Inequality1Today we face problems of inequality even greater than those addressed by Paine. In the USA, the richest 1 per cent own 34 per cent of the wealth and the richest 10 per cent own 74 per cent of the wealth. In the UK, the richest 1 per cent own 12 per cent of the wealth and the richest 10 per cent own 44 per cent of the wealth. In France the figures are 24 cent and 62 per cent respectively. The richest 1 percent own 35 percent of the wealth in Switzerland, 24 per cent in Sweden and 15 percent in Canada.

Although there are important variations, other developed countries show similar patterns of inequality within this range. The problem is extreme in the USA. Lower levels of inequality elsewhere are far from satisfactory, but they indicate what might be politically feasible for the currently more unequal countries.

Spreading property

Bruce Ackerman and Anne Alstott took up Paine’s agenda in their proposal for a ‘stakeholder society.’ They argued that ‘property is so important to the free development of individual personality that everybody ought to have some’. They echoed Francis Bacon: ‘Wealth is like muck. It is not good but if it be spread.’

Housing-CapitalTo this end, home ownership is of positive value, as a means of widely extending ownership of collateralizable property. But there also needs to be a substantial amount of social housing available for rent, to cater for those unable to afford to buy their own homes.

Significantly, the Right has promoted home ownership, while it has often been rebutted by the Left. This resistance comes from the Left’s old-fashioned, over-extended collectivism. By contrast, it is important for the Left to champion home ownership within an egalitarian and redistributive political programme.

When Margaret Thatcher introduced the ‘right to buy’ for tenants in social housing in 1980, Labour responded in its 1983 General Election Manifesto with a pledge to reverse these sales. But by 1985 Labour had abandoned this position.

Recycling wealth across generations

Ackerman and Alstott stressed progressive taxes on wealth rather than on income. Echoing Paine, they proposed a large cash grant to all citizens when they reach the age of majority, around the benchmark cost of taking a bachelor’s degree at private university in the United States. This grant would be repaid into the national treasury at death. To further advance redistribution, they argued for the gradual implementation of an annual wealth tax of two percent on a person’s net worth above a threshold of $80,000. Like Paine, they argued that every citizen has the right to share in the wealth accumulated by preceding generations. A redistribution of wealth, they proposed, would bolster the sense of community and common citizenship.

Paine-AgrarianJusticeIncreased wealth or inheritance taxes are likely to be unpopular because they are perceived as an attack on the wealth that we have built up and wish to pass on to our children or others of our choice. But the brilliance of Paine’s 1797 proposal for a cash grant at the age of majority is that it offers a quid-pro-quo for wealth or inheritance taxes at later life.

People will be more ready to accept wealth taxation if they have earlier benefitted from a large cash grant in their youth. Wealth would by recycled to younger generations rather than syphoned away. The more fortunate or successful can be persuaded to give up some of their advantages if they see the benefits for society as a whole.

A related proposal, also redolent of Paine, was launched by the British Labour Government in 2005. It introduced a Child Trust Fund with the aim of ensuring every child has savings at the age of 18, giving every child a financial boost that they could use for the purposes of education or enterprise. Children received an initial £250 subscription from the government. Family and friends could top up these trust funds. The child would attain control of the fund at age 18. Withdrawals could then be made but be exempt from taxation. A weakness of this particular scheme was its timidity. A greater government subscription would have been more redistributive and egalitarian in its consequences. Child Trust Funds were opposed by the Conservatives and the Liberal Democrats, and abolished after they came to power in a coalition in 2010.

Extending education and share ownership

In the economy, there are many ways of spreading power and influence more broadly. The idea of extending employee shareholding is growing in popularity. This is a flexible strategy for extending ownership of revenue-producing assets in society. In the USA alone, over ten thousand enterprises, employing over ten million workers, are part of employee-ownership, stock bonus, or profit-sharing schemes. Employee ownership can increase incentives, personal identification with the enterprise, and job satisfaction for workers. The evidence suggests that when employee-ownership schemes and some employee participation in decision-making are combined, greater increases in profitability and productivity can be obtained.

As modern capitalist economies become more knowledge-intensive, access to education to develop skills becomes all the more important. Those deprived of such education suffer a degree of social exclusion, and, unless it is addressed, this problem is likely to get worse. Widespread skill-development policies are needed, alongside integrated measures to deal with job displacement and unemployment.

A universal basic income

The need for ongoing education is one argument for a basic income guarantee. Such a basic income would be paid to everyone out of state funds, irrespective of other income or wealth, and whether the individual is working or not. It is justified on the grounds that individuals require a minimum income to function as free and choosing agents. The basic means of survival are necessary to make use of our liberty, to have some autonomy, to function as effective citizens, to develop ethically, and to participate in civil society. These are conditions of adequate and educated inclusion in the market world of choice and trade.

A basic income would also reward otherwise unpaid work in care for the sick or elderly, which is often performed within families. A basic income would also encourage new entrepreneurs and creative artists. There would also be a huge saving in administration costs of often complex social security and welfare schemes. The level of the basic income does not have to be high. It can be set as a basic minimum for survival, thus retaining strong incentives for most people to seek additional sources of income.

Some forms of unconditional basic income have been pledged or introduced in several countries, including Brazil and Finland. Several developed countries have legal minimum income entitlements. In 1968, James Tobin, Paul A. Samuelson, John Kenneth Galbraith, and another twelve hundred economists signed a document calling for the US Congress to introduce a system of income guarantees and supplements. Winners of the Nobel Prize in Economics who fully support a basic income include Milton Friedman, Friedrich Hayek, James Meade, Herbert Simon, and Robert Solow. Significantly, this idea cuts across the political spectrum.

Conclusion

A key challenge for modern capitalist societies, alongside the needs to protect the natural environment and enhance the quality of life, is to retain the dynamic of innovation and investment while ensuring that the rewards of the global system are not returned largely to the richer owners of capital. As Paine put it in 1797:

All accumulation, therefore, of personal property, beyond what a man’s own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation from whence the whole came.

But the benefits of ‘living in society’ are not simply through the advantages of cooperation or the division of labour. Modern societies have developed complex institutions that have empowered innovations and massive expansions of wealth. The ultimate and indivisible accumulation is not simply of things, but of knowledge, relations and rules, guarded by law within an adaptable and pluralist polity.

We need to update Paine’s approach to dealing with inequality, to suit modern times.

 

30 July 2016

Edited 31 July 2016

 

My forthcoming book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

To be published by University of Chicago Press in November 2017

 

Bibliography

Ackerman, Bruce and Alstott, Anne (1999) The Stakeholder Society (New Haven, CT: Yale University Press).

Atkinson, Anthony B. (2015) Inequality: What Can Be Done? (Cambridge MA: Harvard University Press).

BBC News (2016a) ‘Labour’s Owen Smith Vows to Tackle Inequality’, 17 July. http://www.bbc.com/news/uk-politics-36820419.

BBC News (2016b) ‘Owen Smith Proposes Wealth Tax to Boost NHS spending’, 27 July. http://www.bbc.com/news/uk-politics-36896944.

Bowles, Samuel and Gintis, Herbert (1999) Recasting Egalitarianism: New Rules for Markets, States, and Communities (London: Verso).

Bowles, Samuel and Gintis, Herbert (2002) ‘The Inheritance of Inequality’, Journal of Economic Perspectives, 16(3), Summer, pp. 3-30.

Claeys, Gregory (1989) Thomas Paine: Social and Political Thought (London and New York: Routledge).

Credit Suisse Research Institute (2012) Credit Suisse Global Wealth Databook 2012 (Zurich: Credit Suisse Research Institute).

Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Mason, Rowena (2016) ‘Smith’s Policies are Copied from Corbyn, Says Labour Leader’s Team’, The Guardian, 27 July. http://www.theguardian.com/politics/2016/jul/27/owen-smith-policies-copied-says-jeremy-corbyn-team.

National Center for Employee Ownership (2012) ‘A Statistical Profile of Employee Ownership’, http://www.nceo.org/articles/statistical-profile-employee-ownership.

Paine, Thomas (1797) Agrarian Justice: Opposed to Agrarian Law and to Agrarian Monopoly (Philadelphia: Folwell).

Paine, Thomas (1945) The Complete Writings of Thomas Paine, edited and introduced by Philip S. Foner (New York: Citadel Press).

Piketty, Thomas (2014) Capital in the Twenty-First Century (Cambridge, MA: Belknap Press).

Robinson, Andrew M. and Zhang, Hao (2005) ‘Employee Share Ownership: Safeguarding Investments in Human Capital’, British Journal of Industrial Relations, 43(3), September, pp. 469-88.

Wilkinson, Richard and Pickett, Kate (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better (London: Allen Lane).

Wintour, Patrick (2015) ‘Yvette Cooper: Change Labour’s Clause IV to Champion Equality’, The Guardian, 4 September. http://www.theguardian.com/politics/2015/sep/04/yvette-cooper-change-labour-clause-iv-champion-equality.

 

Posted in Common ownership, Jeremy Corbyn, Labour Party, Left politics, Liberalism, Markets, Nationalization, Politics, Private enterprise, Right politics, Socialism, Uncategorized

July 23rd, 2016 by geoffhodgson1946
A Worker Cooperative in New York City

A Worker Cooperative in New York City

 

Geoffrey M. Hodgson

‘The question we ask today is not whether our government is too big or too small, but whether it works … Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched.’

Barack Obama, 2009.

 

Politicians engage in slogans and sound-bites, but sometimes they reveal their true aims.

The Labour Party is now immersed in a battle for its leadership, and possibly for its survival as a viable political party. Jeremy Corbyn, overwhelmingly elected as leader in 2015 by about sixty per cent of the party membership, has lost the confidence of about eighty per cent of the party’s MPs.

Owen Smith

Owen Smith

Owen Smith, Corbyn’s challenger for the Labour leadership, once worked for the private, research-based, pharmaceutical company Pfizer. In response, Corbyn and his allies have been quick to condemn Smith’s association with private enterprise.

Corbyn has always been a supporter of the original version of Labour’s Clause Four, with its aim of ‘common ownership of the means of production, distribution and exchange’. But since he became Labour Leader, he has kept this long-term aim mostly under wraps, highlighting his opposition to austerity economics instead.

However, on 21 July 2016, we had a brief peep under the tarpaulin, showing us Corbyn’s real aims.

Corbyn’s opposition to privately-funded pharmaceutical research

At his campaign launch on that day, in response to a question about Smith, Corbyn declared that ‘medical research shouldn’t be farmed out to big pharmaceutical companies like Pfizer and others but should be funded through the Medical Research Council as a way of developing those drugs’.1

Pharmacological ResearchThe Association of the British Pharmaceutical Industry (ABPI) – the trade association for over 120 UK companies producing prescription medicines – quickly responded with a statement questioning Corbyn’s judgement in this area.

The ABPI pointed out that the pharmaceutical industry invests more than £88bn a year into research and development for new medicines and vaccines to help fight disease. In the UK this equates to £4.1bn per year of investment in R&D, with the Medical Research Council contributing £770m and research charities £1.3bn.

The pharmaceutical industry is global, and it is difficult to see how the taxpayer-funded UK Medical Research Council could take over the roles of the large private players in this sphere, unless this research was dramatically diminished. As the ABPI pointed out, research in this area has to be a collaboration between industry researchers, academics and clinicians, involving both public and private institutions.

Many successes in the development of drug treatments – including for breast cancer and HIV – have involved collaborations between research-oriented universities, risk-taking companies, concerned charities, government agencies, and so on. Typically these collaborations involve complex synergies and are international in scope.

Corbyn’s proposal that modern levels of pharmaceutical research should be publicly rather than privately funded – within one country – is feasible in neither budgetary nor practical terms.2

But further, in his zeal for the public takeover of research and development, Corbyn has failed to learn one of the crucial economic lessons of the twentieth century, concerning the limitations of largely publicly-owned R&D and need more broadly for a healthy, innovative, private sector.

This lesson is sketched out later below.  It concerns the vital role of different forms of private enterprise – from corporations to worker cooperatives, which all have legal autonomy and they sell their products on a market. But first we emphasise that the essential role of the state and the public sector.

The state and the public sector are vital

We should also understand the vital role of the public sector in modern capitalist economists, including in the sphere of research. Numerous authors, including Richard Nelson, Ha-Joon Chang, Erik Reinert, Mariana Mazzucato and myself, have argued that – for several reasons – the state plays an essential, supportive role within modern capitalism.

PrintIn practical terms, evidence shows that the most successful economies are those that involve a collaboration of public and private institutions, including for research, development and innovation.

For example, the modern patent system is backed up by legal and state powers that protect innovations from plagiarism and provide incentives for private research and creativity. It is an example of the way in which the state can maintain institutions that encourage private research.

There are areas where private enterprise works best, and there are areas where the public sector can be usefully involved. Determining these best areas in each case, is a practical question, involving detailed, complex, ongoing, empirical examination and experimentation.

Instead, Corbyn resorts to ideology, with this prescription: public ownership works best, and even when in doubt, nationalize. This is the mirror image of free-market ideologists, who stipulate: markets work best, and even when in doubt, privatize.

A simplistic ideological debate between private and public ownership dominated the twentieth century. The ‘common ownership’ version of Labour’s Clause Four, which lasted from 1918 to 1995, expressed one side in the debate. Margaret Thatcher and Ronald Reagan, among many others, took the other side.

A key lesson of the twentieth century is that the dichotomy between public and private provision is misleading. The key question is how they can be usefully combined. Within any useful combination, both private and public enterprise have a crucial role to play. This essay explains why a private sector is vital.

My recent book entitled Conceptualizing Capitalism explains why the role of the state is also crucial, even to sustain the institutions that make private enterprise work. But here I concentrate on the case for private enterprise.

The failure of centrally-planned innovation

Any vision of a large-scale planned economy involves assembling information in local or national agencies, and then making decisions based on this information. Proposed innovations and other changes must be appraised, and decisions on their viability must be made.

In their schemes to bring all knowledge together into the hands of planners, advocates of comprehensive planning overlook the time and other difficulties involved in gathering and dealing with available information. Also they give inadequate consideration to how innovations are to be incentivized, tested and promoted.

Stalin-MaoInnovation depends on hunches about the future. Successful innovation takes into account local, tacit and other knowledge concerning circumstances and possibilities. Much of this knowledge involves complex details and contexts, and cannot all be brought together and utilized by a central committee or planning authority.

Because of diminished competitive pressures, nationalized industries in centrally planned economies, such as the Soviet Union and Mao’s China, have been unimpressive in terms of innovation and flexibility. Why should a committee back innovation or change, especially when it carries risks of failure? Why should they risk their jobs when they have no secure right of additional reward in the case of success?

The economist Peter Murrell showed empirically that the former Communist countries were apparently no less efficient in allocating resources than capitalist economies. Where they lagged was in terms of dynamic efficiency: the ability to innovate. This shortfall is endemic to any system that works on the basis of hierarchical planning, rather than independent enterprise with legal rights to reap and retain rewards.

Whatever the limitations of a market system, it has the advantage that it does not require majority agreement before a decision can be made to produce or distribute a good or service. Private property and contracts permit zones of autonomy within an interrelated system; agents may reach decisions through negotiated contracts with others. The costs and benefits are devolved to individuals or firms.

Through private enterprise it is possible for many technological or institutional innovations to be pioneered without the prior agreement of (democratic) committees or (undemocratic) bureaucrats. This analysis is borne out by experience. The former Soviet-type economies in Russia and China lacked devolved autonomy, secured by private ownership.

Eventually they learned that lesson. The change in China was most dramatic. After the Communist Revolution of 1949, agriculture in China was organized into large collective farms. Other than by threats and bureaucratic bullying, farmers had little incentive to improve productivity. Risky innovation was unwise. Productivity remained low and often there were shortages of food. But Mao Zedong died in 1976, opening up the possibility of reform.

20130331TigerLeapingGorge2In 1978 some Chinese peasant farmers decided to withdraw from collective farms and take responsibility for production at the household level, where the household (instead of the collective) received the revenue from its sold output. Individual households had much greater incentives to work harder and to innovate. After decades of slow growth under Mao, China’s explosive economic growth began with those changes in rural areas. As a result, unprecedented millions were lifted out of poverty.

China’s spectacular economic growth began when agriculture began to pass into the private control of the peasants after 1978. The Chinese Communist Party endorsed these changes in the rights to use and manage land (while keeping legal title to the land in the hands of the collectives), and also promoted private businesses in rural areas.

China also retained many state-owned enterprises. The state continued to play a major strategic role in economic development. China has demonstrated how viable public and private sectors are essential for growth and innovation in a modern large-scale economy.

The failure of classic socialism

Some version of socialism might work on a small scale. Cooperation can work in this context, based on close, inter-personal interactions. Humans have co-operated in this way, in families and tribal groups, for many thousands of years.

Elinor Ostrom

Elinor Ostrom

Nobel Laureate Elinor Ostrom studied the management of common-pool resources – such as medieval common land, fisheries or agricultural irrigation schemes – and showed how they can be effectively managed by relatively small local communities.

Their small size allows participants to monitor each other, to ensure that necessary tasks are carried out and that the interests of the community are served.

Enforcement mechanisms range from praise to punishment. Within these relatively small and cohesive groups, trust and targeted sanctions are mechanisms for encouraging cooperation, reciprocity and compliance with customary rules.

But socialism on a small scale would lack the economies of large-scale production and the technological dynamism of today’s competitive capitalism. Modern medicines and technologically-advanced treatments, requiring extensive funding, risk-taking and research collaboration, could not be developed. With inferior drugs and healthcare, human longevity would be lower than it is today.

In larger socialist societies, individual incentives for effort and innovation are diminished, and compensatory, face-to-face, trust-based mechanisms to sustain cooperation are relatively less effective. When we move from communities of a hundred or so, where it is possible for everyone to know everyone else, to communities of thousands or more, then interpersonal trust and reputation are much less effective at the overall level, and they have to be supplement both other incentives and constraints.

When thousands of people are brought together, and rewards are shared, then there is less incentive to make the extra effort, because the rewards from that additional work would be hugely diluted.

Large private corporations face this problem too. But competitive pressure on the private corporation obliges it to incentivise its workforce in some way, so that most employees pull their weight.

Market competition is absent or much diminished in a centrally planned economy. Instead, the pressure to perform comes from the state. Consequently, strong discipline is necessary to sustain production, and larger-scale socialism engenders authoritarianism and bureaucracy. Twentieth-century evidence strongly supports this analysis.

Those that propose ‘democratic socialism’ in large-scale societies fail to address some key practical questions. How is all the important information to be gathered and transmitted? How are resources to be produced and distributed? How is everyone to be incentivized to work well and to innovate? And if the system is to be ‘democratic’, how would it be possible for everyone involved to vote on every important decision?

Robert Owen

Robert Owen

Such practical considerations show that democratic socialism (at least in the classic sense of Robert Owen and Karl Marx, who proposed common ownership and the abolition of private enterprise) is unfeasible in any large-scale complex economy.

While interpersonal interactions can engender cooperation on a small scale, in large-scale societies other mechanisms and incentives are necessary. For dynamism and efficiency, there have to be competition, markets and a large private sector, as well as a state.

Private ownership is also important for political reasons, to create zones of politico-economic power that can countervail state autocracy.

Contrary to the twin, all-or-nothing, ideologies of classical socialism and free-market purism, this leaves open a huge area for economic reform and development. A private sector can be made up of many different kinds of enterprise, including worker cooperatives and social enterprises, as well as more conventional corporations. The state can intervene in a myriad of ways, including the adoption of redistributive taxation and the development of a strong welfare state.

Once all this is understood, then the game changes – irrevocably. Once it is realized that classical socialism cannot work (at least in a humane way) then you have to look for alternatives. Once it is acknowledged that private property and markets are indispensable in large-scale modern economies, then you have to accept them, warts and all. The best that can be done is to minimize their deleterious effects, and to explore viable avenues of institutional reform.

Much of the Labour Party learned this lesson in the era from 1945 to 2015. It adjusted to the mixed economy and began to understand the virtues and indispensability of private enterprise. That lesson seems to be forgotten by a large number of Labour Party members, who continue to support Corbyn and his naïve, outdated ideology. Unless that lesson is learned again, and quickly, then Labour has no future as an electable political party.

 

23 July 2016

Edited 24 July 2016

 

My forthcoming book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

To be published by University of Chicago Press in November 2017

  1. Corbyn added that he was in favour of a National Health Service that is ‘totally public’ with ‘publicly employed people running it’. Is he aware that GPs are not NHS employees but self-employed contractors? If so, is it his intention to make all GPs employees?

  2. In an interview on 24 July 2016, Corbyn’s ally John McDonnell backtracked on his leader’s statement, re-admitting a role for private sector pharmaceutical research under some vague notion of ‘democratic control’. He said that Corbyn’s statement had been ‘misinterpreted’. But this dishonest manoeuvring under pressure fails to mask their true aims.

 

Bibliography

Chang, Ha-Joon (2002) Kicking Away the Ladder: Development Strategy in Historical Perspective (Anthem Press: London).

Hayek, Friedrich A. (1944) The Road to Serfdom (London: George Routledge).

Hodgson, Geoffrey M. (2015) Conceptualizing Capitalism: Institutions, Evolution, Future (Chicago: University of Chicago Press).

Mazzucato, Mariana (2013) The Entrepreneurial State: Debunking Public vs. Private Sector Myths (London and New York: Anthem).

Murrell, Peter (1991) ‘Can Neoclassical Economics Underpin the Reform of Centrally Planned Economies?’ Journal of Economic Perspectives, 5(4), Fall, pp. 59-76.

Nelson, Richard R. (1981) ‘Assessing Private Enterprise: An Exegesis of Tangled Doctrine’, Bell Journal of Economics, 12(1), pp. 93-111.

Nelson, Richard R. (2003) ‘On the Complexities and Limits of Market Organization’, Review of International Political Economy, 10(4), November, pp. 697-710.

Ostrom, Elinor (1990) Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge: Cambridge University Press).

Reinert, Erik S. (2007) How Rich Countries Got Rich … And Why Poor Countries Stay Poor (London: Constable).

Simons, Ned (2016) ‘Jeremy Corbyn tells Owen Smith to “Come On Board” And Support The NHS’, The Huffington Post UK, 21 July. http://www.huffingtonpost.co.uk/entry/jeremy-corbyn-tells-owen-smith-to-come-on-board-and-support-the-nhs_uk_5790a576e4b05c99a7092b16

Zhou, Kate Xiao (1996) How the Farmers Changed China (Boulder, CO: Westview Press)

Posted in Common ownership, Jeremy Corbyn, Labour Party, Left politics, Liberalism, Markets, Nationalization, Politics, Private enterprise, Right politics, Robert Owen, Socialism, Uncategorized

July 14th, 2016 by geoffhodgson1946

Building-Construction

 

Originally posted 14 July 2016

 

“A lucid and persuasive piece” – Richard Surr

“A very thoughtful and informative article” – John Boughton

“A frank and thought-provoking assessment” – John Hill

“An excellent and thought-provoking article” – Michael Kelly

“A great read” – Graham Sutton

 

Geoffrey M. Hodgson

 

12 July 2016 will go down in UK history for two major political events. First, it was the last full day that David Cameron was Prime Minister. Second, the National Executive Committee of the Labour Party decided to put Jeremy Corbyn on the membership ballot for the party’s re-election of Labour’s leader, despite an overwhelming vote of no confidence against him by Labour MPs.

On this day, the Labour Party destroyed its chances of victory in the next general election. A party so deeply divided cannot win. For Labour, this is the most optimistic assessment: 12 July 2016 might come to be seen as the day that Labour died.

My latest book elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by the University of Chicago Press in January 2018

Progressive Left politics in Britain has to be rebuilt. It is as if the clock has been turned back 100 years. We must begin again.

Labour’s Grim Prospects

Labour now faces another election among its members for its Leader. Even with a strong and commanding alternative candidate, Corbyn is likely to win this contest. This would leave Labour as a party in Parliament where 80 per cent of its MPs have no confidence in its leader.

Momentum1Consequently, all 172 of the ‘rebels’ would face possible deselection by their local constituency parties. Few would survive the show trials by Corbynistas for their alleged crimes. They would be replaced by hard-left stalwarts.

A small consolation for the deselected MPs is that few of the Corbynista parliamentary candidates would survive trial by the British electorate, especially when made aware of Corbyn’s record as a supporter of terrorist organisations such as Hamas, Hezbollah and the IRA.

In a more optimistic scenario, suppose that Corbyn is defeated for Leader in the membership vote. At least then, the Parliamentary Labour Party and much of the Labour Party machine would be ostensibly in the same hands. But the party would be in civil war. It would become a cockpit of personal abuse and factional machination, unattractive to ordinary, thoughtful, soft-spoken, Labour supporters. Many of the so-called rebels would be deselected by the local parties that were in Corbynista hands.

Electorates are not fond of parties that are unable to quash their internal feuds. Voter want results – not rifts. The Tories are masters of the swift coup to end dissent. That is because they have a thirst for governmental power. Sadly, much of the Labour membership does not. They prefer to be ideologically pure. That is why Labour is dying. It looks likely to be pulverised in a general election. The chances of a majority Labour government have disappeared, at least for 2020 and maybe forever.

Will the Majority of Labour MPs Breakaway?

Assume that a large segment of Labour MPs breaks away and forms a new party. If their numbers were sufficient, then they could claim the official mantle of Her Majesty’s Opposition. They might outnumber the remaining parties, including the SNP and Corbyn’s Rump Labour. They would have to find a new name, be it ‘Social Democratic Labour’ or whatever.

Finding a name would be the least of their problems.

First the new party would have to be built up from the grassroots, in every winnable constituency. Then there would be the problem of party funding. Gaining credibility in Scotland would also be important.

The Global Crisis of Social Democracy

Added to all this is the global ideological crisis within social democracy itself. Social democracy was originally synonymous with socialism, where the latter meant an economy dominated by public enterprise and planning. Many of the early ‘social democratic’ parties were led by Marxists, including the Social Democratic Workers’ Party of Germany, founded in 1869. Although some social democrats favoured peaceful reform rather than violent revolution, they mostly agreed on the goal of large-scale common ownership.

Da Vopedo

 

Social democracy began to change its meaning more substantially after 1945, especially when the German Social Democratic Party embraced private enterprise and a mixed economy in 1959. Today social democracy is often distinguished from socialism in terms of a stronger emphasis on a mixed economy and private enterprise, while retaining the goal of greater equality and social justice.

As Neal Lawson has pointed out, modern European social democracy was built during, and affected by, the Cold War of 1948-1991. It was also founded on a mass industrial working class. Until the 1970s there was a widespread concern the USSR might overtake the West in terms of productivity and economic prowess. Post-1945 social democracy was forged as a compromise between Soviet planning and market economy, within a democratic political system, based on the support of industrial workers and progressive intellectuals.

But the sixteen years from 1975 to 1991 saw this consensus collapse. The post-war political settlement, accepted by parties on the Left and Right, disappeared. In addition, de-industrialisation in the West and the shift of much manufacturing to East Asia, pulverised the traditional working class base. The collapse of the Berlin Wall in 1989 ended the Soviet Bloc and its experiment with socialism.

Fall of the Berlin Wall 1989

Fall of the Berlin Wall 1989

Consequentially, modern social democracy is now in crisis the world over. It is failing in government in France and it is in retreat almost everywhere else, including in its great heartlands in Northern Europe, and no less in Germany and Scandinavia.

Social democrats have been slow to adjust. As Lawson has argued, they have retained ‘their statism and tribalism, their urge to command and control’. They are ‘at odds with a zeitgeist that demands pluralism, complexity’. They failed to develop an adequate alternative vision of ‘a good society that is about much greater equality but is at odds with consumption without end.’

A problem shared by Marxist, ‘Labour’ and social-democratic parties is that they all stem from a post-Enlightenment, doctrinal offshoot (around Louis Blanqui and others in the 1830s) that focused on the interests and aspirations of the working class, rather than on those of humanity as a whole.

Marxism went furthest in this direction, with its doctrine of class struggle and the ‘dictatorship of the proletariat’. But the very name ‘Labour’ speaks to one class rather than to all humanity. One of the great lessons of the Enlightenment is that human rights are universal. Especially in our fractured world, political parties should have a universal appeal.

In particular, the very aim of greater economic equality should be seen not as an outcome of envy, struggle or revenge, but as a moral mission to make society more amenable and cohesive for all.

Class-based, social-democratic, mind-sets have dominated both the Left and Right of the Labour Party for the last seventy years. If the majority of Labour MPs try to build something out of the ruins, then they will face the profound problem of reconstructing their own philosophy and identity for the twenty-first century, alongside a myriad of other practical difficulties.

Radical Liberalism

I do not pretend that I have adequate answers, but I am sure that a new radical movement that faces the problems of the twenty-first century must build on the achievement of the political and scientific Enlightenment in the seventeenth and eighteenth centuries. Hence it must relate in some way to the broad liberal tradition that stems from this Enlightenment.

DaVinci1This tradition emphasises democracy, liberty, equality and cooperation. Socialism derives from the Enlightenment, but has been neither consistent nor adequate in the pursuit of these goals.

In particular, the liberal tradition also recognises that private property is essential to a dynamic economy, notwithstanding the importance of state intervention in health, education, market regulation, redistribution and elsewhere. As the twentieth century shows us, some private property is a necessary (but insufficient) guarantee of liberty. Its abolition has without exception led to totalitarianism.

It is for the reason that one of the greatest achievements of liberal and Enlightenment thought, the United Nations Universal Declaration of Human Rights, includes these words: ‘Everyone has the right to own property alone as well as in association with others. No one shall be arbitrarily deprived of his property.’ Property, in short, is a basic human right.

At the same time, property-owning market economies have important limitations. These must be addressed without destroying private enterprise, competition and the well-springs of innovation and wealth. Greed and individualism must be countervailed by a recognition that, just as we have all benefitted from the work of others, we have a duty to society in return. Extreme inequalities of income and wealth are deleterious to social solidarity and cohesion, and these too must be tackled. This puts radical policies, such as a guaranteed basic income and some viable form of redistributive taxation, on the agenda.

Thomas Paine

Thomas Paine

Everything I mention in the previous paragraph was considered at length by the great Anglo-American radical Thomas Paine (1737-1809). Contrary to widespread belief, Paine was not a socialist. He was a radical liberal.

Take another relevant example. John Stuart Mill (1806-1873) was concerned about the problems of inequality, in wealth, power, voting rights and income. He advocated not simply a market economy but forms of cooperation, particularly worker cooperatives.

John A. Hobson (1858-1940), was a liberal and one of the great neglected economists of the last 150 years. He developed a theory of unemployment and opposed the imperialism of the great powers.

From 1908 to 1914 Herbert H. Asquith (1852-1928), as Liberal Prime Minister, led his party to a series of major reforms, including social insurance and the reduction of the power of the House of Lords. Asquith laid the foundations of the Britain’s welfare state. His Liberal successor, David Lloyd George (1863-1945), gave the vote to women in 1919 (but not on the same terms as men).

The Liberal Democrats

So why not join the Liberal Democrats?

Imagine we are back in 2005, with Charles Kennedy as Leader, but Labour in today’s mess. For many readers the Liberal Democrats would be an attractive option.

Kennedy became leader in 1999. His party won 52 seats in the 2001 election – their highest tally since 1923. He shifted his party to the Left and– unlike Labour and the Tories – the Liberal Democrats came out firmly against the 2003 invasion of Iraq. In the 2005 general election, 62 Liberal Democrats were elected. Kennedy stood down in 2006.

Nick Clegg became leader in 2007. After the economic crash of 2008, Clegg told his party at its 2009 annual conference that ‘savage cuts’ were needed to deal with the mounting budget deficit. When the 2010 election granted no single party an overall majority, Clegg argued that Labour was incapable of making the cuts in public expenditure that he deemed necessary. This was a key argument in persuading his party to join a coalition with the Tories. Kennedy voted against this coalition.

To some degree, the coalition did act as a check on the ideological, axe-wielding, Tory Right. They blocked, and postponed for five years, the dreadful mistake of the referendum on Europe. But the Liberal Democrats under Clegg made the serious mistake of willingly participating in a misconceived and highly damaging programme of cuts in vital public services and investment.

The Liberal Democrats also wrongly blamed Labour for overspending prior to the crash. In fact, Labour had the finances under control before 2008 and the big spending was needed after the crash, to save the financial system from collapse.

Clegg and other members of the Liberal Democrats had forgotten key lessons from their own history. Asquith learned the dangers of doing deals with the Tories. Lloyd George was cast aside by them in 1922 just as Clegg’s party was deliberately crushed by the Tory machine in the 2015 election.

John Maynard Keynes

John Maynard Keynes

Just as grave was the abandonment of Keynesianism by the Liberal Democrats. John Maynard Keynes (1883-1946) was a life-long Liberal and one of the greatest economists of all time. Keynes argued that the first priority of government was not the reduction of its deficit but the maximisation of employment. Through growth and greater employment a government could accrue greater income to resolve its budgetary problems. Attempts to deal with deficits by reducing government expenditure and austerity would be self-defeating: the economy would contract (or grow more slowly) and the deficit would increase.

The failure of a strategy of austerity has become abundantly clear in the six years that George Osborne was Conservative Chancellor of the Exchequer since 2010. The Liberal Democrats need to shout more loudly that they have learned that lesson.

Labour and the Liberal Democrats – Their Aims

Ever since Labour removed its commitment to common ownership from its constitution in 1995, its institutional aims have been unclear. The current Labour Party Constitution outlines commendable principles such as by ‘common endeavour we achieve more than we achieve alone’. It laudably aims for a society where ‘power, wealth and opportunity are in the hands of the many not the few’ and ‘where we live together freely, in a spirit of solidarity, tolerance and respect’.

But these words are too vague to provide a clear goal. They might be deemed consistent with a range of idealistic plans, from statist socialism to egalitarian ‘people’s capitalism’.

Labour’s current Clause Four Part One is silent on the question of property, whether it is to be private or owned in common. Reference to ‘a thriving private sector’ is tucked away in Part Two, alongside a mention of public ownership or accountability where ‘essential to the common good’.

Lib-Dems1The Preamble to the Constitution of the Liberal Democrats is much clearer. It mentions ‘a strong and sustainable economy which encourages the necessary wealth creating processes, develops and uses the skills of the people and works to the benefit of all, with a just distribution of the rewards of success.’

It continues: ‘We want to see democracy, participation and the co-operative principle in industry and commerce within a competitive environment in which the state allows the market to operate freely where possible but intervenes where necessary.’

It declares: ‘We will work for a sense of partnership and community in all areas of life. We recognise that the independence of individuals is safeguarded by their personal ownership of property, but that the market alone does not distribute wealth or income fairly. We support the widest possible distribution of wealth’.

This commitment to greater equality could be strengthened. There are other omissions, which have increased in importance in today’s multi-cultural Britain. They include measures for the development of social integration and cohesion, particularly by winding down state-funded faith schools.

No party is perfect, and we are obliged to compromise to get anywhere.

BrexitIn the current crisis, the Liberal Democrats have another strong card to play. Since 1959 they have been firmly in favour of (what is now called) the European Union. Labour was for withdrawal in 1983. Subsequently it changed its policy back to staying in. But Corbyn was in favour of leaving the EU until he became leader in 2015. His ambivalence during the referendum campaign was obvious.

The Liberal Democrats accept the result of the 2016 referendum but are pledged wholeheartedly to restore Britain’s strong ties with Europe, to the point of possible re-entry into the EU in the future.

So why not join the Liberal Democrats?

I just did.

I accept that others will try and retrieve something from the fragments of today’s Labour Party. Perhaps they can help build a base for progressive policies in the devastated former industrial areas, particularly in Wales and the North of England. I wish them success. We all need to work together to help make Britain and the world a better place.

 

14 July 2016

Bastille Day – liberté, égalité, fraternité.

Minor edits: 15-19 July 2016 and 17 August 2016.

 

Autobiographical Note

Born in 1946. Raised in rented council housing. Educated at state schools and at the University of Manchester. Member of the Labour Party, 1966-1968 and 1974-2001. Labour Parliamentary Candidate for Manchester Withington in 1979. Briefly advisor for Neil Kinnock and Roy Hattersley in the 1980s.

I left Labour over faith schools, inadequate House of Lords reform and neglect of economic inequality. Would have left over Iraq. Politically unaffiliated 2002-2016.

Formerly Reader at the University of Cambridge, now part-time Professor at the University of Hertfordshire. Editor in Chief of the Journal of Institutional Economics. Secretary of the World Interdisciplinary Network for Institutional Research (WINIR).

Author of 16 academic monographs in economics and 145 articles in academic journals. One of my books (How Economics Forgot History) was selected in 2016 by the World Economics Association as one of the 50 most important books in economics in the last 100 years, another (Conceptualizing Capitalism) won the 2014 Schumpeter Prize. Two honorary doctorates. Fellow of the Academy of Social Sciences.

 

Bibliography

Claeys, Gregory (1989) Thomas Paine: Social and Political Thought (London and New York: Routledge).

Fishman, William J. (1970) The Insurrectionists (London: Methuen).

Hobson, John A. (1902) Imperialism: A Study (London: James Nisbet).

Lawson, Neal (2016) ‘Social democracy without social democrats: how can the left recover?’ New Statesman. 12 May. http://www.newstatesman.com/politics/staggers/2016/05/social-democracy-without-social-democrats-how-can-left-recover.

Mill, John Stuart (1848) Principles of Political Economy with Some of Their Applications to Social Philosophy (London: Parker).

Mummery, Albert F. and Hobson, John A. (1889) The Physiology of Industry (London: John Murray).

Waldron, Jeremy (1988) The Right to Private Property (Oxford and New York: Oxford University Press).

Posted in Common ownership, Democracy, Labour Party, Left politics, Liberalism, Nationalization, Politics, Socialism

July 10th, 2016 by geoffhodgson1946

blaircorbyn

“A thoughtful analysis of Labour’s current impasse – back to 1918 in more senses than one”
Niamh Hardiman, Professor of Political Science and Public Policy, University College Dublin
Geoffrey M. Hodgson
 
Tony Blair and Jeremy Corbyn have been pulling Labour in different directions for decades. But under the surface there are some common roots in their thinking. Also Blair created some of the circumstances in which Corbyn was decisively elected as Labour Party Leader in 2015, with 59.5 per cent of the vote.
Both Blair and Corbyn have enjoyed huge support among Labour members. How could this radical transformation of political opinion take place within a large political party, in the space of less than 20 years?
To answer this question we must first briefly examine how Labour evolved from 1945 to 1979, as a mass party based on strong trade unions. Then came the earthquake of Margaret Thatcher’s election victory in 1979. Labour was defeated in three subsequent elections, before Tony Blair led Labour into power for thirteen years. Blair had help to make Labour electable by combining a reforming momentum with a pro-business image, but he did not provide an adequate political philosophy to replace traditional socialism.
This vacuum, combined with the disastrous invasion of Iraq in 2003, and Labour’s part in the financial crash of 2008, created the conditions for the election of Jeremy Corbyn as leader in 2015. Corbyn turned Labour’s ideological clock back by over half a century and lost its prospect of electability.

Post-War Labour: The Broad Church

After the first majority Labour government was elected in 1945, Labour party individual membership was rising rapidly towards one million and trade union membership began a long upward trend, rising from about 8 million in 1945 to 13 million in 1979. In general elections from 1945 to 1979 inclusive, Labour always polled between 36 per cent and 49 per cent of the vote. Labour was a mass party, built on the pillars of organised individual membership, powerful trade union support, a strong presence in parliament, and the loyalty of over a third of the electorate.
Clement Attlee

Clement Attlee

Labour’s commitment to widespread common ownership was enshrined in Clause Four of its constitution, which had been adopted in 1918. Before he became Prime Minister in 1945, Clement Attlee had expressed his support for this full-blooded socialist vision of a planned economy with widespread public ownership. But the practicalities of government, and the outbreak of the Cold War in 1948, pushed Labour leaders and intellectuals towards social democracy and a mixed economy. The most important statement of this shift was Anthony Crosland’s The Future of Socialism in 1956.
But, despite the efforts of Hugh Gaitskell and others, Labour’s Clause Four remained unchanged. Labour contained both classical socialist and social-democratic currents. But the socialist wing never achieved supremacy, largely because it had insufficient support among the trade unions that were affiliated to the party. The great union flywheel kept Labour on a social-democratic course. The first-past-the-post electoral system made a party split and a socialist breakaway unviable.

The Thatcher Era: From Multiple Defeats to Recovery

The 1979 defeat of the Labour Government under James Callaghan brought Margaret Thatcher to power and an ensuing 18 years of Tory rule. At first, in reaction to this defeat, the traditional socialist wing of the party made gains under the leadership of Tony Benn. In 1980, Michael Foot, a radical social democrat, was elected as party leader. In 1981, Dennis Healey narrowly defeated Benn for the Deputy Leadership. In frustration with Labour’s shift to the Left and the use of union block votes, a sizeable portion split off to form the Social Democratic Party.
Labour’s 1983 general election manifesto prescribed a good dose of nationalisation, an interventionist industrial policy, unilateral nuclear disarmament, higher personal taxation and withdrawal from the European Economic Community (now the European Union). Tested at the polls, Labour’s vote slumped below 28 per cent, for the first time since 1918.
Neil Kinnock

Neil Kinnock

Then Foot resigned. Neil Kinnock was elected as leader, beginning the long process of making Labour electable once again. Kinnock fought the Marxist entryists in the party, modernised its policies on vital issues such as home ownership, and made it more credible.
Meanwhile, Thatcher continued her assault on Labour’s trade union base. A series of restrictive laws reduced trade union powers. By the time that Labour regained power in 1997, trade union membership had been reduced by more than a third. Today, trade union membership is less than half what it was in 1979, notwithstanding a bigger workforce.

The Blair Revolution: From Socialism to Undeclared Liberalism

The long period in opposition from 1979 to 1997 convinced a majority of Labour members that principle was impotent without power, and that some compromises were necessary to make Labour electable. In this climate, Tony Blair was elected as party leader in 1994.
The term ‘New Labour’ separated the party from its previous electoral baggage, including its original primary focus on common ownership and its antagonism to private business. Blair argued that previous socialists had confused means with ends. The desired end was a society in which all individuals would be valued and had the means of self-fulfilment. If common ownership had been a means that end in the past, then it was no longer appropriate for the modern, complex, global economy.
Tony Benn

Tony Benn

In 1995 Blair successfully removed Labour’s commitment to ‘common ownership’ from Clause Four of its constitution. But from the Left, Tony Benn protested: ‘Labour’s heart is being cut out’. In a sense Benn was right, common ownership had been Labour’s core principle since 1918, even if no leader since 1945 had made it a primary goal.
Blair hyphenated the word as ‘social-ism’ and attempted to change its meaning. It now meant a recognition of individuals as socially interdependent, the promotion of social justice and of equality of opportunity, recognising the equal worth of each citizen. He also used the term ‘third way’ to describe a path that differed from widespread collectivisation, on the one hand, and unrestrained markets, on the other.
While Blair saw a sizable role for the market, he was not a ‘neoliberal’ or a free-market libertarian. The state was still to play a major role in the economy. But redistributive taxation and the reduction of inequality were not major priorities. Blair’s close ally Peter Mandelson declared in 1998 that the Labour Government was ‘intensely relaxed about people getting filthy rich as long as they pay their taxes’.
Thomas Paine

Thomas Paine

While Blair redefined and retained the word social-ism, he moved Labour closer to a version of social liberalism. There is a radical tradition of social liberalism, but it is not socialist in the sense of widespread common ownership. The good of the community is seen as harmonious with the freedom of the individual. This tradition stretches from Thomas Paine through John Stuart Mill to Thomas H. Green, John A. Hobson and others.
From Paine onwards, social liberals raised concerns about inequalities of wealth and power. They appreciated the complexity of decision-making and the potential fallibility of government. Hence they advocated flexibility: there was a need for policy experiments and ongoing appraisals. Institutional checks and balances were required. But for Blair it was all about ‘values’, not structures or institutions.
Labour’s nostalgic devotion to the word socialism was too strong. With or without the hyphen, social-ism had become a zombie-term – a mere badge of identity. Labour was still stuck in its old rhetoric and unable to learn much from the broad liberal tradition.

Blairism as Marxism turned Upside-Down

The relationship between means and ends is important. Marxism famously separates ends from means, claiming that ‘the ends justify the means’. For Marxism, all means are evaluated solely in terms of the ends that they are deemed to serve. But in a complex world, we cannot be sure that specific means will lead to their assumed ends. Hence, contrary to Marxism, means must be placed under moral constraints as well.
Karl Marx

Karl Marx

Blair argued that the emphasis on common ownership or nationalization confused means with ends. The ends of social harmony and social justice, for example, might be achieved by means other than common ownership. Ironically, by separating means and ends so completely, Blair mirrored Marxism. Blair used a Marx-like separation of ends from means to abandon classical socialist aims.
But means and ends cannot be completely separated. The American philosopher John Dewey pointed out that the pursuit of goal is itself a learning process that can modify our ends. Furthermore, the use of particular means might modify our ends, as we discover unforeseen problems or benefits. Furthermore, the end we uphold is a spur to action, hence also a means of energizing change. Dewey wrote: ‘there is no end which is not in turn a means’.
Blair adopted another dichotomy from Marxism. This is the separation of the sphere of ‘values and beliefs’ from economic structures and patterns of ownership. This is redolent of Marx’s distinction between the ideological ‘superstructure’ and the ‘economic base’. But Blair reversed their importance: for him ‘values and beliefs’ assumed primacy. Adopting the same dichotomy, Marxism was turned upside-down.
This Marxist dichotomy is false. All economic activity involves beliefs, evaluations and value-laden motivations. Values and beliefs are intrinsic to the economy. The economy is not a machine that can be considered separately from the knowledge, beliefs and expectations of the human agents within it.

Blair in Power: From Achievement to Catastrophe

Blair’s highly charismatic and effective leadership led to the electoral landslide of 1997. Labour’s share of the vote jumped from 34.4 per cent in 1992 to 43.2 per cent in 1997. Especially in the early years, his government achieved a great deal. Education and the National Health Service benefitted for large increases in spending.
One of the first major achievements of Blair’s government was the Good Friday Peace Agreement in Northern Ireland. A minimum wage was introduced and devolved assemblies were set up in Scotland and Wales. The Human Rights Act was passed in 1998, but the Blair government was later accused of complicity in human rights abuses abroad. There was important legislation in pursuit of gay rights. Child and pensioner poverty were dramatically reduced. There was continuous economic growth. Many more people were brought into employment.
Blair won another landslide election in 2001. Demonstrably, by a wide margin, he had made Labour electable, after the wilderness of the Thatcher era. But he did not offer Labour a new philosophy or a robust architecture, after the abandonment of traditional socialism and the decline of its trade union base. Even before Iraq, some of his new policies were challengeable.
Blair_Tony_NHSFor example, Blair’s emphasis on ‘values and beliefs’ over institutional structures allowed him to privatize some public services, including parts of the National Health Service. His claim was that the same esteemed values could endure within any system of ownership. But changes to institutional structures affect the habits and beliefs of those involved. Extending the scope for contracts and markets means – rightly or wrongly – that pecuniary and profit-orientated values can become more pervasive, unless checks are put in place.
Consistent with his emphasis on ‘values and beliefs’, Blair promoted a programme of expansion of publicly-funded faith schools. But religious faiths are not simply ‘values’: they are organised enclaves of group self-protection and survival. As already evident from the long experience of segregation in Northern Ireland, institutionalised separation can exacerbate political, ethnic and cultural divisions.
A 2001 report commissioned by Bradford City Council concluded that its communities were becoming increasingly isolated along racial, cultural and religious lines, and that faith-segregated schools were fuelling the divisions. Major riots erupted that year in Bradford and other northern cities.
faith-schoolDavid Bell – the then Chief Inspector of Schools – warned in a January 2005 speech to the Hansard Society that a traditional Islamic education did not equip Muslim children for living in modern Britain. He said: ‘I worry that many young people are being educated in faith-based schools, with little appreciation of their wider responsibilities and obligations to British society.’ In another lecture Bell said: ‘We can choose … whether we want to bring our diversity together in a single rainbow or whether we allow our differences to fester into separate cultures and separate communities.’ Yet, even after the July 2005 London bombings by home-grown Islamic extremists, and until his resignation from office in 2007, Prime Minister Blair continued to promote faith schools.1
Blair’s government reduced the number of heredity peers in the House of Lords, but dithered on further reform. Whether the House of Lords should be fully appointed, fully elected, or be subject to a combination of the two remained under dispute. Blair worried that the House of Lords might impair the will of the Commons – institutionalised checks and balances were not central to his thinking.
Then there was the catastrophe of the 2003 invasion of Iraq. Blair was over-confident that his ‘values’ could prevail, and President George W. Bush could be persuaded to seek United Nations approval. But these ‘values’ were no match for a belligerent Republican Party.
Of dubious legality, this bloody disaster wrecked Blair’s political career. Deadly strife in Iraq continues to this day, with enduring political reverberations in the UK.
Iraq_War1Blair’s motivation for his decision to support Bush’s invasion will be the subject of many biographies and histories to come. The explanation is bound to be complex, but I guess that Blair’s supreme emphasis on ‘values’ over legalities, structures, evidence, fallibilities and practicalities will be uppermost. How else could someone believe in the possibility that Western democratic ideals could quickly take hold in an artificially-created country with no democratic history, riven by ethnic and religious division and fragmented into countless clans?
Blair was an outstanding politician: he restored Labour’s electability and won three major victories in succession. But when he stepped down from office in 2007 he left an ideological as well as a charismatic vacuum. Labour retained the term socialism, but in substance Blair moved Labour toward an untutored version of reforming liberalism. Largely because of the damage to Blair’s reputation after Iraq, the party was unable to digest this ideological shift.
Blair compounded a problem faced by social democratic parties throughout the world. To a large extent they have lost their way, lacking a well-developed ideology with related, viable goals.

The Corbyn Restoration: Marxism-Leninism Revived

After Blair’s exit, the theoretical, ideological and charismatic void helps to explain why the Labour Party eventually choose the retro-Marxist Jeremy Corbyn as its leader.2 Furthermore, the weakened trade unions were no longer a moderating force: the flywheel had been dismantled. Constitutional changes had given them less power within Labour’s structure and the power they retained had been moved by internal changes to the Left.
The financial crash of 2008 undermined Labour’s reputation for sound finance. When Gordon Brown was Labour Chancellor under Blair, he promoted significant deregulation of the financial sector. After the debt bubble burst, and Western capitalism teetered on the edge of collapse, there was a widespread resurgence of Marxist thinking.
Corbyn turned the clock back, returning to socialism in its original meaning. The goal of common ownership was restored. His semi-Marxist, Bennite socialism was combined with a quasi-Leninist foreign policy. Opposed to the invasions of Afghanistan and Iraq, and to the oppressive treatment of Palestinians by Israel, Corbyn’s foreign policy became systematically anti-West. Corbyn turned Marxism the right way up.
LeninAs if oblivious to the enormous changes in world capitalism, Corbyn clings to an ideology made in 1918. There is neither strategy, detail nor appraisal of feasibilty, to his thinking. All that is left is his ‘values’: his outrage and protest against forces from the West that inflict suffering on the world. There is no mention of the many millions that have died under regimes that were ‘Marxist-Leninist’ by name.
Although very different from Blair’s, Corbyn’s ideology faces the same problem of dealing with the potential fallibility of all decisions and policies. Both Blair and Corbyn proceeded as if they had the uncontroversial right answer to any problem. Yet the complexity of the modern world underlines the need for an experimental approach to policy, and for countervailing institutional structures to appraise every move.
Unlike Blair, Corbyn believes that these problems can be solved by large doses of democracy and popular involvement. But he overlooks the problems and dangers of undetailed ultra-democracy. Widespread democratic involvement in the myriad of intricate decisions in a complex politico-economic system is unworkable.
While Blair after 2003 carried the scars of Iraq, Corbyn is on record in his support for terrorist organisations such as Hamas, Hezbollah and the IRA. He has claimed that he was engaging in the peace processes in these theatres of combat. But there was no visible negotiation with the other sides in these conflicts. Corbyn has also given speeches supporting Colonel Muammar Gaddaffi’s regime in Libya and Slobodan Milosevic, the butcher of Bosnian Muslims. Corbyn’s behaviour was more consistent with an ‘anti-imperialist’ and anti-West Leninist than with a broker for peace.
In 1918, Labour first established individual party membership and the ‘common ownership’ Clause Four was first placed in its constitution. Corbyn’s Leninism would take us back to the year after Lenin and the Bolsheviks seized power in Russia. Momentum yes – but backwards in time. Over a hundred years of hard work by millions of activists, building Labour as a political movement and as a party of government, will be reversed.
Corbyn’s political brew has little chance of success. But we should understand the unwitting role of Blair in helping to prepare the ground for its ascendancy within the Labour machine.

Conclusion: Beginning Again

Values are important, but we need more than that. While conservatives can nod in favour of the status quo, radicals must offer a distinctive vision for change – they have to outline the kind of future they want. A movement to change the world must uphold its aims and recruit to its cause.
Changed under Blair’s leadership, the current Labour Party Constitution outlines commendable principles such as by ‘common endeavour we achieve more than we achieve alone’. It laudably aims for a society where ‘power, wealth and opportunity are in the hands of the many not the few’ and ‘where we live together freely, in a spirit of solidarity, tolerance and respect’.
But these words are too vague to provide a clear goal. They are consistent with a range of idealistic plans, from statist socialism to egalitarian ‘people’s capitalism’.
The current Clause Four Part One is silent on the question of property, whether it is to be private or owned in common. Reference to ‘a thriving private sector’ is tucked away in Part Two, alongside a mention of public ownership or accountability where ‘essential to the common good’.
This unmotivated melange satisfies neither traditional socialists who see common ownership as a vital goal, nor liberals who regard some private ownership as one of the preconditions of human freedom. Clause Four is inaudible on these vital institutional questions. ‘Values’ fill the vacuum instead.
Clause Four commendably promotes democracy and human rights, but is unclear about the institutional and politico-economic conditions under which they are nurtured. It does not acknowledge one of the major lessons of the twentieth century, that human rights and traditional socialism have never co-existed, and there are good reasons to conclude that they never will.
The institutional aims of the Labour Party are unclear. There is now a battle for the stricken party’s soul. It will be fought out between traditional socialists and social-democratic modernisers. But it will be a fight over an organisation that has already lost its direction and has no clear way forward. Both Blair and Corbyn bear some responsibility for this crisis.
10 July 2016
Amended: 11-13 July 2016, 18 February 2019.

1 Like Blair, Corbyn also supports faith schools (at least Jewish ones).

2 Pressed by Andrew Marr in July 2015 on whether he was a Marxist, Corbyn ducked the opportunity to deny on television that he held to that view.

Bibliography

Attlee, Clement R. (1937) The Labour Party in Perspective (London: Gollancz).

Bell, David (2005) ‘Full Text of David Bell’s Speech’, The Guardian, 17 January. http://www.theguardian.com/education/2005/jan/17/faithschools.schools

Blair, Tony (1994) Socialism, Fabian Pamphlet 565 (London: Fabian Society).

Bloodworth, James (2015a) ‘A Left-Wing Case against Comrade Jeremy Corbyn’, International Business Times, 4 August. http://www.ibtimes.co.uk/james-bloodworth-left-wing-case-against-comrade-jeremy-corbyn-1513969

Bloodworth, James (2015b) ‘Why is No One Asking About Jeremy Corbyn’s worrying connections?’ The Guardian, 13 August. https://www.theguardian.com/commentisfree/2015/aug/13/jeremy-corbyn-labour-leadership-foreign-policy-antisemitism

Bloodworth, James (2015c) ‘The Bizarre World of Jeremy Corbyn and Stop the War’, Politico, 12 November. http://www.politico.eu/article/bizarre-world-of-jeremy-corbyn-and-stop-the-war-coalition-galloway-rees-iraq-far-left/

Boffey, Daniel (2016a) ‘Hilary Benn Seeks Shadow Cabinet Backing to Oust Corbyn’, The Guardian, 23 June. http://www.theguardian.com/politics/2016/jun/25/hilary-benn-jeremy-corbyn-labour-leadership-eu-referendum-brexit

Boffey, Daniel (2016b) ‘Jeremy Corbyn aides refuse Tom Watson one-on-one meeting’, The Guardian, 3 July. http://www.theguardian.com/politics/2016/jul/02/corbyn-keeps-watson-arms-length

Crosland, C. Anthony R. (1956) The Future of Socialism (London: Jonathan Cape).

Dewey, John (1922) Human Nature and Conduct: An Introduction to Social Psychology (New York: Holt).

Gillard, Derek (2007) Never Mind the Evidence: Blair’s Obsession with Faith Schools www.educationengland.org.uk/articles/26blairfaith.html.

Lukes, Steven (1985) Marxism and Morality (Oxford: Oxford University Press).

Rentoul, John (1995) ‘“Defining Moment” as Blair wins Backing for Clause IV’, The Independent, 27 April. http://www.independent.co.uk/news/defining-moment-as-blair-wins-backing-for-clause-iv-1611135.html

Trotsky, Leon D., Dewey, John and Novak, George (1979) Their Morals and Ours: Marxist versus Liberal Views on Morality (New York: Pathfinder Press).

Posted in Common ownership, Democracy, Jeremy Corbyn, Labour Party, Left politics, Nationalization, Politics, Socialism, Tony Benn, Tony Blair, Tony Blair

June 5th, 2016 by geoffhodgson1946

** FILE ** Writer George Orwell poses in this undated photo at an unknown location. George Orwell's left-wing views and bohemian clothes led British police to label him a communist _ but the MI5 spy agency stepped in to correct that view, the writer's newly released security file reveals. The secret file the intelligence agency kept on the author from 1929 until his death in 1950 was declassified by the National Archives. (AP Photo)

 

Geoffrey M. Hodgson

 

The terms Left and Right have become ambiguous and self-contradictory. Today the term ‘right-wing’ is applied to diverse and opposed views such as the following:

♦ Those who favour private ownership and markets are often placed on the political Right, including those who are strong supporters of democracy and human rights.

♦ Those who put private property above everything, and care less about democracy, are also described as Right.

♦ Pro-market libertarians, who are so strongly against states that they oppose wars, are also described as Right.

♦ Nationalists that venerate the national state are also described as Right, even if they support democracy and individual rights.

♦ Fascists and racists are also seen as Right, including those who would pursue wars and would limit individual freedoms or rights

Hence the debased term Right now covers democrats and despots, peace-mongers and war-mongers, nationalists and individualists, and defenders and opponents of human rights. There is nothing about private ownership and markets that necessarily implies racism or belligerent nationalism. Yet these different things are conflated under the same label.

The word Left has also slipped into various contradictory usages:

♦ Advocates of substantial state intervention in the economy, typically with some planning and nationalized enterprises, are described as Left.

♦ Advocates of a minimal state, with autonomous communes instead of nationalized industry, are also described as Left.

♦ People who care less about democracy or liberty, and much more about public ownership, national planning or the abolition of poverty, are often described as Left.

♦ Champions of extended democracy, decentralization, popular sovereignty, individual liberty and freedom of expression are often described as Left.

Accordingly, the term Left is now applied to both statist centralizers and communitarian decentralizers, to both totalitarians and ultra-democrats, and to both minimizers and maximizers of liberty.

FascesBoth the Left and the Right have advocated forms of collectivism. The word fascism derives from its symbolic use of the fasces of Ancient Rome, with rods bound together to signify collective strength. Fascism subjected individualism to the collective whole. Similarly, nationalism extols the nation over the individual. If you insist that collectivism is Left, be warned that fascism and nationalism also incline in the same collectivist direction.

Also, as shown below, both the Left and the Right have been aligned with forms of individualism and private property. These terms have become confused and unclear.

The original Left

French National ConventionThe origins of the political terms Left and Right are in the French Revolution. In 1789, in the National Constituent Assembly, those deputies most critical of the monarchy began to congregate on the seats to the left of the President’s chair. Conservative supporters of the aristocracy and the monarchy would congregate on the right side of the Assembly. The Baron de Gauville explained:

‘We began to recognize each other: those who were loyal to religion and the king took up positions to the right of the chair so as to avoid the shouts, oaths, and indecencies that enjoyed free rein in the opposing camp.’

Those seated to the left of the Constituent Assembly wished to limit the powers of the monarchy, and eventually to create a democratic republic.

Those on the right wished to maintain the authority of the Crown by means of a royal veto, to preserve some rights of the aristocracy, to have an unelected upper house, and to maintain major property and tax qualifications for voting.

By contrast, the Left demanded an end to aristocratic privileges, limitations to the power and privileges of the church, a single-chamber legislature in which all power rested with democratically elected representatives, and a broad popular – but wholly male – franchise.

JacobinsIn 1789, Jacobin Clubs sprung up all over France. Originally the Jacobin Clubs were an inclusive forum for all revolutionaries; people later described as Girondins and Montagnards were among their number.

The Girondins acquired that name because a number of them came from the départment of the Gironde. The Montagnards were a radical faction within the Jacobins: they took their name from their occupation of the higher seats behind the President of the Assembly.

By 1791 the Jacobin Clubs were dominated by Girondin intellectuals and orators. Hence Girondins such as Jacques-Pierre Brissot and Thomas Paine were also Jacobins.

At least from 1789 to 1792, when the label was most inclusive, the Jacobins as a whole were the Left. Like other radical Enlightenment thinkers, they believed that ideal governments were founded on natural rights and by the will of the people, rather than on religion or tradition.

Accordingly, the Left and Right divided on the question of the legitimate source of authority for government, and on the question of universal and equal human rights. To be Left was to reject aristocracy or religion as sources of authority, and instead claim authority in the will of the people.

The Girondins and the Jacobins supported the use of force to defend the gains of the Revolution and took an aggressive stance against hostile foreign powers. More militant Jacobins argued for suspensions of democratic powers to facilitate a more rapid purging of feudal or aristocratic powers. Some supported the execution of the King, despite a prominent earlier Jacobin sentiment in favour of the total abolition of the death penalty.

French TerrorThe Girondins had a majority in the National Convention; they controlled the executive council and filled the ministries. But the Montagnards controlled vital Parisian institutions including its National Guard.

On 2 June 1793 the Parisian National Guard was deployed to purge the National Convention of the Girondins. Most leading Girondins were imprisoned and executed, and thus began the Reign of Terror, with many thousands of killings by the guillotines, militias or mobs.

After the coup against the Girondins, the term Jacobin acquired a narrower meaning, connoting vigorous, uncompromising, and violent revolutionary action, in line with the Montagnards.

What the Left was not

If energy and determination are Left, then the Montagnards were to the Left of the Girondins. But degrees of fanaticism, activism and violence are poor criteria to differentiate political doctrines. We should be concerned more with the nature of an ideology than the manner it is pursued or expressed.

Caute Left in EuropeA prominent attempt to delineate Left from Right was proposed by David Caute in his popular volume The Left in Europe since 1789. Caute argued that the defining and enduring feature of the Left is its advocacy of popular sovereignty, against the supremacy of the monarchy and the church, as upheld by the Right.

Caute depicted Maximilien Robespierre as the main campaigner for universal suffrage. For Caute, ‘the Left in 1793 constituted those to the left of the Girondins.’ He wrote of the ‘moderate liberal’ Girondins and the ‘radical democratic’ Jacobins. But Caute’s claims are easily refuted.

Consider two influential Girondins. Jacques-Pierre Brissot played such a central role among the Girondins that for a while their whole group were called Brissotins. Before 1789, in advance of Robespierre, Brissot advocated a democratic republic in France. He argued against electoral qualifications based on income or property and instead proposed a representative government based on universal male suffrage. This then became Jacobin orthodoxy. Brissot also took the abolitionist lead in campaigning against slavery.

Nicolas de Condorcet

Nicolas de Condorcet

Nicolas de Condorcet was another leading abolitionist and also aligned with the Girondins. Condorcet was one of the first few advocates of female suffrage. He was not followed by Robespierre in that respect.

Contrary to Caute’s depiction, the prominent examples of Brissot and Condorcet show that leading Girondins were earlier and more inclusive in their proposals for a democratic franchise than Robespierre. The Girondins as a whole were no less radical in their democratic aims than Robespierre and other Jacobins.

Generally, the Girondins argued against the suspension of democratic powers. By contrast, Robespierre and other Montagnards were more willing to suspend democracy in times of alleged emergency.

Otherwise, in terms of ends (but not means) there was little to distinguish between Brissot, Condorcet and other Girondins, on the one hand, and Robespierre and other Montagnards, on the other.

The original Left and private enterprise

In pre-revolutionary France under King Louis XIV there were numerous corporations, closely tied up with royal power and bureaucracy. The sale of corporate offices provided an important source of royal revenues. In return, numerous corporations and guilds received privileges from the king.

In search of an individualistic utopia, and against the despised institutions of the Ancien Régime, from June 1791 the French revolutionary authorities enacted laws that prohibited organizations of workers, professionals and entrepreneurs, and ended much state regulation of business. Business coalitions, guilds and even business corporations were abolished. Individuals were free to pursue their business interests but forbidden to join together for business purposes.

But this revolutionary experiment in free-market, ultra-individualism was short-lived. There were no civil mechanisms to set standards or codes of conduct. Consequently and necessarily, corporations were later reinstated.

Crucially, from the Girondins to the Montagnards, the Left leaders of the French Revolution advocated an individualistic, property-owning, market economy, just as the English Levellers had done in the 1640s and the American revolutionaries in the 1770s. Under the monarchy, the French revolutionaries had experienced the ill effects of state monopolies and other large agglomerations of economic power. They wanted none of them. They defended private property and private enterprise. As the Fabian socialist R. H. Tawney put it: ‘the dogma of the sanctity of private property was maintained as tenaciously by French Jacobins as by English Tories’.

Gracchus Babeuf

Gracchus Babeuf

Some see Gracchus Babeuf as the ultimate Leftist of the French Revolution. Babeuf supported the Reign of Terror and was imprisoned in 1794 for his criticism of the group that ended the Terror and executed Robespierre.

After his release from prison in 1795, Babeuf advocated common ownership and the abolition of private property, to be achieved if necessary by the methods of terror. He was the first revolutionary communist of modern times. He aimed at the equal distribution of income and wealth. Babeuf and his followers planned to seize national power, and then rule on behalf of the masses, until the people were educated and deemed able to rule through locally-elected bodies. Babeuf’s conspiracy was uncovered in 1796 and he was then executed.

Babeuf had a point. How could equality of rights, equality under the law, and the abolition of inherited privileges, be squared with the concentrated inheritance of wealth, much of it being a hangover of the feudal era? How could the abolition of feudalism be reconciled with the persistence of such juxtapositions of luxury with squalor?

But by focusing on this problem alone, Babeuf and his followers pushed the revolutionary slogan of equality far beyond the matter of equivalent treatment under the law. They negated several other important rights that the revolution had enshrined, including the rights to individual property and of freedom of expression and assembly.

Although linked with the thinking of the time, the short-lived conspiracy of Babeuf was hardly representative of the Revolution as a whole. While his slogan was absolute equality, the abolition of private property went against prevalent Jacobin opinion. He was a product of the Revolution, but he was not typical of it.

Using Babeuf to establish a Left lineage, is no less absurd than suggesting that mass executions, terror, dictatorship and Bonapartism are all Left. It is more sensible to apply the term Left to the doctrines that prevailed in 1789-1792, rather than to the bloody upheavals and transgressions that followed.

Changing the meanings of Left and Right

Robert Owen

Robert Owen

When socialism emerged in the 1830s, with the ideas of Robert Owen and others, it underlined equality and solidarity, but sometimes to the detriment of liberty, autonomy or even democracy. Owen opposed parliamentary democracy, lawyers and legal institutions, and the 1832 Reform Bill. Prominent early socialists wanted rational, harmonious communities, and saw division and debate – in courts or parliaments – as counter-productive. This was the first wrong turning for the post-1789 Left.

In the 1840s, Karl Marx and Frederick Engels joined their version of socialism to the predicted victory of the proletariat in the class struggle, and its expropriation of the capitalist ruling class. In his Socialism: Utopian and Scientific, Engels described the principles and rights of the French Revolution as ‘nothing more than the idealized kingdom of the bourgeoisie’. These principles and rights were sacrificed at the altar of class struggle. This was another wrong turning.

Soviet PosterThe first Marxist government was established in Russia in 1917, and it quickly evolved into a one-party state. Purges and terror ensued. But many on the left supported the Soviet Regime. The Left label became associated with totalitarianism, with minimal human rights, sham trials, mass executions, limited freedom, and arbitrary confiscations of property. The original meaning of Left was turned upside down.

As noted above, state-sponsored monopolies were strongly opposed by the French revolutionary Left in 1789. Hence the original Left would have been opposed to the nationalisation of enterprises. For these and other reasons, by the original meaning of the term, there is a case for regarding Stalinism and Maoism as Right.

The term Right has long been linked with authoritarianism, discrimination, the repression of popular sovereignty and the denial of equality under the law. In this vein, it was coupled with the rising fascism of the 1920s and 1930s, in Italy, Germany, Spain and elsewhere. Both Left and Right acquired repressive and authoritarian connotations.

Benito Mussolini & Adolf Hitler

Benito Mussolini & Adolf Hitler

While Marxists since 1848 had wrenched the term Left from its Enlightenment roots, the militant nationalisms and fascisms of the first half of the twentieth century delayed any major shift in the meaning of the word Right. As late as the 1960s it still had strong associations with traditionalism, nationalism, theocracy and fascism. Conservatives in Europe and America supported dictatorships in Latin America, or were apologists for South African Apartheid: these conservatives were appropriately described as Right.

But eventually the term Right also shifted massively, from nationalist and traditionalist apologies for the privileges of aristocracy, to greater advocacy of free markets and private ownership, which ironically had been the territory of the original Left in the French Revolution.

With the collapse of the Keynesian-welfare consensus in the 1970s, a confident free-market neoliberalism took ground. By 1980, some thinkers on the Right had captured a swathe of liberal territory that had been long vacated by the original Left. Both free-marketeers, as well as condoners of dictatorships, were seen as Right.

Ronald Reagan & Margaret Thatcher

Ronald Reagan & Margaret Thatcher

But many on the Right – including US President Ronald Reagan and UK Prime Minister Margaret Thatcher – were inconsistent in their promotion of individualism and liberty. They championed large corporations. They also supported dictatorships and opposed sanctions against South African Apartheid.

Rightly or wrongly, their claimed free-market views were compromised by their negative attitudes to drugs and prostitution and their devotion to conservative and non-individualistic ‘family values’. But many libertarian advocates of free-markets support democracy and oppose dictatorships.

This book by G. M. Hodgson elaborates on some of the political issues raised in this blog:

Wrong Turnings: How the Left Got Lost

Published by the University of Chicago Press in January 2018

The abandonment of major ‘socialist’ experiments in China and the Soviet Bloc in the 1980s led to a further seismic shift. Within the Eastern Bloc countries, the rising radicals promoted free enterprise and democracy: they were against the status quo. By contrast, promoters of nationalization and comprehensive planning on the contemporary Left were seen as reactionary defenders of a doomed social order. This bewildered some 1960s radicals from the West, who discovered in the 1990s that the Eastern European revolutionaries were libertarian advocates of free enterprise and private property.

At least since 1990, the term Right has meant support for market solutions, alongside its enduring alternative associations with nationalism and authoritarianism. For over a century, the Left has been associated with state intervention and ownership. Ironically, in key respects, these terms have now swapped places. In 1789 the original Right advocated state monopolies and some state intervention, while the original Left advocated free markets.

Vitenam War ProtestMany 1960s radicals were critical of Soviet-style totalitarianism. Many also opposed the military confrontations of the Cold War. There was a huge movement of opposition to the war in Vietnam. There were also demonstrations against the 1968 Soviet invasion of Czechoslovakia. The 1960s sensitized many on the Left against militaristic attempts by major powers to impose their will on others.

By the 1970s, some on the Left went further, to oppose any exportation of Western ideas, and to reject any notion that poorer countries deserved to enjoy the same human rights that were promoted and (partly) realised in Western Europe and North America. Even peaceful proposals to extend these rights or values were seen as apologies for ‘Western imperialism’ or for the ‘US Empire’. Ambitions to export Western-style democratic institutions or rights were seen as ideological covers for capitalist imperialism.

Hence, for many on the Left, their anti-militarism turned into opposition to any attempt to spread Western values, peaceful or otherwise. Universal principles and rights held up by the French revolutionary Left of 1789, were seen by some of the 1970s Left as mere excuses for Western militarism or oppression.*

Following Marx and Engels much earlier, many leftists came to see such Enlightenment principles and rights as a sham. They abandoned central defining ideas of the original Left. This was yet another wrong turning.

The language of politics is now broken. Any project to revive the Left must look at its own origins and the wrong turnings it has taken in its journey since 1789. Of course, the world has changed, and some words can reasonably reform their meanings. But the original Left stood for equality under the law, representative democracy and universal human rights. These principles are as important now as they were in 1789.

 

5 June 2016

Minor edits: 13, 27 December 2016, 1 May 2017

 

* For the record, I opposed Western aggression in Vietnam. I was also against the 2003 invasion of Iraq. The fact that US President George W. Bush and UK Prime Minister Tony Blair attempted to justify the 2003 invasion in terms of the exportation of human rights and democracy does not mean that the invasion was justified. Promoting commendable institutions or values does not imply that they can or should be imposed by military force.

 

Bibliography

Caute, David (1966) The Left in Europe Since 1789 (London: Weidenfeld and Nicolson).

Cohen, Nick (2007) What’s Left? How the Left Lost its Way (London and New York: Harper).

Doyle, William (2002) The Oxford History of the French Revolution (Oxford and New York: Oxford University Press).

Hodgson, Geoffrey M. (1999) Economics and Utopia: Why the Learning Economy is not the End of History (London and New York: Routledge).

Hodgson, Geoffrey M. (2017) Wrong Turnings: How the Left Got Lost (Chicago: University of Chicago Press) forthcoming.

Lavoie, Donald (1985) National Economic Planning: What is Left? (Cambridge, MA: Ballinger).

Stewart, John Hall (1951) A Documentary Survey of the French Revolution (New York: Macmillan).

Tawney, R. H. (1921) The Acquisitive Society (London: Bell).

Posted in Common ownership, Democracy, Left politics, Right politics, Socialism, Uncategorized

May 22nd, 2016 by geoffhodgson1946

Geoffrey M. Hodgson

 

CorbynJeremy2016DNAIn September 2015 a rank outsider, with minimal support from inside the Parliamentary Party, became Labour Party Leader. But he was elected with the support of almost 60% of the party membership.

Jeremy Corbyn first became a Member of Parliament in 1983 and was frequently in opposition to the leadership of his own party. His elevation to Leader in 2015 was widely regarded as a radical break from Labour’s past, particularly from the era of Tony Blair’s leadership from 1994 to 2007.

In contrast to a widespread view, I argue here that Corbyn’s politics are – in most respects – more mainstream than reported. They are broadly in line with the original Labour Party, from its formation in 1900 (as the Labour Representation Committee) to at least 1945.

By contrast, from the election of the first majority Labour government in 1945 to the resignation of Ed Miliband from the leadership in 2015, Labour adjusted to the realities of gaining and retaining power, and became more moderate in much of its political rhetoric. A large section of the party abandoned its original socialist ideology, in substance if not in name, and these pragmatists dominated Labour during the post-war period. To retain credibility, they tried to alter the meaning of socialism to serve more moderate ends.

Corbyn’s election as leader should be understood – in part – as a rehabilitation of typical Labour doctrines of the 1900-1945 period, and of Labour’s aspiration for socialism as originally defined. Corbyn has Labour’s DNA. But he has recombined Labour’s original DNA with ‘anti-imperialist’ doctrines that became prominent, largely outside Labour, in the 1960s and 1970s.

I first summarise Labour Party ideology in the 1900-1945 period. I then show how Corbyn exhibits these earlier views, but in genetic recombination with an “anti-imperialist” politics of the 1960s and 1970s. I then briefly draw some tentative conclusions from this analysis.

Socialism and the Labour Party

The word socialism first appeared in English in 1827 in the Co-operative Magazine, published in London by followers of Robert Owen. It was used in the Poor Man’s Guardian in 1833, and moved into wider usage thereafter.

Robert Owen

Robert Owen

For Owen and his followers, socialism meant the abolition of private property. As Owen argued in 1840, ‘virtue and happiness could never be attained’ in ‘any system in which private property was admitted’. He aimed to secure ‘an equality of wealth and rank, by merging all private into public property’.

From the 1830s until the 1950s, socialism was almost universally defined in terms of the abolition of private property and some form of widespread common ownership.

In the Communist Manifesto of 1848, Marx and Engels echoed Owen and others and called for the ‘abolition of private property.’ In 1850 Marx declared: ‘Our concern cannot simply be to modify private property, but to abolish it’. In the Communist Manifesto and elsewhere, he and Engels proclaimed an economic order in which ‘capital is converted into common property, into the property of all members of society.’ They wanted the complete abolition of the ‘free selling and buying’ of commodities.

They welcomed efforts ‘to centralize all instruments of production in the hands of the state’ and looked forward to a time when ‘all production has been concentrated in the hands of a vast association of the whole nation’. Their version of socialism was particularly centralist, but they reflected the views of all socialists in looking for universal common ownership.

Marxism was never a major influence in the British Labour Party. But its founders took on board this same definition of socialism. Socialism was widely understood as the abolition of private ownership and its replacement by some form of common ownership.

Beatrice & Sidney Webb

Beatrice & Sidney Webb

Fabian socialists such as Sidney and Beatrice Webb had an ultimate vision of a fully planned and consciously controlled socialist economy where all markets and private ownership of the means of production were gradually marginalized to insignificance. They wanted private ownership of the means of production to be ended: it was a ‘perversion’.

They envisaged a massive, complex structure of national, regional and local committees, all involved in decision-making over details of production and distribution. But how would these cope with the huge amounts of information and specialized knowledge in modern complex economies? It was simply assumed that this was relatively easy to sort out in some rational manner.

G D H Cole

G D H Cole

Some contemporary Labour Party intellectuals stressed workplace democracy. This was a central theme in the “guild socialism” of G. D. H. Cole and others. Cole – another Fabian – is sometimes described as a ‘libertarian socialist’ and as an advocate of ‘decentralized’ socialism. But he supported the wholesale nationalisation of industry and the abolition of private enterprise.

Cole’s vision of socialism was of an integrated, national system where ‘a single authority is responsible both for the planning of the social production as a whole and for the distribution of the incomes which will be used in buying it.’ Within this ‘single authority’ he also sought devolved worker control. He wanted local autonomy of manufacturing, modelled on the medieval guild. But he was tragically unclear about how the two were to be reconciled.

These theorists ignored the problem of devolving genuine power within a national bureaucracy, without the creation of autonomous private enterprises. A major debate within the Labour Party concerned the desired structure and devolution of power within this national public framework.

Clause Four, Part Four of the Labour Party Constitution reflected a compromise between these different strands of thought. But all were united in their support of wholesale common ownership. Sidney Webb drafted these words and they were adopted by the Labour Party in 1918:

“To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.”

This provided for no exception: all production would be in common ownership and there would be no private sector. Although some Labour Party thinkers began to entertain the possibility of some private enterprise, resolute support for widespread common ownership prevailed.

Clement Attlee

Clement Attlee

In 1937, eight years before he became Prime Minister, Clement Attlee wrote of the ‘evils’ of capitalism: their ‘cause is the private ownership of the means of life; the remedy is public ownership.’

Attlee approvingly quoted the words of Bertrand Russell: ‘Socialism means the common ownership of land and capital together with a democratic form of government. … It involves the abolition of all unearned wealth and of all private control over the means of livelihood of the workers’.

After 1945, the position of many leading Labour Party members began to shift. First the realities of gaining and holding on to power – as a majority party for the first time – dramatized the political and practical unfeasibility of abolishing all private enterprise. Some nationalization was achieved, but a large private sector remained.

Second, with the outbreak of the Cold War in 1948 it was more difficult to sustain the naïve, rose-tinted views of the Soviet Union, although as Bill Jones shows in his book The Russia Complex, they were remarkably persistent.

In 1956 C. Anthony Crosland published The Future of Socialism. This underlined Labour’s slow reconciliation with markets, private enterprise and a mixed economy. In 1959 the (West) German Social Democratic Party abandoned the goal of widespread common ownership. In the same year, Hugh Gaitskell tried to get the British Labour Party to follow this lead, but met stiff resistance.

Because of Gaitskell’s failed attempt to change the wording of Clause Four, Corbyn’s mentor Tony Benn switched his allegiance to Harold Wilson. Wilson had been a student of Cole at Oxford University. When he was Prime Minister, Wilson pragmatically retained the clause but tolerated a mixed economy.

Tony Benn

Tony Benn

In 1995, Tony Blair successfully ended the Labour Party’s longstanding constitutional commitment to far-reaching common ownership. But Benn still wished to retain the original wording and protested: ‘Labour’s heart is being cut out’.

In an interview in 2000, Benn favourably quoted Attlee: ‘If you look around the world, what are the problems? They’re all caused by the private ownership of the means of production, distribution, and exchange.’

It should be clear that Labour’s commitment to widespread common ownership was uppermost from 1900 to 1945. Subsequently Labour adjusted to the realities of a large-scale complex economy, where it is impossible to gather all information together in some central planning office, or even in some massive computer.

Democratic deliberation over every key decision is even more unfeasible. As Oscar Wilde quipped: socialism is impossible because it would take too many meetings.

In practice, if not in declaration, every leader of the Labour Party from 1955 to 2015 had abandoned the commitment to wholesale common ownership. But as Benn and Corbyn have illustrated so well, it has remained in Labour’s DNA.

A tricky gene transplant might have been possible, but only if Labour had developed a thoroughgoing alternative to its pre-1945 socialism. The closest it came to this was Crosland’s Future of Socialism, which commendably emphasized the goal of diminishing economic inequality, instead of common ownership.

Tony Blair

Tony Blair

But largely the party fudged the issue, trying to turn the original meaning of socialism (which had prevailed from 1830 to 1950) into something else. Even Blair retained the word socialism in his rhetoric and in his redraft of Clause Four.

Blair promoted ‘social-ism’, which now meant recognizing individuals as socially interdependent. It also signalled social justice, cohesion, and the equal worth of each citizen, with equal opportunities.

Such a doctrine was indistinguishable from the earlier views of radical social liberals, such as T. H. Green and J. A. Hobson. It was a hundred miles away from the collectivism of Owen, Cole or the Webbs. But (with or without the hyphen) the word socialism was retained.

Blair favoured the tradition of ‘ethical socialism’ naming proponents such as John Macmurray and R. H. Tawney. But he wrongly stated that these socialists had been opposed to common ownership. On the contrary, their original devotion to this goal was no less than that of Owenism or Marxism, although Tawney and others later adjusted their views.

Instead of tackling the problem of its collectivist DNA more explicitly and resolutely, Labour tried to change the meaning of socialism and even rewrote parts of its own history. It is unsurprising that the old DNA survived.

Genetic Recombination with ‘Anti-Imperialism’

The late 1960s and early 1970s were years of great political convulsion. At the centre was opposition to the War in Vietnam. Previously most hard-left groups – including the forerunner of today’s Socialist Workers Party – were ‘entryists’ in the Labour Party. Before 1968 it was the only place to be. But the Vietnam War changed all that.

As British Prime Minister, Wilson declared government support for the military actions of the United States in Vietnam, but astutely avoided sending British troops. By 1968 the Labour Party conference had come out against the war. Wilson personally bore the brunt of the opposition. Thousands of activists left the Labour Party. Most of the hard-left sects followed them.

Hammer-sickle-rose-labourFrom 1920 to 1968 the main socialist party outside Labour was the Communist Party of Great Britain. After 1968 they were competing in this narrow space with several feuding and splintering Trotskyist groups.

It was Lenin, not Marx, who had made ‘anti-imperialism’ and national liberation a key motif of his Marxism. He was followed in this respect by Trotsky.

Hence Leninism once again became visible on the far left. But this time it did not necessarily mean loyalty to the Soviet Union: it mean ‘solidarity with anti-imperialist struggles’ in Cuba, Vietnam, Palestine and elsewhere.

Corbyn was 19 years old in 1968. Politically, these were his formative years. Unlike many others he remained in the Labour Party, partly attracted by the ideas and charisma of Benn, who narrowly lost the contest for deputy leadership against Dennis Healey in 1981. Corbyn’s unwavering views, his election as an MP in 1983 and his political survival until his triumphant bid for leadership in 2015, has spliced Leninist genes alongside those of the old Owenite collectivism.

Blair’s invasion of Iraq in 2003 and the financial crash of 2008 had helped to turn the Labour membership against Blairism, in all its forms and dilutions. As evidence of the Freudian defence mechanism of regression as a response to severe stress, Labour reverted to an earlier stage of development, adopting its infant profile of collectivism and state control.

Labour’s ‘Russia complex’ also re-emerged. We can find sympathy with a post-Soviet Russia, in disputes over the Ukraine and the expansion of NATO.

Labour’s Future?

Labour’s enduring successes in 1945-51, 1964-1970, 1974-1979 and 1997-2010 were great liberal reforms and extensions of social justice, from the National Health Service to the minimum wage. They did not bring a mythical socialist future any closer. Labour advanced despite, not because of, its original socialism.

Recent developments within the Labour Party – including the resurgence of its collectivist past – make a parliamentary majority in 2020 impossible, unless some unforeseen catastrophe hits the Conservative Party. A recent report from within the Labour Party states that unless radical action is taken, Labour’s electoral prospects ‘remain very poor’.

Declining Graph1Any way we look, the outlook is bleak. The election of Corbyn to Labour Party Leader shows that organizations have something similar to the enduring DNA of biological organisms. As business practitioners know well, changing organizational DNA is notoriously difficult.

Later posts on this New Politics blog will address this problem and try to formulate some solutions. But we should not underestimate the scale of the task ahead. One of the first jobs for the Left is to reconsider where it has come from, and what kind of future it wishes to build. Nothing should be taken for granted.

But this ‘DNA’ analysis shows that the status of the Labour Party in Britain as the leader of a renewed and viable Left is now in doubt.

 

23 May 2016

 

Bibliography

Attlee, Clement R. (1937) The Labour Party in Perspective (London: Gollancz).

Blair, Tony (1994) Socialism, Fabian Pamphlet 565 (London: Fabian Society).

Cole, George D. H. (1920) Guild Socialism Re-Stated (London: Parsons).

Crosland, C. Anthony R. (1956) The Future of Socialism (London: Jonathan Cape).

Hodgson, Geoffrey M. (1999) Economics and Utopia: Why the Learning Economy is not the End of History (London and New York: Routledge).

Jones, Bill (1977) The Russia Complex: The British Labour Party and the Soviet Union (Manchester: University of Manchester Press).

Marx, Karl (1973) The Revolutions of 1848: Political Writings – Volume 1 (Harmondsworth: Penguin).

Owen, Robert (1991) A New View of Society and Other Writings (Harmondsworth: Penguin).

Webb, Sidney J. and Webb, Beatrice (1920) A Constitution for the Socialist Commonwealth of Great Britain (London: Longmans Green).

Posted in Common ownership, Jeremy Corbyn, Labour Party, Nationalization, Politics, Robert Owen, Socialism, Tony Benn, Tony Blair