Free Life 22, April 1995, For a New Socialism, by Sean Gabb

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From Free Life No. 22, April 1995
ISSN: 0260 5112

For a New Socialism
by Stuart Pemberton (Sean Gabb)

By all normal indicators, the labour movement should be at the moment in good spirits. The Tories look finished. They have bungled the economy. They are split on every important issue. They are led by a man whom they pity when they don't despise. For the first time in 30 years, there seems a real prospect of a majority Labour Government not too far ahead.

Or so it seems. But forget the normal indicators. They haven't signified in a generation. Look behind the Labour leaders, with their snappy soundbites and snappier suits, look to the labour movement as a whole, and you'll find something approaching the most utter despair. Compared with this, a 34 point lead in the polls is like the winter sun on permafrost.

It isn't that the Tories have won every election since 1979. That is depressing, to be sure; but they almost lost in 1992, and they might lose next time. No - the long run of electoral defeats is not the cause of our despair, but only its collateral effect. The real cause is that the Tories have won the battle of ideas. They won this back in 1976, before they came into government; and, whatever the headline result, their victory is set to outlive the next election. By 1997, the Labour Party may again be in government: no more than today need the labour movement be in power.

The basic end of the British labour movement, uniting it across all sectarian boundaries, is to combine equality with freedom and progress. For much of our century, the means to this end have been state socialism; and this has meant nationalisation and state control of industry. It has also meant a comprehensive welfare state, to shelter the old, the sick and the unlucky from the worst hardships of a capitalist economy.

However, state socialism failed. It did not achieve the desired end. In some respects, it even frustrated the pursuit of that end. Before the Tories stopped it, nationalisation made large areas of British industry into museum exhibits. Welfare continues to reduce millions from the working classes to feckless parasitism.

Some in the labour movement still deny this bleak analysis. John Prescott at least pretends that, given a few dozen more seats, he can take us back to 1965. The Socialist Workers believe that one more push will bring on the dictatorship of the proletariat. But these are the anti-Darwinists of the labour movement - even the flat-earthers. Most members are in the sad position of wanting state socialism to work, but knowing that it won't.

The labour movement seems currently like one of those stone age tribes suddenly put in touch with the modern world. Traditional rituals and beliefs lose their meaning. The outsiders are seen as effortlessly superior. The choice is presented: integrate, put on Western clothes, learn to read and write, move to the nearest town; or sit in the rubble of the old culture, minds blown on cheap alcohol, objects of warning to the young and of interest to the anthropologist.

The Tories know that the post-War settlement has irreparably broken down, and they haven't been afraid to try replacing it. That has made them the true radicals of the past generation. Where they have led, Labour has resisted then followed. The resulting division in the labour movement is plain. Here are the Scargillites, lamenting their vanished or non-existent pasts, objects variously of derision and pity. Here are the integrators, with their filofaxes and their cosying-up to the City. What a wretched end to the brave hopes of 1945!

But the comparison can be pushed too far. The labour movement is not a stone age tribe, and the Tories are not effortlessly superior. They were first in realising the nature of the problem, but their solutions cannot be taken as final or even right: they are, indeed, often ghastly beyond imagining. There must be some other alternative to statism that isn't simply an enthronement of the most callous greed. But to find this, we must be absolutely clear in our minds about the distinction between ends and means.

Remember our basic end - the combining of equality with freedom and progress. The value of this is unaffected by any failure of the chosen means. A driver may set out from London to York, and arrive in Taunton. To point this out is no indictment of the driver's wish to get to York or of York as a destination: It is an indictment only of bad map-reading. Equally, if we accept that the labour movement has lost its way to the New Jerusalem, the correct response is to sit down and devise a better route.

And this we already have. Just like the Tories, we are heirs to a rich and varied tradition of thought; and just as they did in the late 70s, we also must delve into our traditions. We shall see then that the Conservative Party has no monopoly of anti-statism; nor need it retain one of post-statist reforms. Long before Clause Four and the Beveridge Report, our intellectual ancestors were anarchists, syndicalists, voluntarists, co-operativists, and much, much else. Their ideals did not fail, but were simply pushed aside. If the labour movement is ever to taste power again, and not only watch while a Labour Government does Tory things, these ideals must be recovered and reinstated. As Frank Field, the Labour MP and Chairman of the Commons Select Committee on Social Services, has so bluntly said,

[t]he starting point for the left needs to be the acceptance that, politically, welfare issues are fast becoming part of a new ball game. Consumers will willingly listen to right-wing schemes promising more consumer choice if that is all that is on offer. The fightback from the progressive left comes from examining the [historical] roots of the welfare state.1

And in examining these roots, we must accept that socialism isn't limited to statism. After a hundred years of travelling in the wrong direction, turning back will be an immense challenge for the labour movement. So much of what has been denied must be admitted as true. So many passionate beliefs must be discarded as false. Some Tories will point at us and laugh, shouting "We were right all the time". Others will write patronising articles in The Sunday Telegraph on the theme "Please, do borrow our clothes - we have so many more just like them, but better".

But it must all be done. We must face the predictable uproar and continually repeat that we are simply going back to the first practice of the labour movement, as permitted by its ideology and developed now in the light of modern circumstances.

The truth is that the only socialism worth fighting for is the sort that can exist in a free market.

The market isn't inevitably a jungle where the strong prey on the weak, and are in turn preyed on by the strongest. This can happen if a spirit of corrupted enterprise is sufficiently encouraged, and then preserved by corrupted institutions. And that is what the Tories have done. Instead, we must see the market as an area of moral choice. It allows cut-throat competition, and it allows harmonious cooperation: which prevails depends on the moral outlook of those within it. This being accepted, the task of the labour movement a long way into the future is to change our current moral outlook, and devise pure to replace corrupted institutions, and to match the Tory right in finding political mechanisms to translate dreams into reality.

Three of these pure institutions are obvious to suggest. First, the limited liability laws should be repealed. The big joint stock company is before all else a conspiracy for the trading of favours with the State. It is an open conduit for bribes to politicians, and always at least a potential agent of state control. It also tends to dehumanise those who work within it, alienating them from their labour, subordinating them to a most unattractive power structure. Ending its limited liability status will be like exposing the roots of some noxious weed. Its death will allow the flourishing of healthier forms of organisation - these being the sole trader, the small company, and the workers' cooperative.

Second, the law of succession should be changed. At present, subject to a few restrictions, property may be left just as a testator pleases. So far, the labour movement has tried to oppose the concentration of wealth across generations by death duties or capital gains tax. These either haven't worked or have only enriched the State - a far worse enemy than the merely rich. A more certain course is to encourage a multiplication of heirs, so that wealth accumulated in one generation is spread among many rather than concentrated in the hands of the few. This can be most effectively achieved by levying a tax on bequests to single individuals of, say, more than 10 per cent of estates over a certain value - the product of this tax being hypothecated to something like repaying the national debt.

Third, the trade privileges of the professions must be abolished. The commanding influence of the accountants and lawyers is nothing natural: it is a function of the company and financial laws. Reform these, and that influence will evaporate just as surely as the ending of the dock labour scheme ended the power of the dockworkers. Again, it is surely outrageous that our access to much medical treatment is mediated by the doctors and health bureaucrats. There are so many treatments that do not require professional supervision. And there are so many treatments that are kept from us by the flawed understanding or professional jealousy of the doctors.

Turning to welfare, some work has already been done within the labour movement. Though often sketchily, and without any unambiguous statement of the restored ideology, Frank Field has laid down the path that all must tread. "For the whole of my political life" he says in a recent book, "Labour has espoused a view of human nature which is simply wrong".2 He adds that the Party must accept the desire of individuals to get on in the world by their own efforts. Welfare provision must be revised to take account of this.

On pensions, he proposes that employers should be compelled to pay at least six per cent of their employees' salaries not, as now, to the State, but to private pension schemes. There should be a further compulsory minimum of four per cent from employees. Contributions for the unemployed would be made by the State.

If adopted, this scheme would tear up the present chain letter that state provision has become, and guarantee a private pension to everyone. Contributions would be invested as capital. Payments would be from income. On present costings, to introduce the scheme in 2010, by which time many would already have private pension schemes, would save £4 billion compared with the projected costs of the present scheme.3

Mr Field suggests the further reform of giving individuals control over their pension plans. Bearing in mind that the insurance companies own half of British industry, this would at a stroke bring on the collective ownership of the means of production - but in a market environment.4 Nothing so effectively can show that marketisation a sword with two edges. Since 1979, it has been used to enrich a few City bureaucrats whose only credentials have been attendance of the right public schools and a mastery of financial jargon. In other hands, it can be used to enfranchise the masses.

On unemployment, he suggests a combination of workfare and privatised benefit provision:

Parliament would continue to lay down what the minimum rates of benefit would be. Individuals would choose which friendly society they joined so as to qualify for these minimum benefits. As customers, they would be free to move to another friendly society.... The friendly societies would be free to offer additional benefits. Indeed, they would find it crucial to do so. Other societies would try to poach members by offering additional top-up benefits. These would range from second pensions and additional sick pay and unemployment entitlement, through to extra help with the cost of community care.5

To some extent, we have here a return to the principles of the National Insurance Act 1911. Now this was a bad Act, insofar as it started the destruction of the friendly society movement that had been developed by working people during the previous century. However, applied now, these principles would have the opposite effect, of reviving the friendly societies. Like a zero bank balance, the 1911 Act is bad depending only on the direction from which it's approached.

Turning to the National Health Service, Mr Field has so far given little guidance. However, his approach is sufficiently plain to allow others to imagine what he might say.

We should begin by condemning the internal market. It is a good idea to try to improve the performance of hospitals. No doubt, as in the other nationalised industries, state control of the hospitals resulted in massive waste and other misallocations. It is hard to see ill-paid ancillary workers turned out of their jobs after a lifetime of devoted service. But it ought to be plain that the purpose of a hospital is to cure the sick, not to provide employment.

Equally plain, though, the present reforms are replacing one form of waste and incompetence with another. Since 1979, administration costs in the NHS have risen from six per cent of total spending to 11 per cent; and much of this has taken place since 1989.6 At the same time, the stories are piling up of doctors forced out of hospital car parks to make room for new senior accountants, of vast fees paid to "health consultants" for buzz-phrase banalities, of massaged waiting list figures and Stakhanovite hours for medical staff.7

No, if the NHS is to be broken up, it should be replaced by a system of localised, cooperative health care. In the short term, the State will need to underwrite a system of compulsory private insurance, just as Mr Field proposes elsewhere. But this must be seen as an interim measure. The private sector in its present shape is barely less objectionable on moral grounds than the NHS. This is not to call for any direct attack on the private healthcare sector. On voluntarist principles, those who want to spend on having their piles treated in bad hotels must be left to their folly. The large profit-seeking corporations that have come to dominate the British market since 1979 will pass away with company law and moral reform: they need no special treatment. It is to call, though, for a fostering of the cooperative and charitable sectors, which even today make up 38 per cent of the non-NHS healthcare market.

The Tories have won every election since 1979 because they appear to have answers to the problems raised by the crises of the State. They know what they want, and they know roughly how to translate this from dreams to reality. The labour movement will never challenge this intellectual ascendency until it too combines relevant ideology to electoral politics. As said, making the challenge will be supremely hard for a movement in which one mode of thought has held sway for longer than anyone can recall. Even so, it must be made. Perhaps one day, just as socialists now write approvingly of "the Road to 1945", they will write no less approvingly of "the Road from 1945".


1. Frank Field MP, "Giving the public a bigger dole of authority", The Sunday Times, London, 22nd July 1990.

2. Frank Field, An Agenda for Britain, HarperCollins, London, 1993, p. 2.

3. Suggested in a recent Fabian discussion paper - reviewed by Sara McConnell, "Getting enough to live on for life", The Times, London, 17th july 1993.

4. Jill Sherman, "Labour urged to rethink welfare", The Times, London, 21st December 1992.

5. Frank Field MP, "Giving the public a bigger dole of authority", The Sunday Times, London, 22nd July 1990.

6. "NHS costs rise", The Independent, London, 13th January 1994.

7. See for example "Doing the Rounds", Private Eye, No. 837, 14th January 1994:

"South West Thames RHA has rounded up six health professionals to assess elderly care and sent them to Florida. Their report concluded that good healthcare is of 'real importance to older people' and that the 'consumer's voice should be heard'. SWTRHA's Frimley Park hospital recently had to cancel the opening of a geriatric unit because it is £2 million overspent."