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12 February 2020updated 09 Sep 2021 4:18pm

A new Clause IV must commit Labour to democratisation and co-operation

If the party is going to propose major nationalisations it must be clear about their purpose and benefits. 

By Paul Mason

The debate over public ownership in the Labour leadership contest was starting to get interesting until, under pressure from campaigners, every candidate signed up to a pledge committing themselves to all of the party’s 2019 manifesto pledges.

What I would rather hear about is their priorities. Because nationalisation is only a means to an end. There is nothing intrinsically socialist about state ownership, as my dad – who worked for both the National Coal Board and the British railways after the war – never stopped trying to tell me. The real debate we should be having is about common ownership, and the wider social project it has always represented. 

What defined Labour as a socialist party after 1918 was Clause IV of its constitution, written by the Fabian economist Sidney Webb. It consisted of four linked but equally important commitments which, if implemented, would set the economy on a transition path beyond capitalism. They are: (a) common ownership; (b) an economy without shareholder profits; (c) maximum distributional equality and (d) democratic control of every industry. 

Webb was rightly proud of Clause IV. He saw its commitments as central to Labour’s value system, not just elements of its programme; for Webb it was a principle from which specific policies could be developed flexibly by Labour leaders, as capitalism and the political situation evolved. 

This could mean, Webb wrote, anything “from the co-operative store to the nationalised railway”. Likewise the forms of control could range from “national guilds to ministries of employment and municipal management” – in today’s parlance that means workers’ control, ministerial diktat or local government.

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And that is why signing a pledge of support for nationalisation is nice to do but beside the point. The real question is: what forms of common ownership advance Labour’s broader plans, for an economy without carbon, exploitation and inequality?

Because we face two problems not envisaged by Tony Blair when he rewrote Clause IV in 1995. The first is that neoliberal capitalism is broken, kept afloat only with the life support of spiralling debt and money from the central banks. The second is the climate emergency.

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If we believe a market-based economy cannot deliver the decarbonisation of the world fast enough, and that (as Thomas Piketty suggests) the neoliberal model inevitably produces inequality faster than it produces growth, then we need to frame Labour’s long-term project around solving these problems. 

As the US left economist John Roemer insists, in a recent paper, any economic system has to have three things: an ethos, a principle of distribution and a set of property relations. Roemer insists that “the ethos of socialism is co-operation” and goes on to argue, using an abstract model of a socialist economy, that it can work only if there is an ethos of co-operation.

More than a hundred years earlier, Webb gave a textbook outline of the same idea: Labour, he wrote, abhors and repudiates competition, believing “that competition produces degradation and death, whilst it is conscious and deliberate co-operation which is productive of life and progress.”

In that spirit, the incoming Labour leader should ask four questions about any policy proposal: does it help decarbonise the economy; does it promote equality; does it redistribute power; and does it promote an ethos of co-operation?

If it does most of these things it should be ruthlessly prioritised. If not, it should be just as ruthlessly deprioritised. Because, as Jeremy Corbyn found in the case of free broadband, every radical measure we propose consumes political capital. It has to be worth doing, resonate instinctively with voters, and be likely to deliver tangible benefits to the climate, to social justice and democratic control.

That’s why the most iconic document for the left should not be Labour’s 2019 manifesto but the report commissioned by John McDonnell in June 2017, entitled Alternative Models of OwnershipThe report, and the conference held to promote it, represent for me the most significant political achievement of Corbynism: a conscious break with nostalgia for the model of state ownership associated with the Bennite “alternative economic strategy (AES) in the 1970s, and towards one based on the realities of automation and climate change. 

Though the AES was radical for its time, there was nothing particularly anti-capitalist about it. In addition to wholesale nationalisations, its major proposals were state planning, import controls, price controls, income controls and the end of sterling’s role as a global currency. The fundamental premise was that, en route to socialism, Britain would have to detach itself from the global marketplace, finance and currency systems.

While it was just about possible to imagine this happening in 1979, it is impossible now – not only because the fabric of the UK economy is interwoven with globalised finance and trade, but because we now have a highly financialised economy, with millions of SMEs and self-employed people at its core. Dog-eat-dog individualism and cold financial calculation are ingrained into the everyday thinking of millions of people.

Alternative Models of Ownership was Labour’s first real attempt to outline how you start to move beyond the neoliberal economic model and at the same time promote a new ethos of co-operation. It advocated an expanded co-operative sector, local and municipal ownership of public services and a new form of nationalisation, with democratic control as its guiding principle. It overtly attacked Labour’s post-1945 nationalisation programme for creating a corporate elite – often the same people who had owned the mines and railways – who ran these organisations as top-down, inefficient megaliths.

If Labour is going to propose major nationalisations – and it should – then we need to be clear what the benefits are. First, they are a way of abolishing monopoly rents – that is, the rip off of consumers and other businesses currently practised by rail, water and energy companies. 

Second, they are the most efficient way of delivering long-term infrastructure investment needed to combat climate change: for example the Swansea Tidal Lagoon. Third, they guarantee universal and equal public services for all citizens. That’s why – despite the fact that it bombed politically – universal fibre broadband was the right idea.

In Labour’s 2019 manifesto, the ideas of the Alternative Models report were literally buried. For example, the proposal to double the number of co-operatives is dealt with in a single sentence, amid numerous other worthy ideas – from community pub ownership to installing ATMs in villages. What’s absent is a narrative – and that’s no accident.

Because there were always two narratives going on within Corbynism: one said “now is our chance to finally enact the AES”. The other was about democratisation, control and the fight for a co-operative ethos.

Rereading the 2019 manifesto now, outside the atmosphere of hope and hard doorstep graft in which it was launched, I am struck by the deadness of its language: the absence of a clear narrative about values, and of a coherent vision of the society Labour wants to build.

So the most interesting question for the Labour leadership contenders, and the various factions that are backing them, is: who will sign up for common ownership, equality of outcomes and a new ethos of democratisation and co-operation?

Richard Burgon, a deputy leadership candidate, has proposed a “new Clause IV”. But for me the most acute way of posing that question is to ask: what’s wrong with the original Clause IV? Its language is archaic, and of course it ignores climate change, but it only really needs one addition and one tweak. 

The addition is a framing commitment to save the planet and preserve the biosphere. The tweak is in the definition of who we are fighting for. It’s often forgotten that when Webb wrote “to secure for the workers by hand and by brain” he actually meant to expand Labour’s support beyond the unskilled trade unions, into sectors at that time seen as middle class. 

Today, because capital exploits us not only through our work but through rents, finance, consumption and data, Labour’s aim should be to represent those exploited in all these spheres. Call them the multitude if you want, or the 99 per cent. 

A new Clause IV might read, in updated language: “To mitigate climate change by rapidly decarbonising the economy and promoting biodiversity. In the process, to create an economy in which decisive sectors are held under common ownership. To regulate distribution so that there is maximum equality of outcomes. To put the people in charge of decision making – in the workplace, the local community, devolved nations and the state. And to promote, through our campaigns and actions, an ethos of co-operation across society and a rejection of selfishness, individualism and competition.”