Monday 18 February 2008

Northern Rock 'n' role of nationalisation

I welcome, as far as it goes, the government's plan to nationalise the Northern Rock bank (BBC News: Northern Rock to be nationalised). Although I think the nationalisation should be permanent, not temporary as is planned.

I also doubt the government's motives; they have done little or nothing to save manufacturing industry or stop factory closures, even in the case of the Northern Rock nationalisation there are likely to be job losses. I suspect the nationalisation of Northern Rock may have rather more to do with protecting the financial sector and the security of (especially rival banks and financial institutions') investors' profits, than with safeguarding jobs or the savings of small investors.

Having said that, most nationalisations have been to benefit the capitalist system, rather than society. Some, like Northern Rock now and various car companies in the past (some of which were merged into British Leyland), have been ailing companies bought by the government to keep them going. In some cases, the nationalisation provided less direct but still tangible benefits to the capitalist system; nationalised energy (coal, electricity and gas) provided cheap energy for British manufacturing companies, while British Rail provided cheap transport for goods. Others provided less tangible benefits; the NHS provided a healthier and more productive workforce, while the education system provided a skilled workforce.

Also, nationalisation is not akin to socialism. Nationalised companies have always had a class-based structure, with managers overseeing workers, on far better pay and conditions than those of the workers which they are exploiting, on behalf of the state. Indeed, state capitalist regimes - such as the former USSR and its satellites - had an entire nationalised economy.

But nationalised industries are still preferable to private companies, for a number of reasons. Mainly, because private companies must pay a dividend to their owners or shareholders, less of the money earned by the company ends up spent on the workers and/or services.

Also, nationalisation is by far the best way to run natural monopolies, ie companies with a national infrastructure (eg railways, electricity, telephones, water). In the case of private competition, duplication of this infrastructure would be wasteful both of money and of natural resources. In the case of a private monopoly, the company would be able to make grotesque excess profits due to the lack of competition.

In my opinion, the government should nationalise not only Northern Rock, but all banks and financial institutions (the 'commanding heights' of the capitalist economy). And why stop there? Industries privatised, under prime ministers from Thatcher to Brown, should be re-nationalised.

Especially the energy companies; British Gas, the Electricity companies and BP were sold off and/or deregulated in the 1980's; leading to the current wave of private profiteering from the ridiculously high energy prices. Hugo Chavez of Venezuela had the right idea, when he recently nationalised Venezuela's oil industry.

But nationalisation not the full solution to capitalist exploitation. The real answer is for companies and industries to be run by the workers, for the benefit of society.

This will take a revolution to achieve.

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