Now that Labour is close to power, we need to work out what public ownership means in our brave new progressive world

The Labour leadership now presents itself as a government in waiting.  This claim is lent credibility by the party’s clear, costed and bold manifesto, which, in stark contrast to the wholly inadequate Queen’s Speech, addressed many of today’s most pressing problems. A central plank of that manifesto was the commitment to bring rail, mail, energy and water into public ownership.  These policies are popular, but as yet there has been little discussion of what public ownership might look like. When Labour was trailing significantly in the polls, this oversight might have been excusable. Now, with a real prospect of a Labour government within a matter of months, we urgently need a conversation about the model of public ownership we want.

Past mistakes

The major wave of nationalisation that took place under the Attlee government was based on the model of the public corporation. This established two trends in the field of public ownership. Firstly, the transfer of responsibility for the direction of the enterprise, and indeed whole sectors of industry, to politicians and civil servants. This was despite their lack of personal investment or real influence over day-to-day operations.  At the scale of the economy, this concentrated power at the centre.  

In subsequent years, the Wilson, Heath and Callaghan governments all, in their various ways, were wedded to the idea of a managerial state; they consolidated nationalised industries and dreamed of planning the commanding heights of the economy.  There was some truth in the neoliberal critique that market forces were relegated to secondary considerations. The belief prevailed that both technical and governmental expertise could solve the problems of industry. And if those industries failed, those with ultimate responsibility were often far removed from the economic consequences.

The second trend was a reliance on existing modes of management and an adherence to Fordist top-down models of organisation that were largely unresponsive to ideas or developments on the shop floor.  At the scale of the enterprise, this concentrated power in the hands of managers.

The model of the ‘public corporation’ implemented under the Attlee government had often transferred existing business models into the public sector.  An adherence to top-down managerialism in the ensuing decades meant that newly created nationalised companies would also function in this manner.  As a result, employees almost always found themselves being told to do the same things in the same ways by the same people who had brought the enterprise to the brink of ruin.  

Future possibilities

The next Labour government must adopt alternative approaches. We now live in an information economy and sensitivity to the use of knowledge must be at the heart of everything government does. It must also be central to how public enterprises operate.  We now live in a post-Fordist economy where successful firms are highly networked and knowledge and ideas are shared and acted upon throughout organisations. Attempts to transmit information about an area or a customer base to a planner in Whitehall are always bound to involve huge knowledge losses and such plans lack a predictive capacity. Workers within the new public enterprises must therefore be empowered to develop methods for responding to changes in the market as they see fit.

In order to achieve a form of public ownership fit for the new information economy two conditions, diametrically opposed to the two trends associated with the old model of nationalisation, must be met. First, mutual ownership, whereby workers must be economically invested in the success of their publicly owned enterprises. This means they must own a certain proportion of the enterprise they work within. Second, comes democratic control: workers must be empowered to develop structures that enable them to influence the operation and direction of the enterprise.

At the heart of these suggestions is the belief that the old top-down model simply will not work. This type of deep reform has the added advantage of helping the left entrench its achievements. A radical change in patterns of ownership and structures of management will mean that any future Conservative government will not be able to easily shift public enterprises back into the private sector.

The Labour party stands ready to form the next government because it is offering clear solutions to the problems people face. The Tory press showed how out of touch it is by branding Labour’s manifesto a return to the 1970s. In fact, the polices it outlined were genuinely progressive. However, we must take care to re-fit and reinterpret our understanding of public ownership for a new age in which flexibility, accountability and the use of information are fundamental to economic success. A new model of public ownership will be central to our future success, both at the ballot box and in government.