There was Railtrack, I suppose. But generally speaking, the current government has had no truck with such crypto-communist Old Labour notions as common ownership of the means of production, distribution and exchange.
Unless the interests of the financial markets are at stake, of course. It looks like the erstwhile bearded Trot himself is about to revert gloriously to form, and bring Britain’s number five mortgage lender within the ambit of proletarian property relations.
Yes, Alistair, the far left is a bit like the Hotel California. You can check out, but you can never leave. Only another 199 of the top 200 monopolies left to go before Britain becomes a workers’ state, then. Still, we’ve got to start somewhere:
The government is drawing up plans to nationalise Northern Rock, the stricken UK bank which yesterday announced the immediate departure of chief executive Adam Applegarth, as uncertainty surrounding its future mounted.
Nationalisation is looking like an increasingly realistic proposition for the bank, as the number of its potential buyers has diminished.
"There are people looking at this in great detail," admitted one government official yesterday. "But in practice, something like this hasn't really happened before, so precedent is no guide."
Alistair Darling, the chancellor, cannot step in and buy up the Newcastle-based lender overnight - the government would need to have the backing of parliament. For that, it would need to push through legislation quickly, although it might choose to avoid describing it as "emergency" legislation.
It’s a pity New Labour could not have been as quick off the mark when Rover was going tits up, isn’t it? But other than being a vehicle to bail out companies up a well-known creek, there is a positive role for public ownership.
Let's get away from the lie that the unfettered market economy the Tories and New Labour alike have created has been a runaway success. It has wrecked manufacturing industry, and reduced British workers to the lowest level of employment rights in the industrialised world.
Privatisation has, of course, freed taxpayers of the need to pump hundreds of millions of pounds a year into inefficient nationalised industries. Now we just pump billions of pounds a year into inefficient privatised businesses instead.
Selling off such natural monopolies as the railway system and basic utilities simply licences the fleecing of the customer for the sake of private profit.
Legally speaking, the first duty of a private company is act in the best interests of shareholders. But anyone with any sense wants hospitals to act in the best interests of patients, schools to act in the best interests of pupils, and water and electricity companies to act in the best interests of consumers.
That said, I don’t see any special merit in bringing a one-time building society that got too big for its boots into the public sector. But perhaps it might prove to New Labour neoliberal tendency that nationalisation is no worse than, say, bestiality or diabolism, and could at least be seriously discussed in other contexts.
Posted at 13:33, 14 December 2007
Comments (13)
Meanwhile, over a year on, the victims of the Farepak crash are still awaiting compensation. All they did was to be prudent, to save for Christmas rather than put it on the plastic and then the scum who ran the firm used their savings to pay off the overdraft, to no avail. Now many of those who lost out have fallen into a cycle of debt, but never mind as all those comfortable Northern Rock shareholders will be just fine....
Yes, but as I commented more than a month ago, what exactly would the government be nationalising?
Effectively, Northern Rocks assets are the properties and personal loans that they can collect over the next 25 years, balanced against their own borrowing liabilities on the international finance markets.
So the question of where the £30 billion the Government has already given them ends up is rather important.
Just handing it to failing banks in a situation where their real valuation is plummetting will bankrupt the exchequer and pull down the whole economy with it.
The government will get nothing in return for such benevolence and it that sense, nationalisation is just common sense.
This situation is also likely to occur to other banks in the chain of lending across the globe.
As banks fail, so does the velocity of circulation of capital and the ability of businesses to finance investment from borrowing.
Result - an economic depression spreading into manufacturing, job losses and falling consumer demand.
So the ability of mortgage and loan customers to repay will also be hit, making banks an unsafe bet for private investors.
Socialist nationalisation would involve renegotiating personal loans and converting the mortgaged properties to publicly owned housing where householders can't pay.
Nationalising to sell it off again will fail.
I think I'd struggle to refer to the replacement of Railtrack with Network Rail as a return to public ownership.
Network Rail may be, in theory, 'not-for-profit', and yes, it has reintegrated maintenance (though not renewals) by kicking out the contractors, but it is very definitely 'arms length', way beyond the reach of any public accountability.
And they may be 'not-for profit', but you should see the size of the directors' bonuses.
In short, more like an ALMO than a council estate.
Effectively, Northern Rocks assets are the properties
Not particuarly effectively, as "Northern Rock's" properties actually legally belong to a totally different entity which is registered in Jersey (is it not?). Which isn't therefore based in Britain, so can't be nationalised by the British government.
Nothing a socialist government couldn't solve just by sending out a gunboat and a platoon of the workers militia, to sort out this feudal relic.
Introducing a progressive income tax there would considerably increase state revenues too.
Not that I've got anything against the Jersey shore
http://www.youtube.com/watch?v=xRXhDQXhdXE
At 21:01 on 14 December 2007, Janine wrote: "I think I'd struggle to refer to the replacement of Railtrack with Network Rail as a return to public ownership.
"Network Rail may be, in theory, 'not-for-profit', and yes, it has reintegrated maintenance (though not renewals) by kicking out the contractors, but it is very definitely 'arms length', way beyond the reach of any public accountability.
"And they may be 'not-for profit', but you should see the size of the directors' bonuses.
"In short, more like an ALMO than a council estate."
I think Janine's confusing her terms here. Network Rail is certainly not in public ownership. Moreover, neither Network Rail's own bosses, nor even chronically lazy financial journalists refer to it as 'not-for-profit' anymore. They dropped that misnomer in about 2003. Correctly termed Network Rail is a 'not for dividend' company limited by guarantee. In other words, it's private not public, with debt financed by borrowing from private banks at preferential rates underwritten by Treasury 'letters of comfort', rather than debt financed by equity which proved to be the undoing of its predecessor, Railtrack. Being 'not for dividend' rather than equity-financed means not having to be listed on the FT100. It doesn't mean 'publicly-owned'. Centralising sub-contracting services and paying top Directors massive bonuses so that Ian Coucher can feed his addiction to Aston Martins is simply rational behaviour in corporate-world. So, to stretch your analogy it's more of a 'buy-to-let' situation than an ALMO really.
The real question is why Brown preferred the hybrid 'not for dividend' company limited by guarantee, to the cheaper solution of outright public ownership back in 2003. Suggested answers to this include: 1. 'political ideology', having betrayed the 1997 manifesto commitment to 'a publicly-owned, publicly-controlled railway' the fate of Railtrack became a totemic issue for New Labour - being seen to re-nationalise a huge essential natural monopoly would have panicked the markets in a way that bailing out Northern Rock could never do. Mmmmmaybe to some extent, but not totally convincing; 2. 'financial rules on public-sector borrowing'. Surely the main reason for Brown's aversion to public ownership of Network Rail stems from UK Treasury rules on borrowing for infrastructure investment and draconian EU rules against public-spending arising from the Maastricht convergence criteria
* The amount of money owed by a government - known as the budget deficit, has to be below 3% of Gross Domestic Product (GDP) - the total output of the economy.
* The total amount of money owed by a government, known as the public debt, has to be less than 60% of GDP. The public debt is the cumulative total of each year's budget deficit.
* Countries should have an inflation rate within 1.5% of the three EU countries with the lowest rate. This was supposed to push down inflation rates and lead to more stable prices.
* Long-term interest rates must be within 2% of the three lowest interest rates in EU.
* Exchange rates must be kept within "normal" fluctuation margins of Europe's exchange-rate mechanism.
This surely is the principal reason for Brown's rail re-nationalisation phobia. He's a political coward who doesn't dare to challenge public spending dictats from Brussels.
I'm not very well versed in economic factors but wouldn't nationalising Northern Rock set a worrying precedent? I don't cherish the idea of banks feeling emboldened to play fast and loose with peoples cash in the manner of NR, comforted by the fact they could always be bailed out by the government.
That said I wish they'd nationalise a number of things - specifically energy suppliers.
A Swansea Blog
"Legally speaking, the first duty of a private company is act in the best interests of shareholders. But anyone with any sense wants hospitals to act in the best interests of patients, schools to act in the best interests of pupils, and water and electricity companies to act in the best interests of consumers."
Let's look at water comapnies, shall we? There are four models in the UK (NI has now changed, but a couple of years ago when the Economist did this study these were the structures).
England: regulated private for profit companies.
Wales: Mutually owned non profit.
Scotland: Govt owned company.
NI: Direct govt supply.
Those are, roughly speaking, going from the least socialist to the most socialist methods of structure, correct?
But what about acting in the best interests of consumers? That's a combination of a number of things: the price of the service of couse, with lower being better. There's the purity of the water itself, the environmental effects of sewage disposal (higher is better and then lower, respectively)....anything else?
Well, if you rank those different organisational and ownership structures by those criteria you get, England, Wales, Scotland, NI.
That is, that out there in the real world, the for profit English water companies acted more in the interests of consumers than did the mutually owned Welsh, they more than the Govt owned Scots and they more than the direct NI supply.
Interesting, no?
Stuff the legal finesse of what such arrangements are possible and what they actually mean; actually stuff nationalisation that saw the coal owners, the steel owners and the rest paid the market price for their companies in the 40s. French and Indian capitalism works (or worked) normally with state owned banks.
I'd imagine those capitalists, other than those looking to pick over the Northern Rock carcass now, wouldn't give a stuff if the government bought the bank - esp as they might pick it up for a song later (e.g. the latest issue of Private Eye says that Actis - which manages UK aid to developing countries was sold to its managers for £373,000 despite being worth between £182M and £535M!!)
Expropriate the banks. Only pay compensation to the share owners of the basis of a proven need.
KS Rees:-
"wouldn't nationalising Northern Rock set a worrying precedent?"
No, the reverse is true.
What the Government has done so far has set *exactly* the precedent you find so worrying.
Nationalisation would mean gaining control of all the assets and gaining control over policy.
Doing it at the price that Branson was offering would be one of the cheapest nationalisations carried out in British history.
(Assuming that they can recover the £40 billion they've already forked out over the next 25 years!)
In fact, it could be done immediately without spending one more penny, if Brown makes the decision.
Once again, the Liberals have gained the limelight, but it's in line with the policy of the Labour left.
Kelvin Hopkins of the Socialist Campaign Group made the same point in November when he said:
"If Northern Rock’s shares continue to plummet, the sensible thing would be for government to buy up the shares very cheaply and nationalise Northern Rock as a basis for a fully publicly owned banking sector."
Tim
Unless they are reporting from top-notch sources, I would take anything that The Economist says with a large pince of salt. I'm not dismissing what they say out of hand but I'd like to hear the other side of the story from an organisation like UNISON perhaps. Certainly, water privatisation in Cochabamba, Bolivia to Bechtel was an absolute disgrace with price increases of 200% leading to the now infamous riots that got the privateers kicked out.
The private water companies have put in quite a lot of infrastructure investment, which they've been required to do, by borrowing on the international financial markets.
But there's been a bit of a takeover frenzy lately and many are changing hands between overseas corporations, such as Thames Water, which was sold by its German owners to an Australian banking consortium last year.
While their profit margins and prices are controlled by OFWAT, prices can be expected to have risen by around 18% in the 2005-10 period for a stable return of 5.1% to the companies.
However, the level of investment is not enough to meet the challenges of reducing leakages, planning for projected population growth and climate change and increased demand.
Given the private companies are so tied to borrowing on the internaional financial markets, any instability there is likely to affect their profit margins and consequently, their committment to remaining in the UK market for a prolonged period.
This doesn't look like a very stable way to run a public water resource over decades.
This is hardly a particularly "socialist" point to make either. Most US water supply is delivered by local public utitlities and there is strong resistance to privatising them along the lines of the British and EC models.
This news interests me because I find it encouraging that an executive as obsessed with the market as ours is forced to consider the nationalisation of a bank. Hopefully public opinion will move in favour of nationalisation, and against dividend subsidy by the taxpayer. Hopefully more and more people will become convniced of the insanity of market anarchy, and start campaigning for democratic social ownership.
I can dream.
EAT TURKEY