New Labour chancellor Alistair Darling explained last week that he was unable and unwilling to bring in a windfall tax on the fuel companies. His explanation was that these companies made a lot of their money outside Britain – and therefore paid taxes in other countries.
He said, “My main focus is on working with them to see how we can help their customers meet the higher bills that they are facing at the moment.”
In essence, the argument from government ministers is that spiralling fuel prices are nothing to do with them and there is nothing they can do. But governments are not as powerless in the face of economic crisis as they like to make out.
The government intervenes in the economy all the time. Darling himself intervened to bail out the banks – though he was acting in the interests of share owners rather than for people struggling to pay their mortgages.
And Gordon Brown intervened in the economy when he was chancellor to repeatedly cut taxes on profits.
The government could easily deal with the huge rises in gas and electric bills by putting a windfall tax on the super-profits of the utility companies. Or it could make the companies pay at least the same rate of tax as the people who work for them.
It could cap the cost of gas and electricity bills. And, most usefully of all, it could renationalise the companies. But it won’t. The reason is its deeply held belief that the “market” – the pursuit of profit – is sacrosanct.
The mantra that the market is the best solution for all problems is at the heart of New Labour’s policies.
Ministers have been determined to ensure that all new investment in public services is undertaken by private business – hence the near religious commitment to PFI projects in health and education.
The drive in the last 30 years has been away from public ownership.
This was an ideological war to hand over services to the rich and move them away from being owned and controlled, however marginally, by the public. Pushed through first by Thatcher then by New Labour, “private good, public bad” became the common sense.
The idea is that the rigorous pursuit of profit will ensure dynamic and efficient services. The reality is rising bills and decaying railways.
The pursuit of profit is only good for one thing – creating profits at the expense of services. This means a drive towards a low wage deregulated economy with run-down services.
Importantly, the shift towards private provision didn’t mean holding back on spending public money. Rather, the money went from public coffers straight into company profits.
For instance, billions were spent on Northern Rock shareholders, but billions are also spent subsidising the companies behind PFI projects.
In contrast, the most significant nationalisations in Britain after the Second World War were undertaken precisely because private industry was inefficient. That was why the gas, electricity, coal and rail industries were taken into public ownership.
Their private owners were running the companies into the ground. The drive to profit had failed to meet the challenge of a war economy.
Labour nationalised around 20 percent of the economy after the Second World War. Importantly it created the NHS, which guaranteed free healthcare for everyone in Britain and was a huge step forward for ordinary working people.
But government ownership was always at “arms length” – and workers were certainly never allowed any control over their industries.
The structure of the post-war nationalised companies took the form of a “public corporation” – a copy of private companies, with the same hierarchical structure between management and workers.
Management was recruited from the former private industries. The same people remained in charge.
Nationalisation and stronger controls can alleviate the problems that the market brings, but they cannot alter the fundamental structures of society. The state itself represents the concentrated and organised force of the bosses.
The ruling class uses many devices to ensure that the state acts in its interests. Resources are spent on private lobbying groups. Patronage, bribes and favours are used to win influence.
Business-friendly individuals are promoted to positions of power. Ultimately, the ruling class will use force to keep control of the state.
Labour governments in the past had to choose between increasing workers’ democratic control over industry or protecting the interests of those who owned the country’s wealth. They invariably came down in favour of the latter. Now even the facade of acting in the interests of workers has been dropped.
Despite its limitations, nationalisation would be a step to curtail the disastrous effects of the market on public services.
It would give us a level of control over our services. At the very least it could stop the price rises in our bills.
But it is important to note that even the post-war nationalisations had nothing to do with socialism or workers’ control. That would have meant completely transforming the priorities of the government nationalisation and changing the balance of forces in favour of workers.
The government’s commitment to the market perpetuates a state of affairs that condemns us to poverty, low wages and insecurity.
Any challenge to this state of affairs strikes a blow against those at the top. But for that to happen the level of resistance we put up against the bosses and the government will be the key factor.