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Freedom
it is so important
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Pamphlet 5
How the government has substituted Clause IV by centralization and political party monopoly control of the British economy
This is a pamphlet clarifying the nature of political party control over the economy which is more profound than Clause IV.
The Concern
The Labour party in its preparation for the 1997 election was concerned about the general image of the socialist (soviet) concept of the political party supporting the state control of assets of production. This was an election issue because the Labour party remained committed, largely through the Trade Unions, to the so-called Clause IV. The so-called Clause IV moment was interpreted by many as a bold initiative of Tony Blair to remove this from the agenda. But this was done in the knowledge that by removing Clause IV the political party would gain more power over the economy than the owners of companies. Clause IV assumed that the managers held the power - they never did. The outcome therefore is a far more precarious situation where the economy is under the control of a single political party.
How is this possible?
Clause IV was described in a foot note in a proposition at the General Assembly as having been drafted by Sidney Webb of the Fabians in November 1917 and adopted by the Labour party in 1918, and read, in part 4: "To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution, and exchange, and the best obtainable system of popular administration and control of each industry or service."
According to a detailed review on this issue1 Clause IV contributed to a polarization of British politics into basically two distinct ideologies between 1945 through to a peak in the 1980s. On the left there was a promotion of more worker and state control over an economy based upon centralization and Clause IV. On the right there was a less well-defined spectrum varying between liberal ideologies through to capitalism encompassing free market through to corporatist approaches2. Politics was marked by a mutual distrust between political camps and there seemed to be few common causes shared amongst them.
However, important shifts in socialist outlook were championed by Hugh Gaitskell the Labour party leader and Anthony Crosland a Labour MP. In 1959 Gaitskell had attempted to change party policy on nationalization (Clause IV). The intellectual justification for his stand was to be found in work by Anthony Crosland in his book, "The Future of Socialism" published in 1956. Here he argued that"
there was no need for Clause IV nationalization because the actual power resided in the management of economic activities (the political party) and not in the hands of the owners
and
the state (political party) could influence sector activities sufficiently well.
This particular observation was to become the central justification for reducing the force and significance of Clause IV. Crosland is reported to have observed that capitalism seemed to have solved the problem of coming up with adequate per capita incomes for the workers. Crosland's observations can be traced back to meetings of the Congress for Cultural freedom (CCF), launched in 1950 in Berlin and headed by Melvin Lasky. The general drift of Crosland's book's content had been discussed at a Milan CCF conference attended by Hugh Gaitskell, Denis Healey, Rita Hinden and Daniel Bell the author of a book in the same vein entitled, "The End of Ideology". Hugh Gaitskell, by then considered to be a traitor to the socialist cause, died in 1963 under suspicious circumstances after becoming ill during a visit to the Soviet Union and Anthony Crosland died following a stroke in 1977 at the age of 58. There are sound arguments for considering Anthony Crosland to have laid much of the intellectual foundation for what was to be picked up, some 20 years later, as new Labour policy.
In summary
Following the unexpected 1992 election outcome the Labour party agonized over the reasons for their defeat in 1992. There was a need to produce an image of being more responsive to private business concerns. Tony Blair worked to water down the text of Clause IV to extinguish the commitment by the Labour party to the ownership of the means of production. Behind the scenes the arguments to dilute or remove Clause IV were simple and pure power strategy talk3 founded on the need to gain and stay in power. The repeated question was, "do you want another decade of Conservative rule?" Anthony Crosland's arguments that power rested in the hands of the managers of industry, the government political party, and not the owners became a basis for the Labour party saying to the unions and those supporting Clause IV, "trust us we can achieve the same control through centralized government policies." The Labour party's "Clause IV moment", as it came to be known, was therefore far less of a trauma than many outside the Labour party realized; the media exaggerated the extent of the "struggle".
On the side of economic management, Gordon Brown began a disciplined process of reshaping the economic policy agenda within the party. He did this by introducing a pro-forma budgetary approach purposely to reduce the size of the apparent "visible" public spending plans of his shadow cabinet colleagues. This also initiated a process where he began to control the whole economic agenda of the party, and indirectly the relative scope and effectiveness of policies in most of the other portfolios.
New Labour won the 1997 general election.
What we have seen since is a gradual monopolization of economic decision making under the infleucne of fiscal creep and level of effective taxation of 40% of the GNP supporting a public sector of equivalent size to that observed under Labour when Clause IV was more prevalent.
Trades Unions?
The Trades Unions, knowing that having watered down Clause IV they need to have a more effective control over the Labour party and therefore have become resistant to any further lowering of their voting power within the Labour party now set at 50% which is far beyond the numeric numbers of Labour party members within the unions. Government departments under Labour have recirculated public funds back to the unions and other organizations who operate under various NGO guises under "initiatives" in "development" in the third world under, for example, the Department for International Development.
Issue of concern
Whereas in the 1950s the "facilitation role" of government saw Harold MacMillan, a Conservative Prime Minister at ease with centralised planning there are questions to be raised as to the legitimacy of all political parties in the United Kingdom appearing to collude in their acceptance that under our electoral system we end up with main force in economic decision making being a monopoly in the hands of a single winning political party enjoying just 19% of the support of the electorate. As a monopoly taking broad brush decisions which impact people through corporate failures, increases in unemplyoment and significant scales of house repossession, it is time to reassess the degree to which our governance suppresses our fundamental freedoms as reflected in the arbitraty nature of policy decision-making4.
Submitted by E-Mancipation, 27th November, 2007
1 "The Briton's Quest for Freedom - Our unfinished journey." McNeill, H.W., July, 2007, Hambrook Publishing Company, ISBN: 978-0-907833-01-7
2 Corporatism was initially associated with Fascism founded by Mussolini, in Milan, on 23 March, 1919. The single most important impact of Fascism was its erosion and then removal of individual freedom of the people of a country through the substitution of participatory democracy by a governance which paid more attention to corporate and business interests. The public became simply producers and consumers with little political say or influence in decision making. Corporatism exists today in a more covert form and as largely hidden "lobby activity" including laundering funds to provide kick-backs to political parties from a percentage of the value of government contracts as a basis to gain contracts and remain in the favour of political parties. This succeeds to the degree to which political parties succumb to business pressure at the selective expense of individual freedom of the electorate.
3 The power strategy adopted by the Labour party is explained in detail in Chapter 14, "The Power Strategy" in "The Briton's Quest for Freedom - Our unfinished journey." McNeill, H.W., July, 2007, Hambrook Publishing Company, ISBN: 978-0-907833-01-7
4 The problems associated with conventional macroeconomic policy are reviewed in a forthcoming tutorial series at Real Incomes.
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