Socialism in the Modern World
This is a big issue for a Blog. Indeed it would be a big book. But the thought is crossing minds, notably that of the new leader of the Labour Party. What needs to be established at the outset is that Socialism is not just about benefits and tax and equality. It is certainly about all those things and many others. Its failure thus far has been economic. The old command economy with five year plans and vast tracts of public ownership did not work. But neither has the love affair with the free market. This may have produced a more glossy prosperity before the crash, but it also produced the fastest growing gap between rich and poor since the dark old days of the past, with a truly frightening breakdown in social cohesion and quality of life for millions.
If Labour is to embrace and promote a modern form of Socialism, whatever the catchword, it will have to overcome key problems endemic in the way it has governed thus far.
Expenditure on programmes soon exceeds taxation revenue
Raising taxes does not always bridge the gap. Raising them furthur can reduce actual revenue
High Taxes are unpopular and inhibit enterprise and initiative
The interest on accumulated debt acts as a break on economic expansion
High asset prices, including housing, encourages personal borrowing to make ends meet, sucking money from the base of the economy to its top and richest layer, widening the gap between rich and poor
The huge expansion in public employment created a vast and meddling State which devoured more resources than it created and reduced the quality and cohesion of public services. There was a big gap between the politicians’ proclaimations about the excellence of the NHS, the police, the schools and welfare and the actual public experience
Government by Quango is remote and undemocratic
If the Left is to once again appeal through its natural champion, the Labour Movement, it has to come up with a convincing plan to show how it can overcome all these failings. It must be a plan as radical in its own way as Thatcher’s privatisations and Attlee’s nationalisations. The opportunity lies in the banking and financial sectors and in the utilities and transport infrastructure.
Taxpayer majority shareholding in a good deal of these sectors would put the State to work as an investor, building up significant assets and moreover a large dividend income. This would then be put back into public services so as to return the profits to the people who were, through their labour, creating the profits in the first place, by paying for the utilities and financial products which generated them. There is no doubt the majority of the voters are unhappy with the performance and the cost of public utilities and transport and all of them are dismayed by the nature of the modern universal bank.
This does not involve the government running these businesses as in the case of the old nationalised industries, which rarely made a profit. It does mean that the State, called on to provide ever more complex services, can do so best if it broadens its income base as a full participant in the commercial economy.
The requirement to come up with answers to the failings listed above remains, but solutions would come easier if the new Fabians begin to think out of the box. Going into business is just one idea. It has already been tested in the rescue of the banks and in a more direct form, in Network Rail. Both have worked out rather well.
Over to you Ed.