Andrew Cumbers is professor of political economy at the University of Glasgow
One of the most significant mistakes made by the centre left in the 1990s was to accede to the new right’s evisceration of the public realm. Under the guise of coming to terms with globalisation and the limits to ‘socialism in one country’, European social democrats willingly embraced privatisation policies. In France, Germany and Italy, social democrats of various stripes sold off over £150bn of public assets between 1993 and 1998.
In the UK, Tony Blair and New Labour’s abandonment of Clause 4 and ‘common ownership of the means of production’ was viewed as a pragmatic response to new times. But the subsequent denigration of all things public and the proselytising of the private sector in delivering more efficient services, better management, and greater innovation and creativity had the effect of solidifying an anti-state and anti-public narrative in the political mainstream.
What might have seemed like clever short-term politics have, however, had devastating longer term effects. Privatisation and accompanying market deregulation over the past four decades – under Conservative and Labour governments – have delivered most of the critical strategic decisions over the economy into the hands of vested corporate and increasingly financialised interests at the expense of any semblance of the common good. Even many remaining public corporations, notably the BBC, are managed and governed largely by representatives of private corporate interests.
Twenty years on from the height of Blair’s chimeric Third Way, times are changing again. The disaster of PFI, the failings of privatisation and the broader neoliberal project are now at the centre of political debate. Following Labour’s manifesto launch in the run-up to this year’s general election, public ownership, as a serious idea, has also returned to the mainstream policy agenda.
The return of public ownership and the spectres of the past
Public ownership is extremely popular amongst the public, largely because they are at the receiving end of privatisation’s failings in terms of deteriorating services, higher costs and serious organisational failures, evident in sectors such as rail and water. Opinion polls continue to show strong majority support for renationalising utilities such as rail, water and energy, and even around half of the public favouring substantial bank nationalisation, to the consternation of the right-wing Legatum Institute in a recent survey that it commissioned.
Outside the UK, as the failures of the global privatisation experiment mount, public ownership is making a dramatic comeback. A recent report by the Amsterdambased Transnational Institute found 835 examples of what has been termed ‘re-municipalisation’ around the world since 2000, from cities as diverse as Berlin, Houston, New Delhi and Buenos Aires. Politicians from the right and the left are rediscovering the importance of public ownership and control of local services and assets, in the face of poor performance from privatised entities.
In the UK itself, there has been a trend for local authorities to set up their own public energy companies, pioneered by the likes of Nottingham, Aberdeen and Bristol. Unsurprisingly, there is popular support for the idea that customer revenues should go back into other public services, rather than to private shareholders’ pockets. More recently, the Scottish government has announced its intention to establish both a public energy company and a public bank, reflecting the shift in the broader public mood rather than any deeply held ideological conviction.
In the circumstances, it is critical that the left learns the lessons of the past, regarding the failings of older forms of public ownership, as well as creating new organisational forms appropriate to the changing social and environmental concerns of the 21st century. An important step forward was the Labour party’s recent publication in September of its Alternative Models of Ownership report. I will declare an interest here, as a co-author of the report, but the important departure was the recognition of democracy and diversity as key features of a future public ownership agenda.
Older, post-war models of nationalisation have tended to be caricatured by the free market right as inefficient in delivering public policy goals, compared to the preferred privatised solutions. This was always something of a myth, which should be put to rest following the actual negative experience of privatisation. However, from a more democratic perspective, these past forms of public ownership were very top-down, elitist affairs, run by a metropolitan class of civil servants, largely based in London with little involvement or participation for the broader mass of citizens or regions. This is an experience that should not be repeated. Democratic and engaged forms of governance need to be important objectives of 21st century public ownership, alongside organisational effectiveness in delivering critical public policy goals such as tackling climate change and pursuing social justice.
Public ownership fit for the 21st century
In developing new thinking around public ownership, the most important question to ask ourselves is: why do we need it? Public ownership is not an end in itself. It can be used to prop up market failure and the private sector – as the post-crash bank nationalisations remind us – without changing anything fundamental in how the economy is run. Nationalisation is also on the agenda for many far-right politicians, notably the Front National in France, while the Polish government recently used the rhetoric of economic nationalism and anti-foreigner sentiment to call for bank nationalisation. So, we need to be clear about what kind of society and economy it might help build.
In this regard, public ownership is first and foremost about regaining a sense of the common good. Those who have ownership of the economy make the key investment decisions and through this they control the future. A revival of public ownership can challenge the private, short-term and vested interests that are currently doing so much damage to the public realm, and develop investment and planning for the longer term needs of society in a more sustainable manner.
A second set of questions concerns the forms that public ownership should take in the 21st century. In this regard, it is important to recognise that there is no one size fits all model: different sectors and circumstances will require different approaches. In a recent report, Renewing Public Ownership: Constructing a Democratic Economy in the Twenty First Century, I set out six broad types of public and collective ownership that should be encouraged, including national level state ownership, the re-establishment of regional and municipal forms of ownership, and various forms of cooperative and employee ownership.
Where possible, more decentralised forms of public ownership are preferable but there will still be a need for national and even higher level forms of state ownership to ensure strategic oversight, integration, coordination and planning. To provide an example, there is no reason that in the emerging post-carbon economy, there cannot be urban and regionally integrated energy companies that are more responsive to their local electorates, but we would still need national level coordination of the electricity grid to ensure its renewal and modernisation. But even such national level bodies can have more democratic forms of governance than in the past, with overseeing boards that have a much broader representation of interests, elected by employee and user groups, as well as government appointees.
Re-engaging and empowering the public
As people become more disillusioned and alienated from our existing economic system and open to the more extreme arguments gaining ground on the far right, there has never been a more urgent need to regain democratic public control of the economy. An important imperative for public ownership is to re-engage the public in economic decision-making and more broadly in debate and discourse.
Many of the problems facing us today are not just about the colonisation of economic decision-making by an elite but the consequences of that for public knowledge and participation in the economy. Much of the disdain for liberal elites and the emergence of a powerful ‘loss of control’ narrative behind Brexit arises from a sense of marginalisation and powerlessness among many citizens. A new agenda around public ownership must ultimately deal with this alienation.
One interesting trend overseas that might address such problems is the emergence of hybrid forms of collective ownership that combine public and cooperative
elements. A good example from the energy sector is the Mittlegrunden offshore wind farm, constructed off the coast of Copenhagen in 2001 where ownership was split between the city’s own municipal energy company and a specially created residents’ cooperative with more than 8,000 members. Engaging citizens actively in ownership in this way not only provides them with an economic stake but also leads to more collective learning and knowledgeable publics. Although difficult to replicate beyond the boundaries of an already highly engaged Danish body politic, this is surely an important task for public ownership in the years ahead. A revitalised public ownership can both deliver higher quality and effective services, and have the potential to reanimate UK civil society and a sense of the common good.