Britain: Labour Chancellor says socialist Clause IV more relevant than ever

Labour Party Chancellor, John McDonnell, set a confident tone in his speech to the 2018 Labour conference. Whereas shadow chancellors normally address conference to dampen expectations, John stated he would do the opposite, because “the greater the mess we inherit, the more radical we have to be”.

The capitalist system is indeed in a deep crisis, which cannot be solved with moderate policies. Instead, something truly radical is needed: the socialist transformation of society!

The question is, how radical does McDonnell plan to be?

John began by approvingly quoting from Labour's original Clause IV (removed by Tony Blair in 1997), that Labour must:

"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."

McDonnell correctly pointed out that, although this demand is exactly 100 years old, it is more relevant than ever. This is brilliant stuff. We would like to invite John to openly back the Labour4Clause4 campaign, which aims to restore Clause IV to the Labour Party constitution.

The rest of the speech saw John explaining what he means by this. He said that Clause IV is about delivering democratic, collective solutions to society, in particular by extending democratic rights to the workplace.

We welcome his announcement that trade union rights would apply to all workers from day one of employment – whether they be temporary, part-time, or full-time and permanent. We argue that a Labour government should completely abolish all the anti-trade union laws so that workers can struggle unimpeded.

Workers’ control

But whilst his speech contained this important step forwards, it was also clear from some of the details given that McDonnell’s plans are not radical enough.

Clause IV 2 Image public domainMcDonnell embracing Clause IV is a welcome step forward, but his proposals for nationalisation are not radical enough. We must expropriate the fat cats! / Image: public domain

John spent a lot of time explaining that by workplace democracy, he meant such measures as giving workers one-third of the seats on the board of the company, and also that a portion of shares would have to be transferred to an inclusive ownership fund. This would pay out dividends to the company’s workers, with another portion transferred to the government to be paid into public services as a ‘social dividend’. In essence, this means taxing businesses more.

The rationale for this, according to John, is that employee ownership increases productivity and improves long-term decision making. But whether or not this is true is not the point. If the company remains in the market and is not nationalised, then the workers’ decisions are inevitably determined by the laws of the capitalist market: the need to make a profit and out-compete others in order to produce big dividend payments. All the problems of the market – its anarchy of periodic crises and mass unemployment – would remain.

If we want the improved decision making of workers to benefit society as a whole, then these companies must be publicly owned, put under workers’ control, and incorporated into an overall socialist economic plan.

No compensation to the fat cats!

Clause IV’s centrepiece is public ownership of the means of production. We enthusiastically welcome John’s statement in his speech that Labour will bring water, rail, energy and Royal Mail back into public ownership.

John made the important point that this nationalisation must not be the same as that of the past – that is, managed by faceless Whitehall bureaucrats. The implication was that the workers and society as a whole would decide, democratically, how these public services are run. But this was not specified. Instead, only a vague plan of action was offered.

How are these important sectors to be nationalised, and when? We say that no compensation should be paid to these fat-cats, who, as John himself stated, have received more in tax credits than they have paid in tax since privatisation! We say that they should be nationalised immediately and with no compensation!

The pendulum swings

Quite rightly, John said that the past period has been one in which the balance of power has swung decisively in favour of the employers. For workers, this has meant longer working hours, fewer rights, zero-hour contracts and chronic insecurity. He said the pendulum now needs to swing back in favour of the workers. Absolutely right!

In this respect, we must also applaud McDonnell's promise that a Labour government would set a “real living wage of £10 an hour”. If implemented, this would provide an enormous boost to the lives of millions of low-paid, precarious workers.

Clause IV 1 Image public domainThe workers are more powerful than the capitalists, but only if they realise this and unite and fight for the socialist transformation of society / Image: public domain

But this demand raises the question of how a Labour government could ensure that the bosses pay up and give workers what is legally required. Already, there are plenty of cases in recent years of the capitalists stripping back lunch breaks, holiday pay, and so on, in order to get around the costs of a higher minimum wage.

A capitalist society is inherently one in which the employers hold power. Even in the post-war period – in which the welfare state was built and when inequality was lower – the capitalists remained far more powerful than the workers. That is why they were able to use the state to overturn things and begin privatisation and deregulation.

The workers are more powerful than the capitalists, but only if they realise this and unite and fight for the socialist transformation of society.

Lessons of history

The programme John spelled out is a welcome step forwards and more radical than anything we’ve seen in British politics for a very long time. But it is not so radical as to propose the abolition of capitalism.

The lesson of history is that if we stop short of really giving the working class power – “on the basis of the common ownership of the means of production” – then the capitalists will use their economic power to sabotage and reverse the gains of any Labour government.

John joked that he’s “got tips” on “how to handle... being called a Marxist”. The only way to handle that is by embracing Marxist ideas as the only real and lasting solution to the problems faced by the working class. After all, “the greater the mess we inherit, the more radical we have to be”.