Jeremy Corbyn has indicated that he would like to see the re-nationalisation of the railways and energy companies. While such an idea seems rational, there are concerns about how this can be achieved.
Problems of Nationalisation.
For example, if Jeremy envisages the purchasing of shares at market value, in order to nationalise, there must be serious concerns. Thinking logically, such a nationalisation would cost billions of pounds, with existing share owners likely to profit at the expense of taxpayers. Even worse, a future Conservative Government could not be prevented from re-privatising the companies at a future date. Thus, such nationalisation /privatisation could have the effect of lining the pockets of capitalists.
An alternative approach could be re-nationalisation without compensation, That would almost certainly result in a legal challenge to the Courts, with an expectation that the EU Court, and probably ECtHR, would declare such a non-compensatory approach to be unlawful. Another approach could be to compensate shareholders at the same value that the company was privatised at. Such re-nationalisation could still fall foul of the EU/ECHR Courts, but it would be less likely to do so.
Logically, therefore, the old-fashioned share/asset owning approach to nationalisation displays some problems. Perhaps the answer lies in what is meant by nationalisation. To me a central flaw in the UK approach to nationalisation is that the same ‘Sirs” and ‘Lords’ who run the private companies often continue to run it once nationalised. Therein lies the problem with nationalisation – it is centralised and as a result seemingly out of the reach and influence of working people.
A reform of company law is needed.
What is needed is a reform of company law. What we need is for ‘Directors’ of companies to be accountable to the company’s workers and not its shareholders. This way we could have workers control of the means of production. The process could involve the establishment of ‘Workers Councils/Unions’, consisting of workers elected representatives, whose role would be to liaise with the Directors on behalf of workers. When it comes to paying out any dividend to shareholders, the approval of the Workers Councils/Unions would be needed. While that may suggest potential problems of a conflict of interest, there will clearly be a need for the Workers Councils/Unions to balance a pay rise for workers with the need to attract investment from shareholders – who will want a return on their investment.
Such an approach to ‘nationalisation’ is certainly very different from that of the past. However, its real strength is that it provides the socialist dream of ‘workers control of the means of production’. Indeed, it does so by changing the power structures within designated companies. It enables capitalists to continue to achieve a return for their capital investment, while giving workers some control of the means of production.
There is no doubt that Jeremy Corbyn would want the UK to abandon its pro-austerity agenda. Post 2018 this should be relatively easy as the economy moves into a post-austerity period as the deficit starts to disappear. However, I have concerns about spending taxpayers money on compensating shareholders – when we need to improve welfare, housing, and education. Logically, therefore, a change in company law to enable workers to control the means of production may be much more desirable/affordable than simply buying shares from shareholders.
Dr Peter Jepson is the editor of LawsBlog. He tweets as @LawsBlog