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Clause IV and all that ..

Hector McNeill1

Keeping things in focus:- Recently Jeremy Corbyn raised a question as to the modern relevance of a Clause IV-type role for certain decisions under a future Labour government. With a bent on candor Jeremy Corbyn has opened a Pandora's box inviting the normal tsunami response in the media as well as within the Labour party. Many do not appear to be aware of why Clause IV was abandoned or of the direct influence of the New Marxists on shaping New Labour.

A lot of the discussion relevant to Clause IV needs to migrate from the stark desert-like territory of the binary approach of British politicians and to enter the more fertile territory of constitutional economics where the distinctions and complementarity of private and public goods are more apparent as components of a balanced economic system. A more detailed article on this specific issue is Private & public goods

In the meantime, this article is a verbatim reproduction of selected excerpts concerning Clause IV and New Labour contained in the book, "The Briton's Quest for Freedom - Our unfinished journey" (2007). The numbers in parentheses refer to detailed notes at the back of the book.

Chapter 14 - The Power Strategy pp 128-130.
The masses, collectivism & propaganda

British politics has always contained, somewhere, a utopian socialist strand. The latest manifestations link back to the Fabian Society (founded in 1884) whose members contributed much of the intellectual foundation of the Labour party. During the early post-war years, the fact that Russia, a dominant Communist country, had been an ally in the defeat of Fascism and the Nazi horror resulted in many in British politics being seduced by the output of an international propaganda machine which gained momentum under Joseph Stalin. Two influential Fabian Society members who seem to have been taken in by Communist propaganda were Sidney J. Webb and his wife Beatrice Potter Webb. There were many apologists for Stalinism. It is as if George Orwell writing and publishing "Animal Farm" which portrayed a more accurate image of the suppression of individual freedom under Communism lived on another planet. The distinct trend in the years immediately following 1945 was the increasing power of the trades unions and their influence within the Labour party. There was increasing reference by the left to something called Clause IV which had been drafted by the Fabian member Sidney Webb in 1917 and adopted by Labour in 1918 (see box on the right).
Note: Clause IV of the Labour party:

The original version of Clause IV, drafted by Sidney Webb of the Fabians in November 1917 and adopted by the party in 1918, 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."
Clause IV was essentially the Communist position of the need for "the workers" to gain ownership of the means of production. Those supporting this political perspective riding on the trades union movement within the Labour party saw socialism as the natural outcome of a continuing class struggle.

This 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 approaches (50). Politics was marked by a mutual distrust between political camps and there seemed to be few common causes shared amongst them.

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 nationalization because the actual power resided in the management of economic activities and not in the hands of the owners and the state 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 (51). 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 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.

The Power Strategy

The far left strategists never seemed to perceive the family-based reasons for their difficulties in increasing their levels of support. The far left, those favouring the continued "class struggle" and state control over the means of production, began to review their options. Like Stalin in post-war Russia, leaders in all communist countries had long since abandoned any pretence at supporting a class struggle. Socialism had become a buzzword cynically applied by a single political party as the justification of its dominance of the economy and lives of the people and, of course, keeping the party bosses in a state of good living. The name of the game was to keep the political party in power; almost at any cost.

Neil Kinnock, the leader of the Labour party, decided that the challenge facing the party was how to gain and remain in power. With the collaboration of the New Marxist movement, Neil Kinnock developed a radical change in approach for the Labour party. This was to substitute the former political philosophy referred to as socialism and the ideological basis associated with the so-called class struggle with a strategy to change the party image by appealing directly to consumerism and identity concepts (54). This new approach has been referred to as the power strategy (55).

Kinnock had already introduced the power strategy in the general elections of 1987 and 1992, but in the popular mind, Labour was, largely as a result of the miners' strikes, associated with extremism. Tony Benn of the left mounted a leadership challenge to Neil Kinnock in 1988 but Kinnock survived. This served to demonstrate how far the marginalisation of the left had progressed within the Labour party.

For the 1992 election, Kinnock had applied a more professional public relations front aided by Peter Mandelson. What did become evident was that the lack of reference to strong political dogma and ideals by the new Labour party succeeded in taking the wind out of the sails of the Conservative party campaigns. The Conservatives appeared to be old style politics with a strong philosophical undertone. Labour came across more as a rational management team relatively free of political dogma. As a result, the election result improved for Labour but the continuing popularity of the Conservative party still won the day. In spite of Neil Kinnock's effective revolution within the Labour party he seemed to be, as a party leader, unelectable.

Proof of concept acted out in Central Europe

The presence and direct influence of the New Marxist movement on the Labour party seemed to wither in the UK with the initial false starts for the power strategy with two election failures. However their influence and ideas seemed to gain ground in Europe. Indeed, the first practical demonstration of the success of the power strategy occurred in the early 1990s in Central Europe. East and Central European Marxist politicians in ex-Russian satellites, with little sympathy for participatory democracy, were able, on the basis of public relations exercises of simply renaming their parties and to switch their identity from being that of totalitarians to that of being free marketeers and democrats. Such politicians did not change their fundamental political outlooks they simply did what was necessary to stay in power. They succeeded in being elected as democratic governments and the salvation of those whom they had oppressed just days before. This process was associated with effective press censorship as a result of several leading politicians having a particular tendency to sue journalists who published truthful statements concerning their past. Many journalists ended up in prison; to be expected when police chiefs and judges have their jobs as a result of political party patronage.

Pages 135-138
New Labour & the power strategy

Following the unexpected 1992 election defeat, John Smith became the new leader of the Labour party. The Labour party agonized over the reasons for their defeat in 1992. Labour had not completely shaken the image of being in favour of strong centralized state control and ownership of means of production. One of the persistent issues raised by the Conservatives seemed to affect some voters, this was the view that a Labour government would cause a flight of foreign investment and scare away new British private investment. 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 (49). Behind the scenes the arguments to dilute or remove Clause IV were simple and pure power strategy talk 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 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".

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 (56) to purposely 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. These activities were complemented by occasional meetings with financial and business leaders in the City of London. This helped Labour's proposals for governance to appear to be more prudent and more in line with an image of being less orientated to centralization and to be more business-friendly.

In 1994 John Smith died. Initially there had been a general feeling that Gordon Brown would be the next leader of the Labour party but a colleague, Tony Blair, who had been rising rapidly through the party, decided to run for leader. Brown and Blair had both been first elected in 1983 and in broad terms were identified with slightly different natural groupings within the party. An election contest between Brown and Blair would therefore have risked the possibility of a significant split within the party and potentially the destruction of Neil Kinnock's investment in preparing the foundation for New Labour. As a result it would seem that there was an agreement (57) to avoid this possibility with Tony Blair becoming the only leadership contender of the pair. Tony Blair became the leader of the party.

Following the impressive demonstration of the feasibility of the power strategy in Central Europe, the first real test in the United Kingdom occurred during the 1997 general election. This took up the legacy of Kinnock's work and orientation but under Tony Blair. Although not a political philosophy or approach to governance invented by Tony Blair it has been dubbed "Blairism" with Tony Blair taking full advantage of the broad concept to gain power and to ride out his own brand of leadership. The New Labour support Blair enjoyed within the party was essentially founded on Kinnock's former efforts. Very much aware of the importance of the public relations dimension of New Labour, Blair consolidated his anti-left credentials by pressuring within the party to marginalize the so-called old Labour left. On the other hand he kept one or two individuals who he perceived to be "safe" within the shadow cabinet, such as Clare Short and Jack Straw, so as to keep the broad party left contingent in line. New Labour won the 1997 general election.

Chapter 30 - Sovereignty pp 323-325
5. Economic Activity Monopoly

This process of concentration of power in the hands of political party operatives has continued, it would seem, with no clear legal basis. It has culminated in political parties, as small private organizations, using general elections to secure the monopoly of running the state with direct access to the state budget.

Monopolies are evil

The dangers of private monopolies are well established and self-evident. Like any uncontrolled administration, monopolies tend to manage their affairs through self-serving arbitrary decisions harming the interests of the people. This is why in most areas of social organization, and in particular the economy, there is a proactive desire to monitor economic activities to prevent the formation of monopolies. Thus the Competition Commission (114) will review the potential harm of any private group whose investments seem to be increasing their control over the management of a single economic sub-sector. Similarly at the European level trust-busting aims at controlling monopolies by overseeing corporate mergers and takeovers involving large national commercial concerns.

The biggest absolute monopoly in the United Kingdom

The British economy represents a production of around 1.4 trillion. This is more than 30 times the size of the whole manufacturing sector, let alone other sub-sectors where there may be active concern about monopolies. Under the British political system, the governance of the country, as well as the control of the management of the whole economy of 1.4 trillion, is handed over to a tiny political party. Such private groups, with insignificant management experience, also gain the direct management responsibility for a government sector of 590 billion making up some 40% of the gross national product, on the basis of a monopoly. It is evident that Parliament has no means to control executive excesses in the management of this monopoly. The decision taken as to who is given the management of this monopoly is not based upon a very carefully planned selection of managers reviewing their experience and a track record of competence. This selection is made through our haphazard and completely inefficient and non-representative general election system. This is clearly as wrong as it is unacceptable.

Forget Clause IV - this is more serious

Anthony Crosland's observation that Clause IV was irrelevant because those who manage the economy have more control explains why Labour's "Clause IV moment" was no more than a sleight of hand. With pro-forma budgetary planning and a sufficiently centralized economy, governments achieve a far greater degree of control over the production of goods and services than Clause IV could ever have achieved. As has been described, political parties use this to lever their own party power. Political parties opposing Clause IV in the past considered it to be a usurpation of the right of the private sector to manage the economy. But the same political parties consider it to be their own preserve to control directly some 40% of the national economy on the basis of a private monopoly for their own political party through centralized policies if they become the government party. This illustrates a self-serving double standard.

1 Hector McNeill is director of SEEL-Systems Engineering Economic Lab.

2 See: McNeill, H.W., "The Briton's Quest for Freedom - Our unfinished journey...'", HPC, 418 pp, 2007. ISBN: 978-0-907833-01-7.

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