Defend the public sector!

[Green Left Weekly, #205, October 3, 1995]

Privatisation is at the cutting edge of the current capitalist attack against the working class. Throughout the western world, state assets and functions are being sold off, with drastic consequences for both the workers employed in the given sector and those who depend on the services provided. A previous article ("Privatisation is theft") sketched in the general background to the privatisation phenomenon in Australia and put forward some broad guidelines for resisting it. However, any fight against the sell-off of the state sector inescapably raises two central related issues: reforming the public sector in a progressive direction and the nationalisation or renationalisation of privately owned companies.

Socialist and progressive forces should be very clear on exactly why we oppose the selling of the state sector. We oppose privatisation because in every way it will radically worsen the position of the mass of working people. The sole object of privatisation is to enrich a small gang of corporate predators at the expense of society as a whole.

Profits or public service?

In defending the public sector, we must make it clear that we do not defend the commercialised, profit-oriented way it operates under capitalism today. The way, for example, that Australia Post, Telstra (Telecom) or the fragments of the old Victorian SEC (State Electricity Commission) are run is hardly likely to arouse great enthusiasm for state-run enterprises among ordinary people.

The privatisation push has given a tremendous impetus to the commercial orientation of the state sector. Today, for instance, the typical government department, enterprise, utility or service: is probably run by top executives "head-hunted" from the private sector at grotesquely high salaries; operates along business lines with the goal of achieving a certain "profit"; is forever raising prices and reducing services; is constantly selling off or contracting out sectors of its operations.

The ideological banner of the privatisers is "efficiency": the state sector is inefficient, they claim; only the private sector, operating under the discipline of the market, can eliminate waste and deliver services efficiently. While this argument is false and patently self-serving, it would be foolish to deny that waste and inefficiency — along with a great many other problems — exist in the state sector.

But the corrective to this is exactly the opposite of commercialisation and privatisation. Instead of making profit the overriding criterion of success and paying managers grossly inflated salaries (to bring them into line with the private sector), we must insist that the public sector — the utilities, the education, health and welfare system and so on — be run as a public service in the broadest sense. All other questions of its functioning must be worked out within this framework.


The public sector under capitalism is profoundly undemocratic. It has never been subject to any real popular input or control, either by the workers involved or by the general public who depend on its various services. Indeed, this point is so obvious that it may seem absurd even to raise it. The postal, health care, education, electricity, water supply services and so on confront ordinary people as vast, alien, impenetrable bureaucracies.

Their formal control by a popularly elected parliament is meaningless and alters nothing in this regard. Parliament is not where the real power in society lies and, in any case, parliament itself is as remote from ordinary people as the moon.

Socialists stand for the radical democratisation of the public sector. What is needed are services which can respond to the needs of ordinary people and their communities in a direct, flexible way. While not advancing a precise blueprint for achieving this, a mechanism must be created to ensure real popular involvement and control at all levels, both by the workers involved and by society as a whole (the users of the services). For example, utilities could be run by a combination of workers' control and democratically elected boards (subject to recall) at national, regional and local levels.


In campaigning against privatisation, it is impossible to avoid calling for the renationalisation of sold-off public assets. Moreover, we shouldn't stop there. We are in favour of a big extension of the public sector: there is no way this can be achieved without further nationalisations. However, the idea of nationalisation evokes a hesitant or mixed response these days. It is worth considering just what it involves.

Socialists, of course, are fighting for a workers' government which will bring the economy under the control of society. As the essential first step towards this, the new popular authority would expropriate the capitalist class and bring the great bulk of society's economic apparatus into the public sector.

We reject the claims of those ruling class apologists who argue that the collapse of the Soviet Union shows that state ownership doesn't work. On the contrary, what the Soviet experience shows is that in the absence of genuine democracy, nationalisation is not the same as real social ownership of the means of production.

However, even under capitalism the nationalisation demand has great relevance. Advanced in a timely way, it can link today's struggles and consciousness with the desperate need to eliminate profit-mad capitalism and reorganise society along cooperative, socialist lines.

Right now, as well as demanding that privatised enterprises be brought back into the state sector and run as public services, socialists call for the nationalisation of particular industries or particular groups of capitalists. Here are some compelling examples.

Nationalise BHP! The "Big Australian" is the country's largest industrial corporation, employing tens of thousands of workers. As well as being our biggest steel producer, BHP has major interests in oil and gas. For the last financial year the company posted a $1.6 billion profit — the biggest ever for an Australian company.

What BHP does impacts on the whole economy and the lives of all of us. For instance, decisions made by the company's board to "downsize" the company's work force have had (and continue to have) a devastating effect on entire cities like Wollongong or Newcastle. In making such decisions, the directors are answerable solely to BHP's shareholders — in reality, not even to all of these, but only to the big capitalist stockholders.

Wastes from BHP's giant Ok Tedi copper mine in western Papua New Guinea have destroyed the riverine ecology of a whole area of the country, blighting the lives of thousands of people. In the face of rising protests and a pending class-action suit by 30,000 villagers, BHP's lawyers recently drafted legislation to protect themselves and instructed the servile PNG government to pass it — which it is duly doing. (And some people claim that imperialism is an outdated concept!)

The control of this vast productive apparatus — built up over decades through the toil of ordinary people -- by a handful of capitalist predators concerned solely with maximising their profits is a crime against society. BHP should be nationalised and operated to benefit society as a whole.

Nationalise the banks and the financial sector! The entire banking industry is currently in the midst of a huge shake-out: the number of banks is increasing, but at the same time there is a process of mergers which will increase the degree of monopolisation of the financial sector. The four major banks all registered soaring profits in the financial year just ended, but despite this they are intensifying efforts to massively increase their fee income, above all from ordinary depositors. They have shed thousands of staff and plan to eliminate thousands more over the next few years.

The banks are decidedly unloved by the public. As the recent farcical federal inquiry showed, it is utterly futile to expect a capitalist government to fundamentally control the behaviour of the financial monopolies. Yet without state control of the financial sector, any attempt to force the economy to recognise social objectives will fail. There is only one solution: Nationalise the banking and financial industry!

Nationalise the interstate passenger and transport sector! There are especially compelling arguments for keeping the country's railways in public hands. On both ecological and safety grounds, the main mode of long-distance passenger and freight movement should be rail rather than road, as is presently the case. Nationalising the long-distance freight and bus companies and ensuring a shift to quality rail services wherever possible is a big part of the solution here.

Nationalise the polluters! The employers continually claim they cannot afford to switch to clean production technologies or install pollution control devices. They argue that environmental responsibility means wage cuts and job losses. Such arguments should be rejected: rather, working people cannot afford bosses who put profits before the needs of society and their employees. Such companies should be nationalised and their operations restructured to ensure they meet the necessary ecological standards.


The demand for nationalisation (or expropriation as it is sometimes called) leaves open the question of compensation.

As a rule, small investors, who have put their savings into shares in order to augment their modest incomes, should be fully compensated. They are in no meaningful sense actually owners of the corporations and are not responsible for what they do or don't do.

However, with regard to the real owners, i.e., the big capitalist stockholders, there is no question of principle involved, but only political expediency in the given circumstances. They have waxed fat off the labour of working people, and society is under no moral obligation to further remunerate them: their corporate assets should simply be confiscated. (Of course, it is not a question of taking revenge on the former owners: they should be entitled to the same benefits and support as other members of society.)

This is the general socialist position. Nevertheless, in particular circumstances, it may be expedient — in the interests of social peace or to secure their cooperation — to compensate the former capitalist owners more or less generously.


One further point must be clarified in relation to nationalisation. It is wrong to regard nationalised enterprises or utilities as islands of socialism in the sea of capitalism. The public sector in the west has never functioned like that in the past, and it is unlikely to in the future.

Moreover, it is not possible to nationalise capitalism on an instalment plan: a bit now, a bit more later and eventually we will get 100% and that will be socialism. The capitalist ruling class will never permit itself to be eliminated like that, especially when it controls the state that is supposed to carry out this creeping socialisation.

In certain periods some Third World countries have had extraordinarily high levels of state ownership of the economy. One example is Egypt under the nationalist regime established by Nasser following the 1952 seizure of power. Many observers at the time concluded that capitalism had been abolished in Egypt and that socialism was being created.

But no matter how progressive the nationalisations may have been, their later reversal under Sadat shows that unless the mass of ordinary people are involved in the process through a deep-going popular revolution — as in Cuba in 1959, for example — they do not in and of themselves signify that capitalism had been ended. The sordid reality was that the period of state ownership of the economy in Egypt served to incubate a new capitalist class (army officers and their families and cronies).

The key significance of the nationalisation demand is political. Advanced in a popular and timely way, it can play a big role in mobilising the working class against the bosses and focusing the struggle on the question of power, on the way society is organised and the way it must be reorganised if ordinary people are to have any sort of future.

In particular instances this demand may be won, but then the struggle would simply shift to the level of how the newly nationalised enterprise should be run: democratically or by managerial diktat? In the interests of society or big business?

The only way to nationalise the bulk of the capitalist economy so that it leads to a lasting transformation is to break the political power of the capitalist class through a vast popular upheaval culminating in the installation of a workers' government. Reorganising the state power, the new authority would expropriate the corporate owners. The public sector would then be the dominant element of the economy.

Run democratically and responsive to society's needs, it would be used rapidly to raise the quality of life of the whole population. It would provide the material basis for a new society: a society of social solidarity where everyone would be guaranteed a decent life, free from the deforming insecurities of capitalism.