The Labour leadership are wrong. Renationalisation can happen whilst remaining in the EU

Labour's promise to take back control of key public services should be welcomed -- but it's false to claim that this cannot be done whilst in the EU or single market, writes Green MEP Molly Scott Cato.

In his conference speech yesterday, Shadow chancellor John McDonnell reaffirmed his commitment to the public ownership of rail, water and energy. However, Labour’s commitment to public ownership leaves a slightly nasty taste in the mouth.

Jeremy Corbyn suggested at the weekend that the Party’s economic programme, and specifically public ownership, could not be delivered while the UK was within the EU or Single Market. Such claims are, to put in bluntly, simply untrue. 

Corbyn just needs to listen to leading law experts on the matter. Indeed, former adviser to Labour’s shadow Europe ministers, Andy Tarrant, together with Andrea Biondi, professor of European Union Law at King’s College London, have issued a report dispelling such claims.

They conducted a legal assessment of 26 of Labour’s economic proposals and found that the effect of EU or Single Market membership to be negligible.

In addition, Brexit would not provide an optout from state aid rules anyway, as the World Trade Organisation imposes similar limits on subsidies members can pay to domestic industries.

The authors note the UK would have to more than triple the amount it spends on state aid to even match the proportion of GDP which Germany spends on subsidising its public companies.

And it is worth reminding Labour that French railways and German municipal energy are examples of exactly what Labour wants to do in terms of public ownership.

It is also important to point out that state aid rules help protect states from being bribed into corporate handouts; they fight crony capitalism and make sure competition actually works. So Ireland was found to be unlawful as a tax stooge for Apple precisely thanks to EU state aid rules.

John McDonnel’s speech, reiterating Labour’s commitment to public ownership, came hot on the heels of a heated conference debate on Brexit. Or rather on whether conference would debate Brexit, the dominant political issue of the day.

This non-debate revealed the true extent of the splits inside the Party, with some calling for Labour to openly oppose Brexit altogether, while others condemned a Stop Brexit rally outside the conference centre as an attempt to undermine Jeremy Corbyn’s leadership.

It is clear that the ‘Lexit’ wing of the Party, which includes many members of Momentum and which best represents Corbyn’s own longstanding position on Brexit, now steers Labour’s strategy.

Many in the Party can see the economic disaster that will unfold, which is why Corbyn faced calls at the weekend from more than 30 Labour MPs, MEPs, peers, trade union leaders and mayors to commit to full and permanent membership of the Single Market and customs union.

This has been echoed by London’s mayor, Sadiq Khan, who has called for the UK to stay in the Single Market after the two-year transition period. Yet despite all this, there will be no vote on Brexit or on future membership of the Single Market at conference.

It is also clear that the last Labour manifesto’s position on Brexit was based on a false premise. Corbyn believed, or wanted to believe, that the Party’s economic programme was not going to be possible inside the EU or Single Market.

This will leave the hundreds of thousands of people who voted Labour in the belief that the Party was the Party of soft Brexit – or even no Brexit – deeply dismayed. It also places Corbyn increasingly at odds with the vast majority on Labour members.

A recent poll found that 66 per cent of Labour members believe the UK should “definitely” remain in the Single Market, with a further 21 per cent more favourable than not.

Theresa May’s government is leading us towards a nightmare Brexit scenario. But through their consistent failure to oppose the Tories extreme path, Labour are now the real block to a soft Brexit, or to stopping Brexit altogether – something recent polls suggest is an increasingly popular position.

Greens stand united against the Tories hard Brexit plans. We want the UK to remain in the Single Market and customs union in perpetuity and, crucially, will robustly defend freedom of movement.

We will also remain committed to public ownership and taking back control of our vital public services from giant corporations. Particularly as we know that we can do so confidently as members of the EU and the Single Market.

Molly Scott Cato MEP is Green Party speaker on economics and on Brexit. She tweets here.

11 Responses to “The Labour leadership are wrong. Renationalisation can happen whilst remaining in the EU”

  1. Chris Lovett

    Article 345
    (ex Article 295 TEC)
    The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.

    Who owns SNCF? Deutsche Bahn? RENFE? Ferrovie dello Stato Italiane? Trenitalia? NMBS/SNCB (Belgium) ?

  2. Boffy

    There is no need for a Labour government to “nationalise” or “renationalise” anything, as I have set out in my blog post Labour Is Getting Bamboozled Over Nationalisation.

    All big companies, as corporate entities, represent socialised capital. The actual capital, in the form of buildings machines etc. belongs to the company itself, as a legal entity. It does not belong to shareholders, bondholders, banks that lend money and so on, and who are paid interest/dividends for having done so. As a legal entity in its own right, the company owns the capital and should thereby exercise control over it, not the shareholders etc, any more than a bank has a right to tell you what colour to paint your living room, just because it has given you a mortgage to buy the house.

    Germany already has its co-determination laws that go part of the way, and the EU in 1975 drew up the Draft 5th Company law Directive to extend such worker representation on company boards across Europe. A similar proposal was put forward by the Bullock Report in Britain in 1975.

    In fact, those co-determination laws do not go far enough. There is no reason why shareholders should have any say in company boards or appointing executives. All a Labour Government need do is to change Company law in relation to Corporate Governance and to remove the anachronism whereby shareholders exercise control over capital they do not own. All that is required is to establish corporate governance rules that make it the responsibility of the workers and managers in companies to democratically elect boards, appoint executives and formulate company policy.

    That costs nothing, and it also deals with the question of capital flight. What creates profits is the real capital, the machines, the materials, the labour-power. Shares create nothing. If shareholders engage in capital flight by selling shares, they will only damage themselves by depressing the value of their shares, whilst the real capital will continue to employ workers, who will create surplus value, and thereby produce the profits that can be accumulated to expand production.

    So long as workers have democratic control over the capital in their companies, I am quite happy for shareholders to be able to have control over their bits of paper, and to buy and sell them amongst themselves as they see fit. There is no reason why a Labour government should get involved in that pointless paper chase.

  3. Alma

    Going to socialism? Or straight to communism! Still learning from history!

  4. Lee Freeman

    This article is deliberately misleading and here is why: http://www.consilium.europa.eu/en/policies/4th-railway-package/

  5. Pissflops

    The EU is nothing but a neoliberal iron curtain and like Corbyn any real leftist will be happy to see the back of it. “Leftists” whining about leaving a conservative entity that impoverishes the working class of every member state are nothing more than hand-wringing liberals.
    Any actual leftist learnt all they needed to know about the EU from Greece.

  6. Martyn Wood-Bevan

    Just to clarify that the Labour Manifesto advocates a Mixed Economy with certain natural monopolies taken back into Public Ownership. This is more akin to the “Nordic Model” than any narrowly defined Socialist utopia. As the UK has the 5th largest economy but only the 24th highest average wage then this is why Neoliberalism does NOT work!
    The main influence on the policy was Joseph Stiglitz, a noted US economist who backed Corbyn for the 2015 leadership election and was an advisor in 2015/6. He is a “Centrist” economically speaking.

  7. patrick newman

    The current ‘debate’ of capitalism v socialism on the media is just daft and semantically juvenile!

  8. Ken Bell

    We joined what became the EU for many reasons. Suez was clearly a biggie, but I think one of the main reasons was that your typical middle-class type didn’t like the fact that strong unions meant that people they despised were earning almost as much as them.

    Now we are set to leave the EU, the children of those people are having hysterics, not over the EU, ‘cos the buggers didn’t take all that much interest in the campaign until the day after the vote, but over the fact that we did not listen to them when they told us to vote to stay in.

    Having defied them once the fear must be that we will make a habit of it. Guess what? I hope we do.

  9. Boffy

    All those that present a withdrawal from a capitalist Europe, and the potential to link up with EU workers to fight for socialism, only to be isolated in a capitalist Britain, separated from those EU workers are reactionary nationalist windbags, not socialists. Any real socialist, which implies a rejection of nationalism, and inherently implies internationalism would reject such a reactionary perspective.

    At least progressive liberals represent an advance over such reactionaries, who continually look back to some non-existent golden age of the past. Anyone who presents the British capitalist state with its unelected Monarchy, its unelected House of Lords, its unwritten constitution, its undemocratic electoral system, and its massively entrenched power of a capitalist ruling class, as being a progressive alternative to the EU, is a deceiver of the working-class of the very worst kind, a proponent of the main enemy of the working-class at home, a reactionary nationalist, and certainly no kind of socialist, left or right.

  10. Boffy

    Britain’s economy is only tentatively the fifth largest. Actually its now probably only 6th largest national economy. Even inside the EU, the UK was on course to fall to only 12th or 15 largest economy in the next decade. With Brexit its likely to achieve that position even sooner.

    But, talk of 5th largest is pointless. It refers only to “national” economies, whilst in the modern world national economies are increasingly irrelevant. In all parts of the globe national economies are coming together in larger economic blocs like the EU, the Tories and their nationalist supporters for Brexit, are truly reactionary in setting their face against such an historical trend. The UK economy at around $2 trillion is tiny compared to the EU economy, the US, economy, or the Chinese economy, and against the economies of economic blocs such as Mercosur, and so on.

    It will be these larger economic blocs that conduct the negotiations over trade etc., in order to be able to wield economic muscle. The UK as an isolated small national economy will become increasingly irrelevant in such a world. It will be a bit like a rogue planet thrown out of its solar system, and destined to wander aimless in space, and to suffer an icy doom.

  11. Boffy

    The debate in the media of capitalism v socialism is bing framed in terms of socialism v the free market. But, that is a false dichotomy. Marx describes the socialised capital of joint stock companies and co-operatives as being transitional forms of property between capitalism and socialism, and he goes on to describe a slow transition from one mode of production to another, just as capitalism had evolved slowly within the pores of feudal society.

    There is nothing in any of this where Marx posits this transition as requiring an end of the free market. Rather what Marx is mostly concerned with, and spells it out in his Critique of the Gotha Programme, is who owns the capital. As he sets out in Capital III, the worker owned co-operative does away with the contradiction between capital and labour by turning the workers into their own capitalist. In the Critique of the Gotha Programme, he sets out that it is this ownership of the means of production, and thereby the social relations that arise upon which, which is decisive in also thereby changing distribution relations.
    In fact, capitalism itself has already largely dealt with the issue of the market. The large companies already plan their production rather than adjust it mindlessly to every change in the market, and increasingly those companies, via things such as Just In Time, co-ordinate their production plans and requirements with other large companies. Its not a question of a division between Socialism (state ownership and planning) and Capitalism (a free market and individual private ownership of capital), because large scale capital is now socialised rather than privately owned, and that large scale capital already plans its production, rather than being dictated to by the market.

    What is actually required is for worker to insist on control over that socialised capital, and for that control to be used so as to utilise the existing extensive planning of production to meet their needs rather than the needs of profit. But, such planning and economic management can only be logically applied on at least an EU wide basis, which is why the ideas of the reactionary nationalists for pulling out of the EU are even more reactionary and infantile.

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