"New thinking' The theorists of the Labour Coordinating Committee, whose phrases Roy Hattersley picks up, might think they are engaging in some 'new thinking'. In fact, as Keynes once remarked, every 'practical' politician usually turns out to be the prisoner of the ideas of a long dead economist. What Hattersley had to say on the question of nationalisation simply basic errors much less vulgarly expressed by others before. Let us look at Hattersley's arguments starting from the basic features of a capitalist economy itself.
The contradictions of a capitalist economy can, in their fundamental features. be explained very simply. The demand for goods (or services) in any economy may be divided into two fundamental Firstly referred to as management'. they greatly ment in history goods Such means of increasing demand for goods in the economy are often 'Keynesian demand in realitv. however predate John Maynard Keynes and have been used by every revolutionary and reformist governincluding the Bolsheviks in Russia, Castro in Cuba, Allende in Chile, Mitterrand in the first part of his government in France, and the FSLN in Nicaragua today. sions, the These economic techniques are well established, provenly effective over short periods tion If tomorrow the British government increased old age pennational not wage, cut income tax on raised local government spending and embarked building programme there is no doubt that the economy would start to grow There is no reason whatever why socialists cannot use such techniques own purposes indeed every socialist regime in the world has. In fact such methods are parsuited, over short periods of time, to pursuing socialist economic theory, both Marxist and Keynesian, say that goods will increase most effectively if you give the most money to those who will greatest part of it. In other words the most effective means of 'reflation' of the economy is to concentrate on measures such as aiding paid, pensioners, raising working class wages, increasing social spending etc.
The types of immediate policy pursued by the Bolsheviks after October 1917, or by Castro, or the first year of Allende's government, or the FSLN today do not merely aid the most economically policies to pursue. All measures of this type, of increasing wages, or penuseful social spending should be supported 100 per cent.
But the problem for any policy of •Keynesian', or other reformist type is that, under capitalism, demand for of producuon regulated by social need at all — nor is it regulated by individual consumpregulated Capitalists invest, or fail to invest, not because society's needs have or have been met, but depending on whether they make a profit or not. Contradictions This is where the contradictions of Keynesian economic policy mediately become evident in practice.
demand consumer goods, increasing public spending and so on will (where there are unused resources in the economy) produce a short term increase in output. But any sustained increase in output requires new investment - and the need for investment increases nearer the economy approaches full employment and the limits of its existing productive capacity.
If investment does not take place then the result is raging inflation - as more and more money is pumped into the economy but the number of goods and services being produced does not and socialism increase (because investment and productive capacity is not increasing). This situation of rising, or ever uncontrollable, inflation is in practice the outcome Keynesian experiment found out in tound out in rrance. Any traditiona rational Keynesian policy is totally dependent on the willingness of capitalists to invest. Capitalists, not socialist governments, have the decisive weight, and the whip hand, in that situation.
Reflation not There is of course a way out of this situation. invest in the way that is needed then the decision is simply taken out of their hands. 'reflation' of the economy can be carried through on an ongoing long term Oasis Put in its simplest terms, reduced to pure economics, that is exactly what the Bolsheviks in Russia did, Castro in Cuba im- FSLN is doing in simply refused capital. They passed Firms or capitalists which complied with the needs of the economy in increasing investment, ticular needs of production and so on were left owning Those that did not had the decision the taken out of their hands - through being nationalised Workers' control and inspection of production was introduced in the meantime to capitalists were and which were not complying Workers' ed into the firms that were taken investment, who does no control production, where decisions are taken not for his or her interests but for the needs of society, does not 'own' capital in any meaningful sense or lne word al all. Ivanonansanon 1s not a fetish, it is simply the sole means whereby society can control its own