There was an interesting article written in the London Review of Books (September 13, 2012) by regular contributor James Meek in – How We Happened to Sell Off Our Electricity (you need to subscribe to read it). It discussed how the obsession with privatisation in Britain, which was meant to reduce state control of this sector, has led to the state still being dominant in electricity production. The only problem for the British is that the French government now owns a large swathe of the ‘privatised’ British electricity industry. The outcome demonstrates the absurdity of the whole privatisation debate. This example is not unique. State-owned enterprises have eaten up inefficient privately owned firms all around the world as governments sell off public assets in the belief that prices will fall, services will improve and costs will be lower. The reality now some 35 years or so into the privatisation experiment is that none of these claims have been realised. In many cases, costs are higher and the privatised firms rely on higher public subsidies than was the case when the operations were completely in public hands. Prices are no uniformly lower after privatisation. Profit-seeking firms seek to gain by cutting costs and under investing in essential infrastructure, which leads to poor outcomes for Society (blackouts, poor repair times etc). And, millions of jobs have been lost in this cost-cutting mania. As a result, we argue that a ‘Progressive Manifesto’ must include the case for re-nationalisation of many sectors, which are intrinsic to advancing the well-being of Society. Progressive parties should start researching and demonstrating how this policy will take us into the next century where green, sustainable production is the norm and there are high levels of public service available from these key sectors, rather than allow critics to argue that the re-nationalisation agenda is just a return to the dark old days of inefficient state enterprises where cronyism, nepotism and corruption was rife.

The Bank of England’s failure in the early 1970s to control the money supply under the Competition and Credit Control (CCC) policy should have discouraged the Monetarist support base. However, while the monetary targets were abandoned, the Monetarist infestation was firmly alive among economists in the British Treasury and the Bank of England and the junior ministers in Edward Heath’s government. The City was also a hotbed of Monetarist support, with the likes of Gordon Pepper, an economist in the private sector who edited the Greenwell Monetary Bulletin prominent. Pepper, was very vocal and very influential within government circles. The ‘Greenwell Monetary Bulletin’ became a vehicle for the monetarist views to penetrate the highest levels of government. The British Labour Party was struggling with its factions. On the one hand, the Left was becoming more powerful within the Party and deeply rejected the attempts to diminish union operations. They formulated a new and far reaching industrial policy, which was light years away from the approach adopted by Harold Wilson’s government in the 1960s. But there was also a significant rump of Labour Monetarists, mostly concentrated in the Parliamentary party who were closer to the Tories on macroeconomic policy than their colleagues on the Left. Major tensions developed and would, ultimately lead to the famous 1976 surrender to Monetarism by James Callaghan at the National Conference. We trace this evolution in this blog so that we can understand the next instalment, which analyses the 1976 IMF loan arrangement that the British government entered into. This arrangement is a significant turning point in the way that social democratic governments have been captured by the neo-liberal myths.