Mussolini Refutes Classical Liberalism

Yeah, I know – more fascism. I expect you’re getting fed up with it, and I agree. It’s not a very edifying subject. But I intend this little extract from Mussolini and Giovanni Gentile’s ‘The Foundation and Doctrine of Fascism’ as a response to all the self-styled, right-wing Conservative ‘Classical Liberals’, who think that if everything was privatised and there was no welfare state or health service, but only private charity and provision, somehow the country would become more prosperous and industry more efficient. In this extract, Mussolini states bluntly that Classical Liberalism is a failure and the only response to the economic crisis is state intervention.

‘Since 1929, economic and political developments have further confirmed these truths. The importance of the state is growing by leaps and bounds (giganteggia) in all parts of the world. Only the state can resolve capitalism’s dramatic contradictions. The so-called crisis can only be settled by state action and within the orbit of the state. Where are the shades of the Jules Simons, who, in the early days of liberalism, proclaimed that the “state should endeavour to render itself useless and prepare to hand in its resignation”? Or of the MacCullochs, who, in the second half of last century, urged that the state should desist from governing too much! And what of the English Bentham, who thought that the only thing that industry needed from government was to be left alone! And what of the German Humboldt, who expressed the opinion that the best government was a “lazy” one! What would they say now about the constant, inevitable, and urgent requests on the part of business for government intervention? It is true that the second generation of economists was less uncompromising in this domain than the first, and that even (Adam) Smith left the door ajar, albeit cautiously, for government intervention in business.’

In Jeffrey T, Schnapp, ed., A Primer of Italian Fascism (University of Nebraska Press: 2000) 58-9.

Mussolini’s regime had practised what they preached, and learned from experience. When the Duce took power, he stated that his regime would practise Manchester school capitalism and he began a programme of privatisation, starting with the Rome telephone exchange. Private enterprise was declared to be the economic foundation of society and a duty. The state also set up a department to provide aid and technical assistance to failing businesses. But when the Crash hit, the regime reversed its policy, began nationalising firms and Italy had the highest amount of state interference in industry in Europe outside the Soviet Union.

This doesn’t justify Mussolini’s despotism or his destruction of human dignity, freedom and lives. But state intervention and a planned economy are not confined to brutal, tyrannical regimes. They were part of the social democratic consensus that gave Britain economic growth and prosperity before the depression of the 1970s and the rise of Thatcher. And as the current crisis shows, Thatcherism has ultimately brought nothing but poverty and starvation.

Out with the Tories! Time for a return to socialism!

Tony Benn: Socialism Needed to Prevent Massive Abuse by Private Industry

In the chapter ‘Labour’s Industrial Programme’ in his 1979 book, Arguments for Socialism, Tony Benn makes a very strong case for the extension of public ownership. This is needed, he argued, to prevent serious abuse by private corporations. This included not just unscrupulous and unjust business policies, like one medical company overcharging the health service for its products, but also serious threats to democracy. Benn is also rightly outraged by the way companies can be bought and sold without the consultation of their workers. He writes

The 1970s provided us with many examples of the abuse of financial power. There were individual scandals such as the one involving Lonrho which the Conservative Prime Minister, Mr Heath, described as the ‘unacceptable face of capitalism’. Firms may be able to get away with the payment of 38,000 pounds a year to part-time chairmen if no one else knows about it. But when it becomes public and we know that the chairman, as a Conservative M.P., supports a statutory wages policy to keep down the wage of low-paid workers, some earning less than 20 pounds a week at the time, it becomes intolerable. There was the case of the drug company, Hoffman-La Roche, who were grossly overcharging the National Health Service. There was also the initial refusal by Distillers to compensate the thalidomide children properly.

There were other broader scandals such as those involving speculation in property and agricultural land; the whole industry of tax avoidance; the casino-like atmosphere of the Stock Exchange. Millions of people who experience real problems in Britain are gradually learning all this on radio and television and from the press. Such things are a cynical affront to the struggle that ordinary people have to feed and clothe their families.

But the problem goes deeper than that. Workers have no legal rights to be consulted when the firms for which they work are taken over. They are sold off like cattle when a firm changes hands with no guarantee for the future. The rapid growth of trade union membership among white-collar workers and even managers indicates the strength of feelings about that. Not just the economic but also the political power of big business, especially the multinationals, has come into the open.

In Chile the ITT plotted to overthrow an elected President. The American arms companies, Lockheed and Northrop, have been shown to have civil servants, generals, ministers and even prime ministers, in democratic countries as well as dictatorships, on their payroll. The Watergate revelations have shown how big business funds were used in an attempt to corrupt the American democratic process. In Britain we have had massive political campaigns also financed by big business to oppose the Labour Party’s programme for public ownership and to secure the re-election of Conservative governments. Big business also underwrote the cost of the campaign to keep Britain in the Common Market at the time of the 1975 referendum. (pp. 49-50).

Benn then moves to discuss the threat of the sheer amount of power held by big business and the financial houses.

Leaving aside the question of abuse, the sheer concentration of industrial and economic power is now a major political factor. The spate of mergers in recent years in Britain alone – and their expected continuation – can be expressed like this: in 1950 the top 100 companies in Britain produced about 20 per cent of the national output. By 1973 they produced 46 per cent. And at this rate, by 1980, they will produce 66 per cent – two-thirds of our national output. Many of them will be operating multinationally, exporting capital and jobs and siphoning off profits to where the taxes are most profitable.

The banks, insurance companies and financial institutions are also immensely powerful. In June 1973 I was invited to speak at a conference organised by the Financial Times and the Investors Chronicle. It was held in the London Hilton, and before going I added up the total assets of the banks and other financial institutions represented in the audience. They were worth at that time about 95,000 million pounds. This was at the time about twice as much as the Gross National Product of the United Kingdom and four or five times the total sum raised in taxation by the British government each year. (p.50).

He then goes on to argue that the Labour party has to confront what this concentration of industrial and financial power means for British democracy and its institutions, and suggests some solutions.

The Labour Party must ask what effect all this power will have on the nature of our democracy. Britain is proud of its system of parliamentary democracy, its local democracy and its free trade unions. But rising against this we have the growing power of the Common Market which will strip our elected House of Commons of its control over some key economic decisions. This has greatly weakened British democracy at a time when economic power is growing stronger.

I have spelled this out because it is the background against which our policy proposals have been developed. In the light of our experience in earlier governments we believed it would necessary for government to have far greater powers over industry. These are some of the measures we were aiming at in the Industry Bill presented to Parliament in 1975, shortly after our return to power:

The right to require disclosure of information by companies
The right of government to invest in private companies requiring support.
The provision for joint planning between government and firms.
The right to acquire firms, with the approval of Parliament.
The right to protect firms from takeovers.
The extension of the present insurance companies’ provisions for ministerial control over board members.
The extension of the idea of Receivership to cover the defence of the interests of workers and the nation.
Safeguards against the abuse of power by global companies.

If we are to have a managed economy-and that seems to be accepted – the question is: ‘In whose interests is it to be managed?’ We intend to manage it in the interests of working people and their families. But we do not accept the present corporate structure of Government Boards, Commissions and Agents, working secretly and not accountable to Parliament. The powers we want must be subjected to House of Commons approval when they are exercised. (pp. 50-1).

I don’t know what proportion of our economy is now dominated by big business and the multinationals, but there is absolutely no doubt that the situation after nearly forty years of Thatcherism is now much worse. British firms, including our public utilities, have been bought by foreign multinationals, are British jobs are being outsourced to eastern Europe and India.

There has also been a massive corporate takeover of government. The political parties have become increasingly reliant on corporate donations from industries, that then seek to set the agenda and influence the policies of the parties to which they have given money. The Conservatives are dying from the way they have consistently ignored the wishes of their grassroots, and seem to be kept alive by donations from American hedge fund firms. Under Blair and Brown, an alarmingly large number of government posts were filled by senior managers and officials from private firms. Both New Labour and the Tories were keen to sell off government enterprises to private industry, most notoriously to the firms that bankrolled them. And they put staff from private companies in charge of the very government departments that should have been regulating them. See George Monbiot’s Captive State.

In America this process has gone so far in both the Democrat and Republican parties that Harvard University in a report concluded that America was no longer a functioning democracy, but a form of corporate oligarchy.

The Austrian Marxist thinker, Karl Kautsky, believed that socialists should only take industries into public ownership when the number of firms in them had been reduced through bankruptcies and mergers to a monopoly. Following this reasoning, many of the big companies now dominating modern Britain, including the big supermarkets, should have been nationalized long ago.

Tony Benn was and still is absolutely right about corporate power, and the means to curb it. It’s why the Thatcherite press reviled him as a Communist and a maniac. We now no longer live in a planned economy, but the cosy, corrupt arrangements between big business, the Tories, Lib Dems and New Labour, continues. Ha-Joon Chang in his book 23 Things They Don’t Tell You About Capitalism argues very strongly that we need to return to economic planning. In this case, we need to go back to the policies of the ’70s that Thatcher claimed had failed, and extend them.

And if that’s true, then the forty years of laissez-faire capitalism ushered in by Thatcher and Reagan is an utter, utter failure. It’s time it was discarded.

Workers’ Chamber Book: Chapter Breakdown

As I mentioned in my last post, a year or so ago I wrote a pamphlet, about 22,000 words long, arguing that as parliament was filled with the extremely rich, who passed legislation solely to benefit the wealthy like themselves and the owners and management of business, parliament should have an elected chamber occupied by working people, elected by working people. So far, and perhaps unsurprisingly, I haven’t found a publisher for it. I put up a brief overview of the book’s contents in my last post. And here’s a chapter by chapter breakdown, so you can see for yourselves what it’s about and some of the arguments involved.

For a Workers’ Parliamentary Chamber

This is an introduction, briefly outlining the purpose of the book, discussing the current domination of parliament by powerful corporate interests, and the working class movements that have attempted to replacement parliamentary democracy with governmental or administrative organs set up by the workers themselves to represent them.

Parliamentary Democracy and Its Drawbacks

This discusses the origins of modern, representative parliamentary democracy in the writings of John Locke, showing how it was tied up with property rights to the exclusion of working people and women. It also discusses the Marxist view of the state as in the instrument of class rule and the demands of working people for the vote. Marx, Engels, Ferdinand Lassalle and Karl Kautsky also supported democracy and free speech as a way of politicising and transferring power to the working class. It also shows how parliament is now dominated by big business. These have sent their company directors to parliament since the Second World War, and the number has massively expanded since the election of Margaret Thatcher. Universal suffrage on its own has not brought the working class to power.

Alternative Working Class Political Assemblies

This describes the alternative forms of government that working people and trade unionists have advocated to work for them in place of a parliamentary system that excludes them. This includes the Trades Parliament advocated by Owen’s Grand Consolidated Trade Union, the Chartists’ ‘Convention of the Industrious Classes’, the Russian soviets and their counterparts in Germany and Austria during the council revolution, the emergence and spread of Anarcho-Syndicalism, and its aims, as described by Rudolf Rocker.

Guild Socialism in Britain

This describes the spread of Syndicalist ideas in Britain, and the influence of American Syndicalist movements, such as the I.W.W. It then discusses the formation and political and social theories of Guild Socialism, put forward by Arthur Penty, S.G. Hobson and G.D.H. Cole. This was a British version of Syndicalism, which also included elements of state socialism and the co-operative movement. This chapter also discusses Cole’s critique of capitalist, representative democracy in his Guild Socialism Restated.

Saint-Simon, Fascism and the Corporative State

This traces the origins and development of these two systems of government. Saint-Simon was a French nobleman, who wished to replace the nascent French parliamentary system of the early 19th century with an assembly consisting of three chambers. These would be composed of leading scientists, artists and writers, and industrialists, who would cooperate to administer the state through economic planning and a programme of public works.

The Fascist Corporative State

This describes the development of the Fascist corporative state under Mussolini. This had its origins in the ideas of radical nationalist Syndicalists, such as Michele Bianchi, Livio Ciardi and Edmondo Rossoni, and the Nationalists under Alfredo Rocco. It was also influenced by Alceste De Ambris’ constitution for D’Annunzio’s short-lived regime in Fiume. It traces the process by which the Fascists established the new system, in which the parliamentary state was gradually replaced by government by the corporations, industrial organisations which included both the Fascist trade unions and the employers’ associations, and which culminated in the creation of Mussolini’s Chamber of Fasci and Corporations. It shows how this was used to crush the working class and suppress autonomous trade union activism in favour of the interests of the corporations and the state. The system was a failure, designed to give a veneer of ideological respectability to Mussolini’s personal dictatorship, and the system was criticised by the radical Fascists Sergio Panunzio and Angelo Olivetti, though they continued to support this brutal dictatorship.

Non-Fascist Corporativism

This discusses the way the British state also tried to include representatives of the trade unions and the employers in government, economic planning and industrial policies, and suppress strikes and industrial unrest from Lloyd George’s administration during the First World War. This included the establishment of the Whitley Councils and industrial courts. From 1929 onwards the government also embarked on a policy of industrial diplomacy, the system of industrial control set up by Ernest Bevin during the Second World War under Defence Regulation 58a. It also discusses the corporative policies pursued by successive British governments from 1959 to Mrs Thatcher’s election victory in 1979. During these two decades, governments pursued a policy of economic planning administered through the National Economic Development Council and a prices and incomes policy. This system became increasingly authoritarian as governments attempted to curtail industrial militancy and strike action. The Social Contract, the policy of co-operation between the Labour government and the trade unions, finally collapsed in 1979 during the ‘Winter of Discontent’.

Workers’ Control and Producers’ Chambers in Communist Yugoslavia

This discusses the system of industrial democracy, and workers councils in Communist Yugoslavia. This included a bicameral constitution for local councils. These consisted of a chamber elected by universal suffrage, and a producers’ chamber elected by the works’ councils.

Partial Nationalisation to End Corporate Influence in Parliament

This suggests that the undue influence on parliament of private corporations could be countered, if only partly, if the policy recommended by Italian liberisti before the establishment of the Fascist dictatorship. Those firms which acts as organs of government through welfare contracts, outsourcing or private healthcare contractors should be partially nationalised, as the liberisti believed should be done with the arms industries.

Drawbacks and Criticism

This discusses the criticisms of separate workers’ governmental organs, such as the Russian soviets, by Karl Kautsky. It shows how working class political interests have been undermined through a press dominated by the right. It also shows how some of the theorists of the Council Revolution in Germany, such as Kurt Eisner, saw workers’, peasants’ and soldiers’ councils as an extension of democracy, not a replacement. It also strongly and definitively rejects the corporative systems of Saint-Simon and Mussolini. This part of the book recommends that a workers’ chamber in parliament should be organised according to industry, following the example of the TUC and the GNC Trades’ Parliament. It should also include representatives of the unemployed and disabled, groups that are increasingly disenfranchised and vilified by the Conservatives and right-wing press. Members should be delegates, in order to prevent the emergence of a distinct governing class. It also shows how the working class members of such a chamber would have more interest in expanding and promoting industry, than the elite business people pursuing their own interests in neoliberal economics. It also recommends that the chamber should not be composed of a single party. Additionally, a workers’ chamber may in time form part of a system of workers’ representation in industry, similar to the Yugoslav system. The chapter concludes that while the need for such a chamber may be removed by a genuine working class Labour party, this has been seriously weakened by Tony Blair’s turn to the right and partial abandonment of working class interests. Establishing a chamber to represent Britain’s working people will be immensely difficult, but it may be a valuable bulwark against the domination of parliament by the corporate elite.

I’m considering publishing it myself in some form or another, possibly through the print on demand publisher, Lulu. In the meantime, if anyone wants to read a sample chapter, just let me know by leaving a comment.

Fabian Pamphlet on Workers’ Control in Yugoslavia: Part 1

I’ve put up several pieces about workers’ control and industrial democracy, the system in which the workers in a particular firm or industry have their representatives elected on to the board of management. It was particularly highly developed in Communist Yugoslavia, following the ideas of Milovan Djilas and Edvard Kardelj, and formed an integral part of that country’s independent Communist system following the break with Stalin and the Soviet-dominated Comintern in 1948.

In 1963 the Fabian Society published the above pamphlet by Frederick Singleton, a lecturer on Geography and International Affairs in the Department of Industrial Administration at the Bradford Institute of Technology, and Anthony Topham, a staff tutor in Social Studies in the Adult Education department of Hull University.

The pamphlet had the following contents.

Chapter 1 was on Political Structure, and contained sections on the Communist Assumption of Power, the 1946 Constitution, the 1953 Constitution, and the Policy of the League of Communists.

Chapter 2: Economic Planning, had sections on the Legacy of the Past, From Administration to Fiscal Planning, Autonomy for the Enterprise, the Investment System, and Recent Developments.

Chapter: The Working Collective, has sections on the Workers’ Council, the Managing Board, the Director, Departmental Councils, Economic Units, the Disposal of Funds by Economic Units, Allocation of Personal Income, Structure and Role of the Trade Unions, the Right to Strike, Education for Workers’ Self-Management, Workers’ Universities, Worker’s Management in Action: Decision Making, Structure of a Multi-Plant Enterprise, and Incentives or Democracy: the Problem of Motive.

The final chapter, was the Conclusion, which considered the lessons the system had for Britain. It ran:

In considering the lessons which British socialists may draw from the Yugoslav experience, we must not lose sight of the different nature of our two societies and the disparity in levels of industrial development. But it is also relevant to ask how far the ideas of workers’ control could, with the stimulus of the Yugoslav experience, become a truly popular element of British Labour policy. It is true that, with the Yugoslav exception, past experience of this form of Socialism has been inconclusive and fragmentary. Usually, it has been associated with periods of revolutionary fervour such as the Paris Commune of 1871, the Catalan movement during the Spanish Civil War, and the factory Soviets of Russia in 1917-18. The experience of Owenite Utopian communities in this and other countries is misleading, in that they existed as small and vulnerable enclaves in a basically hostile society. On the other hand, there is an authentic tradition within the British Labour movement, represented by the early shop stewards’ movement, the Guild Socialists and Industrial Unionists, upon which we can draw. The Fabian tradition too, is not exclusively centralist or bureaucratic. In the 1888 volume of Fabian essays, Annie Besant raised the question of decentralisation. She did not believe that ‘the direct election of the manager and foreman by the employees would be found to work well’, but she advocated control of industry ‘through communal councils, which will appoint committees to superintend the various branches of industry. These committees will engage the necessary managers and foremen for each shop and factory.’ The importance attached to municipal ownership and control in early Fabian writings is related to the idea of the Commune, in the government of which the workers have a dual representation as consumer-citizens and as producers. This affinity to Yugoslav Commune government is even more marked in the constitutions evolved in Guild Socialist writings.

The history of the progressive abandonment of these aims, and the adoption of the non-representative Public Corporation as the standard form for British Socialised undertakings, is well known. Joint consultation, which was made compulsory in all nationalised industries, became the only instrument of workers’ participation. Yet the problem of democracy in industry is one which should be of great concern to the British socialist. It must surely be apparent that the nationalised industries have failed to create amongst the mass of their workers a feeling of personal and group responsibility. Even in the most ‘trouble-free’ gas and electricity industries, there is little real enthusiasm for the present system of worker-management relations. Nationalisation may have appeared to the Labour government to have solved the problems of the industries concerned. But the experience of the workers in these industries has not confirmed this. They found that joint consultation between managers and unions leaders plus vaguely defined parliamentary control did not create anything resembling industrial democracy. Had it done so, there would have been much stronger popular resistance to the anti-nationalisation propaganda which was so successful in the years preceding the 1959 election.

We therefore feel that the basic aim of the Yugoslavs is one which has validity for our own situation, and we conclude with some observations on the British situation suggested by an acquaintance with the Yugoslav system.

The Problem of Scale

The forms of economic organisation and management which have been evolved by the Yugoslavs are unique, and a study of them provides a valuable stimulus to those who seek ‘a real understanding of a scheme of workers’ control that is sufficiently comprehensive to operate over an entire industry, from top to bottom, and through the whole range of activities’. However, as the scale of production grows, the problem of ensuring that democratic control extends beyond primary groups such as Economic Units through the intermediate levels to the central management of the firm and the industry, becomes more and more difficult. There is a strong body of opinion which believes that schemes of workers’ control must ultimately founder in the context of modern large-scale production. The small, multi-firm industries of the Yugoslav economy make democratic control less difficult than in a highly developed industrial society such as our own.

But questions, which should be asked in relation to our own economy are: how far could the nationalised industries be broken down into the smaller, competing units, without serious loss of efficiency? How far is the growth in the average size of firm (as opposed to scale of production units) the outcome of purely commercial and power considerations, rather than concern for increased efficiency through economies of scale? How far have we been misled by the mystique of managerial skill into accepting the necessity of autocratic control by the managers in both private and public industries? After all, the principle of lay control over salaried experts is the normal and accepted principle in national and local government, and within the Co-operative movement. The decisions in these fields are no less complex and ‘technical’ than in industry. Where lay control in local Councils and Co-operative Management Boards is more apparent than real, how far is this due to the prevailing faith in technology, which makes us reluctant to transform the contribution of the elected representatives by a thorough and enthusiastic education programme of the kind found in the Yugoslav Workers’ Universities?

In the conditions of modern industry, decisions taken by line managers and directors are frequently a matter of choosing between alternative course the consequences of which have been calculated by technical staffs. Such decisions are of a social and political, rather than a technical nature, i.e. they are precisely the sort of decisions which should be undertaken by democratic bodies. These factors should be borne in mind when examining the conclusions of some writers that, whilst the Yugoslav experience is interesting, and may have relevance for countries at a similar stage of industrialisation, it has little bearing on the problems of advanced industries societies.

Continued in Part 2.

The Nazis and Industrial Autonomy

Nazi Germany was a centrally planned economy. This meant that, as in the Soviet Union, business served the state. There was a central planning bureaucracy, which organised and directed industrial production, right down to dictating to employers how many employees they should take from the labour exchanges. Unlike the Soviet Union, this was all done through private, not state-owned, industry. The Nazis furthermore claimed to value private enterprise and initiative amongst business leaders, and Nazi rhetoric attacked state bureaucracy in a manner very similar to the denunciation of state planning and bureaucracy by Thatcherite Neo-liberal free-marketeers.

Robert A. Brady also tackles this in his The Spirit and Structure of German Fascism. He writes

Similar to the ideas of Gerard Swope-one of the spiritual fathers of the N.R.A.- the United States Chamber of Commerce, and other similar spokesmen for “self-government in industry,” “the ideal held up to us by The Leader is a new system of self-administration with the emphasis laid on the responsibility of every individual.” In this theory, business men must be allowed so to organise themselves as to avoid the “bureaucracy” assumed to be inherent in state control and to give free play to “ethical” private initiative in business.

“We cannot dispense with the economic willing of individual business leaders and workers,” Schacht said. To do so, he held, would be to destroy the “creative power” of the people. The function of business enterprise is to release this creative power on behalf of the nation.” Under no circumstances,” he continued, “shall we destroy the multifarious individual character of our economic system. For all time to come we shall need the independent employer who for better or worse, is connected with his enterprise.” In other words, business men in the new Germany are to be given free reign to function as before, except now they must be “honest” in the sense that they must not resort to “unfair” tactics to achieve corporate ends. (pp. 265-6).

Likewise as with the N.R.A., the new German economic organisations are supposed not to engage themselves with “economic planning,” since, according to the Nazis, planning can only lead to “bureaucratisation.” “Free economy, private initiative, and personal responsibility are not demands of employers on us, but our demands on the employers,” as a Nazi party spokesman expressed it. But this is only to assert that the totalitarian powers of the new state can and will be used to see that no one escapes whatever the majority of the more powerful German businessmen decided to do. Membership is compulsory in the new “self-administered” organisations. Nobody is to be allowed to stay outside and spoil the game. All must follow where they are “led” by the state-recognised spokesmen for their respective groups. (pp. 266-7).

In fact, as I’ve blogged about before, German industry did form a kind of partnership with the Nazis, but it was always fragile and could be dissolved at any time, such as later in the 1930s when the party began a series of four-year plans. Nevertheless, in theory at least, the Nazis were not hostile to private industry, and claimed to protect personal responsibility and entrepreneurial initiative, which are still the cornerstones of the neo-liberal economic mindset.

Corporate Influence and Staffing of Government in Britain and Pre-Revolutionary Russia

One of the features of post-Thatcherite British government is the strong influence of big business on government policy and even the staffing of government departments. Government officials are frequently drawn from corporations, where they have directorships or occupy other positions in senior management. The conferences of all three main parties are sponsored by businesses hoping to influence government policy and win contracts or other business concessions from their political clients, once they are in government. The parties increasingly formulate their policies according to think-tanks, formed by and representing the views of particular industrial or corporate interests. Private Eye for years, since as far back as the ‘sleaze’ of John Major’s administration, has documented the way corporations and their employees have permeated government institutions. This has most often been done with the specific intentions of reducing or blunting government regulation of industry. Thus you can find the presence of various senior employees and directors of the big accountancy firms in the Inland Revenue, presenting the government with schemes on how the rich can become even richer by avoiding a tax. Officials drawn from the City have entered the various government bodies regulating the financial sector, to argue that the City should be less regulated. The result of this policy was the massive corruption and trading in toxic debt that created the present international financial crisis. And an extremely large number of the present government have links to private healthcare companies hoping to benefit from the privatisation of the NHS. One of these is Jeremy Hunt, the current Health Secretary, and IDS. I’ve blogged before about how the Nazis had a similar policy of co-opting leaders from business to staff the Reich industrial combines and organisations.

And it was exactly the same in Russia in the decade immediately preceding the Revolution. Big business deliberately set out to influence government policy. Business leaders entered the government, while ministers, senior civil servants and officers of the armed forces moved into posts in private industry. The regime was compromised and ultimately discredited by massive corruption. Kochan describes the situation in Russia in Revolution (London: Paladin 1970).

Industrialists more and more put themselves at the service of the government in the economic development of the empire. An Association of Industry and Commerce, founded in 1906, and its journal Industry and Commerce, devoted themselves specifically to the purpose. The association was a federation of industrial organisations formed along geographic and functional principles, e.g. The mine owners of south Russia or the Baku oil producers. By the beginning of 1914 it embraced thirty-four banks and insurance companies, 251 industrial undertakings, eleven transport companies and nineteen trading concerns.

The association consistently advocated the further economic development of the empire through a policy of high entrepreneurial profits combined with austerity in consumption. It argued against free competition – ‘the anarchy of the market and a chaotic fluctuation of prices’ – and in favour of a five-, a ten- or even a fifteen-year plan, that would overcome Russian backwardness and free it from dependence on agriculture. It proposed cooperation between industry and the government in, for example, the irrigation of Turkestan for the cultivation of cotton, the construction of the Volga-Don canal, and the intensive exploitation of the Magnitogorsk iron deposits in conjunction with Siberian coal. … Planning from above, with the sympathetic stabilizing and regulatory intervention of the vast resources at the disposal of the Treasury would enable trade and industry to take their full share in industrial development, it was hoped. In the last resort, the association envisaged a type of corporate state in which industrial and commercial interests would play a co-determining role vis-à-vis the government in relation to economic policy.

For this reason the association scheduled its own congresses to take place during the Duma sessions – the membership overlapped in many cases – and ‘sometimes its debates were the more interesting and important of the two,’ noted one observer. The association functioned as a vast pressure group: ‘… Russian industry and commerce must, in the interests of self-preservation, ‘ declared an early initiator of the association, ‘express not only its broadly based views but also know how to present these views to those institutions and groups on whom will depend the putting into practice of this or that law or policy … Here lies the whole root and the whole meaning of the All-Empire congresses of the representatives of industry and commerce. (pp. 166-7)

What socio-economic influence was possessed by these conglomerates of power? This is not easy to analyse. It seems likely however, that they had a disintegrating influence in further corrupting and demoralising the Tsarist bureaucracy. An insider, V.I. Gurko, at one time assistant minister of the interior and member of the state council, avers that the integrity of the overwhelming majority of high officials was ‘beyond question’. But he must also admit that private concerns engaged prominent officials at ‘fabulous sums’ with a view to the man’s ‘official connexions and his knowledge of the methods necessary to obtain governmental backing … particularly to secure some state concession. ‘ The line between public and private interest became more and more difficult to draw. This applied particularly to the armament industry. Take Avdakov, for example, for some years the chairman of Produgol, then the Association of Industry and Trade and at the same time councillor in the ministry of industry and trade; or Lieutenant-General Brink, a former head of the department of naval construction and chief inspector of naval artillery, who became a director of the Putilov works; or Vice Admiral Bostrem, a former commander of the Black Sea fleet, who became president of the board of the Nikolaevsk naval construction company; or General Ivanov who joined the board of the same company; or General Miller, former head of the state-owned Obukhovo works, who became director of the Tsarizyn artillery plant.

Civilian official similarly moved between government posts and private industry, especially in they were engaged in the ministries of finance and trade and industry. There was Timryazev, for example, and Bark, Arandarenko, M.M. Fedorov, V.I. Kovalovsky, N.N. Pokrovsky, Langovoi, Litvinov-Falinsky – all these men moved at one time or another between their ministerial arm-chairs and an equally well-padded position in industry or industrial association. (p. 168).

This describes pretty much every government since Maggie Thatcher, including that of Cameron and Clegg today. And the Association’s policy of demanding high profits as well as austerity exactly describes the current government’s policies.

That all ended with the upheaval of the 1917 Revolution and the Bolshevik seizure of power. We don’t need a revolution with all its horror and bloodshed in Britain. But we do need proper government, where the public interest rules and where corporations are not allowed to corrupt, influence and direct government policy.