Labour can learn from Victorian values

Far from being a union crusade, Clause IV began life as a sop to the middle classes. Indeed, public ownership was not a big issue for the early socialists

When Labour delegates sit down to discuss the fate of Clause IV at a special conference this weekend, it is unlikely that much time will be spent debating how and why the party's commitment to common ownership came into being. Both sides seem content to accept the brief account found in the party's consultation document: that Clause IV of the 1918 Party Constitution derived from "revulsion at the sheer anarchy and exploitation associated with the free market of Victorian capitalism". The only questions likely to be discussed are whether the need for such a massive antidote to the free market remains as urgent as ever or whether the need to win support beyond Labour's heartlands demands a new form of words.

But if Labour wants to redefine its vision of the future, it must also discard the soft-focus mythology which so long has stood in place of a clear analysis of its past. In the 19th century, it was the Tories who were known as "the stupid party". But in the 20th century, it has more often been Labour that has retreated into incoherent sentimentality when pressed about its philosophical assumptions or long-term aims. Much of this woolliness was the result of the muddle created by Clause IV.

In fact, Clause IV was not a response to the anarchy of 19th-century capitalism. It was the by-product of a quite new set of circumstances created during the First World War.

The crucial year was 1917. The end of the war was in sight. Political parties not only faced a general election, but a vast, new and untried electorate. Before 1914, only 60 per cent of adult men had been able to vote. Under the 1918 Representation of the People Act, the vote was to be extended to all men and all married women over 28.

Arthur Henderson, the party secretary, concluded that the party must be reorganised and given a proper constitution. Until then, the Labour Party had been a confederation of trade unions and affiliated socialist and co-operative societies; now, as he could foresee, there would be many new voters, who would belong to neither. Hence the need for the setting up of nationwide parliamentary constituency parties.

Clause IV formed part of the constitution hammered out in the winter of 1917-1918. It provoked little debate. The main divisions within the party were the result of the war. By and large, working-class trade-unionists were patriotic and pro-war, while members of the socialist societies were seen to be "middle-class" (professional or white-collar) and pacifist. The union-dominated national executive committee was therefore reluctant to consider any reform that might increase the power of middle-class socialists. The unions had already reformed the annual conference election procedures in January 1917 to restrict the power of socialist societies. Thereafter, voting for the NEC was no longer by section, but by the whole conference, giving the unions a huge built-in majority. It was the origin of the block vote.

In September 1917, the NEC agreed that a committee draw up a new party constitution. In October, the all-male committee, which included Ramsay Macdonald, Sidney Webb, GDH Cole, Henderson himself and five trade unionists, produced its recommendations: individual party membership, constituency- based organisation, election to the NEC by the whole conference and the declaration of a "socialist objective": Clause IV. Domestically, this declaration was needed to distinguish Labour from the Liberals, internationally to distinguish parliamentary socialism from Bolshevism. Originally, Henderson's formulation of the clause referred to "the common ownership of all monopolies and essential raw materials". In Webb's alternative this became "the common ownership of the means of production".

Why Webb's version was preferred is not recorded. But Ross McKibbin, the authoritative historian of these events, believesthe reason was electoral. Common ownership was thought to be popular with those sections of the middle class who had deserted the Liberals during the war. Some of these voters were pacifists. But more important, Fabians believed that the professional and salaried middle class, like the working class, possessed a "class interest" in public ownership. It was, after all, the middle class who would provide the salaried professionals to manage the state. Clause IV, therefore, was primarily a sop to the post-war middle-class voter.

Given that in recent weeks the resistance to the rewriting of Clause IV has been led by Unison and the transport workers, it is important to remember that until 1914 unions were generally suspicious of the extension of state activity. It was the peculiar circumstances of the First World War that gave trade unions a special interest in the extension of the public sector and enabled Clause IV to pass on the nod.

The First World War introduced an unprecedented degree of state intervention in the economy, especially in the control of the labour force. Trade union and Labour collaboration had been essential in this mobilisation of labour and was generally forthcoming from cabinet level downwards. For trade union leaders, the wartime experience of participating alongside employers and civil servants in the direction of the economy was formative and seductive. It removed much of their traditional hostility to the state, and thenceforward shaped what they meant both by "common ownership" and by "the best obtainable system of popular administration and control of each industry or service". In other words, the union conception of Clause IV was collectivist and corporatist. It was to be a peacetime version of the wartime control of industry established under emergency regulations.

The consequence - enshrined in Clause IV - of this remarkable combination of Fabian electoralism and trade union corporatism was a lasting confusion between ethical ideal and legislative programme. Before 1914, socialism belonged less to the sphere of politics than to that of ethics. The achievement of a society organised according to the principle "from each according to their ability to each according to their need" was to be the result of experiments ranging from the establishment of profit-sharing firms and co-operative stores to the building of communities.

These experiments were thought to test socialist propositions about human nature and social harmony. Until the First World War, the subsequently popular notion of socialism as the state direction of industry from a single centre was generally dismissed as "chimerical". In his unfinished "Essay on Socialism", written around 1870, John Stuart Mill maintained that even if revolutionaries took over an economy, they would be forced to divide it "into portions, each to be made over to the administration of a small socialist community".

Mill and his contemporaries also distinguished between socialism as a set of testable ethical beliefs and the unrelated political reasons why governments might periodically change the law of property. Socialism was small-scale and experimental; its proper sphere was that of voluntary action in civil society. If such experiments were to lead to a change in the nature of property relations, it would be by force of example.

Such a prospect was distinct from the fact that forms of property were historically variable and that legislatures might modify rights of property for a variety of reasons. A good instance of the latter was the danger of monopoly. Writing of large joint stock companies, in some ways the equivalent of contemporary privatised utilities, Mill argued, "such businesses, when not reserved by the state to itself, ought to be carried on under conditions prescribed, and, from time to time, varied by the state, for the purpose of ensuring to the public a cheaper supply of its wants than would be afforded by private interests in the absence of sufficient competition". Such measures were designed to protect consumers. It was not assumed they would have any particular bearing on the growth of habits of association or co-operation among producers.

Another confusion contained in Clause IV derived from a conflation of ends with means. A society where each contributed according to capacity and received according to need, was equated with a state in which there was common ownership of the means of production, distribution and exchange. Webb's preoccupation with the failure of voluntary action to meet the needs of those at the bottom of society blinded him to its successes elsewhere in the social field. Thus common ownership was likened in every sphere to state administration. But as subsequent experience has shown, there is no reason in general to assume that state ownership or management produces more co-operation or efficiency than private enterprise or the voluntary sector.

What originally made Clause IV plausible was a set of assumptions which have all but disappeared over the past 40 years. Two at least ought to be mentioned: that socialism was economically superior to capitalism and that a natural deference was owed to expert and professional authority.

It is now wholly forgotten that between the 1920s and the Sixties the prevailing assumption remained that socialist economies performed better than their capitalist rivals. In the depressed inter-war years, progressives assumed that only a scientifically planned economy could overcome poverty and unemployment. But even as late as 1963 Harold Wilson hoped that democratic socialist planning in Britain might rival some of the supposed miracles of growth achieved in the Soviet Union. The halting and stagnant record of socialist economies from the Seventies and increasing awareness of the terrible human and economic costs of the earlier exercises in planning have destroyed this part of the case for Clause IV.

Scarcely less important has been the substantial shift in attitudes towards authority since 1918. The early 20th-century Fabian vision of collectivism still assumed a Victorian ethic of public service within a society in which hierarchical practices and assumptions remained strong. As AJP Taylor once wrote of the British working class during this period, they followed their leaders into the General Strike of 1926 with the same unquestioning loyalty that they had followed their officers out from the trenches in 1914. The question was not so much of democratising authority as of placing it in the right hands. Against the greed and ignorance of Mammon, Labour thinkers such as Sidney and Beatrice Webb or RH Tawney could pit the disinterested authority of the doctor, the teacher, the civil servant or later the scientist. Not the least of the unspoken expectations underlying Clause IV was a deference to professional and educated authority that has now largely disappeared.

Such a conception was one of the casualties of the Sixties. Since then, libertarianism and anti-authoritarianism have been the most potent sources of mobilisation across the political spectrum. Hostility towards European officialdom, ridicule of the monarchy and support for voucher-based choices in education flow from this new political mood no less than feminism, child-rights and environmental campaigns. In the current debate, therefore, members of the Labour Party should not merely weigh the electoral disadvantages of an unreal commitment to a massively extended state sector. They should also consider whether the bulk of their supporters desires the corporatist and paternalist social order implied in the existing constitution. Given the apparent success of the Conservative appeal to "Victorian values" in the Eighties, Labour in the 1990s should reclaim its own Victorian ancestry. For these are times well-suited to the clear-headed distinctions underlying the libertarian socialism of John Stuart Mill.

The author is reader in modern history at Cambridge University and Fellow of King's College.