The continuing destruction of the steel industry in the UK has been a major news topic. And as usual, we see the typical narrative of either statist leftists who parrot nationalisation and subsidies as solutions, or the supposed market supporters, who take Ricardian economic arguments of specialisation and butcher them. What neither of these arguments understand is that the modern economy is constrained via government monopoly and artificial economies of scale which favour large scale international trade in heavy industry markets. Without the subsidisation of tax-based transport, high overhead costs and the inability to develop different price systems and ownership models, these economies wouldn’t exist, and in their place would be a decentralised economy with production for use as much as with production for profit.
UK steel is at a disadvantage not because of free markets, but because of government-created economies of scale that favour modern production systems. Yet these modern production systems, developed from Taylorist ideas of production and microscopic forms of division of labour, aren’t actually that efficient. They rely to a significant extent on government input and subsidies. For example, governments create guaranteed buyers and markets by directly purchasing surplus production and allowing for foreign entry into certain markets. Chinese steel production shows this acutely, as China’s government directly buys surplus through international investment arrangements and sells it to African countries where it is used in Chinese-invested infrastructure projects. Further infrastructure projects in China increase this production, meaning massive overproduction that relies on stable government-industry economic relations. However, with the slowing of Chinese growth, this excess production is left idle, causing the heavy industrialists to lose money. To combat this, China has “dumped” cheap steel into European markets, hampering UK steel’s ability to compete.
Thus, the general production system of supply-push (versus more efficient demand-pull production) is only efficient due to government expenditure that either creates markets or acts as a direct buyer. Another form of government-created subsidy plays a major role. These are transport subsidies, which means the costs of road damage and transport pollution from shipping are subsidised due to waterways and roads not having clearly defined property rights put upon them, thus allowing externalisation of cost through taxation. This means national and international trade are favoured over regional economies, making capital costs unnaturally higher and creating forms of entry barriers to different ownership models that could outcompete these industry megaliths. Due to their seeming reliance on major subsidies, both structural and explicit, there is no reason to believe that these industrial players would actually exist in decentralised, freed markets. It creates international economies of scale that wouldn’t exist in a truly free market.
What we have is corporatism. The privileging of big business by government officials and bureaucracies so as maintain forms of economic hegemony. It is a system reliant on the theft of the money of taxpayers through a corrupt legal system and coercive relation to government. And as I’ve said before, this system is not efficient compared to public ownership or decentralised ownership in competitive markets with regional scale economies. In general, this system can only be called economic fascism.
However, due to the level of government subsidisation and guarantee, it can be extrapolated that in freed markets, the steel industry would fare much better as it could adapt to regional and national economies of scale through different ownership models and competition within these models. So instead of a massive reliance on capital investment by capitalists and stock traders, capital could be collated from labour’s surplus value, thus allowing for trade union and worker-owned firms. There would also be the allowance of planning within this factor market, such as through networked production as seen in the Emilia-Romagna production system so as providing for manufacturers in lieu of the hierarchical economic relations between manufacturing and industrial firms seen now. Further, planned consumption could also be viable for public goods and infrastructure through local governance structures and decentralised planning systems.
UK steel needn’t be another industry destroyed by the interests of capital with its neoliberal, bureaucratic partners. Rather, the building of counter-economic institutions which undermine artificial economic creations of the state mean it will still be viable. Workers should occupy their factories and look for clients in small-scale infrastructure and manufacturing. Further, they should develop planned relations with resilient communities who are in need of infrastructure. Economise the scales to the needs of consumers and firms, and don’t rely on the state or the international economy. By doing this, we undermine the capitalist economy and move toward a post-capitalist future of planned production, worker ownership and freed markets that encourage different price systems and economic organisation. UK steel needs less state involvement, and to move away from the forms of reliance on corporatist economic fascism.