12/08/2015 06:35 BST | Updated 10/08/2016 06:59 BST

Jeremy Corbyn Should Reinstate a Revised Clause IV

In a recent interview with the Independent on Sunday, Jeremy Corbyn alluded to the potential reinstatement of Clause IV. The right-wing media reacted with predictable terror and the left of the left championed Labour's symbolic return to socialism. The reactions from both sides were typically overstated. Corbyn was merely highlighting the possibility of committing the Labour Party to small-scale nationalisation.

Nonetheless, the Labour Party should reinstate a revised version of Clause IV. This should reflect sensible, small-scale nationalisation. Such a constitutional commitment has the potential to differentiate Labour from other mainstream parties, establish a common ground among members and beguile potential voters. To reinstate Clause IV in its original form, however, would commit Labour to an antiquated programme of wholesale nationalisation that the electorate, and indeed most members of the Labour Party, find unattractive.

Labour members and MPs have often clashed over the substance of Clause IV. Following the 1959 general election defeat, Hugh Gaitskell proposed an amendment. Gaitskell saw Labour's written commitment to complete nationalisation as a defining factor in their election defeat. Labour's left-leaning ranks, led by the ever-cantankerous Aneurin Bevan, fought back and eventually defeated Gaitskell's proposal. In fact, they went further: Clause IV was inscribed on Labour's membership cards.

Gaitskell was right to suggest amendments to Clause IV. He was wrong, however, to call for the removal of any reference to public ownership. Public ownership is an important part of the Labour tradition and the nationalisation of certain industries - particularly the railways and the electric industry - has consistently retained popular support. The problem with Clause IV in its original form is that it commits Labour to an outdated political position:

'To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service.'

This is both a terrible sentence and, in the modern world, a terrible idea. The original Clause IV doesn't simply suggest Labour should nationalise certain industries. It calls for the complete nationalisation of all industries.

Labour has never been devoted to such an overhaul. Even Michael Foot, in his controversial 1983 manifesto, refused to commit to the nationalisation of all industries. Clement Attlee, the most successful Labour Prime Minister and the man that brought a surfeit of industries under state control, would not nationalise industries that failed the test of natural monopolies - arguably because of the terms of a US loan. Nationalisation under Labour always targeted industries that are unsuccessful in the private sphere.

Industries prone to monopolies or oligopolies - such as the railways - should be nationalised if market competition fails to provide affordable services. The state should also control industries that serve an important public need - such as the NHS - as markets cannot guarantee adequate provisions. Important industries that collapse entirely and need resurrecting for the common good - such as certain banks following the Great Recession - should also come under public control. Small-scale nationalisation of essential industries that fail in the private sector isn't outdated economic policy, nor is it unattractive to the electorate. This is progressive economics and sensible politics.

Competitive industries that provide a good service and harness healthy competition should remain in the private sector. This, of course, accounts for the vast majority of industries. To argue for complete nationalisation, when the merits of the competitive and successful private sector are abundant, is economically outdated and politically suicidal.

Corbyn is dedicated to small-scale nationalisation - at present he has only committed to common ownership of the railways and Royal Mail. This is an essential part of the Labour tradition and a popular political position - even supported by the majority of Conservative voters. Nationalisation has the potential to bring better working conditions to those employed by publically owned industries and can provide cheaper services by implementing a benevolent monopoly.

There is no reason a revised Clause IV can't reflect the benefits of small-scale nationalisation. Corbyn, if elected, should reinstate Clause IV in this revised form. It would galvanise the left, help to differentiate Labour from the Conservatives and entice potential voters. It would be an irrevocable mistake, however, to reinstate Clause IV in its original form, as the nationalisation of all industries is an antiquated ideal that few Labour members support and for which the electorate has no appetite.