Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: http://www.socialistparty.org.uk/issue/553/6517

From The Socialist newspaper, 21 October 2008

The Socialist editorial

Keynesianism now trumpeted

Oliver Twist banks - Please sir, can I have some more?, photo www.squashdonkey.co.uk

Oliver Twist banks - Please sir, can I have some more?, photo www.squashdonkey.co.uk

"EVERY DAY this week there will be a picture of misery for the UK economy" said Citigroup economist Michael Saunders at the start of last week. The grim pictures are in the form of rising unemployment, falling retail sales, reduced business confidence, falling house prices, and many other symptoms of recession. Over 60,000 homeowners a month are now falling into negative equity.

Stock market share values recovered partially, after nosediving due to fear of a complete financial meltdown. But following the huge bank bail outs, which were designed to prevent a 'worst case' scenario, economic forecasts remain bleak and there is a general realisation that the recession could be long and severe.

U-turn has come after U-turn. First came bank nationalisations by the leading proponents of neo-liberalism. Now these same privatisers and worshippers of the market are singing the praises of Keynesian measures - the spending of public money on services, infrastructure etc to try to stimulate the economy.

Gordon Brown, chancellor Alistair Darling, and new business secretary Peter Mandelson, are chorusing that future expenditure on schools, hospitals and large infrastructure projects should be brought forward. Darling even went so far as to say: "Much of what Keynes wrote still makes sense. You will see us switching our spending priorities to areas that make a difference".

Their expediently-adopted guru, John Maynard Keynes, advocated increased state borrowing in times of recession, to pump-prime the economy. But while feeling compelled to accept the need for this, it is extremely problematic for the government to implement, as the national debt is escalating. It has gone up to around 50% of national income following the latest bank bail outs, and is estimated by the Centre for Policy Studies to be 103% of GDP if all the public sector pension liabilities, Private Finance Initiative contracts and Northern Rock liabilities are included.

This record debt level was built up during a long period of economic growth, because successive governments cut taxes for big business and the rich, and spent huge sums on weapons and wars. Going into a severe recession with such a debt level is a massive burden. Even without decisions in favour of additional spending, the state debt will increase as a result of lower tax receipts and higher unemployment benefits. So, at present, rather than promising new money, the government is trying to limit itself to 'bringing forward' future spending. This is being combined with some insufficient special measures, like funding more Housing Association housing and buying thousands of newly built houses for councils to rent out.

Also, the increased spending on some types of public services and needs is likely to be combined with cuts in others. The treasury has already clawed back over 5 billion of unspent NHS funding, to spend in other areas, and the NHS management board is presently waiting for further funding cuts and raids.

Nevertheless, such is the seriousness of the overall economic crisis and prognosis, that further Keynesian type measures are likely - some of which could be new departures compared to those taken in the past, and could be much further reaching than those announced so far. But the resulting increase in the public debt ultimately has to paid for, either through increased taxes on big business and the rich, or increased taxes on working class and middle class people, or through the government printing more money - which would fuel inflation.

The Socialist calls for a massive programme of public works, to satisfy people's needs for housing, schools etc, and to provide jobs. But this should not be paid for by ordinary people suffering increased taxes or price rises. The capitalist class however would howl with rage at being asked to pay through their taxes and would take measures to avoid this; which shows the need for the major companies to be taken out of their hands, and placed in public ownership.

Keynes also advocated lowering interest rates during a recession, and this is now the expected direction. Larry Elliot commented in the Guardian: "Although inflation currently stands at 5.2%, it is going to fall like a stone over the coming months... the impact of this on monetary policy is obvious. Rates will be cut, and cut aggressively, in an attempt to shock the economy back into life". But 'attempt' is the right word, as low interest rates are no panacea - they are only useful if the banks actually pass the lower rates on to borrowers and if people feel in a position to borrow money.


Greed and blame

THE EFFECTS of the uncontrolled speculation that has been carried out by finance industry chiefs, backed up by most of the leading western politicians, is being brought down on the heads of many millions of people. A thin layer of super wealthy 'investors' on the globe have enriched themselves hugely, not through any useful development of production or society, but through financial gimmicks involving fictitious capital.

Gordon Brown and David Cameron not so long ago were singing the praises of these parasites who have contributed greatly to the misery now being inflicted on ordinary people. Brown worshipped their "unique innovative skills", their "ingenuity and aspiration" and the "invaluable contribution...to the prosperity of Britain". Cameron declared: "Our hugely sophisticated financial markets match funds with ideas better than ever before".

Last year, Barclays president, Bob Diamond, received total pay and bonuses totalling a staggering 36 million. Since the onset of the banking crisis, the top bankers and chief executives of most of the major companies are continuing to pay themselves indefensible salaries and bonuses; this year alone, the pay of FTSE 100 chief executives has gone up by 11.5% on average.

Ordinary working-class and middle-class people are furious about the greed and catastrophic management of the leading financiers. A FT/Harris poll found that most people are blaming the bankers for the economic crisis. But substantial minorities - as high as 30% in Germany - are blaming the failure of capitalism itself. They are right to do so. The bankers have indulged in huge excesses, making the credit crunch much worse than it would otherwise have been. But capitalism is a system that will always have cycles of boom and slump, as Karl Marx explained over 150 years ago. He also explained that it is a class based system that develops its own gravediggers - the working class - who have the common interest and potential power to build a socialist alternative.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 21 October 2008:


Ford workers strike

'Why not save our jobs?'

Socialist measures to fight capitalist crisis


Socialism 2008

Rally For Socialism 2008

Socialism 2008 details pdf

Socialism 2008 - book here

Socialism 2008 website


Socialist Party editorial

Keynesianism now trumpeted


Socialist Party campaigns

Liverpool: Mass protest wins back the right to campaign!

Demonstrators stop fascist march

42-day detention dropped - for now


Socialist Party workplace news

PCS members vote to strike

Fight for jobs at JCB

Striking against academies

Protest at disciplinary action against teachers

Fast News


Socialist Students

Bangor students vote to fight fees

Fighting for youth in Lewisham

Campaign to Defeat Fees day of action

Kirklees: The battle to save our schools heats up


Comment

NHS props up the private profiteers

We can't afford private rail. Nationalise the railways now!


International socialist news and analysis

Iceland: A victim of the casino economy

Aer Lingus threatens to axe 1,500 posts


Socialist Party review

Persepolis, directed by Marjane Satrapi and Vincent Paronnaud

Black Power Salute (BBC 4)


 

Home   |   The Socialist 21 October 2008   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

Keynesian:

trianglePerspectives for Britain 2017

triangleThe Corbynomics challenge

triangleThe Causes of Capitalist Crisis; Reply to Andrew Kliman

triangleKeynes revisited?

triangleKeynes revisited

Keynesianism:

triangleCorbyn victory another step to transforming Labour

triangleKeynesianism 'back in fashion'

Taxes:

triangleTrump's tax plan: Robin Hood in reverse

trianglePFI privateers dodge tax

triangleNasty party imploding...drive out the Tories

Debt:

triangleA world in crisis, ripe for revolution

triangleRetail sector crunch: nationalise to save jobs

News and socialist analysis

News and socialist analysis

13/12/17

Labour

Labour 'purge' furore really just democracy

13/12/17

Brexit

Brexit deal no solution to Tory rifts

13/12/17

Housing

Two in five 'right to buy' homes now for let

13/12/17

NHS

Save our NHS

13/12/17

Them & Us

Them & Us

13/12/17

Fees

Uni market 'failure', two-year degrees - end cuts, scrap fees!

13/12/17

Retail

Retail sector crunch: nationalise to save jobs

8/12/17

Government

Local government pay: fight for the 5% claim, fully funded

6/12/17

Labour

Corbyn's Labour can defeat Tories with socialist programme

6/12/17

NHS

Branson sues NHS: kick out the profiteers

6/12/17

Immigration

Royal wedding exposes them-and-us visa system

6/12/17

Banks

RBS to sack 1,000: nationalise the banks

6/12/17

Homelessness

Rough sleeping crisis: make homes, not arrests

6/12/17

Poverty

End Tory war on poor

6/12/17

Rail

Nationalise rail now

triangleMore News and socialist analysis articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle16 Dec Blairite council 'all ears' to rich property developers

triangle16 Dec Arriva bus drivers' action wins pay rise

triangle14 Dec Stop the rotten redevelopment plan, demand residents

triangle13 Dec Six months on - still no justice for Grenfell

triangle13 Dec Movement growing against fracking giant Ineos

triangle13 Dec Totnes MP uses coffin controversy to distract from brutal NHS cuts

triangle13 Dec Trump's incendiary Jerusalem statement reignites Israeli-Palestinian...

More ...

triangle18 Dec Leeds Socialist Party: Religion and Socialism

triangle19 Dec Bristol North Socialist Party: Christmas social

triangle21 Dec Wakefield Socialist Party: Socialists and the National Question

triangle6 Jan Socialist Party national women's meeting

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

Archive

Archives:

December 2017

November 2017

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

February 2017

January 2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Legal

SP RSS feed RSS

Platform setting: = No platform choice

V2