Re: [A-List] Wilson plot: Leigh review, part 3

[Hudsonmi@xxxxxxx]

       The discussion of the IMF's 1975-76 conditionalities is important because it made privatization inevitable.
       The key feature could not have been done without uniquely British ignorance at work. That was the insistance on including the "capital budget" of Britain's public enterprises in the overall budgetary restraints. These enterprises were prohibited from raising capital funds needed to modernize their operations, on the specious ground that this would add to the public-sector deficit, and that all such deficits were "unproductive" and "inflationary" ipso facto.
       This ruling made it inevitable that British Telephone and all other public enterprises would become obsolescent. It meant that the only way they could invest in modernization was to "go private," and thereby get free of the Treasury's bizarre insistance that they not raise capital funds "off the government balance sheet" as independent and autonomous public agencies or what used to be Crown Corporations, so to speak, as occurs in the United States as a matter of course.
       How could the Labour Party not have drawn the simple distinction between a "current" deficit and "capital investment," which would have been repaid out of increased output and hence fees for the public enterprises? I have looked through the literature for a book I am now writing on Privatization and can find no discussion of this simple mental confusion. 
       It was a confusion sponsored by the monetarist extremists at the IMF, which continued to press the same ideas in Russia after 1991, and in intellectually backward countries like Norway today.
       It was the combination of the IMF conditionalities and Labour's inability to point out the difference between capital spending and "welfare spending" that helped lead to the collapse that brought Mrs. Thatcher and her manic monetarists into power to vastly centralize economic control and planning, not in the government but in the City, and hence in the international financial community.
       So we are back to Super-Imperialism's basic theme (which will be made clear in the chapter on US control via the IMF's destroying foreign self-dependency through public spending).

Michael Hudson