[PEN-L:32609] Brown's budget statement

[Chris Burford <cburford@xxxxxxxxxx>]

At 27/11/02 18:58 -0800, Ian wrote:
> A chancellor still in control of events. But only just
>
> Larry Elliott
> Thursday November 28, 2002
> The Guardian


Important theme and illustrative of the crisis of capitalism in the UK as
well as the world.

Brown is seen as over-optimistic with his predictions, despite his previous
reputation, yet the Stock Exchange did not react badly and his speech (on
the Guardian website) may have been successful in making lots of favourable
comparisons with other leading capitalist powers about the proportion of
national debt in the economy.

Contrary to Larry Elliott's suggestion I would have thought that all the
major governments are rushing to place their faith in some sort of
Keynesian solution, but he is right that this is part of a global challenge
to the claimed rationality of capitalism.

Brown can be perceived as having kept the UK economy going for two years on
inflated consumer debt, and now he is doing it on expanded government debt.
In some ways it is rational that government debt should rise in a recession
but no one knows how long the economic cycle will last.

It is not clear to me whether he has applied his rules about distinguishing
between current and capital expenditure in any effective way, but long term
the UK needs to accumulate real value again versus the rest of the world.
Showing little inclination to move in with euroland, he presumably hopes
the UK economy will keep just ahead of its rivals in relative terms however
bad the overall figures look.

It is therefore interesting that he dombines a whole series of measures to
keep wages down and the workforce more flexible and he makes a show of
going ahead with a proposal to increase a global development fund from $50
billion a year to $100 billion a year.

As well as giving stern warnings about any rise in pay of government
workers that would increase wage costs, his raft of small measures include
interestingly expanding immigration, and extending positive tax credits,
(always a step at a time) but now to certain categores of childless earners
and even single men, to stop people being kept off the labour market
through being caught in a benefits trap. If he was the capitalist ownere of
the entire British economy these would be rational ways of increasing rate
of accumulation of surplus value by intensifying the exploitation of
workers. And as a Scot he probably remains undaunted in his feeling that he
should be in charge of the entire British economy.

Chris Burford

London