Gordon Brown today was delivering an impressive speech arguing that this is the worst of all possible times to forget the poor of the world. While that is true, his staff were also briefing reporters that maybe the best way to deal with the rising unemployment is to employ Keynesian deficit financing - that is better than cutting taxes to stimulate the economy because people will just save them.
So it would help very much politically if massive UK deficit financing was disguised in a global plan for massive deficit financing. What fairer one than one which looks after the worlds poor? (and perhaps the environment at the same time?) But a few problems and doubts are emerging about the brilliant global success of UK social democratic policy. We have been told repeatedly that the problem was the inter-bank lending rate was so high. That was one of the main reasons to improve their capital reserves to lending ratio. But it remains high. Why it is important for banks to lend each other money, when according to this theory the important thing is that they should lend money to worthy small businesses, is not clear to some of us. But perhaps there has been an assumption that what is a symptom is in fact a cause. My marxist reading is a bit rusty. I remember the passage about how the hart does not thirst more for water than the capitalist for money in times of recession. But is there any way to explain what is really going on without turning to some sort of theory of the labour theory of value - implying that the process is a zero sum game, however elastic at times the units are to express it - that if capital has accumulated such a proportion of surplus value out of a system, that it cannot maintain its previous rate of profit, and it is not possible to open up new markets like selling mortgages to poor people because the actual total amount of purchasing power of the masses is finally limiting no matter how creative personal credit instruments will be - then capital, real capital, has to be destroyed in order for the remaining capital to resume its accumulation of profit at the appropriate rate. And when the main agenda is destroying old capital, why should even a 1% reduction in the interbank lending rate, convince a capitalist with cash to invest that he or she can be certain they have found the right place to invest it? So there is a frustrated argument going on in England now about how ungrateful the banks are not to be lending money to each other after all the money they have been given, and frustration that civil servants would not be able to look over the shoulder of a every lending decision and take it for the banker, even if they wanted to. But if they are not careful they will get lost in this tangle, and become rapidly totally discredited. Chris Burford _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
