Editorial from the September 2001 issue of the Socialist Standard
The mantra repeated by Tony Blair and Chancellor Gordon Brown since they were first elected has been the importance of avoiding "Tory Boom and Bust". Everything else has hinged on the economic stability which they claim is the almost unique preserve of their type of "new" Labour government, with its supposed emphasis on "building for the long-term" over "short-term fixes".
During the recent election campaign Labour put up posters across Britain depicting William Hague and Michael Portillo as Mr Boom and Mr Bust in a pastiche of the film Towering Inferno, called instead 'Towering Interest Rates". Those with long memories will have found this slightly odd – not because the Tory record on unemployment and recessions was a good one – but because no Labour administration in history until the present government had ever left office with unemployment lower than when it had been elected.
Since 1997 the government under Blair and Brown has harvested some of the luck denied to these previous Labour governments, simply by virtue of being elected during an economic boom (even if it offends their sensibilities to describe it in such terms). And their reticence to recognise the recent economic prosperity for what it really amounts to is significant in itself. It stems from their awareness that most people think that all booms eventually end in busts, no matter whether it is the Tories in office or some other group of tricksters.
In the rather distorted worldview of Blair and Brown things underneath really are different this time, as a benevolent New Labour government guides the economy along a smooth upward path avoiding the recklessness and irresponsibility that led to two consumer booms and two deep recessions under Thatcher and Major. New Labour has allegedly tapped into a technological "paradigm shift" in the global economy, rendering the old problems and previous conceptions and analyses obsolete. But it is a worldview which is increasingly – and embarrassingly – child-like and which is now finally being tested to the limit by economic realities that are starting to emerge on an almost daily basis.
On the back of the big slowdown in the US economy (caused by an over-expansion in relation to market demand of the high-tech and "dot com" industries) there comes a British manufacturing sector which is now officially in recession, having suffered two consecutive quarters of economic contraction (or "negative growth" as the government euphemistically likes to call it). That this state of affairs has transpired should be no real shock to anyone, for the economy in Britain has been in the grip of a consumer boom in recent years to rival the best of them. Total consumer debt in the UK is now 10 percent higher than total disposable income with many people borrowing against rising house prices to sustain – or increase – their spending levels, just as they did in the last unsustainable boom. With mortgage brokers and building societies issuing warnings that rises in commercial and domestic property prices are now about to stall with the market reaching its peak, the signs are there for all who want to see them.
Not that the present government does want to see the signs of course, any more so than any of its predecessors did. The present Labour government has never taken the considered view of those who have based their analysis on the entire history of the operations of the market economy, and certainly not of anyone claiming to put a Marxist analysis, as we do.
But whether they realise it or not, the moment of truth for this official government outlook is now upon us it seems. Is modern capitalism under Blair and Brown really crisis-free or is it still essentially the same system it always has been?
While Karl Marx in the nineteenth century and we in the Socialist Party today claim that capitalism inevitably goes through a periodic cycle of expansion, over-investment, crisis and economic stagnation, new Labour contends that it is all old hat. But their problem is that so has, in effect, every government that has ever preceded them. Those governments didn't necessarily talk about paradigm shifts but they did talk a lot of other economic tomfoolery: from protectionism to free trade, from nationalisation and indicative planning to laissez-faire and privatisation, from Keynesian intervention to monetarism, and all in the hallowed name of "economic stability". And what was the one thing they all had in common? Sooner or later they were all beset by the very boom/slump cycle of capitalism (and its attendant economic problems) that the Marxian analysis contends is endemic to the system.
Will Blair and Brown's government be able to buck the trend? Well, not if history, tried and tested sound economic analysis and the government's own figures on the stagnating manufacturing sector are anything to go by.
So forget the rhetoric and forget the "paradigm shifts". Once again it looks like time for Mr Boom from 11 Downing Street to go and visit his friend next door, Mr Bust.