Monday, November 23, 2009
However, the CBI is an executive body of the ruling class, and its views count for more than yours. All three party leaders are making their case before its annual conference, and listening out for signals as to what policy mix business is likely to prefer. If the keynote dissertation of the present head of the CBI, Richard Lambert, is any guide, then the age of full-blown neoliberalism focused on financial innovation, is considered to be at an end. Instead, an era of manufacturing revival headed by infrastructural investment is indicated. This is not a restoration of Keynesianism, before anyone gets too excited. (Though it can only be a matter of time before Socialist Unity has a post congratulating the CBI for its enlightened posture). Lambert, a former editor of the FT, also served on the Monetary Policy Committee for three years. He is a man of conventional persuasions as far as economic theory is concerned, a zealous advocate of 'globalisation' and 'free trade', and a supporter of the opposition's plans to slash spending sooner rather than later. Nonetheless, the speech does signal that the ruling class no longer has faith in the old strategies of accumulation.
Given the CBI boss's statements on the deficit and public spending, and his express wish that Osborne would be even more aggressive in his proposed spending cuts, the conference is likely to provide a genial experience for the Tory leader. But note the blackmail inherent in the Tory position, currently being expounded to the converted captains of British industry. The Tories aver that a failure to reduce the deficit will result in a collapse of sterling and a bond crisis, and a downgrading of Britain's credit rating. This could be true. The credit ratings are conferred by a major financial corporation, Fitch Ratings Ltd which is part of the Fitch Group. If the major financial corporations which have benefited from government largesse protest against the deficit which the bailout has produced, they may well downgrade Britain from its current AAA credit rating. If they downgrade, as they have been threatening, then currency traders will undoubtedly unload sterling faster than they can flush a bag of the devil's dandruff, and bonds will drop like [insert amusing simile here]. Not that speculators necessarily need Fitch's permission to carry out a run on the pound - this tactic has been a key lever over government policy possessed by finance capital for some time, creating a virtual parliament of investors who can vote instaneously and powerfully on any government policy they dislike. No, it's just that the threat of downgrading on the pretext of a totally fabricated fiscal crisis itself amounts to a form of blackmail by a sector of the ruling class.
On the other hand, the CBI position is not supported by the IMF, a body every bit as consequential for British policymakers. This is because the sudden collapse in credit available to households holding up consumption in the richer countries has to be met with countercyclical spending. Now, the IMF has a pathetic record on predicting world economic events. Its prescriptions for 'developing' and 'transitional' economies have been based on unsophisticated neoclassical precepts that have failed on their own indices (though they have not necessarily failed the interests of those dictating said solutions). It has long since ceased to be a creditor of choice for poor countries. It certainly didn't foresee any of the problems of the 'subprime' collapse, nor does its basic approach to development appear to have altered. Its most recent World Economic Outlook, for example, proposes macroeconomic stimulus for the advanced capitalist countries, but still proposes monetary tightening and fiscal austerity for the poorest countries. Thus, while Obama plies the Pakistani state with aid as a bonus for assisting with regional US geopolitical goals, another wing of Washington power insists that the state should cut spending and raise interest rates. So, there is no reason to think the IMF is defending a more progressive agenda (though it can surely only be a matter of time before...). It is not that this particular vector of US capital is at all concerned about the expropriation of the public treasury by finance capital. It is just that it has a different perspective on where the crisis is heading, and thus supports Brown's tactic of spend now, cut later.
But you see the pattern here: the debate is taking place more or less within the strategic and tactical coordinates of a split within the capitalist class, globally and nationally. What does the ruling class do when it rules? It, well, it rules.