Issue 247 of SOCIALIST REVIEW Published December 2000 Copyright © Socialist Review


A joyless boom

'There is no way the government is going to meet its spending plans this year unless ministers start giving away money on street corners--and probably not even then. The money is there but it is not being spent.' This was the assessment of an economist at Deutsche Bank on learning that the government's own figures admit to a much bigger surplus than was originally thought. In fact, Gordon Brown's 'war chest' now stands at £11 billion.

In a country where pensioners are still the worst off in Europe, where the railway system has effectively ceased to function as a national network, and where millions of pounds of investment are needed in the infrastructure, the government is dragging its feet in spending more money. Partly it fears raising expectations and encouraging workers to think that even more money is available, partly it fears what its friends in the City of London and the media will say, and partly it wants to hang on to its surplus to follow in the Tory tradition and bribe voters with tax cuts next spring.

No wonder the bitterness encapsulated recently over fuel tax and pensions looks set to continue. New Labour may have placated at least some of its opponents on these questions but there are plenty of other issues to make them unpopular. The government surplus symbolises the contradiction at the heart of the neoliberal agenda. We are repeatedly told that we live in conditions of economic boom--but it is a joyless boom with few outright winners, many losers, and a general feeling that the system is controlled by a clique of the rich and powerful and is beyond the control of the rest of us.

If this is how people feel now, what would happen if economic crisis took hold? This question is beginning to exercise some of those who study the economy and the stock markets. They have noticed that the US economy is slowing down after years of expansion. Predictions for growth in the world economy expect an overall slowdown--global growth is expected at 3.4 percent next year compared to 4.2 percent in 2000, and the US economy is expected to grow at 3.1 percent, well below this year's expected 5.2 percent.

Despite the success of the US economy, there are many worries. The US private sector deficit stands at 5 percent of national income. There are fears that a slowdown will lead not to a 'soft landing', but to some sort of crash in the economy. In addition, while most commentators feel that a generalised crisis would not result from a slowdown in the US economy, they see a risk, especially if an economy such as Argentina defaulted on its debt. The IMF is already intervening there to try to freeze public spending as a precondition for 'aid'.

Events in south east Asia are also flashing a warning. The South Korean car firm Daewoo has just been declared bankrupt and there is talk of one fifth of all South Korean jobs going. Far from the Asian crisis of 1997 being over, we are still seeing its consequences. The only answers our rulers have are more attacks on workers in the form of aid packages and structural adjustment plans. But these are being bitterly resisted. In the US itself that resistance exists in the struggles since Seattle and in the vote for Nader in the presidential election. If the economy there goes wrong, the ruling class there and elsewhere will try to win further concessions from workers. The protest against the EU summit in Nice this month looks like being large and militant--it has to be part of building a growing movement against capitalism which can spread the resistance.

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