Tagged with Economic crisis

The crisis remains an investment crisis

investment, pic by 123rf.comPrior to the recent G20 meeting leading international economic bodies such as the IMF and the OECD made tentative calls for increased investment, although this was often confused with increased spending. This is a belated or partial recognition of the real source of the crisis in the advanced industrialised countries. In terms of actual changes to policy it seems to have made no impact at the G20 whatsoever.

As the world economy is once more slowing and there are again a series of spurious explanations offered for this, it is worth revisiting the actual causes of the ongoing crisis which first became widely apparent in 2007. In this piece the advanced industrialised countries as a whole will be the reference point, using aggregate data for the OECD. But each individual economy within the OECD simply provides its own unique combination of these common factors, including Britain. Continue reading →

Is Labour ready for another economic crisis?

a man pushing over the word "crisis"Ellie Mae O’Hagan writes that the Tories are politically prepared for another economic crisis, should one hit. Looking at the lack of profitable opportunities for capital presently, the ongoing investment strike, stock markets that went up and then came down, and the inflating credit bubble you’d be daft to rule one out with certainty over the coming years.

Ellie talks about how she felt the left response to the crash(es) of 2008 were bland and complacent. My experience was different. I wrote at the time that there was a bit of energy and excitement about, even though we knew the government would strive to make a crisis of private capital into a question of public spending. For our part (I was a Socialist Party member up until early 2010) it was a spur for activity, of trying to raise questions about the crisis-ridden character of capitalism and get people to take our analysis seriously. Never mind that the SP’s theory of crisis was premised on the underconsumption of the working class, and therefore was both wrong and owed more to Keynes than Marx, and that it had confidently predicted 15 out of the last three recessions, we felt we were right and that our ideas had been vindicated after 30 years of neoliberal consensus. Continue reading →

Economic recovery failing working people

cashIn 2010, the Tories promised to make work pay. Today, they are hailing the economic recovery, growth revised up and record numbers of people in employment. The economy is certainly working for those at the top. A top rate income tax cut has coincided with the return of bankers bonuses and above inflation increases in executive pay which means they are now paid 140 times the wages of their average employees. However, the recovery has yet to be reflected in workers’ pay packets, and while more jobs are being created the vast majority are insecure, low paid, and part time. Continue reading →

Labour will inherit a crisis not a recovery

For once it seems that the widespread reaction to a Budget was correct. Chancellors usually bury bad news in the detail of a Budget released long after their speech. However the dire electoral position of the Tories means that the main changes were announced with a flourish. The personal income tax rate threshold was raised to £10,500 a year, which the Institute for Public Policy Research has shown mainly benefits the highest earners. In addition, the annual amount of tax-free savings was boosted to £15,000 a year, which is actually close to the average (mean) disposable income in Britain. This was a Budget to shore up the Tory vote among higher earners and savers and staunch the defections to UKIP.

Osborne did nothing to address the economic crisis. This is not because the crisis is over or a self-sustaining recovery is underway. That is a dangerous delusion. Even the forecasts from Office for Budget Responsibility (OBR), which has proved to be significantly over-optimistic on growth since it was established, project only an annual average growth rate of approximately 2.5% over the next 5 years. Continue reading →