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An ideology uncontained… June 16, 2015

Posted by WorldbyStorm in Austerity, British Politics, Economy, European Politics.
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This should be required reading for some, a piece on research that unsurprisingly suggests:

In a wide-ranging analysis of Britain’s performance in the decades before and after 1979, economists at the University of Cambridge say the liberal economic policies pioneered by Thatcher have been accompanied by higher unemployment and inequality.

But, more importantly:

At the same time, contrary to widespread belief, GDP and productivity have grown more slowly since 1979 compared with the previous three decades.

It’s always been remarkable how tenaciously the trope of productivity and growth increasing under Thatcherism has taken hold, and how uncritically it has been received both on right and parts of the left, and former left. I suppose that’s the thing with narratives, they provide massive simplifications that allow for reiteration of certain points, whether accurate or not.

There was one area that there was change… but… a double-edged sword this:

“Financial liberalisation was the sole aspect of the liberal market reforms introduced into the UK, initially in 1971-73 and more consistently from 1979, which materially increased the rate of economic growth,” the paper said.
“The freeing up of finance led to a huge, and eventually unsustainable, expansion of household borrowing. This temporarily accelerated the growth of consumer spending and hence GDP and of house prices, but in 2008 contributed to a banking crisis and the longest recession for over a century.”

Important, perhaps, to note that it was the ideological approach that led to the more recent events rather than ‘Thatcherism’ as such

But note again how the crisis of the last decade has not seriously undermined the broader narratives about economics and enterprise despite – by any rational reading – suggesting that those narratives are fundamentally incorrect.

Comments»

1. FergusD - June 16, 2015

“Important, perhaps, to note that it was the ideological approach that led to the more recent events rather than ‘Thatcherism’ as such”

Some economist (name I forget) is quoted as saying that while he believed in the “free market” economics of Hayek, Friedman etc and thought he had persuaded Thatcher of them he later became convinced that the Tories back then just used them as a cover for an attack on the organised working class to destroy the unions and force down wages. They weren’t that interested in the economic theory. Same old approach to economic problems as always!

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2. Gewerkschaftler - June 16, 2015

Theorists of the fall in the rate of profit claim that the neo-liberal era coincided with an overall fall in profit. They further claim that investment rates track profit rates, and accounts for the fall in the rate of increase of productivity. Or so I understand the argument.

Productivity in many fields is intimately related to investment in technology and research. This is probably at least partly true in imaginable non-capitalist worlds as well as the existing capitalist one.

What is certainly true is that much innovative fundamental research has been done by publicly-funded (often military) institutions, such as publicly funded universities. A quick look at big pharma shows that they themselves to little innovation, apart from tweaking of old drugs to create ‘new’ licensable drugs, even though some of them are less effective than the originals.

As this funding (outside the military) has fallen off, so has the rate of innovation, and so has the rate growth of productivity.

The association of productivity with cuts in individual wages and the social wage is, as noted above, pure class warfare from above.

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