Growth Nearly As Good As Under Labour

In April 2009, I predicted the power of the global boom,
combined with Labour's fiscal stimulus would end the recession.
 It did.  Quarter on Quarter growth not only took place, but it was
accelerating.  The Liberal-Tories scaremongering, and then austerian
economics was bound to tank the economy, as I said in 2010.  As
I predicted, the economy went back into recession at the end of
2010.  That was made worse, by the effects of the 3 year cycle, which
took effect in the second half of 2011.  The current growth is part of
the same cycle, but is goosed by the Liberal-Tory sugar rush introduced
into the housing market.  The crash from that, plus the next
cyclical slow down due for the second half of 2014,
 spell trouble for Osbourne.

The GDP growth figure for the last quarter came in at 0.8%. That is the highest since 2010. Of course, the 2010 figure was the result of the fiscal stimulus policies introduced by Labour. For the last 3 years, the austerity policies introduced by the Liberal-Tories have by contrast caused the economy to tank. In other words, their policies have caused capital to shrink, or at best prevented it from expanding. Hardly a result for a party that claims to be the party of business! But, of course, like their counterparts in the US, the Republicans, the Tories are really only the party of one section of business – the small capitalists who make up their core membership and support. Worse still, just as the Republicans are under pressure from the Tea Party, which is the extreme version of that ideology, so the Tories are under pressure from UKIP, and their own Tea Party wing.

In the US, big business has put the Tea Party in its place, as it threatened to destroy the economy over the Debt Ceiling. In Britain, big business has so far failed to do the same with the Tory, Tea Party Taliban. Over the last year, sections of big business have started to rail against Osbourne's failing policies, and the representatives of big capital within the national and international state – IMF, OECD and even the Credit Rating Agencies – had started to call on him to reverse or rein in the austerity measures. But, the growth of the last two quarters has subdued those calls for now. It will not last. The UK economy has been given a sugar rush as a result of the Help to Buy scam. But, like any sugar rush it is short lived, and then the body crashes. The same will happen with the UK economy. In any event, the normal three year cycle will cause growth to slow in the second half of next year. The two things together spell disaster for Osborne's economic policy, and the political strategy for 2015, he was building on it.

In the UK, the Tory Tea Party Taliban urged on by UKIP, are not only threatening the interests of big capital with their austerian economic policy, but the same ideology of small capital that stands behind it, is what is driving their policy of hostility to the EU, which will be even more disastrous for the interests of big capital. The Democrats realise that they made a mistake in 2011, when they came to a compromise with Republicans over the Debt Ceiling to introduce Sequester. They believed that the Republicans would not be so stupid as to risk the recovery of the economy by going through with the austerity measures that the Sequester entailed. But, under pressure from the Tea Party, they did. That is one reason the US economy's previous growth has slowed, but unlike British and European capital suffering under the impact of austerity, at least the US, as a result of the fiscal stimulus has been growing.

Back in 2008, I warned that the Financial Meltdown was about to happen, even though, as I pointed out at the time, the world economy was still booming. A few weeks later, that prediction was fully confirmed. The reason is that financial crises and economic crises, as Marx pointed out, are not the same thing.

Similarly, in April 2009, when most commentators were still sure the recession was continuing, I wrote that the recession is over. That was also correct. See – Now Its Official.

I provided further analysis of why that was the case by looking at the global conjuncture in – Why The Recession Is Over. The reason others on the Left had failed to recognise that such a recovery was likely was because of a general catastrophist view common on both the Far left and Far Right, as I set out in Oh Ye Of Too Much Faith.

By contrast, in the second half of 2010, when the Liberal-Tories talking down of the economy, and then their austerity measures began to be introduced, I wrote a number of posts setting out why these policies would tank the economy, and were, therefore, bad for capital in general, and particularly big capital. I forecast, again against consensus that the strong growth resulting from Labour's fiscal stimulus, would be reversed, and GDP would fall in the final quarter of 2010. Again that was proved correct, as I set out in Economy Sinking Into The Mire .

Whatever spin the Liberal-Tories try to put on these latest figures, the truth is that their austerian economic policies have been a disaster over the last 3 years, as these posts demonstrate. The UK economy, like the US economy, like every other economy such as Brazil, China etc. that used Keynesian fiscal stimulus had quickly bounced back from the effects of the financial meltdown – the worst financial crisis in history – in 2009. Those economies like the US that continued that policy continued to grow. Those economies that introduced austerian measures, quickly went back into recession, causing a destruction of capital. As a result, Governments like the Tories, have pulled off the remarkable feat of turning recovery into stagnation, in the context of a global economic boom that is probably the largest in history. They have also accomplished the feat of following a policy, thereby, which has been in the interests neither of Labour nor Capital.