New Labour cuts rentier interest payments

[Chris Burford]

Whether the New Labour government's announcement yesterday of increase in
public expenditure on health and education is that radical, compared to the
level of the previous government, is debatable. But it is regarded as
clever since it is not accompanied by tax rises. Indeed, helped by a fall
in inflation figures, the London stock exchanges FTSE index went through
the 6000 barrier on the day the Chancellor, Gordon Brown announced
increased government expenditure over the next three years of 56 billion
pounds.

A small detail not highlighted by any side is that by the end of this
parliament, (2002 at the latest) annual government interest payments on
debt will be 5 billion pounds per year lower.This means a significant
reduction in the proportion of national resources going to the rentier
layer of capitalists. Frankly a reformist move, but a reform that ,frankly
also, I do not think we should oppose, but should rather welcome.

That was not always the case. There used to be an assumption that left
leaning reformist Keynsian governments would deliberately spend more than
income, to stimulate the economy and sometimes for redistributive purposes,
at the cost of a bit of inflation. And if that deflated the real value of
old capital so much the better. But when the increased mobility of
international finance, made this type of government policy impossible, then
the existence of large governmental debt, subsidising unproductive capital
became particularly unprogressive.

Chris Burford