New Labour cuts rentier interest payments

Chris Burford cburford at
Wed Jul 15 16:07:55 PDT 1998

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

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