There’s another aspect to this ‘confidence’ business as well. We are being told by the UK Government that the ‘markets’ have ‘confidence’ in the UK Government’s approach to fiscal policy, and that is why the UK’s credit rating is not threatened in the same way as that of the US.
I’m not sure that ‘markets’ can have, or not have, confidence in anyone or anything. In this context, the term ‘markets’ is just a shorthand way of referring to the outcome of a whole series of individual decisions by the people who own and control the capital which flows around those markets.
And what we’re being told effectively is that those owners and controllers of capital like the way the UK Government is approaching the issue, and don’t like the way that the US is dealing with it.
That doesn’t mean that one way is right or the other is wrong. It merely means that the ‘markets’ believe that one approach is better than the other – from their viewpoint, and in their interests. Falling in line with that is simply another way of allowing capital to determine policy, and another example of the way in which elected governments have surrendered control.
(Actually, the best argument that I can think of for a deficit reduction programme would be to put ourselves in a position where the ‘markets’ don’t dictate policy to us, but we’re not going to be in that position any time soon.)
I didn’t know quite what to make of China – one of the most expansionist military powers – telling the US that it can’t afford its current level of military or welfare spending; but I bet it didn’t go down too well in the White House. It did, though, highlight the extent to which China, nominally the world’s largest ‘communist’ state is now a key player in the ‘markets’ due to the level of control it has over capital.
However, there’s something very incongruous about a ‘communist’ state lecturing the capitalist world on the need to cut welfare for the poorest in society; it’s an interesting interpretation of the international brotherhood of the working class.
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3 comments:
The word “Confidence” is a little misleading.
The story of Palmerston dealing with 19th century potentate who had learnt that HMG had changed sides sums up the attitude to money and markets more accurately , when Palmerston advised the poor man “ England does not have friends, it only has interests”
As for the Workers’ Paradise of China , the strategic aim of Uncle Sam is to render China ,broke ,as it did with the USSR and my friends in low places tell me this is a 24/7 obsession in the economic warfare/military community – get rid of the man who owns most of your debt and you are out of jail free.
China have all the cards at the moment. They own over 1 trillion dollars of the USA debt, and will be one of the most prominent likely buyers of the next issue, so the US has to listen to what they say.
The 'markets' and the capitalist system in general appears to me to be in critical condition, and cannot survive without radical surgery. The free market, unregulated experiment has failed, but I hear no-one coming up with realistic proposals to revive it. The Tory instinct of cutting taxes for the rich - which has been raised recently - will just make things worse.
I think this notion of needing the approval of the markets is a classic application for the term Hegemony Gwyn Alf would be in his element...
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