AGAINST THE ORTHODOXY

Read this excellent interview with Hugo Radice from Leeds University at the New Left Project. These two responses are particularly helpful:

The cuts are being justified in order not to spook the financial sector – in particular the bond markets. How accurate is that? Is the financial sector really desperate for these cuts?

Well I don’t think they are. I think the support of the city for the cuts is part of a more general ideological offensive. As far as the bond markets are concerned, my view is that throughout this crisis there has been clear evidence that there is a global savings glut. In other words there are funds available that are looking for a safe and well-remunerated outlet, and what we are seeing is that countries like the UK have actually been able to borrow with very little difficulty throughout the crisis. And this is largely because over the last thirty years or so there has been a very substantial redistribution of income from labour to capital, from wages to profits. What that has generated is a massive amount of capital available for investment in all sorts of activities. With the collapse of business investment after 2008, investors simply transferred their funds to the government bond markets instead; and in the course of this year UK bond yields – in other words the costs of government borrowing - have remained at remarkably low levels. There doesn’t seem to be any difficulty in meeting the expectations of the bond markets.

Even if this claim about the bond markets is unfounded, as you say, what does it suggest about the power of the financial sector over the political sphere that this claim is even made?

I don’t think it’s particularly helpful to see it in terms of a power relation or a power struggle between the two. The political sphere has been moulded over several centuries around the primary task of maintaining the power of private property, maintaining the power of capital. Now there’s no honour among thieves, and so because certain sections of the ruling classes benefit from certain policies and other sections benefit from other policies there are always going to be arguments about how to move forward. It has often been argued that the city somehow has excessive power vis a vis industry, but really there is a symbiotic relationship between the city and industry, making up a more general business interest – the interest of capital as a whole. And the same applies to what we can call the political class: the system of government, the main political parties, the state apparatus, will only break with the basic interests of private property in the most exceptional circumstances.