economics

peter et al,

that may have been the case a number of decades back, but i think you are right to look at the 1980's as the turning point. for a number of reasons.

capitalism needs growth in the economy to survive. By the 1970's domestic markets were saturated and profit margins low.

businesses responded in two ways to this by the mid 1980's:

1. they started to look at global markets for expansion. thus ushering the era of 'globalisation' of markets and labour, and finance.

2. they tried to expand domestic markets through the expansion of credit (i.e. to fuel the economy by getting people to borrow more).

of course, every new strategy to accumulate wealth or profit (wether is be new divisions of labour, new industries, or new froms of financial speculation) goes through an initial perios of sucessful growth (say, for example with certian banking and lending strategies, or high tech stock options, or whatever), followed by the eventual abuse of that system to squeeze as much profit as possible out of it, and its subsequent decline when people start to see the inherent flaw in that particular capital accumulation strategy.

examples of these include

-the property boom in the 1980's.

-the financing of the asian 'tiiger'economies and their collapse in the late 1990's.

-the high tech stock bubble and it's collapse in 2001.

-the sub prime mortgage market and the global mortgage market borrowing in the last few years.

now nalin, you are correct in suggesting that the labour government took credit for a boom that was largely out of their hands (apart from their strategy of making the UK 'finance friendly' as well as other strategies like immigration ect. which did assist our economy and were withing thier control). but really, what governement would not do that? it does not erase the fact that current fluctuations have little do to with anything gordon brown or labour has done. they are a straw in the wind just like the rest of us.

global financial fluctuations are pretty much beyond the control of most governments. in many was we have been lucky that, with the ascendency of china, we have had a major economy growing to buffer most countries against a declining united states (who, in previous decades would have taken us all down with them).

now of course, China has been good for our economy, but now thier insatiable demand for food, fuel and raw materials is starting to rase the price of all of these commodities, and hitting us in terms of inflation.

it is difficult to accept that really no one has any control over the economy these days. but that is the situation, and one we tacitly accepted in the 1980's when we decided, along with the US, to go headlong into a globalised economy. It has brought us cheap goods, cheap food, higher standards of material living, but also made us far more vulnerable to the outside world.

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