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Gordons Dream

Marxist Analysis · 2026-05-13

Core Argument

The article argues that Gordon Brown's claim to have abolished "boom and bust" through "prudent" fiscal rules is a fantasy that will be shattered by the impending global recession. The central thesis is that British capitalism remains subject to the same cyclical crises as the rest of the world, and that New Labour's "golden rule" — borrowing only for investment — was sustained only by the temporary conditions of the late-1990s boom, not by any structural transformation of the economy. The article claims that the real driver of the coming downturn is a profit crisis in the US, and that the UK, despite Brown's boasts, is uniquely vulnerable because New Labour deliberately ran down public investment during the boom years, leaving the economy structurally weaker.

Theoretical Grounding

The analysis is grounded in the Marxist theory of crisis, specifically the centrality of profitability as the driver of capitalist cycles. Roberts explicitly rejects the Keynesian and neoliberal consensus that policy management — whether through interest rate cuts or fiscal rules — can smooth out the business cycle. The argument draws on the Marxist understanding that crises are endogenous to capitalism, rooted in the tendency for the rate of profit to fall, rather than exogenous shocks or policy errors. The article also deploys a class analysis of fiscal policy: New Labour's tax cuts for business and the rich, combined with regressive taxation on working households, is presented not as technocratic management but as a class project that prioritises the City of London and corporate profitability over public services and working-class living standards. The critique of the OECD's repeated forecasting failures is a polemic against bourgeois economics' inability to grasp the underlying dynamics of accumulation.

Conjunctural Relevance

The article is written in July 2005, at a moment when the global economy had not yet experienced the 2008 crash but was emerging from the 2001 recession. Roberts identifies the US profit crisis as the key driver: profits in the S&P 500 fell 60% year-on-year by mid-2001, the worst decline since the 1930s. He notes that the US had already experienced 12 consecutive months of industrial decline by September 2001, and that the Federal Reserve's ten interest rate cuts had failed to revive growth. The article situates the UK within this global context, arguing that Brown's 2.25% growth forecast is unrealistic because it depends on a US recovery that has not materialised. The article also draws on data from the Institute for Fiscal Studies showing that public investment as a share of GDP fell to 1.7% in 2000 — its lowest since WWII — and that even after promised increases, it would remain below 1992 levels. The conjuncture is one of a "jobless recovery" in the US, a profit squeeze in the UK, and a Labour government that has cut corporate taxes while raising regressive taxes on working people.

Where the Argument Continues

This article is an early statement of a theme that Roberts and the Marxist.com tradition would develop extensively over the following years, particularly in the lead-up to and aftermath of the 2008 crisis. The argument about the centrality of profitability to capitalist crises is developed in Roberts' later work, especially his book The Great Recession: A Marxist View (2009) and his ongoing blog The Next Recession. The critique of New Labour's fiscal "prudence" as a cover for austerity and public sector decay is continued in subsequent IDOM articles on the 2008 crash, the 2010-15 coalition government, and the Corbyn period. The article's identification of the US profit crisis as the global epicentre anticipates the analysis of the 2008 financial crisis as rooted in the falling rate of profit in the productive economy, not merely in financial speculation. The argument about the OECD's forecasting failures is a recurring theme in Roberts' work, which consistently contrasts mainstream economic forecasting with Marxist crisis theory.

Connections

  • Michael Roberts' The Great Recession (2009) — develops the profit rate analysis of the 2008 crash.
  • Marxist.com articles on the 2008 crisis — particularly those by Roberts and Alan Woods on the global recession.
  • The Marxist theory of crisis — especially the work of Henryk Grossmann and Paul Mattick on the tendency of the rate of profit to fall.
  • The critique of New Labour — this article sits within a broader Marxist tradition of analysing Labour governments as managers of capitalism, not as vehicles for working-class interests.
  • Against the Stream episodes — the podcast has covered the 2008 crisis and its aftermath extensively, often with Roberts as a guest.

Key Quotes

  1. "Gordon's argument about booms and slumps is based on his claim that he no longer allows the government to spend more than it can earn in taxation, unless it is for investment. This 'golden rule' ensures that inflation (caused by government borrowing apparently) does not return."

  2. "It has now been revealed, in a new analysis of the first four years of the New Labour government that investment in the public sector fell to its lowest level as a proportion of national income since the second world war!"

  3. "Even after the doubling of investment in public services up to 2004 as promised by Gordon in last year's pre-budget statement, and even after taking into account all the money that is supposed to come from big business for investment in public services through the ghastly 'private finance initiative', public investment as a share of national income will still be lower than in 1992!"

  4. "The US is in the worst profit crisis since the 1930s. According to Dresdner Kleinwort Wasserstein, the reported profits of companies in the S&P 500 index fell by 60% in the year to the second quarter. It's already the biggest decline since the Depression."

  5. "The world is not going to recover quickly from the economic recession of 2001. And as capitalism grinds further down into depression, all the prudent calculations of Gordon Brown and the belief of New Labour in globalisation and the end of boom and busts in the New Economy will be exposed as sham."