Is there a grand plan behind Tory economic policy? Simon asks:

To what extent was austerity an inevitable political consequence of the financial crisis, or did it owe much more to opportunism by neoliberals on the right, using popular concern about the deficit as a means by which to achieve a smaller state?

Michael Burke thinks the answer's clear:

A central tenet [of Osbornomics] is that the private sector is the key to prosperity and that therefore everything possible should be done to promote and encourage it. The state should shrink in order to release the inherent dynamism of the private sector.

I'm not so sure. I suspect Michael is giving Osborne too much credit.

To see my point, remember that fiscal austerity is ambiguous for profit rates - which are what matter in a capitalist economy. On the one hand, austerity can boost profit margins by weakening workers' bargaining power. On the other hand, though, austerity also depresses demand tends to depress profit rates.

Whether austerity is in capitalists' interests depends upon how capital spending responds to it. If capitalists are afraid to invest because profit margins are squeezed, austerity might succeed in boosting growth and profit rates by removing the fear of wage militancy. Silvia Ardagna has shown (pdf) that this is one mechanism through which expansionary fiscal contractions are possible.

However, whilst this might have been true in the 1970s - thus justifying Thatcher's attack upon workers - it is not the case now. Whatever other problems capitalists have, a militant working class is not one of them. In these conditions, austerity is hostile to capitalists' interests, insofar as weaker aggregate demand depresses profits.

To put this in the useful terms of Marglin and Bhaduri, in early 80s we were in an exhilarationist regime in which higher profit margins stimulated investment and so boosted profit rates. Today, however, we might be in a stagnationist regime in which the adverse effects of weaker aggregate demand offset the benefits of weaker worker power.

Thatcher might have been a saviour of British capitalism, but Osborne is not.

Three other things also make me think this:

- Osborne has retreated significantly from the spending cuts he planned a year ago. This is not the action of a man with a plan on cutting the state to encourage capitalist growth.

- This government is not noticeably expanding the realm of markets and profit-making opportunities. Privatization of the NHS is slow. And whilst academisation will allow a few spivs to make money, I'm not sure it represents a significant expansion of the domain of capitalism.

- Many other Tory policies are hostile to the interests of many capitalists: the uncertainty created by the Brexit referendum; immigration controls and the National Living Wage.

The left has often in the past under-estimated its enemies. But I'm not sure this is the case now. Sometimes, there is no great conspiracy or brilliant strategy. Sometimes, a twat is just a twat.