Donagh Brennan analyses the historical and contemporary reasons for the passive response of the Irish public to the savage public expenditure cuts
The situation the Irish Left finds itself in during the largest recession in the history of the Irish state and the greatest crisis in global capitalism since the Great Depression is not that different in terms of the challenges and limitations which face the left across Europe. The inability to respond to it in a collective way, as a mass movement of workers bringing forward alternative solutions and calling for real political and economic change is similar to a general weakness within various Left formations in any other European country. Of course, each country has its unique differences and the popularity and power of the Left in these countries varies. But even in countries where leftwing parties hold power, the policies of these parties more often than not adhere closely to what has been broadly termed the neo-liberal consensus – the orthodox economic faith in the ability of the markets to correct themselves and the need for them to be free from the interference of the state, the shrinking of taxes, the evisceration of the Welfare state, the reduction of wages to provide competitiveness and the conversion of national assets to private investment. And it is this consensus that is considered as being largely responsible for allowing the crisis to happen.
Prior to the crisis which we can say began in earnest in 2008 the decline of popular left-wing politics in general, either through the hollowing out of the centrist social democratic variety after the economic crisis of the 1970s or the inability of the further left to engender a mass movement, suggested that the stagnation of wages, the rise of credit and the financialisation of capital; the undermining of trade unions and the erosion of worker’s rights; the spread of globalisation and the broad acceptance of free market economics was the new order, implacable; immovable. It was the end of history and the game was up on any alternative socialist society developing, we were told. This sense of an end seemed to be copper-fastened in the minds of many on the left with the fall of the Berlin Wall. After this we saw the left ceding discussion of the economy to the right and talking more of pragmatism, the need for ‘realism’ and the citizen as consumer. The left also made a cultural turn ditching political for cultural theory and as Walter Benn Michaels has recently argued, continuing to campaign for greater gender, sexual and racial equality which could be subsumed within the neoliberal orthodoxy while forgetting about class politics and the need for economic equality, which couldn’t.
The increasing unification of global capital lead to popular leftwing support forming around the anti-globalisation movement, challenging multinational corporate power, protesting at the economic summits where the heads of governments gathered to discuss further selective market liberalisation. But this movement was small compared to the majority of citizens who increasingly relied on the media to gaze into the glass chamber of representative democratic politics which through increasing centralisation of power operated more at a distance than ever. What did increase, in terms of political activism and party political involvement across Europe was the Green movement which drew in many of those who became disenchanted with the more well-established leftwing political movements. This is understandable as there was and still is, a compatibility between the need for the fairer distribution of the world’s resources, reducing the excess that comes from an elite that demand that societies need 3% annual growth and the urgency to reduce the effects of man made climate change. However, there was also another trend for the left that went hand in hand with these other changes. Political activism itself was migrating away from political parties, where membership numbers were dropping despite the fact that they had been there to provide for all the concerns of the members, including educational, environmental, economic and social issues, to the lobby group and NGOs which campaigned on single issues.
the combined worth of the top 100 richest Irish individuals was the equivalent of one fifth of Ireland’s GDP. In the United States, the 100 richest Americans were valued at just one twentieth of all US economic activity.
So, the structure of all politics being mediated between the political class and the media now was modified slightly to make room for the lobby group, which when created by business groups was simply a coming above ground, but for the left meant an attempt to enter the discussion on policy by arguing that they were representative on individual issues rather than part of a broad-based political campaign. In the meantime the citizen was left as the onlooker, staring into the glass chamber with increasing disinterest.
This general trend within the Left can be seen in Ireland as well: its Labour Party, Ireland’s longest established party and traditionally social democratic, has through its overriding desire to enter the next government been pitching policy not so it appeals to workers fighting a class war instigated in the interest of those the government feels it must support, but so it is not incompatible with its most likely coalition partner, the centre right party Fine Gael, for whom privatization is a deity to be adored. Its Green Party having built up credibility as the party of protest consistently challenging the free run that capitalist interests had over the country and the environment, subsequently lost it completely when, as a coalition partner in government, it approved the NAMA bad bank scheme which provides banks guilty of serious financial misconduct with a means to escape the worst of their debt and keep them in business, despite the considerable burden on future taxpayers. Its other left-wing party in the Dail, Sinn Fein, a republican socialist party in the South, spurned by Labour because of Labour’s legacy of anti- Republicanism and its distaste at the involvement of the party in the Northern Ireland conflict, but which in recent years steadily increased its working class support up until the general election in 2007. Although it’s policies are the most to the left in the Dail, it seems that the inconsistency brought about by Sinn Fein in coalition with the DUP in Northern Ireland, and the maintaining of a single party leadership across the whole island has prevented an expected increase in support from happening (a May 2 poll showed Sinn Fein support dropping by four points to six per cent, the same level as the Green Party, with the Labour Party ahead of Fianna Fail for the first time). The further left, the Trotskyist organisations such as the Socialist Party (formerly Militant Labour)and the Socialist Workers Party (including People Before Profit) gets only marginal support among workers, and remain ideologically very much the children of their parent organisations in the UK. However, it and various Anarchist and Socialist Republican groups have been at the forefront of the Anti-War Movement, The Shell to Sea campaign, Anti-Globalisation and the No to Lisbon campaigns. It’s Unions, NGOs and lobby groups and the only leftwing think tank, TASC, provide representation, campaigns and detailed policy documents for a broad array of workers, but at the moment do not provide a co-ordinated front.
But Ireland, a small island on the periphery of Europe with a population of only four million within it southern borders, has a tendency to see itself as unique. It’s self image is one that allows it to portray itself as having more importance and differences than it would seem to have considering its size and position, history and traditional political structure. It also has a tendency to talk itself up, imagining itself dipped in some sort of magic fairy dust that allowed it to top every indicator the Economic Intelligence Unit could formulate. During the scally years (the period between 2000 and 2007 when economic growth was no longer based on growing exports and productivity but a credit and housing boom spurred by government tax breaks to the construction industry) of “Celtic Tiger”, Ireland regularly was listed by magazines like The Economist as one of the best places to live, where the population were the happiest, which had the highest per capita growth in the EU, the fastest growing economy, the best conditions for attract foreign direct investment, the lowest corporate tax in Europe and where in 2004 the combined worth of the top 100 richest Irish individuals was the equivalent of one fifth of Ireland’s GDP. In the United States, the 100 richest Americans were valued at just one twentieth of all US economic activity. These entrepreneurial giants from our Lilliputian Island, which had been a British colony for 800 years were now buying up expensive hotels in London and New York, investing in football teams, race horses and extensive property developments in far-flung places like Dubai.
And then the crash happened. The property bubble upon which a good proportion of the Irish economy relied collapsed, and we were still unique. reland was the first country in the Eurozone to enter recession. We now have the highest unemployment in the OECD, the highest deficit in the EU (higher than Greece), we provided the biggest bank bailout in Europe in terms of the level of indebtedness placed upon the individual taxpayer and have the highest drop in house prices. We also might have the largest number of unoccupied houses – no official figures exist, but the country is littered with ghost estates and recent estimates have placed the potential overhang at over 100,000. We’re also unique in the EU by being the first to impose austerity measures, the first to cut social welfare payments, public sector pay and jobs in the public service, the first to cut… the list goes on.
These measures have brought about protests and industrial action, anger and resentment towards those still in government who oversaw the policies that are considered to be largely responsible for the scale of the recession in Ireland. However, despite a rather naked class war-style campaign – involving much of the media, the not inconsiderable help of the Ireland’s state funded Economic & Social Research Institute and the government – against public sector workers in particular in an attempt to reduce pay across the economy, much seems so far to have been tolerated too. In April 2009 after the first emergency budget in which cuts were imposed the Irish Times reported: “Speaking at the Irish League of Credit Unions conference in Killarney on Saturday, Mr Lenihan, the Minister of Finance said other European governments would not have been able to impose the kind of pain the Government had. In France, you would have had riots if you tried to do this”, he said”. Since then the pain of austerity has been meted out to Greek workers, and their response was to riot. In February 2010, the Greek protesters chanted “we are not Ireland, we will resist”.
Why could Brian Lenihan speak so confidently? The reason is complicated, of course, and there are historical, cultural, social and political reasons for this too. But the main reason is we have been unable to face up to how Ireland is economically structured and we have a less well defined Left identity because of that. Generally, those who are interested or involved in leftwing politics in Ireland, but who are aware of the history and politics of the left in other countries think that Ireland is unique. The left in Ireland has consistently been uniquely small, uniquely marginal, and uniquely weak. Ireland is a country that has shown rebelliousness but not is not known for its political radicalism. However, in other nations with strong Catholic oligarchs the left is considerably larger and stronger – even though in the case of some they have for a time been controlled by fascist dictatorships (Although I acknowledge that those two things may be connected). These include Portugal, Italy, Greece and Spain, all countries that today are grouped together as the economies on the periphery of Europe considered by the terms of the Maastrict Treaty to be prone to high deficits and weak growth. During the era of cheap credit these previously debt- prone economies surged ahead, but such development was built on air, and the export-led economies of France and Germany benefited from a rising of incomes in these countries (A recent open letter written by a group of economist and organised by The European Trade Union Institute stated “the loss of competitiveness by Greece and a number of other countries, including Spain and Ireland is the mirror image of an increase in relative competitiveness by others, notably Germany, Austria and the Netherlands. The latter countries could not have increased their net exports without the faster demand expansion in the former group, which, it is often forgotten, were also responsible for much of Europe’s economic and jobs growth in recent years, while demand and output growth in the surplus countries has been sluggish. The problem is symmetrical and the solution must be as well.” ). Once the means of that development was cut off, however, the economies are left to freefall.
Government officials in Ireland in recent times have tried to stress that unlike those countries they have done what was required of them within the growth and stability pact. They have, by their own reckoning, impressed the markets by imposing austerity through cuts in government spending and increased national ‘competitiveness’ by encouraging the reduction of wages across the board. But many analysts from outside Ireland still put Ireland in that group, now called PIIGS, the extra ‘I’ referring to Ireland. This is because of the high cost of servicing a deficit that increased to 14.3% recently because the EU Commission considered that money used to bail out Anglo Irish Bank, a relatively small Merchant bank geared towards property development (and which stands accused of sever malpractice and a too strong connection to Fianna Fail, the main party in government) represented spending and not investment – the money put into this bank will never be seen again. In addition, Ireland is considered part of that group because it has provided no plan for developing further growth with which to repay this debt. Instead it has chosen to deflate the economy, an action that has a disproportionate effect on the low and middle income earner. This could potentially trigger a debt crisis, as we join Greece, Spain and Portugal as one of those countries to have its credit rating once again graded down. The market they were supposed to have placated might yet start to swoop on us through the contagion effect where a country is considered not to have the means to repay its debt.
In a New York Times blog posted at the end of April it stated that officials from Standard & Poor’s said: “…the main reason for downgrading the debt of Greece and Portugal was the prospect that forced austerity packages would be an even bigger drag on economic growth. It is the most vicious of circles: stagnating economies are forced to cut back more, which reduces their ability to generate revenue and thus pay off their debts. As part of the euro zone, these countries do not have the ability to print their own money to stimulate growth and bolster exports, so increasing debt and an increasing prospect of default result.”
In the sovereign-debt crisis which has led to the increase of the spread between Irish bonds and those of Germany recently, Ireland is considered to be next in the firing line after Greece, Spain and Portugal. The only thing keeping it at bay at the moment is the fact that we have large cash reserves built up through earlier rounds of borrowing. The National Treasury Management Agency (NTMA), the authority responsible for manages assets and liabilities on behalf of the Irish Government, has decided to skip next months bond issue in the hope that the market will stabilize. So, while we try to consider ourselves as different from these economies, others outside of Ireland keep on lumping us together. There is one difference however, that can be made between these countries and ours. While the Fianna Fail government after the ending of the Second World War famously offered their condolences to Germany on the death of Hitler, Ireland has never had a dictatorship. Yet it has remained in the grip of a conservative elite that has retained a hold on political, economic and to a degree social power since the formation of the State in 1922. Maybe Ireland , having already shaken off the yoke of one oppressor and heading straight into a civil war, was not in the mood to accept a dictatorship, despite the machinations of General Eoin O’Duffy. However, it could also be that there was no need for it.
The outcome of the Civil War, we are commonly told, is the reason why Ireland is dominated by two factions of the Right, Fine Gael, who won the Civil War and formed the first Cumann Na Gaelheal government and Fianna Fail which was founded in 1926 by Éamon de Valera, who led anti-Treaty Sinn Féin during the Irish Civil War (1922-23). The third element of Irish political life during the establishment of the Irish state was The Labour Party, which was formed in 1912 by James Connolly as the political wing of the Irish Trade Union Congress. They provided the party of opposition when Dail Eireann first sat, as Fianna Fail did not recognize the new government. To get an essence of this time from a left perspective it is worth reading Ralph Fox’s account of the political and economic situation in Ireland in 1924. But what is singular about it is how he illustrates that the new Ireland was an attempt not to change anything, but to keep the system as it had been under British rule. He highlights the construction of a false identity – that of the Irish people as a race apart who have successfully won their independence from the Empire, and by creating a Republic have also shaken off the economic structures and conflict that came with them. Accepting the image and not the reality continues to blinker the left to this day.
We can see that the people who moved into power were at the top of the Irish capitalist class and those in the first Cumann na nGaedhael government who supported them. But what is highlighted here also continued in some form in successive governments. Ireland was a colony, and after Independence the colonial relationship with Britain continued, and to some extent still does. When Fox says “and now they depend upon England and upon finance for support” he is pointing towards how that structure was maintained. Michael Burke an economist who has been writing on the Irish economy recently put it this way: “At the time of Ireland’s Partition, 98% of the South’s foreign trade was with Britain, chiefly the export of live cattle. The entirety of Irish official economic policy was for decades aimed at maintaining the dominance of the big farmers who served the British market. However, diversification was forced on Ireland, not least by Britain’s relative decline.”
Ireland’s self image is one that allows it to portray itself as having more importance and differences than it would seem to have considering its size and position, history and traditional political structure
It is also not by pure chance that partition happened the way it did. As Burke also points out Britain retained Belfast and the North East, which had developed much the way of industrial centres such as Liverpool, Glasgow or Manchester had: “Shipping, linen and, latterly, aircraft appeared to place Belfast on the same footing as the industrial centres of Glasgow, Manchester and Liverpool with which it traded. It was wholly unlike most of the rest of Ireland, even the nearby counties in the North, which mainly rested on agriculture. Most of Ireland, it was often said, had been cleared of its people to make way for England’s cattle. As a result the majority of Ireland, the oldest capitalist colony was also an archetypal one.” So the south was left with a largely agrarian capitalist base, one dominated by the large farmers who were favoured, as the Irish orthodox historian Mary E. Daly puts it “at the expense of smallholders and increased spending on unemployment, housing, or industrial development was ruled out.” This favouring of the large farmer can be seen as part of economic policy of the Free State. For a more detailed discussion of this I direct you to Conor McCabe’s work in which he shows how Ireland’s economic policy in the Free State was a continuation of the status quo that existed prior to partition (www.irishleftreview.org/2009/11/30/lights-city/ ). However, in this context it is worth providing a small quote from his article: “In 1924 Irish exports stood at £51.58 million. £50.59 million was comprised of trade with Britain, 86 per cent of which was made up of agricultural, food, and drink sales. The minister for agriculture, Patrick Hogan, stated in 1924 that “national development in Ireland for our generation at least is practically synonymous with agricultural development.” However, what Hogan meant by “agriculture” was not tillage, nor even mixed- farming, but cattle and grazing. Furthermore, the maintenance of the already existing state of affairs is not development. It is exactly what it says it is: the status quo as economic policy.”
That this policy became the mainspring of later economic policy can be seen in one singular fact: Ireland’s new currency, the Punt (Irish pound) remained on one-to-one parity with Sterling until 1978, and we were the last of the former colonies to finally make the break. As Patrick Honohan, an economist who is widely considered to be an expert on Irish banking – and is the current Chairman of the Irish Central Bank – put it in a recent paper: “For over half a century after Independence, Ireland maintained a one-to-one currency peg with sterling. At first, this was not an unusual position for an ex- colony. But, one-by-one, each of the former countries of the sterling area abandoned such a link, typically very soon after independence. Some countries were motivated either by economic nationalism or a desire to exploit the apparent pro-growth potential of an autonomous currency. The break in other countries was driven by unsustainable expansionary money-financed fiscal policy. By the end of 1978 Ireland was the only former sterling area country to have maintained an unchanged parity since independence.”
While Honohan details the qualms various Irish officials down through the years had about breaking the Sterling link he does not explore how this illustrated a continuity of the colonial economic structure. This is despite that fact that he all but spells it out. In another article, “Using Other People’s Money: Farewell to the Irish Pound”, written for History Ireland he points out that it was not until 1942 that Ireland established a Central Bank with extensive powers, preferring up to then to work with a currency commission “on the long-established model of British colonies”. These new powers, however, were little used and “the one-for-one sterling parity of the Irish pound never came under threat”. Honohan then goes on to ask whether such a link was a good idea since it blinkered Irish exporters from seeing opportunities in new dynamic markets further afield. What we have seen is the continuity of an economic policy which favours those who had the most economic power within the country, one which is based on the pre-existing colonial structure of the economy and which benefits an oligarchy of large farmers disproportionately.
In Ireland in 2010 it is typical to hear complaints about how the current economic crisis was brought about by Ireland’s unique form of crony capitalism where a cosy relationship between certain members of the elite and politicians led to short-term interests taking over from the greater good of the country. In his leader’s speech at the Labour Party conference in Galway on the 17 of April, 2010, Eamon Gilmore made the following point: “We could spend all night complaining about why and how it happened. How greed was allowed to win out over the generous instincts of the Irish people. Why self-interest was promoted over our natural inclination for friendship and working together. How an arrogant, and inside, clique hijacked our country.” It is a point of view that very few would disagree with, and it was a political speech in which he announced his party’s desire to lead the next government (A suggestion that is now less implausible now that they are ahead of Fianna Fail in the polls – just). But its lack of depth mirrors a general analysis among the ‘liberal’ left that chooses to personalize the crisis as the errant ways of particular politicians and business people. In his recent bestselling book on the cause of the crisis, The Ship of Fools: The Sinking of the Celtic Tiger, Fintan O’Toole provides the reader with some background to the “Celtic Tiger” by showing how in the mid 90s the economy was performing well prior the first FF/ PD government coalition in 1997. He then says that the figures of Chalie McCreevy, Mary Harney and Bertie Ahern, through their “sheer idiocy” and “macroeconomic illiteracy” managed to blow this boom. “This stupidity was not about a lack of intelligence: McCreevy, Harney and Ahern were all very bright people. It was induced by a lethal cocktail of global ideology and Irish habits. On the one side, so-called free market ideology held government in contempt. When McCreevy boasted of spending money when he had it and not spending it when he didn’t, he was expressing a deeply held belief that it was not the business of government to interfere, for good or ill, in the workings of the economy. More broadly, if you believe, in accordance with the doctrines that dominated official thinking, that government itself is essentially evil, the very idea if using political power to effect the long-term transformation of a society is anathema.”
This analysis, designed to produce clarity, actually creates a smokescreen for how economic power works in Ireland. It creates an alternate reality where it is “foolishness” of individuals, or the blindness of their particular ideology (as opposed to the majority of politicians in Dail Eireann who shared it to a greater or lesser degree) that was responsible for taking what was a fundamentally sound economic system and wrecking it for everyone. What it fails to do, and what so much analysis on the Irish left fails to do, is too look at the reality. To see the power structures, the class dynamic, the interplay of forces that produce a similar outcome time and again. We are told a lot of things about Ireland’s economy. How we are a small open economy, a unique case in Western Europe which has to be treated differently. We can’t stimulate our economy because any money pumped in would be spent on imports. How, in contrast to the North of Ireland we were not able to build an industrial base, so leading to uneven capitalist development with taking into account the interplay between industrial and agrarian capitalism. We are the victims of “Irish habits” and “crony capitalism” but no explanation or curiosity about how these developed is provided.
If the Irish left is to respond to the current crisis in a coherent way, and if a solidarity to be found which can build trust across the working class and challenge those currently in power and stop them acting only in the interests of those who they have always supported, then we have to look at the reality and build from there.