Jun 12 2013

IRELAND – UNION STRATEGY, KEYNES AND THE DEBT

This article, by James Fearon, is from the Socialist Democracy (Ireland) website. It highlights how the Irish Congress of Trade Union’s (ICTU) support for Keynesian reforms is tied to a strategy to make workers pay for the ruling class’s debts – only more slowly than the incumbent Fine Gael/Labour coalition government.  

In the UK, Ed Balls has flagged up Labour’s acceptance of current Tory attacks on our class, and his willingness, if Labour is elected in 2015, to go down the same road with further attacks on universal benefits. The TUC’s thinking goes no further than that of the ICTU. Only when pushed does it mount any actions – such as on November 30th, 2011 over pensions. However, these actions are merely token, as the TUC’s ignominious collapse in the subsequent days highlighted. The TUC is trapped in the same Keynesian thinking as the ICTU.  It has no wider vision than a return of a Labour government, hopefully committed to  some Keynesian economy boosting measures, so that, as in Ireland, workers are given longer to pay off the ruling class debts. With such miserable aspirations, it is unlikely that the TUC will be able to shift Ed Miliband and Ed Balls. Their appeal is directly to the  banksters and other corporate capitalists –  ‘You can trust Labour to continue the austerity offensive and the welfare counter-reforms.’

David Begg, General Secretary of ICTU whipping up worker enthusiasm

David Begg, General Secretary of ICTU whipping up worker enthusiasm

The Irish Congress of Trade Unions (ICTU), and reformists in general, have been particularly animated recently over flaws that have been found, in the research by Reinhart and Roghoff, on the effect of austerity on the fiscal multiplier. They have taken this as evidence that ‘austerity isn’t working’ and that the possibility exists that they may still receive a lifeline from a slower, less virulent capitalist attack on the working class. If this ‘Better, Fairer Way’ to pay off the banksters’ debts should be adopted by the political elite in any meaningful way ICTU could claim that the slightly reduced pain of a slower austerity was their doing, and this in turn would provide them with some semblance of a fig leaf to cover their shame.

A former senior advisor to Citibank was quoted favourably in union literature recently when he expressed doubts about the efficacy of austerity based on figures which show a larger than predicted fiscal multiplier of €1.6 in economic shrinkage for every €1 removed through austerity measures. Figures from the IMF, based on data from 28 countries between 2009 and 2013, actually put the multiplier as high as 1:1.7 and Keynesian economists, the TUC and ICTU have all seized hungrily upon these figures. While trade unions exhibit a touching, perhaps over zealous, faith in these figures, the findings are not so readily accepted by the financial establishment.

The IMF’s analysis has been contested by the Financial Times and even by more critical Keynesian economists such as Jonathan Portes and Professor Carlos Vegh. They argue that the figures used are unreliable because they are based on either too small of samples or that attempts to generalise by applying the findings to conditions in widely varying countries would “be an exercise in futility”. The issue is not clear cut and the arguments both for Keynesianism and for austerity are questioned from within both camps. But from the point of view of the working class what these academics are arguing about is what the impact of austerity is on ability to pay down the banks’ debt while ICTU seeks more time but essentially agrees that their members should voluntarily enslave themselves for decades to attempt to solve the capitalist crisis.

The Keynesian arguments accepted by ICTU are in some quarters winning a hearing, but it is worth bearing in mind that increased government spending does not restore capitalist profitability, it undermines it. That was the Reaganite, Thatcherite argument that saw layer after layer of state industries sold off and destroyed. Like Roosevelt’s ‘New Deal’, it will not solve capitalism’s essential problem. Indeed as an antidote for the capitalist crisis Keynesianism is not opposed to austerity per se. Paul Krugman agrees that deficits and government indebtedness should be brought down “once normal conditions return” and concurs that the bankers’ debts should be paid by the working class eventually, but right now…“is no time for austerity”! In this he is in agreement with ICTU, the Labour Party and reformism in general. They take encouragement from the approach of the Irish government, and the Troika, who have implemented a very pale variety of Keynesianism with the rescheduling of the debt covered by the Promissory note and recent vague promises of investment for jobs.  This approach is a lifeline for the trade union bureaucracy who wish only to re-finance the huge debt the working class has been burdened with, as a method of saving the capitalist system itself and, most importantly, their place within it.

For the working class the question is not academic, it brutally affects daily life, but an understanding of the question on which our union leadership is selling us out is essential. For ICTU’s preferred school of economics, Keynesianism, profit is caused simply by investment but the theory provides no explanation for what causes investment other than “animal spirits”. So rather than base their analysis on Marx’s greatest discovery, the source of profit in the exploitation of labour, and the tendency of the rate of profit to fall, the ‘scientific’ Keynesian basis on which ICTU argues the working class must base its hopes is that government spending must prime the shrinking capitalist system so that the “animal spirits” of wealthy investors can take over and we can  ‘grow’ our way out of the crisis. Indeed this growth is not necessarily good news for workers. Figures show that a recent marginal increase in profitability to be registered in the US is due to a fall in wages. In fact, the capitalist “animals’” best intentions depend on profit, and investment depends upon profitability; no profit …. no investment! As wealth flows from the poorest to the world’s richest it is the US treasury Secretary Andrew Mellon’s observation, from 1929, which is animating the capitalist class; “in a depression assets return to their rightful owners”. The poor can rot! Who recommends that the working class should sacrifice itself to repair such a system?

This capitalist crisis is fundamental and systemic. Investment will only return when profitability returns, profitability will only return when the existing bubble of fictional capital is destroyed, wealth is transferred from the working class to the capitalists and ‘competitiveness’ returns. All of which means Irish workers will be competing with the poorest most oppressed workers in the most lamentable sweatshops of the world. The question for ICTU is – where does that leave the working class? Cutting each other’s throats in an even more vicious race to the bottom!

The Irish trade union leadership lost any remaining tenuous sense of the legacy of Connolly and Larkin and became completely attuned to capitalist ideology during the Partnership decades, when the bubble of fictional capital was expanding and ‘fig leaves’ were relatively plentiful. Propaganda that capitalism had resolved all its contradictions and that ‘boom and bust’ had been conquered became uncritically accepted. Now, by their acquiescence to repaying the banksters’ debt, they accept that the system is trying to repair itself through the blatant daylight robbery of working people world wide and they seek only to slow this process down in order to facilitate their own survival. We are in an era of heightened class war and bourgeois liberals and the trade union leadership alike shudder at the prospect of the coming fight and both wish to withdraw; the former from the realisation that ‘strong’ governments are required to facilitate capitalism’s need to impose austerity and the latter because they, like the liberals, dread the end of the cosy years of relative class peace.

The problem for European capitalism is political. They need to be able to decisively administer austerity and for that they need a political force equal to the job in countries where there is a large working class with historic struggles behind them. In Greece, Portugal, Italy, Spain, all with a history of Fascism, and the country that has the pro-austerity contingent most worried, France, they must produce strong political movements capable of defeating the working class. This has not happened, hence the growing tendency among some to look again at Keynesianism, they seek a hiatus while they find, or consolidate, their Thatchers, Reagans and Pinochets – that’s all!

The same political challenge faces the working class, which must also produce a political tool that will allow them to clearly analyse and identify capitalist objectives and organise defence against these assaults and eventually counterattack. Such a political organisation must by the nature of the tasks it faces be revolutionary. It will not be built overnight but the struggle to do so must begin, and it can only begin when we clearly identify the enemy, muster our forces and turn to face them. Seeing something progressive in a Keynesian capitalist survival tactic is to be blinded by liberal ideology.

Despite the layers of theory, class interests are expressed clearly by everyday reality, but this is what the entire ICTU leadership refuses to countenance: that what workers are paying is NOT working class debt! That hospital patients, recipients of home help services, teachers, nurses, the entire toiling population and most tragically our fast disappearing youth should not be paying for the capitalist crisis! In the battle against this robbery a token one day general strike will not be enough, we face a determined enemy and we have a leadership determined to betray any fighting spirit that emerges; they have the ability to extinguish any flame that flickers into being, we should be cautious. When workers do take industrial action they should not be blinkered by ICTU’s illusions in a ‘better fairer way’! The

Only by defying trade union bureaucracy can workers' demands be met

Only by defying trade union bureaucracy can workers’ demands be met

fairness they talk about is simply a more pragmatic way to facilitate the Troika’s crimes, to demobilise resistance, and to more efficiently transfer workers scant livelihoods into the pockets of millionaires and billionaires.

To begin the fight-back workers must resist the introduction of all austerity measures and fight to repudiate the bankers’ debt. Once they do, they will be betrayed by their leaders. The feverish attempts to resurrect Croke Park II shows this. The leadership must be replaced. To facilitate change at the top workers must organise from the bottom up. This struggle must organise across all unions and support and act with community and single issue groups, building a movement that cannot be sectionally isolated as public or private sector, industrial or service sector, unemployed, pensioner or small farmer. This resistance can only come from the rank and file taking matters in to their own hands, actively resisting the imposition of all austerity measures, actively refusing to participate in the “tainted” tasks of administering those measures. By building a cross-union organisation activists can facilitate the practical defence of all services, demand an unequivocal repudiation of the banksters’ debt and pose the question suggested by a general strike, the question of political power.

25 May 2013

(This article first appeared on  http://www.socialistdemocracy.org/RecentArticles/RecentUnionStrategyKeynesAndTheDebt.html)

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2 Responses to “IRELAND – UNION STRATEGY, KEYNES AND THE DEBT”

  1. RCN says:

    “This resistance can only come from the rank and file taking matters in to their own hands, actively resisting the imposition of all austerity measures, actively refusing to participate in the “tainted” tasks of administering those measures.”

    This sounds quite revolutionary and I agree with the Idea but the next part talks about cross union action which I have serious doubts of ever happening in a truly meaningful way.

    I have always believed that any revolution in the UK would take place without the Unions. The Unions have always propped up the capitalist system with their own existence in mind, and are not known for revolutionary thinking.

    “By building a cross-union organisation activists can facilitate the practical defence of all services, demand an unequivocal repudiation of the “banksters’” debt and pose the question suggested by a general strike, the question of political power.” 


    This at best is wishful thinking. Whilst we have seen the Unions getting involved in the rhetoric of defiance against the cuts and even in the organising of one day strike actions, this is clearly not enough.

    The left needs to get organised in order to offer a genuine alternative to capitalism and I believe that we have started a process in Scotland that could eventually lead to the reformation of socialists across the spectrum and across the UK.

    John Lanigan (RCN)

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