Jun 06 2014

The ECONOMIC SITUATION IN IRELAND AND MARTIN McGUINNESS AT THE ROYAL BANQUET

Emancipation & Liberation is  publishing two articles from the latest issue of Socialist Democracy (Ireland). There is much talk of an economic ‘recovery’ in the UK by George Osborne. The first article examines another  the claims of another economic ‘recovery’ in Ireland. The second article  looks at the continued political degeneration of Sinn Fein in Northern Ireland, highlighted by Martin McGuinness trip to the royal banquet at Windsor castle, and links it to Sinn Fein’s electoral ambitions in the South.

 

1. HOW REAL IS THE RECOVERY?

 

How real is the recovery? From a socialist point of view, there is no direct connection between the possibility of revolution and economic ups and downs. Workers may revolt out of desperation when their backs are to the wall, but equally the confidence that comes from a boom can inspire revolt.

The issue is still important, partly because different strategies apply in boom and bust and also because socialists are divided about the nature of the crisis. Some groups see the credit crunch as part of the normal business cycle, Socialist Democracy believe that the crisis of capitalism is systemic, with no end in sight.

 

Boom

There is no limit to the jubilant optimism on the capitalist side. The government claims a new era of Irish freedom and independence following the supposed exit from the troika. The central bank predicts a period of growth, only to be outdone by the ERSI’s more expansive claims. Dublin housing prices are booming again. In the UK and US the economies are growing and Europe is out of recession.

However there are dissenting voices. Economist Morgan Kelly, in an off the cuff remark, dismisses all talk of a recovery and claims that the reality is a slow drip feed of low interest funds from the European Central Bank. Any stress test of Irish banks would mean further stress on domestic firms and the collapse of small and medium sized enterprises. In any case the reality of everyday life is further austerity budgets, an extra water charge and a bailout debt extending until 2054.

 

Eurozone tensions

Finance minister Noonan claimed that the extra debt taken on in last year’s bailout would shrink to nothing over time because of inflation. Now the main concern in Europe is around deflation and the reality is that the Irish debt is not an imaginary number but a real pressure on the Irish working class and the economy. The 2013 deal was “noted” by the European Central Bank rather than endorsed by them. Some member countries have continued to voice concern that the arrangement is illegal and a proposed resolution is that the Irish Central Bank sells bonds early, forcing up interest rates. This is all part of an ongoing tension in the Eurozone, where the insistence that bondholders be protected from any consequence of their recklessness has to be balanced against the need to prevent sovereign debt turning into an overall euro debt that might bring the whole house of cards down. The fact that Greece is now trading bonds at relatively low interest rates despite the lack of any real change in its economy is a indication that speculators now assume that the European Central bank will cover debt and also draws attention to the illusory nature of much of the Irish recovery.

In Europe there is a great deal of resentment of the ECB subsidizing a 12.5% corporation tax rate, especially when it turns out that the effective rate is close to zero and that a central element of the Irish recovery is its use as a tax haven, producing almost nothing but a branch office and kickbacks to the property speculators.

There is much dispute about the relative weight of different elements in the proclaimed recovery, but all commentators, no matter how optimistic, agree that an Irish recovery is absolutely dependent on a more general recovery which is very much in doubt.

 

Capitalist strategy

Rather than speculate it is possible to examine the wider successes and failures of capitalist strategy.

At the start of the collapse the main strategy was to nationalise the debt as sovereign debt, with the immediate outcome programmes of mass austerity justified by the debt the working class now found itself in possession of. There was much talk of rebalancing the economy to reduce the weight of finance capital in relation to manufacturing capital. An unstated aim of austerity, and its main effect, was to reduce the cost of labour in terms of overall wage rates, pensions and the social wage of state services while simultaneously opening up a mass privatisation of services and natural resources.

Quantitative easing – fictional capital produced by government decree at almost zero interest rate has been a factor in US and UK recoveries and is being considered by the ECB in an attempt to overcome economic stagnation. (The 2013 Irish loan extension had something of the same effect as QE in that it provided a ready supply of money at low interest).

The sovereign debt has not gone away and remains an immense economic drag. Irish banks are still extremely weak. A wave of privatisations has transferred large sums from public to private hands and this will lead to an increased cost for services. In Ireland a vast range of resources have been swept up by US speculators – the entire NAMA holding in the North went at a quarter of its book value. It is true that wages and pensions have been driven down, but there is a long way to go if this process is to ensure a high level of profitability.

Of all the strategies employed by capital one mainly underpins the current limited recovery. That is the strategy of quantitative easing and the associated bank and sovereign debt guarantee by the ECB.

This is of course the exact opposite of rebalancing. Finance capital is roaring ahead, feeding a bubble of speculation and yet another property bubble.

The next recession is on its way, and this time there will not be the same reservoir of public capital available to cushion the blow.

Opposition

Yet there is no refutation of the bizarre claims of a new prosperity because there is no opposition. Despite the depth of the crisis, the Irish ruling class is able to sail through it with only a few flunkies guilty of any wrongdoing. There is no smoking gun, says Irish Central bank governor Patrick Honohan, despite standing in a battlefield of smoking guns.

The judicial process refuses to find anyone guilty. Judges admit that the crimes occurred, but direct juries that they are the fault of the system. It would be unfair to punish anyone for the nightmare working people have suffered. They claim there is no evidence implicating individuals, yet the investigations show a ruling class that acts as a criminal conspiracy. Decisions that shape the lives of the workers are taken informally by a clique, with no notes and no chain of evidence.

What makes opposition so difficult is that everyone in the establishment is in the clique – and that includes the trade union leadership. The groups on the outside won’t break with labour and the union bosses and scandal follows scandal with no response.

The capitalist system in Ireland and across the world has not recovered from the great depression. The limited recovery that we see has been built around the same motor of financial speculation that produced the crash. Many of the mechanisms of austerity that have been imposed on workers have yet to feed through.

Workers are crushed by feelings of desperation and anger. They lash out in elections but at the same time cling on desperately to their traditional leaders (or to con artists such as Sinn Fein mimicking a left party) and to the belief that bust will be followed by recovery and a new dawn.

According to capitalism the recovery is here. Yet for workers fresh pressures, charges and poverty are the reality. Real recovery will only come when workers take charge and establish a socialist society no longer tied down by the need to feed the profiteers, the bankers and the speculators.

John McAnulty

(this article was also posted on the Socialist Democracy (Ireland) website at:-  http://www.socialistdemocracy.org/Bulletins/SDBulletinMay2014HowRealIsTheRecovery.html)

 

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2. KOWTOWING TO THE QUEEN

If there is one image (though there were so many) from the state visit by the Irish president to Britain that demonstrates the complete debasement of nationalism it is the sight of members the Irish elite and British royal family happily singing along to a rendition of The Auld Triangle during a special gala concert at the Albert Hall. When royals can sing revolutionary songs it is a sure indication of how far the threat from upheavals in Ireland to the establishment order of things has receded. The final symbolic nail in the coffin of radical Ireland will come in 2016 with British royals taking part the in ceremonies to mark the anniversary the Easter Rising. Such a prospect would probably have even been beyond the satirical vision of a Brendan Behan. Yet this is the political reality of the present.

The overriding theme of the state visit, the first official visit to Britain by a head of state since Irish independence in 1922, was the establishment of “normal relations” between the two nations. The visit by President Higgins, reciprocating one made by Queen Elizabeth II to Ireland in 2011, is presented as the final symbolic step in this process. But what is the nature of these normal relations? The traditional republican view was that normal relations could only be established after Ireland was unified and independent. A watered down version of this was reflected in the official ideology of the southern state and had expression in things such as articles two and three of the Irish constitution. While the Irish ruling class had long abandoned 1916 type Republicanism it still felt it necessary to make gestures towards it particularly during periods of heightened anti-imperialist sentiment. This was the reason why the state visit had taken so long to come about.

That it is taking place at this time is evidence of the degree to which political consciousness amongst the Irish people has declined. A major factor in this is undoubtedly the defeat of the Provisionals – the last major political movement that claimed adherence to traditional republican principles. The sight of Martin McGuinness, a leader of a party that was once committed to ending Britain’s involvement in Ireland through force of arms, attending a banquet in Windsor Castle in honour of the British Monarch is symbolic of how compete that defeat has been. One of cornerstones of the new normality is the acceptance of partition and the direct control of part Ireland’s national territory by another state.

Going hand in hand with the acceptance of the division between north and south there is also an acceptance of the sectarian divisions within the northern state. The concept of the “two communities” has become the accepted basis of political organisation in the North and informs the operation of the system of administration brought into existence by the Good Friday Agreement. Despite claims of power sharing what these institutions and mechanisms are really about is the distribution of sectarian patronage. Of course its sectarian nature means that there cannot be an equal sharing between the “two communities” – the unionists must have the upper hand. It is the necessity for this advantage to be demonstrated that explains the agitation by the unionist troika (Unionist parties, loyalist paramilitaries & Loyal Orders) around such issues as flags and marches. The acceptance of this schema also enables the British government to present itself as a neutral negotiator between two conflicting groups while at the same time consolidating Northern Ireland as part of the British state.

Also, the British interest does not stop at the border. Indeed, during the state visit the North was largely a sideshow with most of the emphasis being placed on the links between the British and Irish states. This was set out most clearly in the address by President Higgins in the City of London in which he repeated often quoted fact that trade between Britain and Ireland (estimated to be €1 billion every week) is greater than that between Britain and Brazil, China and India combined. Higgins also praised Britain’s role in securing the Troika bailout for Ireland and in providing a separate bilateral loan of €3.8 billion. For this Ireland was “deeply grateful”.

Of course this was not an altruist act by the British state to help out Ireland. Rather it was a means to protect the massive commitments that British financial institutions had in Ireland. The loan also carried a significant interest rate and was dependent on the Irish government signing up to the punishing Troika austerity programme. The British state also contributed indirectly to the bailout through its support of the RBS owned Ulster Bank (the third biggest financial institution in Ireland) that has so far racked up losses of £16.6 billion. All of this flies in the face of the claim in the Downing Street Declaration of 1992 (the blueprint for the current political settlement) that Britain has no selfish economic interests in Ireland.

Another mechanism for the increasing links between the states has been the British and Irish states membership of the EU. This has provided a platform for common political positions on the internal workings of the Union and its external relations. We see this over the current crisis in Ukraine in which the Irish foreign minister resembles a modern day Skibbereen Eagle in his denunciation of Russia. The EU has also provided the basis for military co-operation, with Irish soldiers serving under British command for the since time since 1922 as part of a mission to Mali.

What the state visit to Britain, and all that goes with it, represents is the utter bankruptcy of Irish nationalism and the complete subordination of the Irish state to the interests of imperialism. The weak gestures towards a democratic programme such as national self-determination or military neutrality, that for many years were the political currencies of half-baked bourgeois radicals like Michael D Higgins, have been cast aside as the Irish ruling class enthusiastically embraces this role. It is comprehensive evidence that the Irish capitalist class cannot achieve even the most basic democratic tasks. This is why the cause of Ireland is, as James Connolly asserted, bound up with the cause of labour and the working class.

 

J.M. Thorne

(This article was also posted on the Socialist Democracy (Ireland) website at:- http://www.socialistdemocracy.org/Bulletins/SDBulletinMay2014NationalistIrelandsDeadAndGone.html)

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