The 2013 budget is going to introduce tax increases and spending cuts of €3.5 billion. Michael Noonan smiled when holding up the budget document to the cameras while Brendan Howlin looked serious. Nevertheless RTE reported that Labour TDs were pleased claiming that their fingerprints were all over it. And so they are. Their footprints, where they walked all over many vulnerable sectors of society, are also all over the budget.
There has essentially been only one defence of these austerity budgets and that is that the Government has had no choice. No choice because there is no economic alternative and no choice because the State has lost its economic sovereignty and is basically doing what it is told to by the Troika of European Commission, European Central Bank and International Monetary Fund.
In this budget they have felt compelled to come up with a new defence – it is nearly over. This was trumpeted by Michael Noonan and also claimed by the Labour leader that “It is the budget that is going to get us to 85% of the adjustment that has to be made, and will therefore put the end in sight for these types of measures and these types of budgets”.
This hardly looks credible, which is not good news, because what it essentially means is that the austerity measures implemented have both been insufficient and haven’t worked. The economy has contracted and stagnated even as the austerity measures have been insufficient to bridge the deficit.
For 2012, the deficit has turned out to be around €500 million larger than planned but because of upward revisions to data from earlier years, the deficit target, set as a percentage of GDP, will still be hit. This assistance in meeting the ‘target’ will not be available in 2013.
At the end of 2013 the deficit will be 7.5% of GDP. In 2008 (excluding that related to the banking bail out) it was 7.3% rising to 11.5% in 2009. All the austerity budgets have achieved so far is a reduction of 4% – less than half way to eradicating the budget deficit never mind 85% of the way. Even by 2017 the IMF forecasts the deficit will be 1.8% so the debt will still be getting bigger.
As with all these budgets there have been cuts to capital expenditure with another €500 million reduction targeted for 2013. In 2008, capital expenditure was close to €10 billion. In 2013, it will be under €3.5 billion. Public capital expenditure has been slashed by 66% which wipes out, and more, the so-called stimulus measures announced earlier in the government’s PR/con exercise that claimed to be promoting jobs. This means the infrastructure of the state, economy and society will disintegrate more or less quickly.
The sheer madness of the austerity agenda is demonstrated by the fact that the €3.5 billion in cuts and tax increases will be wiped out before they are even implemented by the €3 billion payment of the promissory notes for the Anglo-Irish bank, which no longer exists, and repayments of €2.45 billion of bonds for Irish Life & Permanent. On top of this there is the rising interest cost of the debt, which will increase from €5.7bn in 2012 to €8.1 billion in 2012-13.
With the debt increasing, even at a reduced rate of increase, the burden of interest payments on it can only worsen. This makes the debt unsustainable. A rising interest burden will be a permanent anchor on growth. This is a problem because the Government is relying on renewed economic growth to get out of the stagnation now in place. The weakness of Irish capitalism means that it must rely on outside forces for this growth. Either that or there is some debt relief to lower the amount of debt and the burden of interest payments.
In the meantime particular groups of the working class will suffer real hardship, living standards will decline or at best stagnate and unemployment will be limited only by continuing emigration. The stresses imposed on society will be expressed in mounting social problems that will often be presented as a simple increase in personal misfortune while increased inequality will coarsen social relations and further weaken social solidarity. The absence of any radical perspective will see reactionary prejudice become common currency.
Once again the United Left Alliance has put forward what it states is a socialist alternative. In substance it is the same argument as that put forward last year but with more detail and some development here and there. There is no need to repeat the analysis presented earlier in this blog including here, here and here.
The ULA is in no position to implement any of its proposals. The purpose of the document must therefore be an educational one. What it teaches is therefore the only useful criterion by which to judge it.
It starts out by claiming to be a socialist alternative and its headline is repudiation of the debt, an end to austerity and the need to invest in jobs and services. All these are undoubtedly the immediate needs of the working class. The problems start when we look to see how it is proposed these ends might be achieved.
The ULA “proposes to take the burden of the crisis off working people, improve their lives and revive the Irish economy.” On the other hand it admits that “the budgetary proposals put forward by the ULA can in no way offer a comprehensive solution to the crisis we face.” How the first claim is reconciled to the second is not explained.
While the debt crisis “resulted entirely from the actions of developers, bankers and the politicians who facilitated them” it is not explained how this can be reconciled to it being “a manifestation of a deep structural crisis of global capitalism.” It is nowhere explained what this latter statement means, how it explains what has happened or how it explains what solutions are possible. The Marxism to which the core elements of the ULA claim commitment is founded on claims to present just such answers but they are not here.
It might, with some justification, be claimed that the precise cause of the crisis is also a cause of some debate within Marxism. Unfortunately any suggestion that a key task of the ULA might be to debate this out so as to inform the politics it espouses would be held up many as a fetish of sectarian or dogmatic individuals who aren’t interested in practically ‘building the movement’, or some other such boorish remark. Instead while (dumbed down) Marxism is relegated to recruitment meetings for novices the vacuum that is the politics presented to workers is filled with Keynesian, that is capitalist, ideas that are the currency of liberals and the leaders of the trade unions.
Let us see some ways in which this is expressed in the ULA economic alternative.
First the ULA proposes to improve the lives of working people and revive the Irish economy but there are no socialist measures proposed that would achieve this. Were the proposals to therefore fail (if by some miracle they were tried) it would discredit what passes itself as socialism while if they were to succeed they would go some way to making socialism irrelevant.
The ULA claims that “the alternative we propose will not be implemented by the current parties in the Dail or by the Irish state.” Yet it proposes that the Irish State increases income tax on the rich, reduces taxation on workers, introduces a wealth tax, introduces a financial transactions tax, increases corporation tax, takes “full control of the banks”, supports small business, invests to create jobs, embarks on a programme of council house construction, creates a new construction company, renationalises all privatised strategic enterprises and establishes a state owned gas and oil company. It declares that “the ULA believes public enterprise and public works must play the central role to redevelop the economy on a sustainable basis.”
The ULA claims that “radical measures that break with the logic of ‘markets’ are required” but the demands on the state above do not do this while it is claimed these measures will “revive” and redevelop the economy on a sustainable basis.”
“There is a need for active struggles to demand policies that prioritise the need for jobs, public services and growth, using public investment and democratic socialist planning to chart a way out of the current crisis.” What sort of struggles? For what policies? And who will we demand this of? How would they deliver on it? What, who and how? Where and when don’t even arise given the vacuousness of this string of words.
In other words – as a vehicle for education – the alternative budget, when it is not mistaken, as we have explained in earlier posts, is simply incoherent.
What is clear is that the ULA has no strategic perspective. It calls for socialist planning, but socialist planning is just another term for working class rule, for the working class controlling society. Yet it proposes the state, the capitalist state, take action in the here and now to solve the crisis and develop the economy on a “sustainable basis”.
This lack of coherence reveals itself in timidity, contradiction and calls for solutions that have already been the means to subordinate and exploit the working class; as when the ULA calls for “full nationalisation with direct public control of the banks” when it is nationalisation and state control of the banks that has been the mechanism to burden workers with the debts of the speculators.
Even when it calls for “direct public control of the banks” this can as easily be defined as the current arrangements as it might by workers control. So how does such a demand clarify anything? How does it educate anyone on what they should fight for?
The ULA is currently undergoing an organisational crisis but its real problems are political. It argues an alternative that is simply not based on the actions of the working class. It is imperfectly aware of this so it substitutes vague calls for action and acknowledgements that what they are proposing is only temporary amelioration.
There is a possible solution to this problem and it involves debating openly and democratically what a socialist strategy should be. As I have said such calls are resisted. It therefore falls to those prepared to do so to engage in such a debate so that we don’t just point out what’s wrong but also say what’s right.