In October I was invited to speak at a meeting organised by the Glasgow South branch of Left Unity on the subject of workers’ cooperatives. The post below is the first part of the text on which the speech delivered was based. I would like to thank the comrades for the invitation and for the couple of pints in the pub afterwards.
The first thing I want to do is look at two problems to which I think workers’ cooperatives can play an important role in providing an answer.
In 2008 the Irish banking system was on the verge of complete collapse. It had lent exorbitant amounts of money to commercial property development and for the construction of houses. Not only finance but employment and state revenue became overly dependent on construction. When the price of houses rose beyond a certain point, and when the commercial property market became saturated, the over-extension of property developers became evident in bad loans that bankrupted the banks.
This was an international problem because much of the financing of Irish banks came from Britain, the US and Germany for example. The bankruptcy of the Irish banks would thus have had severe repercussions for investors in these and other countries, including the financial institutions in these countries.
To save the Irish banking system, to bail out the native bankers and foreign investors, the Irish Government launched a bailout of the banks through a state guarantee of all their liabilities, worth around €440 billion in an economy nominally producing €154 billion a year. It was declared ‘the cheapest (bailout) in the world’ by the Irish Finance Minister. This could not possibly be afforded and has so far cost an estimated €64 billion, although the exact figure is still a matter for development.
This bill and the huge budget deficit caused by the collapse of construction resulted in a series of attacks on working class living standards involving seven austerity budgets consisting of a variety of tax increases, cuts in public services and investment, the robbery of workers’ pension funds, massive unemployment, emigration and lots of praise from around the world at how well the Irish swallowed the austerity medicine. From poster boy for the boom the Irish have become poster child for austerity.
In the following election the ruling Fianna Fail party was badly mauled and a coalition of Fine Gael and Labour Party was elected on the promise of a ‘democratic revolution’ and by Labour the promise it would reign in Fine Gael. The vote was a choice between ‘Labour’s way or Frankfurt’s way.’
In truth however no one could really be surprised that this coalition continued and intensified the policies of austerity began by Fianna Fail. That anyone thought differently demonstrated only a very low political awareness.
On the ‘left’ 5 United Left Alliance candidates were also elected and 14 Sinn Fein TDs out of a total of 166, although Sinn Fein had also voted for the bail-out.
In 2012 the Irish State was compelled to hold a referendum on the new EU Fiscal Compact that limited state deficits and debt. It basically required signing up to continued austerity which is why it was called the ‘austerity treaty’. Despite the unpopularity of austerity it was approved by 60% to 40%. In my view a crucial reason for this was the complete lack of a convincing alternative.
What was the alternative proposed?
This consisted of a number of elements – repudiating the debt, opposing austerity, taxing the rich, and increasing public expenditure in order to improve public services, boost employment and further economic growth.
There are two points to note about this alternative – first it doesn’t change the nature of the economic system, it is what is called Keynesianism. This does not mean that socialists should not support some of these measures, or point out the hypocrisy in their not being implemented. But the question is, if the problem is capitalism and this alternative doesn’t threaten the system then quite obviously it cannot be a solution.
The second flows from this, because if it isn’t a solution would it actually work? I’ll just take two examples from this programme – why on earth would the rich allow their wealth and income to be taken off them? And how then could the state increase public sector investment when it was heading towards budget deficits of over 13%?
This illustrates a deeper problem with looking to the state as a solution. This is because the burden placed on Irish workers was not simply, or even mainly, carried out by the banks and property developers. It was the State that made their debts the debts of the Irish people and it has been the State that has increased taxes and cut services, making their own particular contribution to cutting wages and increasing unemployment.
Since the state is a capitalist state, funded and staffed at the highest levels by the propertied classes this can really be no surprise. The actions of the capitalist state are not therefore the answer. Not only does it not have any interest in providing a solution but it is incapable of being the solution. State ownership, bureaucratic ownership, is not democratic and is totally unsuited to running productive activities the civil servants that staff it have no knowledge of.
There is no point calling for the state to nationalise the banks – they did and that was precisely the problem!
At bottom this is the root of the failure of resistance to austerity and is why it has not only failed in Ireland but in every other country affected by the financial crash.
The second point is connected to all this. If the Keynesian alternative is not a road to socialism what is the road to it?
The alternative to the view that the capitalist state will reform society is that the state is actually the mechanism for enforcing oppression and exploitation and should therefore be smashed. In this scenario of revolution the oppression of capitalist society breeds resistance which develops into a revolutionary seizure of power by the working class that then proceeds to build a new socialist society. In this society the market is replaced by planning and capitalist economic crises become history.
But how are workers to become aware that their own ownership and control is the alternative? How does it not only come to consciousness of this but is actually trained, ready and able to play this role? How in the middle of crisis is a workers’ economy supposed to rise from the ashes more or less fully formed and present itself as a qualitative advance on what has went before?
Of course in some ways capitalism itself anticipates this planning through the growth of big business with advanced forms of planning within it, increased cooperation between companies that ostensibly are in competition and increased interdependency of different firms and different countries, encapsulated in the term globalisation. This has all been demonstrated negatively through the simultaneous near collapse of the financial system, world trade and economic growth through the credit crunch plus the increased role of the state despite privatisation.
There is however one thing missing from this anticipation of the new society in the existing one and one thing missing from the scenario of revolutionary overthrow.
The missing factor is what the new society, the harbinger of socialism, actually is – the rule of the working class and its allies; the rule of the majority of society in place of the capitalist class and its managers, bureaucrats and politicians who all currently administer its rule.
Where in the anticipation of socialism within existing capitalist society is the growth of workers participation in running the economy, in preparation for taking over complete control? Where are the grounds for workers to build a new society before, during and after revolution? Where is the alternative that would avoid a new version of Stalinism where the State rules society rather than a society ruled by workers subordinating the state? Where even arises the motivation for workers to see that their own rule is the only valid unfolding of their resistance to the exploitation, oppression and iniquity of current society?
How are workers to come to see that it is they that not only can but must take control of society and its productive powers if they do not first take initial steps now through workers’ cooperatives? Are we to believe they will suddenly come to realise through a revolution – an episode of at most a few years – that they must take over the economy? How will they come to seek this as their solution unless many of them have already tried to do it and become committed to it?