Category Archives: neoliberalism

Ireland – the Apple Republic part 2

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apple-taxWhen a left wing TD called the decision of the Irish Government to appeal the decision that gives it €13+ billion “economic treason” against the Irish public he contributed nothing to clarifying for Irish workers the role of the state, which is precisely to defend big business against that part of the Irish public made up of workers, their families and small businesses, who mostly have little choice but to pay the state’s taxes.

Much better would be a socialist campaign to rally trade union branches, community groups, tenant associations, consumer groups and campaigns etc. to put together their own proposals as to how exactly the €13 billion should be spent.  The purpose would be to demonstrate that the needs of workers should come before those of multinationals and before the reputation and interests of the state and its ‘national interest’.  A campaign that sought to unite with the workers of other countries swindled out of tax receipts by Apple would go a long way to demonstrating that this is not about a race to the bottom that pits workers of one nationality against all others.

This would also allow working people to show, not least to themselves, that they can plan effectively how to spend the money, not just for their own benefit but in the interest of all working people. Its purpose would be to begin to instil a view within them that they should take control of society themselves rather than relying on the state to do the big things for them.

On this count the view expressed by another left wing TD was much closer to the mark.  Speaking in the Dáil Paul Murphy said: “Governments in capitalist societies are but committees of the rich to manage the affairs of the capitalist class. It is as simple as that …. All of the establishment parties represent the rich and the 1 per cent. We need to be rid of this committee of the rich, and we do not need it replaced with a reconfigured committee of the rich.”

The creation of a desire for, and mechanisms to achieve, an alternative to a “reconfigured committee of the rich” is precisely the objective of this proposal for working class activity.  Only by workers increasingly taking control over their lives now can we conceive an alternative that is real, compared to reliance on a state that always has your best interests as far away from its mind as possible.  The motto of socialists in this regard should be the famous quip of the British actor David Niven who, when speaking of Errol Flynn, once said “you always knew precisely where you stood with him because he always let you down.”[i]

A wider claim in relation to the Apple judgement and reaction to it is that such sharp practices are part and parcel of a policy of neoliberalism which is past its use by date.  The exhaustion of this policy has been expressed in the crisis of financialisation in 2008 and the failure of Eurozone austerity policies and similar policies in Britain, where their effects have not been quite so damning only to the extent that the Tories have failed to follow through fully on their austerity rhetoric.  In this view we will see a return to a class compromise that was supposedly the cornerstone of Keynesian policies practiced among the most developed countries after the Second World War.  Among these will be fair taxation of capital and the rich.

Against this it might be pointed out that the Apple ruling did not uphold any principle that taxes should be levied where real economic activity takes place and that in fact it was justified through an objection to state intervention, on the grounds of unfair state aid.

In 1997, even during the neoliberal era, EU Finance Ministers set up a Code of Conduct Group on business taxation that was charged with examining unfair tax practices and in succeeding years it abolished nearly 100 tax incentives across the EU.  Today it is the OECD which is supposed to be spearheading cooperation between governments on tax avoidance and evasion but this body has been a consistent supporter of neoliberalism.

In so far as there has been a trend in corporate taxation it has been a lowering of rates:

“Corporate tax is falling, both as a share of GDP and in the global tax take. . .  Within the last 20 years, corporate tax rates have fallen from around 45% to less than 30% on average in OECD countries. And lately, with increased mobility of multinational corporations, tax competition has intensified. Thus from 2000 to 2005, 24 out of the 30 OECD countries lowered their corporate tax rates while no member economy raised its rates.”

Closing or restricting some ‘loopholes’ is perfectly consistent with lowering rates because the loopholes become less and less relevant.  Reliance on the state to produce ‘fair’ taxation is like relying on Errol Flynn.  The Apple case, precisely because of its scale, is instructive in this and other respects.

The Left has pointed out the sheer scale of the windfall that the Irish Government is potentially spurning, pointing out its hypocrisy in demanding that the Irish people must do what the EU wants when it comes to austerity, bailing out the banks, ensuring no bond-holder is left behind and their demand that water charges simply must be paid.  When it comes to standing up for the Irish people no demand from the EU is too big but when it comes to standing up for the wealthiest multinationals no claim is too disreputable, no sacrifice too large and no neck so shiny and hard.

Commentators have pointed out that €13 billion would make up the budget for the health service for a year or it could take a significant chunk off the national debt of €200 billion.  It could pay the equivalent of a few years of the unpopular Universal Social Charge or it could mean a cash donation to everyone in the state of around €2,800 each, so that a household of four would get over €11,000.  A tidy sum for everyone in the State, or a significant boost to public services.

What it isn’t, despite its unprecedented size, is fundamental or transformative.  While it is a godsend of an example of taxing the rich, which much of the Left repeatedly presents as the answer to austerity and an exemplar of socialism, the Apple example shows that it is not.  Or not if one thinks of socialism as a fundamental change to society and a transformative change in working people’s lives.

What it is, is confirmation of the point made by Karl Marx many years ago, about the limits of distributing existing income or wealth, as opposed to changing the fundamentals of the ownership of productive resources that creates and recreates, again and again, this income and wealth.

“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself.

The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power. If the elements of production are so distributed, then the present-day distribution of the means of consumption results automatically. If the material conditions of production are the co-operative property of the workers themselves, then there likewise results a distribution of the means of consumption different from the present one.

Vulgar socialism (and from it in turn a section of the democrats) has taken over from the bourgeois economists the consideration and treatment of distribution as independent of the mode of production and hence the presentation of socialism as turning principally on distribution. After the real relation has long been made clear, why retrogress again?”

This is the argument that goes to the root of the nonsense peddled by Michael Noonan that taxing Apple would mean “eating the seed potatoes” or Micheál Martin that “This model supports hundreds of thousands of jobs and pays for teachers, nurses and pensions in every part of our country.  What’s more, it has done so for decades.`’

Such is the significance of any battle over Apple’s taxes.  Reliance on multinational capital and all the crap that goes with it or a cooperative economy owned and controlled by workers not just in Ireland but everywhere.

[i] Of course the parallel isn’t exact – Niven and Flynn were “pals” while the working class and the capitalist state are enemies.  It is appropriate however that the above remark was made of an immature personal relationship that has no correspondence to the political stance workers must take against the state; even if failure to take such a stance reflects an undeveloped and therefore immature failure by some Irish socialists.

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The EU: neoliberalism and democracy – part 2

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images (10)An argument was made a long time ago by right wing ideologue Frederick Hayek that Europe could only be united on the basis of the free market.  Generally speaking, unity by state power can be achieved by conquest, or diplomatic alliance and compromise which would be slow, messy and prone to threats of resort to the former method. The Left supporters of Brexit also pose the unity being attempted by the EU as one underpinned by, in fact essentially and intrinsically comprised of, neoliberalism and its child austerity.  This approach is presented as a policy choice at the national level but essential to the EU, which doesn’t add up.

The imposition of austerity in the Eurozone for example is a policy choice determined by the conservative leadership of Germany and some other Northern European countries. In large part this is a reflection of the interests of their particular national capitalism, or its perceived interests, so not an inevitable feature of European capitalist integration.

The imposition of this particular national capitalist regime across Europe cannot work so it involves the subordination of weaker capitalisms such as the Greek etc.  The ultimate subordination is expulsion from the Euro club, whereupon the Greek state is free to reflect its weakness through devaluation, have greater freedom to preserve or expand crony state ownership and decide which sections of its population it wants to throw to the wolves and which to protect. What it could not do on its own is reverse austerity and develop a strong capitalist economy.  A separate Greek socialism is out of the question.

The refusal of the strongest national states within the EU to seek an alternative to austerity that addresses the needs of all member states is grounded on refusal to implement fiscal transfers between states, common and pooled debt and greater regulation.  This would involve not less but more European integration but will not be accepted by the conservative led national states without their much greater control of the EU.  The question then becomes one of democracy.

For the nationalist opponents of the EU, on the right and left, democracy can only be national.  The Irish People’s Movement repeats this again and again:

“The EU is most accurately seen as a supranational anti-democratic system that deprives Europe’s diverse living peoples of their democracy while serving the interests of its big state members, as mediated through their ruling politico-economic elite, interacting with the Brussels bureaucracy. The project of EU and euro-zone integration is at bottom an attempt to overturn throughout much of Europe the democratic heritage of the French Revolution: the right of nations to self-determination, national independence, and national democracy.”

“. . . This right to national self-determination is the foundational value of all modern democracies and of democratic politics within them. But it is anathema to the EU elite. . . . The core illusion of the EU elite is that the peoples of the euro zone will consent to abandon their national independence and democracy, reversing centuries of European history . . .”

Today the increasing lack of democracy across Europe is sometimes put down to a lack of accountability of the governing elites in Brussels to the electorate, but it is notable that this complaint is widely expressed at national level as well.  The Irish State for example has long had two major parties periodically alternating in office that have had no ideological differences and which have provided no meaningful political choice.  In the last election the electorate voted against the incumbent main party and got it back in government.  In some other counties there has been more appearance of choice but it has been obvious for years that even social democratic parties have embraced neoliberalism, so it is not an EU only phenomenon.

It is argued however that it is worse in the EU and, unlike at the level of the individual state, nothing can be done.  It must be noted however that this malaise at the EU is partially a result of the processes at national level and made worse by being filtered here first. If pressure from below is stifled by the national political system there is much less to transmit upwards to the EU’s bureaucratic machinery.  At this EU level there are no European political parties, the trade unions at a European level are a shell and there are no other vehicles for protest except protest itself and its campaigns that put pressure on institutions but fundamentally do not threaten them.

The organisation, or rather the lack of organisation, of workers at the European level is not something that can be rectified by more democratic arrangements at the EU, although this would obviously help.  It is a task for workers themselves and seeking the nationalist way out is not a solution but rather running away from a problem that cannot be escaped.

The nationalist nonsense that posits democracy rising from the nation ignores the existence of nations that have had precious little democracy and ignores the process of struggle that imposed on ruling elites what democracy there is.  The idea that centuries of European history were devoted to the development of national democracy is as fatuous as the idea that these nations were generally independent states. War and subjugation has been a feature of the history of European states as much, if not more, than any sort of mythical independence, which no longer exists even for large European states never mind the smaller ones.

What is true is that the development of capitalism took place at the national level and that this involved the creation of classes which had a material interest in forms of bourgeois democracy and which fought for them as a result.   The state form within which this development took place has been elevated into the development itself but it is capitalist economic development and the political struggles that it generated that are the real foundations of bourgeois democracy.

That capitalist economic development has burst the bounds of nation states has created problems in relation to the forms of democracy that have taken root at the national level.  At this level the machinery of the state has legitimised capitalism through nationalist ideology and the exercise of state power that has educated, subordinated and reformed the society in which everyone has grown up in; making nothing more natural than the idea of belonging to a nation.  From this ideology and the state’s power to mould society has come the view that rights, freedoms and politics in general can only be framed at the national level with anything above this simply being political relations between the states and therefore not actually above them.

History is further perverted in this nationalist version by declaring that the ideals of the French revolution were purely national, ignoring the proclamations within it relating to the rights of individuals, the freedom of individuals and the equality of individuals.  In the first part of these two posts it was noted that for some Irish nationalists these “are not unequivocal concepts. There is no Union-wide consensus on what constitutes a higher or lower standard of protection of rights; there is no consensus on the source of human rights, such as the theory of natural law, whether secularly or religiously based, that would permit a rational analysis and evaluation of conflicting positions.”  But we are expected to believe such problems of unequivocal definition, consensus on source and application of rights, disappear within the nation, with all its minorities subservient to whatever the national ideal of these happens to be.  Most important of all, the national definition of these non-unequivocal concepts is assumed to be superior to the different understandings of these concepts that arise from the class divisions within society.  Instead these are assumed to be erased by unity behind a mythical ‘national interest’.

This understanding of the world as fundamentally structured by nations within which coherent, consistent and valid interests are formed and expressed reaches its height when we are told that:

“Although the EU has most of the formal features of a state, and Euro-federalists aspire to it becoming a United States of Europe, comparable to the United States of America, outsiders hesitate to regard it as a state in its own right. They think that if it were such it must surely have its own people, who would identify with it and insist on endowing it with some meaningful democratic life. But such a people does not exist.”

If this means anything it means that democracy can only exist for a relatively homogenous people, defined by nationality, which is the worst sort of ethnic-centred nonsense to which all nationalism is prone to fall into. It condemns those states that are multi-national in composition, which must presumably not expect to have any sort of democratic political arrangements.  This also of course absolves the EU, because it too cannot be expected to be democratic.  In fact no future unity of peoples can be expected to be democratic either. The more one reads this short paragraph the worse it gets.

But for a socialist it is precisely the identity of interests within the nation that must be exposed and rejected a false.  In contrast it is the identity of the interests of working people regardless of nationality that is the essential socialist argument and historically the nation state that has been the last barrier to the creation of the new society that expresses these common interests.  Workers of the world unite! is the clarion call of socialism.  If capitalism seeks to unite Europe on its own terms it is not the job of socialists to seek to reverse its progress but to fight for creation of the socialist society on these foundations.

If the nationalist left does not know how democracy, workers unity and a socialist future can be fought for except within the realm of separated national states then it should step aside because whatever the problems posed to socialists by the EU they will continue to exist, in fact worsen, in the nationalist rat race that implementation of their policies would involve.

concluded

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The EU: neoliberalism and democracy – part 1

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EU-TWEET-2Both right and left supporters of leaving the EU see it as some sort of emerging Super State, a bureaucratic Leviathan sitting on top of a population of so many Joseph Ks, captured by its labyrinthine rules, in a state of helpless and woeful ignorance of the malevolent plans to which they are subject.

Within its confines there is no way out, there is no solution.  Nothing is familiar.   It is foreign in every respect.  There is no democracy and you can do nothing to change it.  For the Left it cannot be reformed – its essential character is neoliberal – although it can be defeated, or rather it can be escaped from.  And this is what Brexit offers.

It offers release from a putative empire and its recognisable emperor – Germany.  The very breadth of the alternatives presented as possibilities outside its walls is testament to the potential freedom existing beyond its bewildering restrictions, its Treaties, Guidelines, Regulations and Directives. The natural territory of democracy is the nation and the return of national democracy will free Europe’s very different peoples to make their own decisions.

The differences between the British, the Finns, Bulgarians, Greeks and Italians etc. are simply too great.  No cultural commonality or elements of unity can be found and therefore no common political architecture can accommodate their different views, aspirations, values and demands.  Lack of democracy within any project that attempts it is therefore inevitable.

The ‘Peoples Movement’ in Ireland, which opposes the EU and supports Brexit puts it like this:

“The supposition in the EU Treaty that member-states already share a common value system is, moreover, a disingenuous fiction. The principles of “liberty, democracy, respect for human rights and fundamental freedoms and the rule of law” which are stated in article 2 of the Treaty on European Union to be the foundation of the EU, are not unequivocal concepts. There is no Union-wide consensus on what constitutes a higher or lower standard of protection of rights; there is no consensus on the source of human rights, such as the theory of natural law, whether secularly or religiously based, that would permit a rational analysis and evaluation of conflicting positions.”

——

Such an analysis is not one that any socialist can endorse or support.  In fact socialism rejects every substantive claim made above.

The EU is not even a State never mind a Super State.  If we begin with the understanding that the state consists above all of armed bodies of men and women then the EU has no army and no police with which to assert the class interests of European capitalism.  It often cannot unite politically even if it did have a single and coherent state apparatus to command. It had no such view when Yugoslavia disintegrated and it was NATO that went to war.  That it is not a Super State became clear in its failed intervention in the Ukraine, where it lacked the economic power, political unity of purpose and military prowess to counter Russia.

The illusion of a united, efficient and increasingly powerful bureaucratic apparatus reveals a view of bureaucracy as a predominantly rational and rules bound organisation that is internally coherent.  But not only is this not the case with any bureaucracy it is certainly not true of the EU.  Even its critics, or at least some of them, are not so much forced to acknowledge this but see it as a primary feature of the EU – that its rules are as often observed in the breech as in the observance.

There is apparently a remarkable level of non-compliance within the EU and its member states, in which EU Directives are not transposed into national law, rules are not adhered to, decisions at summits are not respected and European Court of Justice rulings are not enforced.  In other words the state machinery necessary to impose laws is not in place.

So the Maastricht rules dealing with debt and deficits were first broken by Germany and France while such rule breaking by Greece is anathema.  Much has been made of the Greeks fiddling statistics to get into the Euro but what they did was simply to follow what the Italians had done before, and everyone looks the other way when this is mentioned.  Bank stress tests are taken seriously by no one. The Eurogroup, the body that decides on these economic matters, that determines the economic policy in the Eurozone, has no legal standing and therefore doesn’t legally exist.

The incoherence of much of the bureaucratic machinery is illustrated in the inefficiency and corruption that besets the EU.  It lacks effective financial controls so that it has failed its own Court of Auditors for over twenty years.  In 2003 only 10 per cent of payments by the European Commission “faithfully reflected budgets and expenditure”, while the rest could not be accounted for and over 10,000 cases of larceny were uncovered in the year before. When the Chief Accountant reported that the EU budget “was an open till waiting to be robbed”, Neil Kinnock fired her. He also smeared another whistle-blower after she reported improprieties at Eurostat, a statistics agency whose figures were employed in allocating the EU budget. It has been investigated six times, during which shell companies, slush funds and “rake-offs” were all uncovered.

In his latest Book – ‘And the weak suffer what they must’ –the ex-Greek Finance Minister Yanis Varoufakis, rips into the failed design of the Euro and the rules it is based upon but admits that these rules are often in large part made up by the EU as it goes along.  This includes as a result of the struggle between the Bundesbank, its German ordo-liberals and the Draghi-led European Central Bank and its commitment to ‘do whatever it takes’ to save the Euro.

This is not some sort of all powerful juggernaut or all-powerful emerging German empire.  The GDP of Germany in 2015 was over €3 trillion while that of the EU as a whole was over €14.6 trillion, so the German share was around 20%.  Germany also lags behind Britain and France in terms of military capacity so whatever about its economic strength this is not basis for a fourth Reich.  Germany can lead but it cannot on its own determine the future of the EU.

The EU therefore lacks the scope and depth of function required of a state while aspiring to both, the difference for its critics often obscured by its declarations of intent and its bombastic and arrogant approach to what it does control.  It is not therefore easily identified, categorised and summed up so, when its more obviously nationalist critics denounce it, the simplicity of their analysis is often embarrassing. So the People’s Movement can’t help but notice that the EU has no army and police but “Their absence makes it all the easier to hide from ordinary citizens the reality of Europe’s hollowed-out nation-states and the failure of their own mainstream politicians to defend their national democracies.”  The People’s Movement declaration of hollowed out national states fails to register its admission that the EU proto-state is also empty of crucial functions.

The simple story of EU power also includes the declaration that the EU cannot be reformed as it is intrinsically a neo-liberal construct, one that enforces this economic policy on its members.  But as we have noted, such enforcement is not uniform.  The progenitor of the EU, the European Coal and Steel Community, was not a vehicle for the free market but a cartel arrangement for oligopolies. The EEC/EU was part and parcel of Europe-wide Keynesian policies in the 1960s and is now part of the neoliberal turn that was to be consolidated in the European Constitution but became part of the Lisbon Treaty when this constitution was rejected.  It is also strongly in evidence in the austerity agenda mandated by the Maastricht Treaty and enforced during the Eurozone crisis.  It has not therefore always been part of the EU and there is good reason why it may not remain part, including that it is not working, for example irrecoverable debt cannot be repaid.

While the EU has introduced state aid rules that restrict state subvention of private capital it does not prohibit it.  The Lisbon Strategy of 2000 called for it to be phased out but the reality became more rules that explain how it may be permitted.  In the years 2000 to 2011 its level didn’t change, amounting to 0.7 per cent of GDP, so argument continues as to whether public procurement in the EU is more or less open than its competitors in the US or Japan.

The EU is made up of states, which jealously guard not only the interests of their national capitals but also their own interests as states. This includes protection of state owned capital.  For example in the field of energy, where the EU has some competence i.e. it has some control, many components of this industry are still state owned. Even in the Irish State, at the depths of the crisis and diktats from the Troika of European Commission, European Central Bank and IMF, the state retained ownership of much of power generation through ESB and the electricity transmission and distribution system through EirGrid.

Those on the Left who regard the interests of nation states, and their powers of discretion, as the alternative to the neoliberalism of free markets have a lot of explaining to do, in particular how these states that barter and trade off the perceived benefits of trade to themselves, and the big capitalist businesses they seek to protect, are any sort of alternative.  The seeming obsession of the EU with competition rules is in part an inevitable result of any inter-state cooperation, which is undoubtedly more involved in the EU, but which would not disappear outside of it, that is if progress on trade and investment deals is to be made.

The emphasis on free markets and competition arises not just from a general and obvious commitment to capitalism by all the European capitalist states but from the desire to create a free trade area across Europe in the same way that there is generally free trade within the national states themselves.  This is not because the individual states do not want to intervene to bolster the position of national champions but because they must have rules and mechanisms that limit the same intervention by the other states that may be to the detriment of their own capitals.

The developing logic is to create not national champions but European ones, which leads to a similar process at the world level.  The US and Japan etc., like the EU, seek trade and investment deals that will allow the growth of their capitals without discriminatory barriers put in their way by other states.  Each therefore has to strike deals that limit such practices, not only between but also within their borders, and which protect their own big capitalist businesses. The confidence to exploit and exchange commodities that exists at the national level is sought at the European and world level through a single European market and world trade and investment deals.  To see these deals as the problem and not the system of exploitation and commodity exchange that is taken for granted at the national level is to forsake a socialist for a purely nationalist perspective and fail to understand the roots of what is going on.

A contradiction thus exists between the rhetoric of free competition and the state and EU interventions that seek to strengthen particular capitalist concerns.  From this also arises the repulsive system of lobbying by big business that is such a feature of the Brussels scene.  It brings to light the crony and corrupt interface between politicians and capitalists which has grown organically at nation state level and because of this is much better hidden from public view.

The contradiction is also expressed through the fact that the state at a national level not only provides for a level playing field that privileges the workings of capitalist competition, which finds expression through the market, but also intervenes positively to support groups of, or individual, capitalist concerns.

This not only involves what might be considered purely economic measures, such as grants, subsidies, and taxation arrangements but also purely political interventions that for example provide for or foreclose market access.  The rules and the wrangling in the EU are the outcome of the attempts to do this at a supra-national level.  Such activities would continue were Europe to revert to a world of separate nation states – the world beloved of nationalists and a left no longer confident of the future but hankering for a supposed golden age of social democracy, i.e. a particular form of capitalism.

What does change in the EU framework is acknowledgment that the state’s intervention in support of capitalism is no longer adequate if confined to the national level and that the political interventions required also have to take place at the European level.  The logic is creation of a political vehicle that can do this adequately, a European State.  If you don’t like this the answer is not to attempt to turn back the clock to an earlier form of capitalism that the development of the system has outgrown but to make the alternative to capitalism also international.

Forward to part 2