Ireland – the Apple Republic part 2

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.

Back to part 1

Ireland – the Apple Republic part 1

apple_tax_european_union_sept022016The decision of the European Commission to require the Irish State to collect €13 billion in unpaid taxes, plus a potential €6 billion in interest, from US technology company Apple made headlines across the world.  Special tax arrangements, which appear not to have applied the State’s already low 12.5% corporate tax rate, led to an effective tax rate on Apple of 0.05% in 2011 and 0.005% in 2014.  Two tax rulings in 1991 and 2007 allowed an Irish company to book Apple sales across Europe, the Middle East, Africa and India in Ireland and attribute profit on these sales to a “head office” which was stateless, had no offices, had no employees and existed only on paper.

The Irish State has decided to appeal the ruling, as has Apple itself.  Apparently preventing the State from abjectly prostrating itself in front of Apple is an assault by the European Commission on the sovereignty of a small nation.  It supposedly calls into question Irish tax policy while the Government frantically claims that the ruling affects the arrangements of no other multinational.

The appeal is to protect Ireland’s reputation although being dragged kicking and screaming to apply your own laws without discrimination, while defending cheating other countries of tax revenue, is apparently good for it.  The appeal is to prove that the Irish State is not a tax haven although a tax rate of 0.005% would appear to be a decent definition of one and defending it would appear to be open acknowledgement of it.  The Irish Government seeks to defend its prerogative to set an (in)famous corporate tax rate of 12.5% but does so by defending a 0.005% rate.

€13 billion is a big number and is the biggest judgement in the history of EU competition law – the cumulative total of all EU cases involving repayment of illegal state subsidies over the past 15 years is less than €11 billion – and it has been imposed on Apple, the world’s biggest company by market capitalisation.

One explanation given for all this is that the Irish state is dominated by imperialism and plays its natural role as an obsequious supplicant to multinational capital.  This is ok as far as it goes but it doesn’t go far enough, either in explaining or in providing the grounds for an alternative.  If we start with the latter – an anti-imperialist struggle in Ireland to make the natural resources of Ireland the property of the Irish people isn’t a solution.

For a start, the main natural resource of Ireland is its people.  In fact the growth of technology, and companies like Apple, demonstrates that it is the knowledge and skills of workers which is the key to the most dynamic sectors of the economy.  So it is harnessing the power of workers that is the key to economic development in Ireland as elsewhere, not minerals under the earth or the factory building which house the most modern production.  The machines that power this production are obsolete within years; simple ownership of them does not guarantee the future unless workers not only own them but have the knowledge and capacity to continue to revolutionise their development.

Secondly an utterly subordinate role for Irish capitalism does not explain how it allowed itself to become the vehicle for depriving other European countries of tax revenue, which the EU ruling now gives the latter an avenue to pursue.  The ruling signals that although other EU states may not have liked the Irish State’s low corporate taxation regime, it was not such a problem if it remained relatively marginal.  After all, they’re all engaged in tax competition in one form or another as one facet of inter-state and inter-company rivalry.

The problem for the Irish is that they prostrate themselves disproportionately to the US, who don’t so much mind the role of Ireland as a tax haven since it is US tax rules which permit Ireland’s role of in tax avoidance and also still allows the US to take a cut if and when the profits are eventually repatriated, perhaps as a result of some tax amnesty.

The Irish State has thus put itself in the middle of a bigger competition between EU and US capital and however much it might be “closer to Boston than Berlin” and wallow in its generations of emigrant’s ties to the old sod, the Irish State is part of the EU.  Its facilitation of US companies through an effective tax haven can only be permitted so much success before the bureaucracy of the EU proto-state decided that it had gone too far.  The Irish are therefore not just functioning as a subordinate client to imperialism but play a particular role in inter-imperialist rivalry.

And it would be wrong to characterise this role as something anomalous to the normal functioning of capitalism.  Apple had over $215 billion in cash and assets sitting outside the US as of June this year, sitting there avoiding US taxation.  It has been estimated that this is only part of $1.4 trillion sitting offshore of the US, all avoiding tax and perhaps waiting for an amnesty and a nice big deal.

It has been estimated that about half of all lending and deposits originate in Offshore Financial Centres(OFCs), about half of which are also tax havens.  The Irish State comes in 9th on the list in terms of size of tax haven, behind the Cayman Islands, which is the largest, and Switzerland and the Netherlands, which are 7th and 8th respectively.  These OFCs account for receipt of about 30% of the world’s foreign direct investment and themselves originate a similar amount.

While the tax rulings in 1991 and 2007 were based on Apple’s proposals to the Irish State, there is nothing anomalous about this either.  The British ‘Guardian’ newspaper reported last Thursday that  “the government has effectively privatised tax policymaking and enforcement . . . a working group consisting entirely of representatives from GlaxoSmithKline, Rolls-Royce, Eisai pharmaceuticals, Syngenta, Shell, Dyson, Arm, KPMG, Vectura and AND Technology Research drafted what eventually became known as the Patent Box legislation. They secured a special tax concession worth over £1bn a year for large corporations.”

The EC ruling on Apple has been described as “a watershed” and liberal Irish commentators have argued that it’s a wake-up call – that the Irish State’s success, based on attracting multinationals through tax breaks, is not a strategy that will stand the test of time.  The Irish State and its apologists claim that their tax policy is actually an industrial policy, which should be regarded as a purely national issue, but if this were so then we would expect the Cayman Islands, the Bahamas and Jersey to be thriving centres of industrial production.  Their brass plate companies and those in Ireland shown how ridiculous this rebranding exercise really is.

Some states benefit from tax competition and some suffer losses.  The EU bureaucracy attempts to set rules that do not allow discrimination against European companies as if the European Union was one capitalist state, which it isn’t (yet).  The state aid case against the Irish State is not therefore a bolt from the blue.  Since 2000 there have been 400 state aid cases and 225 cases involving tax advantages across the EU.  The Irish State, as a fully paid up member of the EU, has approved European Commission investigation of the tax arrangements of fellow EU states.

In October last year the EC concluded that Luxembourg and the Netherlands had granted tax advantages to Fiat and Starbucks respectively and in January concluded the same in relation to Belgium’s treatment of at least 35 multinationals, mainly from the EU, amounting to €700 million that should be collected.  The EC is currently investigating Luxembourg and its relations with Amazon and McDonald’s.

Capitalist states therefore both cheat and enforce laws against cheating.  They both protect big business and tax it in order to pay for itself.  Mostly however they tax small businesses and workers to provide the services and infrastructure that allow society to operate and function, one that functions and operates according to the laws of capitalist accumulation.

Forward to part 2

Remembering the Rising part 3 – Who’s afraid of 1916?

easter 1There is a view of the world and its history that what matters most is not what it is or what it has been but how it is perceived and understood; first having recognised that the two are not the same.  There is a different view that the world may be misconceived and misunderstood but its true reality matters more and ‘will out’.  The misconceptions are themselves part of the real world and are themselves a reflection of it and often contain a grain or more of truth, while still being wrong.

We can thus learn and appreciate the Easter Rising in 1916 by looking at how it is variously understood.

In the January 15 copy of ‘The Irish News’ the Sinn Fein leader Martin McGuinness states:

“The Rising wasn’t simply a rebellion against British rule.  It was an insurrection against injustice, oppression and inequality.  It was a social as well as a political and national revolution.”

We have seen in the previous post that the Proclamation did not rail against imperial oppression and injustice but condemned British rule as illegitimate.  Its claims for equality were limited and were made in relation to the particular context of foreign fostered religious division.  The Proclamation does indeed talk of welfare and freedom and of the common good but it is the nation’s welfare and national freedom that is extoled and the common good is for the people to sacrifice themselves for. And even if these clear meanings are ignored there is no statement as to how any different sort of freedom, welfare or the common good can be defined and its promise made good.

The Proclamation is a nationalist declaration and did not and could not explain how it could deliver any promises that its readers may mistakenly or otherwise have read into it.  A century of national liberation struggles across the world against British and other colonial powers, often inspired by the Easter Rising, have failed to demonstrate how the most radical understandings of such promises, such as those stated by McGuinness,  can be made good by any sort of nationalism.

But perhaps McGuinness is claiming that the words of the Proclamation do not matter, it is the reality of the Rising that is important, although I doubt he would make such a claim.  So perhaps he is saying that there is more to the Rising than the Proclamation that the Proclamation did not announce.

So the Rising was indeed a political revolution and a national one in so far as its aims were concerned although, by deliberate design, not national in scope – there was to be no Rising in Ulster.   However it was not a social revolution; it certainly didn’t pretend to be a socialist revolution.  We know what one of them might look like because we saw one the year after in 1917. And it wasn’t a social revolution of the land question.  If anyone deserves credit for the revolution in the transfer of land ownership from largely alien landlords to native tenant farmers it is the British who must stand first in line.  It must be said that in this they were helped by the massive loss caused by the famine for which they should also stand first in line, and were subject to agrarian agitation to force them.

So even in three very short sentences that are easily passed over as received wisdom the understanding of Martin McGuinness is inaccurate, just as 100 years ago the British and many others were wrong to see the Easter Rising as a Sinn Fein rebellion.  Sinn Fein had nothing to do with it and the party was led by a man who was not in favour of a Republic.

Does it matter that McGuinness’s understanding is so wrong?  Such misconceptions have been legion. The embers of the Rising were still warm before it was widely condemned as a ‘German plot’, all the better to damn it as a disloyal stab in the back in the middle of a real war.  The fiftieth anniversary celebrations have been blamed by Unionists for sparking ‘the Troubles’ in Northern Ireland, absolving the demands of Ian Paisley that the Tricolour be removed from the Falls Road for the trouble that erupted there in 1966, and later unionist attempts to attack demonstrations for civil rights for the eruption of violence in 1968 and 1969.

So yes, getting history wrong does matter because it will not explain why the Troubles broke out in the North of Ireland and it doesn’t explain why the 1916 Rising failed to achieve a truly national revolution never mind a social revolution.  If we dispense with incorrect explanations of the world and its history we are much better placed to seek better ones and in doing so better able to understand what is happening today.

For many what has happened during the centenary celebrations today is an “Irish capitalist class .  . overcome with embarrassment and revulsion, forced to commemorate something they despise”, according to one left wing leaflet handed out at a meeting in Belfast a few weeks ago.

For another left wing author “the notion that Enda Kenny owes his position as Taoiseach to republican guerrillas who stormed the GPO is, to put it mildly, deeply unsettling.  The political elite is therefore  approaching the centenary commemorations of the rising with profoundly ambivalent feelings and not a little trepidation”.

Two other authors have written a short book, ‘Who’s afraid of the Easter Rising? 1919 – 2016’.  They note the opposition to the Rising from those who think Ireland could have won its independence without the violence unleashed in 1916 and who therefore condemn it for the example it set to later generations of violent republicans.  They also characterise the attitude of the Irish Government to the commemoration of the Rising as one of “bad faith.  They talk in doublespeak  and clichés. Their energy is not directed at genuinely exploring or celebrating the legacy of the Rising but rather in controlling it.” In this desire for control however they are hardly alone.

“This political class is embarrassed by 1916 but most are afraid to say so publically, hence they practice the politics of ambiguity and dishonest historical revisionism as a way of avoiding the truth and real debate.”

But if the Irish establishment has been variously “uncomfortable”, embarrassed”, “afraid” and “nervous” they hid it well during the commemoration and scored a significant success, all the more significant depending on how much they were exposed to the emotions attributed to them by some left wing authors.

Far from ambiguity they presented a coherent narrative – we commemorate those gallant men and women who gave us our freedom today, a freedom expressed by the existence and independence of the Irish State which put its back bone on display through the military parade of its armed forces.  This is the State to which we owe loyalty and we celebrate the foundational act of that state – the Easter 1916 Rising. No one among the broadest ranks of Irish nationalism seeks to attack the institutions of this State, not even ‘dissident’ republicanism centred the North.

Easter 3

The celebrations were therefore a celebration not only of the Rising but of the legitimacy of the State and its institutions.  The highlighting of descendants of the 1916 rebels and later revolutionary heroes in the parade of today’s Armed Forces on Easter Sunday and the reading out of the Proclamation by an officer of the Irish Army was a coherent message that there is only one legitimate Óglaigh na hÉireann.  Loyalty to the state is mandated by the sacrifice of the men and women of 1916 whose creation it is.

And is this not at least partly true?  And if it is not by any means the whole story are we not then into more ambiguous territory and far from a simple story of misappropriation of a risen people by an elite?  Or, recalling our first post on remembering 1916; were Cosgrave, Collins and de Valera etc. not part of this risen people or, recalling the second post, did the Proclamation not address itself to national freedom and not any wider set of promises?

It is not that the Irish establishment finds nothing in the history of the Rising that it finds objectionable.  Who does not?  But among the emotions listed above there has also been indifference in the past, in commemorating the Rising and, for example, in maintaining and giving access to the historical records upon which its story can more truthfully be told.  In 1971 Garrett Fitzgerald stated that “this country will look very odd indeed in international eyes if Britain continues to release information about Irish matters before we do – as has already happened.  We will have to stop being afraid of our own history.”  His view reversed the previous Fianna Fail view of the late 1960s that access to state papers could result in “injury . . . to national unity and harmony.”  Taoiseach Jack Lynch said that even if the British opened papers the Irish Government would not because it “might well stir domestic controversies that best lie buried.”

In any case attempts to emulate the rebellious attitude of 1916 will not depend on seeking to emulate the Volunteers of 1916 but will come from the nature of the oppression and exploitation faced today and more importantly by the goals and strategies that channel this rebelliousness.  This is what makes the release of historical state papers possible – the historical controversies they relate to are relevant but  will not of themselves stir struggle today and are not amenable to a simple repetition of rebellion – what for, by whom, with what objectives and for what alternative?

We are called upon to commemorate those who fought in 1916 and to remember the Proclamation of the Republic they fought for, but on what grounds are we called upon to remember?  Who is asking us to commemorate and do we celebrate the same thing if we do?  Does this now matter, for will there now be any future anniversary with such resonance?

Easter 2

Back to part 2

Forward to part 4

How left does a Left Government have to be?

AAAdownloadThe weakness of the left’s strategy is revealed in the proposals upon which they would proclaim their difference from Sinn Fein and their preference not to seek a common platform.  If we look at the Anti-austerity Alliance (AAA) proposals for the 2016 budget we can see this illustrated in a number of ways. The gap in the strategy of the Left, evidenced in the AAA proposals, therefore also raises the question of how left the policies of a Left government have to be.

But first there is the reluctance of the AAA to accept that there is an economic recovery and one that many have benefited from, if only to the extent that the cuts appear to have relented.  Of course, that the rich do best is a permanent result in capitalism.  The issue here is not that the rich do best but the view that “for us, for working class people, for the majority of young people, unemployed people, pensioners and small farmers – there is no recovery.”  (AAA)

But this isn’t true.  Unemployment has fallen, and not just as a result of emigration, and wages are beginning to rise again while taxes are no longer increasing as before.  These things matter to people and go some way to explaining why there will be no left Government elected in 2016.

Stating otherwise allows the opponents of socialism to claim that socialism is politics for the poorest only.  It sits comfortably in right-wing rhetoric that socialists are only interested in those at the very bottom of society as opposed to better off or better placed workers.  It makes poverty the issue rather than the class inequalities and class divide in society.  It does not make one more of a socialist, or revolutionary, to deny that capitalism can improve the living standards of workers in particular ways, within particular limits and with regular crises that threaten the lifestyle that workers have slowly tried to create for themselves.

Worst of all, it fits with the view that socialism is created not out of the strength of the working class – that it has employment, that this employment is often skilled, that society is dependent on this skilled labour, that the working class is increasingly educated, and that it is not on desperation and oppression that socialism will be built but on hope, expectation and confidence of the working class in its potential power.

Above all, the unity of workers is based on shared interests regardless of more or less temporary differences in status and income.  The income inequalities within the working class are barriers to its political unity while the reformist emphasis on redistribution ignores what all workers share regardless of levels of income.

Poverty, unemployment and marginalisation are most important from a political point of view because they present barriers to a common class identity and unity.   Denying what little improvement there is robs whatever else is said by socialists of some credibility and it is not necessary to deny the growth of capitalism in order to argue for its greater failure and the need for an alternative.

When we move to the programme of the AAA the gap in the perspective of the left becomes apparent.  In proposals to repudiate the debt the case of Syriza’s attempt to renegotiate the Greek debt is recalled.  While it is proposed that “a left government in Ireland would demand a negotiated write-down of debt to a sustainable level” it is acknowledged that “if as the Greek experience indicates seems likely, it did not have success at the negotiating table, it (a left government) would then turn to the option of repudiation.”

The proposals state that this would involve an audit of the debt and that “it is reasonable to estimate that such a debt audit repudiation would result in a reduction of the total debt to at most 50% of GDP.”  The issues this proposal throw up – of opposition by the EU and of private capitalist measures that would be taken in retaliation, in other words of everything that makes this option a challenge, is unexplained.  The unwillingness to state how this would be successfully implemented and the opposition to it defeated hides an inability to explain how it could be carried out.

No amount of rhetoric will hide the failure to explain what needs to be done to implement the policy.  In a previous post I have looked at the lessons that the Greek experience might teach us, which elicited some discussion, but none of the potential lessons touched upon there are presented in the proposals of the Anti-Austerity Alliance.   Unfortunately problems are not overcome by ignoring them.

A second area in which purely reformist perspectives are evident is in the proposals for ‘Public Investment, Jobs and Decent Work’.  Here it is argued that “the state should not only be willing to employ people in public services, but rather should also invest and create jobs in “wealth creating’ sectors of the economy – construction, communications, natural resources.”

This proposal cannot be confused with the demand for employment presented in the Transitional Programme written by Leon Trotsky, which was written to “deal with the present catastrophic period” and which was not a perspective for long term development of the (capitalist) economy.  It was required in order to protect the working class “under the menace of its own disintegration.”  Its purpose was not primarily to protect living standards or to provide a long-term solution to the ravages of unemployment but was necessary because “the proletariat cannot permit the transformation of an increasing section of the workers into chronically unemployed paupers, living off the slops of a crumbling society. . . Trade unions and other mass organizations should bind the workers and the unemployed together in the solidarity of mutual responsibility.”  Its purpose was plainly mainly a political one, to put the workers in a better position to take over society, not to confuse such measures with socialism itself.

The proposal is mistaken not only on the grounds of principle, that it proposes, and expects, that the capitalist state  could “provide the investment necessary for the creation of a an economically and environmentally sustainable recovery”, in other words a more efficient and effective capitalism, but that its proposals are concentrated on development of infrastructure that private capitalism has been so bad at providing almost everywhere and on which it has often relied on the capitalist state to provide.  In other words state investment in infrastructure is complementary to private capitalism not a competitor to it, even if state ownership in itself could be so considered, which it can’t.

The specific proposals for investment make this clear, mostly directed to traditional state sectors – a public works programme based on the water and sewerage industries, healthcare and education; childcare and development of wind energy.  All are complementary to existing private capitalist accumulation and are supportive of it.  Even development of the wind industry is already well established and already has state companies at its core – ESB and EirGrid.

The most dynamic industries situated in Ireland are in the ICT and chemicals sectors (including pharmaceuticals).  Encouraging the setting up of workers cooperatives in these would signal a real appreciation of the possibility of a workers’ owned cooperative sector of the economy growing in competition with the private capitalist sector, laying the basis of a future economy totally based on cooperative principles.   But there is no evidence that this has been considered at all.

Finally, the AAA proposes not to raise the corporation tax rate but simply asks that the headline rate of 12.5 per cent becomes the effective rate.  It is obviously aware of the timidity of its approach despite saying that: “by maintaining a regime of low effective corporation tax to entice foreign multinational companies, Irish society pays a heavy price by depriving our wrecked public services of the funds they require to provide decent living conditions for all.”

Given its view of the paramount need to redistribute income from the richest corporations to workers it makes little sense to propose that these corporations incur a tax rate of 12.5 per cent while the lowest income tax rate for workers is 20 per cent (excluding the universal social charge).  The reluctance to even make them equal arises from the knowledge that such a rate would not be considered credible.  The AAA is unable to rebut the claims of establishment society that low corporate taxation is essential for the State’s economic sustainability:

“If it is truly the case – as claimed by the entire political establishment (as well as Sinn Féin, who support not only maintaining corporation tax at its current levels but extending that rate into the North) – that the slightest rise in effective corporation tax, to say fund the expansion our healthcare system and end the scandal of homelessness, would lead to a flight of companies out of Ireland then that is an indictment of their system, not a mark of economic irresponsibility on the part of the Anti-Austerity Alliance.”

So despite stating that “it is not simply a matter of tweaking with elements of the system here and there”; that a “rupture is needed”; “rules must be broken” and “a fundamental transformation of our society  . . needed”, it becomes clear that this rupture lacks foundation, except as a generalised declaration of the existence already of “the wealth and resources . . to deal with all the ongoing problems of the crisis”.

The calls for a “move to a socialist economy, with public ownership of the key sources of wealth, under democratic control of working people, and planned in the interests of the majority”, like the AAA “indictment of their system”, becomes a moral condemnation separated from a programme to achieve the goals desired.

If the AAA cannot have the confidence that multinational capital will not up-sticks and leave upon increased corporate taxes, never mind actively seek to sabotage a left Government’s plans, then what confidence can workers have?  More importantly – what will give workers this confidence to take steps to tax the rich, tax the corporations and slash corporate welfare?  The AAA itself admits that: “as was unfortunately demonstrated in Greece, the wealthy are unreconciled as a class of people to any encroachment on their privilege. . . . the rich . . . will attempt to do whatever it takes to avoid paying for the crisis in their system.”

Unfortunately the AAA comes nowhere near explaining just what “whatever it takes” means, or whatever it takes would mean for the working class to defeat this capitalist resistance.  A radical left Government that truly sought to introduce a socialist society could not do whatever it takes, and this wouldn’t be mainly because of the opposition of capitalism, but because socialism can only be the creation of the working class itself, not a left government sitting atop a capitalist state.  If multinational capital struck against a radical Irish state this state is not capable of taking over the production vacated even if it were able to sell internationally what it produced.

This demonstrates in a very practical way how reformist notions of a state-led transformation of capitalism into socialism cannot work.  Only working people themselves can take over production and organise it on a cooperative basis.  Only workers can implement a radical restructuring and development of a cooperative economy and only they can replace, if necessary, the production vacated by fleeing multinationals.  That no significant section of Irish workers sees this as a possibility, as a mission, is why they buy into the fear that to challenge multinational capital too hard would only invite a retaliation they would be unable to cope with.

All this is why the creation of workers’ cooperatives is so necessary – in order to establish in the minds of workers the realisation that they can own and control production themselves; that they can create their own firms, provide their own jobs, develop their own products and markets, and impose their own discipline in the workplace.  On such a basis the failure of capitalist production will more and more witness a successful rival that, as the cooperative sector grows, would provide a potential alternative to it, one based on more than simple propaganda or agitation.

This alternative would involve the realisation of workers that their future lies not in sacrifices for the capitalist system but the development of their own cooperative sector to cover the whole of production.  In this rival sector of working class power all firms would be under the ownership and control of their workforce, all jobs their creation and all products those that workers see a genuine need for.  Within this sector of the economy their own discipline would determine the relations of power which would more and more come into conflict with the relations of power across the rest of society.  Such an exercise of power would see them shed illusions in the neutral role of the state and would see them stop looking to the state as the solution to all their problems – a state that they can never control and that can never reflect their interests or will.

Unfortunately the AAA like many others present the state very differently, as all its proposals demonstrate.  I will not dwell here on whether its devotion to the capitalist state as the vehicle for socialist transformation is a result of electoralism, which posits a left government at the top of the state as the key task, or whether worship of the transformative power of the state makes pursuit of a left Government the only rational objective.  But even the AAA sometimes can’t help expose the contradictions in its whole approach, as when it states that: “the contrast between the state’s efforts to publicise its corporate welfare schemes and its miserly approach to social welfare claimants could not be starker, or more revealing of the capitalist interests the state exists to serve.”

So if the state exists to serve capitalist interests why would it tax a resistant capitalist class, provide jobs for workers and strengthen their bargaining power; attack corporate welfare; countenance the replacement of private capitalist investment for its own and agree to a programme that clams will lead to socialism?

Perhaps some defence of the AAA proposals is possible by recalling its statement that “the purpose of the Anti-Austerity Alliance budget statement is to give an illustration of how things could be organised differently – how the wealth exists to provide decent living standards for all.” Except that what it holds up is more than an illustration but is proposed as an important step on the road to a socialist society.  Of course socialists should not oppose the measure proposed by the Anti-Austerity Alliance but only because their implementation, even partially, would make taking the right steps on the right road to working class power easier.

One purpose of the examination of the AAA proposals has been to demonstrate that the conception of change held by the left is not so very different from that of Sinn Fein; one based on state led economic development directed by a left Government with popular support.  In the next post I will look at further proposals to separate the left from the Sinn Fein by People before Profit and what approaches the Socialist Party and the Socialist Workers Party have for dealing with the situation after the election when there will not be the left Government they seek.

Back to part 2

Forward to part 4

The gap in the strategy of a Left Government

ireland IT map-480x360In the first part of this post on a left Government I stated that I did not believe that it was going to happen in the coming elections and also that this left a strategic gap in the perspectives of the left.  The fixation on electoral intervention and its potential success are therefore misplaced.    I have argued many times before in this blog that the reformist politics of the Left is inadequate to the objectives it professes to advance.

The focus on achieving a left government as the key to fighting austerity, and implementing policies that would mean a fairer capitalism, are misguided and bound for ultimate disappointment.  To put the argument at a very summary level: they fail to target the foundations of the capitalist system and avoid what is the root of the working class alternative.  The foundation of capitalism is the ownership of the means of producing everything we consume and rely upon for a remotely civilised existence by a separate class of capitalists and the resulting necessity of the working class to sell their labour power in order to earn the money to live. Workers do not own the product of their labour because it belongs to those who also own the means of production.

This is ABC for Marxists but unfortunately it is not carried forward to argue that the means of production should belong to the workers and thus support for measures that lead to this workers’ ownership of production, such as the formation of workers’ cooperatives.  Instead the Left argues for increased state ownership and argues that democratic control of the state and/or workers’ control under state ownership makes their programme different from the frequently employed policy of capitalist nationalisation.  I have argued differently here and here.  I have also addressed some arguments against workers’ cooperatives that are often advanced by the left here and here.

The Left’s alibi is that a revolution will accomplish the necessary transfer of property ownership, although this ignores a lesson of the Russian revolution that state ownership of property is not the same as workers’ ownership.  It also leaves the idea of a revolutionary approach, not as something that can grow today (before culminating in a transfer of power through creation of a new workers’ state after the capitalist one has been destroyed) but as something for the future, between now and which all sorts of very non-revolutionary methods are acceptable, if sometimes not actually desirable.

Because such non-revolutionary approaches are not in themselves fundamentally different from more or less radical alternatives that seek to reform capitalism a problem arises in distinguishing the proposals of the left parties from those of parties that do not seek to break from capitalism, such as left liberals or in Ireland – Sinn Fein.  As I have argued, this also leaves a strategic gap in perspectives aimed at fundamental transformation of society.

Again to summarise: without adequate preparation and prior strengthening of the working class through building strong trade unions, parties and workers’ cooperatives the fundamental break from the  diktats of capitalism becomes much harder and workers themselves,  as witnessed recently in Greece for example, are unwilling to consider a revolutionary leap.

Strengthening of the state, through state ownership and growing its power by increased taxation and spending does not increase the power of the working class but often leads to increased working class dependency on it.  Such dependency is something that should be argued against, not encouraged either directly or indirectly.  Workers doing it for themselves should be the maxim, not least because state initiatives proposed by the left are almost always national ones that are at best nationalist solutions.  It’s why nationalisation is nation-alisation.

Capitalist state ownership is not socialism and democratising the state does not make it socialist.

On practical grounds the reform of capitalism is easier to consider and to implement when the particular capitalist state is both strong economically and has greater political and social capacity to mobilise and organise wider society.  The relatively weak fundamentals of the native Irish economy reproduced also in the machinery of the Irish state, reflected in its endemic corruption and lack of developmental capacity, make the reformist development of a strong reforming state and dynamic economy less credible and more difficult to achieve.

This was the fundamental problem facing Syriza in Greece when it sought to confront the demands of the European Union led by Germany.  There was no strong Greek capitalism that it could rely upon both to increase the costs to the EU of any measures it might take against Greece or strong economic base on which to venture an alternative international economic strategy outside the EU.   This weakness of Greek capitalism is reflected in Greek consciousness through support for the Euro even while this was portrayed by many as the source of its disaster.

images (12)Similarly in Ireland the weakness of Irish capitalism is reflected in Irish workers acceptance of sycophantic policies towards the richest global corporations while suffering austerity themselves.  It is why the ability of the Irish State to set a low corporation tax and defend this policy against other countries’ opposition is held up as the peak of Irish sovereignty and is by and large accepted as such.

The latter view is in turn reflected in the policies of the left, which proposes not to raise the corporation tax rate but simply ask that the headline rate becomes the effective rate.  The existing rate of 12.5% thus lies below the rate of corporation tax that Thatcher found acceptable in Britain – when she resigned it was well over 30 per cent.  Such modesty must have an explanation.

This is only one aspect of the various proposals of the Left to increase state intervention which, of necessity, take into account the capacity of the capitalist economy to deliver.  We will see this again and again in the next post.

Finally, the necessity for international working class action to achieve socialism is clear when it is appreciated that a radicalised Irish state, even if it was not socialist, would be in a very weak position set against the ranks of the British State, its historic oppressors, occupiers of part of its territory; the European Union and its control of the currency; and the US, not least through its multinationals.  It is well known that the US, in the person of its treasury secretary Timothy Geithner, vetoed haircuts to senior bondholders of the insolvent Irish banks, which would have hugely reduced the burden on Irish workers.

It hardly needs saying that in a socialist society international economic links with the rest of the world will increase and so dependency on the outside world will also increase.  A hostile capitalist world would not see a radical Irish state survive in its radical state very long.

The left’s approach leaves a strategic gap which even the existence of a left Government does not fill because it is not a answer to these problems.  The gap is further evident in the separation (or lack of it) of the left’s proposals from that of non-anti-capitalist forces such as Sinn Fein.  As I have said, fundamentally the difference in proposals between the Left and Sinn Fein is one of degree and not fundamental.  This does not make the differences unimportant but it is not the difference between socialism and ‘progressive’ capitalism.

to be continued

Back to part 1

Forward to part 3

Screwing the unemployed in the North of Ireland

Belfast Plebian

work-fare211

One development in the North of Ireland that has come into existence largely unmentioned is Stormont’s new welfare to work programme. There have been quite a few of these in the past, New Deal, Steps to Work, but this one is more than just a hand me down modification, it fits with the now.

It emerged from out of the thinkery of the Department of Employment and Learning (DEL) as recently as 2012. The protocols were first aired in a draft published in April 2012 (feasibility study; DEL web site). Tenders were then put out to the private sector for attention at the beginning of 2013 and the Stormont Executive approved the full regulations in June 1914. Implementation of the programme started in October 2014 and it is still being rolled out. The Alliance party man in the Executive, Minister Farry declared that this was ‘a major change in the way we help people, focusing on providing more flexible support for individual’s needs and their barriers to work.’

It is certainly a major change all right; it is the semi- privatisation of Stormont’s unemployment responsibility. The job of getting the north’s unemployed reserve army into work has just been handed over to three ‘lead contractors’ i.e. to profit seeking private companies.

  • Belfast Ingeus UK Ltd, supported by Armstrong Learning NI, People 1st, Springvale Learning, SES Consortium and Addiction NI.
  • Northern Region – EOS (Trading) Northern Ireland Ltd, supported by Elle Enterprises, Customised Training Services, Network Personnel, Ulster Supported Employment Limited, North City Business, Roe Valley Enterprise Ltd and Roe Valley Community Education Forum.
  • Southern Region Reed in Partnership, supported by Global Education Ltd, Network Personnel, Rutledge Recruitment and Training and South Eastern Regional College.

From now on the private sector will be gifted an opportunity to make a profit out of the unemployed with contracts worth £35 million. The only objection raised by those MLA’s who were there for the Committee stage was that DEL had unkindly overlooked some locally run training organisations in favour of the bigger outsider businesses -Pat Ramsey of the SDLP worried that 400 jobs could be lost to local training organisations in the transition period.

Ingenus, for example is a welfare to work international business founded in 1989 by the wife of the former Australian Prime Minister Kevin Rudd.  Therese Rein sold the business to Providence Service Corporation of Arizona in April 2014 in a deal said to be worth £65 million in cash and another £25 million in stock options, and she agreed to stay on as the Chief Executive.

Although present in several countries, Ingenus makes seventy percent of its declared profit from the British Government’s welfare to work contracts. The Australian government has been pretty ruthless in the slashing of the social entitlements of workers and this gradgrind model is being imposed in Britain via companies like Ingenus.

Another lead contractor is Reed Partnership a division of the Reed Group that includes Reed Specialist Recruitment and Reed Online. The Reed Partnership boasts on its web site that it was the first welfare to work contractor to be trusted by New Labour to deliver the service under the New Deal Programme – “We launched as one of the first private welfare to work providers in the UK. Our first contract started in Hackney in 1998.”

News journalists in Britain frequently claim that the welfare to work programme has been an unmitigated disaster, on the basis that it has been shown to be not good value for the taxpayer’s money lavished on it.  It has been reported that less than 5 percent of those forced under its iron wheels find any permanent work. These sorts of ‘I feel sorry for the taxpayer’ type of political analyses has become the norm for almost all news media criticism of government policy.

When asked about the work programmes’ lamentable failure reported by the news media in England, the DEL civil servants simply told the Assembly Committee that civil servants were under no legislative obligation to take the poor results into consideration when inventing their own scheme specially tailored for the North of Ireland. The DEL officials told the Assembly Committee they were aiming at a better programme and at a higher achieving rate of 29%. Success is defined as finding a job for anyone on the programme for at least three or six months.

The ‘getting good value for taxpayers money’ model of social criticism is an absolutely hopeless one in dealing with the private welfare to work model as it is to be applied in the North of Ireland. The only model of political analysis useful here is the one that relates important government policy decisions directly to the aims of the Good Friday Agreement and fulfilling the mandate of the peace process.

The managerial side of the Stormont regime is certainly not dedicated to ‘helping’ the unemployed section of the working class into some new era of private sector prosperity – that much is obvious.  Rather it is preparing and training them for a future based on low expectations, frequent changes to part time working and acceptance of a long life on the minimum wage.

One of the most significant new protocols attached to the steps to success programme is that the new providers are not obligated by their DEL contract to offer training and education to their unemployed clients. All of the previous work programmes at least contained such a proviso, stipulating some skills training.  This new iteration does not.  It was no doubt thought to be an added expense that the private contractors could well do without.

There is no expectation that the jobs the private sector currently has on offer will be anything but part time, temporary, low skilled and low waged. The fact that the private contractors will receive a payment from the Department on the basis of any three or six months job take-up speaks volumes.

It should be said that participation on the new work programme is mandatory. Even the 60 to 65 age group are forced to take part, something that did not previously apply.

There are to be five client groups – Jobseekers 18-24, Jobseekers early entry, ESA’s (employment support allowance) voluntary ESA’s and Returners. The ‘client’s’ routine is to change from visiting the job centre once a fortnight, to show sufficient evidence of really seeking work, to carrying on with this plus an added second routine of meeting with the ‘provider’ at least three or four times per week for sessions lasting either one or two hours – supervised job searching to really really show they are seeking work.

The larger client group must do a minimum of five hours supervised searching spread out over the week.  This routine includes cold calling of employers who may not have even adverted any vacancies. This is obviously an enhanced surveilling of the lives of the unemployed. The ‘clients’ even have to hand over their mobile phone details and email addresses for random contacts about job offers. They also have to sign wavers allowing the providers to retain and make use of their personal details.

You are asked to inform them of any health problems you may have and to let them know if you are a ‘substance abuser.’  Some of the client groups have to agree to do work placements without pay. The client can in theory claim travelling expenses if they are especially diligent.  I had to delve deep into the DEL protocols documents to discover this.

Claims for travel expenses will be submitted at participant level and can be claimed on a four weekly basis. The Department will make payments within 30 working days of receipt provided receipts are offered.’ The least expensive way to travel in Belfast is to buy a bus day ticket costing £3.40 or £3.90. So the typical travel expense for participants is likely to be between 10 and 15 pounds per week. A single person under 25 on JSA receives £57.35 and the over 25 person gets £72.40. Obviously one training tip you are going to get on this programme is a vital lesson on keeping receipts.

Any unemployed person who is deemed not to be ‘performing’ to the protocols will be sanctioned with a withholding of benefit. The rules state that:

‘Your benefits will be stopped for two weeks for the first time you

  1. Give up, or fail to attend the required S2S attendance without good reason or are asked to leave for non-compliant behaviour.
  2. Your benefits will be stopped for four weeks for a second breach of the rules.
  3. It will be stopped for 26 weeks if the client breaks the rules for a third time.’

There is as yet no evidence available for current sanction rates in the North of Ireland. The rates of sanction penalisation in GB are amazingly high.  On 12 February, DWP published an important Freedom of Information response 2014-4972 showing the proportion of JSA claimants sanctioned and the numbers of repeat JSA sanctions.

Almost one-fifth (18.4%) of the 3,097,630 individuals who claimed JSA during 2013/14 were sanctioned: 568,430 people.  During 2013/14 the maximum number of JSA claimants at any one time was 1,474,428. This gives some idea of the amount of turnover in the claimant count.

We know from Stat-Xplore that there were 888,936 JSA sanctions in 2013/14, so that the average number of sanctions imposed on sanctioned claimants in 2013/14 was 1.56. It should be remembered that these figures show the proportion of claimants sanctioned after reviews/reconsiderations and appeals. The proportion sanctioned before these challenges in 2013/14 must have been about 20%.

Incredibly the Work Programme continues to deliver far more JSA sanctions than successful JSA job outcomes. The official statistics show that up to 30 September 2014 there had been 345,640 JSA Work Programme job outcomes and 575,399 JSA Work Programme sanctions.

This new policing regime for the unemployed is already in situ while the controversial welfare reform changes that have provoked so much comment are yet to be rolled out. One intention of the welfare reform plan in waiting is to push as many of the more costly benefit claimants into the cheaper Steps to Success programme.  This anticipated change is the reason why the bigger private sector welfare to work contractors from Britain are anticipating an increasing client base. The other is to harry as many people off the benefits system as is possible within the law.

The early signs are that it is working – the last three months have seen the biggest fall in live jobseeking claims ever recorded, 1,700 per month. Many are drifting on to other benefits like claiming sickness benefit but the the economically inactive count is also rising rapidly and last month it reached 28%, the highest by far in comparison with Britain. It is the high numbers of economically inactive that is now attracting the gradgrind attention of the neo- liberal economists.

How quickly the promises of the Good Firday Agreement have turned to dust for the working class. The peace process promised a better life for all and there was much talk of a lasting peace dividend. For a few years there was all the appearance of incresasing prosperity, but it was based on bank lending, rising house prices and some increased public spending.  In retrospect the material cause of the peace process can be said to be precisely this raised State spending.

A recent study carried out by the Nevin Economic Research Institute provided data showing how the cuts may impact.  According to the report three parliamentary constituencies, Foyle, West Tyrone and West Belfast have above-average public sector employment, with West Belfast the most vulnerable to job losses with over 45% of total employment being in the public sector.

A proposed public sector redundancy scheme was announced as part of the Stormont House Agreement. The scheme is intended to “re-balance” the local economy, which is said to be disproportionately dependent on the public sector, which accounts for 31% of total local employment.

The exact number of job losses in the scheme remains the subject of speculation. The DUP Finance Minister Simon Hamilton has announced an initial “closure” of 2,410 civil service posts over the next year but trade unions have estimated an eventual figure of 20,000 job losses. The report also highlighted that the retail and hospitality sectors, which make up the second and third highest sources of employment in West Belfast for example, and which are areas where those made redundant might find alternative employment, are also the sectors with the lowest wages. (NERI Research no 20 by Paul Mac Flynn)

If so many of our people, the ‘oppressed nationalists’ are being employed in secure long term jobs by the State why are we concentrating all our efforts on destroying it? This was the objective condition faced by the revolutionary movement organised by the republican movement pre-peace process.  The long war was never targeted at the private sector just the State. We know how that story turned out.

The republican movement disarmed and then married into the State to become senior board members in a logical exercise in political thinking. Things are now changing – the British government strategy of supressing the insurgency with above-normal levels of public spending is coming to an end. You could argue that the proposed rebalancing to a private sector based economy is simply the logical extension of neoliberal austerity economics. Yet a more precise argument would have to factor in a change in the political conditions and climate of opinion.

The republican organised insurgency is finished and the peace process leverage once thought to be with Sinn Fein has all but been used up. Martin McGuiness said recently that the Tories just don’t get it like Labour did.  This was a plea for special economic clemency for the North of Ireland.  But it is Sinn Fein that doesn’t get it.  We are no more special than the Greeks.  We surely are in new times.

Workers’ cooperatives as an alternative to Capitalism – 2

10698536_420301091453164_5593204590190940624_nMarxists believe that conditions determine consciousness.  The ideas that most people have are products of their circumstances.  Currently workers sell their labour power as a commodity.  That is why they concentrate efforts on the price of their labour power (wages) and the terms and conditions at which it is sold.

It is why they value those services that they cannot provide for themselves individually but are unable to provide collectively because they lack the consciousness and organisation to do so.  This includes such things as unemployment insurance, pensions, health care and education.

The sanctification of capitalist private property means that the former is not strictly political while the distribution of the revenue from capitalism is.  Through the latter the working class is made dependent on the state for these services, including through employment in their delivery.  The welfare dependency culture repeated like a mantra by the right has this much basis in fact.

What there is not therefore is the material basis for the growth of a consciousness that workers should own, manage and control the productive activities of the economy and the state.  Instead the growth of the state and its acknowledged political leadership are the grounds for the view that the redistributive powers of the state are the basis for a solution.  This mistaken view takes the extreme form on the Left that the state should take over production itself.  Of course this has been tried.  It didn’t work well.

What we have with the Keynesian alternative then is an expectation, doomed to disappointment, that the capitalist state will divide the fruits of capitalism to benefit those who have first been exploited in opposition to those who have carried out the exploitation, which must remain in place in order to continue funding the redistribution.

Marxists believe that the future socialist society is not utopian because current society contains its anticipation in various ways.  Capitalism is pregnant with the future socialism; except that if the state is the embryo then the pregnancy taken to full term does not result in socialism but something else entirely.

Workers’ cooperatives are one of the crucial elements of this anticipated new society growing within the womb of the old.  It reunites workers with the means of production and removes the capitalist from the workplace.  It gives ownership to the workers and elevates their power, confidence and consciousness.  It can prepare the workers involved and other workers for the task of making the whole economy the property of the working class, which is socialism.

Workers ownership can provide the basis for workers to provide the services that are currently provided by the state and which leaves them at the mercy of the state and the politicians who preside on top of it.  Such services include education, health, welfare and pensions.  Workers self-provision of this would result in their own priorities being imposed on their provision.

However to posit this as the alternative immediately demonstrates a major difficulty.  While it is possible to envisage workers cooperatives supplanting individual capitalist production it is much more difficult to envisage this in regard to the services now provided by the State.  What this once again demonstrates is the role of the state as defender of the capitalist system – through exclusion of the working class from direct control within society and protection of the accumulation needs of capitalism.

Workers’ self-provision of what are now services provided by the state would necessarily lead not to demanding more taxation by the state but less, so that workers would have more control of their earnings and would have more to pool together and employ to their collective benefit.  In short workers would take more and more responsibility for their own lives, even when temporarily or permanently unable to work.  The dependence on the capitalist state would be weakened, at least in this respect.

In Ireland workers would have the grounds for recognising that there is an alternative economic development model to reliance on US multinationals.  They would have an example of a model of development that didn’t rely on the state.  They would have a living alternative to the threats that they need the capitalist banks.

Instead of workers relying on the state to provide for them by taxing the rich or investing in infrastructure to promote private capitalist investment they would have an alternative in which it is their own activity which is the alternative to capitalist crisis.

Is this the viewpoint of a reformist and utopian scenario?  I think not.

Firstly thousands of cooperatives already exist; they are not purely idealistic mental constructions.  What’s more they can be, and many are, very successful; providing hundreds of thousands of jobs.  Living proof that workers can do without capitalists to tell them what to do.  Workers can take control, can make decisions and can be successful.

The spread of workers’ cooperatives in entirely possible, their growth and development is not precluded by any necessarily limiting factor in capitalist development, at least to the point where capitalist accumulation appears threatened by it.

The trade union movement and the political organisations of the working class can play an important role in their development.  Workers’ cooperatives are therefore not an alternative to the existing workers movement but are something that can be complementary to its development, freeing it more and more from dependence on private capital and the state.

In fact workers’ cooperatives will inevitably demonstrate through their development the antipathy of the state to workers ownership and the power that workers as a class will develop as a result of its development.  The state will inevitably be used by the class it serves, the capitalist class, to undermine competition from workers cooperatives and support private capitalist accumulation.  Such a development will clarify the lines of battle between the workers’ movement and the capitalist system.

Workers’ cooperatives are not an alternative to class struggle but a means of carrying it out.  The creation of workers’ cooperatives in Argentina following its capitalist crises is evidence of this – how much better to promote workers’ cooperatives before such cataclysmic crises rather than in their midst or aftermath.

When workers say – “where is your socialist alternative after over a 150 years of your movement?”, we might have a living movement to point to rather than a simple promise for the future.

And such a movement will be an international one because just as capitalist development has become international there is every reason why workers’ cooperative production should also be international.  Every bit of such development will strengthen the international bonds between workers and undermine nationalist solutions that are currently growing.

In other words workers’ cooperatives provide the living link between resistance against the injustice of the current system and the creation of a real alternative.  Instead of simple rejection of cuts and lack of democracy workers’ cooperatives not only posit employment and democracy within the cooperative but the transition to a new society.  Workers’ cooperatives thus provide the material basis for linking the struggle against capitalism to the creation of socialism.

Workers’ cooperatives are not a magic bullet answer to the current crisis on the Left.  There is no simple or singular programmatic answer to a crisis that exists at the level of working class consciousness and organisation.  But for the Left a programmatic answer is currently by far and away the most important contribution that it can provide to workers.

Traditionally the revolutionary left has rejected workers’ cooperatives because they have been seen as an alternative to revolution – a militant class struggle against capitalists and the state culminating in an insurrection, the smashing of the capitalist state and creation of a new one.  I don’t think anyone can credibly claim that the patient work of class organisation involved in union organising, party building and creation of workers’ cooperatives would get in the way of a burgeoning revolutionary movement.  Anyway, when was the last revolution in an advanced capitalist state, one in which the working class is the vast majority of society?

It can be legitimately claimed that workers in existing cooperatives lack socialist consciousness so how can they provide the material basis for socialism?  This objection however must also take on board the reality that decades of union organisation has also not turned the majority of trade unionists into socialists.  However no one advocates abandoning the organisation of trade unions.

Finally an objection is made that workers’ cooperatives will simply teach workers to exploit themselves within a market economy based on competition.  They will simply become their own capitalists.

However, at the extreme, the ownership of all production by the working class would not only remove the capitalist class but would also remove the need for all allocation by the market, or by socially necessary labour time, to use the strictly Marxist definition.  In other words workers’ cooperatives would cooperate with each other.  Such competition as would exist would not play the same role as capitalist competition just as the continued existence of money tokens would not make it a capitalist system.

So for example, a factory making shoes that became unfashionable would not close down and throw its workers into unemployment but would see them transfer to either production of shoes that were in demand or to some entirely different branch of production.  Other workers would support this because they would all know that what they produce might equally go out of fashion, become technologically obsolete or have its workforce reduced by automation.  In the same way the receipt of money as salaries and wages would not mean that this money would exist as capital, able to purchase labour power in the pursuit of profit.

The current value of workers’ cooperatives is not just as living practical examples of socialism but that they allow theoretical and political clarification of just exactly what socialism is.  They shine a light on the difference between workers power and all the solutions that rely on the state – from Keynesianism to nationalism.

This is the second part of the post.  The first part appeared here.