Tag Archives: United Left Alliance

Why have the Irish not revolted?

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Public-service-workers-st-006The defeat of the opposition to the property tax and the ability of the Government to impose a second Croke Park austerity deal might lead many to conclude that resistance to austerity has been defeated.  Even before this many have commented that while Greece has witnessed violent protests and numerous general strikes the absence of such events from Ireland is notable and remarkable.  General strikes have also taken place in Spain and Portugal but not in the Irish State.

The relative electoral success of the United Left Alliance appeared to blind some to this but the collapse of the ULA has simply confirmed what is more generally understood to be the case.  More and more it is acknowledged on the Left that we have to face the reality as opposed to perennial false claims that an upsurge is taking place or is just around the corner.

Realistic assessments of the state of workers’ action have often been drowned out by childish claims that this shows one is insufficiently revolutionary, underestimates the workers , their ability to change their ideas quickly or that such views will not encourage workers to take action.  Not in front of the children appears to be the motto.  Workers are always ‘angry’ and all it needs is the right campaign, so long as it is active enough, to stir them into action.

Reality is imposing itself and no sound bites along the lines of ‘the darkest hour is just before dawn’ can hide the fact that the economic crisis has resulted in the imposition of austerity on workers without effective resistance.  Why is this?

First we must qualify the judgement that Irish workers are peculiarly useless.  Commentators have remarked in similar terms about the countries in southern Europe.  We have noted before that more or less spontaneous social explosions have not resulted in great advances by the working class.  Greek workers have been by far the most combative in terms of general strike action but in hardly anywhere has living standards plummeted so much.  I have also noted in one of my first posts that economic crises spurs growth in extreme reactionary forces and we have seen this is in Greece with the rise of the Golden Dawn movement.  So Greece is no model to seek to copy.

Secondly Irish workers have fought back albeit within very strict limits.  I can still remember the very large demonstration in November 2009 in Dublin, which had many working class people from outside the ranks of the trade unions taking part.  The following year public sector trade unions organised a successful strike.  At a local level in certain places and at certain times strong campaigns have developed against tax increases or hospital closures.  All this and more was reflected in the vote for ULA.

There is however an over-estimation about what workers can achieve within the limits of the capitalist system – a general misconception that workers’ struggles can overturn the laws of capitalism.    For example, if a company goes bust and attempts to close down, making all its workers redundant, it is pretty obvious that strike action will not achieve very much.

At this point many on the left propose that the capitalist state protect workers even though these same people have a part of their brain that tells them that the state is a weapon of the capitalist class that cannot be reformed and must be smashed.  They also believe that the emancipation of the working class must be achieved by workers themselves but usually object to the idea that, instead of the state, the workers should take over and own and run these workplaces as workers cooperatives.

It is a similar situation at the level of society as a whole and at an international level.  The Irish state was and still is bankrupt.  It needed a massive injection of money to save the banks and put itself in a position to start reducing its mushrooming debt.  Austerity is a means of doing this.  Again the Left argues that the state can adopt policies of taxing the rich and spending money on investment that will restore the capitalist economy to economic growth, which will then deal with the problem of the debt.

This is not however the view of socialists.  The socialist view, confirmed once again by recent events, is that capitalism inescapably produces economic crises which are dealt with and resolved by the laws by which the system works, including through unemployment and destruction of unsuccessful capital whose markets and sometimes businesses are picked up on the cheap by those remaining.  It is not possible for the capitalist system to prevent such crises by adopting policies of more investment, as for example argued by left followers of Keynes.

It is not therefore possible for workers no matter how well organised to prevent the laws of capitalism from working.  This at least was the view of Marx and the evidence of history would again confirm this.  So workers resistance against austerity may be able to ameliorate austerity but, in so far as they are necessary to lay the foundations of a new upturn, it is not possible for workers to prevent unemployment or wage cuts or tax increases in their entirety or even to a significant degree.  In other words it is not possible within the system to prevent capitalism periodically disrupting workers’ lives.  That’s why we oppose the system and why we propose a different one called socialism.  If we thought capitalism could work better without its nasty effects we wouldn’t be socialists would we?

Yet the left presents austerity as simply one policy option of the Government which it could choose to reject and replace with their own proposals.  But even the Keynesian alternative requires ‘counter cyclical’ state action.  In other words the austerity measures are simply postponed.  All the left’s proposals involve actions by the capitalist state in one way or another – tax changes, public investment, nationalisation etc.

The point in terms of the current argument is not that the Left is misleading workers into accepting reformist solutions that won’t work and this is a reason why resistance to austerity has been such a failure in Ireland.  These ideas are more widespread in southern Europe than they are here.  No, the issue is that, absent a socialist alternative being created, as long as capitalism exists the laws of capitalism will continue to work and impose themselves.  Resistance to austerity will therefore fail and this failure is bound in turn to lead to weakening of the resistance.

We must be careful however not to qualify the problem out of existence when it contains more than a grain of truth.  When Greek workers chanted “we are not Irish” on their May Day demonstration in Athens in 2010 they weren’t imagining the relative weakness of resistance in Ireland.

Nor can the question be dismissed by saying Irish workers did fight back – they did, but nowhere near to the extent required for success.

Nor is it credible to blame the poor politics or organisation of the Irish Left.

It is also not adequate to simply say that capitalism wins unless we create socialism. This is obviously true, although its logical implications for reformist strategies and policies are often ignored.  But it doesn’t come near explaining why the reformist strategies for resistance have elicited such weak workers’ action.  It’s hardly that Irish workers can see through such strategies and are ready for something more radical.

Socialism is not an event or a situation but a movement. Workers will only become capable of building a socialist movement and carrying out revolutionary change if they are also capable of mounting strong resistance to the ravages of capitalism.  In Ireland this hasn’t happened and there has been a retrogression of the small socialist movement, although this in itself is not particularly new.

So in Ireland the state has been able to pursue austerity policies that increase unemployment and wage restraint in order to restore its solvency in very much the same way capitalist crises work to   restore profitability in the private sector.  It has been able to do so without much of the resistance shown in other countries in a very similar situation.  This remains to be explained.

To be continued.

A new Left electoral campaign in Limerick

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The Revolutionary Programme web site altered me recently to the latest electoral initiative of the Left – here.  The programme of this initiative is the following:

  • No to the Property, Water & Septic Tank Taxes – No to Deduction at Source.
  • No to all Austerity – ordinary people have paid enough.
  • For a united movement of ordinary people affected by home taxes and austerity – no to divisions based on race or nationality.
  • Tax the Wealthy as the alternative to austerity: For progressive taxation on the wealthy and corporate sector.
  • End the bailouts of banks and bondholders, instead use the money to create real jobs through a programme of necessary public works.
  • Our candidates if elected would:
    Fight against plans for Water Metering, Water Taxes and Water Privatisation.
    Oppose all cuts in council services or erosion of workers conditions.
    Make no deals on the Council with the austerity Parties (FF, FG, LP).
    Oppose the gravy train – no participation in junkets. Demand local planning for the community, not for developers or vested interests.

What attitude should Marxists take to this electoral initiative?

Just like every other party standing in an election it must surely be judged by what it says – by its professed programme or set of policies, providing of course these are also what it truly represents.

Can and should it be supported?

The electoral slate is clearly not a party and was organised by the Campaign Against Property Tax and Austerity but the logic of standing in an election is to act like a party and even more so if elected.  The failure of the Unite Left Alliance to do so has led to its demise.

The policies above are no way different from that of the ULA, except more limited.  The Left has argued over the last number of years that elections and those elected are there to advance ‘real’ struggles outside of parliament and council chambers.  The last few years have demonstrated conclusively however that it is the other way round – struggles in communities and estates have been means to advance electoral ambitions.  Electoralism is a dirty word on the Left but nothing would appear to describe the method of organising so accurately.

This initiative, the promised first of many, must be judged firstly on its own terms.

The short summary of its aims says it is against austerity and the various taxes that have made up a large part of this agenda.  The anti-property tax has failed so it will have to be explained how standing in elections will bring success.  Otherwise voters are being asked to vote for good intentions.  Councils can clearly not change the policy of central government so how will the taxes and austerity more generally be blocked and reversed?  No concrete and practical way forward is put forward.  Maybe it will be, but if it isn’t then it is purely propaganda.

If the reason for standing is to build the campaign this should be the main point of the programme but even here it should be explained how the campaign will achieve its aims.  Is, or rather was, a mass boycott a road forward given deduction at source?  If not what is the alternative – a mass political campaign aimed at persuading tax workers to refuse implementation of the tax?

What role is there for councils?  Are enough candidates standing to win a majority?  If so what would they do with such a majority?  Can they unite with other similarly minded councils to campaign against the tax?  What powers do councils have to frustrate or prevent this tax or austerity?  Will the new council promote workers control or ownership of council services?  What other steps will it take to promote the democratisation of local government?

If there is no possibility of winning a majority then what role would those elected take?  Will they release all information currently withheld on council activities?  How will they frustrate the local implementation of austerity?

If these questions aren’t put to the fore then, as I’ve said, what we are seeing is purely propaganda.  This does not mean that this aspect should be underestimated.  Even in periods of limited struggle, in fact particularly in such periods, the task of socialists is to try to educate as many workers as possible through propaganda.  Given the very small size of the socialist movement in Ireland this is by far and away its biggest task.  If it doesn’t get this right then the majority of what it is capable of doing is wasted if not positively harmful.

The thrust of the programme appears to be anti-austerity with the alternative being taxation of the wealthy – “for progressive taxation on the wealthy and corporate sector.”  It is also proposed to “End the bailouts of banks and bondholders, instead use the money to create real jobs through a programme of necessary public works.”

I have shown what is wrong with the idea you can tax the wealthy here and here so I won’t repeat my arguments again in this post.  The main problem is that it is not the wealth or high incomes of the rich that are the cause of austerity so even if it were possible to tax both effectively the cause of austerity would persist.  This cause is the economic crisis.  Because the economic system is a capitalist one the elementary task of a manifesto would be to state this and explain it.  Explain exactly how the way the capitalist system works has given rise to this crisis and will create more in future. This would be necessary in order to argue that the alternative to austerity from a working class point of view is socialism.  Explaining what this is would involve is an obvious next step – expropriation of capitalist ownership and workers ownership in its place and a workers’ state in place of the existing state.

Complaining that the programme does not mention socialism is not the problem since the programme is not a socialist one.  If this is the way it is then it is better that it does not claim to be socialist.

The programme proposes ending the bailouts of banks but does not explain how this might be done, the consequences or the alternatives.  Some of these issues are touched upon here, here and here.  How is the debt to be repudiated?  What debt is to be repudiated? How would credit be provided if the banks were allowed to fail?

Anyone who begins to think seriously about what “ending the bailouts” means will have these questions in their head and without an answer they will be open to accepting right wing claims that such proposals are not thought through , cannot be implemented or would be even more disastrous than what we already have.  Dealing with such claims is the important task of propaganda and at this point in time elections are useful means of getting across the message.

In the absence of all this the message put across is a radical Keynesian one, that is a capitalist one.  One that is temporarily more beneficial to working people but one, if followed,that would lead to inflation, wage cuts, unemployment, and calls for reducing budget deficits and tax increases later on.  That’s if it worked in the meantime!

From a political point of view therefore the programme does not assert separate working class politics but, in so far as it puts forward an alternative, puts forward the benign actions of the capitalist state as the solution.  It therefore doesn’t even get to first base in terms of a socialist alternative.  It may therefore be reformist but it isn’t working class reformism because it seems to rely solely on pressurising the state.

In terms of the reformist/revolutionary dichotomy it isn’t even the former since it lacks the courage of its convictions and fails to propose a Left Government for the Dail that could tax the rich and the corporations; burn the bondholders and use the money to create jobs in the public (read – capitalist state) sector.

A socialist programme would explain that fighting austerity is required to defend our living conditions but that this will ultimately fail unless the system is replaced.  Austerity can at best be ameliorated but such is the depth of the crisis it cannot be entirely halted and reversed under the present economic system.

Some will deny this and claim that austerity can be ended without changing the system; that the rich can be made to pay for their crisis and that policies of growth will ensure that this can happen.

On the other side will be those who will claim that austerity is an inevitable result of an economic crisis, which is caused by the capitalist system in its attempts to produce and accumulate capital beyond the conditions that allow it reproduce itself harmoniously.  The excessive expansion of credit is always a feature of capitalist crisis and the bigger the boom the bigger the bust, unless even more credit is injected into the economy in which case the bigger the boom  . . . No amount of regulation or honest government can prevent this without seriously gumming up the capitalist system, in which case you simply have a different sort of crisis with very much the same symptoms of unemployment etc.

On the first side of this debate will be the liberal defenders of Keynes, including their economists and leaders of the trade unions.  On the second, socialists, who can only consistently defend their ideas by understanding and presenting the arguments of Karl Marx, which is the reason Marx wrote ‘Capital’.

A recent post on the Michael Roberts blog has a couple of interesting points to make about these arguments.

He points to research showing that inequality of income reduced between 1910 and 1950 across the OECD (most advanced) countries, which calls into question the idea that capitalist crisis is a result of inequality that progressive taxation could cure.  This period, after all, covers the great depression of the 1930s.

He points to other research that:

“Credit booms mostly lead to financial crises, but inequality does not necessarily lead to credit booms. “Our paper looks for empirical evidence for the recent Kumhof/Rancière hypothesis attributing the US subprime mortgage crisis to rising inequality, redistributive government housing policy and a credit boom. Using data from a panel of 14 countries for over 120 years, we find strong evidence linking credit booms to banking crises, but no evidence that rising income concentration was a significant determinant of credit booms. Narrative evidence on the US experience in the 1920s, and that of other countries, casts further doubt on the role of rising inequality.“

The problem with left solutions that highlight (sometimes more or less exclusively) inequality of income and wealth is that their solutions do nothing to tackle the origin and cause of this inequality.  The Michael Roberts blog points out that “in 2011, capital income constituted 60% of the top earner’s income compared to just 32% in the 1980s.”

The origin and cause is capitalist ownership of the means of production, including its purchase of labour power, its ownership of capital and the money and power this involves.  It is the relations of production in which workers have to sell their ability to work to a class of owners of the means of production that produces the gross inequalities in society.  Redistributing what is already produced, even were it possible, would not overturn this power relationship or the exploitation and oppression involved because it does not get to the heart of the matter.

In a country where little or nothing of this is understood the elementary task of socialists is to explain this to as wide a number of workers as possible and elections should be taken as an opportunity to do so.

So we are back to our question – should this electoral initiative be supported?

To the extent it has been judged as a more or less adequate immediate guide to action or corresponds to the  educational  needs of the working class the verdict would appear to be no.

Perhaps unity could not be agreed between the participants on any other basis and what we see is a campaign standing in an election not a party.  But was any other basis proposed or offered?  Was any discussed or do the participants see no problem in the platform of a campaign being adequate to a programme for an election?

It might truthfully be said that the low level of the programme reflects the low level of Irish workers’ class consciousness but this is not a way out of objections to it, for there is nothing in it to advance Irish workers’ understanding of the cause of the austerity they face or the great changes that are required to defeat it and establish a new society.

The only conditions upon which it would be possible to support this initiative is if it went further in arguing the socialist case or if it raised the prospect of invigorating a section of workers into activity, in which case through this activity they may learn about the roots of their predicament and themselves go beyond the timidity of the anti-austerity campaign.  To do the latter they may have to go beyond the existing Left groups who save what they think is socialism for potential recruits while the broader class of workers they address in electoral material, the purported agent of revolution, are fed re-heated capitalist reforms.

Support the ICTU demonstrations!

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frame-1-ictu-protest-march-over-the-governments-four-year-austerity-plan-assembling-at-christchurch-in-dublin-irelandThe Irish Congress of Trade Unions is meeting on Wednesday to discuss the possibility of organising a series of demonstrations across the Irish State in opposition to austerity and debt.  It has issued a press statement outlining its reasons; in particular it is targeting the issue of debt and has indicated that demonstrations might take place in a number of towns and cities including Dublin, Cork, Galway, Sligo, Limerick and Waterford.

The possibility of these being organised should be welcomed but more important, if they take place, they should be supported.  It gives working people an opportunity to demonstrate their opposition to austerity, to demonstrate the scale and anger of their opposition and put forward what they think should be the alternative.

It gives the small socialist movement an opportunity to campaign in the working class to make these events as large as possible so that the demonstrations can convince and give confidence to others to also oppose austerity and oppose the crippling debt.  It gives it the opportunity to speak to workers to take action outside as well as inside the trade union movement and in the private sector as well as the public sector.  The purpose would be to begin reuniting workers who have been successfully divided into union and non-union and between public and private sector by the propaganda of the State, employers and media.

A real campaign at union and community group meetings, at workplaces and in the streets including door to door leafleting and canvassing should aim to mobilise as many as possible to turn out, should the demonstrations be called.  Right away attempts should be made to extend the numbers building the demonstrations through meetings organised to discuss the demonstrations and how they could be made as large as possible.

These meetings should not simply be organising meetings but should also discuss why we oppose austerity and the debt, how they are affecting the lives of working people, how we should organise against them and what our alternative should be.  What for example is our position on debt default?  What role does strike action have in a campaign against austerity and default?

There are many issues facing workers and socialists have the opportunity to give them the possibility of coming together beyond the existing union movement to unite and discuss all these issues.

In this blog I have addressed these questions here, here, here and here.

What have been called as one-off demonstrations should be supported in order to make them an on-going campaign both before and after they take place.

All this is primarily the task of the socialist movement but it is not limited to it.  There are many opposed to austerity and many campaigns against its effects that should take the opportunity to better organise and unite with each other to discuss what should be the alternative.

An additional onus is however placed on the socialist movement.  It claims to stand for the interests of the whole working class and has a special duty to take every step to unite it in defence of its own interests.  This has two aspects.  First it must unite itself to carry out the task of uniting workers.  Otherwise it is weaker and opens itself to charges of incompetence, hypocrisy or political sectarianism.  The second is to create a campaign which is open and democratic and which at the very least offers the possibility, if not yet the certainty, of uniting the most militant workers.

The unity of the socialist movement in such a task should in principle be easier since it has theoretically already achieved some level of unity through the United Left Alliance.  The ULA should immediately discuss how such an opportunity can be utilised to build an anti-austerity campaign, on what basis it should be built and what policies it should fight for.  This is, after all, something which the ULA said it was going to do when it got elected and it would not do to renege on promises, just like the Labour Party and all the other right wing parties, once elected to the Dail.

Complete agreement should be no barrier to taking this action.  A democratic campaign would in any case allow everyone to argue its particular view on the way forward and the alternative.  In a democratic campaign of action there would be no role for vetoes.

The objective on the day would be a united left contingent, united around an agreed programme and demands, offering an on-going campaign to everyone at the demonstration who didn’t just want to go home afterwards to watch themselves on the RTE news.  The size and resonance of such a contingent would testify to the potential to build real and lasting opposition to austerity.

There is of course a flip side.

To borrow from management-speak: for every opportunity there is a threat and for every potential strength a potential weakness.  To fail to take opportunities threatens the effectiveness of resistance to austerity and to fail to strengthen the resistance will result in weakening it.  The ULA through its minor electoral success has given itself some responsibilities which it should relish as opportunities to help workers build a movement against austerity.

Support, build and go way beyond the ICTU demonstrations!

Budget 2013 and the alternative

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6122011-budget-2012-second-day-14-630x491The 2013 budget is going to introduce tax increases and spending cuts of €3.5 billion.  Michael Noonan smiled when holding up the budget document to the cameras while Brendan Howlin looked serious.  Nevertheless RTE reported that Labour TDs were pleased claiming that their fingerprints were all over it.  And so they are.  Their footprints, where they walked all over many vulnerable sectors of society, are also all over the budget.

There has essentially been only one defence of these austerity budgets and that is that the Government has had no choice.  No choice because there is no economic alternative and no choice because the State has lost its economic sovereignty and is basically doing what it is told to by the Troika of European Commission, European Central Bank and International Monetary Fund.

In this budget they have felt compelled to come up with a new defence – it is nearly over. This was trumpeted by Michael Noonan and also claimed by the Labour leader that “It is the budget that is going to get us to 85% of the adjustment that has to be made, and will therefore put the end in sight for these types of measures and these types of budgets”.

This hardly looks credible, which is not good news, because what it essentially means is that the austerity measures implemented have both been insufficient and haven’t worked.  The economy has contracted and stagnated even as the austerity measures have been insufficient to bridge the deficit.

For 2012, the deficit has turned out to be around €500 million larger than planned but because of upward revisions to data from earlier years, the deficit target, set as a percentage of GDP, will still be hit. This assistance in meeting the ‘target’ will not be available in 2013.

At the end of 2013 the deficit will be 7.5% of GDP.  In 2008 (excluding that related to the banking bail out) it was 7.3% rising to 11.5% in 2009. All the austerity budgets have achieved so far is a reduction of 4% – less than half way to eradicating the budget deficit never mind 85% of the way.  Even by 2017 the IMF forecasts the deficit will be 1.8% so the debt will still be getting bigger.

As with all these budgets there have been cuts to capital expenditure with another €500 million reduction targeted for 2013. In 2008, capital expenditure was close to €10 billion. In 2013, it will be under €3.5 billion. Public capital expenditure has been slashed by 66% which wipes out, and more, the so-called stimulus measures announced earlier in the government’s PR/con exercise that claimed to be promoting jobs.  This means the infrastructure of the state, economy and society will disintegrate more or less quickly.

The sheer madness of the austerity agenda is demonstrated by the fact that the €3.5 billion in cuts and tax increases will be wiped out before they are even implemented by the €3 billion payment of the promissory notes for the Anglo-Irish bank, which no longer exists, and repayments of €2.45 billion of bonds for Irish Life & Permanent. On top of this there is the rising interest cost of the debt, which will increase from €5.7bn in 2012 to €8.1 billion in 2012-13.

With the debt increasing, even at a reduced rate of increase, the burden of interest payments on it can only worsen.  This makes the debt unsustainable.  A rising interest burden will be a permanent anchor on growth.  This is a problem because the Government is relying on renewed economic growth to get out of the stagnation now in place.  The weakness of Irish capitalism means that it must rely on outside forces for this growth.  Either that or there is some debt relief to lower the amount of debt and the burden of interest payments.

In the meantime particular groups of the working class will suffer real hardship, living standards will decline or at best stagnate and unemployment will be limited only by continuing emigration.  The stresses imposed on society will be expressed in mounting social problems that will often be presented as a simple increase in personal misfortune while increased inequality will coarsen social relations and further weaken social solidarity.  The absence of any radical perspective will see reactionary prejudice become common currency.

Once again the United Left Alliance has put forward what it states is a socialist alternative.  In substance it is the same argument as that put forward last year but with more detail and some development here and there.  There is no need to repeat the analysis presented earlier in this blog including here, here and here.

The ULA is in no position to implement any of its proposals.  The purpose of the document must therefore be an educational one.  What it teaches is therefore the only useful criterion by which to judge it.

It starts out by claiming to be a socialist alternative and its headline is repudiation of the debt, an end to austerity and the need to invest in jobs and services.  All these are undoubtedly the immediate needs of the working class.  The problems start when we look to see how it is proposed these ends might be achieved.

The ULA “proposes to take the burden of the crisis off working people, improve their lives and revive the Irish economy.”  On the other hand it admits that “the budgetary proposals put forward by the ULA can in no way offer a comprehensive solution to the crisis we face.”  How the first claim is reconciled to the second is not explained.

While the debt crisis “resulted entirely from the actions of developers, bankers and the politicians who facilitated them” it is not explained how this can be reconciled to it being “a manifestation of a deep structural crisis of global capitalism.”  It is nowhere explained what this latter statement means, how it explains what has happened or how it explains what solutions are possible.  The Marxism to which the core elements of the ULA claim commitment is founded on claims to present just such answers but they are not here.

It might, with some justification, be claimed that the precise cause of the crisis is also a cause of some debate within Marxism.  Unfortunately any suggestion that a key task of the ULA might be to debate this out so as to inform the politics it espouses would be held up many as a fetish of sectarian or dogmatic individuals who aren’t interested in practically ‘building the movement’, or some other such boorish remark.  Instead while (dumbed down) Marxism is relegated to recruitment meetings for novices the vacuum that is the politics presented to workers is filled with Keynesian, that is capitalist, ideas that are the currency of liberals and the leaders of the trade unions.

Let us see some ways in which this is expressed in the ULA economic alternative.

First the ULA proposes to improve the lives of working people and revive the Irish economy but there are no socialist measures proposed that would achieve this.  Were the proposals to therefore fail (if by some miracle they were tried) it would discredit what passes itself as socialism while if they were to succeed they would go some way to making socialism irrelevant.

The ULA claims that “the alternative we propose will not be implemented by the current parties in the Dail or by the Irish state.”  Yet it proposes that the Irish State increases income tax on the rich, reduces taxation on workers, introduces a wealth tax, introduces a financial transactions tax, increases corporation tax, takes “full control of the banks”, supports small business, invests to create jobs, embarks on a programme of council house construction, creates a new construction company, renationalises all privatised strategic enterprises and establishes a state owned gas and oil company. It declares that “the ULA believes public enterprise and public works must play the central role to redevelop the economy on a sustainable basis.”

The ULA claims that “radical measures that break with the logic of ‘markets’ are required” but the demands on the state above do not do this while it is claimed these measures will “revive” and redevelop the economy on a sustainable basis.”

“There is a need for active struggles to demand policies that prioritise the need for jobs, public services and growth, using public investment and democratic socialist planning to chart a way out of the current crisis.”  What sort of struggles? For what policies? And who will we demand this of?  How would they deliver on it?  What, who and how?  Where and when don’t even arise given the vacuousness of this string of words.

In other words – as a vehicle for education – the alternative budget, when it is not mistaken, as we have explained in earlier posts, is simply incoherent.

What is clear is that the ULA has no strategic perspective.  It calls for socialist planning, but socialist planning is just another term for working class rule, for the working class controlling society.  Yet it proposes the state, the capitalist state, take action in the here and now to solve the crisis and develop the economy on a “sustainable basis”.

This lack of coherence reveals itself in timidity, contradiction and calls for solutions that have already been the means to subordinate and exploit the working class; as when the ULA calls for “full nationalisation with direct public control of the banks” when it is nationalisation and state control of the banks that has been the mechanism to burden workers with the debts of the speculators.

Even when it calls for “direct public control of the banks” this can as easily be defined as the current arrangements as it might by workers control.  So how does such a demand clarify anything?  How does it educate anyone on what they should fight for?

The ULA is currently undergoing an organisational crisis but its real problems are political.  It argues an alternative that is simply not based on the actions of the working class. It is imperfectly aware of this so it substitutes vague calls for action and acknowledgements that what they are proposing is only temporary amelioration.

There is a possible solution to this problem and it involves debating openly and democratically what a socialist strategy should be.  As I have said such calls are resisted.  It therefore falls to those prepared to do so to engage in such a debate so that we don’t just point out what’s wrong but also say what’s right.

Should we call for a general strike?

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One theme of the anti-austerity demonstration in Dublin was the call for a 24 hour general strike by a number of left groups.  The Socialist Workers Party (SWP) said that “one march is not enough – we need a 24 hour general strike”.  The United Left Alliance (ULA) called for a “boycott of the Property Tax” and “for a 24 hour general strike – on 31 March next year”.  The leaflet from the Socialist Party did not mention a general strike but said that the “mass campaign against Property Tax can be key to defeating austerity agenda . . challenge the sell-out of the trade union leaders – organise from below to strike against austerity.”

Repeatedly reference was made to the experience of workers in Spain, Portugal and Greece and sometimes unflattering comparisons with Ireland.  General strikes against austerity have taken place in these countries but not in Ireland.  Under the headline “How austerity can be defeated” an article in the Socialist Party paper says that “all that is needed is some leadership and direction.  The union leaders should follow the example of workers in Spain, Portugal and Greece – a one day strike in Ireland of public and private sector workers against the cuts and austerity taxes would be a body blow against this weak government.”

Two questions immediately arise from such a call.  What is the purpose of a general strike and how would one be brought about?

It is not stated explicitly by any of the groups demanding one but it must be assumed by the criticism of the failure of demonstrations and previous action, that the purpose a general strike is to stop austerity.  Unfortunately reference to Spain, Portugal and Greece does not support such a claim.  In all countries austerity has continued, if not intensified, despite general strikes.  In fact, as we have noted here and in an earlier post Greece has had a huge number of general strikes but austerity there is the worst.  So at the very least supporters of a general strike owe it to everyone to explain in what way it will work to achieve a specific purpose.

An argument can be made that a general strike will prevent austerity getting worse but again this is not the Greek experience.  It can be argued that the situation would be worse if there was no resistance and as socialists we could all agree with this but this is not the argument being made, in so far as there is one.  This argument appears to be that a general strike will not just prevent austerity from being worse than it might otherwise be but that it would stop austerity, or at least prevent it deepening.

The Socialist Party article claims that a general strike might destroy the Government.  This is doubtful but even if it were true the experience of Greece bears witness to falling governments and continuing austerity.

So if the purpose of a general strike is not apparent the means by which one could be brought about seems even less clear.

Two problems are posed.  What is the role of the Irish Congress of Trade Unions (ICTU) and the trade union leadership generally and what is the role of the Left and rank and file activists inside and outside the trade unions?

Two criticisms of the approach of some on the Left have been levelled here.  It is argued that while the call for a general strike is a good one it is a mistake to pose it as a demand on the rotten ICTU leadership.  This is because such a demand would confuse those working people looking to the ULA through implying ICTU would carry through on such a call.  Even if forced to give nominal support their role would be to minimise its impact and undermine its success.  Any mention of ICTU should be to expose their role not imply that they could be on our side.

There are various formulations relating to how we should approach the question of the ICTU leadership.  The Socialist Party proposes to “challenge the sell out of the trade union leaders – organise from below to strike against austerity.”  “There is a rotten trade union leadership – we need a revolt from below which either pushes them into action or else has the power to push them aside.”

The Socialist Workers Party says that “trade union members and activists should unite and campaign within all unions to demand that the union leaders organise a fight back – organising demonstrations is not enough – real action including strike action against austerity is needed now.”   It argues that “resistance (has been) held back because most union leaders are in the Labour Party.  Break all links with this Party and remove people who support them from the leadership of our organisations.”

It is clear, from the size of the anti-austerity demonstration compared to that of earlier ICTU organised events, that there is currently not a large enough unofficial or rank and file movement either within or outside the trade unions calling for, never mind in a position to organise, a general strike.   It is not on this basis a realistic short term possibility.  At the moment the only body with the authority, credibility and organisation to call a general strike is ICTU.  It is the unchallenged leadership of the trade union movement and of the vast majority of its members.  However much we might regret that fact it is nevertheless the case.

Unrivalled in its position of leadership it certainly has the authority no other grouping has.  It is the only body currently, which if it issued a call, would be seen as credibly being able to threaten the Government with such an action.  There is no other organisation with the capacity to mobilise the trade union membership and organise a general strike.

However much we also reject their claim to be against austerity the majority of Irish workers have not consciously rejected their leadership.  The vast majority of workers not totally cynical either accept that all that can be done is being done or that austerity is inevitable or that they wish, hope or believe that something more could be done but don’t know what that something is or how it could be made to come about.  Irish workers are angry but they have no clear idea about what to do about it and have no clear and united vision of what the alternative might be.  The general election that voted in a Fine Gael dominated Government and the passing of the Austerity Treaty referendum are confirmation of this.

This means that ICTU cannot be ignored and that the problem is not that of creating illusions in ICTU that are not there but destroying the vast illusions or acquiescence in their role that is there.

So if we should agree that on their own ICTU will not call a general strike, and would attempt to neuter it of its potential if it did, we are left with a recognition that we are not in a position to make a general strike anything more than a propaganda demand that lays the foundations for possible realisation of it in the less immediatefuture.

This is in effect acknowledged by the various Left currents.  The ULA leaflet says we must “start the campaign now with trade union and community meetings to oppose Croke Park II and demand a 24 hour stoppage.”  The SWP also talks about the “start of mass resistance”,  that “we need to start taking real protest action” and calls for, as yet non-existent, “assemblies to allow people to put forward their own vision.”

All the Left argues we need a campaign against austerity but it would be putting its money where its mouth is if it were able to debate openly and come to an agreed decision on how such a campaign should be built.  At the moment there is no agreed position on this.  The ULA has unfortunately signally failed to unite the Left in an anti-austerity campaign with an agreed policy and perspective.  If it cannot unite itself it has to explain how the working class will be united in a general strike against the Government.

A first step in such a task would be to determine the role of a general strike in the struggle against austerity.  A 24 hour general strike would be clear evidence of the potential power and organisation of the working class.  To even achieve the level of organisation beforehand that would be required to make it a success would indicate a jump in political consciousness and capacity to independently organise.  Success in carrying it off would add to this class consciousness and capacity.  It would demonstrate to the Government the opposition to it that exists and the potential for it to be toppled.  But after 24 hours everyone would have to go back to work and the question would have to be what next?  Everyone, including the Government, would know this.

In Greece some socialists are speaking of an indefinite general strike but such a call really is a challenge for political power in one form or another and who believes the Irish working class is remotely in a position to issue such a challenge?

A general strike therefore can only be the product of a prior campaign that was able to extend enormously the consciousness and organisational capacity of the working class.  From where we are now it is clear that a campaign for a general strike would have to argue that this should be the demand of the whole trade union movement and wider forces.  This means fighting for it to be the demand of ICTU.  Such a campaign would have the aim not of passing resolutions calling on the current leadership to call a strike, although this would be one necessary approach, but would fundamentally be about building a movement within (and outside) the trade unions to win support for it from ordinary workers and making them capable of carrying out a general strike with or without and probably against the leadership of ICTU.

We are a long way from that at the moment.

The call for a general strike however is only one rallying point for a campaign against austerity.  Workers not only suffer from austerity they also implement it.  In order to impose the property tax workers must process the bills.  In order to close services workers must accept that they close.  In such cases campaigns must be built that boycott processing of new taxes, wage cuts and redundancies etc and which occupy services threatened with cutbacks or closure, or related workplaces that have been spared.  Taking over the workplace is often a more effective form of action than walking out of it.  Such actions have begun in Greece.

All of this means that workers must have effective control over their own organisations.  This is either through fighting to democratise existing organisations that have been bureaucratised such as the trade unions or creating real democratic organisations from the new campaigns against austerity, the property tax etc that have been or will be created.

Within such a perspective the culminating point, the objective, is not a general strike but the advancing organisation, consciousness and power of the working class movement.  The question of a general strike is one (important) one of many.  Any significant advance along this road would raise the question of a working class political party.

Such a perspective allows us to start from where we are without seeming to pose currently unrealistic objectives.  It is designed to build solid foundations and to go as far as it can without thereby suffering failure because it has not achieved everything.  It is not saddled with a perspective based on one determining clash of forces that it will fail, until that is it might be capable of offering such a battle with some confidence of success.  It is built on the workers themselves and not concessions from the State that are under the State’s control and can be pulled back later.  It is a movement of opposition that teaches workers to rely on themselves and not on the State and not on Left TDs passing legislation that will supposedly make the rich pay for the crisis.

In other words the debate on a general strike cannot be divorced from the problems thrown up by austerity and the resistance to it more generally.  Other questions and issues around this have been put forward by the Left.  Is the Socialist Party correct that the Campaign against Household and Water Taxes is key?  Is it true that “the property tax issue can become a vital issue to defeat not just the Government’s agenda for more home taxes but to undermine the entire austerity agenda itself”. What is the role of the Labour Party and its links with the trade union leadership in betraying any fight against austerity?

A debate on what the purpose of a general strike is – what it is expected to achieve – and how such a call can be put forward as a practical objective, if at all, is necessary.

Can Ulster Unionism be left wing?

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Flags of the Left?

In this week’s Belfast nationalist paper ‘the Irish News’ their regular columnist Brian Feeney put forward the claim that Protestant unionist workers had been duped into believing that being left wing was also to be ‘disloyal’.  Presumably these workers can therefore be left wing and ‘loyal’.   Indeed this is the thinking behind recent proposals within the United Left Alliance to build a “new mass working-class party in Northern Ireland to unite the working class against sectarian division and against the right-wing austerity of the Assembly Executive.”

An obvious objection to the ULA proposal is that it claims to stand for workers unity while accepting the division of workers created by partition.  The only way this can be justified is by accepting unionist claims that such workers unity should not exist.

A smarter unionist might claim that the unity of Irish workers would break the unity of the workers in Northern Ireland with those in Britain.  The problem of course is that Irish workers unity is sacrificed for a unity that does not exist.  There is in reality no genuine UK workers unity because most British workers regard those from Belfast, Derry and Enniskillen as Irish.  No carnival of reaction predicted before, and confirmed afterwards, by partition is likely upon the separation of the North of Ireland from Britain.

So we are back to the repeated collapse of what often passes for socialism in Ireland before the veto on workers unity demanded by unionism.  If such unionism is inherently and unavoidably reactionary then it is clear that such a veto should be rejected.  It might only be accepted if it could be credibly claimed that Feeney is right – Protestant workers are merely duped into believing that being left wing is also to be ‘disloyal’.

Unfortunately Feeney gives enough examples of the reactionary character of real unionism, as opposed to the pretend hypothetical unionism that at no time and nowhere has existed, to demonstrate that a different sort will never exist.  He records the mass expulsions of Catholic workers from the shipyards by sectarian unionist mobs in 1912 and 1920 when around 2,000 were expelled in the former year and thousands more in the second.  Crucially he also notes that 500 Protestant workers were also expelled in 1912 and 1,800 in 1920.  These were ‘rotten Prods’ who failed to demonstrate their true credentials by not being bigots.

Feeney notes that these Protestant workers refused to put an ‘ethnic’ solidarity, in reality a sectarian solidarity, in front of any other.  Some supporters of the ULA are presumably content that Protestant workers can accept this sectarian solidarity while being ‘left wing’.  If they did not put this sort of sectarian solidarity first then there could in principle be no objection to proposals for the unity of the whole Irish working class.  Proposals within the ULA that avoid this conclusion are in practice accepting that sectarian identity must be accepted and accommodated.  In other words sectarianism must be accepted and accommodated.  Protestations to the contrary can in reality be dismissed.  Political positions have consequences and in this case these are quite clear.

Feeney records the words of Peter Robinson of the DUP that ‘the unionists of Ulster were a distinct people entitled to determine their own future.’  Since the most right wing forces will always be the most vigorous defenders of this position acceptance of it necessarily means acceptance of the leadership of Protestant workers by the most reactionary bigots.

As to the cogency of Robinson’s claims – the unionists of Ulster were happily the unionists of Ireland until they could no longer garrison it all whereupon they then demanded not that they determine their own future but that the imperialist power did.  This then amounted to the seizure of both more than the territory within which they were a comfortable majority and less than would include all the Ulster unionist people they claimed they were.  The character of the movement that expressed this people politically became evident when it came to determining not their own future but that of the large Catholic minority they took with them.  This minority was subject to sectarian pogroms and systematic discrimination for nearly half a century before a civil rights movement exposed the irreformibilty of this unionist movement.

We can go back to Feeney’s claim that Protestant workers have been duped into believing that being left wing is ‘disloyal’.  It is obvious that they have not.  For what is it that unionism claims that there must be loyalty to?  Loyalty to what?  Well – to Queen and country!  To a monarchy and an imperialist power.  To partition and division.  To a state based on a sectarian head count.  To the rights and privileges of Robinson’s ‘distinct people’.

How could you possibly be left wing without being disloyal to all that?

Apologists on the left for capitulation to unionism put forward the final argument that we must accept unionism because the vast majority of Protestant workers are unionists.  In fact it is this very fact that makes opposition to partition absolutely necessary.  Opposition to partition is not necessary despite the unionism of Protestant workers but because of it.  It is not possible to break their commitment to this reactionary political programme without defeating it and it can only be definitively defeated by destroying the state power on which it bases its power.

The state of job creation

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In my last post on the politics of the left I questioned proposals on state investment as the answer to unemployment.  In this post I want to look at this further.  The Nevin Economic Research Institute (NERI), an economic think-tank affiliated to the Irish Congress of Trade Unions has published a similar proposal to that of the United Left Alliance (ULA).

Its paper is entitled ‘An Examination of the Effects of an Investment Stimulus’ and its research shows that an investment stimulus of €1 billion would create about 16,750 short term jobs and between 675 and 850 long term jobs.    In the longer term the competitiveness of the economy is increased so that the economy grows, which increases taxation, which more than offsets the interest cost of any loan to fund the investment in the first place.  This means that “overall there is a long-term permanent decrease in the government deficit as a result of an investment stimulus.”  This is what has been referred to often as growing our way out of the crisis and debt problem.  NERI therefore proposes a phased investment stimulus of €15 billion over 5 years.

The net cost per job created, at around €34,500, is nearly the same for both the NERI and ULA proposals.  The paper by NERI sets out more fully its assumptions so it is fair to assume that these are not dissimilar to those of the ULA, which in any case we can also fairly adduce from the ULA proposals themselves.

In order to arrive at its estimates the NERI researchers use an economic model.  Like all models these require assumptions as to how the economy works and therefore how the parameters of various economic variables interact, e.g. how imports will increase given a certain increase in income as employment increases.  This is calculated from historic data from the Irish economy.  The HERMIN model used “combines Keynesian short term features with neoclassical longer term features.”

This is a problem, or rather there are two problems, not perhaps so much for the presumably Keynesian researchers at NERI but for the ULA, whose biggest components claim to be Marxists.  The Marxist analysis of the way capitalism works is very different from the Keynesian or neoclassical one.  Unfortunately, through the budget proposals of the ULA and their similarity to those of NERI, the policy proposals of the ULA display much affinity to Keynesian economics.  We have noted this already in their definition of the problem as being one of insufficient demand, which is also the view of Keynesian economists.

For Marxists this is indeed a feature of the current crisis, indeed of all crises.  Where the difference lies is that Keynesians think that this problem can be put right by state-led investment while for Marxists the lack of sufficient demand is really just one expression of deeper problems but not the fundamental cause of the crisis, which will not be put right by expansion of state expenditure.  This fundamental difference is invisible when the proposals of the ULA and NERI are compared.

For Keynesians the capitalist economy can reach equilibrium, where demand for investment funds and its supply are equal, in a situation where there is nevertheless massive unemployment, both of people and resources.  The autonomous action of the state in increasing investment can solve this problem and bring the system back into an equilibrium that resolves the unemployment problem.  For Marxists state investment can at most postpone the crisis but is not itself an answer.  By contrast the ULA present it as part of the answer.

For Keynesians the autonomous action of the state can provide a solution because the system can reach equilibrium and investment can be the driver of the economy to this equilibrium.  As the Keynesian Minsky puts it –“Investment and government spending call the tune for our economy because they are not determined by how the economy is now working.”  That a model shows state investment to be self-financing when that model contains Keynesian assumptions can hardly be called convincing. Keynesianism believes that “if entrepreneurs can only screw themselves up to do enough investment, it will eventually justify itself, since the income generated will absorb the excess capacity.” (Robin Mathews in ‘The Trade Cycle’)[i]

On the other hand Marxists see this type of statement as an example of bourgeois economists overwhelming tendency to assume that the capitalist economy works like a socialist one; that all production will more or less fulfil a useful role.  After a crisis based on massive construction expenditure that powered a phenomenal boom and then bust, this is just an incredible assumption.  The NERI and ULA proposals are based on further infrastructure spending by the same state that encouraged the last ‘stimulus’. That NERI believes this will lead to long term growth is again built into the neoclassical assumptions of the model.  Neoclassical economics assumes that capitalist markets are totally free and efficient.  A model built on such long term assumptions could hardly show anything else.

Neoclassical economics assumes that production is efficient and finds a market and that growth is the result.  Marxism makes no such assumptions but instead demonstrates the contradiction at the heart of an economy determined, not by autonomous investment, but by the pursuit of profit.  The recent massive overproduction of infrastructure was massively profitable, which is why it continued for so long.  The contradiction between this profitability and real need; the contradiction between the limitless expansion of capital and the limit of the market, was suspended temporarily and resolved temporarily by the expansion of credit.  When this expansion of credit can no longer continue the limits of the market are exposed and massive overproduction , which inevitably involves massive over-accumulation of capital, is revealed.  Keynesianism’s answer is to continue the accumulation because investment will find its own market and in any case can be autonomous within the system, as we have seen.  Marxists believe on the contrary that the accumulation of capital is determined by profit and lack of it may see accumulation shudder to a halt and collapse.

In a contest of economic ideas, between neoclassical economics where crisis are not supposed to happen and are self-correcting when they do, and Marxism, in which overaccumulation driven by super-profits is periodically inevitable, the real world has given a decisive confirmation of the latter. In a contest in which Keynesianism can assume investment creates its own demand and is self-financing and Marxism which points out the contradiction in production between use and profit, the empty office blocks and ghost estates are again striking confirmation of the truthfulness of the latter.  So why oh why would the left want to promote Keynesian solutions?

There is absolutely no reason to believe that a renewed burst of construction spend would not create new imbalances.  Perhaps the left believes that because the state carries out the spend it does not have to earn a profit but this is false for a number of reasons.

First it has to pay for the investment.  If it takes out a loan it will have to pay it back and if the investment does not create tax revenue by promoting further private capitalist investment it will not raise the necessary tax.  In these circumstances taxation would have to come instead from workers or business, which would remove the stimulus that has been created.  If the investment does stimulate or facilitate private investment then this only confirms ULA reliance on the state promoting capitalism as the way out of crisis.

Although the ULA does call for €5.3 billion of state investment in modern industry it calls for much more, €26 billion, to be invested in infrastructural investment.  In fact even some of the modern industry investment is in infrastructure.  Such infrastructural investment is normally not competitive with the main private capitalist industries but complimentary to it, facilitating it to make profits.  By making such spend central to its economic alternative the left, subconsciously no doubt, evidences the inadequacy of its alternative and subservience to capitalism.

An alternative is that state investment is directed to the production of goods and services that people actually need and want and are prepared to pay for.  This would indeed be competitive with private capitalist owned industry but this is not what is proposed by NERI or the ULA.  Instead either taxes or the promotion of private capitalist production through helpful infrastructure is proposed.

In our last post on this we questioned the policy of reliance on state investment given its history of incompetence, even in areas of no great complexity or requiring no great innovation.  The left sometimes excuses this (why?) as the result of subordination of the public sector to private capitalism.  And the answer to this is yes, that is what the capitalist state is for.  It is not for creating competition to private capitalism so why would the left demand that it does?

Even if the specific proposals of the left, in the particular circumstances that Irish workers face, are not practical this is not the main objection to them.  The main objection to them has possibly more force where they actually to work.  For if they worked, even if only temporarily, they would be both a diversion from creation of a socialist alternative and some evidence that this alternative is not needed.  The success of state industry would be the success (temporarily) of state capitalism.

The successful development of capitalism has been facilitated by the state many times and it may be argued that the more recent, and quicker, that development the more it has relied on the state.  This may be true going back through the development of every new major capitalist power from Holland in the 17th century, to Britain in the 18th, Germany and America in the 19th and 20th, the Asian Tiger economies of the late twentieth century and the Chinese of the 21st century.

The socialist alternative is something very, very different from this but the left’s fixation on the power of the capitalist state is strong and we shall look at the question some more.

[i] The quotations above are taken from a new paper that compares the Marxist explanation that the capitalist economy is driven by profit with the Keynesian alternative of the role of investment – ‘Does investment call the tune? Empirical evidence and endogenous theories of the business cycle’ See link.

 

Back to the Future? – the State to deliver jobs?

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Before it went on holiday the government announced the stimulus package for the economy that many in opposition had demanded. An additional €2.25 billion is to be spent over the seven years to 2018 on roads, schools, a new college site in north Dublin, primary health care centres and Garda headquarters. The government claimed it will create 13,000 new jobs and is designed as a stimulus to the economy that will promote growth.  Green Party leader Eamon Ryan got it right when he said the “plan is a throw-back to the last century when the only way Irish politicians knew of stimulating the economy was to pump money into the construction industry.”

Unemployment is 309,000 or over 440,000 if you include part time, seasonal and casual workers entitled to Jobseeker’s benefits or allowances.  The stimulus will therefore not stimulate very much.  The chief Economist for the Irish Congress of Trade Unions (ICTU) nevertheless said it was “an important step in Ireland’s recovery.”  The Irish Business and Employer’s Confederation (IBEC) welcomed it in almost identical words saying it was “an important first step in helping to restore domestic demand in the Irish economy.”

The feeling of déjà vu became overpowering when the Minister announcing it, Labour’s Brendan Howlin, had to ‘explain’ why road projects were going ahead in his own constituency.  His Department was also unable to provide a journalist with any cost/benefit analyses for individual projects, which are always nice to see even when they begin ‘once upon a time’.  A commentator described one road project as “largely a vanity project” and that it “never added up even at the height of the boom.”

The money will come from what’s left of the National Pension Reserve Fund, so workers will know their future pension money is being craftily spent.  Some will come from the European Investment Bank but it’s not clear how much.  Some will come from the sale of state assets.  This is where the state buys duff things from the private sector – like banks – which cost it a lot of money and sells good stuff – like companies that make profits – which also cost it money.

No spanking new construction project would be complete without the involvement of the banks and they too will be involved, although again it isn’t known by how much, but since these are funded by the State this doesn’t really matter that much.  Finally, to complete the story, much use will be made of Public Private Partnerships, a partnership where one partner gives money to the other, for example when roads don’t have the traffic that was predicted but one partner gets paid anyway.  Again we don’t know the figures but we’re not expected to get much exercised over this because it’s all for a good cause, although it’s the usual story of being bribed by your own money.

Fianna Fail complained that many of the announcements would have no effect for six years, which might have been a good thing had it applied to their own policies.  They complained that some of the announcements were bringing back projects that the government had just cancelled, such as the Grangegorman project, which inspires confidence that planning by the capitalist state will continue to be used as a weapon to discredit socialist planning. The word planning might however be going a bit too far since Howlin said it would be nice to give the new jobs to people from the Live Register and also to apprentices who haven’t finished their training, but “I don’t want to promise  that that can be done.”   It’s wonderful how governments can promise to spend billions of workers’ pension and tax money while saying that they can’t promise that it will deliver what it’s supposed to deliver.  The sense of building new health facilities while preparing to get rid of health staff and of building new college facilities while cutting the number of lecturers seemed not to have been questioned by many.

The Irish State doesn’t have a great record when it comes to investment.  It bought 700 electronic voting machines for €55 million and they didn’t work.  It wasted money on hospital co-location, decentralisation and €100 million on the ‘Bertie Bowl’.  It commissioned a PPARS IT system for the health service with an original budget of €9 million in 1997 which ballooned to €120millin in 2004 before being pulled in 2007.  The Auditor General reported that the roads programme which was supposed to cost €5 billion ended up costing €20 billion.  The high-technology Media Lab Europe set up jointly with the Massachusetts Institute of Technology was to focus on the development of digital technology but went into liquidation within five years with consultants describing its output as “mediocre, “surprisingly weak” and “dismal”.

The United Left Alliance’s budget statement stated that “the current crisis cannot be resolved without a state led programme of investment.”  It proposes a reversal of cuts in capital spending and an emergency state programme of infrastructure investment costing €26 billion to get 150,000 back to work.  If we assume unemployment at around 310,000 this would still leave 150,000 unemployed. What happens to them?  The programme is to last “for at least five years”.  What happens after that? The economic contraction has already been going nearly five years and the slump could continue five more.

The ULA wants to employ workers’ private pension funds just like the government wants to use the pension funds of public sector workers.  The ULA wants the latter money, €5.3 billion, to fund investment in modern industry and it rejects privatisation.  Instead it wants state companies to carry out this investment.  If successful this might make some further dent in the unemployment total and at the cost of job creation estimated in its infrastructure programme this would reduce unemployment by perhaps 30,000. Of course there would be further multiplier effects but this depends on the overall performance of the economy.

It is the assumption around this performance that motivates both the proposals of the government and the ULA.  As we have seen, the bosses organisation IBEC, and also ICTU, see the problem as one of insufficiency of demand and the government’s stimulus “an important first step in helping to restore domestic demand in the Irish economy.”  The ULA say “direct government job creation through public works is necessary to promote effective demand and halt the deepening crisis.”  The government, bosses, trade unions and the left offers a similar analysis of the problem and a rather similar remedy.  Of course the trade unions and left oppose privatisation but state ownership in itself is not socialist. What we have, as in the sphere of taxation, is a difference of quantity in the measures being proposed, not a difference of quality.

What the ULA proposes, based apparently on a Keynesian analysis of the problem, is not socialist although, if successful, would have a big impact on defending workers’ living standards by reducing unemployment and defending its welfare entitlement, take home pay and public services.  Were its proposals to succeed they would go some way to providing a capitalist alternative to the policies of austerity although they would do little to prevent the regular future occurrence of capitalist crises.

Lest it be thought this judgement too harsh let’s go back to just one proposal of the ULA, that of using workers’ pension funds.  This is a proposal that the capitalist state that has saddled the working class with an unsupportable debt and denuded its state pension fund, imperilling the pensions of future workers, should also take a chunk of workers’ private pensions, and it with its sterling record of investment and economic management.  In effect it’s a capitalist expropriation of workers funds with no more than a promise from a politician for comfort, and a few Irish workers have had letters of comfort from the Irish State before.

The workers should take over management of their own pension fund?  They should promote worker owned firms to address the problem of unemployment?  Heaven forbid!  That sounds like socialism.

Taxing Capitalism

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Turner’s ‘The Slave Ship’

A press statement by the United Left Alliance last week, just before the Dail went on its long summer holiday, reported on Richard Boyd Barrett of the ULA who  ‘challenged Taoiseach Enda Kenny during leaders questions over the “gross inequality and unfairness” in the manner in which “the pain of austerity policies has been imposed on the least well-off and most vulnerable sections of Irish society, while the wealthiest people in the country have been protected and in some cases have actually increased their incomes.   All the promises in the programme for government about “protecting the vulnerable and to burden sharing on an equitable basis” have now been fully exposed as hollow. The government have constantly claimed they have no choices, that austerity and pain for ordinary people was a tragic necessity.  Only people power, protests and strikes can challenge this obscene injustice.’

Boyd Barrett is correct to tear into the policies of the government, which favour the rich and places the burden of austerity on the rest of us.  He is absolutely right that this is not inevitable and that there are choices.  Above all he is right to demand taxation of the rich in order to press this home so that workers should not meekly accept that they suffer while the rich escape.

In my last post I criticised the ULA’s tax proposals but not for any of these reasons.  They were criticised for the idea that they could really take the wealth off the rich, that this could fund real protection against austerity, that the rich would not fight back and that the state would not help them do so.  Above all they were criticised because they were put forward as being practical, realistic and reasonable because they could be implemented by the state, when in reality all these things are determined by class struggle against the rich and the state. All the points made by Richard Boyd Barrett can be supported precisely because they are all arguments for and within the class struggle.  While I may disagree that “only people power, protests and strikes can challenge this obscene injustice” this difference is one of strategy to be adopted by workers, which is of a different character than criticism of a policy based on explicit reliance on the state.

In such strategy the excuses that the rich will evade tax would be turned against the state to demonstrate its incapacity to enforce a fair and just tax system as perceive by the majority.  The evasion by the rich would then be held up as a reason to demand expropriation of the source of their wealth and for refusing to pay for austerity in their place.

The policy of taxing the rich is not however what really stands out in the ULA taxation policy.  What stands out is the dog that does not bark, for what is most distinctive about tax policy in the Irish State is not its protection of the wealthy but its policy of minimal taxation of corporate profits.  This is such an article of faith of the political system that there appears almost universal agreement that while children, the sick, elderly and disabled should suffer from austerity the richest corporations in the world should be protected from even the most modest changes to their taxation.  The result is that the taxes paid by them have become voluntary contributions to facilitate the pretence that they are subject to rules and laws like everyone else.  Yet the ULA budget proposals simply note that the policy of taxing multinationals at an effective rate of 4 – 7 per cent has failed to develop a sustainable economy.

Some US multinationals pay even less than this.  Two years ago it was reported that Google paid only 2.4 per cent on non-US earnings that were routed through Ireland to Bermuda.  Apple is a pioneer of a tax strategy called ‘Double Irish with a Dutch Sandwich’ which routes profits through Ireland, the Netherlands and onto the Caribbean.  The deliberate lack of controlled foreign company legislation allows the Irish State to collaborate with notorious tax havens to produce such results.  Microsoft was reported in 2005 to have made a profit of over €682m on its Irish subsidiary and paid no corporation tax at all (as did Symantec between 2004 and 2005).  The company at the heart of this tax structure was based in a solicitor’s office in Dublin.  Facebook has five subsidiaries here but only two are required to publish accounts.

These tax structures and systems are not only used by big corporations but also by the world’s corrupt dictators, its non-resident multimillionaires and its international criminal organisations.  The offshore tax system, which should include the tax-dodging activities in Dublin’s International Financial Services Centre, has been described by Raymond Baker of the Washington Global Financial Integrity organisation as “the ugliest chapter in global economic affairs since slavery.”

This massive tax avoidance is central to the Irish taxation system yet it is ignored.  There are no proposals to raise the headline tax rate, not even for Irish companies many of whom pay no corporation tax either.  No proposals for controlled foreign company legislation, steps to tackle transfer pricing or suggestions to close tax breaks for holding companies.  All the ULA proposals are aimed at individuals not business or corporations. Why?  Why is there no proposal to increase taxation of multinationals?  Or proposals to tax the IFSC through which billions are routed in speculation every year, the sort closely associated with the recent global financial crash?

Perhaps the reason is revealed by the justification given by the Revenue Commissioners for continuing with a policy of encouraging corporations to set up their Headquarters in Ireland even though they recognise many pay no tax.  They justify it on the basis that these companies may increase real investment later.  It is therefore not just fiscal policy that is predicated on minimal corporate taxation but what is laughably called industrial policy, in fact the whole hope of economic growth to get out of the current slump. In essence the reliance on foreign investment is a testament to the continuing failure of native capitalism and a profound expression of its weakness.  On this weakness has rested a weak working class and on it sits a weak left, unable to present a convincing policy of taxing multinationals lest they pack up and leave and add perhaps another 100,000 or so to the ranks of the unemployed.

Would this be the result of an increase in corporate taxation?  The truthful answer is that this would probably depend on how much it increased.  Multinationals locate in Ireland for many reasons including market access to the EU, a relatively skilled and compliant workforce which speaks English and a general pro-business environment.  The left can hardly claim that increased tax will not endanger the location of these multinationals because it cannot credibly claim that it would support the continuation of a pro-business political environment which, among other things, ensures the exclusion of union organisation in most multinational plants.

Instead the ULA concentrates on income taxation and in doing so proposes measures that are radical only quantitatively but not qualitatively, in other words they are not in themselves socialist measures.  Proposals for increased taxation of the rich have to some degree gone mainstream, supported even by millionaires, conscious of the need to fund their state.  A financial transaction tax has been supported by Bill Gates and increased income tax by billionaires Warren Buffett and George Soros.  Of course the support of the rich for increased taxation goes nowhere near where the ULA would go.  It should however also not be forgotten that in Ireland as recently as the 1980s there was a marginal tax rate including PRSI of 72.5 per cent. In the US during the cold war a tax rate for income ranged up to 92 per cent and was still as high as 70 per cent in 1980.

In other words taxation does not get to the heart of the matter and the way in which it does not was explained by Karl Marx in his ‘Critique of the Gotha Programme’:

“it was in general a mistake to make a fuss about so-called distribution and put the principal stress on it.  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 labour 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?”

What matters fundamentally then is the mode of production.  The ULA concentrated in its budget statement on measures purely to do with distribution.  It did however raise the question of production and the way it did it will be looked at in the next post.

 

Taxing the Rich

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In its 2011 budget statement the United Left Alliance (ULA) pointed out that while unemployment and taxation of workers had gone up, net financial assets of households had increased by €45 billion between 2008 and 2010, which meant that while many workers’ living standards were taking a hammering the wealthy in society were actually getting richer.  They therefore called “for a radical shift in taxation policy so that those with the real wealth pay according to their ability to pay.”

We all know the arguments against such a policy – higher tax rates, especially for those at the top, will discourage work, investment and business creation.  It would be tempting to dismiss such arguments except that Marxists believe that it is profits that regulate the operation and performance of the economy.  Surely reducing the returns to profitability would reduce capital accumulation and economic growth?

Research has shown however that the massive reduction in top tax rates in the English speaking world has not led to improved economic grow compared to countries without similar tax cuts.  The reduction of top tax rates, which were over 70 per cent in the 1970s, by over 40 percentage points in the US and UK has not witnessed any more impressive growth there than countries which have not reduced the rates by such enormous amounts.

This could be because high tax rates are not  the disincentive claimed, that those affected are often not capitalists, that most profits are reinvested and not subject to income tax anyway, and that profits are determined by much stronger and more fundamental forces than taxation of individuals or taxation in general.  Many people believe that those earning astronomical amounts of money simply want more of it because they are greedy, obscenely status conscious and engaged in grotesque exhibitions of conspicuous consumption.

The ULA has put forward plans to raise taxation on the rich in order to “use the money for a state funded programme of job creation.”  They state that the top 5 per cent hold 46.8 per cent of all wealth and have total net financial assets of €219.3 billion.  These figures are taken from Credit Suisse ‘Global Wealth Report’ in November 2011.  Elsewhere they quote a figure from the Central Statistics Office which estimates total net financial assets of €117 billion in 2010. If we assume non-financial assets (property) as 53 per cent of the total this would give a total wealth of €249 billion and that of the top 5 per cent at around €117 billion, over €100 billion less than they calculate from the Credit Suisse report.

It should be kept in mind that all economic statistics are estimates and subject to all sorts of errors.  One thing they are not is exactly right.  The Central Statistics Office has revised its GDP figure for last year by €2.6 billion while the Department of Finance double counted and found itself €3 billion better off.  How much more is this the case when the very rich seek to hide as much of their wealth as possible, which varies as the various markets go up and down, including the stock markets and currency markets. Looking at the Credit Suisse report I calculate the wealth of the top 5 per cent at ‘only’ €185.7 billion instead of €219.3 billion.

One more check available that I am aware of is to look at the ‘Wealth of Ireland’ report published in 2007 which recorded it at the height of the boom.  If we assume a fall in property prices of 50 per cent and its estimate of the share of the top 5 per cent at 40 per cent we arrive at a figure of almost €206 billion.  This however excludes the fall in value of shares, which dropped by 47 per cent between September 2007 and November 2010.  If we assume that equities were 40 per cent of financial assets the value of wealth becomes €188 billion.  This discussion only goes to show the uncertainty involved.  We will therefore go with the ULA budget statement number of €219.3 billion without any illusion that it is exactly right.

The ULA proposes an annual wealth tax of 5 per cent which would bring in roughly €10 billion a year (219.3 times 5%).  It also proposes that those earning over €100,000 should have their taxes increased.  These people, it says, have a total income of €20 billion and paid €4.86 billion in income tax.  This should be increased by a further €5 billion.  The ULA also sets a target of an additional €2 billion to be taken from the super-rich tax exiles.  Thus an extra €17 billion would be raised per year which, allied with refusal to pay for the bank debt, would be used to reverse cuts in social welfare, abolish the Universal Social Charge, increase tax credits for workers and reverse cuts in health and education etc.

There are five reasons why this won’t work

Firstly the sums involved.  The proposals above, where they to come in on plan, would raise €17 billion yet the budget deficit in 2010 excluding the bank bailout costs was €17.4 billion.  There would therefore be no room for closing this deficit while also funding the state-led investment programme of over €5 billion per year, which the ULA statement said was to be partly funded by tax increases. This also ignores reversing the €12 billion of cuts etc. which took place before and during 2010 in order to arrive at a deficit of ‘only’ €17.4 billion at its end.

The second is the nature of the wealth. Roughly half the wealth is in financial assets and half in property.  The financial assets will be in cash and bits of paper like shares which can be sold for cash.  To turn this wealth into money that can be used to pay workers to provide services, reverse workers’ tax increases and procure services it will be necessary to sell these bits of paper after the wealth held as cash is exhausted.  The value of these bits of paper, such as shares, may very well fall if a lot are sold at one time or it is known that they cannot be held and sold at what might be considered by their owners as the most favourable time.  The value they are held and valued at may therefore be greater than what could be got in a sale.  Everyone is familiar with this because of NAMA and the property collapse.  How much more of a problem is this for that half of assets which is property?

And there is an additional issue.  Who would the State sell these assets to?  Workers, self-employed, farmers and small businesses are in no position to buy these assets.  In fact only Irish and foreign rich would be in a position to buy.  But when we consider this for a moment, how would the Irish rich afford to buy these assets when these assets are being taken off them in the first place?  This leaves only foreign capitalists.  Putting it like this, selling off Irish assets to foreign capitalists to finance State expenditure doesn’t look too much different from what the Governing parties want to do.  Perhaps it is proposed that they too are taxed on Irish assets, in line with the policy on taxation of Irish assets held by tax exiles, but this then only puts them in the same position as the Irish rich.  Why buy assets that are going to be taken off you in tax?

Making the most simple assumption that a wealth tax would remove an equal amount of the wealth each year, with a wealth tax of 5 per cent the total wealth of the rich would be cut in half in ten years.  Ten years later it would be gone.  Even with wealth growing at say 2.5 per cent a year, and a wealth tax that took 5 per cent of what was left from the previous year, the wealth of the rich would still be halved in less than 23 years.

In other words this is not sustainable and anything not sustainable collapses long before the final step is taken.  An unsustainable tax base based on property is replaced by an unsustainable tax base constructed on wealth taxation.  The ULA proposes that those earning over €100,000 pay an additional €5 billion in taxes above the €4.86 they are currently paying, on a total income of €20billion, doubling their taxes and moving to an effective tax rate of half of income.  The ULA give the example of the top 0.5 per cent who have a current average after tax income of €400,000 each, which after the implementation of the ULA proposals would reduce to €166,000 each.  This is a reduction of 58.5 per cent in income.  This won’t work because of reason four.

The ‘Sunday Independent’ rich list published in March this year records that the richest man in Ireland is Pallonji Mistry, an Indian tycoon with Irish citizenship, worth €7.4 billion. How long does anyone think he would hang around if he thought the Irish State was going to take half his wealth off him within ten years and reduce his income by nearly 60 per cent?  How many others of his fellow rich would do exactly the same as him?

The ULA have said they have plans to get €2 billion extra out of Irish tax exiles and propose various measures to get this €2 billion.  Unfortunately they have said that “it is impossible to predict the revenue which would be generated by the above measures” which is tacit acknowledgement that they have little confidence that these measures could be effective.  They refer to the US and its expectations that its citizens will pay US income tax on earnings abroad but the Irish state is not the US state.  It says that its demands are reasonable but whether workers believe them to be or not, the rich do not and become tax exiles to avoid tax.  They will not be swayed by ‘reasonable’ demands that they pay up and the ULA knows this.

The ULA has said that even if such people move liquid assets out of the country, as will non-exile tax payers, the tax can be taken from the value of their fixed assets in Ireland.  But this leads us to the problems involved in reason two above.  The idea that the wealth of the rich can be taken by taxation is fine only if one believes that they will not resist with every weapon in their armoury.  The budget statement mentions that there is an investment strike by private investors as if it were some wilful act and not a perfectly rational response to the recession.  Yet serious attempts at taxation of the rich really would produce wilful acts and private investors would use their ownership of assets to reverse investment and sabotage the economy.

Marxists have always been aware that in the class struggle the capitalist class have usually demonstrated much higher levels of class consciousness than workers and their superior organisation will see them able to avoid a great deal of taxation, especially when it becomes worth it.  Their success in this is guaranteed by reason five.

The ULA have stated that “it is a matter for government which has Department of Finance, Revenue Commissioners, Central Statistics Office etc at its disposal to devise legislation to reach the target revenue of 10 billion from the top 5 % and that, in particular that the homes, farms and pension funds of those outside the top 5% be exempt.”  But this is the State that has given rich tax fraudsters two tax amnesties on top of all the various tax incentives and loopholes!

As a Marxist I believe that the state is an instrument to defend and protect the capitalist class, that it is therefore a capitalist state.  I believe that the bail out of the banks even at the cost of bankrupting the state itself is testament to how far it will go to do this.  The recent history of attacks on the working class in order to spare the rich are further examples and are the result not of a policy whim that can be changed but a result of the structure of the state, economy and society.  The proposals of the ULA rely on all this being mistaken.

I remember listening to Today FM and an American writer on financial affairs, whose name I did not hear, being interviewed about the situation in Ireland.  He remarked that Ireland was no more corrupt than many other countries but that what really set it apart was that no one ever seemed to get punished for all the corruption.  Yet the tax plans, and others, of the ULA depend not only on the Irish State not defending the rich but instead actually defending the working class.

The taxation proposals of the ULA are clearly presented as eminently reasonable and practical.  However what is reasonable is decided by class struggle and class struggle means they are not practical.