The Citizen: Issue 1
Author: Eugene McCartan
Are we in recession or on a slippery slope leading into one of the periodic slumps, followed by booms, that are inherent in capitalism? This is the framework of the debate in which newspapers, radio, and television programmes attempt to explain what is happening, trotting out the usual serried ranks of what pass for experts (economists, economic advisers, consultants, and gambling experts in the form of stockbrokers) debating whether or not we are ‘in recession’ or just experiencing a blip in the economic cycle.
None of these have any understanding of, nor do they wish to publicly concede, the extent of the economic crisis, whether it is a crash or a ‘correction’; and, of course, none of them challenge the neo-liberal orthodoxy of today or the dominance of big business. They don’t mention Keynes, let alone Marx. Most importantly, they are all agreed that working people will have to pay the price.
This debate is mirrored throughout the developed capitalist world, including the United States, Britain, and the main industrialised countries at the heart of the European Union, where a similar cabal of experts and the political establishments agree that working people will pay the price: in job losses, cuts in services, and loss of pensions. The policy adopted on both sides of the Atlantic is to blow up the bubble a bit more, bailing out the bankers and speculators, while giving little or no help to the millions of workers threatened with the loss of their jobs, their homes, or their pensions.
To many working people in Ireland, it is obvious that something very serious is happening, both here at home and in the biggest economy in the developed world, that of the United States.
Ronald Reagan promised ‘less government’, and Margaret Thatcher campaigned against the ‘nanny state’. These ideas appealed to what their disciple Mary Harney called the ‘coping classes’. The coping classes never liked seeing their taxes going to help the sick, the old, or the unemployed, who were not coping so well – through their own fault, of course.
The main beneficiaries of these policies were never the middle classes who voted for them so enthusiastically, but the banks, speculators, and transnational corporations. As we have seen, when they are not coping the state rushes in with grants and subsidies.
‘There is no alternative’ has become the unchallengeable dogma of these forces. In the early 1970s, Keynesian economic theory came under extreme pressure, and it has now been thrown out and replaced with the god of the free market. Neo-liberalism, as laid down by Milton Friedman and his disciples, known as the ‘Chicago Boys,’ was implemented wholesale in Chile after the fascist coup in the 1973, as well as in Poland and Russia in the 1990s. European Social Democracy has abandoned its ‘third way,’ and the ‘historic compromise’ agreed between labour and big business is now being dismantled throughout Europe. With the defeat of the Soviet Union and the potential alternative that socialism posed (despite its many shortcomings and weaknesses) being dismantled, big business and governments started taking back what they were forced to concede in relation to public education, public health, pensions, the age of retirement, and the length of the working week – the list is endless; the attacks are constant.
What the present crisis has exposed is the reality that state intervention in the economy is very much allowed when the banks are in trouble and need state welfare to bail them out. Millions of euros can be found for this purpose, yet no new money is to be found for developing the health and education services. Governments in several countries have had to step in to stave off collapses in the banking systems. Recently, the British government gave more than €50 billion to British banks, with no strings attached. No demands were made on these banks, nor were new regulations introduced to stop them carrying on the same reckless financial strategies that are central to the present crisis.
This exposes an essential feature of the present stage of development: that finance capital needs and relies on the state. One could say that, in fact, it controls and uses the state and has the power to call upon its resources as it sees fit. This is corporate welfare on a vast scale.
Another example of the power that finance capital has over our lives is the role of the European Central Bank, which was established to ensure that financial policy is shaped by the needs of the monopolies and that it is above and beyond any national democratic accountability. The residual democratic accountability of national parliaments, such as it is, has been circumvented by the European Union. The central thrust of EU integration – as contained in the defeated Lisbon Treaty and the previously defeated EU Constitution – is the maximising and centralising of power at the centre and weakening democratic control and accountability at the national level. The objective of this process is maximum freedom for capital, maximum regulation and control on labour, and minimum rights for workers, which will be subject to the needs of the market-the model neo-liberal straitjacket.
The term ‘globalisation’ entered popular economic and political use in the early 1990s to describe what some believed was a new phenomenon, but which is, in fact, a very old and inherent necessity of monopoly capitalism. Capitalism needed and still needs to look continuously for new resources (such as oil, gas, minerals, water, and food) to bring under its control, new reserves of labour to exploit, and new markets to control, which inevitably leads to war. The promoters of this ‘capitalism-without-borders’ herald this process as the end of the nation state and assert that a new world corporate governance will emerge and, indeed, is necessary.
In the nineteenth century, colonialism was the means of dominating, controlling, and exploiting vast areas of the globe. This resulted in small and large wars between the colonial powers for the division and redivision of colonies, the exploitation of clan or tribal rivalries, and also the development of racism as an important ideological weapon in its strategy of divide and rule.
Direct colonialism was defeated by national liberation struggles, but was replaced by neo-colonialism, which exploits the historical underdevelopment, personal contacts, and class interests resulting from colonisation. Neo-colonialism is essentially an alliance between the imperial power and the local elite or nascent bourgeoisie. It is pointless to complain that such governments are corrupt: how could they not be?
Historically, the colonial powers shaped economic development to suit the metropolitan centre, thereby stunting the economic development of the colonised countries. With the loss of their colonies, they maintained control in other ways, ensuring that those countries had little access to the capital that was and is essential for development or the means of controlling it. The methods have been refined, though the essential objectives remain the same and are employed today to subjugate hundreds of nations and billions of people.
The overwhelming majority of the countries of the world are poorer now than a decade ago. China is one of the few that has experienced a significant increase in the living standards of its 1.4 billion people (because of terms dictated by the state). Hunger and food shortages are affecting tens of millions of people as countries are forced to switch from growing food to growing biofuels to feed the western addiction to cars and an unsustainable lifestyle. It is increasingly clear that you cannot feed the greed of global financiers and corporations and, at the same time, feed the people.
Since the early 1960s, the Republic of Ireland has been marketed as a secure place for ‘foreign direct investment’, or ‘mobile capital’, to set up manufacturing plants so as to avail of the well-educated, low-cost workers, who speak English, and of the handsome grants and incentives from the state. This has been the central strategic plank of economic development for all governments, regardless of their make-up. A similar policy was carried out by the Unionist government in the North of Ireland.
Factory closures are now being announced weekly, and we are witnessing significant shrinkage in jobs in some of these transnational companies as they move their manufacturing base eastwards. We have essentially placed our strategic economic development in this very unstable and volatile basket. With vast profits repatriated to home countries rather than being reinvested in our economy, this can be seen in the percentage gap between GNP and GDP.
Some of the promoters of the idea of globalisation as the end of nation states also proclaimed that this had finally put an end to capitalism’s inherent cycle of slumps and booms. Our world was to be run by bankers and technocrats in order to ensure this new global governance and permanent stability. The World Trade Organisation was established and joined the World Bank and the International Monetary Fund as the pillars of this brave new globalised world.
Some on the left have taken this as justifying the argument that capital can only be controlled either at the regional or the international level. Yet, the bulk of manufacturing and sales still takes place within the developed capitalist counties or regional economic blocs such as the European Union. Today, the majority of American investment and production by American transnationals is still in Europe, Canada, and other developed capitalist countries. Of the 170 largest companies quoted on the French and German stock exchanges, 80 per cent have a single shareholder who owns more than 25 per cent of the shares, and in 50 per cent of companies that shareholder controls a majority of shares. This is also the pattern in Italy, Belgium, Austria, and Switzerland. In France and Belgium, ownership is largely concentrated in family trusts, while in Germany, German banks are the dominant shareholders.
What we have, in fact, are national economies or regional blocs competing against each other, with only a handful of truly globalised corporations. The emphasis placed on globalisation exaggerates the power of transnational corporations and banks, which have grown so big and economically powerful that they are beyond any national control, independent of any state power, and can operate at will.
This has led to an overemphasis on building ‘social movements’ across national boundaries, with little emphasis on winning national trade union centres or on building political coalitions to develop the necessary demands and bring the necessary political pressure to bear on national governments. This approach essentially sees politics not in class terms, but in terms of a better or more humane capitalism. Such an approach can only disempower the left and allow national governments off the hook, and it ignores the central role of the state in relation to shaping economic decision-making. What is needed is to build the forces at the national level that will shift the balance of power in favour of people-centred policies.
Capitalism is driven by its own internal needs and contradictions. Certainly at this time there are many factors that have contributed to the present phase of imperialist1 expansion, some of which are:
- The advances made in manufacturing and financial services resulting from the scientific and technological revolution.
- The destruction of the Soviet Union.
- The bringing back into the imperialist sphere of economic domination of a large pool of well-educated labour in Eastern Europe.
- The opening up of China and its 1.4 billion people to transnational investment.
- The lack of alternative sources of capital for developing countries to draw on.
- The savage wars waged against progressive governments in the developing world by proxy armies or direct imperialist intervention.
- The lack of alternative sources for the development of intellectual capacities, such as engineers, doctors, and scientists, following the destruction of the Soviet Union and other eastern European countries.
- Rocketing military expenditure of the US and its proxy regimes.
Global neo-liberalism is one of the main instruments of imperialist domination, forcing the privatisation of state companies and their sale, at rock-bottom prices, to transnational corporations from the developed capitalist world. Western governments demand such policies as ‘liberalisation,’ opening local markets to transnational capital. This strategy pushes more and more public industries into private or corporate hands, narrowing the public economy and the state’s role in economic decision-making and the provision of services. Also demanded are lower taxes on foreign capital, the surrender of national resources at bargain-basement prices through privatisation, and increased unemployment.
The political elites of the European Union argue for greater concentration of power at the EU level in order to maximise its influence internationally – it must speak with one voice. The EU pursues a neo-liberal strategy of divide and rule, singling out the weaker countries and imposing unfair agreements, while isolating those who put up resistance to its ‘economic partnership agreements’ with developing countries.
The World Bank and IMF are geared towards ensuring the imposition of neo-liberal policies globally, which are an essential element of the global strategy of transnational capital, particularly finance capital. These institutions have been used to force open the markets of the Global South and to prevent any independent course towards development.
The repayment of developing countries’ debt is managed by the IMF and the World Bank, which impose restraints on how development may take place, ruling out any potential state-led development or control over natural resources, which is the only way to establish real autonomous economic development. The coercion and regulations that the WTO imposes have served as tools for ensuring imperialist control over nations and peoples in order to reap huge profits from the Global South.
These strategies are implemented by the World Bank and IMF and the USAID agency, along with the covert actions of the CIA and institutions such as the National Endowment for Democracy (to which body most Irish political parties and even some trade unions have sent people for ‘training’). Through a policy of bullying and massive bribery, Western governments ensure that economic policies sympathetic to their interests are pushed through under the guise of promoting ‘democratic values,’ which essentially means weakening national government power to regulate or control finance across the world. Financial power is inherently cosmopolitan and, therefore, antagonistic to the power of national governments; it is thereby in essence anti-democratic. All these bodies, including the financial institutions, the state, and the global mass media, constitute the means of control by the ruling class, each one reliant upon the others.
The WTO talks have now stalled, and the organisation is in deep crisis as it is unable to impose its will in the face of the clearly emerging greater unity among developing countries. Both the IMF and the World Bank are looked upon with jaundiced eyes by many developing countries when it is seen that policies imposed by these two organisations have led to wholesale economic dislocation and a staggering growth in poverty, hunger, and bankruptcies. In Argentina, thousands of ordinary citizens lost their savings.
These institutions now have major credibility problems throughout the Global South, and their policies are being met with growing resistance. The ‘Group of 4’ (China, Russia, Brazil, and India) and the wider G20 (a group of smaller countries headed by Venezuela and Cuba) have mounted a serious challenge to the power of Western governments and their use of the WTO to impose unjust conditions on the majority of the world’s countries.
Barely twenty years since it was declared that we live in a unipolar world dominated by US, that illusion has come to an end. The military might of the United States is under extreme pressure; its economic position in the world is in decline, and some would argue that this decline is terminal. The attempt by the European Union to assert itself as a centre of opposition to the hegemony of the United States is being exposed daily as it attempts to build its own military capabilities and to assert and strengthen its own unequal trading relations with countries of the majority world, in particular with its member-states’ former colonies. It is attempting to place itself strategically to fill any potential vacuum that might arise.
The mass power of people throughout Latin America and the resistance of the mass of the Indigenous people have forced a retreat on a whole range of issues. The growing demand of millions of people is for governments to reassert their sovereignty and democratic control over those areas of the economy that are within their grasp, such as oil, gas, and other mineral resources, as well as to reclaim control of their fishing resources and agricultural production and use them in a manner suited to their needs, rather than solely to satisfy the demands of the metropolitan markets.2
These same demands need to be developed here in Ireland in relation to our own resources. In a global world of insecure energy resources, it is essential that the Irish people own and have control over the vast natural resources around our coast and on land and that these resources are managed and developed to meet the needs of our people. This must also apply to our fishing resources. One economist has estimated that the European Union has extracted €180 billion worth of fish from our waters, which are now overfished and will need very careful management to get them back to a level where they can provide incomes and revitalise fishing communities around our coasts, north and south.
The same policies must also be applied to food production and agriculture policies, now determined by the European Union, which uses food and aid as weapons with which to exert pressure and gain concessions and advantages against those wishing to trade with it.
The serious question of the subservient role of the Irish Central Bank to the European Central Bank needs to be addressed in order to begin looking at ways and means to re-establish control over financial policies and to accumulate, control, and manage the necessary capital to develop a people-centred, sustainable economy.
What is clear is that resistance is necessary and possible, and that Irish progressive forces need to learn from the success of the forces from the Global South in their forms and methods of struggle and not confine ourselves to the ‘European’ experience. At this juncture, there is a growing necessity to build solidarity with those countries (such as Cuba and Venezuela) that are in the front line of the struggle for a better world and a new international people-centred sustainable economic order. Securing the maximum sovereignty and decision-making in the hands of the Irish people is the battle ground of today, coupled with a new internationalism based upon social justice and equality.
Resistance to transnational capital and to imperialism is growing around the globe, and what the present crisis has exposed is just how vulnerable it really is.
2. Irish farmers have agitated against the massive importing of beef from Brazil, which they fear will ruin them. This trade equally threatens the landless peasants of Brazil, who might otherwise feed their families on the land used for beef production. The enemy of both the Irish farmer and the Brazilian peasant are the Brazilian ranchers and North American food corporations, who are also clearing the Amazon rain-forests.