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The anti-people budget

Speech by Eugene McCartan,

General secretary, CPI,
10 December 2009




Comrades and friends,
     The speakers before me have dealt in some detail with the contents of the budget and the effect the various provisions will have on working people. Yes, Brian Cowen may have taken a 20 per cent cut in wages, along with other members of the Government; but his salary is still six times the average industrial wage.
     Ultimately this is all mere window-dressing, designed to placate the anger of the people. Make no mistake: what is happening here in Ireland, and also internationally, is a massive and unprecedented transfer of wealth from working people to the economic and corporate elite of our society. The past and present budgets and current economic policies have been design to facilitate a massive transfer of wealth from the poor and workers upwards to that elite.
     The economic and social policy of this state is to maintain the status quo, and in this it is directed and controlled by the European Union and the European Central Bank. This Government will take no decisions without first clearing them with Brussels.
     One example of how decisions made in Brussels are calculated to meet the needs of the more powerful states is the fact that euro interest rates are shifted to suit the German and French economies, and not the Irish economy. If we had greater control over interest rates we could have controlled our runaway house prices. It would also have enabled us to respond to our present economic woes through devaluation. Much of the drive to reduce the deficit has been shaped by the need to meet the demands of the European Central Bank.
     What we are experiencing at present is the effect of the inherent contradictions and the periodic crises of capitalism, of slum and boom, a crisis of oversupply and lack of demand, which in this case has been precipitated and accentuated by the growing financialisation of the American and British economies. This is a process whereby money is not invested in productive manufacturing but rather in speculative investment and financial products.
     This process is the consequence of the growing monopolisation of production and the domination of finance capital. Capital is invested in financial products in order to ensure greater returns to investors; so we end up with vast amounts of capital being used not for socially productive use but rather to enrich shareholders and corporate institutions. Money now chases money in an endless global paper trail.
     The growth in speculative investment and the vast sums of capital accumulated bear no relation to the material base or what the establishment like to call the “real economy.”
     The outcome of this crisis will be a further concentration of both manufacturing and financial markets in the hands of fewer and fewer monopolies, which will, in time, lead to the further financialisation of the global economy and stagnation. The seeds of the next crisis have already been sown.
     One of the features of the present crisis is the willingness of the state to take responsibility for the debts of financial institutions, both here and throughout the capitalist world. The state itself is now acquiring debt that in some cases is so vast as to be unpayable without deep cuts in public spending and further privatisation.
     The example here is of course NAMA. These are debts that working people will pay with higher taxes, both direct and indirect, and by massive cuts in public spending. The economic elite is attempting to solve its crisis by making working people carry the burden. The state itself may well become embroiled in the next crisis of the system, with its capacity to bail out the monopolies severely restricted because of the level of debt it has now taken on.
     Because of the global crisis of capitalism, coupled with the legacy of the so-called Celtic Tiger, we are experiencing our own version of the shock doctrine, as exhibited in the McCarthy Report, with massive cuts in social provision and spending cuts in education and health and the other social services that working people depend upon. What McCarthy recommended, and is now being implemented, is deep structural changes. One example is the proposed changes in how public-service pensions will be calculated—all because of the Government’s desire to shore up the system itself and to ensure that the powerful minority retain economic and political power.
     What we are experiencing in fact is a period of intense class struggle carried out by the state, by IBEC, the mass media, and the various economic think-tanks. This class struggle is being carried on on many levels, from direct attacks on workers’ wages and conditions to attacks on the unemployed and on community services. All the main establishment parties are agreed on who will pay for the crisis. What separates them is how it is to be extracted.
     Apart from a few dissenting voices, the mass media have been engaged in an intense ideological campaign to divide public and private-sector workers and to divide all workers from those those receiving state benefits. Workers who dare take industrial action are portrayed as saboteurs of the so-called national interest. Economic discussion and debate has been highly politicised and so controlled that all problems and solutions have been reduced to questions of management styles and regulation or lack thereof. The ownership and distribution of wealth and how society is organised are questions that have been ruled out of the debate. The purpose of this is of course to ensure that those on the top of society’s pillars remain on top.
     The elite wants to divide and demoralise working people. The Irish Times published figures from the Department of Finance last Friday that demonstrate what the establishment is trying to defend. According to these figures, 1,633 income tax payers earn more than €1 million per year: after tax they take home on average €1.6 million each. If this was reduced to €500,000 it would yield €1.8 billion in extra tax per year.
     There are also 31,138 taxpayers earning between €200,000 and €1 million. After tax they take home on average €242,000 each. If this was reduced to €150,000 it would yield €2.8 billion extra tax per year.
     Adding these figures together, the Government could raise €4.6 billion extra tax every year by leaving 1,633 people with take-home pay of €500,000 per year and 31,138 people with €150,000. Fewer than 1½ per cent of earners could provide more than the sum the Government says is necessary to pay for the crisis and insists must be paid by workers and the unemployed.
     That is what this ideological battle is about. That is what class struggle is about.
     This strategy has proved successful so far. No doubt it has been assisted by the relative pacification of the labour movement through the years of “social partnership.” Indeed the limitations of this strategy are now being exposed. We were told that through participating in such agreements unions would be simply trading wage moderation for “policy influence.” Where is that policy influence now? Two decades of social partnership and so-called influence and we couldn’t even obtain statutory union recognition rights.
     Elements within the labour movement have been exposed in this crisis for their poverty of ideas and lack of vision.
     Social partnership fed into the neo-liberal ideology of low tax rates. The coalition created under social partnership concentrated on increasing private consumption at the cost of public spending by reducing tax. Look where this has got us now: a huge shift away from labour to capital in national income during the period of social partnership. The share of labour in national income was 54 per cent in 2001, while the EU average was 67 per cent. Profit levels have increased substantially under social partnership.
     Aside from this, the labour movement has made some fundamental tactical errors since the present crisis emerged. The calling off of the national day of action in March gave the Government, employers and media time to whip up a campaign against public-sector workers. The momentum, unity and anger that the mass demonstrations of tens of thousands of workers and pensioners so clearly expressed this time last year was wasted and allowed to dissipate.
     Much of the voluntary and community sector has equally been silenced in relation to important political issues, again as a result of trading criticism of the Government for money and access to Government ministers, shying away from involvement in political campaigning and wider socio-economic and political issues. An example of this is the fact that few if any where prepared to speak or take a position on the Lisbon Treaty. They have all been caught up in “partnerships” in one form or another with the state. This is a difficult area that the left needs to at least discuss.
     Despite our criticisms of the labour movement and the strategy it has adopted, we still maintain that the trade union movement is the only vehicle at present capable of mobilising workers and of mounting effective resistance. The question this raises, of course, is, What demands can we as individuals and organisations of the left help develop in order to mount a fight-back and to help reinvigorate our union movement so that it is capable not only of defending members’ interests but of being an effective voice for the voiceless in our society?
     Certainly we should be campaigning in the short term for radical reform of the tax system and the closing of all tax loopholes. Certainly public services need to be reformed and transformed—which of itself would show that public services and public enterprises can be efficient and productive and can provide quality services. This would go some way towards undermining one of the ideological planks, the assertion that only the “market” can provide efficient services, which of course is a fallacy. Anyone who doubts this needs only to look at the pension industry. Vast amounts of wealth have been squandered or siphoned off by a private-sector clique in the pursuit of profit at the expense of sustainable pensions.
     But we need to go further. We need to present an alternative direction for our country and for working people but one that goes beyond simple sloganising. It was clear long before this crisis that the Government’s industrial strategy—relying largely on transnational investment—had run out of steam. There is a growing list of transnational companies with subsidiaries here already pulling out.
     We have no significant indigenous industrial base. What there is largely depends on the continued presence of transnational corporations. It is our belief that we need to control capital and establish investment priorities based not on the needs of monopolies and financial speculators but on the needs of the Irish people. (The IDA has had its budget increased by 21 per cent—that is, by €15 million—while Enterprise Ireland has had its budget for support for indigenous industries cut by €7 million.)
     We have argued for the establishment of a state bank, democratically accountable to the people, to control and direct the use of capital. This would provide a safe investment place for pension funds, people’s savings, and home mortgages. It would also allow for a much more productive use of the National Pension Reserve Fund, which at present is being squandered to prop up the banks.
     The control of capital is essential if we are to create the necessary jobs and reorient the direction of the economy. To do this we need to establish a National Development Corporation, which would direct and allow for the planned use and development of natural resources on an all-Ireland basis, with responsibility for developing cutting-edge state companies in such areas as bio-technology and green technology. In doing this we would have the experience of the progressive role played by the state-sponsored companies over many decades in developing branches of the economy that Irish capitalism was either unable or unwilling to develop.
     This is not a call for socialism but rather for a national democratic transformation of all areas of economic, social and political life. It is for creating a society based on a more genuine democracy and greater equality of opportunity; it is for opening up the road to a socialist future. This strategy is to present a socialist future through the struggles of today. It is about empowering people and raising their class-consciousness. It is about building the necessary forces for pushing forward. This is, we believe, the base from which we can move on from slogans to building the necessary forces for change.
     A central element of this strategy is the necessity of building unity among working people: between private and public-sector workers, between those still in employment and the hundreds of thousand now out of work, between working men and women in a common struggle for equality.

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