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Inherent inequality and instability

Eugene McCartan
General secretary, Communist Party of Ireland



Comrades,
     First of all I have to state that I am not an economist, so I will not venture into areas where I have little or no expertise but instead will attempt to outline what I see as the state of play at this time—not just in Ireland but at the EU level and globally.
     There is no better starting-point than Lenin (a much-maligned man) on imperialism, where he wrote: “Finance capital is such a great, such a decisive you might say, force for all economic and in all international relations that it is capable of subjecting, and actually does subject, to itself even states enjoying the fullest political independence . . . Of course finance capital finds most ‘convenient,’ and derives the greatest profit from, a form of subjection which involves the loss of political independence of the subjected countries and peoples.”
     Though Lenin sketched out what was the essential growing dominance and central role of finance capital, he could not have foreseen the sheer scale that it has assumed today. It is estimated that speculative capital is ten times greater in one year than the worldwide value of manufactured goods. What we have is a vast global paper chase.
     There are a number of features of the general crisis of imperialism that I would like to draw your attention to.
     (1) Its political hegemony is under pressure.
     (2) Its economic contradictions are deepening.
     (3) Its moral leadership is questioned and resisted.

Growing political challenges to the hegemony of imperialism

Barely twenty years since it was declared that we live in a unipolar world, dominated by US imperialism, 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 position itself strategically to fill any potential vacuum that might arise resulting for the decline of the USA.
     Imperialism is bogged down in a number of costly wars and is suffering significant setbacks in its attempts to impose its hegemony. The growing cost of financing these wars is having a major impact on budgetary spending. This growing military spending can only lead to further attacks on the living standards of working people and to intensifying the exploitation of the countries of the majority world, which in turn is meeting with increased resistance. Compromising governments, such as those of Brazil and South Africa, are being forced by popular pressure to change course—but of course this is being met with counter-resistance from the powerful vested interests.
     Today we have the emergence of regional blocs that no longer look to the United States but are in fact in direct opposition to imperialism. The most progressive of these developments is the emergence of a number of progress left governments in Latin America. The mass power and resistance of people throughout Latin America 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 their democratic control over those areas of the economy that are within their grasp, such as oil, gas, water and other mineral resources, as well as reclaiming control of their fishing resources and agricultural production and using them in a manner suited to their needs rather than solely to satisfy the demands of the metropolitan markets.
     Even Russia has been forced to defend its own national interests, which has brought it into conflict with the strategy and interests of imperialism. From this we are witnessing the emergence of a more multi-polar world, which has the potential to push back the political and military power of US-led imperialist forces, which have the capacity to bring about inter-imperialist conflicts and possible wars.

Economic contradictions intensifying

Today, the cyclical crisis of capitalism is being exposed as never before to hundreds of millions of people around the world. People can sit in their homes and watch as financial markets collapse. Our radio, television and newspapers are polluted with “experts” who until recently were rattling on on the air waves or writing long, fanciful articles about how capitalism had overcome its contradictions and how “TINA”—“There is no alternative”—is alive and well and still the only game in town.
     It needs to be said, and constantly repeated, that these same experts—economists, economic advisers, consultants, and gambling experts, in the form of stockbrokers and three-card tricksters—by and large have little if any understanding of 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. 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 equally agree that working people will pay the price: in job losses, cuts in services, and loss of pensions. Private control of finance capital has shown that it can take the rest of the economy hostage, fatally tying the economy’s fate to its own.
     The agreed policy adopted on both sides of the Atlantic, both in the past and today—or so it appears to me at least—is to blow up the bubble a bit more, bailing out the bankers and speculators, giving little or no help to the millions of workers threatened with the loss of their job, their home, or their pension. They are printing money to bail out the banks, which does not reflect the material base of economic activity. This is living beyond one’s means on a scale previously unimaginable, which can only feed growing inflation in circumstances in which price stability is one of the economic priorities of neo-liberalism
     For the first time in decades, the name that they dared not mention, Karl Marx—standing like a spectre at their door—gets a mention in passing as somebody who may possibly give some insight into what is happening. This old “dinosaur” may after all have had a thing or two to say about the workings of capitalism and its cyclical crises of boom and slump.
     To many working people in Ireland it is obvious that something very serious is happening, both at home and to the biggest economy in the developed world, that of the United States. This presents anti-imperialist forces with an ideological opening in which to challenge imperialist influence and power and to present an alternative. TINA is sick, but not yet terminal.
     Ronald Reagan promised “less government”; Margaret Thatcher campaigned against the “nanny state.” These ideas appealed to what their disciple Mary Harney, the Irish Minister for Health, 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” was the unchallengeable dogma of these forces. In the early 1970s, Keynesian economic theory came under extreme pressure, and it was been thrown out and replaced with the god of the free market. Neo-liberalism, as laid down by Milton Friedman and his disciples, the “Chicago Boys,” was practised wholesale in Chile after the fascist coup in 1973, while here in Europe, social democracy has abandoned its “third way,” and the “historic compromise” agreed between labour and big business is being dismantled throughout Europe, but not without resistance from working people, confused and leaderless though they may be at this time with regard to a possible alternative.
     With the defeat of the Soviet Union and with the potential alternative that socialism posed (despite its many shortcomings and weaknesses) being dismantled, big business and governments began taking back what they were forced to concede in relation to public education, public health, pensions, the age of retirement, 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, while we witness the Irish and British governments stepping in to stave off a collapse in the banking system.
     Within the space of two weeks the Irish government stepped in to shore up the Irish banks to the tune of €485 billion. The policy of guaranteeing personal savings as well as guaranteeing the debts of the banks for the next two years can only bring temporary stability. If any bank applies to take up the government scheme the state will become a guarantor for any loans they have with other financial institutions around the world. If any of the banks call in this guarantee, the consequences could be very costly for the state, which in turn will attempt to place a far greater burden on workers in order to bail out the banks and its financial backers and to maintain the liquidity of the state itself.
     The Irish national debt now stands at €45 billion; but now the national credit rating will be judged as having a potential bad debt of €530 billion. That means that the cost of borrowing for the state has gone up—so we are already paying the price.
     The debts incurred by Irish banks are the result of reckless lending policies to property speculators, and not just to property speculation in Ireland but globally as well, which has given very large returns to Irish banks and their shareholders over the past decade, who have been reaping huge profits from speculative investment in the property market. Of course those profits seem to have disappeared when the crisis began to bring the very existence of the banks into doubt and public money was required, while billions of euros in profits made in the last decade are safely beyond reach. One has to ask, Where have all the profits gone?

The unfolding crisis

As the crisis unfolded and deepened it was the bankers who demanded the meeting with the government, and it was they who proposed what the solution should be. They have even determined the criteria on which they can draw down government support. The feature that has been most exposed in the present crisis is the role of the financial regulator and the Irish Central Bank as mere tools in the hands of finance capital—paper watchdogs.
     The carcase of the so-called “Celtic Tiger” lies rotting, and the clean-up job will cost Irish workers dearly. We have an economy that is already facing a possible €10 billion shortfall in government revenue this year alone (2008), with the same projected, if not a greater one, for next year. Unemployment is rising rapidly, resulting from an almost complete melt-down of the construction industry and the haemorrhage of light manufacturing jobs to eastern Europe and China. This week’s budget was a savage attack on working people, with the government attempting to place the burden solely on the backs of working people.
     In the recent wage talks, if what is called the “social partnership” agreement, between the government, employers, and unions, is agreed by union members it will result in public-sector workers facing a pay pause of eleven months, with workers across the board getting a 6½ per cent pay increase over twenty-one months—a very small increase in wages, which will be wiped out by inflation.
     But no sooner had the ink dried on the draft of this agreement than the government presented its budget, which it had to bring forward because of collapsing revenue. It announced that a 1 per cent levy was being placed on workers earning up to €100,000 and 2 per cent for those over that. If you visit a hospital A&E without first going to a doctor you will have to pay €100 down; so you had better not let your child get sick in the middle of the night when the doctor’s surgery is closed.
     The ending of the automatic right to a medical card (the concession of free medical treatment) for pensioners over the age of seventy will cause immense hardship. There is an increase in the VAT on a whole range of areas. The possible loss of thousands of public service jobs is now very real. The heyday of the “Celtic Tiger” is well and truly over, and the beast is now proceeding to eat its young.

Their strategy is making more people poorer

A few short years ago, hundreds of thousands of citizens marched in Ireland, in Britain and around the world to “Make poverty history.” We had the G8 meeting in Scotland, with fading Irish rock stars prancing across well-manicured lawns, talking about how they had secured a great deal for the “poor” of the majority world and the significant step forward in debt cancellation that had been secured.
     If we contrast the hundreds of billions of dollars, pounds and euros handed over in the last few days and weeks for bailing out the banks and speculators and other parasites, the hurriedly convened summit meetings of politicians and bankers to devise schemes for raiding the public purse, and pose that frantic pace to shore up the global banking system with the few measly hundred millions of cancelled debt of some of the poorest countries on this planet, coupled with the demand that those countries open up their markets, hand over their resources, allow totally free movement of capital, and with no state regulation or control on capital allowed, which has resulted in the gross impoverishment of hundreds of millions of people, this stark contrast lets us see more clearly than ever the priorities of imperialism.
     We witness not only that finance capital is responsible for the imposition of anti-human, anti-development policies but also that their actions in commodity speculation have pushed up the price of food and fuel, forcing hundreds of millions of people deeper into hunger and despair. Every aspect of human life, of human activity, is commodified, to be bought and sold. Countries and people are forced to grow bio-fuels instead of food. This is the anarchy of imperialism, the anarchy of capitalism.
     The present crisis 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. Seán Fitzpatrick of Anglo-Irish Bank confirmed that it was the banks that demanded a meeting with the Irish government. One has to ask, Who called the meeting in Downing Street?
     We know they went to the state for help. The bourgeois state remains under the control of big industrial and financial interests. Could it not be argued that regulation by the state could be self-regulation, in the sense that it is their state? We know that the financial crisis is only a symptom of much deeper fissures, of deeper fault lines running through the very nature of capitalism and imperialism. The present strategy is to put another few storeys onto the house of cards.

The European Union calls the shots

Another feature of the power that finance capital has over our lives is the role of the European Central Bank, which was established to ensure that finance 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 was, has been circumvented by the European Union. It only mandate is “price stability.”
     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, which will be subject to the needs of the market—the model neo-liberal straitjacket.
     The Lisbon Treaty would reinforce competition as the framework for all other policies. Articles 16 and 115 would give the European Union the power to say how governments should manage their budgets and run public services. Price stability or control and the value of the euro are considered priority areas over everything else.
     Judgements by the European Court of Justice in Luxembourg have clearly ruled that workers’ rights are conditional and inferior to the rights of business. The Posted Workers Directive is essentially Bolkestein by the back door, reinforced by recent judgement and backed up with the power of the ECJ. The strategy of the European Union is to pitch worker against worker, using a very old tactic of divide and rule, pitting one set of workers against others so as to batter down wages and conditions.
     One example of the growing casualisation of the work force can be seen in the following small example. On one of the major construction sites where the National Conference Centre is being built in the Dublin docklands, of the 1,400 construction workers seven are employed as direct labour; the remaining 1,393 are agency workers. That means they are not entitled to sick pay, wet time and many other benefits and securities that workers employed directly by a building company would have of right.
     The recent EU summit meeting in Brussels was an attempt to reassert control over some of the errant children. Germany, Britain, France and poor old Italy were unhappy with solo runs by a number of the smaller states, including the Irish state, which attempted to take affective action to save their own financial bases without due regards to what the EU Commission or the big states had to say.
     This temporary expression and assertion of national priorities by some of the smaller players is anathema to the EU big states and EU institutions, particularly the Commission. We welcome this expression of independent thinking and the taking of action, though not necessarily the particular action taken to salvage the Irish banks and speculators, as an important expression of national priorities and of what is possible if the political pressure is applied to this central contradiction in the power relation between the institutions of the European Union and the needs of individual member-states.
     Full control has been temporally restored with the decision to attempt to establish a unified approach to global financial matters agreed at the EU summit meeting on 15 October. That of course is code for whipping everyone else in behind the position adopted by what they now call the G4—once again proving a central point made by Irish communists and democrats for some time, that independent action to meet Irish conditions is simply not acceptable.

Is this the end of neo-liberalism?

While some commentators—once champions of neo-liberalism—have heralded the end of neo-liberalism, I would not be so quick to predict that. Neo-liberalism is deeply entrenched in the ideological superstructure—in fact it is the very essence of imperialism. It is embedded in the laws of many states; and are not the many draconian anti-union laws a necessary and central part of the neo-liberalist strategy?
     So we are a long way from the end of neo-liberalism. What we have, I believe, is a clever ideological attempt to divert workers away from the very nature of the problem and to focus on what is clearly an attempt to socialise the debts of bankers and speculators, while the profits remain firmly private, to induce people to be willing to carry an additional burden created by finance capital. The talk of bankers’ salaries and the like is mere window-dressing, a diversion from the real, deep-seated contradictions.
     We witness daily the expression of the power of ruling-class forces coming together, including the financial institutions, the state, and the global mass media, which constitute the means of control by the ruling class, each one reliant upon the others.
     Some commentators have presented the situation as being similar to the 1930s, which in fact is not the case. This crisis is even deeper. In the 1920s and 30s, from an Irish viewpoint, our “surplus” population went in the main either to Britain or the United States, as both economies had a strong manufacturing base. Today that is not the case, as those economies are now dominated by finance capital, and China has now become the “workshop of the world.” Manufacturing capital has moved east, so the demand and opportunities for labour are greatly reduced. This shift in manufacturing and the capital that it creates will mean that China will have a significant influence on the outcome of the present crisis.
     It is clear that our world faces a number of crises. One is the growing instability of imperialism and state monopoly capitalism; second is the global environmental crisis created by monopoly capitalism. Neither crisis can be solved by imperialism. What is clear is that all that imperialism has to offer the peoples of this planet is growing crisis and wars, both large and small.

We believe that the anti-imperialist forces have new lessons to learn

There are many lessons to be drawn from the experience of the unfolding struggles in Latin America. We have to develop our demands to meet the specific conditions in Ireland. These demands need to be developed here in Ireland and elsewhere in relation to our own resources. Imperialism and the economic path that it has attempted to impose on the nations and peoples is now shown to be anti-people and anti-democratic and new forms of economic co-operation are now beginning to blossom and need our solidarity and support in order for them to grow and develop.
     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 coasts and on land, and that those resources are managed and developed to meet the needs of our people. This is to develop the national democratic struggle of our people and to fight for and build a national democratic economy.
     What is clear is that resistance is necessary, and possible, and that Irish progressive forces need to learn from the success of forces in the global south in its 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—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.

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