Ireland and Economic Depression

international | anti-capitalism | opinion/analysis

Friday March 06, 2009 22:27

by Paddy Hackett

rasherrs at eircom dot net

Irela nd

Paddy Hackett writes:
The world capitalist economy has plunged into a sustained economic depression. The signs are that this depression shall be deep and prolonged. The principal way by which capitalism can come out of the depression is by reducing both the living standards and employment conditions of the working class. The only other solution is social revolution involving the seizure of power by the working class from the capitalist class necessitating the establishment of a world communist federation.

The world capitalist economy has plunged into a sustained economic depression. The signs are that this depression shall be deep and prolonged. The principal way by which capitalism can come out of the depression is by reducing both the living standards and employment conditions of the working class. The only other solution is social revolution involving the seizure of power by the working class from the capitalist class necessitating the establishment of a world communist federation. Because of the peculiarities of the Irish situation: booms powered by bubbles and a Fianna Fail dominated government that instead of storing up its surplus revenue, in anticipation of future contingencies, largely squandered it. These funds were largely used to bribe the electorate into voting the Fianna Fail party back into power. It was also used to support its capitalist friends such as Irish property developers and bankers.

Since the outset of the depression the same Irish government has been engaged in a sustained attack on the working class. It endeavours to achieve this by splitting the working class --pitting worker against worker. By maximising the fragmentation of the working class it is rendered more vulnerable to a crushing defeat. Immigrant workers are split from indigenous workers; public workers from private workers; female workers from male workers; unskilled workers from skilled workers etc. In its current attack the government has singled out the public sector workers. To achieve a cutback in the income of these workers it has actively led a sustained campaign against them entailing the polarisation of pubic and private worker. This is the basis from which it has imposed a substantial pension levy on the public worker. Success here will render it easier for the state to reinforce this cutback with follow up cutbacks in the incomes of the entire working class. Its declared intention of widening and further increasing income tax within the next month is irrefutable evidence of this. The government also hopes to continue the reorganisation of the public sector work force. "An Bord Snip" with its mandate to focus on slashing employee numbers and spending within the public service forms part of this plan. The consequent reorganisation and diminution of the public service will lead to a weaker and harder pressed workforce. It is hoped to ultimately reduce the public service worker more or less to the same condition as that of the average factory or shop worker. Then capitalism will have a cheaper and more docile workforce. The European bourgeoisie is watching this conflict with keen interest. Cowan will be Europe’s new hero should he succeed in defeating the public sector workers and indeed the working class in Ireland as a whole. His success may provide them with encouragement to attempt to impose similar conditions on their own public sector. The present struggle in Ireland is not just a local matter. It also has a European dimension that may influence events in the European Union.

In view of this it is imperative that the working class meet this capitalist onslaught, led by its state, with stiff resistance and the correct politics. Working class action must involve strikes culminating in the general strike together with the setting up of workers' councils for the organisation and administration of economic, social and political life. In the struggle the conservative unions must be replaced by communist unions. In connection with this communists must struggle to set up workplace committees as a means of organising against the bosses and the leadership of the conservative trade unions. In solidarity with the working class in Ireland the European working class must strenuously resist their own ruling class too in the struggle for power.

The government has been actively encouraging the mass immigration of workers into the Irish Republic on an unprecedented scale. This is but a further way of promoting more division within the working class. Immigration is a social engineering device intended to drive down the price of labour power through competition. It is also intended to hinder the prospects of the working class in Ireland evolving into a unified revolutionary class force. The working class based in Ireland must overcome this division by endeavouring to create unity among migrant and indigenous sections of the working class in Ireland on a principled revolutionary basis.

None of the political elements represented in the Oireachtas can offer a solution other than essentially the same solution as that of the Fianna Fail Party. They are each bourgeois in character including the Labour Party, the Green Party and Sinn Fein. They simply attempt to dress the same solution up in different clothes. They all actively support a solution to the capitalist crisis at the expense of the working class. The leader of the Labour Party, Eamon Gilmore, has expressed his opposition to strike action and does not reject a pension levy in principle. Neither is he, in principle, against increased taxation being imposed on the working class. He merely calls for “fairness” in taxation. The Labour Party and Fine Gael claim that cutbacks in the living standards of the working class are necessary and correct. Their difficulty with Fianna Fail is their alleged lack of fairness together with the unscrupulous way in which they are imposed. The opposition of Fine Gael and Labour hinges on matters of ethics. Fine Gael and Labour like to present themselves as corruption free in contrast to Fianna Fail. They oppose the form as opposed to the substance of Fianna Fail's politics. They thereby present a false opposition since ethically there can be no essential difference between the parties. If Fine Gael and Labour were in power as much as Fianna Fail they would exude just as strong a smell as the latter. Again this is a rather derivative difference of no real significance. In effect the main party in power and the opposition are similar. Consequently the Dail opposition concentrates its opposition largely around matters of corruption, ethics and competence. These constitute matters of secondary importance that obstruct the healthy development of class politics.

The voluntary reduction of salaries of high profile figures from the business and media world is merely a ploy designed to exert further pressure on the working class to accept living standards.

The growing army of the unemployed means that the production of surplus value, total profits, has diminished. This means that fewer resources exist from which to pay for state expenditure. This forces the state to cut spending, increase taxes and borrowing. Borrowing is a form of future taxation with a difference. Interest must be paid which amounts to an addition to future taxation. This constitutes a further deduction from total profits which further adversely affects investment conditions. This tends to bring about a downwards spiral. Consequently the Irish economy is forced to further contract in order to reproduce the conditions for recovery. Spending cuts, taxation and borrowing must be further increased.

The present depression is a result of the bourgeoisie's refusal to let the economic system follow its "natural" cyclical downswing whereby capitalism cleanses itself of less profitable forms of capital. This leads to a restoration of profitability and greater sustained economic activity. Instead the capitalist class through the medium of its state modified the downswings through counter-cyclical interventionist activity. The ruling class fear a generalised depression because its destabilising consequences may lead to revolution. In general the more the cyclical behaviour of capitalism is modified and prevented from completing its "natural" cycle the greater, more intense the crisis. The evidence suggests that the capitalist social system has plunged into depression. No amount of state intervention can prevent it from assuming an acute form this time round. We have now entered a new historical epoch. Politics can never be the same again. Under these new conditions of sustained and deep stagnation the class struggle sharpens. Consequently capitalism's obsolescent character becomes increasingly visible and thereby the need to abolish it.
At present the leadership of the working class (trade union and political leadership) has been offering solutions intended to rescue capitalism from its demise. Capitalism can only be rescued at the expense of the working class. There exist no significant political forces advocating a solution necessitating the transcendence of capitalism. Communists must endeavour to create a communist current within the working class. This can begin by organising circles of communist intellectuals. Such a communist intelligentsia conducts an intellectual struggle to propagate communist doctrine. As this intelligentsia develops and spreads its influence it has the basis for linking into the more advanced sections of the working class to form a communist strand within the working class. This is the basis on which a revolutionary communist movement can be built.

Under the present critical conditions a communist movement would draw up an action plan as the basis for struggle against this sustained attack on the working class.

Paddy Hackett

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Comments (7 of 7)

The Crisis and the Consolidation of Class Power

by David Harvey - CUNY

Sat Mar 07, 2009 02:03

Does this crisis signal the end of neo-liberalism? My answer is that it depends what you mean by neo-liberalism. My interpretation is that it’s a class project, masked by a lot of neo-liberal rhetoric about individual freedom, liberty, personal responsibility, privatisation and the free market. These were means, however, towards the restoration and consolidation of class power, and that neo-liberal project has been fairly successful.

One of the basic principles that was set up in the 1970s was that state power should protect financial institutions at all costs. This is the principle that was worked out in New York City crisis in the mid-1970s, and was first defined internationally when Mexico threatened to go bankrupt in 1982. This would have destroyed the New York investment banks, so the US Treasury and the IMF combined to bail Mexico out. But in so doing they mandated austerity for the Mexican population. In other words they protected the banks and destroyed the people, and this has been the standard practice in the IMF ever since. The current bailout is the same old story, one more time, except bigger.

Transcribed by Kate Ferguson
Edited by Mary Livingstone

Full text at link.

Caption: Video Id: 02eskyHJY_4 Type: Youtube Video
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Academic and Theses and Essays on relvant topics

by Michelle Clarke - Social Justice and Ethics

Tue Mar 10, 2009 18:01

I studied in Trinity - Economics, Sean Barrett, Professor Wickham Social ..........,

These are excellent lectures. Why don't student's start publishings essays on Indymedia to aid the recover of Ireland.

Professor O'Hagan was excellent on Economy of Ireland and then History

Working class

by Polly

Tue Mar 10, 2009 18:13

I just wonder what we mean by working class today. It is a very small group of people who own large private companies. Senior civil servants, judges, senior bankers, senior business people take no risk with their own money and generally own only a small part of the means of production (through shares). The people who have power and make decisions are generally wage earners and have used this power to take large slices of the National Cake. Senior presenters in RTE who have enormous influence on society may technically be self-employed but without any capital investment of their own. Accountants, auditors and legal professionals appear to have few ethics and are solely concerned with their own economic interests and seem to have no responsibility to their clients or society. You must audit your accounts but the auditors have no responsibility. Just listen to how many times you have heard recently that no-one can act because they received legal advice. People throughout the country who have a small to medium business have put their money on the line - these are the owners of capital - they are creating jobs for themselves and others with a view to earning profit and some go bankrupt with that effort. They have no recourse to social welfare when things go pear-shaped.
So, I'm not sure what relevance this argument of the owners of capital versus the working class has any longer. I think the real problem is with the waged /salaried elites. This doesn't mean I believe the neo-liberal, market above all capitalist society is right. I just think the focus has to change from owners of the means of production. Speculation for quick profits has to be prohibited somehow. I agree that venture capitalists should not be allowed to take over the Irish banks. Even though I have bank shares I would prefer to see them nationalised. My real question is "Who are the working-class?" and how do you stop the "new elites" in the new communist society from using their power to feather their own nests? This is the problem of "human nature" and "political association" that philosphers have been trying to come to terms with for thousands of years.

Tax the poor ...

by Paul o toole

Sun Mar 15, 2009 13:53

pauljotoole at eircom dot net

Fools And Our Money
Willy O dea, minister for defense announced savings to day of between 8 and 9 million Euros because the mission of Irish troops has moved over to a UN led opperation. This in effect decreases the financial burden on the Irish exchequer by about 60% because the EU now funds the difference.
The mission to date has cost the Irish taxpayer 57m euro per annum. A 60% savings at this point of 57million is 34.2 million yet the minister says there is savings of 8 or 9 million....wheres the other 24 or 25 million??. And where did he get his leaving cert??

Minister for Finance admitted he cost us arround 700 million in failed V.A.T. policy. This was known long before the losses would be incurred and he sat on his hands.

I asked Minister Lennihan outside the dept. of finance last week......
'Why wont you get Bono to pay his taxes here in Ireland?',
He said ..'Why dont you ask Mr. Bono yourself.'....
I said...'You made the legislation which allows him away without paying income-tax in Ireland for the last 32 years'
He said....We introduced the 'Cinderella Clause' which.........blah blah.....
The Cinderella clause has no real bearing on what the question posed to ask.

As floundering shareholders funds in our most presdigious corrupt banks are being secured against our taxes, without any transparency as to these mega-rich people are whomb we are bailing out, as social services are being removed at stealth speed, as the government sits motionless in the face of crisis, as the value of labour spirals down, as the health services cut a billion in funding, as schools are having to cut staff, as busses are removed from service, as jobs are heading east, as a new emigrant era migrates south,
as brokerage firm economists demand 2 million in fees to advise.....our politicians..........award themselves a payrise.

generated rescession

by pseudonym

Mon Mar 16, 2009 17:03

The recession was generated by the media and the banks.
The media suddenly had doom gloom etc. all over it and the ministers were the first to shout the word.
The banks suddenly paid an enourmous amount in 'insurance' fees towards internal money transfers between banks imposed by the central bank. This left them with no cash. As long as people believe in this rescession there will be one. When you stop spending the economy falls. Then the governement and the central bank have a chance of changing the amount of euro's in circulation. There is no gold or good standard. So the amount of euro's is not measured to the amount of goods produced/posessed. They can play false in what to them is the big euro game.
Do you want to be cheated out of your euro's?

On David McWilliams and the Slump

Wed Mar 18, 2009 18:03

David mistakenly claims that the Irish state can borrow instead of cutting back and increasing taxes.
Remarks concerning comments by David McWilliams published in The Sunday Business Post
Paddy Hackett

“It is crucial now that the world - and Ireland- creates inflation, not deflation. If we haven’t the stomach to print money (which would be by far the easiest exit route), we need to turn on the taps through government borrowing” (This Is Not The Time To Panic by David McWilliams: Sunday Business Post 15th March, 2009)
In his comments on current economic conditions David McWilliams suggests that under the present economic downswing the Irish state can liberally borrow funds to compensate for the steep fall-off in revenue from taxation. It also suggests that this wholesale borrowing will largely relieve the Irish economy of the problems it has been experiencing as a result of the economic downturn. He also claims that this mass borrowing will prepare the Irish economy for taking advantage of the pickup in the global economy when it comes.
David is a victim of the illusory way in which capitalism presents itself. He seems to think that the Irish economy can essentially avoid the effects of the global economic downturn by borrowing. If this is the case then there need never be recessions since economies can merely borrow their way out of them.Borrowing then is the the agency that prevents economic recession. But it is just this borrowing that has largely helped turn boom into bubble with its current deflation. The very borrowing of the banks and private companies in Ireland and elsewhere was a factor in intensifying the economic conditions that created speculative practices.
It is only at a particular stage in the downswing that the injection of cash into the economy can precipitate recovery. At this stage the economic slump has effectively bottomed out rendering it ready for take off.
If it was as easy as David suggests there would never be recessions and there would be no need to abolish capitalism and replace it with communism.

Catherine Austion Fitts and Money creation

by Diarmuid

Mon Mar 23, 2009 01:05

A suggestion - please visit solari.com - this is the site of Catherine Austin Fitts - ex wall street insider previous under secretary for housing (HUD) under Bush 1 - she exposes the shell game which is our current monetary / financial system and "dirty tricks" which are currently used to generate massive profits for a few (I believe many of the same tricks /. corruption are currently at work in Ireland)

For details on the how the war and drugs and the massive increase in the prision population in the US has generated massive profits for wall street and London financial centers please read her personal story at

http://www.dunwalke.com/

I believe this crisis may well be an exsistensial one for the middle class and working communities of Western Europe and the US - as far as I can tell all of the proposed solutions, so called capitalist, socialist or communist solutions being presented are ones which will further concentrate power in the hands of a few - global financial regulation - EU super state - more regulatory powers to the FED in the US - more power to the IMF BIS etc. bigger goverment everywhere. none of this is in anyones interests except for the few in the inner circle who will weild this power and further consolidate their wealth and position at the expense of peoples everywhere we must break this cycle in my view by assserting our own independence as individuals, stop looking to our goverments or politicians of so called opposition parties for solutions what they are proposing is not in our interests, start to bring decision making and investments back into our communities decentralize - people need to educate themselves on the nature of money - if you do not understand the term FIAT money and understand ALL money is Debt - its a claim on your future labour the only thing of true value in this world - and the ramifications of this statement on your life then you need to educate yourselves as a matter of grave importance

Please watch the MONEY MASTERS and "money as debt" on google video as an introduction to money and its creation

http://video.google.com/videosearch?q=money+as+debt&emb=0#

http://video.google.com/videoplay?docid=6076118677860424204

- you will then begin to truly understand the utter fallacy in David McWilliams Keysian assertions that a debt problem can be cured by more debt - the Irish goverment has already burdened us and our children with a debt they will never be able to pay off by backstopping and accepting liability for fradulent investments of the insolvent Irish banks (whos consent was given to do this?) and now they want to burden our grandchildren aswell

God Bless

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Comments (7 of 7)