- Monday, 27 August 2012
- Written by Tony Healy
The economic and political background to the current position in the state is grim. There seems no let up to the bad news from Europe, a new recession is looming and the Germans and the French have just turned down Greek pleas for an extension on the debt repayments. The after effects of the crash in 2008/9 will last for many years.
What started as a crisis of overproduction in the US became a banking crisis and then a crisis of “sovereign debt”. At each stage the working class and the youth, have been made to pay for the crisis. There seems little difference between the policy of the Fine Gael and Labour coalition and that of Cowen and Lenihan in the past. The reason for that is clear; capitalism is in a deep crisis, without a fundamental break with pro capitalist policies Eamon Gilmore can only offer more austerity.
Labour is the junior partner in the coalition and whatever gets discussed behind the scenes at Leinster House in reality it is the Troika that sets the agenda. The latest report from the IMF has identified a whole list of cuts they want to see:
“Comprehensive targeting of spending is needed to deliver immediate reductions combined with reforms to underpin savings in the medium term. Maintaining expensive universal supports and subsidies is difficult to justify under present budgetary circumstances. Better targeting of the child benefit, medical card spending, the household benefits package and the expenditure on non-means tested pensions can generate significant savings while protecting the poor. The Croke Park Agreement has facilitated personnel reductions and efficiency savings, and has helped maintain the industrial peace needed to achieve broader reform goals. Continued monitoring of the adequacy of savings in the net pay and pensions bill, and of public service provision, is necessary. Deeper reforms in health and higher education are needed to identify service priorities and deliver them efficiently”.
This report which we recently analysed will no doubt be translated into coalition policy presently.
The collapse of the Celtic Tiger and the chaos in the state during the Fianna Fáil/Green government generated a swing to the left among the working class, particularly in Dublin. This was the basis for the election of 37 Labour TD’s last February. That election result should have laid the basis for a political struggle against the austerity. Instead the Labour leaders argued that by participating in the coalition they would be able to defend working people.
The fall in Labour support to 15% while support for Fine Gael is growing in the latest opinion polls published by Red C in June illustrates a major contradiction within the coalition. Fine Gael and Labour rest on very different layers of society. Labour ministers will be hung out to dry by Fine Gael, as they were in the 1980’s. As long as the Labour leaders are prepared to carry out the austerity against the interests of the voters that put them in the Dáil, they can only erode their support further.
The debate within the coalition over the Croke Park Deal illustrates the differing pressures on Labour and Fine Gael. FG TD’s have been screaming over the last few months for the Croke Park Deal to be torn up. Labour on the other hand have argued for it to remain, arguing that it has delivered. Certainly any attempt to smash up Croke Park and introduce further wage cuts in the public sector would create an enormous reaction from the public sector workers.
Labour has come under pressure also from the campaign against the household taxes and coalition plans to “broaden the tax base” in the state will only create more opposition.
The onset of a new recession in the Eurozone will most likely lead to more austerity and more pressure on the working class. Already, the ECB and the EU have turned down Enda Kenny’s pleas for reduced interest rates on the bailout.
With that in mind a new organised left in the Labour Party is very welcome. But what programme will it fight for and where will it stand in relation to the coalition?
It is clear that there will be many issues and many opportunities to argue against the line coming from the coalition. But it is important to note first of all, that the economic crisis in Ireland is no mere blip, but part of a profound world crisis of the system.
Already sections of the left and the trade union movement have argued along the line of a Keynesian Economic programme for Ireland. The main points of the “Claiming our Future” programme are as follows:
- First, drive a sustained and substantial investment plan. CoF proposes a 5-year, €15 billion programme similar to the proposed schedule put forward by the Nevin Economic Research Unit and UNITE. The investment would cover education and labour training, environmental technologies, broadband, school and medical buildings, and support for indigenous enterprise.
- Second, progressive taxation to pay for quality services – with a long-term aim of increasing taxation to average EU levels, as measured as a proportion of GDP. In the short-term taxation ‘should fall harder on highest income earners’ with suggestions of a wealth tax, standardising tax reliefs and a new top rate of tax.
- Third, as a consequence of raising taxation to EU average levels, we can raise expenditure on public services, social protection and investment to similar levels. This will afford greater investment in health, education, social care and housing, child care and community infrastructure. This investment would not be a cost to the state, if it is paid out of increasing taxation, but rather a contributor to both economic and social value-added.
Gilmore himself has talked about “growth”; Hollande in France has talked about growth also. But the prospects for public investment and growth in the Irish economy seem very limited.
Meanwhile in the private sector; Ireland exports some 80% of what it produces. If there is a recession in Europe, that will limit the possibility for expanding trade. Inward investment was an important part of the Tiger boom, but even despite the low rates of corporation tax in the state, that will most likely tail off in a new recession. The building industry is still struggling as house prices continue to fall.
Again, in the middle of a world crisis of capitalism the conditions for economic peace and harmony to break out just don’t exist. Ireland’s economy is too small and too dependent on trade to flourish when the main countries that Ireland trades with are either in recession or heading in that direction.
Michael Taft pointed out in his blog that the government’s so called “infrastructure stimulus” made up of Public Private Partnerships and €850 million looted from state owned companies was little more than an accounting exercise:
“Where does this leave us? In pretty much the same place as before the Government announced it’s Infrastructure Stimulus. There is little new in it, there is little additional, there is no new money allocated for the PPP-related projects. It is mostly spin with little substance.
But there are some things on the investment front that we know for certain – the planned cuts. The Government is planning to cut a total of €5.6 billion from public investment up to 2016. Had the Government, on entering office, maintained capital spending at the 2011 level, It would have been investing €22.6 billion up to 2016. However, with its cuts, it will only be investing €17.1 billion.
The only boost we get from all this is the increased energy that goes into disentangling reality from rhetoric.” Another day in the Spin Factory 24/7/2012
A Keynesian policy to generate public investment would come under enormous pressure from the bond markets and the ruling class. To implement even the limited programme that is being proposed by the authors of Claiming our Future would require a break from the coalition with Fine Gael. The idea of a progressive taxation system in Ireland would send paroxysms through the board rooms in London, New York and Tokyo. To achieve even basic reforms at the current time will require a militant political struggle linking the trade union movement to the political demand for a socialist programme.
While the main focus of this article is on the development of a left group in the Labour Party, many of the same criticisms can be levelled against the main groups operating within the United Left Alliance. Merely arguing for taxation on the banks or a wealth tax on the top 300 in Ireland will not solve the problems that workers face in the state. Without a clear perspective and a clear socialist alternative, not only to the coalition, but to the capitalist system itself the ULA is not likely to develop into a serious opposition to the left of Labour.
Marxists would support a massive programme of public works, but under the current conditions that is inconceivable without nationalisation of the banks and big industry and the development of a socialist plan of production for Ireland. The only solution to the problems of the Irish working class lies in a political and economic struggle against capitalism and for a Socialist United States of Europe.
Here is the letter that was circulated by the Campaign for Labour Policies
Campaign for Labour Policies
I am writing to you today on behalf of the Campaign for Labour Policies.
We are a campaign of grassroots Labour party members who have come together to mobilise Labour members and supporters around an alternative political programme to the one now being pursued by government.
We are determined to fight for a political party which serves to meet the needs of ordinary people. We are deeply concerned about the erosion of social and economic rights that is taking place in Ireland, as austerity continues to wipe clear hard fought for gains. We do not believes that austerity is working, or that austerity politics, which have failed up to now, will somehow start working soon.
We are launching the Campaign for Labour Policies at a meeting for Labour members on the Saturday September 15th at 2pm in Wynns Hotel, Middle Abbey Street, Dublin. Our speakers will be Mags O’Brien and Michael Taft. We hope to mobilise as many Labour members and supporters around policies which prioritise the needs of society. Our campaign will focus on key questions such as job creation, income inequality, the protection of services and dealing with the onerous bank debt.
The Campaign is open to all Labour members, and we are made up of ordinary labour members of all generations. As Labour members, we all fought hard to convince our communities to elect Labour TDs. The Campaign for Labour Polices is determined that Labour members will have a voice, and become a voice for change in a radical campaign for labour, left policies.
We hope to see you on the 15th.
Secretary Campaign for Labour Policies