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The rant from the right - neoliberal economists rubbish social partnership

Joe Craig

9 June 2006

As we face into another social partnership deal between trade unions, bosses and government all the tired rituals of the process have once again been on display, the most contemptible being repeated reports of how hard it has been to get an agreement that, this time especially, may not be reached. As in  the past, agreement is a certainty.  The trade union bureaucracy have only one thing to sell – workers rights – and only one set of customers – the government and Irish bosses. Any haggling aways ends with a firm handclasp.

The whole process was initially put forward, and has been sold ever since, on the basis that the alternative is much worse.  Almost twenty years ago ICTU argued that cuts in public spending - particularly in health - and wage restraint were put forward as necessary to stave off privatisation and Thatcherites like the Progressive Democrats.

Today, as a result of partnership, we have the PDs in government and the unions supporting privatisation while the health service is still a mess.  The working class has had its trade union organisation neutered and its political interests buried.  Now the greatest threat to the partnership deals comes not from militant workers but from the demands of a neo-liberal chorus that doesn’t see the point of seeking trade union agreement to its demands but wants unquestioning acceptance of its diktats.

Leading this chorus is the economics profession (not for nothing called the ‘dismal science’) and in particular its propagandists in the media.  Their role is that of providing cover for the union bureaucrats who can always point to more extreme voices from whom, through their gallant negotiating efforts, they have saved their members.  A fine example is that of the economics correspondent of the ‘Irish Times’, Marc Coleman, in today’s ‘Business This Week’ supplement.

One Size Only?

This latest rant (for that’s what it is) is informed by a developing theme of right wing critics of partnership.  It inveighs against the ‘one size fits all’ policy under which it is asserted that some workers get unfairly large pay rises on the back of the deals when the competitive position of their employers doesn’t warrant them.  In particular they rave against public sector workers and their assumed privileges for which private sector workers are paying.  These privileges are supposedly a result of inefficiencies that exist because of a lack of market mechanisms that alone are able to enforce efficiency.

In fact partnership does not impose wage increases on reluctant employers.  Most private sector workers are no longer members of unions and their pay is only very weakly influenced by partnership deals.  The wage levels agreed are often a ceiling to increases very much in the way the minimum wage has become accepted by government, bosses and union bureaucrats as a maximum for the most exploited labour, especially migrant workers.  In any case the pacts have always included inability to pay clauses which employers can invoke to prevent them paying what has been agreed, even in the public sector negotiated increases have been withheld.  More profitable companies have also always paid bigger increases where they have felt it necessary in order to recruit or retain staff.

The original purpose of the deals was not primarily to cap private sector pay but to impose attacks on the whole working class through public sector service cuts and continued high levels of taxation while their leadership was recruited to ensure they lacked the means to resist.  Later tax cuts were traded for wage restraint while privatisation was imposed and the unions finally locked into a position of being the mechanisms for imposing whatever work changes the bosses thought were necessary to maintain or increase profits.  The major result of all this has been a political defeat for the working class that a few extra percentage points on the salary will do nothing to reverse.


The arguments of the neo-liberals have been repeated so often that they have been more or less accepted by the majority of the working class.  Resistance thus takes place despite these arguments, when workers are pushed to the edge, and not because they have rejected them and are able to present a convincing socialist alternative.  The latest partnership deal is thus reported to start with the need for capitalist competitiveness, which surrenders from the very beginning the possibility of a resistance built upon an alternative economic and social policy.

Neoliberal propaganda is worthless as genuine analysis or argument. It derives its force mainly from the real social power of the capitalist class and the state’s ability to enforce discipline on workers, justified not because of any superior rationality of the capitalist market but because they have the power to do so.  This power is all the greater because workers leaders have already surrendered and many workers accept, albeit reluctantly, the arguments of capitalist economics.

The crude partiality of this economics is fully on show in the Irish Times article and it would be a major task to address all the ideological nonsense that passes for unbiased, expert and objective analysis contained within it.

So, we are informed that ‘the new question for social partnership is how to get the public sector to catch up with the private sector in terms of efficiency, performance and accountability.’  We hear this type of crap so much that most of it goes unexamined but in just what way is the private sector more accountable and who to?  How is its performance better and how could this possibly be measured?  In what way is it possible to compare increased activity in teaching children or treating patients or processing welfare payments with increased production of computers or insurance claims or advertising copy?  No such measure exists, so how does Marc Coleman know that the public sector is so much more inefficient?  More to the point, no such measure can exist – it is impossible to compare the increased productivity of computer production with better patient care.

But why let reality impinge on a good rant?

Anyway isn’t the free market and ‘perfect competition’ the only way to increase economic efficiency according to these boys and girls?   Their ideology is firmly rooted in the fantasy world of classical economics.  In this schema there are many firms all exactly the same, many consumers (again all exactly the same!), perfect information and simultaneous instant decision making and distribution of goods.  So how to be created out of the existing bureaucracy of the Irish State and its domination by a handful of massive transnational firms?  To ask the question is to explode the nonsense that lies behind neoliberal economic prejudice.

But perhaps Coleman thinks that some other means can increase public sector efficiency.  But if this were so we might be tempted to believe that private ownership and the ‘free’ market (it’s anything but free) might not be necessary for the efficient working of the rest of the economy.

Public Sector

Further on we read that ‘wage growth is not the cause of economic difficulty but rather a symptom of one.’  In fact wage growth is not a symptom of economic difficulty at all but a result of economic growth.  We are then told that it is the public sector and the service sector that has caused the Irish State to be the most expensive country in the EU in which to live.

In reality the fact that the latter is true is partly explained by the fact that the Irish State is one of the most profitable countries for multinationals to invest in – someone has to pay the price and with the help of social partnership it has been the working class.  Besides, how could it be the fault of the public sector since the size of the public sector has shrunk as a proportion of the economy?  And how could the sector most closely approximating the neoliberal ideal of a perfectly competitive market be the source of unnecessary price increases?

To clinch this argument the results of a recent Central Statistics Office (CSO) survey are quoted, revealing that public sector wages are higher than private sector ones by 40%.  This is like going down to the supermarket and complaining that pineapples are more expensive than apples but their both apples so why don’t they cost the same?

All the differences between the work of the public and private sectors; the different workforces; their differing levels of skills, experience, length of service and not least the appalling levels of exploitation in some private sector operations are just ignored!

To be fair he does tackle one reason advanced for the difference – that public sector workers are more qualified than private sector ones.  But this too is a problem because ‘the public service continually recruits overqualified personnel at unnecessary cost to the taxpayer.’  But isn’t this recruitment through the free market that he so admires?  And what does he want to do about it – propose the least qualified candidates are appointed to jobs or advertise only for less qualified candidates? 

Just how would this increase the ‘efficiency’ and ‘performance’ of the public sector that he sees as the ‘new question for social partnership’?

But hold on a minute! Just what sort of economic crisis does he think will erupt if public sector wages are cut by 40%?  Surely a lot of houses will have to be sold because mortgage payments can’t be kept up. Wouldn’t that lead to a collapse of the property market and bust much of the current booming construction industry?  Won’t bad debts multiply and companies ‘at the margin’ go bankrupt?  Won’t we be hurled down the road of economic recession?

We are however informed that the savings achieved in public spending could reduce indirect taxes.  Apparently the latter are so high in Ireland because of high public spending even though, as we have said, the size of the public sector as a proportion of the economy has fallen over the last period.  High indirect taxes, paid disproportionately by the working class, have apparently absolutely nothing at all to do with corporation tax rates of 12.5% and the rich hardly paying tax at all.


The essentially ideological content of the arguments of neoliberalism is revealed in their use of concepts and categories that have no fundamental existence or explanatory value to classify and explain society.  So Coleman wants ‘taxpayers’ and ‘consumers’ to also be included in the social partnership negotiations.  But who exactly are these people and how would they be selected for negotiations, or is this another rhetorical homily we are not really meant to take seriously?

Taxpayers representatives would have to exclude the rich since they have accountants that help them pay no or very little tax.  Since most tax comes from the working class does Coleman mean more reps for the workers?  Consumers?  Well I suppose this means the rich since the rich are disproportionate agents of consumption, although they also have the ability to save and invest a disproportionate amount of their income as well.  So who does he mean?

What he means of course is that the working class should be confused by their division into antagonistic groups that would advance wholly secondary demands and in doing so obscure their essential interests.  In this way they can hopefully be brought to identify at least in some way with the interests of the capitalist class – who don’t like tax at all and can afford to do without a lot of public sector spending that working class people find essential.

The nostrums of neoliberalism are thus just another way of achieving the aims of social partnership – identify your interests with your class enemy and then join together in getting yourself stuffed.

How appropriate then that Coleman should use the famous prisoners’ dilemma to make his point about capitalist rationality.

In this ‘game’ two prisoners are held separately without communication and invited to incriminate each other.  If one prisoner refuses and the second incriminates the first the second prisoner will go free and the first prisoner will serve a long sentence.  If both prisoners incriminate each other they will both serve shortened sentences.  Capitalist rationality dictates that both should rat on the other as the range of possible results for an individual prisoner– freedom in one possible case if the other prisoner does not incriminate him and a short sentence if he does– is better than not incriminating, because the range of possible results in this case are worse – freedom in one case and a longer prison sentence in the other.

Neoliberal economics will say that the rational decision for a prisoner in this situation is therefore to look at the possible outcomes and squeal on his fellow prisoner.  This advice is the same for both prisoners.  The result is that both go to jail.

This is called rationality under capitalism

We would say that both prisoners should tell their capitalist jailers to get stuffed and then practice that Northern commandment – thou shalt, whatever you say, say nothing.  That way both prisoners go free. 

This is called solidarity and socialism.

So in one respect Coleman has provided a service – he could not have raised more clearly the difference between the selfish and self-defeating rationality of capitalism and the liberating logic of socialism.



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