What sort of Economy? What sort of working class?
(The following article is based on a talk by Joe Craig given at the Socialist Democracy School in October)
11 November 2007
Why is it important to understand what sort of economy exists in Ireland?
There are at least two answers to this. Firstly the nature of the economy determines to a great extent the nature of the working class and plays a very important role in determining how that class thinks of itself. Secondly the character of an economy is an obvious important starting point for any project for a socialist alternative and how that might be constructed. This talk will focus on the first of these questions.
The economy of the Irish State is widely viewed as a success story and is held up as an example for other countries to follow.(1) To answer the question – what sort of economy the Irish one is we can ask why has it been so successful.
One answer widely touted is that the Irish economy experienced a delayed catch-up with the rest of Western Europe. Once policies of national self-sufficiency were abandoned and those of fiscal rectitude plus others were implemented the economy experienced the growth that was always possible. The theoretical perspective informing this is that creating an environment for free market forces allowed them to combine to produce the growth that has occurred over the 1990s and to a lesser extent in this decade. In this sense there was a certain amount of inevitability about such a process once the right policy choices by the Irish State were adopted.(2)
A second part of this explanation is that policies of low taxation, an educated and English speaking workforce, a business friendly environment and helpful Irish State attracted the foreign direct investment that created the Celtic Tiger phenomenon. There are differences among academics over the relative importance of the various elements of this explanation but one objection is applicable to both.
The Irish State has pursued a policy of opening up to the world economy since at least the late 1950s. It has also offered tax incentives, a business friendly political and social environment and creation of an educated workforce since the 1960s. Yet only in the 1990s did the economy take off. In fact in the 1980s the economy of the Irish State was in economic crisis, with most of the factors that supposedly led to success in place.(3) It is not credible to argue that the growth of the 1990s and after was in any sense inevitable.
It is quite clear that foreign direct investment by primarily US multinationals was the dynamic motor of the Celtic Tiger boom and is still the key foundation of current economic growth and success. Decisions to invest in Ireland as opposed to anywhere else are obviously ones that require a global perspective. It is therefore developments at the global level that must provide the starting point for any explanation of the development of the Irish economy.
This does not mean that domestic developments are unimportant but they are secondary. We have seen that similar policies resulted in different outcomes in the 1980s and 1990s and we can see that the key decisions – by multinationals to invest in Ireland - were taken outside the country.
One other consideration demonstrates this. The open nature of the Irish economy has led to widespread emigration throughout the existence of the State up until the recent boom. This has historically been determined by incorporation of the country into the British economy as a purely regional economy of the latter. For most of its history the Irish State has effectively had no separate currency. This has meant that it could not have industrialised in the 1960s in the way other less developed European countries did, such as Portugal, Spain and Greece, through production of low-wage consumer goods for export. Wages could never fall low enough to allow this because workers would emigrate to Britain or even to the US before they did. This is why the Irish economy had such a low productive capacity yet had relatively high living standards in world terms.(4&5) It also explains why recent growth could be so powerful and sustained, because untapped domestic reserves of labour (e.g. labour force participation rates) and external reserves of labour (including returning emigrants) could be deployed to keep it going.
To emphasise our point, what this demonstrates is that the Irish economy and its development has always been determined by external powers. The much vaunted escape from the complete dominance of the British economy has been replaced by dominance from a combination of US multinationals and the Western European imperialist project of the European Union.
Mainstream economists term all this as an example of a regional economy and point out that understood in these terms Irish growth rates have not been exceptional. ‘ If Ireland had been a US state its population growth in the 1990s would have ranked it twenty-third of the fifty US states, while no fewer than nine US metropolitan areas with populations of over 1 million grew faster than Greater Dublin.’(6) The problem with this perspective of course is that the Irish State is a State and not a region and that this introduces elements into the analysis that a purely regional perspective could not allow. For example competition between the US and EU leaves the Irish State at the sharp end of any conflict and particularly riven by the conflicting forces.(7)
What all this demonstrates is that the Marxist method of approaching the phenomena of the Irish economy from an international perspective is immediately validated. The internationalist politics of Marxism is vindicated from the start by the need to adopt an international analysis.
History of international economy
Following the Second World War international capitalism underwent an unprecedented boom accompanied by rising working class living standards. By contrast the Irish State in the 1950s, in the middle of this boom, incurred acute balance of payments crises and massive and rising unemployment and emigration.
This world wide boom was built upon defeats of the working class by fascism in a number of important countries and by incorporation and subordination in others; by a renewed wave of capital accumulation based on the physical destruction of much of fixed capital in the war, and the reduction in value of much that remained. These factors combined to boost the profitability of capitalism which fuelled rapid accumulation on a new technological basis, including electrification and the car, and a new capitalist order based on US hegemony and the growth of world trade and investment. By being inserted into the world market mainly through Britain, which was in relative decline, many of these factors did not apply for the Irish State. By the time it had opened itself up fully to the world market the latter was approaching renewed problems of profitability.
The exhaustion of the technological changes that had initially propelled growth, rising working class demands, and reduced growth in productivity combined to reduce the rate of profit and thereby the rate of capital accumulation and economic growth. This resulted in the economic crises of the late 1960s and 1970s.(8) The latter led to a severe economic crisis in the Irish State with the latter facing bankruptcy through a rising national debt and the weakening of the foreign investment that had been attracted in the 1960s and 1970s. In the 1980s significant parts of the indigenous capitalist base was bankrupted by outside competition with no offsetting increase in outside inward investment.(9)
The capitalist class reacted to the worldwide decline in profitability by attacking the working class and taking other steps to reduce costs by shifting production geographically and eliminating the least profitable companies so that overall capitalist profitability could be increased.(10) In this the capitalist class has been successful.
The Stalinist states of the Soviet Union and Eastern Europe plus China have been reincorporated into the capitalist system(11), the working class has incurred defeat after defeat in many countries symbolised most poignantly by the defeat of the year long British miners strike in 1984 -1985. National liberation struggles were defeated, including in Nicaragua and Palestine, and the cause of socialism has been discredited in the eyes of millions of workers. On the basis of increased levels of exploitation, increased availability of cheapened capital and new markets plus the application of new computer based technology the capitalist class has been able once again to increase profitability.(12) This process has been described as globalisation, witnessing once again renewed growth of a financial sector that disciplines industrial capital and taxes the working class through expansion of debt, assisting the shifting of capital to more profitable locations. Defeat of the Soviet Union in the cold war has also allowed the US to once again seek to confirm a world hegemony upon which the rest of world capitalism may develop. Its wars against Iraq are the most obvious manifestation of this new expansive role.
It is a commonplace that the Irish State has benefited from globalisation and the processes associated with it. This includes the development of the EU with its transfer of subsidies to offset increased competition with domestic capital and the wave of inward foreign direct investment to take advantage of the inauguration of the single market in 1992. It includes the worldwide growth of foreign investment dominated by information and communication technology. The names of companies from this sector investing in the Irish State is a who’s who of the top multinational firms, including Intel, Gateway, Dell, AST, Apple, Hewlett-Packard, Siemens-Nixdorff, Fujitsu, Microsoft and Oracle. The growth of the world market has provided the platform and vehicle for the exports which powered the boom in the 1990s. The deregulation of international capital markets has helped fuel this boom and prolong its life through the first decade of the new millennium.
The transformative power of this boom, turning a relatively underdeveloped economy into one of the most developed has not however changed the relative weakness of native industrial capital. Despite unprecedented conditions for growth the indigenous sector has not developed the power to drive economic growth in the absence of foreign investment.(13) To this extent the Irish State is still one dominated by the capital accumulation needs of foreign capital.(14) Combined with political weakness this constitutes continuing imperialist domination of the country. It also demonstrates the impossibility of any meaningful ‘independent’ development of capitalism. If a strong indigenous capitalism capable of intersecting with world imperialism on an even minimally equal basis has not been created by the economic boom of the past fifteen or so years it is very unlikely to ever develop.
All this has meant a huge expansion of the working class with the labour force increasing from 1,354,400 in 1991 to 2,027,900 in the first quarter of 2006, an increase of nearly 50%.(15) Labour force participation rates have risen and immigration has increased.(16) A significant section of the Irish labour force is now involved in very advanced manufacturing production, in sectors associated with higher than average profits, and therefore objectively with the potential to win gains for themselves and set a benchmark for those in other sectors.(17) To some extent this has happened and real wages and living standards have increased but this has had more to do with the natural propensity of the labour market to raise wages in a period of boom than any assertion of collective power by a working class labour movement.(18)
Once again it is impossible to understand the Irish situation without placing it in a world framework and understanding international developments. At this level globalisation has generally been viewed as undermining workers power and the gains that they have historically made. It is also claimed that it will continue to do so in the future through a race to the bottom.
The ability of significant sections of capital to move to lower cost locations has weakened union bargaining power. It has weakened the ability of states to tax capital and raise the corporate taxes that fund welfare provision from which workers are assumed to disproportionately benefit.
We will make a number of points about these arguments here but will not deal with all the issues thrown up. Firstly it is true that the power of the capitalist state vis-à-vis international capital has weakened. This is demonstrably true and can be seen from the experience of even the most powerful state, the US, when it was unable for example to prevent ending the convertibility of the dollar into gold in August 1971. This reflected the relative decline of the US economy and of the power of the US State to prevent this. This does not demonstrate an end to the major contradiction between the increasing internationalisation of production and the predominantly national state system but signals its raising to a new level. Nor does it ‘excuse’ the willing abandonment of national controls over the movement of capital which all states have legislated and enacted. Nor does it mean that the repressive power of states is somehow less or that workers should support the strengthening of capitalist state power against international economic forces.(19)
The reformist perspective that laments the processes by which state power is weakened in the face of international capital leads only to nationalist ‘solutions’ (protectionism and anti-foreigner proposals sometimes dressed up as progressive measures), which would inevitably line up the workers of one group of countries against those of another group, and two world wars in the last century testify to the fateful consequences of this sort of policy.
State sovereignty has been weakened, most in the smallest countries – although they had least already, but this does not explain the weakening of the workers movement worldwide, only the weakening of the bureaucracies that lead the national labour movements and which have relied on incorporation into their state for their privileged position. They are no longer able to deliver significant reforms, at least partly because the states that they rely on to deliver them do not have the same freedom of manouevre to accommodate them. The major reason however is trade unions’ growing weakness over the last number of decades.(20)
A third part of the explanation for the weakening of the working class movement at a world level is the introduction of new technology and work practices that make it harder to organise workers. These include new human resource management techniques including union busting; the growth of outsourcing and especially agency employment; subcontracted work; smaller scale employment sites and growth of temporary employment.
At a world level the opening up of China and India to multinational capital and the increased mobility of capital generally has created, or at least created movement towards, a world labour market – depressing the wages of the least skilled especially in the most developed countries, in effect the mobilisation of a world reserve army of labour. This is reflected in pressure to lower costs in the most developed countries and/or to recruit cheaper immigrant labour. In less developed countries it is reflected in huge migration to cities and the ending of non-wage sources of income that shielded the poor from the worst aspects of wage slavery and gave them some independence in relationship to capital.
All these trends are reflected in a falling share of wages within the economy.(21) It nevertheless still remains the case that around 74% to 86% of world inequality arises from between country inequalities rather than within country inequalities.(22) There thus exists a long way to go before the world working class faces roughly similar conditions which might ground a common consciousness of its enemy and common terrain for fighting it.
Many of these international developments not unexpectedly find reflection in Ireland, often in an exaggerated fashion. Falling labour shares are associated with more open and liberalised capitalist economies and the economy of the Irish State has one of the most globalised in the world.(23) It no longer has the pretence to an independent currency (it never had one), can no longer set its own interest rates and progressively removed capital controls over the 1980s and 1990s.(24)
The share of expenditure going towards social protection as a share of GDP in the EU 15 rose slightly from 26.1% in 1991 to 27.9% in 2002 while it fell from 19.6% to 16% in the Irish State. The adjusted wage share of the economy which fell in the EU15 (see above), fell more dramatically in the Irish State – from 77.9% in the period 1960 – 1970 to 54% in 2001 – 2007. The share of non-agricultural incomes going to capitalists, the self-employed and landlords rose from 30.7% in 1987 to 48.1% in 2004 while the share of wages, pensions and social security fell from 69.2% to 52.1% in the same period.(25) This growing polarisation is reflected in increasing inequality. Between 1994-95 and 1999-2000 the average gross disposable income of the lowest 10% grew by 33.3% while it rose by 54.8% for the 6th highest and by 61.8% for the highest (richest) 10% of households.(26)
The processes lying behind these shifts include a growth in atypical employment and migration of workers into the State.(27) GAMA and Irish Ferries are testament to the use of foreign workers to lower particular and overall pay rates. The union bureaucracy has failed to fight this and often collaborated with it. Like unions elsewhere the Irish trade union movement has been weakened over the years despite growth in absolute numbers which it could hardly fail to achieve given the enormous rise in the workforce including in the public sector. However its policy of not seeking to organise in the multinational sector and the emulation of this by indigenous private sector bosses has seen union density also fall in the Irish State. There are various measures but all show decline.(28)
Across the world, including Ireland the ability and willingness of the working class to fight back in defence of its interests has undoubtedly been set back. Strike statistics are only the most graphical measure of this development. Taking 42 countries and looking at the period between 1981-85 and 1996-2000 the number of countries in which strikes increased was 8 while there were 34 countries in which they declined. In the group in which strikes rose the increase was only 5,183 while the reduction in strike numbers was 63,657 in the group of countries in which there was a decline.(29) In the Irish State the annual number of days lost in strikes has fallen from over 580,000 in the 1970s to 26,650 in 2005. In the latter year there were only 15 strikes and only 10 in 2006, in which only 7,352 working days were lost, the lowest since records began in 1923.(30)
Industry & Workers
In looking at the future the only guide we have is the past, and the conceptual tools to analyse it in order to make some more or less tentative judgements. While the globalisation of capitalism is not a completely new phenomenon it is nonetheless true that the wave of internationalisation of capital has built upon earlier development and has reached a new level. It has brought huge countries fully, or more fully, into the dynamics of capitalist accumulation. In doing so it has created new working classes. The growth of the Irish working class is a small part of this process. Marx believed the development of capitalism will bring its gravedigger but the new wave of capitalist growth takes place not just after a series of important defeats of the working class but also in historically new circumstances, in which the idea of a socialist alternative has hardly been weaker than for well over 100 years. The recent general election has confirmed the marginal character of the left in Ireland.
Historically geographical shifts in industrial production have created new working classes and, after a period, new class struggles. The paradigmatic industry of the twentieth century was the car industry. In fact so emblematic has it been to successive waves of industrialisation that it has given its name to the way some theorists characterise the whole capitalist economy, speaking of ‘Fordism’ and ‘post-Fordist’ economies. The mass car industry has grown and shifted production from the US in the 1920s and 1930s, to north-west Europe after the Second World War, to southern Europe, including Argentina, then Brazil and South Africa mainly in the 1970s, and then South Korea in the 1980s and 1990s.
Much of this movement was designed to avoid unionisation or to seek out lower wages. The original decision to site auto production in Detroit was because of its anti-union environment and plants were almost immediately opened elsewhere after the big car factory strikes in 1936, in Buffalo in 1937 and in the US south and in rural areas. In Brazil investment dried up from the mid-1980s to mid-1990s after widespread strikes, and when it resumed it went to new greenfield sites devoid of unions.(31) In South Africa the failure to destroy militant unions was one factor leading to disinvestment in the 1980s. In Korea there were new class struggles although even here a new militant working class could not escape world –wide trends of reduced militancy, strikes fell from a high of 3,749 in 1987 to only 78 in 1997 before slowly increasing to 320 in 2003.(32) Nevertheless the shift in production from one site to another inevitably brought struggle in its wake even if this took some time – after all it took US unions 38 years to organise in Ford.(33)
The pace of events has quickened so that struggles arise earlier and unionisation sooner, but so also does incorporation and bureaucratisation of trade union movements. In part this is a reflection of the product cycle: the car industry is no longer a new one with surplus profits from which workers may gain some portion. Production therefore continues to shift, in the US to small towns around the great lakes.(34) The search for increased exploitation takes place under ‘lean production’ strategies that are often ‘lean and mean.’
This experience of the car industry finds a parallel in the ‘leading’ industry of the 19th century – textiles. It too saw production progressively mechanised and spread across the world from one country to another. The last few decades have witnessed the decimation of the textile industry in Ireland – north and south – beaten by low wage competition from abroad. Even more so than cars the textile industry is a mature one, even with technological progress in fashion and materials, so the scope for gains by workers in new production sites may be more limited. Today it is thought that car production, with its large numbers of workers brought together under one roof, is particularly suited to organisation, in contrast to textile production units, which have typically been much smaller and staffed more by women. In fact the introduction of mechanisation in the car industry including the conveyor belt was also initially thought to be inimical to working class organisation – undermining the bargaining power acquired through possession of craft skills and reflecting ethnic divisions inside the workforce. It should also not be forgotten that one of working class history’s greatest bearers of struggle have been miners who have often worked in relatively small workplaces and with technology that has deskilled many of them.(35)
Thus just as industrialisation shifted its driving edge from one industry to another so did worker organisation shift from one industry to another. While it may appear that car workers had greater bargaining power than textile workers it has been argued that the latter were no less militant, perhaps more so, but that their struggles were much more likely to go down to defeat.(36) And this brings us to the key variable in working class organisation and militancy. New developments in industrial organisation such as geographical dispersion of production and ‘just-in-time’ management have left capitalism more vulnerable to action by workers in the transport industries, and particularly new ones such as aviation. Yet today’s transport workers do not display comparably more militancy than those of yesteryear. What matters most then is not any objective bargaining power, derived either through possession of scarce skills or size and nature of the workplace. What matters is the political context and political consciousness.
This can be seen in the history of workers in the industries we have mentioned. It is seen in the militancy of textile workers despite their relatively unfavourable bargaining position. It can be seen in the car industry where in 1930s America political workers were crucial to strikes. In France the main Renault plant in Paris was closed for the first time in 20 years by the May Day strike in 1936. In contrast it can be seen negatively in the experience of workers in the aviation industry today.
The modern industries that play the leading role in capitalist accumulation are now also held to be inimical to easy organisation. Firstly, it is hard to identify just what the early 21st century equivalent to the textile or car industry is. Computerisation is driving technological development, and the semiconductor industry is obviously central to this, but it employs relatively few people and has not had the wider impact on working class development of these earlier industries. Many service industries seem either to combine very well paid workers, including for example some finance professionals, with much lower status and lower paid workers such as secretaries, telephone operators, cleaners and porters. There is no reason not to assume the proletarianisation of much of the former but this has yet to happen on a widespread basis. Personal services employ workers with relatively weak workplace and market place bargaining power but none of these obstacles are insuperable to organisation and militancy, especially with wider community support and mobilisation, i.e. when their struggles start to take on political characteristics.(37)
In any case we should emphasise that successful organisation for socialists is not primarily about achieving permanent gains within the system but organising for its abolition. The victories won by US car workers were subverted by the ‘Treaty of Detroit’ leading to the incorporation of US unions into the cold war establishment consensus, joining the witch hunt of militants, defeating rank and file organisation, accommodating to discriminatory practices and presiding over both membership decline and job losses.(38) Permanent victories, as Connolly once put it, do not exist short of the final victory, and this is not a trade union task.(39)
Politics & Ireland
The history of international working class action shows clear peaks associated not so much with the development and spread of new industries but with grave political events – primarily war. The two biggest outbreaks of international working class action were at the end of the First and Second World Wars, in 1919/20 and 1946/47.(40) The peak was higher after the First World War in the more advanced countries and higher after the Second World War in the colonial and semi-colonial countries. In general it was rising and more explosive in the first half of the century in the more advanced countries and higher in the second half of the century in the colonial and semi-colonial countries.
The rise of capitalist globalisation at the end of the 19th century involved the growing dominance of finance capital, which Lenin included in his definition of imperialism, and this drove increased exploitation of the working class in the context of increased capitalist competition. It succeeded in forcing back working class organisation, although only for a relatively short period lasting perhaps a decade from the late 1890s, before workers once again began increasing their struggles, only to be short-circuited by the First World War. Their struggles were finally only defeated by fascism, Stalinism and another war.
The latest dynamic phase of globalisation has also involved a massive growth of finance capital which has again forced increased working class exploitation in the context of intensified capitalist competition.(41) It too has witnessed the geographical spread of capitalism through FDI and the opening up of the previously Stalinist economies and protected colonial and semi-colonial economies.(42) While the first globalisation assault on the workers movement took place in the context of a rise in the movement the assault at the end of the twentieth century comes after a long crisis in that movement.(43) This crisis has seen its vital roots petrified by Stalinism and social democratic reformism, which in both cases subordinated the workers movement to state machines and thoroughly bureaucratised it. While a rising movement can suffer defeats and come back into struggle a movement undermined by treacherous leaders and characterised by hollowed out organisation cannot face a determined enemy again and again. This is why the decline in the workers movement at the end of the twentieth century is longer and deeper than that at the end of the previous century.
We are thus in a position to answer more confidently the question why the growth in the power of the working class in the Irish State in an objective sense has not been associated with a rise in collective awareness and struggle but instead has involved quite the opposite. It is not primarily due to the nature of modern multinational industry because that industry has made super profits and the labour market has required relatively large immigration to feed it. Unlike the spread of the car industry across the world the rapid growth of the Celtic Tiger has not witnessed workers advancing their claims on the basis of their strengthened market position. The history of the car industry gives us a clue why. The only exception to the appearance of workers struggles after development of that industry in a particular country is Japan where the workers movement had suffered defeat before the growth of a mass car industry.
This is what happened in Ireland. The working class movement had suffered a defeat before the Celtic Tiger took off. The imposition of social partnership in the late 1980s was simply the coup de grâce. The defeat of the tax struggles in the late seventies and early eighties and the inability to take advantage of ruling class political disarray, plus the mass unemployment and emigration of the 1980s, weakened the working class both politically and materially. It is ironic that it is the methods of organisation of that decade that the most prominent opponents of social partnership in the trade union movement have always wanted to go back to. A look at a graph of strike activity would show clearly a steep decline from the early 1980s from which there has been no recovery.(44)
The history of industrial development across the world shows many industries being staffed by migrants, either foreign workers or the poor newly arrived from the countryside. In many cases in both the US and Europe first generation migrants did not protest, and it was only later generations that embarked on struggle. The possession of citizenship, and all the rights and security it gives, has been a major factor allowing and facilitating these workers embarking on struggle. The Irish Government has been very careful to restrict ruthlessly the rights of immigrant workers and to bolster their dependence on their employers. They have reinforced the division in the working class and strengthened foreign workers’ isolation through the racist referendum which cut off a route to the benefits of citizenship.
The State’s high profile outrageous treatment of migrant children, including their forced expulsion from the country, has been a statement of intent that could hardly be missed – except inexcusably by some on the left who think humanitarian appeals are a political basis of opposition when it is precisely the abrogation of such considerations that is the point of the exercise. A working class campaign against the exploitation of migrant workers is central to rebuilding a new, healthy working class movement in Ireland.
Other obvious major tasks face the working class, such as increasing levels of organisation, particularly in the multinational sector and among agency workers, and some of these have already been highlighted by union leaders. These issues however beg the question. Are we talking about organisation or are we simply talking about trade union membership? There are enough examples around the world of sweetheart deals between multinational companies and unions, promising no strike deals in return for exclusive recognition agreements, to appreciate that union membership and real organisation are two very different things. Irish unions have been quite happy to engage in sweetheart deals with their bosses, indeed they have promoted the biggest deal of all – a series of social partnership agreements proclaiming the unity of interest of workers, bosses and State.
We may now be entering a new period in which an overarching ten year deal, ‘Towards 2016’, is the social partnership framework within which the whole thing is torn up and bosses and the State feel free to change agreed terms and conditions without the least pretence at consultation and through lock out. The recruitment moratorium in the health service and threatened wholesale lock out at Aer Lingus are pointers to such a future.
The current crisis in the working class movement thus has its roots in the defeats of the 1980s when the extreme weakness of the imperialist dependent economic development of the Irish economy was exposed. There existed no political movement that could point to a socialist alternative to the crisis and international working class defeats simply confirmed the Irish collapse. The world wide victory of imperialism was reflected in Ireland in intensified dependence on imperialist capital and its political projects. The working class is inevitably part of this dependence with, for example, its trade union leaders supporting EU treaties even after they have been rejected in referendum, where the State’s calling of a second vote because it didn’t get the right result the first time amounted to a flagrant denial of democracy.
The apparent success of this intensified dependence on imperialism – the ‘Celtic Tiger’ - has gone some considerable way to weakening working class consciousness of separate class interests or the possibility of an alternative. The partial exhaustion of the Celtic Tiger phenomenon has been followed by a replacement engine of growth in the shape of the expansion of debt and an asset price bubble in the form of a booming housing market.(45) Debt has always been a great disciplining measure for capitalism as numerous poor countries around the world can testify. It too however is now running into the ground.
It is thus clear that the grounds for a resurgence of working class politics must involve failure of imperialism to continue to offer rapid economic growth and rise in living standards. It must also mean a failure of imperialism and local capitalism to shift the burden or blame for economic failure onto weaker sections of the working class such as migrants. We can rely only on workers themselves deciding to fight back against exploitation in order for this to happen, although we must be aware that the history of workers struggles across the world shows the importance of political workers in leading such struggles. The existence of a layer, however small to begin with, of socialist workers with a firm understanding and belief in socialist politics is therefore crucial to all this. The task of creating this foundation for the renewal of working class politics is the one facing socialist organisations.
(1) Productivity in the Irish State was 29.2% higher than the EU average in 2005, being the second highest among all EU States, with a per capita Gross Domestic Product of 138.9 compared to an EU 25 average of 100 and ahead of the UK which had a figure of 117.5, ‘Measuring Ireland’s Progress 2006’ Central Statistics Office (CSO) p. 18.
(2) See presentation by Patrick Honohan, TCD, 12th June 2007,’Ireland’s economic miracle: A story of delayed catch-up.’
(3) Unemployment reached a high of 17.6% in 1987; inflation reached a high of 20.4% in 1981; economic growth was negative in 1982 and 1983; the current budget deficit reached a high of 8.3% in 1986 and the public sector borrowing requirement reached 20.3% of GNP in 1981. Government debt rose to 129% of GNP in 1987, debt servicing reached 12.5% of GNP in 1985, debt servicing swallowed up 93.5% of income tax receipts in the same year; an average of 14,000 (net) emigrated each year in the first half of the decade and 27,000 each year in the second half – over 200,000 over the decade. ‘The Macroeconomy of Ireland’ Anthony J Leddin and Brendan M Walsh, second edition, pp. 20, 122 & 123.
(4) In European terms for example, in 1960
the EC average was 100 while the Irish State’s was only 60% of this while
that of Greece was 39%, Spain’s was 59% and Portugal’s was 38%. ‘The Context
of Economic Development’, Kieran A Kennedy in ‘The Development of Industrial
Society in Ireland’, edited by J H Goldthorpe and C T Whelan, p. 12.
(6) ‘Future Irish Growth: Opportunities. Catalysts, Constraints’, Frank Barry, ESRI Quarterly Economic Commentary, Winter 2005, p. 3.
(7) An additional weakness is that regional models of growth argue that gains from the boom will be concentrated in the growth of asset prices, including property, because property and infrastructure are the only factors of production in ‘quasi-fixed supply.’ This however assumes what needs to be proved – why has their supply remained relatively fixed and why should it? Has the growth in property prices reflected an imbalance between growing demand and less expansive supply and is the former not inflated by speculation? Is not the real reason for this not tied to property rights, class structure and the traditional incentives in Ireland to make money from parasitic activities such as property ownership rather than in directly productive investment, despite the supposed transformation of the Irish economy and society?
(8) Average annual growth in GDP in the world fell from 4% between 1950 and 1973 to 2.9% between 1973 and 1996. The net profit rate for manufacturing between 1950-70 and 1970-93 fell from 24.4% to 14.5% (US), 23.1% to 10.9% (Germany), 40.4% to 20.4% (Japan) and 26.2% to 15.7% (G7).’The Economics of Global Turbulence’, Robert Brenner, p. xxvii & 5.
(9) Permanent full-time manufacturing employment in Irish owned firms fell from 143,300 in 1980 to 110,918 in 1988 while those in foreign owned firms fell from 88,400 to 82,381. ‘The Revival of Irish Indigenous Industry 1987-1997’ Eoin O’Malley,in ESRI Quarterly Economic Commentary, April 1998, p. 37. It should be noted that this led to a number of workplace occupations by workers attempting to defend their jobs, e.g. Clondalkin Paper Mills. This has not happened when multinational companies have folded.
(10) The geographical shift in production can be seen in the increase in foreign direct investment (FDI) over the past 15 or so years. The outward stock of FDI in the world has increased from 1,791,092 million US dollars in 1990 to 10,691,889 million US dollars in 2005. The stock of FDI as a percentage of GDP in the world has increased from 8.5% in 1990 to 22.7% in 2005. The share going to the EU has increased from 37.2% in 1980 to 51.3% in 2005, of which the Irish State has received a disproportionate share. ’World Investment Report 2006’, United Nations Conference on Trade and Development, pp. 7 & 303.
(11) That is their productive assets have become capital and their workers subject to capitalist exploitation and the production of surplus value– i.e. both have been employed to earn profit, as opposed to the diktats of a Stalinist plan upon which a bureaucracy enriches itself by more or less naked corruption.
(12) The US rate of profit rose from 16.4% in the first quarter of 1982 to 30.1% in the second quarter of 2007. .’The recovery in profit rates is the strongest in more than fifty years, with 15 successive quarters – until the second quarter of 2007 – of double digit profit growth, pushing profits to their highest levels since the late 1960s.’ ‘The SWP’s Economics’, ‘Permanent Revolution’ number 5, www.permanentrevolution.net.
(13) The share of low-tech employment in indigenous industry is 74% while it is onlt 24% in foreign owned industry. The share of high-tech employment in indigenous industry in 10% while it is 56% in foreign owned industry. ‘The average foreign firm operating in Ireland exports 92% of gross output, compared with the indigenous average of 31% . . . Indigenous industry remains almost as strongly excluded from the high-tech sectors as it was in 1974.’ ‘Multinational Firms in the World Economy.’ G B Navaretti and A J Venables p. 202 & 203. See also the judgment of Frank Barry: ‘The structural weaknesses of indigenous industry manifest themselves across numerous dimensions. . .If Ireland’s foreign-owned sector were to be decimated for any reason, much of the economic progress made over the boom period could well disappear along with it.’ Op cit p. 8-9.
(14) Inward stocks of FDI as a percentage of GDP grew from 71.5% in 1990 to 129.7% in 2003 while the average for the EU15 was 10.9% in 1990 and 32.8% in 2003. European Economy No. 6 2005, European Commission, p. 399.
(15) ‘Population and Labour Force Projections 2006-2036, Central Statistics Office.
(16) The employment rate has increased from 53.9% in 1983 to 65% in 2003. ‘Employment Miracles’, U Becker & H Schwartz (eds.) p 12. Foreign born as a percentage of the population in the Irish State has grown from 6.1% in 1991 to 10.4% in 2002 and the inflow of non-Irish has increased officially by 150,000 in the three years after 2002, CSO.
(17) The rate of return on US FDI in 1997 was 27.2% in the Irish State, 11.9% in Europe and 13% elsewhere. For chemicals the rates were 35.4%, 12.6% and 12.8% and for electrical and electronic equipment 35.5%, 15.6% and 14.4%. ‘Employment Miracles’, op cit p 144.
(18) The standardized unemployment rate has fallen from 13.4% in 1990 to 4.4% in 2006 while that of the OECD group of countries as a whole has remained comparatively stable – 6.1% in 1990 and 6% in 2006, OECD Employment Outlook 2007, OECD, p. 245. Real compensation of employees per head has increased by 1.6% per year between 1992 and 1996, 0.8% per year between 1997 and 2001 and 2.1% between 2002 and 2006. European Economy No.5 2006, European Commission, p. 143.
(19) A near example of the relationship between these two forces is given by Renault, the state owned car company in France, which implemented massive cuts through manipulation of competition between its French and Spanish plants with the object of reducing French workers terms and conditions. ‘Global Restructuring and the Power of Labour’, Bill Dunn, p. 76.
(20) Trade union density has fallen in most countries and in some over a long period. In the 1950s US density was one third of wage and salary earners, in 2000 it was 13%. In Canada union density dropped from 34.6% in 1985 to 30% in 2000. In the EU it fell from 37.3% in 1985 to 29.5% in 1997. In Korea it fell from 21% in 1980 to 11.6% in 2002. In Australia it declined from 40.5% in 1990 to 23.1% in 2002, from ‘Global Industrial Relations’ Edited by M J Morley, P Gunnigle and D G Collings. It is important to have some clarity over what this indicates – trends in organisation - rather than absolute measures of organisation, strength or militancy, because the coverage of collective agreements can be much wider than union membership. Bill Dunn, op.cit. p. 162. More importantly in France, where union density is 9% - much lower than for example the UK or Ireland, where it is 29% and 45% respectively, workers have engaged in huge strikes which have successfully defended their conditions and rights in sharp contrast to either of the latter two countries. ‘Global Industrial Relations’ op. cit. p. 74. Northern Ireland has the highest union density in the UK but nowhere in that state system is the working class more bitterly divided and weak.
(21) The adjusted wage share of the total economy (measured as the compensation per employee as a percentage of GDP at factor cost per person employed) fell for the EU15 from 74.5% in 1971-80 to 67.3% in 2001-2007. K Allen in ‘Contemporary Ireland a Sociological Map’ edited by S O’Sullivan, p 244. See also the graphs in chapter 5 ‘World Economic Outlook, April 07’ IMF quoted above.
(22) Quoted in B J Silver, ‘Forces of Labour: Workers’ Movements and Globalisation since 1870’ p. 10.
(23) It has been voted the most globalised
state in the world three years in a row by the US ‘Foreign Policy’ magazine.
(25) Quoted in K Allen, op cit, pp. 244 & 245.
(26) R Munck, ‘Social Class and Inequality’, in ‘Contemporary Ireland: A Sociological Map’, p. 307 edited S O’Sullivan. See also the tables in ‘Bust to Boom: the Irish experience of growth and inequality’, Edited by B Nolan, P O’Connell and C Whelan, p,130 and 131 which suggest inequality driven by the rich getting richer.
(27) For example part time work increased from 10% of the total in 1990 to 18.1% in 2003, ‘Economic Miracles’, op cit p. 12.
(28) As a percentage of the employed workforce trade union membership has fallen from 56.2% in 1987 to 42% in 1998, quoted in ‘Corporatism in Ireland: a view from below’, in ‘Irish Employment Relations in the New Economy’, D D’Art and T Turner, p. 271. Separate figures record a reduction from 46% in 1994 to 35% in 2004 while ICTU admits that density has fallen from 39% to 36% in the last three years. It is lowest among young workers and is only 17.7% in those under 24 years of age. Where unions exist member participation has dropped.
(29) Quoted in ‘Global Industrial Relations’ edited by Morley, Gunnigle and Collings, p 279.
(30) Labour Relations Commission.
(31) Strike activity in Brazil reached a peak of 9 million workers involved in 1987. During the four years from 1985 to 1988, real industrial wages in Greater Sao Paulo grew by an average of 10 percent per year.’ B J Silver Forces of Labour: Workers’ Movements and Globalisation since 1870’ p. 36.
(32) ‘Global Industrial Relations,’ op cit.
(33) The exception, it is pointed out, is Japan where the working class suffered an historic defeat before the rise of mass car production. B J Silver, op cit.
(34) Japanese car factories have also moved to small towns close to the heart of traditional car manufacturing in the US and have avoided unionisation in the process. In Europe they have done the next best thing and signed single union sweetheart deals. ‘Global Restructuring and the Power of Labour’, Bill Dunn, p. 74
(35) The construction industry has also been one where subcontracting and small firm size did not prevent relatively high levels of unionisation although the scale of the former has increased, for example the percentage of UK construction workers directly employed fell from 77% in 1976 to 45% in 1996. Bill Dunn, op. cit., p. 108.
(36) In B J Silver, op cit.
(37) Call centres have actually grouped finance workers into larger workplaces even as the number and size of bank branches decline. They have been described as the ‘dark satanic mills’ of the 21st century. There are examples of workers fighting back against their bosses in the finance industry. In Spain bosses’ attempts to reduce the workforce ‘found that dismissals are problematic and costly, because voluntary redundancy is close to nonexistent and labor unions are strong and disputatious’. In France ‘by occupying their workplace, workers succeeded in forcing Société Générale to abandon a plan to eliminate jobs.’ Bill Dunn, p. 159.
(38) There were job cuts of 75,000 between 1957 and 1963. ‘Global Restructuring and the Power of Labour’, Bill Dunn, p. 67.
(39) These struggles were characterised by Rosa Luxemburg as a ‘labour of Sisyphus.’
(40) B J Silver op cit, see the graphs on pages 126 to 128.
(41) In the ‘third world’ this has taken the form of debt accrued to first world banks and IMF structural adjustment programmes to ensure repayment. In advanced countries it is reflected in the credit explosion and the drive for quick returns by investors in stocks and shares etc., celebrated as the Anglo-Saxon model of capitalism.
(42) In these countries, e.g. India and China, the reliance on relatively mature industries requiring low labour costs has reduced the gains that workers can make from trade union action, already some Indian labour is too expensive! On the other hand the ‘Economist’ magazine reports on skill shortages in Asia, although this is for relatively very skilled labour.
(43) Bill Dunn notes repeatedly in his book that restructuring in industries often took place after workers had been defeated rather than new workplace organisation and technology making struggle no longer effective or possible. See p. 200. It should also be noted that such defeats make relocation of production less imperative.
(44) See graphs in ‘Irish Employment Relations in the New Economy’, p188 and summary statistics above.
(45) The ‘Economist’ reported, in the context
of the threat of recession caused by the sub prime mortgage crisis in the
US, that between 1997 and 2006 house prices rose by 124% in the US, by
180% in Spain, 194% in Britain, and 253% in Ireland. ‘Economist’ ‘A special
report on the world economy,’ 20th October 2007.