Conference PaperPDF Available

Crisis? Which Crisis? – Assessing the Current Crisis in a More Fundamental Way. Ireland as a Case Study

Authors:

Abstract and Figures

Austerity policies – Yes, No, or Where to go with it? Austerity policies are today specifically defined, (broadly) in particular as enforcement and justification of strategies of retrenchment not least in the social area and deregulation of working conditions. Two points are easily overlooked: these policies, though evoked by international institutions as especially the IMF, are also highly nationalist. And austerity as term has also the meaning of strictness and graveness. Looking at Ireland then, the crisis actually showed the need of austerity policies. Not least as it cannot be said that the new measures are predominantly a matter of dismantling an existing social security system. The actual challenge is to look how the imposed strategy links into the strategy of the Irish government: the concern of establishing a new ‘regulatory system’ which could never aim on replacing a well established public system but started to replace one private system – a semi‐feudal, semi‐communitarian system with marginal social support – by another private system – now defined as ‘modern business sector’. The question then is really more one of the kind of ‘austerity’ that may be needed. The presentation will briefly present the point of departure of the Irish boom and bust, look at main lines of the reactions on the crisis and outline briefly real but also needed but detained policies. http://www2.euromemorandum.eu/uploads/background_paper_hermann_crisis.pdf; 14.7.2015
Content may be subject to copyright.
Peter Herrmann
Crisis?WhichCrisis?AssessingtheCurrentCrisisinaMoreFundamental
Way.IrelandasaCaseStudy
(Draft,maybequoted,butexpectingcompletion)
ABSTRACT:AUSTERITYPOLICIESYES,NO,ORWHERETOGOWITHIT? 1
INTRODUCTION2
DEVELOPINGANIN‐DEPTH‐PERSPECTIVEANOUTLINE5
THECOREOFTHEECONOMICPROCESS10
ABRIEFHISTORICALREVIEW11
(A) 11
(B) 23
SOMESCHEMESANDTECHNICALISSUES34
Politics–RhetoricandReality 35
BudgetaryPolicies 36
EmploymentandSocialPolicy 43
InfrastructureandPublicServices 51
Income,Consumption–andanOutlookonWorkingandLivingConditions 54
PublicServiceReform 64
PoliticalOrganisationandLabourRelations 68
CORECONCLUSIONONEU‐INTERVENTION83
CONCLUSIONSANDOUTLOOK85
Abstract:AusteritypoliciesYes,No,orWheretogowithit?
Austerity policies are today specifically defined, (broadly) inparticularas
enforcementandjustificationofstrategiesofretrenchmentnotleastinthesocial
areaandderegulationofworkingconditions.Twopointsareeasilyoverlooked:
thesepolicies,thoughevokedbyinternationalinstitutionsasespeciallytheIMF,
are also highly nationalist. And austerity as term has also the meaning of
strictnessandgraveness.LookingatIrelandthen,thecrisisactuallyshowedthe
needofausteritypolicies. Not least as it cannot besaidthatthenewmeasures
are predominantly a matter of dismantling an existing social security system.
Theactualchallengeistolookhowtheimposedstrategylinksintothestrategy
oftheIrishgovernment:theconcernofestablishinganew‘regulatory system’
whichcouldneveraimonreplacingawellestablishedpublicsystembutstarted
2
toreplaceoneprivatesystem–asemi‐feudal,semi‐communitariansystemwith
marginalsocialsupport–byanotherprivatesystem–nowdefinedas‘modern
businesssector.Thequestionthenisreallymoreoneofthekind of ‘austerity’
thatmaybeneeded.Thepresentationwillbrieflypresentthepointofdeparture
oftheIrishboomandbust,lookatmainlinesofthereactionsonthecrisis and
outlinebrieflyrealbutalsoneededbutdetainedpolicies.
Introduction
There are different heuristic points for accessing the assessment of an
apparentlysuddenandunforeseencrisis–acceptingthatitisactuallyaboutthat,
i.e.asuddenandunforeseenevent.Actuallyitmaywellbethat the crisis had
beenformanyoftheresponsiblepoliticiansandperhapsevenactors in the
economicfieldunforeseen–theso‐calledThreeWiseMonkeysortheattitudeof
achild thatsuggeststhat byclosingthe eyesthingsareobjectivelynon‐existing
anymorespringstomind.–Thisisacomponentofthepictureas the country
joined the institutionalised Europe in 1973, being considered as one of the
poorhouses – and having been able to become one of the richest ‐ and most
expensive – countries had been considered as progress which invited to deny
anynotionofcrisis.
Unforeseen,however, does definitelynotequalunforeseeable.Inactualfact, all
indicators posed big question marks over the future; the dangers had been
issuedbysome–whosubsequentlyhadbeenstigmatisedasdoomsayers; and
their had been surely a widespread discomfort amongst the population,
expressed in attitudes like ‘I don’t have a choice – not takingwhatIcanget
means loosing twice’ and general ‘complains about the times we live in’
(scepticism about modernity, increasing suicide rates, increasing problems
arounddrugabuse,criminalityand‘anti‐social‘behaviour).
Anotherpointtostartfromisakindofshock‐doctrine–Ithink it is here as
inappropriate as it is in the use of Naomi Klein: sure, queues of unemployed
people,theoldimagesofbeingonthedoleandthesoup kitchensreturninghad
beenastrueastheproposalmadebyajudgetodistributevouchersratherthan
social benefits (seeforthelatterthejournal.ie,2011[July,29th]:Judge:Dole
3
recipientsshouldgetfoodvouchersinstead;http://www.thejournal.ie/judgedole
recipientsshouldgetfoodvouchersinstead188980Jul2011/10/09/20116:05
p.m.).Ofcourse,theseareappallingfeatures–butattheendofthedaytheytella
fewstories,andwiththistheyeasilyunderminedevelopingaclearpictureofthe
contradictorinessoftheentiredevelopment.
Wemayalsobeginwiththelamentofa‘Butwearenotthemstatement, for
instancemadebyLucindaCreighton,complainingthat
itwas‘reckless’toplaceIrelandandGreeceinthesamecategory.
‘We’renotinthesituationthatGreeceisin.Oureconomyisavery
strongeconomy,notwithstandingtheproblemswehavewith
consumerspending’
(ECBrejectsGreekDebtMove;in:irishtimes.comLastUpdated:
Wednesday,May18,2011,12:57;
http://www.irishtimes.com/newspaper/breaking/2011/0518/br
eaking22.html19/05/201101:56).
Unfortunatelysimilar statements, thoughnotsostrong,can be alsofoundfrom
tradeunions.
Againanotherperspective is tolookattheofficial presentation as itisgivenin
theNationalRecoveryPlan.RightlyitstatesatthebeginningoftheOverviewand
Summary:
ThisPlanprovidesablueprintforareturntosustainablegrowth
inoureconomy.Itsetsoutindetailthemeasuresthatwillbe
takentoputourpublicfinancesinorder.Itidentifiestheareasof
economicactivitywhichwillprovidegrowthandemploymentin
thenextphaseofoureconomicdevelopment.Itspecifiesthe
reformstheGovernmentwillimplementtoaccelerategrowthin
thosekeysectors.
(IrishGovernment,[2011]:TheNationalRecoveryPlan.2011
2014;Dublin:StationaryOffice:5;
http://www.budget.gov.ie/The%20National%20Recovery%20Pla
n%2020112014.pdf08/09/20118:06p.m.)
Anditthencontinues:
4
Reducingthebudgetdeficitwillnot,byitself,solveoureconomic
difficulties.Wemustbuildonourstrongexportperformanceby
improvingourcompetitiveness.Wemustenhanceourproductive
capacitybymaintaininginvestmentinkeyinfrastructureprojects
andineducation.Wemustremovebarrierstoemploymentand
ensurethatthosewhohavelosttheirjobsareretrainedandare
readytotakeupemploymentasthelabourmarketrecovers.This
PlansetsoutthekeyreformmeasurestheGovernmentwilltaketo
returnoureconomytoasustainablemediumtermeconomic
growthpath.
(ibid.)
Of course, this raises the temptation to enter a debate on the principles of
capitalisteconomy–andthereissurelymuchneedforthatinthecountry,inthe
EUandonaglobalscale.However,thereasonforfinallytaking the before
mentioned point for departure is another. At least for somebodywhoknows
even a little bit of Ireland it is immediately getting clear that this approach,
entirelyfocused oneconomicgrowthas theonlyvariable,had to fail becauseit
systematically undermined its own foundation. This means that the actual
investment into the Irish economy – since it aimed on initialising growth –
wantonlyneglectedfromthe outsettheissueofeconomic sustainability evenin
itsmostbasicunderstanding.–Iwillelaboratethisin thefollowing,notleastto
bring forward anargument that qualifies the mainstreamdebate oftheleftor
alternative economics under the heading of austerity. The pointinquestionis
that the entire history of Irish ‘growth politics’, i.e. from the 1950s (see
Herrmann,Peter[withoutdate]:TíogarCeilteachAnEnlargementCountryofthe
70sasShowcase?[WilliamThompsonWorkingPapers,7];
http://www.ucc.ie/en/socialpolicy/WilliamThompsonWorkingPapers/DocumentFi
le37827en.pdf08/09/20117:49a.m)canbecharacterisedbytomajorpillars
ofthought,namely(i)thegeneralgoalofagrowthbyallmeans‐strategy (ii)
accompaniedbythenotlessgenerallackofastrategicoutlookandplanning.
Thelatterisanongoing,hugelydisputableissueasthereisgoodreasontomake
thislack responsible fortheoverallfailure of boththestrategyandthe current
attemptstofacetheconsequencesofthecrisis.Atellingstory had been the
5
severalemergencybudgetsandcorrectivemeasuresovertherecentyearsand
alsothehelplessnessmirroredinthefollowingfact.TheDepartmentofFinance
publishesonitswebsitean
annualEconomicReviewandOutlook[which]isgenerally
publishedinAugust.Itcontainsareviewofdomesticand
internationaleconomicdevelopmentsovertheprecedingyearand
anassessmentoftheshorttermoutlookfortheIrisheconomy.
Thispublicationalsocontainssomedetailedbudgetaryand
economicstatistics.
(http://www.finance.gov.ie/viewdoc.asp?DocId=1&CatID=9
02/09/20115:54p.m.)
Onehadbeenpublishedeachin2005and2006;twoin2007(butonlyasEnglish
andIrishlanguageversion);onein2008,lookingat‘Irealnd'sContributiontothe
PublicConsultationProcessontheReviewoftheEUBudget[typoin original];
the ‘Pre‐Budget Outlook 2009’ in 2009, none in 2010, but three in 2011: the
‘PresentationontheNationalRecoveryPlan’,the ‘IrelandStabilityProgramme
UpdateApril2011’and‘TheIrishEconomyinPerspectiveJune2011’(ibid,linking
totheyearsinquestion).This arbitrary, casual commitment of a government
Departmentthatshouldbeparticularlyalertandorientedonplanning is
complemented by the fact that the same government reflects in all its reports
different figures,1andneglects–asitissurelynotuniqueforIreland–the
obvioushugedifferencebetweenshort‐,medium‐andlong‐termoutlook.
DevelopinganInDepthPerspectiveAnoutline
Todayitiseasy tospeakinthelightofthe globalcrisisof austeritypoliciesand
refertoneo‐liberalpolicyapproaches.
Looking at the term austerity we see it commonly defined as matter of ‘cost‐
cutting savings’. It further suggests that these savings are harsh and their
characterin termsofscopeand depth.Statingthis mayresemblealittlebit the
ideaofMinervasowl,preachingtothefaithful.Still,Ithinkit is important to
emphasisethestructuralfaultofsuchunderstanding:ithastobeveryclearthat

1 Withoutthatthiscouldbesufficientlyexplainedbydifferenttimesofpublication
6
weareactuallynotatallsimplylookingat‘cost‐cuttingsavings’.Rather, at the
verycentreofthe‘austeritypolicies’stands arestructuration.Havingthisclear,
we have to define carefully in which direction and to which degree such
restructuration is a matter of different spheres of the socio‐political‐economic
system.Furthermorewehavetoaskinwhichwayandtowhichextentwecan
actually analytically separate different policy areas (financial policy, industrial
policy,socialpolicy,regionalpolicy)…fromeachotherand/orinwhichwayand
towhichextentitisthespecificshapeofthe‘interplay’thatmarksitscharacter.
A further word of caution may be called for: we have to avoid to leap to the
conclusionthatwearefacingastrategicapproachby(a)unifiedrulingclass(es).
Isuggesttointerpretthesedevelopments–alludingtotheperspective offered
byHegel but turning it around– as cunning ofunreason,not onlyamatterof
decisions taken by individual decisions in a Mills/Smithian understanding but
moreoveramatterof‘segmentedreason,caughtwithintherealms of socio‐
functionallydifferentiatedsocieties(seealreadyHerrmann:DieOrganisation.The
proposedperspectivealsoaimsoncontradictingsuggestionsfrom‘post
modernity’).
Thetermcrisisalsosuggestsaproblematicperspective–theonereasonisthatit
is frequently understood in different ways: reaching from collapse to a
foundationofclearance(seenotleasttheSchumpeterianview).Therearetwo
furtherreasonsforseeingthetermasproblematic:itisthestatedgeneralityand
theproposedobjectivity.
Althoughtherearegoodreasonstospeakofthegeneralcharacterofthe crisis,
thisisnottrueinallrespects.Itiscorrect,suggestingthatitconcernsallareasof
life on all possible aggregate levels – personally, socially and societally. It is
correctinthesenseofleavingnearlynosocietyout,affectingalsothosecounties
and regions that are able to maintain a certain degree of stability–onlyfew
countries are standing entirely outside of the‘global village’ . However, it does
notsufficientlyreflectthefundamentalsocialandfunctionaldifferencesbetween
areas – an important aspect when it comes to political consequences. A quick
lookatarecentlypublishedarticleintheGermanHandelsblatt,writtenbyDavid
Marshmayhelptoalertus.Hesuggestsaweirdconglomerate:
7
WhenthelegendarymountaineerfromNewZealand,SirEdmund
Hillaryhadbeenaskedwhyheclimbedin1953theMountEverest
helaconicallyreplied‘Becauseithadbeenthere.’Lastweeka
youngEnglishrioterdeclaredinasimilarwaywhyhethrew
stonesintoshopwindowsandwhyheplunderedshopsshortand
concise:‘Becausenobodystoppedme.’
(Marsh,David,2011[Monday,August15th]:Nurdiegeballte
MachtsorgtfürRuheauchandenMaerkten;edition156:12
translationPH)
Afterrelatinginthiswaymountaineeringandsocialprotesthecontinued:
Therearealsoparallelsbetweentheunbelievablesceneswesaw
duringthelastweeksfromEngland’severyday’slifeandthe
recentturbulencesontheinternationalfinancemarkets.
(ibid.)
So it is all the same? Mountaineering, social hopelessness and engaging in
expressionofdespairand…,speculationandthelike?Inconnectionwith the
analysis of differences, a clear distinction is required between the apparent
causesandconsequences–evenifitisonlyaboutmakingsuchdistinction in
order to elaborate in a sound way the connections. This way it is possible to
counteractthewide‐spread eclectic approaches of crisis(andanti‐crisispolicy)
discourses.
Nodoubt should be allowed:Crisisisabout objective structures, constellations,
figurations and processes. Saying this, is not to deny at leasttwoimportant
moments on the subjective level. In particular perception of any crisis as
‘subjective dimension’ is important and can develop its own dynamics. For
instance,‘depressionasmatterofmassmovement’candevelopasacceleratorof
performanceproblemsonthelabourmarket–thisisonlyoneofmanypossible
examples.Anothermomentofimportanceinrespectofthesubjectivemomentis
concernedwiththetimeoftransitionandexpectations:thereissurelysomelink
between the general climate of profit development, general market behaviour
(demand,supply,investment…)andpersonaldecisions–thisisnotatstakehere
inanydetail,neitherwillbeexploredwhatexactlytheconcretepatternsarelike
northeweighingwithintheoverallframeworkofcrisisdevelopment. However,
8
lookingatobjectivity,wearenowconcernedwithacomplexunderstandingof
thequestion‘whatcrisis?Again,wehavetolookatadifferentiated practice
whichmaybe–paintedwithamoreorlessbroadbrush–captured by the
followingmatrix.
cause
action
(goal) effect conse‐
quences
side‐
effects
working
classin
itself

working
classfor
itself

citizensin
them‐
selves

citizens
forthem‐
selves

citoye‐
nitée 
bourgeoi‐
sie 
Overview2:ActorsandInterests2
Thispresentationprovides atleastananalyticalframework. Though it neglects
the mutual interactions and interferences, it allows dissectingthedifferent
stagesandlevelsofactions,makingtheinvisiblehandvisible.Anotherimportant
aspectis that this analytical separation alsoallowsfinding outaboutboth,the
differentdegreeofconsciousnessandalsothepointonwhichpracticeisaiming.

2 Orcourse,theimpressionofmechanicalcause‐effectrelationshipsis onlyvalidforthesakeofthepresentation.
9
Thefollowingguidingdimensionsareproposedasmostrelevant–andtheyare
alsolinkedtotherelevantdimensionsofthesocialqualityapproach.
DIMENSIONSOFCAPITALISMSOCIALQUALITY
DIMENSION
short‐termprofitability
socio‐
economic
security
long‐termprofitability socialinclusion
security,including
manageability
calculability
socialcohesion
self‐(co‐)determinacy social
empowerment
increasingeffectiveness/efficiencyasmatterofsustainabilitysocial
responsiveness
reliabilityofvariables:performancesand’rights’ social
recognition
accessibilityandconsistencyofrights personal
security
activesupportmechanisms,includingsupportandsecuritymechanismsfor
codetermination,legalprotection…
personal
capacity
Overview3:CapitalismSecuringMinimumSocialStandards
Thismeans thattheoverall perspectiveneedsto gobeyondthe concern forthe
short‐termfunctionalityof the capitalistsystem,ithastounderstanditselfalso
aspartofawider–political‐economic–hegemonicsystemandfinallyithasto
thinkinonewayoranotherbeyondsocialstandardsinsimpleandmechanical
termsofbasicmaterialstandardsandprovisions.
Thisissurelybothamatterofthedifferentfractionsofthecapitalist class and
thereadinesstoovercomecapitalismitself.
10
Ofcourse,the‘individualdimensionshaveindividuallydifferent meaning, are
basedondifferentinterpretations.Andtheyareofcoursetoalargeextent
dependent on the respective class position of the ‘individual actors’. Today
possiblyofspecialinterestisthefactthatthe‘financialclass’ is particularly
expansionist,possibly comparablewiththe heavyindustryin the 1920s/1930s.
Still,the major difference isthattoday’sexpansion is based ina‘virtualworld.
Thismeansalso that it encompassesotherareasthanspace. Oneofthecentral
featuresis aboutthenew patternsofperformancethatarenow entirelyshifted
towardsthe sphere ofcirculation.‘Unproductiveconsumption’ emergesnowas
newframeworkforboth:theeconomicprocessandpersonalitydevelopment.As
such,exchangevalueissupersededbythevalueofexchanging.Casinocapitalism
cannowbeclearlyseenasbasedonspeculationalone.
Inshort:‘Objectivityisrelative’–amatterofrelations.
TheCoreoftheEconomicProcess
Whathadbeensaidsofarisapparentlyverybroad.Anditmaylookforsome
noncommittal.However,itisessentialifwewanttogainadeeper
understandingofthecurrentcrisis–acrisisofwhichwemaysay with some
justificationthatitisactuallythefirstglobalorworldeconomic crisis (e.g.
Schaefer,Ulrich,2011:1931und2011;in;SueddeutscheZeitung.No186;
13th/14th/15thofAugust:4).
Letusbrieflyrecallsomecoremomentsoftheeconomicprocess.
First,wehavetheprocessofproduction,differentiatedinitself
(production/manufacturing; consumption; distribution; exchange)andthisis
linkedin complex ways with the differentiationbetweensectors and branches
(inpart in as separation,in part in parallel …). Tothe extent ofopenmarkets
beingincreasinglydominantthiscanonlybeunderstoodasmatterof a global
space.However,forthecurrentstageofdevelopmentthetermof‘openmarkets’
is somewhat misleading. Although we should not underestimate the ongoing
meaningofnationalboundaries,wehavetoacknowledgehatweareincreasingly
dealingwithatrulyglobalsystem.Thiscangeteasilyconfusing:Ofcourse,the
notionofaworldsystem(itisnotrelevanthereifitexistsfor500or5,000years)
presumesalwaysand by definition some kindof‘globality’.Also,wecanseein
11
some way that the globality is to a large extent developed outside of the EU
and/or in terms of relations between EU‐member states and so‐called third
countriesthanitisthecasewithintheEUitself.
Insome ways we may say that we findonlyat this stage ‘true competition’as
competitiondependsonatleastaminimumofinclusion.
Takingproductionandmarketsasfirsttwomoments,wecancometoathird
one. This is a matter of an increasing separation of distinct moments of the
labouract:
* commodities as first stage of abstraction, being a matter of exchange values
ratherthanusevalues;
*abstractlabourasembodimentofthedominanceofexchangevalue and
gainingatonestageacertainindependenceofitsactualproductivity;
*processedtimeasownforce,expressedintermsoftheneedto increase
turnover;
* finance,reachingadegreeofabstractionthatmoneydoesnotappearanymore
as primarily ameans of exchange, the generalisedvalue but in its fetishised
characterasvalueinitselfandforitself.
Againinmoregeneralterms,wearedealingwiththequestionof interplay
between abstraction, objectivation and process. The crisis – andwearenow
simplylookingattheeconomiccrisisinarathertraditionalway–cannowbe
accessedinaclearer,morestructuredway.
ABriefHistoricalReview
(A)
A more in depth analysis had been provide by the present authoronanother
occasion(seeHerrmann,Peter[withoutdate]:TíogarCeilteachAnEnlargement
Countryofthe70sasShowcase?[WilliamThompsonWorkingPapers,7];
http://www.ucc.ie/en/socialpolicy/WilliamThompsonWorkingPapers/DocumentFi
le37827en.pdf08/09/20117:49a.m.). That document had been somewhat
exceptional as it elaborated the close link of the immediate economic
developmentsandperformances–actuallyprovidinginthatrespecta picture
12
paintedwithabroadbrushonly–andtheexistingandemerginghegemonythat
shapedtheuniquenessoftheIrishpath.
Still,some momentsdeserveattention.Socio‐politicallyIrelandcanbeprobably
bestdescribedbythefollowingcatchwords.
*Byandlargeithadbeenforalongtimeacountrywithacolonialstatus–even
aftergainingindependencein1921.Ifatallanexaggeration,it will only be a
smallone tosay(withallqualifications)thatthis couldonlybeovercomewhen
thecountryjoinedtheEUin1973.
*Thisandthepersistingpowerofthecatholicchurch–basedintheperishes–
laidthefoundationforahighlycentralistsystem,howevergoinghandinhand
with a somewhat disobedient attitude–thereal,factualmeaning of control
decisions,the‘acceptance’andfullimplementationcouldonlybereachedbyway
ofclientelismassystemofgovernance,brininglocalandcentralleveltogether.
* This socio‐political outline is important in order to understand the lack of
‘expresseddemand’ofsystematicandstructurallysoundpublicwelfareandalso
thelackofpublicprotestonasocietallevel.Familyandcommunityorientation
hastobeunderstoodasbeingverymuchamatterofforbearances and
inwardnessofprotest.
*Ofcourse,muchofthiscanbelinkedtothefollowingdimensionsof‘insularity’
> theobviousfactofinsularityingeographicalterms;
> thelong‐lastingandpersistingdominanceofagriculture;
> thepersistingparishialisationandcommunitarianisation
> the political ‘segmentation’, welding matters together althoughtheydonot
belong together – for instance communities and localities, claiming against
eachotherratherthanbringingtogether people whose common interest is
based on the social class to which they belong, independent of the ‘physical
community’inwhichtheylive;3orforinstancethefactthatclass‐buildinghad
beenverymuchunderminedbythelackofindustrialisationgoing hand in
handwiththe‘commonmoney’,thecolonialiser.
Thuswemaysaythatalotofthepreviousandindeedoutstandingboomisin
actual fact a ‘renewed colonialisation’ though the overall pattern changed in

3 Thisisnotsaidinnegligenceofprocessesofsocio‐spatialsegregation.
13
several respects. Leaving changes aside, some of the features that suggest a
‘renewedcolonialisation’areasfollows.
ThemeaningofFDI
Rather than providing another (set of) table(s), some short issues are worth
mentioning,pointing on somequalitativemomentson a topicwhichistosome
extentmystified.ThisisnottosaythattheroleofFDIisoverestimated.Itisnot
all about money flows – and FDI‐capital flows are not only about the money
comingintothecountry.
PaulaClancy and TomMcDonnellmention a pointthatis commonlynotwidely
taken into account. Foreign DirectInvestmentisnotonlyaboutthemoney
invested in the country in its own terms because ‘muchdoesnotconstitute
productiveactivitybutismerelytransferpricingtoexploitIreland’slow
corporationtaxrateandothertaxadvantages’(Clancy,Paula/McDonnel,Tom,
2011[February]:FromTigertoBailout:TheIrishCrisis.ETUIPolicyBrief
EuropeanEconomicandEmploymentPolicyIssue1/2011;Brussels:ETUI:1;
http://etuiold.audaxis.com/research/Media/Files/EEEPB/2011/12011
09/09/20117:25p.m.;similarConefrey,Thomas/FitzGerald,JohnD.,2009:The
MacroEconomicImpactofChangingtheRateofCorporationTax;Dublin:ESRI
[WorkingPaper273]:9f.).Thisunderlinesthe fact which had beenfrequently
mentioned–alsobythepresentauthor:Therehadnotbeenanyinteresttobuild
upan indigenous Irishindustrynorhad there beenanyambitiontoestablish a
significant body of public infrastructure (seeonthelatterpointthesection
InfrastructureandPublicServices,Pages51ff.ofthepresenttext).
Afurther pointdeserves attention,showingthatitis toosimpleto highlightthe
FDIas such(asIhavewronglydoneinanearlierwork,namelyHerrmann,Peter
[withoutdate]:TíogarCeilteachAnEnlargementCountryofthe70sasShowcase?
[WilliamThompsonWorkingPapers,7];
http://www.ucc.ie/en/socialpolicy/WilliamThompsonWorkingPapers/DocumentFi
le37827en.pdf08/09/20117:49a.m.).FDIhad beenindeedhugely influenced
bythelowtaxrate.ButitisalsoimportanttonotethatFDIneededto coincide
withotherconditions,namelyafavourablecomplexeconomiccycle, not least
reflectingtheoverallactivity‐structureoftheproductiveforces.ThomasConfrey
andJohnD.FitzGeraldmakeusawareofit,writingaboutthedevelopmentofthe
14
taxrateinIreland.Accordingtotheirresearchithad beenonlyin themid/end‐
1980sthatwecanspeakofthelowtax‐rateuniversallyappliedacrossallsectors
(Conefrey,Thomas/FitzGerald,JohnD.,2009:TheMacroEconomicImpactof
ChangingtheRateofCorporationTax;Dublin:ESRI[WorkingPaper273];in
particular4f.).AndithadbeenthenaswellthatIrelandofferedinsomerespect
anichethatcouldnoteasilybefilledbyothers(asithadbeennotonlythelow
taxationthatworkedlikeamagnet).
Thedominantdependenceoftheeconomyonalimitedrangeofsectors.
Adocumentpublished by the DepartmentofFinancestates with respect to the
currentdevelopmentthat
[t]heexportperformanceisbroadlybased;thepharmaceuticals,
software,financialservices,businessservicesandfoodsectorsare
allperformingwell.Exportersarealsochangingtheirmainfocus
awayfromtraditionalmarketstowardsnewexportopportunities
inNorthandSouthAmericaandAsia.
(DepartmentofFinance:TheIrishEconomyinPerspective:4;
EconomicReviewandOutlook;June2011:34;
http://www.finance.gov.ie/documents/publications/economicsta
tsetc/irisheconomyjune2011.pdf05/09/201112:34p.m.;cf.
ibid.:43,highlighting‘thatnearlyonethirdofIrishexportsis
classifiedashightech(suchasITandchemicals)asbusiness
functionsshifttohighervalueactivities.Thiscompareswithan
averageof17%intheEU27).’
WecanlearnaveryimportantaspectinthisrespectfromtheOECD‐reportfrom
1994,wherewereadthat
industrialemploymentandemploymentandoutputareheavily
dependentonforeignfirms:halfoftheemploymentinthe
industrialsectorand75percentofitsoutputareattributedto
foreigncompanies.Foreignfirmsemployalmost80percentofall
thoseemployedinthechemicalssector,70percentintextiles,70
percentinbeverageandtobacco,ad55percentinfinancialand
otherservices
15
(OECD,1994:OECDReviewsForeignDirectInvestment.Ireland;
Paris:OECD:19).
Today’sverystrategyispushingforthesameway–andapparentlydoessoquite
well.Ireland sufferedamassive decreasealready since2004,skyrocketingthen
againin2007.
Flows 2001 2002 2003 2004 2005 2006 2007 2008
In 9,653 29,350 22,803 ‐10,614 ‐31,670 ‐5,545 ‐30,597 ‐12.278
Out 4,066 1,035 5,555 18,079 14,304 15,332 20,778 13,202
(OECD,2010:CountryStatisticalProfiles:KeyTablesfromOECD.
Ireland2010;http://www.oecdilibrary.org/economics/country
statisticalprofileireland_20752288tableirl11/09/20117:06
a.m.)
Table1:FDIInandOutflowsinMLNUSD
Recently,however,thecountryhadbeenreportedtobe‘secondmostattractive
countryforFDI’(RTÉBusinessNews,2011:Irelandsecondmostattractivecountry
forFDI[Updated:14:56,Friday,25February2011];
http://www.rte.ie/news/2011/0225/fdibusiness.html09/09/20117:08a.m.).
RonnieO’Toole,authorofthereporttowhichtheBusinessNewsrefer,claims
[t]hedataflowfortheglobaleconomyhasturneddecisivelymore
positiveoverthepasthalfyearandpointstoimprovinggrowth
prospects.AsiangrowthisstrongandactivityindicatorsintheUS
andEuropehaveturnedhigher
(O’Toole,Ronnie,2011:FDIQuarterly.Spring2011;Dublin:
NationalIrishBank:2;
http://www.nationalirishbank.ie/PDF/FDI%20Quarterly%20Rep
ort%20%20Spring%202011.pdf11/09/201112:53p.m.
AmoredifferentiatedpicturecanbeobtainedfromadocumenttitledIreland’s
InwardFDIovertheRecessionandBeyond(seeBarry,Frank/Bergin,Adele,2010:
Ireland’sInwardFDIovertheRecessionandBeyond;
http://www.nuigalway.ie/ecn/resrch/pdf/event_169.pdf09/09/20117:12a.m.).
Fromthereanimportantpointisgettingclear,namelythatthefigureofinvested
moneyassuchtellsonlyhalfofthestory.ThequalityofFDIis of not less
16
importanceandwehavetothinkalsoaboutthe‘positionofthe transferred
capitalin the overallprocess.Atthe end itseemstobe clear that Ireland’srole
hadbeentoalargepartnotmuchmorethanahub–assaidearliermoneyhad
notbeen invested in ordertodevelop a sustainable economy.Instead,onemay
evensaythattheforeigncapitalhadnotbeenrealinvestmentbutonlyusingthe
Irishnationaleconomyandsomeofitsfeaturestoobtainofadvantages by
transition.
AccordingtoDrRonnieO’Toole,ChiefEconomist,NationalIrish
Bank,‘2010wasanothergoodyearforFDIintoIreland,and2011
hasstartedwell.Wecontinuetoseeasteadyflowofmidsized
projects,particularlyinservicesindustriessuchassoftwareand
customersupport,thoughalsowithsomehighquality
manufacturingprojects.’
(IDAIreland,2011:IrelandRankedSecondGloballyasFDIFlows
Jump15;FeaturedNews.February25th,201:
%http://www.idaireland.com/newsmedia/featured
news/irelandrankedsecondglo/09/09/20117:21a.m.)
Thismeans as well that the focuslieson some selected areas as shown in the
followingfigure.
(http://www.nationalirishbank.ie/PDF/FDI%20Quarterly%20Re
port%20%20Spring%202011.pdf09/09/20117:41a.m.)
Figure1:ImportantSectors
Still,comingbrieflybacktothepoliticaldimension,weshouldnotlooktoomuch
intothesefigures:Moreimportantisactuallythestructurethat emerges as
overallpattern.Andofcourse,thereisalotofpoliticalmessageandsomething
thatwemaycallgoodwillhunting–theoptimismbasedonpurpose.Itisnottoo
longago,thatthesamesource,theNationalIrishBankServicestatedinFebruary
17
2010 that ‘IrelandSuffersSharpFallinInwardInvestmentin2009’
(http://www.nationalirishbank.ie/PDF/AbouttheBank/ForeignDirect
Investment/NIBfDiInvestmentPerformanceMonitor2009Feb2010.pdf
09/09/20117:31a.m.)
Thelackofanexistingoremergingindigenous‘independent’modernindustryand
theemergenceofamainly‘subcontractingindustrialforce’.
InhisSpeechtotheOireachtasinSeptember2011,MichaelNoonanasserts
Turningfirstlytotheeconomicsituation,whereIthinkitisfairto
saythattheemergingdatapresentasomewhatmixedpicture.On
theonehand,theexportingsectorscontinuetoperformverywell
overallexportsincreasedby7percentinannualtermsinthe
firstquarter,whilemonthlydatarelatingtothesecondquarter
suggestasimilarpattern.Therecoveryinexportsisincreasingly
broadbased,andIamparticularlyencouragedbytherobust
exportperformanceofindigenousfirms.
Ontheotherhand,domesticeconomicactivityinotherwords
consumptionandinvestmentremainsweak.Forinstance,
personalspendingcontinuestodeclineashouseholdsmaintain
theirsavingsatelevatedlevels.Itisunfortunatelythecasethat
significantimbalancesbuiltupduringtheboomwilltakesome
timetocorrectand,assuch,itisunlikelythatdomesticdemand
willdriveeconomicgrowthintheshortterm.Thegrowththatwe
arenowbeginningtoseeisexportdrivengrowth.
(Noonan,Michael,2011[September1st]:OpeningStatementby
theMinisterforFinance.OireachtasCommitteeonFinance,Public
ExpenditureandReform;
http://www.finance.gov.ie/viewdoc.asp?DocID=6971
11/09/20111:10p.m.)
Leavingdetaileddiscussionofsuchstatementaside–onecouldalso seriously
question the optimism that is expressed by the minister – an even more
fundamentalissue may be asked. It is gearedto assessing the principle role of
18
such investment. The question is ‘Does FDI matter?’. Severe doubts had been
raisedfromperhapsunexpectedangles.
ThelongertermsustainabilityofIreland’sFDIoriented
developmentstrategyhasalsobeencalledintoquestionrecently
bycommentatorssuchasCraigBarrett,formerchairmanofIntel,
whoarguedinarecentspeechinDublinthat‘thefutureisnotone
whereforeigndirectinvestmentwilldrivegrowth’.Similarly,
RobertShapiro,formerundersecretaryofcommerceforeconomic
affairsintheClintonadministration,advisedina2008lecture
that‘IrelandmustweanitselffromdependenceonFDI....FDIisa
transitionalstrategy,notanendgamestrategythatcreatesa
lastingimpact.’*
*Thetextsofthesespeechesareavailableat:
http://www.irishtimes.com/newspaper/finance/2010/0212/1224264272768.htmland
http://www.smurfitschool.ie/aboutsmurfit/news/newsarchive/title,20742,en.html
respectively.
(Barry,Frank/Bergin,Adele,2010:Ireland’sInwardFDIoverthe
RecessionandBeyond:2;
http://www.nuigalway.ie/ecn/resrch/pdf/event_169.pdf
09/09/20117:12a.m.)
ItissurelyofinterestinthiscontextthatthemeaningoftheIrishestablishments
ofMNCsisnotnecessarilycentraltotheoverallbusiness(seeCondon,
Frank/O’Toole,Ronnie,2009:SurveyofMNCsinIreland2009.Resultsofthe
AnnualCompetitivenessSurvey;Dublin:IrishManagementInstitute:18)
The lackofasystematicallydevelopedinfrastructureacross the country and
acrossdifferentsectors.
Thefactofbeinga‘lawlessstate’,itsgovernancecharacterisedbyclientelismand
thelackofarightsbasedapproachtosocialsecurity.AtthispointIamnot
talkingaboutthesocialprotectionsysteminthenarrowsense.Instead,following
pointsareofinterestwhenwelookatthelegalsystem:
* Ireland is a kind of hybrid in the overall classification of legal systems
(positive,Roman,Common,Brahonlawetc.)
* atleastintermsofthespirit,thesociallegislationisverymuch showing its
roots:thepoorlaw
19
*theentirelytechnicalandprivatistapproachtoquestionsdominates now –
communitariansightsgoactuallywellhandinhandwiththis.
Itisimportantthoughtopresentthepictureinaconciseway,andthismeansto
analyse also the different contradictory aspects. Here, this can only be
undertakeninvery limited ways – and the followingmomentsdeserve special
attention.
Firstandforemost,itwouldbewrongtosaythatIrelandremained without a
genuineindustrialpolicy.Moreoveritwouldbewrongtosaythatsuchindustrial
policy had been solely a matter of generating foreign capital. Although this
played surely a central role, the overall role of the relevant Industrial
DevelopmentAgenciescoveredaratherwiderangeoforientations and
activities.Importantlyitisa policy that developed over manyyears,decisively
emerginginthe1950s–thishadbeendevelopedonanotheroccasion(seepage
4;andseelateragaininthesectionIncome,Consumption–andanOutlook on
WorkingandLivingConditions).
Oneof the majorstructuralproblemsisinmyinterpretationthatthis‘strategy’
(ifitcanbeseenassuchandisnotactuallyabundleofisolated, only loosely
connectedmeasures)failedtogetthefollowingpointsright.
(a)The issue of anopen versus a closed economyhad not been appropriately
understood.Inindustrial politics this had been actually translated intoanother
dichotomy,namelythatbetweenlocal(regional)andnationalpolitics.
(b) The question of ‘industrialism’ and the clarification of what kind of
industrialismactuallyhadbeenenvisaged.
(c)Notleast,andinconnectionwithpoint(a)theissueofthe national
accumulationregimeandthemodeofproduction.
Of particular relevance in respect of the latter is the fact and question of the
relativelylargenumberofsmallcooperativesandthehugenumber of small
(‘dwarf’) enterprises – ‘dwarf‐enterprises’ not meaning one‐person‐self‐
employment‐undertakings but ‘actual, real’ enterprises, consistingofathough
verysmallnumberofemployees.Thoughdifferentfromthis,familybusinessand
‘profit‐orientedcoops’havetobementionedheretoo.
20
Incloseconnectionwithit,wehavetoseethedevelopmentofthe productive
forces and also the lack of any specific resources (leaving time – the widely
knownjoke–aside).
The lack of infrastructure is the second point that deserves special attention.
Fromacriticaltakeonmodernisationbeevenseenaspositive,inlinewitha
cooperative,communityoriented,selfhelpandcharitablespirit. Of course, all
theseareissuesthatareinasociologicalperspectivemarkingtheedgebetween
pre‐modernandmodernpatterns,butalsobetweenmodernand,takingitinan
emancipatoryway,postmodernpatterns.Partoftheproblematique in a
developmentalperspectiveisshownbytwofacts.
Thecooperativeideahadbeentakenupinitsmostpronouncedstancefromthe
conservative side: MuintirnaTíreplayedadecisiverole–andIdaretosayit
characterises ina very fundamental way theentire approach by showinginan
extreme way what the cooperative idea is about if taken in a conservative
perspective.MuintirnaTíretheproximatetranslationfromtheIrishlanguage
is PeopleoftheLand.Whatmakesthisorganisationormovementsomewhat
uniqueisthefactthatitisgroundedin ideologicalclaims,howevernotinterms
ofovercomingthesystembutasinstrumentof(a)maintainingingeneralterms
theIrisheconomicandpoliticalsystemand(b)generatingaspecificinstrument
insupportofthecatholicideologyandpractice.
The other example refers to the role of the CreditUnions.Different from for
instancetheGermanStadtsparkasse,theyactedmoreintherealmofprivate,
non‐investmentissuesratherthanseeingthemselvesintheposition of ‘public
institutionsinsupportoffosteringsmall‐scale entrepreneurship’.Themeaning
ofitgoes farbeyondthequestion ofimmediatepromotion(privatehouseholds
ratherthan ‘alternative entrepreneurship’).Suchorientationalsomeansthat in
effect the national economy lacked support from this side, moreover foreign
industry and dependency had been fostered because of the money made
availableforpurchasingcommodities,forconsumption whichmostlybenefitted
foreign economies (due to the high dependence of consumer markets in
imports).
Itwouldactuallybeinterestingtolookatanotherfeature:the Irish Farmers’
Association (IFA) which still plays an important role as supporting and
21
regulatingagencyintheareaofagriculture.Unfortunatelythishastobeomitted
here.
Nevertheless,all thiscontributedto ameaningfulextent tothemainstreamof a
relativelyhomogenous, cohesive society – put sarcastically:to the widespread,
egalitarian‘povertyofall’.
Sowecansaythatthemainpoliticalandpolitical‐economicfailurehadbeenthe
factuallyabruptopening of an up to thenclosedeconomy, goinghandinhand
withmaintainingthe‘hiddensocialclosures(andthesubsequent social
structures)oftheprevioushistoricalstage.Itisimportanttonotethat previous
openings of the economy remained limited – the actual seize of the Irish
economy has been further limited by the fact that the British economy
functioneduntilatleastintothemid‐1970sasgatekeeper.Thusjoiningthethen
ECcanbeseenasawatershedforthedevelopmentoftheIrisheconomy.
MuchhadbeenwrittenontheIrishboom–alsocriticisingitasmatterofwrong,
short‐sightedpolicymakingorevenasmatterofbadpolitics.And there is not
muchpointinengagingwiththevariouscontributions,manyofthem providing
expostpopulistcriticalviews (forinstanceO’Toole,Fintan,2009:ShipofFools:
HowStupidityandCorruptionSanktheCelticTiger;London:FaberandFaber).
Still,thefollowingremarksmaybeworthtobeconsidered:
*Toomuchattentionispaidtowrongdecisionsforwhichindividualsareseenas
being personally responsible. Without denying such responsibility it is in the
presentauthor’sopinionmore appropriatetoanalysethoroughlythehistorical
structuralpatterns.
* In many analysis, comments and presentations we find a centrality of moral
dimensions:itis not only about individuals beingseenasresponsible but also
about defining this behaviour by moral standards, looking for normative
frameworkstodenouncetheirbehaviour,andalsolookingforstandardsof‘good
governance’.Thisclearlyleadstorathershort‐sightedviewsonaShipofFools–
aperspectivethatinmyopinionactuallyblamesthevictims–andstillmanages
togetthemessageacrossinapopulistway,makingsurethatthosewhoarenow
victimised from two sides (exploited and blamed for allowing to be exploited:
moreover, suggesting they followed the same notion of ‘greediness)arenot
feelingthattheyarefooledandequallyavoidingthattheyarefeelingfoolish.
22
*Ifonestillwantstospeakof‘generalgreediness’amongstthe population at
large,onehastolookinparticularatthebacklogdemand:substandard
conditions, including the need of establishing ‘first‐time existence’ by (re‐
)immigrants have to be seen as part of the story of subprime loans – banks
nearlyforcingpeopleintothesystemofeasyborrowing.Andseen from this
perspective, EC/EU‐membership meantanopeningofa‘marketofneeds and
wants’.4
Partofthis is surely reflectedinthesuggestionthat ‘[t]hisverysharpeconomic
growthresultedinariseinIrishincomepercapita,fromaroundtwothirdsofthe
EUaverageinthe1980stoaboveaveragelevels.’(DepartmentofFinance:The
IrishEconomyinPerspective:4;EconomicReviewandOutlook;June2011;
http://www.finance.gov.ie/documents/publications/economicstatsetc/irishecono
myjune2011.pdf05/09/201112:34p.m.).–Leavingasidehowreliablethese
figuresare,theofficialfiguresmaygivesomeorientationandgivegoodreasonto
questionsuchoptimism(seebelow,page55).
*Banksontheonehand,employersinparticularoflarge,multinational
companiesontheotherhandplayedanunfortunaterolebymakingmoneyeasily
availableandpretendingthatpersistingsecuritywouldnotbeanissueinneedof
investigation – it seemed to be naturally given as before povertyhadbeenan
issuethathadtobetakenaskindofgod‐given.Ofcourse,thismeantnotleastan
individualisationofthequestionof‘living standards’. This includesthespecific
formofanti‐syndicalism,theunionisationonenterpriselevelbeingoneexample.
Furthermore,thegovernmentpolicytokeepconsumptionaprivatematterhas
tobementionedasaccompanying moment. What may appear asadvantageous
atfirstsight–relativelylowtaxes–is,whenseeninthewider framework, a
dangerous strategy. It went so far that certain amenities, commonly being
consideredaspublicgoods,hadbeenandstillarefinancedbyprivatemeans.–
Thistopicwillbetakenupatalaterstageagain.
Door‐to‐doorcollections of donationsforbuildingsport‐halls for publicschools
areinthislightjustanotherform of privatisation, similar to a dangerously
underdevelopedpublichealth(care)system,unavailabilityofchildcarefacilities

4 This may be seen in a wider perspective of the debate on poverty being relative by way of looki ngat Marx’
elaborationsofthehistoricalandmoralelementofthecostsoflabourpower.
23
and the early and wide‐ranging introduction of toll‐roads. – Leaving the
pecuniarydimensionaside,theissueofbuildingahegemonicideologyofprivate
responsibilityisamajorissue.Laterdiscussionwillaimonelaboratingthisissue
ascoreoftheentireprocess–anditwillbeshownthatthisgoes far beyond
whatthetermausteritypolicycangrasp.
(B)
Inanarroweconomicperspectivethedevelopmentrestedonthreepillars:
* The industrialisation to a large extent based on foreign capital – although
recentlyithadbeenoccasionallyclaimedthattheactualquotaofFDIdidonly
makeupasmallamountoftheoverallinvestmentitsurelyisdecisivethatthe
sectoral distribution had been shaped by the investment from abroad, in
particularfromtheUS,butalsofromsome‘strong’Europeancountries.
Furthermore,intermsofsectorsithadbeenalsoaverynarrow range on
whichthedevelopmenthadbeenbuiltupon(seeabove).
* ImportantlythisshapedtheentireeconomyintheSouthoftheisland.Roughly
wecandividethisintothefollowingmaingroups:
¾ thestillforalongtimeimportantgroupoffarmers,duringsometransition
phase taking the position of part time farmers, while working mainly in
someminor industrialpositions,asteachersor otherareaswhich allowed
acertainflexibilityandadaptationtopart‐timefarmingneeds
¾ the workers and employers in small enterprises, many of them run as
familybusiness
¾ (whiteandbluecollar)workersinnormalcapitalistenterprises,
increasinglyset upinthe newindustriesasin particularIT(inthe widest
sense),chemistry/pharmacyandincreasinglyserviceindustries
¾ inthisoverallcontextanimportantpatternisanemergingstructuralrift:a
largetrunkoftheIrishbusinessesdependsinoneoranotherformonlarge
enterprises – and although this is a more or less typical pattern for
capitalismingeneral,itisimportantintheIrishcasethisisnotamatterof
‘replacement’ and repression but a moment that emerges as the very
essenceoftheentirestructure

24
* An important factor: EU‐accessi on as pragmatic step toopen avistatothe
worldmarketsforwhich ithadbeen necessarytobypassingtheUKthoughit
took even after joining the then European Communities still some time. It
should not remain without mention that over the years there had been
frequentdebatesonBostonorBerlin–currentlysuchquestionis again
claimingattention.MarianHarkin,IrishMEPoftheAllianceof Liberals and
DemocratsforEuropeforinstanceclaimedintheDáilinMayof2011that‘we
needtoreview,reappraise,andwherenecessary,readjustourrelationshipwith
Europe,IrelandNorthandWest’
(http://www.marianharkin.com/index.php?id=20&no_cache=1&tx_ttnews%5Btt
_news%5D=61502/09/20117:24p.m.)
Againstsuchbackgroundwecanseethattheproblemoffinancialisation in
Irelandhadbeenonlyalate‐bornchild oftheentire process.Ireland’seconomy
had been based on a treble‐external strategy: (i) the conscious engagement in
extreme dependency from foreign capital, (ii) the orientation on an export‐
driven economy, (iii) and dependence on foreign supply for high‐skilled
workforce.InternallyIrelandhastobecharacterised(a)aslow‐taxcountry in
particularintheareaofhigherincomesand definitely in the areaofcorporate
tax and (b) as country with relative limited opportunity for high‐end
consumption,andongoing(c)ascountrywithalargelayeroflow‐income
households, thus lacking a sourceofstablemassconsumptioninthemiddle
layer.Thus,thecourseofthecursehadbeentoalargeextentpredictableand
actuallybysomeforeseen:
1)at one stageIreland’seconomybecame especially pronetofinancialisation–
anareathatcouldforatleastforalongtimeabsorbthesurpluscapital.
2)thebuildingsectorasamajorareaofinvestmentcouldserve–again limited
intime – asanothercollecting pond forexcessmoney; here we havetoremind
ourselvesalsoaboutthedomesticdemandbasedonthebacklogandtheneedto
overcomesubstandardqualitythathadbeencharacterisingduringtheprevious
period.Whatthismeantissowninthefollowingfigure:
25
(from:DepartmentofFinance:TheIrishEconomyinPerspective:
4;EconomicReviewandOutlook;June2011:9;
http://www.finance.gov.ie/documents/publications/economicsta
tsetc/irisheconomyjune2011.pdf05/09/201112:34p.m.)
Figure2:HouseCompletions19952015
Ofcourse,thenitisobviousthat
[t]hegrowingdependenceoftheeconomyonhousebuildingis
evidentfromthechartabove,whichshowsthatby2006house
completionshadsurpassed90,000unitsperannum.Asaresult,
theratioofresidentialinvestmenttoGDPreachednearly13%
thatyear,comparedwithalongrunaverageof6%inIreland.
Thesubsequentsharpdeclineinhousecompletionshashada
majordirecteffectonthecountry’sgrowthrate.Completions
declinedbyaround80%between2007and2010,subtractinga
cumulative712percentagepointsfromthelevelofrealGDP.
(DepartmentofFinance:TheIrishEconomyinPerspective:4;
EconomicReviewandOutlook;June2011:9;
26
http://www.finance.gov.ie/documents/publications/economicsta
tsetc/irisheconomyjune2011.pdf05/09/201112:34p.m.)
However, as long as the fundamental issues of the Irish economy will not be
changedtheconstructionsectorwillnotshowanysoundshiftof the
development.
Onepoint inquestionwill bethatthe phaseofovercoming the backlogcamein
themeantimetoahalt.Furthermore,wehavetolookatthefactthatthehousing
stock – now the stock of large and modern houses, will keep prices possibly
down. What is more important, however, is the fact that new buildings, now
moreasmatterofinvestmentinstockthatisnotusedforprivatepurpose, is
increasinglyamatteroflargedevelopers,includingbuildingcompanies from
outsideofIreland.
Finally,anyhopeforaturnofthedevelopmentlooksunlikelyifwelookatthe
developmentofsavings(seebelow:thesectionIncome,Consumptionbeginning
onpage54).
3)Amentionableamountofmeansofconsumptionhadbeenalsospentabroad.
4)Itremainsthe‘greedypart’–forashortperiodoftimethelowerandmedium
income groups, all at least better‐off than in previous periods needed and
wantedtocatch‐up,strivingfora‘normalEuropeanstandard’,aimingtobepart
ofEuropeas‘centre’ratherthanacceptingtobethesocialperipheryofacounty
attheworld‐economy’speriphery.
Twoexplanatorynotesareuseful:
First,thoughIrelandsurelymovedtowards the centre of the world economy
especially when seen in the light of national wealth and growth of GDP, it
remained with itsspecifically structured economy byand large determined by
anddependingonexternaldevelopmentsandevents,thiswayverymuchcaught
inthestatusofaperipheralnation.Itisusefultointroducetheconceptof
structuralperipheralism.
ThisisinfactalsoadmittedbytheDepartmentofFinance,statingintheNational
RecoveryPlan20112014
Irelandisanopenregionaleconomy.Itsopennessismostobvious
intermsoftheimportanceofinternationaltrade:exportsand
importsofgoodsandservicesareequalto175%ofGDP.Butthere
27
areotherdimensionsofIreland’sopennessthatarenoless
significant.Oneisitsdependenceoninternationalcapitalflows,
includingflowsofforeigndirectinvestmentfromabroad.Another
istheelasticityofitslaboursupply:thecapacityforitslabour
forcetobeaugmentedbyimmigrationanddepletedby
emigration.
(DepartmentofFinance,November2010:TheNationalRecovery
Plan20112014;Dublin:StationaryOffice.Government
PublicationsSaleOffice:19
http://www.budget.gov.ie/The%20National%20Recovery%20Pla
n%2020112014.pdf03/09/20111:53p.m.)
And importantly, the statement that follows indicates that the lessons learned
areverylimited:
Ireland’sopennessmeansthattheeconomyhereinteractswidely
anddeeplywiththerestoftheworldandissensitivetochangesin
worldeconomicconditions,whileitssizemeansthatthedomestic
marketistoosmalltoprovidethebasisforlongrunsustainable
growth.Longtermgrowthinasmallopeneconomythereforeisa
functionoftheexportbase,thecollectionofenterprisesthatare
involvedintheproductionofgoodsandservicesforinternational
markets.
(ibid.)
Inthelightofeconomictheoryitisinmyinterpretationmoreimportantto
highlightthisaspect of the structuration of the economy in thelightofcentre‐
periphery relationships rather than putting special emphasis onthesmalland
open economy and seeing this as an ineluctable momentum, determining the
structurationoftheIrisheconomy.
Second,ithadbeenrepeatedlyclaimedthat the level of education is inIreland
exceptionallyhigh.
28
(DepartmentofFinance,November2010:TheNationalRecovery
Plan20112014;Dublin:StationaryOffice.Government
PublicationsSaleOffice:24
http://www.budget.gov.ie/The%20National%20Recovery%20Pla
n%2020112014.pdf03/09/20111:53p.m.)
Figure3:Proportionofpopulationwithatleastuppersecondlevel
education
Leavingother issuesaside,this doesnotacknowledge thatwearedealingwita
very recent development. Data from the QuarterlyNationalHouseholdSurvey
teachusthat
[i]nthesecondquarter(Q2)of2010,overonethird(37%)of25
64yearoldshadattainedathirdlevelqualificationcompared
withjustonefifth(22%)inQ2of2000.Whenoneincludes1524
yearolds(theagegroupmostlikelytobestillineducation),33%
ofthoseaged1564hadattainedathirdlevelqualification,an
increasefrom19%tenyearsearlier.
(CentralStatisticsOffice,2010:QuarterlyNationalHousehold
Survey.EducationalAttainment.Quarter22000toQuarter2
2010;Dublin/Cork:CSO,December10th:1)
Thisispicturedinthefollowinggraph:
29
(ibid.)
Figure4:DevelopmentofEducational20002010
Another mentionable point is that the formal level of qualification does not
recognisesufficientlythequalitativedimension.Ifwelookforothersourcesthan
thefamous OECD‐PISA‐study,andin particularitsearly years,6 wehaveto look
inparticularforthoseanalysisthatclarifiesthequalitativedimension.Andithad
been frequently issued that the Irish system is rather rigid, oriented towards
recapitulationandrepetitionofknowledgeratherthanproviding space for
independentandcreativethinking.
Anotherpointshouldnotbeforgotten:Theavailableeducationhadnotalways
beenemployedafterfinishingschool–anditissurelyahighly problematic
momentthatespeciallymanywomenreceivedgoodqualificationjusttoend up
ashousewife,workingonthefamily‐farmorinunder‐ratedpositionsnotleastin
theretailsector.
Although this trend could be turned to some extent, there remainsamajor
gender‐patternedoflabourmarketpositions.–Whenlookingatincome,wefind
aremarkablegendergap.LeavingasidethatjoiningtheinstitutionalisedEurope
surely made a huge difference especially in this area there are still major
questions unanswered. When studying these areas, one has to be ready to

6 Thisremark goes back on anecdotal memories, suggestingthat – presuming the results would actuallyreflect the
realitythepictureshowed especiallybadresultsfor GermanywhereasIreland, togetherforinstancewiththe Nordic
countries,hadbeenseenasperformingextremelywell.
30
engageaswellincontradictionsasinsomeareaswomenhadbeen able to
overtakethepositionswhichhadbeen previously occupied by men. –Without
engaginginthisdebateitmaybesuspectedthatitisjustamatterofmanifesting
thedisadvantagedposition: it is the growth of badly paid,precarious jobs (see
belowpage48).
Thereforeitisalsoworthwhiletoremarkthatwefindoverthelastyearsasmall
butremarkableincreaseofinequality.
(from:CentralStatisticsOffice,2011:NationalEmployment
Survey2008and2009,Dublin/Cork:CSO:8;
http://www.cso.ie/releasespublications/documents/earnings/20
09/nes_200809.pdf11/09/20116:10p.m.)
Figure5:UnadjustedGenderPayGap(5)byreferenceperiodNational
EmploymentPeriod(NES)
Returningtotheissueoffinancialisationwecanimportantlyconclude that
thoughsurelynotuniqueforIreland–thegeneralpatternhadbeen extremely
pronounced:thefactthattherealeconomyhadbeenmarkedbyanincreasing
gapthatledtoincreasing financialisation and the financialisation corroborated
andfurtheredthispattern.Inotherwordsitiseffectandcauseatthesametime
(seeinthiscontextArrighi,Giovanni,1994:Thelongtwentiethcentury:money,
power,andtheoriginsofourtimes;London/NewYork:Verso:314f.).
Subsequently another factor comes to the fore, namely the question of
competiveness.Ireland aimed onachievingcompetitivenesson the basisoflow
taxes,lowwagesandlowwagerelatedcosts.Indeed,thiswayit had been
possibletoattractFDIandthiswayithadbeenpossibletomaintainforsome
31
time an extreme advantage, achieving an exorbitant growth. And it is again
claimed that the same orientation will be guiding the future policy. Of special
importanceisasupposed‘partofourinternational‘brand’’:
Whiletaxationhastoplayapartinrestoringbalancetoour
publicfinances,thiswillnotapplytoourcorporationtaxrate.A
lowrateofcorporationtaxonexportorientatedactivityhasbeen
acornerstoneofourindustrialpolicysincethe1950sandthe12
½%rateisnowpartofourinternational‘brand’.The
contributionfromthecorporatesectorwillbemadethroughthe
maintenanceandcreationofhighvalueemployment.
(DepartmentofFinance,withoutdate:TheNationalRecovery
Plan20112014;Dublin:StationaryOffice:89:100;
http://www.budget.gov.ie/The%20National%20Recovery%20Pla
n%2020112014.pdf11/09/20116:47p.m.)
Highlightingsomepointsmaysheddifferentlightonthisstrategy.–Asmuchof
theargumentistakenfromthesamereportitshowsenpassentthe lack of
circumspectionoftheanalystsinquestion.
∆Thereishardlyadirectlinkbetweentheheightofthecorporationtaxandthe
attractivenessofaplaceforinvestment.LookingatthereportDoingBusiness
2011fromthe WorldBankandTheInternationalFinanceCorporationprovides
thefollowingpicture.
32
(InternationalFinanceCorporation/TheWorldBank,2010:Doing
Business2011.MakingaDifferenceforEntrepreneurs;
Washington:TheInternationalBankforReconstructionand
Development/TheWorldBank:4;
http://www.doingbusiness.org/~/media/FPDKM/Doing%20Busi
ness/Documents/AnnualReports/English/DB11FullReport.pdf
06/09/20117:04a.m.)
Table2:RankingsontheEaseofDoingBusiness7
According to these data from a side that will hardly be suspected to easily
underestimatethetopicoffavourabletaxation,Irelandistop‐ranking–anditis
doingsobehindforinstanceDenmarkandNorway,well‐knownforbeing high‐
tax countries. If we take the World Bank Data for the three countries in
comparisonwearriveatthefollowingfigures:

7 Acompilationfocussingon theEU,referringto thesamesource, canbefoundinEuropean Commission,Directorate‐
General for Economic and Financial Affairs, 2009: The EU's response to support the real economy during the
economic crisis: An overview of Member States' recovery measures [Occasional Papers, 51]; Brussels: European
Commission,Directorate‐GeneralforEconomicandFinancialAffairs:88)
33
COUNTRYPROFIT
TAX(%)
LABOURTAX
AND
CONTRIBUTIONS
OTHER
TAXES
TOTAL
TAXRATE
(%
PROFIT)
Denmark 21.9 3.6 3.7 29.2
Ireland 11.9 11.6 3.0 26.5
Norway 24.4 15.9 1.3 41.6
(Compiledfrom:InternationalFinanceCorporation/TheWorld
Bank:DoingBusiness:PayingTaxes
http://www.doingbusiness.org/data/exploretopics/payingtaxes
06/09/20117:35a.m.)
Table3:TaxRates
The problematique of such orientation is obvious – and the Department of
Financeiswellawareofit,statingintheNationalRecoveryPlanthat‘theincome
taxsystemisunsustainableif45%oftaxunitspaynoincometax.(Departmentof
Finance,withoutdate:TheNationalRecoveryPlan20112014;Dublin:Stationary
Office:89;
http://www.budget.gov.ie/The%20National%20Recovery%20Plan%202011
2014.pdf11/09/20116:47p.m.).But such insight is not sufficient to be any
seriousproofasmatteroffavourableconditionforjobcreation.Inthiscaseitis
truetospeakofausterityifwerecognisethefactthatthegovernmentisreadyto
accept lowering minimum wage, is accepting the increase of low‐income and
precarious jobs and is then proposing explicit deregulation, pointing in the
EU/IMFProgrammeforFinancialSupportforIreland,dated on the 28thofJuly
2011afterabriefremarkonemploymentpolicyonitscommitmentto
[i]ntroducelegislativechangestoremoverestrictionstotradeand
competitioninshelteredsectorsincluding:
*thelegalprofession,establishinganindependentregulatorfor
theprofessionandimplementingtherecommendationsofthe
LegalCostsWorkingGroupandoutstandingCompetition
Authorityrecommendationstoreducelegalcosts.
34
*medicalservices,eliminatingrestrictionstotradeand
competitiononthenumberofgeneralpractitioners(GPs)
qualifyingandremovingrestrictionsonGPswishingtotreat
publicpatientsaswellasrestrictionsonadvertising.
(DepartmentofFinance:EU/IMFProgrammeforFinancial
SupportforIreland,datedonthe28thofJuly2011:9;
http://www.rte.ie/news/2011/0729/budget.pdf11/09/2011
7:22p.m.)
Sure,thesearenotgroupsweshouldworryaboutmost.Butitclearlyshowsthe
direction – which actually opens up for two distinct ways: (a) pushing these
groupsalso and more towardsprecarity or/and (b) allowingthem to increase
prices on an unregulated market which would mean that people who have
alreadyfinancialdifficultieswhenitcomestoobtainingofservices in question
(inparticularmedicalservices)arecomingevenmoreunderpressure.–Anditis
actuallyofsomerelevancethatinparticulartheseareasaretargetedasthiskind
ofrestructurationisstructurallymoreimportantthantheeffect of the
immediate and in cases without doubt severe pressure on social living
conditions.
Again,greediness,frequentlyhavingbeenmaderesponsibleforthe
development,hadbeenfarfrombeingcause.Lookingatthelawsofcapitalist
accumulation,wecanonlysaythatgreedplayedatmostaroleasconsequenceof
the putrefaction of the system’s fundamental mechanisms. – Thisdoesnot
suggestthatindividualsarenotresponsible.Onthecontrary,itsuggeststhatthe
responsibilityhastobeseenasmuchmoreseriousthanbeingonlyamatter of
personalwealthgrab.8
SomeSchemesandTechnicalIssues
Inmyopinion,muchofthepublicdebatehasactuallyashortcoming that is
similartothatoftheproponentsoftheconservativeside.First,itconcentratesto
a very large extent on the financial markets and its problems andthus

8 Itmaybenotedherethatdebatesinthe‘Marx‐is‐relevantschool’(seeMagnus,George:Capitalismishavingavery
Marxistcrisis;in:FinancialTimescomments;August31,20111:30am;http://www.ft.com/intl/cms/s/0/a1cd5b74
cfd711e0a1de00144feabdc0.html#axzz1WtBOdlDd03/09/20112:40p.m.)aresurely disorienting ins some way,
notleastinthosecaseswhereMarxistisseenasprovidingadifferent‘moralstand’.
35
contemplatesaboutthebankingsector,thebail‐outpolicywhichis,leavingother
moments aside, unquestionably a politically reprehensible way of securing
profitsandalsoashort‐sightedpolicy,layingthegroundforthenextcrisis.Ieant
toholdagainstthisorientationthefactthatthecoreoftheentiredebateshould
be concerned with the issue of the mode of production and the accumulation
regime– in anycasewiththe ‘real economy’.Inotherwords andshort: weare
notfacingacrisisof regulating the economy but a crisis of theeconomyitself.
Second,the argumentation – being caught in the beforementioned orientation
onbankingissues–easilydrawsattentionawayfromthepoliticalissues,leaning
towards moralisation. However, we have to keep in mind the two admittedly
general,nevertheless crucial questions:Whatsocietydo we actually want? And
Whatiseconomyforandhowdowedefinetheroleofeconomy(andeconomics)
withinthisframework?
–Whatfollowsisverymuchasketchondifferentissues,aimingonprovidingan
overviewon somecoreissues– thuscontaininglong passagesfromofficialand
commentatingdocuments–and alsoshowingthedifficultiesonfindingasound
groundforassessment.
Politics–RhetoricandReality
Twomomentshavetobebrieflydeveloped.
First,thepresentationfromtheofficialsideisfullofcontradictions – and
althoughonemayexpectthisasbeingnormalonthepoliticalstage in general,
thelack ofanysufficientlystrongopposition,beit intheParliamentor outside.
Thismayillustratethe remarks that had been made earlier:the traditions that
shapedtheIrishpoliticalculturemakeitpossiblethattheforbearance of the
Irish people is a relatively unswerving ‘resource’ in the contest of hegemonic
power – using Parsons’ terminology we may say history as latency, or latent
patternmaintenance.
Several detailed illustrations could be given. It may be surprising that the
contradictionsarecharacterisingeven‘analyticaldocuments’–andtheydosoto
suchanextentthattherearehardlyanyreliabledata.
Less surprising, but highly irritating is that the perspective is permanently
changingwiththetimehorizon.Promisesaremadeforthefuture–andthereis
36
apparentlynoattempttohidethatthefutureismovingwiththesamepaceaswe
areapproachingit–thereallystrikingpart:this‘moveofthefuture’ratherthan
arealmovetowardsthefutureisopenlyadmittedalthoughthereareatthesame
timethecelebrationsofthesuccessesaswecanfindthemforinstance in the
Memoranda and the attached letters from the Department of Finance
(DepartmentofFinance:EU/IMFProgrammeforFinancialSupportforIreland,
datedonthe28thofJuly2011;http://www.rte.ie/news/2011/0729/budget.pdf
11/09/20117:22p.m.).
Second, critical voices are not entirely missing. But three issues have to be
shortlypointedout:
(a)Thereisnostrongoppositioninthecountry–inparticularseenintermsofa
unifiedforce.Eventradeunionscanhardlybeseenasunitedpower.
(b)Theoppositionisalsoverymuchcaughtinthepatternsmentionedearlier:
clientelismandcommunitarianism.
(c)Thisdidnothinderthatwecouldfindespeciallyinthebeginningofthecrisis
an emerging protest movement, gathering different forces, representatives of
differentwaysoflife.However,thetwofactorsthathadbeenmentionedbefore,
hadbeenverymuchinthewayofdevelopingafocuswhichwouldhaveallowed
tomaintainthemomentumandconstructivelydevelopitfurther.Thuswehave
various independent movements, protests and even think tanks thatcouldbe
supportive.Wealsofindsomereflection ofapoliticalshiftin theDáil.Notleast,
we find ‘public protests’ – better: protest as publicity: some people make
themselves heard, using strong positions that have had already – the problem
with it is that the positions taken are very much characterised by their
eclecticism and a kind of populism, presenting insufficient or even wrong
analysis–itisakindofEuropeanversionofthegimmickyMoore‐ionade,not
leastunderminingtheneedtoreallyengageinsystematicanalysis.
BudgetaryPolicies
A rather comprehensive overview of the overall program is in the following
presentedbydrawingattentiontowhatissuggestedaskeytothe overall
outlook,theorientationonthecoreeconomicstrategy.
Competitiveness,GrowthandEmployment
37
TheGovernmentwill:
*Reducetheminimumwageby€1to€7.65;
*Reformwelfaresystemtoincentiviseworkandeliminate
unemploymenttraps;
*CompleteareviewtoeliminateanomaliesinRegistered
EmploymentAgreements(REAs)andEmploymentRegulation
Orders(EROs)withinthreemonths;and
*Reinvigorateactivationpoliciestoensurethatunemployed
peoplecanmakeaswiftreturntowork.
Costcompetitiveness:
*Promoterigorouscompetitionintheprofessionsandmeasures
toreducelegalcosts;
*Takedecisiveactionstoreducewasteandenergycostsfacedby
businessesincludingthedevelopmentofSmartGridsand
renewableenergy;
*Enhanceavailabilityoftechnologicalinfrastructure,in
particularnextgenerationbroadbandnetworks;
*Leadeffortstoreduceofficerentsinboththeprivateandpublic
sectors;and
*Increaseefficiencyinpublicadministrationtoreducethecosts
fortheprivatesector.
SectoralPolicies:
*Implementsectorspecificmeasurestoassistanincreasein
exportsaswellasanincreaseindomesticdemand.
*Supportinnovationthroughtheinnovationfund,other
enterprisesupportsandthetaxsystem,andencouragesmall
businessdevelopment
(IrishGovernment,[2011]:TheNationalRecoveryPlan.2011
2014;Dublin:StationaryOffice:10;
http://www.budget.gov.ie/The%20National%20Recovery%20Pla
n%2020112014.pdf08/09/20118:06p.m.)
Lookingatthedifferentdocumentsonthedevelopmentweareactually not
really facing a bleak outlook. As can be expected, the officialandmainstream
38
documentsarenotaddressingthemainissues.Themostseriousgeneralconcern
islookingatthetimeframeofpayingoffthedebt.Thereisoccasionalmentionof
theneedtospanthetimeforrepaymentoveralongerperiodsothat austerity
doesnottranslateintostrangulation(seepage41ofthepresentdocument).
Keepingthisinmindtheoverallfiguresonsavingsinthebudgetarypolicyare
apparently not too severe and the efforts of repayment seem to be successful,
evencausingcommentators,analysts and of course politicians like Minister for
Finance,MichaelNoonanandCentralBankgovernorPatrickHonohantosaythat
‘Ireland‘mayexceed’EU’stargetforcuttingbudgetdeficit’(Businessetc,2011[July
27th]:Ireland‘mayexceed’EU’stargetforcuttingbudgetdeficit;in:Businessetc.;
http://businessetc.thejournal.ie/irelandmayexceedeustargetforcutting
budgetdeficit189521Jul2011/13/09/20119:35a.m.).
FitzGeraldandKearneyprovidefollowingoverviewoverthe‘austeritypackage’:
(FitzGerald,John/Kearney,Ide,2011:IrishGovernmentDebtand
ImpliedDebtDynamics:20112015;Dublin:ESRI:14;
http://www.esri.ie/UserFiles/publications/QEC2011Aut_SA_FitzG
erald.pdf9/8/119:47AM)
Table4:SummaryofActualandPlannedAusterityMeasuresoverthe
Period20082014,€billion
Theyexplainthat
[t]hisanalysisisbasedontheassumptionthatthegovernment
implementsinfullitstarget€9.8billion(6percentof2010GDP)
austeritypackageoverthethreeyearperiod20122014.Onthe
basisofthisanalysisweconcludethat,absent