New Paper: Deepening neoliberalism via austerity and ‘reform’: The case of Ireland

A new paper critiquing how decision-makers have dealt with the Irish crisis is now available on NUIM eprints. It questions how the adherents and practitioners of neoliberal ideas have sought to deal with the contemporary crisis by examining three elements of the Irish state’s adjustment and austerity programme in the areas of property and finance, the labour market and state spending.  The paper contends that the crisis has led to processes of adjustment that deepen and extend neoliberal ideas and practices rather than negate them. It concludes that the various crisis-adjustment strategies are part of a process of disturbance which focuses on shaking the confidence of the working class and ultimately redistributing an even greater share of economic output to capitalists. It can be downloaded via NUIM eprints here. This version deals with events/policies up to May 2 2013 when the final revised version was submitted for publication.

The paper by Alistair Fraser, Enda Murphy and Sinead Kelly is to be published in an upcoming issue of the journal Human Geography. The journal is motivated by a need to retain control of the value produced by academic labour. Over the last twenty years, journals that once were owned and produced by universities and academic and professional associations have come to be controlled, in part or in whole, by publishing houses that increasingly are concentrated in a few multinational media conglomerates. This means that the profit produced by (mostly) public funded academic labour ends up with large corporations. The aim of Human Geography is to change that and ensure that any profit made from the journal is re-distributed to young radical scholars.

Abstract

The current economic crisis – the ‘great recession’ – raises numerous questions about neoliberal ideas and practice, not the least of which is whether (and if so, how) neoliberalism can survive it. Our paper takes on these issues using the case of Ireland. This is the first proper neoliberal crisis in Ireland. From the early 1990s to 2008, Ireland was held up by many neoliberal champions as a place that gained from deregulation, openness to inward investment, and low corporation tax rates. But the build-up of contradictions in Ireland exploded rapidly in 2008, when its property bubble burst and private banks and government finances collapsed. Rather than examining what caused Ireland’s crisis, we look at what has happened between 2008 and 2013. We focus on structural adjustments regarding the property, finance, and labour markets and then on the government’s austerity programme as a whole. In addition to demonstrating how these adjustments have been an attack on workers and ordinary citizens, we identify some particularly striking elements, which we use to argue that a new phase of disturbance and restructuring is deepening and extending neoliberalism’s influence in Ireland.

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‘Trickle-up’ Economics: Deconstructing Budgetary Priorities

In a recent post I alluded to the deep philosophical problems associated with NAMA.  The aim here was to highlight the relationship between democracy and inequality when discussing the role of the state in modern democratic systems. The problems alluded to can also be applied to the recent budgetary announcements; particularly the lack of concern with reducing inequality. On the contrary, it seems that the government is intent on the reverse. The welfare cuts announced in the budget reinforce and deepen rather than reduce inequality. Strikingly, this is referred to as ‘making hard decisions’ in the ‘national interest’. Clearly then, ‘making hard decisions’ is more or less analogous to reinforcing and deepening inequality.

 

Welfare Cuts: Possible Alternatives?

Brian Lenihan announced welfare cuts of 760 million in yesterday’s budget. This is referred to as ‘making hard decisions’ in the ‘national interest’.  It’s hardly a ‘hard decision’ to attack the most vulnerable and least powerful individuals in society. On the contrary, those individuals tend to have more restricted access to sources of private power, resources  and political interests than more privileged counterparts. Moreover, the percentage cuts outlined  are greater than they appear because they do not take into account the fact that the Christmas bonus has already been removed for welfare recipients; effectively a c. 2% cut has already been implemented without yesterday’s announcements.

Government Expenditure 2009/10

What’s most striking though from the Estimates of Receipts and Expenditure for 2010 is the projected increases in spending in a huge number of government departments (see image). The government expects an increase in net voted current expenditure of c. 3 billion between 2009 and 2010. While the increase can be accounted for by an increase in expenditure within the Department of Social and Family affairs (largely, one presumes, due to projected  expenditure increases on unemployment benefit), one wonders whether more ‘belt-tightening’ could have been achieved in other government departments and whether welfare cuts, in particular, could have been avoided? Of course, other real alternatives exist but even within the narrow ideological framework adopted by government, perhaps the misery being heaped on the most vulnerable could have been avoided.

Enda Murphy

 

Adam Smith’s Maxim

One of Adam Smith’s maxims was that ‘Wherever there is great property, there is great inequality. For one very rich man, there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many’. Indeed, it wasn’t only Marx and Lenin who felt that the primary function of the state was to facilitate the accumulation of capital for ‘the principal architects of policy’, as Smith termed the elite; while at the same time mediating resultant class conflict. Not often mentioned by economists is the fact that Smith, like many other Enlightenment figures, had similar things to say. In his words: ‘The acquisition of valuable land and extensive property…necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary’. Clearly then, he felt that one of the central roles of the state was to mediate class conflict resulting from the disproportionate levels of ownership related to property. Should we expect then that NAMA will do anything other than serve ‘as a mechanism to transfer wealth from the general population to themselves [the financial sector]’ in the words of Joseph Stiglitz referring specifically to the proposed Irish remedies for the banking crisis?

Enda Murphy

 

Aristotle and NAMA: Reducing Inequality or Reducing Democracy?

‘The true forms of government are those in which the one, or the few, or the many govern with a view to the common interest; but governments which rule with a view to the private interest, whether the one, or the few, or the many, are perversions.’ (Aristotle, Politics, Book III, 7:29)

In the foundational text for modern political theory – Politics – Aristotle was very concerned with conflicts arising from private ownership of property. Although he did not state it explicitly, he was essentially broaching the question of class conflict in ancient state systems. He felt that if in a perfect democracy there were extremes of rich and poor, the poor would use their democratic right to initiate land reform and confiscate property from the rich. He considered this to be unjust on the basis that if one considered this to be just then ‘all the acts of a tyrant must of necessity be just; for he only coerces other men by superior power, just as the multitude coerce the rich’. One could debate Aristotle’s judgement about justice and injustice at length. But it is his potential solutions to the problem that are most insightful and have most contemporary relevance. In democratic states, he saw two ways of dealing with the difficulty: the first option was to reduce inequality so that the poor would not be inclined to initiate land reform; the second option was to reduce democracy so that the poor would not have the power to initiate land reform. The question then arises as to which of Aristotle’s two solutions the state is currently pursuing with regard to contemporary failings arising from private ownership of property: so, is NAMA an attempt to reduce inequality or reduce democracy?

NAMA is being implemented under a veil of secrecy with one TD referring to it as a ‘secretive, tax-funded, politically directed work-out process for 1,500 of the most powerful, well connected business people in Ireland’. This lack of transparency tends towards Aristotle’s second option. The recent news that NAMA is to be submerged into a ‘special purpose vehicle’ which is to have majority (51%) private ownership is further evidence of the pursuit of Aristotle’s second option. There are many other examples pointing towards the adoption of Aristotle’s second option which is essentially a means of preserving the existing power structure in society by reinforcing and likely deepening inequality. Bearing that in mind, it is worth noting that Aristotle favoured the first option – reducing inequality.

Moreover, the scheme is being implemented with minority support from the general public and with little regard, its seems, for the ‘common interest’. A recent Irish Times poll shows that only 26% of the population support it. In a true democracy we would educate and inform the population about the important issues and allow them to make an informed decision on that basis; not here however, because that is not the position favoured by the current system of private power.

Enda Murphy