Friday, March 13, 2009





In a closed-door speech to Dublin Chamber of Commerce last month, Taoiseach, Brian “Biffo” Cowen, waxed lyrical on his “Save the Nation” plans but, unfortunately, the whole thing is misconceived, misguided and totally useless in our current situation. A situation for which Cowen, as Minister for Finance for years was a principal contributor to with his facilitation of rampant property speculation, no tax on the wealthy and total reliance on foreign direct investment and EU subsidy policies to shore up the fraudulent “Celtic Tiger” economy. Cowen and his cronies swallowed whole the American neo-liberal, anti-regulation, market fetishist, destructive philosophy and imposed it here. They rolled over in the Galway Tent to all the gung-ho developers, privateers and three-card-trick men of the so-called “Celtic Tiger” while all the time it was becoming clear that the entire international economy was running not on values created in production, but, on the odor of paper.Piles of paper. Bundles of mortgages and mysterious “securities” and “derivatives” of unknown origin and value. Paper that stated its own worth and signed by some hand no one could quite identify though if looked at closely it might have looked like Lehman Bros or J.P. Morgan Chase.

Now, like Captain Ahab, on the “Pequod” in “Moby Dick”, Biffo Cowen has conjured up a fantasy, a White Whale, which if we follow him in chasing after it we will achieve salvation. Cowen’s proposals are based not on the actual needs of the people for productive employment, decent public services in Health, Welfare, Education, and Utilities but, on a desperate and ultimately futile attempt to shore up a system which has actually collapsed. The US Dollar, which is the world’s reserve currency, is failing in its role. The present financial crisis which has its roots in Wall Street and at the US Federal Reserve, has demonstrated that the dollar must be replaced as the world's "reserve currency" and that the US must be deposed as the de facto regulator of the global economic system. Leadership implies responsibility and the US must be held to account for its failings. The deliberate reduction of the value of the dollar is, in effect, a tax on those countries who have massive reserves of US currency in their central banks. This US scam must be ended immediately..The international system can be re-stabilised on the basis of the Euro, the Russian Rouble and the Chinese Yuan. The sooner practical measures for achieving this are put in place the better.

The G20 Economic Summit, which will take place in London 02 April, is supposed to tackle these issues but, given past evidence, Washington is still trying to retain control of the financial empire it considers is its sole right, regardless of the costs to the rest of the world. Therefore, there is no likelihood of any comprehensive agreement which would ameliorate the current crisis.The EU must not surrender to Washington’s demands. Now more than ever, Europe’s interests are aligned with our neighbours on the Eurasian land-mass; Russia, China and India. This combination, not the USA, holds the future of world civilisation in its grasp. The greatest concentration of land, productive resources, labour, science, technology on Earth is here, on our doorstep. Yet, the European political elite are still bound up with last-century Cold War attitudes and beliefs which have served mostly the political and economic interests of the USA and its Corporate Empires.

Meanwhile back at the Ranch……

Cowen and Co. are deliberately delaying nationalisation of the Banks because they know that nationalisation would lead to the land and property assets on which the credit bubble was based would revert to the State. The Government has inspired deliberate and vicious attacks on public service workers such as the attack on public service workers in the Electricity Supply Board getting an agreed pay increase under the terms of the Partnership Agreement for 2009. This was agreed by the Trade Unions (ICTU) with the Government and IBEC. Profitable companies would pay the increases but companies not in profit could claim inability to pay and defer any increases. Now IBEC and others have attacked the ESB decision although they agreed the terms only months ago. In the Seanad, the charge was led by poseur-in-chief Senator Shane Ross, a well known gambler on the stock exchange, who, from his €60,000 a year perch condemned the ESB for paying out the increase.

The stupidity of these people and the “economists” whose nonsense they parrot are one of the reasons why we are in the mess we are in currently. As seen in previous crises going back to the 1929 Crash, wage cuts do not lead to higher output or increased demand; lower wages may lead to lower prices because companies are under severe competitive pressure. As a result, buyers will expect further price reductions and thus postpone their purchases, reducing aggregate demand and therefore employment. To the extent that wage cuts do not translate into price cuts of the same magnitude, however, they always lead to lower real wages, lowering the purchasing power of working class households. The effect is the same either way: decreases in aggregate demand and employment can turn a cyclical recession into a depression with devastating social consequences, which is what happened in the 1930’s and was ended, not by Roosevelt’s ‘New Deal’ agenda but the massive destruction of life and property of World War 2. This is why the Government’s policy, following only the IBEC employer group demands, will do nothing to ease the present crisis but, more likely, make it much worse.The Government now plans another emergency budget which will gouge working peoples’ incomes even further. Workers and their Unions must prepare for stiff and resolute resistance to these schemes of the Celtic Rats who have led this country into the mire. The rich must pay for their follies and irresponsibilities whether they like it or not.

Arise the New!

The scale of the crisis today provides an opportunity for a new round of radical politics that puts forward onto the political agenda a systemic alternative to capitalism. What is needed is not just a reining in of the delinquent financial institutions which have brought about the crisis, but a fundamental re-structuring of how credit is created and used in a new type of economic formation suitable for the 21st Century. What is, in fact, needed is to turn the whole banking system into a public utility so that the distribution of credit and capital would be undertaken in accordance with democratically established priorities rather than short term profit.

It hard to see how anyone can be serious about converting our economy to green priorities without understanding that we need a democratic means of planning through new kinds of public institutions that would enable us to take collective decisions about allocating resources for what we produce and how and where we produce the things we need to sustain our lives and our relationship to the environment. The reasons trading in carbon offsets as a solution to the climate crisis is a dead end is shown in this financial crisis. It involves depending on the kinds of derivatives market that are so volatile and are so inherently open to financial manipulation and to financial crashes. The Economy must change from being an engine of blind consumerism and profit taking and enrichment of a tiny minority of the world’s population, to being a democratically controlled tool for the betterment of our lives individually and the progress of human civilisation as a whole. In terms of immediate reforms, in a situation where the only safe debt is public debt, this should start with demands for massive programs to provide for collective services and infrastructures that not only compensate for those that have been wrecked by privatisation but, meet new definitions of basic human needs and come to terms with today's urgent ecological challenges.

Such reforms would soon come up against the limits posed by the reproduction of capitalism. As in previous history of social and economic transformation, the old regimes will resist to the bitter end the loss of their positions of wealth, power and influence This is why it is absolutely necessary to demand not merely the regulation of finance but the transformation and democratisation of the whole system. This would have to involve not only capital controls in relation to international finance but also controls over domestic investment, since the point of taking control over finance is to transform the uses to which it is now put. And it would also require much more than this in terms of the democratisation of both the broader economy and the state.

Of course, without rebuilding popular class forces through strengthening and expanding the political parties which, broadly, represent working people, this will fall on barren ground. Essential to this rebuilding is to get people to think inspirationally again. However deep the crisis, however confused and demoralised the financial elite inside and outside the state, and however widespread the popular outrage against them, this will require hard and committed work by a great many activists. We will need to put our minds to the serious questions of what the new institutions of democratic public finance would look like and what kinds of movements would be needed to build them.

FearFeasa Mac Léinn

Áth Cliath/DUBLIN, 13 Marta/March 2009.

Watch video of ICTU mass protest here:

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