The Irish Bubble

national | worker & community struggles and protests | opinion/analysis Friday December 17, 2010 10:22 by Paddy Hackett maxanger at live dot ie

Concerning the “deal between the Irish Government and the ECB/EU/IMF troika” Constantin Gurdgiev argues in the Sunday Independent, December 5th 2010, that far “from providing a resolution to Ireland’s financial and fiscal crises, it made the restructuring of our banks’ debt inevitable,

Concerning the “deal between the Irish Government and the ECB/EU/IMF troika” Constantin Gurdgiev argues in the Sunday Independent, December 5th 2010, that far “from providing a resolution to Ireland’s financial and fiscal crises, it made the restructuring of our banks’ debt inevitable, no matter what the conditions underlying the deal says.” Gurdgiev has been one of the those analysts stridently calling for a large and significant part of the total surplus value owed by the Irish state and banks to be transferred abroad. There appear to be at at least three kinds of economic commentator occupying the public stage in Ireland at the moment.

The first kind might fit into the neo-liberal group: They are of the view that the total exchange value foisted onto the state, and thereby the working class, is on such a scale that it may prevent the Irish Republic’s economy from recovering from the adverse effects of global economic downswing. Such a situation, many of them would hold, can but lead to political instability and even class warfare. These bourgeois intellectuals see the writing on the wall. They realise the dangers for capital regarding the character of the so called bail out. The vast amount of exchange value that must be extracted from the Irish economy now and into the future will leave little or no capital to maintain and extend the reproduction of capital in the country itself. The effect of this massive transfer of its wealth abroad will transform the country into an economic and social wasteland. Consequently European capital may be forced to tolerate an Irish default. However because of the belated nature of this default there are is a greater probability that the default will do more economic harm than a controlled and regulated default undertaken now. Constantin Gurdgiev, Jim Power and Brian Lucey.
This group overstates the power of the Irish government to radically renegotiate a deal with the troika. The Irish economy is too minuscule and dependent on imperialism to be in a position to determine how it deals with the economic crisis that it has been enduring. If it were as strong as this group suggests then there would never have been a crisis in the first place.

The second type of economic commentator essentially goes along with the Irish government. It bases its economics on the Micawber Principle. These doughty ideologues are claiming that the economy should be able to recover from the huge debt burden being imposed on it. They don’t see any possibility of renegotiating the deal done with the international troika. Underlying their claims is the assumption that the expansion of the valorisation process will increase to and beyond the minimum rate necessary to make repayment possible. This suggests that the reproduction process will start to produce exchange value on a scale that allows Ireland to both produce enough surplus value to maintain and increase the accumulation of capital and leave surplus value over for distribution towards welfare and debt obligations. Ironically there is no evidence to support this Quixotic prediction.

This second group of bourgeois analysts based in Ireland are, largely speaking, the very group that mistakenly claimed that the Irish economy was in for, at worst, a soft-landing in the aftermath of the Bertie Bubble. These are commentators such as Brendan Keenan from the Irish Independent and John Fitzgerald from the ESRI.

Then there is the third type. They are of the view that the Irish government are not compelled to lie on the procrustean bed offered by the international troika. However they mistakenly believe that the state can and should engage in more spending rather than less. They say that more spending will stimulate the Irish economy and bring about recovery. This group are the infamous Underconsumptionists. For them economic crisis are caused by deflated demand. What they don’t understand is that by its very nature demand is always deflated under capitalism. This is why there has always been poverty under capitalism. If the solution were as simple as one of increasing demand then there would never have to be economic crises under capitalism. Once demand was artificially increased to a sufficient degree the entire population, generally speaking, would be made affluent. Indeed the years of the Bertie Bubble were, in a sense, just that. Demand was “artificially” increased leading to the Bertie Bubble. People like Michael Taft, Kieran Allen and Joe Higgins are exponents of Underconsumptionism. They patriotically wish to save Irish capitalism from destruction by a programme of public investment.

The real future is that the Irish Republic will be forced into default or else be turned into an economic wasteland. The latter scenario may lead to the further centralisation and concentration of European capital to the advantage of its core imperialist economies. Now European imperialism has less need of bombs and guns. It can destroy and colonise a country by subjecting it to financial attack. Hopefully in the meantime the European working class, becoming class conscious, will have mounted a struggle to seize power from the hands of the European bourgeoisie.