Through Irish Eyes
A column from Socialist Democracy, Irish section of the Fourth International
Republicanism's blinkered vision of Irish boom
‘Inside The Celtic Tiger’: Denis O’Hearn, Pluto Press, 200pp.
In August 1994 the American investment bank Morgan Stanley published a laudatory prospectus about the southern Irish economy comparing it favourably with the Asian Tiger economies. the Irish government was so chuffed by the praise that ever since its agencies have sought to promote the country as the Celtic Tiger.
In these days of collapsing capitalist confidence, southern Ireland with its six per cent annual growth rate is increasingly being heralded as a model economy that others should imitate.
SNP leader Alec Salmond recently explained that Scotland would seek to follow the southern Irish example if and when it became politically independent. It is timely then to have a book that casts a critical gaze over the life and times of the Celtic Tiger.
O’Hearn’s book deserves to be read, but not welcomed unconditionally. There are major faults with his analysis.
O’Hearn pulls together much previously scattered information, to some extent helps update the chapter on the southern economy in our own ‘Promise of Socialism’. That chapter was conceived at a time when the Irish economy was in crisis, when the State Treasury was close to the point of bankruptcy, unemployment close to 20 per cent resulting in a massive flight of people from the country.
Giddy with success
Today things have turned around. Instead of feeling a deep gloom about the present and fear for the future the Irish capitalist class is giddy with the feeling of success. Conspicuous consumption is the order of the day. There has never been a boom like it – housing prices are heading for the stars.
On the surface everything looks wonderful. Since 1992 the economy has grown by an average of 6 per cent per annum and the bourgeoisie now believe they can sustain a high growth low inflation economy into the future. Some pundits believe that they are about to surpass the British in productivity and average living standards. The poets are instructed to compose in praise of the Celtic Tiger.
O’Hearn essentially warning them not to get carried away. He punctures the idea that the southern economy is a Tiger economy by pointing out that the Asian Tigers experienced three decades of annual growth rates of around the 8 per cent mark – and are now in crisis.
For us though the key question is has the economic boom transformed Ireland from a semi- colony into an advanced industrial nation?
The left republican is a nationalist first and a socialist as an afterthought
The evidence amassed by O’Hearn suggested not. The recent boom, he maintains, is but more evidence indicating just how dependent the Irish economy is on foreign capital. In the period of the crisis foreign capital deserted Ireland:its return has induced the upturn.
He argues that it was been the rapid influx of American capital that has caused the boom. He gives the lie to the Irish government’s view that it has put in place the ideal macro-economic(neo-liberal) conditions .
O’Hearn shows that American owned Trans National Corporations (TNCs) were directly responsible for 15 per cent of Irish GDP in 1990, and today this has reached a staggering 24 per cent. Government figures for 1995 and 1996 suggest that 60 per cent of all new fixed investment in Ireland came from a handful of American TNCs.
American-run
Since 1988 Ireland has attracted 40 per cent of all the American electronics investment streaming into Europe. O’Hearn believes that, at a minimum, 45 per cent of the growth that has occurred in the Irish economy since 1990 has stemmed directly form American investments.
It was the arrival of Intel that made the big difference: "Ireland captured a crucial segment of foreign investment into Europe during a time when such investment was agglomerating in fewer locations following the global restructuring in the 1980s."
In 1991 Intel made a £31 billion investment in Ireland, this was followed by another £3,750 million investment in 1996.
O’Hearn argues that the Intel investment caused a sudden agglomeration of investment in a couple of areas: computers and electrical engineering. With Intel came PC manufacturers Gateway, Dell, SST, Apple, and Hewlett- Packard.
Then came Disk Drive makers Seagate and Quantum and the software giants Microsoft, Lotus and Oracle. Ireland is now the fourth largest exporter of software packages in the world.
The Irish economic miracle is in fact in the hands of a handful of American TNCs. O’Hearn’s main worry is that what they have so quickly brought they can just as quickly take away. Ireland remains a privileged semi- colony.
O’Hearn has certainly brought much useful information together. He explores why almost uniquely the Irish GNP statistics are 14 per cent below those for GDP.
Incredible figures
He raises questions as to the credibility of the economic statistics i.e. how come Ireland’s dynamism is accompanied by the lowest investment in the means of production in Europe, and how is it that American firms in Ireland are able to declare such fantastic profits – five times larger than anywhere else in the world? The case that massive tax fraud and transfer pricing must be occurring is well made.
He proves that the much trumpeted Irish-owned software industry is still very much small change, subordinated to the American giants and accounting for only 3 per cent of exports.
However his book ultimately disappoints. This as a lot to do with O’Hearn’s politics.
Although not an overtly political book, nevertheless his left republican political credentials shine through.
There is a world of difference between a left republican and a socialist. The left republican is a nationalist first and a socialist as an afterthought: as egalitarian nationalists, they are not in principle opposed to capitalism or in principle in favour of the political independence of the Irish working class.
What O’Hearn is criticising is not the inherent tendencies of capitalism but its political form of regulation. This limitation badly skews his whole analysis.
His method is to use one mode of regulation, the more productive Japanese organised one that assisted the development of the Asian Tigers as a template with which to test and criticise the American or "Western" policies.
"Thus the Japanese model is more constructive to the development strategies of lesser nations, the Asian model is more employment friendly and more egalitarian than the one that is imposed on countries like Ireland" (p147)
Because of this favouritism the crisis in the East has to be explained bizarrely as a crisis of "strength" (p151), indeed as a crisis caused by American mismanagement of its domestic economy:
"Asian producers by and large, depended on the US as the major market for their expanded manufactures. By the 1990s however American consumers could no longer purchase what Asia produced."
"Foreign" capital
O’Hearn is against the "market limitations of export-led development or industrialisation in a liberalised global economy". This is a repackaging of the traditional left nationalist dislike of ‘foreign’ capital.
He consistently plays down domestic Irish class exploitation and plays up foreign exploitation:
"The main recipients of the fruits of economic growth are a foreign capitalist class rather than a domestic one"(p127)
What is essentially wrong with capitalism in Ireland is its mode of political regulation – a useful argument for republicans, which allows them to sound radical while not calling for a break with capitalism.
In his concluding chapter O’Hearn advises an economic development strategy for Ireland that does not put all of our hopes in one basket i.e. depending on TNCs.
He calls for "movements of the periphery to organise to demand new European rules that allow their states to implement development policies that are currently disallowed, just as peripheral regions world wide urgently need to unite to reverse global liberalisation.
"Moreover such peripheral movements need to pressurise the EU for a new technology policy where major innovative research and design projects would be located in the periphery."
OUT NOW!
The Real Irish Peace Process
Book available from Socialist Outlook; £6 plus 70p p&p from Socialist Outlook, PO box 1109, London N4 2UU.
This is pure new Sinn Fein speak, after having dropped its former anti-imperialist anti-EU stance.
What could best develop the Irish economy "is the removal of the economic partition of the island. An all-Ireland economy would substantially reduce transaction costs and enable Irish producers to take advantage of scale economies that would arise from an enlarged Irish market".
This is certainly untrue, and a long way from being what most Irish workers would need, but it is exactly in tune with current Sinn Fein orthodoxy.