Views from the left (2)
Next up is a lengthy piece from new kids on the Irish block, éirígí. Brian Lesson, chairperson of éirígí, starts:
While the Twenty-Six county government last week succeeded in rushing its emergency Credit Institutions (Financial Support) Bill 2008 through Leinster House many serious questions remain to be answered. A host of ministers have to date refused to answer these questions, preferring instead to repeat the mantra of are acting in the national interest ad nauseum; presumably in the hope that people will get bored of asking questions that they are unwilling, or unable, to answer.
This national interest argument has also been successfully used to rally support for the controversial legislation. While the Green Partys Paul Gogarty may have referred to banking executives as scum that didnt prevent him from voting in support of a financial package which saw the same scum remain in charge of the disgraced banking system.
Sinn Féin similarly supported the multi-billion guarantee despite Arthur Morgans assertion that he didnt trust the government or have access to any of the details of the package. The Labour Party alone voted against the bill, for reasons that have more to do with elections than they have with ideology as time will show.
On the costs to Irish people:
And so it came to pass that within less than seventy-two hours all of the risks of the Irish private banking sector came to be guaranteed by the exchequer. Within a week, on Thursday 9th October an additional five, non-Irish, banks were added to the scheme. By extending the government guarantee to Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank the total potential cost of the scheme rose to at least 500billion.
This means that every man, woman and child in the Twenty-Six counties has now been saddled with a potential liability of at least 125,000 each!
Who will pay for the banking mess?
In answering this question it may be easier to identify who will not pay for the current financial crisis.
Nationalised the Risks but Not the Assets
For starters it appears that the banks themselves wont be paying. When the Dublin government so generously rescued the banks Brian Lenihan indicated that there would be conditions attached. More than a week later it still isnt clear what these conditions might be and it appears that the details will now not be released until after Lenihans budget on October 14th.
While nationalising the liabilities of the banks the Dublin government failed to nationalise any of the assets of those same institutions. The option of taking complete or partial ownership of one, or all, of the banks wasnt exercised. Nor was the option of taking seats on the boards of the banks taken Finally the banks have not been required to pay any lump sum or royalty to an exchequer that has underwritten all of their liabilities.
Instead it has been suggested that the banks will pay interest on any monies taken from the state, but the rate of interest has yet to be disclosed. It appears that, such was the panic in Leinster House last week, the Dublin government may have overlooked what it should seek in return for taking on a 500 billion liability.
If the banks arent going to pay for the mess what about those who run the banks – will the bank executives be personally held to account? Did the government demand the resignations of those who walked the Irish banking sector into the current mess?
For the year ending March 31, 2007 the chief executive of Bank of Ireland, Brian Goggin, was paid roughly 4million. In the year ending March 31, 2008 he received 2.9million roughly 88 times the average industrial wage. His counterparts in all of the other banks are all paid similar vast sums of money each year.
Whatever happens over the coming period it is certain that none of the wealth that Goggins or his colleagues have personally accrued over the last ten years will be reclaimed by the state.
For happily encouraging an entire generation into unprecedented levels of personal indebtedness they will receive no substantial punishment. Indeed more than one commentator has suggested that the bank chiefs deserve a huge bonus for negotiating the government bail-out at such little cost to the banks.
And what of the property developers who made so very much from the Celtic Tiger property boom? Will some of their wealth be recovered by the state to offset the hard times now faced by the people of Twenty-Six counties?
Only the stupidest of developers will loose anything beyond a bit of credibility. While some projects will be postponed or abandoned and perhaps a company or two will have to close, the personal, protected wealth of the developers will remain untouched. Bank loans will be re-negotiated, limited companies will be folded and assets will be protected.
For the Bernard McNamaras, Ray Grehans and Sean Dunnes there will be no repossessions of their family homes – or their many holiday homes for that matter. For them and their cronies there will be no need to choose between turning the heating on or buying tomorrows dinner choices which many families across Ireland are already having to make and many more will have to make in the near future.
On the future:
Will it work and will it happen again?
Before answering the question will it work? one must first define what the question actually means. If by work one means that the capitalist banking system will be stabilised and it will soon be back to business as normal, it is quite possible that the government intervention will work. Given the instability and complexity of the current global financial system, however, it may not. It is just too early to say.
But if by work one means that there will be some sort of quick-fix to the current economic crisis and that the pain of any solution will be borne equally by all, the answer is a categorical NO.
Since the time of Marx it has been known that the capitalist model is fundamentally based upon a boom and bust cycle. In recent years some right-wing economists have attempted to undermine this fundamental truth, arguing that modern capitalism can manage continuous growth a boom without a bust.
Those same economists, and their political allies, argue that in a free market the law of supply and demand will find a natural balance, thus creating economic stability. Events of recent weeks and months have exposed the falsehood of this argument.
Rather than bringing stability modern capitalism ensures the very opposite. The globalisation of banking and stock markets over the last two decades has simply created a vast, unregulated playing field for bankers, speculators, commodity traders and venture capitalist to accrue vast amounts of personal wealth. And this wealth does not appear from thin air, it is created by the hard labour of workers across the globe.
This reality provides an answer to the question Will it happen again? and that answer is YES.
The only way that people in Ireland and across the globe can avoid a repeat of the current cyclical capitalist collapse is to change the overall socio-economic system. Instead of supporting a system which actively encourages human beings to prey on each other in a form of social and economic cannibalism people across the world need to actively support a socially based alternative.
Modern capitalism requires the breakdown of community. It requires people to detach themselves from their neighbours and place individual material gain above the collective good. It requires people to believe that the casting of a vote once every five years is democracy and to believe that no other socio-economic system can work.
A socialist alternative is not only desirable; it is also practical and realisable – but only if sufficient numbers of people actively support it. A socialist alternative will not be created by the corporate media, the business class or the bankers. It will instead be built by ordinary women and men coming together to challenge the status quo and replace it. Each extra shoulder to the wheel will make a difference.
So, when the right-wing economists talk about tweaking the free market to ensure that another crisis does not happen people should ask the question just how free are people with a crippling forty year mortgage; or how free are those whose homes are dependent on the whim of a landlord; or how free are those who wait for years on end for social housing; or how free are those who are afraid to turn on their heating or visit a doctor for fear of the bills that they will be presented with.
Every person in Ireland has a choice to make. Do they support a free market or do they support a free people? And if they choose a free people they need to make one more choice to become politically active and join the struggle for a free, socialist Ireland.