Catastrophic Event

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As we approach the centenary of the Republic’s Proclamation in a state of economic chaos and democratic underdevelopment will we be remembered for our failures rather than our resolution?

On the face of what we know, the Irish economic crisis will trigger similar events to some of our previous catastrophes in the 19th and 20th centuries.  While we cannot take direct responsibility for the Famine, which within a century reduced the population by half and left precious little social, material or psychological foundation upon which to build a new state, we have been responsible since then for two major economic crises resulting from the adoption of an unsuitable model of development, import substitution in the 1930s, and from reckless economic management in the 1980s.  Emigration, stunted development and residual poverty were the legacy and it took a set of determined initiatives and favourable circumstances in the 1990s before we began to develop some sort of equivalence with other Western European countries.

This present crisis, the severity of which is the result of weak management, will in a relatively short number of years have a similar regressive impact as previous failures. Money is being drained from the economy at a rate of knots through enforced austerity. Personal debt is growing to epidemic proportions in the aftermath of the housing bubble. Unemployment has soared forcing unattached skilled graduates to flee the country, and growth is made impossible within a wages-decline/taxation-increase matrix. In many ways this is an even more distressing situation than the onset of famine in 1841, because even though people then had no particular understanding of potato blight, enough was known about plant biology to contemplate the worst possible scenario. By contrast this crisis is characterised by the plethora of nebulous options proffered and the almost complete absence of imaginative citizen-centred solutions.

It is also a crisis set within the complexities of high finance and money markets where we are all subject to the wizardry of economists and the formulaic explanations of ministers and EU-ECB officials. This article attempts to break some of this down, so we can get to the core of the issue and begin to get the focus onto people, citizens, families. There is of course a macro-economic dimension to the crisis and it is rooted in the rediscovery of a previously failed form of capitalism, laissez faire liberalism. This was the form of capitalism that brought about the industrial revolution and the creation of massive wealth, especially in the UK and Germany in the 19th century. But it also brought massive levels of poverty and social degradation which eventually moved religious leaders, philanthropists and writers such as Charles Dickens to seek regulatory changes and protections alongside ameliorations to address the needs of the poor. Over time, this led to the introduction of a more profound regulatory framework that placed restraints on the excesses of capitalism without compromising on its dynamic and potential. This enabled growth and development, and a more even distribution of the prosperity that ensued. The rediscovery of laissez faire economics in the 1980s, driven by a ruthless ideology, combined with the effects of globalisation (facilitating the free movement of monies) and diminishing returns from investment in production brought about an unleashing of speculative venture, the amassing of personal and corporate fortunes and, ultimately, the implosion of key elements of the global economic system.

A second factor, which we cannot ignore, is that there is too much debt in the world, mainly in the older developed world. These economies are highly dependent on worker’s consumption which in turn is dependent on discretionary income. Maintaining this spending capacity in the face of massive product pressure has brought about a greater dependency on personal credit.  Governments have also increased their borrowings. Worker’s consumption can only be sustained if it is accompanied by a full range of state provision and services – investment in infrastructure required for economic development and the provision of social supports. This should be provided through taxation, mainly on income and wealth, but many countries have found it difficult to resist the ideological stance of neoliberalism in calling for a ‘reduced state’ with a low tax regime. When this is added to the cocktail of consumer spending demand and populist politics, it is easy to see why governments opted to increase their borrowings to maintain core services and activities (although this was not the case in Ireland during the boom, where there was an increased tax take from an unsustainable property bubble). Neoliberals see the solution as bringing lots of state provision into the market economy – through contracting, outsourcing, public-private partnerships etc – and cutting back on state responsibilities regarding pensions, welfare and other social services. On the other hand, social democratic countries, particularly the Nordic states, maintain tax regimes capable of meeting their social and infrastructural obligations. So, while the problem presented is a real one, the solutions are ideologically driven. However, since important European institutional spaces like the Council of Ministers, the EU and the European Central Bank are increasingly dominated by neo-liberals, austerity measures which will force a re-engineered society along preferred neo-liberal lines is the chosen approach, despite its immediately apparent (in Keynesian terms) stupidity.

Most commentators have focused on the economic problems, analysing options, critiquing formulas proposing alternatives and anticipating likely outcomes – both the potentially good and the dismally bad. A lot of this comment has been either highly moralistic or overly subservient. Much of the anger has, quite rightly, been about the socialisation of the private debt of investors. In contrast, arguments on the other side focus on compliance and the orthodox belief that there is little choice other than a programme of measures to address both fiscal imbalance and national debt. Whatever about the merits or righteousness of each side’s arguments there is a far greater issue lurking beneath the surface. What this crisis has brought to the fore is the pathetic state of democracy, especially the decline of the political system which acts as the intermediary between the people’s will and the policy decisions that should be made in their interest and to their benefit.

Democracy, both on a global and national level, has been in difficulty long before present problems emerged. Voter participation across Europe has been steadily declining and institutional decision making has been increasingly influenced by corporate power blocks. In theory, the type of populist politics that we have in Ireland should be capable of resisting this trend by virtue of the strong parochial connection between voter and politician; but for a variety of cultural and institutional reasons – most notably an idiosyncratic post-colonial clientalism and a locally-competitive electoral system – what has emerged is a constituency where local issues are primary issues. This is not to say that people are unaware or incapable of forming strong views on national and European policy matters, but the political and institutional mechanisms developed or inherited on the back of independence are incapable of facilitating a transfer of citizen will on this layer of policy. As a result people organise where there are possibilities to impact and are thus relatively easily placated. The chasm between the citizenry and government on the resolution of the accumulated public/bank debt illustrates this most starkly, but the departure of governing parties from key electoral promises and the refusal to accept referenda results are other indicators of this democratic crisis.

There are also deeper failures, especially the refusal to address obvious deficiencies in representation and in representative democracy. Women constitute only 15% of Dail deputies, the professions are grossly overrepresented and poorer communities are hugely underrepresented. The most marginalised and needy groups in the country – Travellers, the subject of constant urging by the UN CERD Committee to the state to do better, and Roma, who are outside even the basic protections afforded citizens – have no representation; no voice other than the civil society organisations who plead on their behalf. The absolute failure to augment representative democracy with participative mechanisms is striking. Even the constitutional institution intended to augment the representative system, the Seanad, was rendered utterly useless once put into play as a consolation prize for failed Dail candidates, and is now under threat of abolishment. Government is now looking to various mechanisms of constitutional assembly, which will undoubtedly end up doubling the voice of existing political elites and dominant social classes. The failure to create a democratic bridge between the community development organisations that are the associative networks of the poor and marginalised has undoubtedly contributed to the growth of inequality in Irish society.

Despite the apparent justification for the existence of advocacy organisations they are not a substitute for a more direct voice into policy development and decision making. Indeed, advocacy organisations are unwittingly undermining or diluting the inclusion of those on whose behalf they plead. Some operate out of a religious ethos that proclaims social justice principles, but only within a hierarchical model of society. Others operate under the influence of philanthropic endowment and are therefore more likely to be overly inclusive of the benefactor’s agenda. They are in fact a distraction in the quest for democratic inclusion and need to be separated from the participative structures created within and by communities, and through which they develop a policy analysis.

In conclusion, there is no doubt that we will have to chart our way out of a particularly difficult time in history as the dominant economic model hits the doldrums. It is also apparent that leaders of stature and vision are required to navigate through the economic morass and resultant social chaos. If we take the Great Depression as our yardstick then the existing dispirited and unimaginative leadership will need to be swept away. For this to happen and for a new order backed by popular consensus to emerge, changes and adjustments will be required in the democratic and political apparatus. What this amounts to is a renewal of the democratic crusade, focusing on the completion of the participative-representative circle that will ensure the effective involvement of all the people. That means creating an institutional link between the participative and representative systems, enacting a legal mechanism to ensure that the elected government adheres to the mandate it is given, and, investing in civil and political education processes so that we can celebrate 2016 with some sense of principle and achievement.

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