God will forgive them.
He’ll forgive them and allow them into Heaven.
I can’t live with that.”
Dead Man’s Shoes (2004)
What are we to make of the Irish Banking Inquiry, which began its public hearings last week. For myself, as I said in Shop Floor in September, I think it provides an opportunity for progressives and we should make use of it.
As to what I mean by that, well, take this quote from a 2012 paper by Gregory Connor, Thomas Flavin and Brian O’Kelly, entitled ‘The U.S. and Irish credit crises: Their distinctive differences and common features’, published in the Journal of International Money and Finance (available as a pdf here).
It is not clear that Anglo Irish Bank represented a systemic risk. Anglo Irish had a limited retail presence; it operated by making large-scale commercial loans funded by institutional borrowing. Other banks may have wanted Anglo Irish included in the government support schemes since, as was subsequently revealed, many developer loans with different banks were secured with the same collateral, creating a complex web that would be difficult and costly to unwind if Anglo Irish alone were allowed to fail.” (Connor et.al. 2012: 63)
The key to the Irish bank guarantee and subsequent sovereign debt crisis is right there in that complex web of developer loans with different banks. That’s the rabbit hole, the one we need to fall into, in order to make sense of this whole mess.
But let us be clear: although the loan book is key, this is not just about developers and their bets.
For example, the loans for commercial property speculation cannot be separated from the tax incentives approved by the Oireachtas and various finance ministers; nor from the legislative and regulatory environment that finance and property speculation demanded of, and received from, the Irish State.
Alongside the finance/speculator/state core lie the professional sectors that benefited hugely from this environment – that is, accountancy, law and real estate.
There is also the issue of the media in Ireland – private and public, the newspapers as well as RTE – which as a sector not only benefited from property speculation via ad revenue, but at a deeper level shared (and continues to share) much of the ideological framework which gave an intellectual sheen to such base and futile speculation.
When we take these dynamics and place them within a historical time-frame, we start to observe a reconfiguration of the Irish State, from the late 1960s to the mid-1990s, which parallels the shift in profit-seeking strategies within Western capital, from production to rentier. Ireland’s role as a comprador state, that stays the same, albeit one that shifts from the grazing fields of Meath to the glass towers of the docklands.
The best way to make sense of a ‘complex web’ of social, political, economic and cultural forces is to apply a relational approach, not a causal one.
A world seen through causality is binary, whereas a relational approach is dynamic – it allows us to see the various forces in motion, bouncing off each other, as they create new tensions and contradictions.
The terms of reference of the Irish Banking Inquiry allow for such an analysis. They state quite clearly that,
In conducting the inquiry, the Joint Committee… may inquire into…relationships between [emphasis mine] State authorities, political parties, elected representatives, supervisory authorities, banking institutions and the property sector… and the role of the media.
This is a clear invitation to undertake the type of investigation demanded by the profound consequences of the bank guarantee – that such a decision cannot be dismissed as a case of ‘bad management’ within banks and ‘asleep at the wheel’ regulators.
The people of Ireland, since 30 September 2008, have been taught a harsh lesson in the nature of class power and the Irish State. The dynamics of that class power, the economic and social relationships and institutional structures that sustain and protect it, are key to our understanding of how – and why – the bank guarantee was given.
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