Articles

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Corbynomics and Crashes: Investment Versus Speculation

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Words matter. But in economic discussion as elsewhere they are frequently abused. In economic commentary one of the most frequent falsehoods is to describe speculative activity as investment. Stock market ‘investors’ are in fact engaged in speculative activity. There is no value created by this speculation. The claim made by its apologists that it provides for the efficient allocation of capital to productive enterprises is laughably untrue in light of both recent events and long-run history. In fact, a vast number of studies showthat that there is an inverse correlation between the growth rate of an economy and the returns to shareholders in stock market-listed companies.

The chart below is just one example of these studies, Fig. 1. The research from the London Business School and Credit Suisse shows the long-run relationship between real stock market returns and per capital GDP growth. The better the stock market performance, the worse the growth in real GDP per capita. The two variables are inversely correlated.

The Economist found this result ‘puzzling’. But it corresponds to economic theory. The greater the proportion of capital that is diverted towards speculation and away from productive investment, the slower the growth rate will be, and the slower the growth in prosperity (per capita GDP).

Fig.1 Stock market returns and per capita GDP growth
 

This is exactly what has been happening in all the Western economies over a prolonged period. SEB has previously identified adeclining proportion of Western firms’ profits devoted to investment. The uninvested portion of this capital does not disappear. Instead, it is held as cash in banks and the banks themselves use this to fund speculation and share buybacks by companies (which simply omits the banks as intermediaries in the speculation). The effects of this are so marked that some analysts believe ‘financialisation’ is the cause of the current crisis, when instead it is an extreme symptom of the decline in investment and the consequent growth of speculative activity.

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No China’s economy is not going to crash – why China has the world’s strongest macro-economic structure

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This article originally appeared in Socialist Economic Bulletin on Tuesday, 1 September 2015.

A great deal of highly inaccurate material is currently appearing in the Western media about the ‘crisis’ of China’s economy – an economy growing three times as fast as the US or Europe. This follows a long tradition of similarly inaccurate ‘crash’ material on China symbolised by Gordon Chang’s 2002 book ‘The Coming Collapse of China’.

The fundamental error of such analyses is that they do not understand why China has the world’s strongest macro-economic structure. This structure means that even if China encounters individual problems, such as the fluctuations in the share market or the current relative slowdown in industrial production, which are inevitable periodically, it possesses far stronger mechanisms to correct these than any Western economy. This article is adapted from one published in Chinese by the present author in Global Timesanalysing the greater strength of China’s macro-economic structure compared to either that of the West or the old ‘Soviet’ model. The original occasion of the article was the next steps in the development of China’s next 13th Five Year Plan. The analysis, however, equally explains the errors of material currently appear in the Western media.

*   *   *

In October a Plenary Session of China’s Communist Party (CPC) Central Committee will discuss China’s next five-year-plan. This provides a suitable opportunity to examine the reasons for China’s more rapid economic development than both the Western economies and the old Soviet system.

Taking first the facts which must be explained, China’s 37 years of ‘Reform and Opening Up’ since 1978 achieved the fastest improvement in living standards in a major country in human history. From 1978 to the latest available data real annual average inflation adjusted Chinese household consumption rose 7.7%. Annual average total consumption, including education and health, rose 8.0%. China’s average 9.8% economic growth was history’s most rapid.

As China’s ‘socialist market economy’ achieved this unmatched improvement in human living conditions it is this system which must be analysed. Its difference to both the Western and Soviet models explains why China’s economic development is more rapid than either.

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Cameron’s Swarm is Europe’s Solution

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David Cameron labelled them a ‘swarm’. Thousands of them have died in the Mediterranean.  Border fences are being built to keep them out:  Hungary, Spain, Bulgaria, Calais.  The Slovakian Government will take a handful of them but only if they are ‘Christian’ (apparently they don’t do Muslims or Mosques).  And all the while millions are being spent  on aperverse mini-stimulus – as ‘defence contractors, outsourcing companies and security forces find willing buyers for their security-based “solutions”, bringing new surveillance systems, patrol vessels, co-ordination centres and detention facilities to the market with little scrutiny or due diligence.‘  A rational political and economic response gives way to militarisation.

This is what has been labelled the ‘migration crisis’ – as hundreds of thousands are seeking refuge, asylum, work and a better life while risking oppression and even their lives to come to Europe. 

Much has been written on this subject – including this insightful analysis by Dr. Vincent Durac.  I don’t intend to survey all the issues or appropriate responses as this crisis has many origins and dynamics and will require substantial doses of enlightened national policy combined with international cooperation.  But here are a couple of thoughts.

First, the men, women and children that make up Cameron’s swarm – they are not a problem, they are a solution.  They are a solution to Europe’s ageing demographic, skill base and employment crisis.

A key part of this is the fact that Europe is growing old.  Using the EU’s main scenario demographic projection, we see that the EU’s total population will rise by 17 million while the number of over 65s will rise by 54 million.  Working age population will fall by 34 million.  12 of the 28 EU countries are actually projected to experience an overall fall in their populations.  With a higher proportion of elderly and a falling number of working age men and women, Europe is set to suffer a slow age crash.

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Who Was Right? The Magic Trick of Austerity

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The Irish economy has finally recovered 8 years after the slump began. This is the longest depression in the history of the State.  Since its inception the economy has grown at around 3% a year. So the lost output over 8 years means that the economy is now about 25% below its trend growth rate.

Supporters of austerity will claim that growth is a result of austerity. But this is a conjurer’s trick, asking us to suspend disbelief. The reality is very different. The Irish economy experienced a change of policy and a change of circumstances. It was these that produced recovery. Everything else is sleight of hand.

When Fine Gael/Labour came to office they implemented their own version of austerity. The response of the economy predictably was to re-enter recession from mid-2012 onwards for 4 quarters, creating the rare phenomenon of a double-dip recession. This is shown in Fig. 1 below. Recovery only happened later.

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Fig.1 Real GDP

The policy response was marked, if little publicised. From the end of 2012 onwards there were no new net austerity measures. Instead government spending was actually increased. This was a turn towards stimulus spending, not austerity and is shown in Fig.2 below.

It is not possible to claim that austerity led to recovery. Government spending was increased after the end of 2012 and recovery began 6 months later.

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Fig.2 Real Government Spending

The change of circumstances was even more dramatic and had a bigger overall effect on growth.  Since early 2014 the Euro has fallen by 25% against the US Dollar, providing a boost to exporters across the Eurozone and especially to very open economies like Ireland. Many other currencies are linked to the US Dollar in one form or another, notably the Chinese Renminbi. Together, these two economies alone account for 30% of all EU trade.

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Housing Policy is More Than Pulling Levers

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This article originally appeared on Eoin O’Mahony’s blog 53 Degrees on the 17th of August

In the new online newspaper, Dublin Inquirer, Lorcan Sirr stated that the most serious problem ”with housing in Dublin…is this:  at the state level, housing policy is dominated by an inappropriate and politically motivated rural ideology…” This ideology is made manifest by a constant drive for home ownership.  This leads to discrimination against urban housing and elected politicians who are concerned only with ”road frontage  and planning permissions.” I understand that Lorcan’s article was a version of a talk he gave at the MacGill Summer School in late July. But there are a number of problems with his argument as presented, the biggest one of these being that you cannot talk about housing in Ireland unless you talk about social class.

Houses  and flats are built, rented and bought.  People live in housing of all sorts and sizes and communities develop around these forms of housing. We find things in common with people around us and we build and sustain communities. These are productive relations  and housing is one outcome of these relations.  In this way, housing is not simply a matter of sufficient  units being built but decisions taken about how we should live.  It is a matter of politics, not technical capacity.  Lorcan’s argument about a rural ideology owes more to the second than the first.  Recent research  has pointed significant changes to housing over the years. In a report for hardly radicalised Jesuit  Centre for Faith and Justice  (JCFJ) earlier this year, the authors wrote that:

The  prolonged  period  of growth in the owner-occupier  sector reflected State-driven tenure strategies [since the mid-1940s], employing a range of direct and indirect incentives.

In other words, there is nothing natural or essential about an increase, post-1940s, in the proportion of the population living in owner-occupied  tenure. It is a matter of policy, an effort by strategy and tactics reflecting particular relations within a class, to achieve particular ends.  As the authors of the JCFJ demonstrate, owner-occupation is actually in decline since the early 1990s. The NESC has written recently on social class and tenure in Irish housing. They have noted a trend amongst different social groups:

Mortgage-holding is declining most among young people in the un- skilled, semi-skilled and skilled manual classes, particularly the former.

… [And] with the sharp decline in local-authority housing construction and other supports for low-income buyers from the mid-1980s, this option is no longer available for many younger people in socio-economic groups with lower incomes.

Sirr states that ”housing [policy] is regarded as being about three things only: planning, selling price and construction cost.” He is correct to point out that professions like planners have an overweening influence on housing in Ireland but local authority housing sections are not ”endured” by their staff. The electoral cycle is also a powerful influence on decision making. Local authorities are constrained by decisions by the last few governments, and particularly the current one, that are determined to starve social housing of funding. The last time the Irish government completed over 1,000 local authority houses was in 2010.  In the four year period since (for which data is available) about 1,300 local authority houses have been completed (source: CSO). In contrast,  during the same time period, over 35,000 units of private housing have been completed.

What this research and much more show is that these are the results of choices and political ones at that.  When  sufficient political pressure is brought to bear, much like the water tax struggle since 2013, things get changed.  It is not a matter of personnel and the over-familiarity among housing associations and local councils. Levers don’t get wearily pulled out of habit; political choices are argued for and, at times, forced. An argument that relies on an abstract sense of housing form, for ex- ample one-off housing, and the capacity of people to reproduce living conditions are both problems. We only have to drive through Leitrim, Longford and Roscommon to notice the longer-term effects of trying to cluster houses at the edge of villages ill-suited to suburban  housing forms.  These  are, however, the results of political decisions, not individual choice. It seems to me that Sirr’s argument relies on blam- ing ordinary people for putting themselves in poorly-planned housing. Decisions on housing are made on many scales.

I agree with him when he argues we need better data but a housing policy must serve people first, not a technocratic process of ’build and they will be housed’.  There is no sense that this ’rural ideology’ can be seen in material terms other than its rep- etition for want of an alternative just appearing.   I argue therefore that we need to understand social class when housing is considered,  particularly from a formal policy point of view. The use of adequate data is a necessary step. So too is avoid- ing unhelpful categories like rural and urban or more importantly between renters and owner-occupiers.  Housing in Ireland, particularly right now, is a more dynamic process of class relations than is evident from Sirr’s analysis.

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Return: A Palestinian Memoir

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Everyone wants to get home: at the end of the day, a place of comfort and security, repose. It’s not the magnitude of the space – a bedsit can be remembered with affection – but the space itself, somewhere you fit in.

For Ghada Karmi home is Palestine, the place she left as an infant in 1948, and she returns there in 2005 to Ramallah in the West Bank, the seat of the Palestinian Authority (PA), after half a century spent living in Britain. She secures a job as a consultant for the Media & Communications  ministry of the PA, which at that time also administers Gaza although a Hamas government is about to emerge there and challenge Fateh’s long-standing claim to represent Palestinian aspirations to statehood. Hamas is prepared to launch rocket attacks on Israel; Fateh is accused of subservience to the occupying power and its ongoing building of a high concrete wall to divide up the West Bank and screen off Jewish settlements from the Arab areas around them.

Fateh’s energies are caught up in the myriad NGOs that emerged in the aftermath of the Oslo Accords, when Palestinian statehood seemed only a matter of time. Israel plays with time, waiting for the generation who fled their homes in 1948 to die out and bury with themselves the right to one day return to their land. After a massacre in the village of Deir Yassin, when Jewish militias killed some 120 inhabitants, Ghada Karmi’s family departed, thinking to return when the situation calmed down. That was fifty-seven years earlier. In Ramalleh in 2005, political priorities have changed and  Karmi sees the formation by the PA of an 8,000-strong ‘counter terrorism force’ which brings murderous attacks on Hamas members and the gratitude of Israel.

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August Socialist Voice is Out Now!

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The August Socialist Voice is now available online

In this issue:

Greek and all European workers paying a heavy price

Eugene McCartan

As events unfold in Greece it’s clear that the EU is determined to make Greek workers pay for the crisis now engulfing the country.
The Greek debt, like the Irish debt, is simply unsustainable and unpayable. The impact and renewed assault on Greek workers will be felt throughout the European Union: it will not be confined or contained within the borders of Greece.

http://www.communistpartyofireland.ie/sv/01-greece.html

International Development Bank set up by BRICS states

The “BRICS” countries (Brazil, Russia, India, China and South Africa) stepped onto the stage of global finance last month with the launch of the New Development Bank in Shanghai. The six BRICS countries had agreed to set up the bank at the group’s sixth summit meeting in Brazil in July 2014.

http://www.communistpartyofireland.ie/sv/02-brics.html

Social democracy tries to reinvent itself

Tommy McKearney

Just as capitalism has the knack of changing its shape, social democracy also displays an extraordinary ability to reinvent itself, and almost always to the detriment of the working class.

http://www.communistpartyofireland.ie/sv/03-soc-dem.html

Racist crime raises its ugly head

Paul Doran

There is nothing more detestable than the hate some people have for people of colour or people of a different ethnicity. This disgusting trait has recently raised its ugly head in Clondalkin, Co. Dublin.

http://www.communistpartyofireland.ie/sv/04-racism.html

Maria’s story (continued)

Readers may recall “One woman’s experience of Job Bridge” from the November 2014 issue

I have a new job, working in a call centre. They recommend that we come to work fifteen minutes before every shift, so we can clock in and have our computer turned on, ready for action.

http://www.communistpartyofireland.ie/sv/05-maria.html

Painless “postcapitalism”—a utopian dream

Nick Wright

Paul Mason has conjured up a very 21st-century formula for the replacement of capitalism. It combines all the elements of a problem-free route to “postcapitalism,” rather than the old techniques of revolt, revolution, and working-class power, and relies—it seems—on the facility of the internet to permit the free transfer of information combined with the ability of human beings to devise forms of exchange that evade the capitalist market.

http://www.communistpartyofireland.ie/sv/06-mason.html

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LookLeft 22 in Shops Now!

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LookLeft 22 is in Easons stores and hundreds of selected newsagents across the country now.

Only €2.00, the highlights of this issue include:


Greek Lessons
– What can be learnt from the referendum and negotiations in Greece? Gerry Grainger and Ronan Burtenshaw debate.

You Can’t Eat a Flag – Chris Bailie and Paddy Wilson take a look at the state of Protestant working class politics in Northern Ireland.

Spotlight on Denis O’Brien – A critical look at the controversial business man and media baron’s career.

Take Back the City – LookLeft looks and how working class communities are seeking to assert control of their cities.

Leading the charge – Dara McHugh looks at the next steps for Right2Water and the water charges movement.

Can we organise now? – The union movement will not be saved by planned collective bargaining legislation alone. Richard O’Hara investigates.

Bomb Girls – Hugo McGuinness on the social and political effects of WW1 munitions factories on Dublin’ Northside

Paving Paradise – A community garden in West Dublin digs up problems of church and community relations.

A different vision of society – LookLeft talks to the Cuban Ambassador about talks with the US, the Cuban social model and medical internationalism.

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Eurostat Has Done Us a Favour

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We should not under-estimate the impact of the Eurostat ruling. It completely removes the rationale for Irish Water and the water charges.  After Eurostat, there is no policy, no direction, no strategy.  Ministers will downplay the ruling with a ‘move-on-nothing-to-see-here’ rhetoric, punctuated by a ‘there-is-no-alternative’ but all this does is expose the inability to grasp how fundamentally the landscape has changed.

Eurostat was never going to rule in any other way than it did.  The Government admitted this last April in the Spring Statement when it put all water expenditure back on the books in its projections up to 2020.  The fundamental issue is not whether enough people paid the charges.  It was the ‘market corporation’ rule:  did Irish Water look like and act like a commercial company in a market economy?  Eurostat said no – and this is all down to the Government’s headless-chicken response after the mass Right2Water protests last October and November.

The Government capped charges, froze them until 2018, and introduced an indirect subsidy through social transfers (the water conservation grant).  The lack of ‘economically significant prices’ (i.e. charges that reflect the cost of producing water) and government control led Eurostat to rightly label the whole exercise as a mere reorganisation of non-market activities.  Given all this, what company in the world could be considered a market entity?

The main rationale for the Government’s water policy was not charges; this could have been introduced as a stand-alone revenue-raising measure.  Nor was it the creation of a single water authority; that could have been done as a public agency rather than a corporation. The over-riding issue was to take the estimated €5.5 billion of desperately needed investment over the next seven years ‘off-the-books’.  Everything flows from this:  to take investment off the books you need to create a corporation, you need to charge a ‘market-like’ rate for the service.

Remember those lectures from Government Ministers and commentators with that ‘common-people-just-don’t-understand’ attitude?  Without the investment there would be water shortages while we would all be walking through sewage.  And the only way to get this investment was through Irish Water and charges.

Eurostat has killed that narrative.  Investment will be on –the-books.  With that foundation removed, the edifice – and the rationale for that edifice (the corporation, the charges) – crumbles.

What now?  Whatever they say in public Ministers must know its game over.  The only way to pass the Eurostat test is introduce ‘economically significant prices’.  This would mean reverting to prices based on usage with no cap determined by an independent regulator.  Is that likely?  No, not with the potential to bring another 100,000 to 200,000 on the streets.  The people didn’t win many victories during the austerity days; they won the battle over uncertain charges, PPs numbers and cut-offs.  No political party is going to challenge that.

How do progressives react to this?  The safe ground would be to call for the scrapping of the charges and the reform of Irish Water.  Fianna Fail is already calling for that.  Progressives can and must go further.  We can’t effectively challenge the current ‘steady-as-it-goes’ Government approach with a ‘steady-as-it-went’ that dominated past policy.  We need creative and innovative thinking that can not only address the issues but present an exciting, inclusive alternative to water supply and all public provision.

Investment

We need to increase investment to €600 million annually to modernise our infrastructure.

Water investment has been a bit of a roller-coaster ride.  We are now slightly ahead of 1995 levels after peaking in 2008.  We need to do better.

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On the “Unelectable” Jeremy Corbyn

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Anyone who has glanced at a copy of the Guardian this past week, or the latest issue of the New Statesman, will have found themselves inundated with a wave of opinion pieces arguing against the possible victory of Jeremy Corbyn in the upcoming Labour party leadership election. The spectre of Corbyn has forced the hands of the commentariat, who must now state plainly that anyone who votes for such a leftist candidate is naive, deluded or simply mad. They will have, as Polly Toynbee put it, taken leave of their senses. What was a shadow of discontent during Ed Miliband’s timid efforts at turning left has now become an open and unabashed damnation of socialism and its advocates. There is no left but the hard left, and the only way is forward is to be as “pragmatic” as the Tories.

The have been a couple of constants in the media’s portrayal of Corbyn. First, the assertion that his rhetoric appeals primarily to naive youngsters, the disengaged youth who had given up on politics until Occupy, Syriza or Podemos came along to inspire them back towards the fold. While there is little doubt that Corbyn is the overwhelming favourite of young Labour party members, many of who have joined in the aftermath of this year’s election, his appeal is certainly not limited to those born post-Thatcher. Corbyn’s primary issues – renationalising the railways and the utility companies, taxes on wealth to pay for free third-level education, maintaining the NHS, ending Britain’s nuclear program – are all popular across the board. Even Tories are split on the railways, and the SNP have shown how much support there is for not wasting billions of pounds on nuclear weapons that will never be used. Meanwhile, Ed Milliband’s indecision on the same topic was deadly.

The media’s off-hand dismissal of Corbyn’s support base as passionate but misguided youth also contradicts their claim that Corbyn’s ideas are “out-dated”. One Guardian editorial says that his solutions to social crisis “long pre-date the challenges of the 21st century”, but does little to elucidate any actual issues with those apparently ancient policy positions. This is perhaps the first time that the much sought-after youth vote has been derided as backward, nostalgic and out of touch. 

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Reality and Myth of the US ‘Internet Revolution’ – And its lessons for China

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China is speeding up still further its ‘internet revolution.’ From the viewpoint of China’s overall economic strategy premier Li Keqiang has launched the concept of ‘Internet Plus’ – emphasising integrating the mobile Internet, cloud computing, big data and the Internet of Things with manufacturing and e-commerce. To further boost Internet use the premier recently urged China’s telecommunications operators to enhance Internet speeds and cut prices.

China’s still greater emphasis on the internet is even more impressive as it is in a context that China already has by far the world’s greatest number of internet users – 642 million in 2014, compared to the US’s 280 million and India’s 243 million. From a global perspective 21% of the world’s internet users are in China compared to 9% in the US.

Equally striking is the build-up of China’s investment in Information and Communications Technology ( ICT) of which the Internet is at the core. Over the last two decades China’s investment in ICT was already generating 1.0% a year total GDP growth – out of an average 8.8% annual expansion. As the Table shows over the last 20 years China’s annual GDP growth created by ICT investment was already significantly higher than any other major industrial or BRIC economy – for example two thirds higher than the US, over twice that of Germany and three times that of Japan.

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 But even given this high level of achievement China’s further push into the internet is vital for economic strategy. In a modern economy the internet has expanded far beyond its original use with computers to become the most rapidly growing sector of telecommunications, retailing, and application to advanced manufacturing – hence the key idea of ‘Internet Plus’.

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Ghosts of Alternatives Past

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This is a transcript of a talk given by Helena Sheehan at the “Democracy Rising” international conference, Athens 16 July 2015

What echoes and shadows of left experiments of the past haunt us as we embark on a new era opened by the formation of a radical left government in Greece? What is the plot of the longer story in which this new episode is embedded? How has the weight of the wider world, the power of the global system, borne down upon attempts to move from capitalism to socialism, whether in rupturalist projects, stemming from the October Revolution, or more protracted programmes of transformation, such as those set out by the ANC in South Africa in 1994 and by Syriza in Greece in 2015? What are the dynamics of attempting to forge an alternative in the face of the hegemony of there-is-no-alternative? How to make history in conditions not of our making? How, with so much going for it, nationally and internationally, has the ANC failed to achieve, or even approximate, the society that those who fought and died for it set out to achieve? How could Syriza, in the face of far more formidable obstacles, advance both its immediate programme and a new path toward socialism?

There is now a long history of left alternatives, even of left governments. From the Paris in 1871 to Athens 2015, we have seen hopes rise and the prospect of a new order come into view.

Some left governments have come and gone with little attention from outside their borders, such as that of Akel in Cyprus so recently, whereas others have captured the imagination of the world, even to the point crossing borders to be a part in it, eg, to Spain in 1936, to Greece in 2015.

The storyline looming largest in our story is the October revolution of 1917. It went farthest and lasted longest. It is a foundational myth of our movement. We have varying versions of it, not only about what happened, but about what might have happened.  I have imagined and written my way through its early decades and witnessed its later decades.

If you looked at a map of the world in 1989, countries defined as socialist covered vast territories of this planet. It is not so now.

Why? Volumes have been written by now answering this question. Through 1989 and 1990 I was often in Eastern Europe, exploring the meaning of this vast overturning in its world historical implications. I never accepted the postmodernist ban on grand narratives. There was a dominant grand narrative in play and I believed it needed to be met with a counter-narrative on the same scale. Their story was one of capitalist triumphalism, captured in the mocking joke that socialism was the longest, most painful, most inefficient path between capitalism and capitalism.

Much of the left retreated in dismay and disarray, unable to overcome confusion and to conceive of an alternative narrative or even to believe in the possibility of an alternative narrative. Others carried on, even though our philosophy of history had been dealt a massive blow. We had believed that history, in however complicated a way, was moving from capitalism to socialism, and then we beheld the opposite happening before our eyes. I saw lives turned upside down and nations disappearing from the map of the world.

So why our defeat? Many reasons have been given. There were monumental mistakes within our own movement. There was murder, treachery, suppression, fear. There were honest voices silenced. There were alternative paths not taken. There was an unfavourable balance of forces. There were conditions of underdevelopment. Socialism was meant to be built on other side of advanced capitalism. Not only its economic productivity, but its parliamentary democracy, mass media and complex civil society. It was meant to be a further development, not a suppression, of these advances in history.

Nevertheless, there had been expropriation of the expropriators, social ownership of the means of production, distribution and exchange, relative equality of opportunity and a radical shift in the balance of power in the world.

The existence of a socialist bloc made the hegemony of capitalism incomplete, but the intensifying hegemony of capitalism made the existence of a socialist bloc increasingly precarious. An advancing globalisation shaped by capitalism was all the time tightening its grip and extending its hegemony into territories and into psyches previously outside its dominion.

Socialism was all the time in a world dominated by capitalism. It was not only the internal failures of these regimes, which made their populations turn against them, but the lure of an imagined other of freedom and plenty that eluded them in reality when they moved towards it. Most fundamentally, It was the external pressure of an increasingly integrated global capitalism exerted upon an inadequately achieved socialism that brought its downfall.

So what then? We had to re-think and re-coup, to analyse our defeat and to seek a new path. Our glorious and tragic past had to yield to a new paradigm. One thing we had to face was that socialism could only be built on consent and in ever more complex conditions. The left would have to stop dreaming of storming winter palaces, of imagining ruling through decrees, purges, guns and gulags.

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No Country for Young People

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So you’re young, ready to take up work, make a bit of money and, most of all, make the social contribution that is expected of all members of the homo economicus species.  There’s only one problem.  You live in Ireland.

Following on from my previous blog on the weakness of our market economy to produce jobs – except in the construction sector – let’s look at employment growth by age.  Overall employment is rising, even if it is patchy.  But not for young people.   For young people, the jobs recession continues apace.

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Employment grew by 2.2 percent overall.  But for young people – between 20 and 34 years – it fell by 1.5 percent.  Among older groups – over 50s – employment grew by 5 percent.

When we drill down further, we find that those aged between 30 and 34 years saw employment fell by 3.1 percent.

This is part of a longer trend.employment_growth2jpg

Since the crisis began, employment has fallen by 10 percent.  However, for those aged 20-34, employment fell by a third.  For other age groups, employment has recovered and increased – with employment among 50s and over increasing by 14 percent.

There has been some discussion about bringing Irish people back from abroad.  It has been suggested that a main obstacle is our ‘high’ tax regime (sigh).  As we see above, the problem remains what it has been some time ago – lack of jobs (though there will be some sectors that are undergoing growth).

Young people face more problems than just falling employment.  Since 2008, nearly 475,000 people have emigrated.  Unsurprisingly, the majority who left were young people.  Over 300,000 men and women aged between 20 and 34 years have left the country – or 65 percent of all those emigrating.

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For those who stayed behind it’s still tough out there in the labour market.  The unemployment rate for those aged between 20 and 24 years the unemployment rate is 19.6 percent – twice the national average.  No wonder Eurostat estimates that 40 percent of young people are at risk of poverty or social exclusion (for the age group 18 – 24 years).

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Strengthen Ties with the People and Maneuver Cleverly: The Tasks of the Greek Radical Left

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The last few weeks have seen a number of crushing developments in Greece. Especially the Greek referendum and the signing of a new memorandum by the SYRIZA government are historical events which will strongly influence not only the future of the Greek but of the European Left as well. They will also influence the further course of the EU and the Eurozone, which came on the verge of dissolution and showed by the way it dealt with the crisis its true class nature.

SYRIZA’s signing of a new memorandum cannot be called otherwise but a heavy, unacceptable compromise and a capitulation. This is all the more true, since the Greek people, with its decisive “No” had expressed a massive support for a break with the memorandum policies in the Greek referendum just a week ago. The SYRIZA leadership, however, and Alexis Tsipras personally, chose to come in line with the spokesmen of “Yes”, the bankrupt bourgeois Greek political forces that supported the previous memoranda and the corrupt Greek and European elites.

This choice of the SYRIZA leadership does not in the least diminish the importance of the daring “No” raised by the Greek people in the referendum. This was a “No” not only to the EU agreement proposals, but the memorandum and austerity policies as a whole. The Greek people stood up against unbearable pressures by the Greek mass media, the parties of the ruling class and the EU leaders and showed, by their stance and vote, that they are ready and willing to support another road and overthrow the austerity policies. This result, unexpected even to the most optimistic commentators of the Left, is a proof of the possibility and a call for resistance of the European peoples, as the only force capable of producing radical change.

The decision of the SYRIZA leadership to compromise at all cost with the lenders must be criticized by all Left activists and Marxists in particular. However, it is essential to provide a serious criticism, which points exactly and explains its mistakes.

A number of ultra-Left forces here in Greece, and perhaps elsewhere too, respond to SYRIZA’s compromise by shouting “betrayal”, arguing it proves the bankruptcy of reformist tactics and the fact that the revolutionary overthrow of capitalism is the only road. However, this kind of criticism misses the fact that the situation in January, when the SYRIZA-ANEL government was formed, was not revolutionary, and it is neither so now. In such a situation it is necessary to maneuver and arguing that focusing on maneuvers and reforms leads to a deadlock, is the wrong way to argue. While this is true on the long run, it does not rule out the necessity to deal seriously with the phases of the struggle when maneuvering predominates and this cannot be done by calling for the immediate application of revolutionary tactics.

In fact, the SYRIZA leadership must be criticized not for maneuvering in general, but for maneuvering badly. It must be criticized for the vacillations and lack of planning it showed during this phase of maneuvers, leading it to a position where it was forced to accept an intolerable compromise. In particular the following points should be noted:

  • SYRIZA lost too much time in meaningless negotiations for months. The dragging on of these negotiations was just a means for the ruling circles of the EU to drive the Greek economy to the present financial suffocation, after exhausting its reserves. The supposed progresses during these negotiations, like the Greek 47 pages proposal, were all sham, a plot intended by the German ruling circles to bring about the present situation.
  • The election of Prokopis Pavlopoulos as President of the Greek Democracy was also an unnecessary concession. It indicated SYRIZA’s leadership readiness for further moves to the Right, when the situation called for cautious moves to the Left.
  • The payment of roughly €8 billion in February-June from the Greek reserves to the EMF was also a step leading to direct capitulation. If the SYRIZA government wanted to base itself on the people, it should have led things to a referendum in February or March, when it had still the means to resist for some time the economic sabotage from the EU. Obviously, if the Greek government had some billions € in reserves this might not suffice to support a break with the EU, but it could help endure for some months a situation with closed banks, etc, and this would put the EU ruling elites under pressure, as the consequences of the protracted instability would begin to be strongly felt by their economies too.
  • Apart from these Right mistakes, the SYRIZA leadership made, in our opinion, a “Left” mistake when it rejected the conciliatory proposal made by Merkel just before the decision for the referendum. This proposal for an extension of the present memorandum for 5 months would have provided the Greek state €15.5 billion for this five month period. It would have been a harsh compromise, including an “evaluation” by the “institutions”. However it would last for only 5 months leaving further options open, while not including the devastating, enslaving conditions of the new memorandum, like the sell-off of public property. During that time the Greek government would build up some monetary reserves from various sources (EU inputs, tourism, taxation etc). Moreover, the end of this five month period would coincide with the parliamentary elections in Spain. A Greek referendum at that time, together with a possible victory of the Left forces in Spain (especially if they are able to unite), would have given a strong thrust to popular movements across Europe.

All this comes to show that, despite all negative aspects, this would have been an acceptable compromise. The reason the SYRIZA leadership failed to take advantage of that opportunity is its fear of the people, together with its illusions about the real intentions of the EU leading circles. As a result it never considered seriously the prospect of a rupture at a suitable moment and of preparing the people for it, but chose to reach a “final” agreement at all costs, falsely hoping it would not be so harsh.

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