Archive for Our Commentary

Apple taxes: rotten to the core

Statement by the Communist Party of Ireland
30 August 2016

The EU commissioner for competition has found that the Irish state gave preferential treatment to Apple over other companies, so that Apple must now pay €13 billion in back tax, plus interest from 2003 to 2014.
This windfall tax should be put immediately into the National Pension Fund to guarantee future workers’ pensions.
Apple, which made a profit of €16 billion in 2011, paid tax at the rate of 0.05 per cent: that is, for every million in profits it paid €500 in tax. In 2014 it paid only a tenth of this, 0.005 per cent, or €50 per million in profits.
Apple was declaring the profits at its head office in the Irish state, a head office with no employees. There is simply no head office.
The Irish state has in effect been turned into a vehicle for tax avoidance and is now little more than a tax haven. Its economic and social policy has been shaped to meet the needs of global monopoly capital. Ireland’s recorded GDP increased to 26 per cent, largely as an indirect result of various “tax-efficient” schemes. Recent research has shown that the real corporation tax paid by American transnational corporations based in the Irish state is between 2.2 and 6.9 per cent.
While the Irish people have been forced into debt servitude, the Irish state, at the behest of the European Union, willingly took responsibility for the massive speculative banking debt incurred by both Irish and European banks and finance houses, which resulted in savage austerity. At the same time the Irish state and the Irish ruling class were securing sweetheart deals with transnational corporations.
The European Union is no friend to either the Irish or the European working class. The Irish elite are committed to the creation of a very precarious economic base, totally dependent on transnational monopoly capital, resulting in widespread precarious employment.

The left and immigration

Nicola Lawlor – http://www.communistpartyofireland.ie/sv/05-immigration.html

The left must embrace the debate about immigration from a working-class viewpoint and not run away from it, or shout over it, or ignorantly paint all workers who have fears and concerns as racists.

The recent British referendum has revealed a number of serious weaknesses of the left, and consequently a lot of working-class anger and frustration is expressed though right-wing groups.

The social-democratic left jumped to the defence of the European Union, a regional political, economic and social structure of monopoly capital, largely Franco-German, while the self-proclaimed “radical” left spent much time calling for “open borders” as a counter to the anti-immigration rhetoric of the leading Leave campaign groups. There were, of course, exceptions to this, in the RMT Union, NIPSA, the Communist Party of Britain, and the daily Morning Star.

The social-democratic position has obviously failed workers, and humanity, in that it allies itself with the very forces exploiting and abusing workers, creating increasingly violent and uncontrolled divisions and wrecking the environmental system that we require to sustain our lives. It seeks to defend the free movement of labour, which in reality is the freedom to exploit. It is the creation of an internal EU reserve army of labour, which drives down wages and divides working-class organisations.

But the “radical” left position is equally destructive to working-class unity and to building an actual working-class movement in opposition to capitalism.

“Open border” policies when monopoly capitalism remains the dominant social order will only benefit monopoly capital, economically in its greater access to cheaper labour within core economies but also politically, when inevitably workers will be further divided along racial lines and racism will be used to manipulate, control and disrupt organised fight-back.

It will be different when monopoly capitalism is being challenged seriously by socialist states, with military back-up, and by socialist international structures. But that is not, sadly, the present balance of class forces. The socialist policies of transformation and struggle towards socialism have to be very different from the socialist policies of a socialist hegemonic, or near-hegemonic, order.

Samir Amin, quite rightly, sees the movement we must build as being both anti-imperialist and anti-liberal.

Our task is to give new life to workers’ internationalism. Workers and working people ought to unite at all levels, both within their countries and across borders, and stop competing with each other. This can only happen on an anti-imperialist basis, working with an anti-liberal strategy.

The cornerstone of liberalism as an ideology, and also of monopoly capitalism as practised through a managed technocratic system within the EU, and dominant globally, is the free movement of capital, goods, services, and labour. An anti-imperialist and anti-liberal strategy needs to challenge all four of these points, at both the national and the international level, by progressive movements but also progressive states, where the workers’ movement has gained hegemony within a state or even become the ruling class within a state.

While Marx favoured free trade and the growth of capitalism, that was in the context of breaking down old feudal structures and ideology, when capitalism was still in its progressive phase. It has now, of course, moved well beyond that, and so our policies must too.

Again, Samir Amin sees this strategy based within national boundaries but with an obvious international dialectic.

     A precondition is to restore priority to national policies over international ones. Nations need self-determination—not just for cultural reasons, nor because they are black or white, Christian or Muslim, but because of their political history. A high degree of national independence is necessary to reduce inequalities between nations in the world today. That’s how we must define working-class unity.

     This debate must come from the grass roots. I see no contradiction between national and international levels, but I think that no progress will ever be made on the international level as long as there is no progress on the national level. Things always start to happen through a bottom-up process, and essentially this means on the national level.

While it is fair to say that the media and establishment politicians wanted the Brexit debate centred around immigration and not democracy, public services, the environment, war, workers’ rights, or real economic sovereignty, the left still failed to engage in that immigration debate from a solidly anti-imperialist and anti-liberal standpoint.

Workers have fears, concerns, and worries. Some are perceptions, some are based on ignorance, some are manufactured; but some are legitimate, and the roots of these views are real. This talk of Leave voters from some on the left as being racists or misled is itself deeply ignorant as well as being politically arrogant and obnoxious enough to turn people off the left altogether, which indeed it does.

This argument was brilliantly espoused in a post-Brexit article headed “The demonisation of the working class shames our nation” by Paul Embery, regional secretary of the Fire Brigades Union in Britain, published in Huffington Post, where he wrote:

A group of people, the most exploited within our society, are under attack . . . Few among the political class really understand them. These people live in modest homes in the grittier parts of the country. They work in factories, call centres and on building sites . . . They like football and watch Coronation Street . . .

     They are the people who tipped the balance to lead us through the EU’s exit door. They are the new scapegoats. They are the working class . . .

     The sneering contempt displayed towards these and all 17 million who voted Leave by the resentful new alliance of metropolitan liberals, know-all academics, no-mark “celebrities” and know-nothing-yet students should trouble us all . . .

     The opprobrium heaped on working-class voters post referendum demonstrates just how little their critics know of their lives . . . They considered their own lives, the perpetual strains they were under, the financial hardships, the impact of near decade-long austerity, the lack of affordable housing, the ravages of deindustrialisation, the challenges of mass and unrestricted immigration in their communities and its resultant pressure on wages and local services, and they concluded that the elite in neither Brussels nor Westminster gave a fig for their predicament . . .

     So the backbone of the nation, the people upon whose labour we rely, the section of society which creates the wealth, stands condemned, vilified by the pro-EU liberal intelligentsia, voiceless and without a political party it can truly recognise as its own.

A recent survey showed that only 35 per cent voted leave on the basis of immigration issues or concerns. But for this 35 per cent, do we write them off, or do we engage in a real conversation and with a solidly based position on immigration and borders that can help to educate but also be a fundamental principle of internationalism and national sovereignty?

Firstly, we should listen. Brexit has shown that the social-democratic left and many trade unions are largely out of touch with and irrelevant to most of the working class. They are not the political influencers or leaders of our class in Britain, and the same can be said for Ireland.

Capitalism is a barbaric and inhumane system that remains hegemonic because it is based on a political and media structure that creates division, sows hatred and fear, and does not always present the working class or the left with simple questions, or questions as we would like them presented. While Rosa Luxemburg’s proposition, “socialism or barbarism?” is ultimately correct, that is not the immediate political question.

So we must face questions like Brexit in a form and a way presented to us by the establishment. We have to tackle questions such as immigration in the context of a barbaric system and how it creates these contradictions. As Julian Jones wrote in the Morning Star:

The grim economic reality behind this free movement is in essence a free exploitation of a primarily young European work force with no job security and no prospects . . . Quite simply, those at the bottom of the pile are more likely to have witnessed the basic principle that if a boss can use a cheaper foreign work force, they will do so.

The economic structure of monopoly capitalism today includes an openness of borders within politically defined areas for the purpose of the exploitation of working people, cultivation of a bigger, more mobile reserve army of labour and driving a race to the bottom as well as a closed approach to borders for defined areas “outside,” where immigration policy can pick and choose as a form of brain drain from peripheral regions within the global economic order.

Indeed Marx noted that the English bourgeoisie “exploited the Irish poverty to keep down the working class in England by forced immigration of poor Irishmen . . . Ireland constantly sends her own surplus to the English labour market, and thus forces down wages and lowers the material and moral position of the English working class . . .”

The policies we must put forward on immigration during the struggle for socialism are different from the absolute policies that would be pursued under socialism. It is the right of all sovereign states, and an essential part of the transition to socialism, to control their borders as regards capital, labour, goods, and services.

This is a vital distinction. If the political left doesn’t realise it soon it will move further and further away from the working class and hand influence and the leadership of our class to the right, with all the dangers this presents.

Book Review: 21st-century imperialism

Seán Edwards

John Smith, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis (New York: Monthly Review Press, 2016)

In 2002 Anne Daly produced a documentary called Race to the Bottom, provoked by a fire that killed fifty-two workers in a garment factory in Bangladesh. John Smith’s book begins with the Rana Plaza disaster in 2013, when another garment factory collapsed and 1,131 workers died. Clearly, the race to the bottom continues. 
The conditions derive from the cut-throat competition between suppliers in Bangladesh and other oppressed countries that is mandated by the transnational corporations in the imperialist countries. The more monopolised the garment industry in the North, the more intense the competition between countries, between businesses and between workers in the global South. Most of the profits accrue to the North. According to an example given in this book, only €0.95 of the price of a H&M tee-shirt sold in Germany for €4.95 stays in Bangladesh. 
Along with other examples of intensified exploitation, smartphone manufacture, and coffee-growing, John Smith connects the outsourcing of production to the lowest-wage economies with the nature of capitalism today. 
The twenty-first century dawned with capitalism—according to most observers in the media—swinging along nicely. The taoiseach of the time, Brian Cowan, cheerfully exclaimed that the era of booms and slumps was over. Only Marxists predicted a crash. (They would say that, wouldn’t they?) 
When the crash came, the economists and the politicians were taken by surprise. They are still thrashing about looking for an explanation, blaming each other, blaming deregulation, blaming rogue bankers, always addressing the superficialities, afraid to look into the abyss: the crisis of capitalism. 
Among the Marxists, Monthly Review Press not only saw the crash coming but described many of its features in advance. It has maintained a spirit of inquiry into the workings of contemporary capitalism, so it is appropriate that it is the publisher of John Smith’s book. This book is strictly about economics, not so much the political and military means of maintaining imperialist hegemony—that would be another book. 
The crash of 2007 was not a surprise; the only surprise is that it was delayed so long, which Smith endeavours to explain. 
One of the responses to the stagnation crisis of the 1970s was the drive to cut costs by moving production to countries with cheaper labour. This was closely associated with increasing financialisation, which the author insists is not a separate phenomenon. Both were facilitated by the advances in information technology. What began as an economic solution has become a pathology. After thirty years, it was fundamental to the new crisis. 
The outsourcing of production, ever seeking cheaper labour power, accelerated up to the crash of 2007: for example, Levi-Strauss, which in the 1960s operated sixty-three factories in the United States, closed its last factory there in 2004. The process was pushed also by the emergence of such retail giants as Walmart, Tesco, and Carrefour—commercial interests coming to dominate manufacturers and growers, at home and abroad. The pressure on suppliers inevitably leads to further pressure on wages. 
According to mainstream economics, the “developing countries” should be catching up with the developed. There is no sign of this happening, however (apart from a few special cases), for a number of reasons. 
The process is controlled by the transnational corporations, whether through direct investment or subcontracting. While there is free movement of capital, there is no free movement of labour. The reserve army of the unemployed and precariously employed is so large, and continues to be reinforced by the displacement of peasants from the land. 
Development is largely limited to the particular activities required by powerful corporations and by commercial and financial interests. It is unusual for a product to be manufactured entirely in one country. For example, transnational companies and their subcontractors operating in China typically assemble articles for export from parts made elsewhere. This keeps control in the hands of the corporation. 
The direct rule of the colonial powers has been more or less successfully replaced by neo-colonialism. Imperialist hegemony is enforced by economic means, in alliance with the local ruling class—not that force, or the threat of force, has been abandoned. Levelling up is just not happening. 
Meanwhile the wages and conditions of workers in the imperialist countries continue to deteriorate, with jobs in production only partly replaced by service employment. They are facing austerity policies imposed by governments and employers. These have so far met with only sporadic resistance, but this may be changing. 
John Smith argues at some length that Marx’s theory of surplus value needs to be interpreted in the global context of contemporary imperialism. As he sums up his argument, “global labour arbitrage—super-exploitation—that is forcing down the value of labour power, is now the increasingly predominant form of the capital-labour relationship.” This he sees as “a defining feature of the neoliberal era,” along with the financialisation with which it is closely associated. He makes the point that financial assets are largely derived from the surplus value extracted from super-exploited workers in low-wage countries. 
Behind the financial crisis of 2007 lay a crisis of production, that is, of capitalism itself, of imperialism. After nine years, no solution has been found. The policy of North American and European governments has been to protect business, keeping share prices up by “quantitative easing” and imposing austerity on working people. They have certainly succeeded in making the rich richer, but the underlying crisis remains, and is spreading to the oppressed countries, which depend on exporting to what is now a stagnant market. 
The return to Keynesian strategies and re-regulation advocated by the left is hardly more promising; nor is the “non-interference” proposed by some on the right. The author argues that there is no capitalist solution to the crisis. There has been, he maintains, an enormous growth in the working class, the industrial working class in particular, which includes women and men, all races and all religions, “more closely resembling the face of humanity than ever before”—a powerful force. 
Either humanity will destroy capitalism, or capitalism will destroy humanity. We are back to Marx: “Workers of all countries, unite!”—never more difficult, never more urgent, never more necessary.

Another Europe is possible—another EU is not

The Communist Party of Ireland expresses its solidarity with and welcomes the decision of the British electorate, with working people having played a decisive factor to vote to leave the European Union. 
The decision of the people is a victory over Project Fear, unleashed by big business, global banks and financial institutions, with the EU and the ruling elite throughout the EU, including the Irish government, playing back-up. We congratulate those in the north-east of Ireland who had the opportunity to vote in the referendum and voted to leave. 
We call for a new referendum here in the Republic on continued membership, coupled with a halt to any further or deeper integration within the EU. We need to reassert national democracy and sovereignty. Also required is an end to the secret negotiations by the institutions of the EU and the United States regarding TTIP. 
The working people of Britain have sent a resounding message to London and Brussels, that they have had enough of the bullying, enough of permanent austerity, enough of putting the interests of big business above those of the people. This is also significant rejection of the straitjacket economics of the EU. The political and economic strategy of the EU is an affront to democracy and the ability of people to democratically decide their countries’ economic and social priorities and possible alternative direction. 
Throughout the EU, millions of workers will welcome this vote to leave, which may well mark the beginning of the end of the EU itself. Project Fear, masterminded by the EU, has been used to bully the Greek, Spanish, Italian, Cypriot and Irish people into accepting debt slavery, that there was no alternative but to bail out the banks and speculators over the rights of the people. But not only them: this strategy has been used against all working people right throughout the EU, using fear to impose the feeling that there is no alternative, using it to mask savage attacks on workers’ rights and conditions, and the further erosion of democracy and national sovereignty. 
The cycle of fear has now been broken. Working people need to take the opportunity now presented to assert their own demands throughout the EU, to assert themselves and build unity of action against these massive assaults. 
Now is the time for the mobilisation of working people to assert that there is a progressive left democratic alternative to the the plans and strategies being imposed big business through the institutions of the EU.

The Brexit debate and the left

Letter in the Irish Times http://www.irishtimes.com/opinion/letters/the-brexit-debate-and-the-left-1.2674376

Sir, – Many people will have been repelled by the selective xenophobia of the Brexit campaign, concluding there is little option than to vote to Remain in the EU for fear of being tarred with the same brush. However, we would all do well to consider the membership of the “Remain Club” – the combined forces of international capitalism, including the World Bank, IMF, multinationals, the US and, of course, the European Central Bank itself.

As a result of the Brexit campaign, the idea that a country might retain a degree of sovereignty and border control has been rendered toxic and even racist. This despite the fact that it is commonplace around the non-EU world! Nor can it be in the interests of countries to see large numbers of their working population leave, many never to return.

The postwar democratic consensus of full employment, public ownership and a welfare state has been systematically dismantled. In the event of a vote to Remain we will see a continuing attack on the public sector and privatisation of services as the EU moves towards federalism.

The next step is TTIP (Transatlantic Trade and Investment Partnership), an agreement with the most far-reaching consequences to date. In essence this elevates a multinational company to have the same status as national governments, will erode further the right of a state to protect its citizens, and force states to go to a third party to justify its actions if a company deems these to have eaten into its profits!

Tell the people of Greece, Spain, Portugal and Ireland that the EU has equality as a priority. When equality has come up against the interests of employers, the latter have won (check the Viking Line and Laval judgments).

There are those in the trade union and labour movement who argue that membership of the EU will protect our members’ rights and conditions. What have they got to say about Greece, with the destruction of wages, pensions, jobs, healthcare and the forced sale of public assets and enterprise on the insistence of the EU? Or France, where the social democratic president’s decision to proceed with legislation to remove the legal protection for working hours and wages at the insistence of the EU, despite political opposition, widespread protests and national strikes? Or Ireland, where the EU insistence that no more than 2 per cent can be spent on social initiatives or infrastructure to alleviate the effects of austerity, which was caused by irresponsible behaviour of world and European banks, irrespective of GDP growth?

Britain does pay in more to the EU than it receives. The common fisheries policy has decimated the local fishing industry. There is endemic waste through the common agricultural policy. There is a trade imbalance which other countries will be loath to lose after a vote to leave. Of course, we are under no illusions that money no longer spent on EU membership will used to replace current funding, which will in any event stop as other regions take precedence. We would have to fight hard to achieve this. The point is though we would be able to do so, a capacity we will lose if the vote is to Remain.

The consensus on the impact of Brexit on Ireland is that a “Border with attitude” is unlikely and even far-fetched. There are precedents for relaxed borders between member and non-member countries.

The headline debate reflects a disagreement about the way ahead for British capitalism, and we are under no illusions regarding the anti-working class credentials of the Brexit Tories. However, a vote to Remain will further erode the capacity to defend living standards, the public sector and in particular the NHS.

The Communist Party of Ireland has opposed the “European project” in all its guises, and we take no pleasure in saying that what we predicted has happened. We support a left exit campaign – a Lexit! – Yours, etc,

LYNDA WALKER,

Northern Area

Committee,

Communist Party of Ireland,

Belfast.

Vote for withdrawing from the European Union

Starry Plough

Statement by the Communist Party of Ireland

1 March 2016

The Communist Party of Ireland expresses its solidarity with all progressive forces in Britain, and in particular with the Communist Party of Britain, in the forthcoming campaign for Britain to withdraw from the European Union. In particular we call on working people in the north-east of our country to vote for leaving the EU.

A vote to leave can be a vote for a different way forward, a vote against the deepening global militarisation of which the EU is one of the driving forces—not alone within the wider European continent but around the world.

A vote to leave would also call into question the southern Irish state’s continuing membership of the EU and reopen opportunities for working-class struggle on the national level.

We should not be distracted by the fact that very reactionary and chauvinist forces, nostalgic for the days of the British Empire, are also opposed to the European Union. We support the demand for withdrawal not on some narrow nationalist grounds but rather from a working-class internationalist position. There is a need to break the unity of the European monopolies, to break the unity of the European employers’ network of control, by dividing them, which can only weaken the whole. A withdrawal by Britain could well trigger a response from working people in other member-states to campaign also for withdrawal. It would break the fear that the EU has so successfully propagated, that outside the EU lies economic disaster.

The deal worked out between the British state and the EU institutions is a further attack on the rights of workers throughout Europe, especially migrant workers, the most vulnerable section of the working class.

The struggle against the European Union is essentially a struggle for democracy and sovereignty. It is an anti-imperialist struggle, one that some formerly anti-EU forces in the north-east of our country have walked away from, retreating into an idealised “critical engagement” with imperialism.

We reject the illusions being peddled in support of these arguments. They undermine the potential for bringing unity to our people on a progressive basis. It is wrong to present the idea that the EU is a potential bulwark against attacks on workers and environmental rights. These are false arguments. The EU and the treaties since the Maastricht Treaty of 1992 have been for institutionalising austerity, consolidating the interests, influence and power of the big European monopolies specifically but also monopoly capitalism in general.

The attacks on workers in all Ireland will continue, inside or outside the European Union. Membership does not guarantee protection from attacks on workers’ rights and conditions—far from it: all the central institutions are above democratic control and are accountable to no-one, as designed by treaty.

The EU Central Bank, which is the central institution for imposing EU economic and monetary policy, is run by and for finance houses and big banks. The EU Commission is the guardian of conformity with the fiscal, political and military strategy of the EU. Attacks on workers, fiscal control and the primacy of the “market” above all else are hot-wired into the EU.

We do not accept that the EU is the source of, or has the potential for, progressive social and economic change, either at a transnational or the national level. EU laws, directives and institutions are designed to prevent and block change at the European and the national level. The Lisbon Treaty of 2009 consolidated the power and ideological influence of big business over the policies and the institutions of the EU. It enshrined the primacy of EU directives (i.e. laws) over national laws, in effect making illegal any progressive alternative economic or social policies. As far as the EU is concerned, there will be no way back to any serious democracy at the national level.

The anti-democratic nature of the EU and the absolute power of European big business over it will be further consolidated with the adoption of the Transatlantic Trade and Investment Partnership (TTIP).

The Communist Party of Ireland calls for the broadest coalition of progressive forces to campaign for British and also for Irish withdrawal from the European Union.

Time to step up the struggle for water

sv

The water movement, in all its manifestations and sometimes confusion, has been the biggest and most successful working class mobilisation in decades. This is in large part thanks to the thousands of activists all over Ireland. The movement is urban and rural. It has been an education process for everyone involved and opened many eyes to just how rotten the capitalist system and Irish State are. It is vital that momentum isnt lost just as the movement is on the very of victory. It is vital the movement remains on the street and the politics of the movement remains in the grassroots. If we allow, or pass to, elected representatives the political power this movement holds it will be a disaster for both the immediate goal but also the long term need to build on this great political class mobilisation.

Below is the editorial from the March issue of Socialist Voice available online at http://www.communistpartyofireland.ie/sv/index.html and is an important read for activists.

It is a matter of urgency for working people once again to mobilise, to get back on the streets to press home our demands for an end to water charges and, most importantly, for a constitutional amendment to enshrine the people’s ownership of water—not state ownership, because the state belongs to the rich and powerful.
Regardless of the negotiations now under way about the formation of a new government, which will only continue the policies of the previous two, we must not allow ourselves to bargain away all our hard work, the early-morning blocking of the installation of water meters, the local and national mass demonstrations.
Water activists urgently need to rally together to impose our agenda on the current political flux, and not allow them to impose their agenda on us. Fianna Fáil say they want to postpone charges for five years and to break up Irish Water; this is only a tactical matter for them in order to squeeze the momentum out of the mass mobilisation.
The establishment is mounting a counter-attack on those opposed to water charges. Its strategy is to play the long game and break the people’s resistance. Although the manner in which this valuable resource is managed is important, it is not the central question we face. What is central is the ownership of our water resources; our demand is therefore for a constitutional amendment. This is the only way to block privatisation. It becomes even more urgent when we realise that the TTIP and CETA, once enacted, could make this impossible.
We have to take advantage of the current political situation and use it to our advantage. Teachtaí Dála have been elected on the promise to end water charges and secure a constitutional amendment. They must be held to account. We cannot allow our struggle to be wasted on tactical manoeuvring for perceived political advantage, nor to be sidetracked by political sectarianism and petty point-scoring.
As the dust from the elections begins to settle, a number of things are becoming much clearer. Certainly the continued growth in the anti-establishment vote is to be welcomed, especially if we add to it the significant numbers of people who did not come out to vote at all because of their disillusionment with the politics presented to them.
All the main electoral parties and blocs, including those that stood on an anti-establishment platform, argued very much within the existing system. They allowed themselves to be corralled within the narrow ideological framework, some of them presenting their alternative economic and social policies with the boast that they had been fully costed by the Department of Finance! This implies that the Department of Finance and the state in general are neutral, above the cut and thrust of politics, above siding with any particular class interests. The reality is that the Department of Finance is the guardian of the interests of the economic system as a whole, that it takes direct orders from Brussels and Berlin.
A big effort now, especially before a new government emerges from the whisperings in Leinster House, can achieve not merely a moratorium on water charges but a major victory, consolidated with a constitutional amendment.

 

 

Tyrrelstown: only the latest episode in a growing crisis

Statement by Dublin District Committee, Communist Party of Ireland

14 March 2016

Tyrrelstown is just the small tip of a massive crisis in housing now building up beneath the façade of a system that is politically, economically and morally bankrupt and deeply anti-human.

Tyrrelstown is only the latest episode in a growing crisis, with thousands now facing homelessness on top of the already record numbers of homeless people and families, as well as the tens of thousands on local government housing lists.

Twinlite, the construction company that built the estate in Tyrrelstown and is now managing the 100+ rental houses, sold the houses in 2008 to a company called European Property Fund, which then rented them out. Rents are increasingly going beyond the capacity of many families, never mind single individuals. EPF’s loans linked to the development were purchased by Beltany Property Finance,  a Goldman Sachs vulture fund, for a reported €89 million.

This is a direct result of turning the basic human right and need for shelter into a source of vast profits for both private landlords and corporate property companies. These people are only interested in making a profit, and as big a profit as possible.

The crisis is a reflection of the deep immorality of a system that is based on turning fundamental human needs, such as shelter, medical treatment, and education, into a source of vast profits, regardless of the consequences.

There is no solution to the housing crisis if we continue to use the same tools that created the crisis in the first place. Leaving the provision of shelter to capitalist methods and capitalist thinking will only accentuate and prolong the crisis.

Public housing should not be sold off. Housing is a human right, and we need an emergency programme of house-building by the state to build high-quality houses for people and to take shelter out of the hands of greedy landlords.

This could create thousands of jobs, both in the construction and the maintenance of quality houses.

Credit Unions and Mortgages

There has been a lot of talk recently about Credit Unions entering the mortgage market and both Fianna Fail and People Before Profit seem to suggest it as part of their housing policies in this election campaign.

The first thing to consider here is that one thing that saved the credit union movement from total destruction in the financial crisis was that it was not involved in the mortgage market. So, any move now to enter it should be considered very carefully. Given the debacle of the recent Banking Inquiry where lessons clearly have not been learned and the lack of any meaningful reform and regulation in the housing and lending sector this should be even more reason for caution on pushing credit unions into this sector in a big way.

The number of credit unions has reduced from 383 to 335 as a result of the crisis. The loan book is currently 3.9 billion made up mostly of small short term loans. However, about 2% of its loan book are longer term larger loans. Credit unions are already offering members some mortgage products. For example, the Health Services Staff Credit Union, HSSCU, offers members, a max of 20 year loan up to 150,000 and not more than 3.5 times the certified income of those members seeking the loan. So,the products are already here in a small way.

The dangers are these will gradually grow and make up a larger proportion of the loan book as Governments fail to address the housing crisis through direct state-led intervention and provision and instead direct citizens to private lending and ownership. As house prices rise the lending ratios will get worse and the risks greatly increase. If credit unions go into this market in a significant way then the next crash and crisis could damage the movement beyond repair.

Many of the managers of credit unions share the training and culture of more mainstream Bank managers, and so, do see mortgage lending as a natural area for credit unions to be in. Many of the members of the Boards of each union are ‘professionals’ like solicitors, who again, see lending and private ownership as the natural course of things. These factors, while subjective, are important and will influence the future direction of the movement.

Lessons should also be learned from the debacle of the collapse of the Irish Nationwide Building Society. Originally founded in the late 1800’s to assist working people save and borrow for a mortgage, again a private ownership and market led strategy to housing, the INBS ended up bankrupt by, largely, commercial real estate lending with little to do with its original ethos and purpose. While, former CEO Michael Fingleton will take much of the blame for this, deservedly, it is also the logic of the system once this path is chosen.

And tragically, those people who took mortgages out with the building society, have been, and more will be, thrown to the most vicious wolves, sharks and vultures in the form of bottom feeding private equity firms collection agencies as the loan book in IBRC is sold off as part of the liquidation to the highest bidder with little concern for those mortgage holders and amidst political scandals in both the Republic and Northern Ireland.

The credit union movement has not been spared the ideological influence of who has the biggest loan book which challenges the movements ethos of saving together and lending to each other. With 2.9 million members and 11.9 billions in savings the risks to working people and communities if mortgage lending goes wrong is massive.

 

Das Kapital Mark 2?

By Bernard Murphy

Thomas Piketty, Capital in the Twenty-First Century, Cambridge (Mass.): Belknap Press, 2014; €25.

Thomas Piketty’s Capital In the Twenty-First Century, published in English translation in 2014, made the New York Times best-seller list. In the book Piketty, a professor of political economy at the University of Paris, details the enormous accumulation of capitalist profit and the origins of the state-supported financial oligarchies in advanced capitalist countries over the last thirty years.
He does this without broaching its motive force: the promotion of Milton Friedman’s economic policies by Ronald Reagan in the United States and by Margaret Thatcher in Britain. These policies hegemonised economies on both sides of the Atlantic, that of Ireland included, and led to the unprecedented capital accumulations in capitalist coffers.
Piketty was criticised in the United States by capitalist apologists and media, such as the Wall Street Journal, which defined his tract as “communist.” He put liberal and neo-liberal economists on the defensive, demolishing their idea that neo-liberal taxation policies are necessary for growth and creating wealth. He blames the current socio-economic downturn on precisely those policies, showing that economic growth rates were greater between 1932 and 1980 than between 1980 and 2008, when taxes on capital and high earnings were much lower than in the earlier period.
But Capital in the Twenty-First Century virtually ignores the capitalist exploitation of labour, central to Marxist political economy. Piketty sees capital accumulation and concentration as being largely intrinsic to the nature of capital itself and unrelated to conditions (wages included) in the work-place. Yet conditions in the latter have been undergoing a continuing deterioration since the 1980s.
Growth in salaries in the United States was less during the years 1980–2009 than in 1950–1980, contrasting with spectacular increases in capital’s rate of profit over the former period (Jack Rasmus, Z Communications, 1 May 2014). Income from work, as a proportion of national income, fell from 56 per cent in 1983 to 52 per cent in 2007, when the crisis reached its peak, and has now fallen to a (still falling) 49 per cent.
Average family income fell accordingly, losing 10 per cent of its acquisitive value. Well-paid jobs ($14 per hour) were replaced by low-paid labour ($7.64 per hour). Part-time labour and precariousness became the norm throughout the entire neo-liberal order. Meanwhile, income from capital jumped well ahead of that from labour. Why?
The period following the Second World War, from 1945 to 1980, was marked by a social pact between the owners and managers of capital and the workers, fronted by their political representatives and trade unions. Thence, income from work (as a proportion of total earnings) reached between 70 and 75 per cent of national income on both sides of the Atlantic. The welfare state emerged and expanded, thanks to working-class power. Scandinavia, where working-class clout was strongest, led this tendency.
Reagan and Thatcher, aided by the collapse of the socialist bloc, reversed these advances. They aimed to recuperate the power of capital and weaken labour. Alan Budd, economic adviser to Thatcher, stated clearly that the neo-liberal measures adopted by her government were to increase unemployment in order to reduce the power of the working class, which would permit a reduction in salaries, with a corresponding increase in the profitability of capital. (Observer, 21 June 1992)—a classic example of the capitalist exploitation of Marx’s “reserve army of the unemployed”!
As the oft-quoted American billionaire Warren Buffet put it, “Sure, there is a class war in this country. And my class, the rich, are winning it every day.” (New York Times, 26 November 2006.)
The central question Piketty doesn’t ask: Is the enormous concentration of capital and its profits over the last thirty years—accentuated during the years of recession—directly related to a corresponding collapse in labour earnings? The first can hardly be explained without the second. Marx taught that the continuing accumulation of capitalist wealth is due to the exploitation of continually rising labour productivity. The enormous power of capital—with its corresponding political influence—explains why most of this wealth is captured by the owners and managers of capital and not by those who create it.
The exploitation of labour reaches record levels during the present crisis. During the Clinton presidency, from 1993 to 2000, 45 per cent of the wealth created in the United States was stolen by 1 per cent of the population, rising to 65 per cent during the Bush presidency (2001–2008) and to 95 per cent during the Obama era. Such variation in the distribution of the social product can be understood only in the context of this abusive capital-labour relationship.
The huge salaries that the non-productive, parasitic 1 per cent give the managers of its riches—bankers, higher executives, speculation wizards, casino adepts, etc.—greatly distort national salary averages. They thus hide the substantial salary decreases and impoverishment of the operators of the productive economy, the working class. The inordinate growth in the earnings of the former group is the major cause of current economic instability.
The generating of mega-profits from the productive economy is due neither to sales increases nor to price rises but to the enormous reduction in production costs, above all labour costs—exploitation, in short. For example, productivity per worker in the United States increased by 80 per cent between 1973 and 2011, but the worker’s hourly salary rose by only 4 per cent. But you will search Capital in the Twenty First Century in vain for the word “exploitation.”
Socio-political imperatives mandated by these facts go far beyond the fix proposed by Piketty: a Tobin tax on international financial transactions to augment social spending. But such a highly desirable step would need to be accompanied by major increases in returns on productive work, salary increases, and greatly expanded social expenditure to ensure the health and cultural well-being of working people and guarantee the basic human rights (as defined by the UN Charter on Human Rights) of all citizens.
Strong popular demands for such measures, ignored in capitalism’s decision-making centres, would rock the foundations of the existing neo-liberal order. Rallying around them would bring a popular movement into sharp conflict with the realities of the EU and the capitalist state. But, most importantly, in the context of such struggle the outlines of an alternative and humane social order—socialism—would come gradually into focus. This would be seen by increasing numbers of working people as the only viable alternative to the present toxic social order, which destroys democracy and reduces them to serfs.
Such messy perspectives of popular struggle form no part of the elegant, mathematically configured socio-economic landscape described by Thomas Piketty in his otherwise stimulating Capital in the Twenty-First Century.