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  • irishtimes.com - Posted: February 9, 2009 @ 11:32 am

    Can Parliamentary Democracy Rescue Private Enterprise?

    Deaglán de Bréadún

    Got an intriguing email from Padraig Yeates, formerly a colleague of mine on The Irish Times, now a press spokesman for the Siptu trade union. The heading was, “The Only Economist Who Got It Right”. Who could it be, I wondered? Morgan Kelly? Michael Casey? Paul Sweeney?I left the message unopened for a few days, as you do. This wasn’t notice of a press conference by Brian Cowen or Enda Kenny. Eventually I opened it this morning to read: “The Only Economist Who Got It Right – and he’s been dead for over 120 years.” There followed this quotation:

    Owners of capital will stimulate the working class to buy more and more expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism“  

    You’ve probably guessed it, His Eminence Karl Marx, in Das Kapital, published in 1867. This quotation, or similar ones, have been flying around cyberspace since the current crisis began. I note also, from passing through downtown Dublin, that groups styling themselve Marxist are displaying their posters and inviting people to hear their “take” on the situation.

    Whether one is a Marxist or not, there is no doubt that this is a crisis of capitalism. Apart from the prediction that communism is inevitable, Marx’s analysis is spot-on. Well, he was a journalist after all.

    Having soared to heights of unprecedented prosperity, we are now plunged into what bears alarming resemblances to an abyss. Capitalism has survived deep crises before and may do so this time. State intervention is the order of the day. Parliamentary democracy is on a rescue mission for private enterprise.

    It will only work if there is, in that time-honoured phrase, “consent of the governed”. Here in Ireland, we see public sector workers faced with substantial sacrifices which are being made, in essence, to save the banking system. Even our precious pension fund is to be used to shore up the banks.

    Meanwhile the banks show no obvious signs of gratitude. Top bankers’  salaries remain astronomical and we even hear talk of bonuses. The Government is trying to get the bankers to moderate their appetites and have even taken pay-cuts themselves.

    It’s a big test for the political system. In the last ten years or so, Leinster House has itself acquired many of the aspects of a gravy-train. A startling statistic was put before me at the weekend by a seasoned political observer. Your typical Opposition frontbencher pulls in something like €2m in pay and expenses over a ten-year period. So why go to the trouble and travail of getting into government?

    Today there will be a teachers’ picket on the Anglo-Irish Bank. No doubt there will be photographs in the papers tomorrow of the placards which will probably say something like, “Bankers prosper; the people pay”.

    And indeed there is a growing perception in the place politicians call “Out There” that we have a cosy conspiracy in this country between our elected rulers and the financial sector. It’s potentially very damaging to democracy. The Government and, indeed, the Opposition must make greater sacrifices to demonstrate their sincerity to the populace. And they must go after those bankers who are flaunting their greed and their cleverality in the faces of the nation.

    In my capacity as a journalist, I have met a number of  people in the upper echelons of the banking sector. These particular individuals are sensible and intelligent and must be well aware of the dangers in the present situation. I hope they can exercise some restraint over the sector generally.

    One of the differences between this crisis and the previous ones is that emigration does not seem to be the viable option it once was. One hears talk of Australia and Canada but they, too, are feeling the pinch. In the past, this was a safety-valve which reduced the possiblity of social disorder (and inhibited social change, too, unfortunately).

    The only comparable period is the early 1930s when the US economy closed-down and emigrants returned even to poverty-stricken Ireland. That was a time of great upheaval when democracy was in peril and was, in effect, abolished in several European countries. We don’t want to go through all that again.

    Should there be a national government? It wouldn’t be very democratic! But watching the usual argy-bargy between Brian Lenihan and Eamon Gilmore last night, one wondered if there wasn’t a case for it. Oppositions are there to oppose and if they don’t, they are not doing their job. But in the present situation even normal opposition politics can have the effect of validating the viewpoint of more destructive forces that are currently lying dormant in our society.

    We are embarked on a journey to an unknown destination. The ship has hit an iceberg. It’s not sinking yet but there are some alarming leaks in the hold. The crew are working frantically below decks. But there aren’t any lifeboats.

    • Robespierre says:

      No – the parliament cannot rescue private enterprise but it has a role in stimulating it. Business and trade won’t disappear and no matter how serious this becomes it is still a blip – a period of overreach for liberalism in all its forms.

      There was an excellent article in Prospect Magazine some years ago looking at the wider impact of the secular values of the enlightenment / French revolution on the world since 1789.

      The author contended that fraternity rose initially through militarised autocratic empires and nation states and led inevitably to its fraternal nadir with totalitarian fascism. Equality also rose through a militarised response to autocratic empires and replaced them with totalitarian communist regimes. These two forms of the values of the revolution were debased and pushed to the querulous ends by venal, corrupt and tyrannical minds.

      Finally, the unresolved question at that stage was the expanding influence of liberalism in moral and commercial terms. An east / west schism exists between the Arab and African mores and those of western secular society following the rapid loss of secular influence of religious doctrine. Similarly, the expansion of globalised trading frameworks has rendered all economics correctly global rather than regional or local in terms of impact. Greed and the loss of influence of major trading powers over corporations since 1989 has contributed to the rapid deterioration of global economic well-being.

      So when taking these three aspects into account it shows that the 3 big ideas must be in balance in order to have the confluent intention Rousseau wrote of. When any of the three are pushed or abused it upsets the natural order and balance of things.

      So what can parliament do? Firstly, they need to make tough decisions and start shutting down services, programs and reducing the size of the state. If they are at 2001 income levels they need to downsize government to 2001 cost levels. That is not easy and would probably mean FF dissapearing from the political landscape. I personally would welcome that but acknowledging that they have always placed their party before the nation, I agree with you that a national coalition would be necessary to ensure Labour’s petulant populism is curtailed and the necessary decisions taken.

    • DesJay says:

      Ireland may indeed have soared to unprecedented heights of prosperity, but 20% of the population lived in poverty. Unnoticed, except by a few. Unremarked by seasoned journalists. And that thug, McCreevy ,is still in a position to do more damage to Irish society.

      Irish pundits now scratch their heads about the issue of leadership. They hope that Cowen may be the man, but they blithely accepted decades of limp FF leadership, increased numbers of junior ministers and their cars, and unprecedented growth in non-gov bodies providing government services. The cabinet was a joke, AWOL, more concerned with dress and speech than with society.

      You complain about the salaries of bankers, and sure isn’t it safe to do that now? But what did youy have to say about the corrupt planning system in Ireland? What did you have to say about the kick-backs to ministers from developers? Because, in Ireland, as in America, the housing bubble is at the heart of the economic meltdown.

    • Ray D says:

      The ship may have hit an iceberg but so far only the lower-paid (Clerical Officers and such grades) are drowning. These persons are on incomes round about the €30,000 mark. Some have huge outgoings on affordable housing in Dublin which they bought when that scheme operated – at the height of the boom. They have high mortgages – many on fixed rates – and very high management company charges. These people cannot afford to take the massive pay-cut just announced. They are drowning.

      Much fairer, as I wrote weeks ago, would be big hikes in PAYE and other taxes.

    • Dan Sullivan says:

      That text has been floating about the place but apparently it’s not Marx at all. It’s like those alleged predictions Nostradamus made for 9/11.


      I would also think that we need to be more honest that this is not a crisis in capitalism but rather in consumerism. Capitalism (or making your existing wealth work for you while you sit and sip the amber nectar) existed before consumerism and it will exist after it. What we are witnessing is a gear shift in the consumerism that overheated and eventually burnt out our economic model.

    • Deaglán says:

      Well-spotted, Dan. It does seem suspiciously modern and tailored to today’s conditions all right. Full Marx!!

    • Anthony Williams says:

      That Marx quote is a HOAX. It has been repeatedly debunked on the web. Marx never said anything close to that in Capital, or anywhere else. Tip off – there was no such thing as consumer “technology” in 1867. The scenario imagined in this quote has nothing to do with Marx’s thoughts on the transition from capitalism to socialism, it is a fabricated quote designed to scare people.

    • Deaglán says:

      Yes, we know it’s a hoax. Dan Sullivan spotted it – see above. Thanks anyway.

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