November 2013        

Austerity is working as planned

Speech by Eugene McCartan, general secretary, CPI,
at the International Meeting of Communist and Workers’ Parties,
Lisbon, November 2013


Comrades,
     There are a number of central questions facing the workers’ movement throughout our world.
     Firstly, we need to deepen our knowledge of the continuing crisis of the system, which clearly is showing no signs of abating, and in fact the contradictions appear to be intensifying.
     The second area in which we need to develop our understanding and to strengthen our common actions is in relation to the growing environmental catastrophe now facing our planet—a crisis that is having and will have a devastating impact on the lives of hundreds of millions of people as well as thousands of species of plants and animals.
     Thirdly, imperialism’s strategy is now one of a permanent state of war and military build-up, with permanent regional conflicts to sustain the industrial-military complex.
     And fourthly, there is the importance of maintaining our unity, based upon mutual respect. There is more that unites us than divides us.
     Comrades,
     Many comrades will cover all the above, and more, but because of time restrictions I will concentrate on three of those areas.
     Recently the Irish establishment proclaimed that the crisis is over, that the worst has passed, and the economy has “turned the corner.” Both the Irish ruling class and the European Union have declared that “austerity” has worked and that we are ready to leave the restructuring programme, or what they call the “Programme for Ireland,” in early December. They also falsely proclaim that the Republic will get its sovereignty back.
     This has more to do with appearances than with reality. The European Union has to show to the people of Greece, Spain, Portugal and other EU member-states that if they take the austerity medicine without resistance, it works. In reality this is nothing more than rocking the train from side to side to pretend that it is moving forward.
     Since the crisis erupted, the Irish government has taken more than €20 billion out of the economy in five annual budgets. This has been achieved by massive cuts in public spending on social welfare, education, health, social provisions and pensions and with thousands of jobs lost in public services. This strategy is hitting working-class women harder, as they have always made up the majority of low-paid workers and those dependent on social welfare. Simultaneously they have increased government charges, introduced new taxes, and increased working hours without pay. Workers in the public health service are now being forced to work two extra weeks for no wages.
     A recent report by the hand-picked establishment figures who make up the National Fiscal Council stated that the government’s financial liabilities “have increased four-fold since 2007, reaching €208 billion (127 per cent of GDP) in 2012. Over this period, Ireland experienced the largest increase in indebtedness (relative to GDP) of any Euro Area country . . . [This] mainly consisted of sovereign bonds, Troika/bilateral loans and promissory notes.
     “Debt in Ireland in 2012 amounted to €192 billion or 118 per cent of GDP. There has been a four-fold increase in government debt over the past five years, reflecting a series of large budget deficits and the cost of direct support provided to the banking sector. On this basis, Ireland had the fourth highest debt ratio in the Euro Area in 2012, whereas in 2007 Ireland had the second lowest ratio.”
     The Irish people in the Republic experience the political and economic strategy of the European Union, while identical policies are imposed by British imperialism on the working people of the North of Ireland.
     In the Republic, unemployment now stands at nearly 409,090, or 13 per cent. In the North of Ireland the rate is 7½ per cent.
     The economic policies and priorities of the British state and their impact on the people of the North of Ireland are further exacerbating the deep underlying sectarian divisions and tensions. The growing poverty and social alienation among sections of the working class, particularly among youth, are being exploited by elements of the establishment parties and paramilitary groups.
     A growing number of home-owners are unable to pay their mortgage and are now facing eviction and repossession.
     The “troika,” in alliance with the Irish ruling class, continue to turn the country into a zone of precarious employment, a low-wage economy. Workers’ rights and conditions are under sustained attack, while the government has rushed in legislation giving it the power to cut the wages of public-sector workers.
     Key elements of the leadership of the trade union movement have been more than willing to co-operate and to actively discourage workers’ resistance to the continuing attacks. Some are members of the Labour Party, the junior party in the current government.
     The result of recent budget cuts in social welfare for those under the age of twenty-five will drive tens of thousands of young people out of the country. Emigration from the Republic is now running at 50,000 per year, equivalent to nearly a thousand a week, or one person every ten minutes. Those remaining will have to work on schemes called “Job Bridge” for up to forty hours a week for less than the minimum wage or be forced into internships.
     Debt has become the principal means for pushing through the long-term strategic imperative of economic restructuring that is intended to restore lost inequalities and to impose new ones. They are driving forward with the privatisation of public companies and the commercialisation of remaining public services, allowing the economy to be further dominated by monopoly capitalism.
     The national gas company, An Bord Gáis, is now up for privatisation. Stage 1 of privatisation is the services side of it; the state will still retain the production side, but the profits will be reaped by the servicing part. That’s what citizens will be financing: private profits for energy that is socially owned.
     Since the eruption of the crisis our party has been arguing that austerity is working: that it is working as designed. Communists have been a lone voice in putting forward this argument, which challenges the illusion that bourgeois governments actually act in an objective or impartial way, that they are above class antagonisms.
     Austerity in Ireland, as elsewhere, is clearly designed to facilitate the transfer of wealth from working people, small businesses, working family farmers and the self-employed, upwards and outwards: upwards to the Irish ruling class, who are becoming richer, with wealth becoming more concentrated, while at the same time the massive flows of capital out of the country to service the socialised corporate debt are strengthening the dependence relationship and mechanisms of control over the Irish people’s potential to develop alternative, independent political and economic action.
     The servicing of the debt is costing the Irish people nearly €9 billion per year.
     What is clear to us is that the European Union and international finance capital do not want the debt repaid but rather are using the debt, particularly that of the heavily indebted peripheral states, as one of the central means of exercising and strengthening their control and domination. Debt-dependence is the means of ensuring that austerity is permanent and irreversible.
     This debt is not the people’s debt but corporate debt imposed on the people by the external troika, with the active collaboration of the internal troika of establishment politicians, business leaders, and the state.
     The dominant economic and political interests within the EU, in co-operation with dependent national ruling classes, have, through the stability mechanism, securely fixed banking and sovereign debt together; and in all future financial crises the state—in fact the working class—will bear the burden. They have also made it clear that large and small depositors will in the future carry the main burden.
     The European Union is itself under growing strains, with the stability of the euro still very questionable. More and more working people are beginning to ask, Whose interests does the EU serve? This is reflected in the setting up by the EU of a new section to monitor social media in the member-states to try to actively combat this growing questioning of the EU’s legitimacy.
     We believe that the question of the euro needs deeper study. Are the euro and the banking debt the strategic weaknesses of European monopoly capitalism? We need to examine this not only in relation to the weaker EU countries but also as an instrument of inter-imperialist rivalry against the dollar. And can we build united working-class action and mobilisation around them?
     Regarding the growing environmental crisis, this is something we cannot ignore. We need to study the whole relationship between global environmental destruction and modern state monopoly capitalism. It is capitalism that is creating the environmental crisis, with its need for growth. If capitalism is not growing it is in crisis.
     In addition, a significant contributing factor is modern imperialist warfare and its contribution to the destruction and pollution of the environment, with their use of depleted uranium weaponry. Military production is the most anti-environmental of all industries, and wars, of course, hundreds of times worse.
     The workers’ movement has not successfully linked the ownership and nature of capitalist production and capitalist commodity fetishism in our political understanding and anti-monopoly strategies. We would argue that, because we have not fully taken into account the environmental crisis, the defence of the environment has been in the main championed by petit-bourgeois forces, with all their weaknesses and vacillations. They are unable to give any clear understanding of monopoly capitalism, the nature of the crisis and the reasons for it, as they continue to seek a solution within the confines of the capitalist system.
     We need to seriously reconnect the workers’ movement with the defence of the environment, build it into our anti-monopoly strategy, turn it against imperialism. We have to raise the argument that we must either save the planet or save capitalism: we cannot save both.

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