Thoughts on the crash and the alternatives


Our government has become more and more open about their plans for us. Cowen wants to drive down our living standards 12% and has already cut all our wages through the tax levy and slashed the wages of workers in the public sector further through the so called ‘pensions levy’. He openly talks of “four more years of even steeper cuts”. He is so confident of us taking this lying down that he had the cheek to announce his intention to drive down our living standards at what even RTE referred to as the “Dublin Chamber of Commerce's lavish AGM dinner which cost €160” a head.

Our government has become more and more open about their plans for us.

Cowen wants to drive down our living standards by 12% and has already cut all our wages through the tax levy and slashed the wages of workers in the public sector further through the so called ‘pensions levy’.

He openly talks of “four more years of even steeper cuts”. He is so confident of us taking this lying down that he had the cheek to announce his intention to drive down our living standards at what even RTE referred to as the “Dublin Chamber of Commerce's lavish AGM dinner which cost €160” a head.

The government is trying to create the impression there is no alternative to their plan but in fact several alternatives are in circulation. I’m going to look at one of these in some detail before discussing the general scale of the crash, how we can resist the attacks on workers and what we should learn about the future of the planet.

The SIPTU plan

Towards the end of last month the SIPTU leadership emailed out a 1500 word PDF file* to its members that provides their analysis of the crisis and an alternative solution to that being imposed by the government. It’s an important document in that SIPTU, Ireland’s largest union, organises over 200,000 workers of all types and across all sectors of the economy. Looking at the document provides us with a useful starting point to look at the alternative solutions to the crisis as well as the limitations of these solutions and the need to go beyond them.

The SIPTU statement starts off comparing this crisis with the 1929 crash which put the global economy into almost a decade of recession. A recession which was really only escaped in the huge arms buildup before world war two. The statement talks of how the crisis has been compounded in Ireland by the neo-liberal policies pursued since 1997. In particular it highlights the slashing of the tax base, which pays for social services and the shift from progressive income tax to indirect taxes as a way of funding these services.

At this point it has to be pointed out that the SIPTU leadership supported this slashing of income tax which was after all one of the part of the social partnership deals they pushed again and again on the membership. It allowed them to sell the deals to us on the basis of more take home income despite what were only modest increases in gross pay. PAYE workers had been carrying too much of the tax burden for too long. So while the boom lasted it’s not surprising workers voted for such deals as an apparent redressing of the balance.

Those of us who opposed the social partnership program pointed out at the time that there would be trouble when the boom came to an end because these income tax cuts had not been balanced by increasing corporate tax, or other taxes on the rich. The balance was being made up by stamp duty and VAT on what was very obviously an unsustainable property boom, the collapse of the boom means that as predicted the funds have vanished. It’s good the SIPTU leadership have now woken up to that danger, it’s a great pity that they did so at five past midnight rather than 12 years ago.

The statement then says this situation had been made worse by the fall of the dollar and sterling against the Euro as of our 64 billion in exports in the first 9 months of 2008 18% went to Britain, 19% to the US and 23% outside the eurozone. It’s not clear why this section was included except perhaps to re-assure readers that the SIPTU leadership haven’t completely gone radical and are still happy with the language of “price competitiveness.” The currency rates are of course affecting exports but more fundamental is that this is a global crisis of capitalism where exports and imports are collapsing regardless of currency rates.

Why attack public sector workers

It's argued that the purpose of attacks on the public sector has two functions. The first is to drive a wedge between public and private sector workers. We have come through a five-month intense government and employer driven media offensive against pay and conditions in the public sector. This along with panic about the crash has meant that huge numbers of workers in both the public and private sector have swallowed core parts of this argument.

A large pay cut has now been imposed on public sector workers, disguised as a ‘pensions levy’. Foolishly some public and private sector workers now hope that the worst is over and that they have either dodged the bullet or will find ways to cope. The reality is that the additional 36,000 on the unemployment live register in January will, between reduced tax and higher dole payments, have absorbed almost all of the money 'saved' in the pay cuts. And the annual shortfall is forecast 18 billion and growing. Even if public sector workers were to be paid nothing this wouldn’t deal with the entire shortfall. The worst has yet to some.

That is the context for one of the smarter observations in the SIPTU statement. That is that the public sector pay cut is not simply about dividing workers or cutting the wage bill. Rather it is also about setting up workers in the private sector for a pay cut. In some places this has already happened but we can now expect that in workplace after workplace the employers are going to be demanding that ‘private sector’ workers at the every least accept a pay cut of the same magnitude. You don’t have to be paying too close attention to the many PR people for the employers cluttering up the airwaves to have heard the message about ‘uncompetitive wage rates’. And next in line after that will be the unemployed, after all with all these wage cuts we’ll be told the existing dole rates don’t give enough incentive to find work.

The SIPTU statement goes on to acknowledge that the economic problems are not only real but also fundamental. Again presumably an attempt to reassure the reader that the leadership are not losing the run of themselves. It correctly argues that public sector costs can’t be held responsible for the state of the economy as the reality is they are among the lowest of the “developed European country’s.”

They argue that the hostility of the right to the now collapsed social partnership talks is hostility to the idea that workers should have any say in economic matters. You don’t have to be a fan of social partnership to agree with that, media commentary during the collapse was full of talk about the government governing (in the interests of business) without interference. But despite this the SIPTU leadership imagines we can have a negotiated solution and not a “prolonged battle, which would inflict suffering all-round.” I’ll return to this curious phrase below.

Much of the above analysis is both useful and correct; it’s a welcome antidote too much of what has been carried in the media. Sure it doesn’t really look at the macro causes of the crisis but then it would have been very surprising if it had. There is however a rather chicken hearted reference at the end of the first paragraph. Rather than putting the SIPTU leadership on the risky ground of suggesting there might be a problem with capitalism they instead quote an Irish Times editorial on the crisis; “It was correctly described in a recent editorial in the Irish Times as ‘… intrinsic to the very functioning of the capitalist system’.”

But we can forgive this; after all we are not under the illusion that the SIPTU leadership are secretly anarchist revolutionaries. They have bought into capitalist ideology and to neo-liberalism with a human face, let's settle for now with being pleased with the small steps taken away from that position. Now what of the SIPTU leadership’s alternative plan?

The SIPTU alternative

The alternative plan is of course based around the only thing SIPTU still knows how to do, strike a deal with the bosses and government through social partnership, this time dressed up as a ‘Social Solidarity Pact’. What is puzzling is why they think either the government or the bosses would sign up to this neo-Keynesianism proposal.

The SIPTU leaderships proposals amount to prioritizing the protection of jobs, nationalizing the banks, launching “dramatic new initiatives in support of training, adult education and skills enhancement”, new workplace legislation to prevent ‘a race to the bottom’ and protection of private pension funds. Many of these measures it is argued will promote economic activity. It is also argued that it is essential to avoid pay cuts, which would just deflate economic activity further. On the funding side it is proposed that over a period of five to seven years the “better off in society must contribute, through the building of a proper progressive tax system.”

All in all this is really quite an attractive document compared to what the government is offering. It’s a demonstration that there are alternatives to driving down workers pay and conditions and attacking social services. It’s a shift by the SIPTU leadership from the ‘neoliberalism with a human face’ of the past decade to a form of neo-Keynesianism, the idea that state spending can be used to get out of a crisis. All very nice, but also completely at odds with the policies being imposed by the government.

Nice ideas – how would they be implemented?

So let us return to the curious phrase I highlighted earlier, the fear of a “prolonged battle, which would inflict suffering all-round.” We can guess that this is pleading with the social partners to avoid the SIPTU program being imposed by industrial action. One wonders how seriously they take that threat!

What is so hard to understand is how the SIPTU leadership think this program can be achieved through negotiation rather than through a “prolonged battle”. Their program would be a complete reversal of government strategy and in complete opposition to what the employers demand. This is not a case where a clever negotiator can nudge an agreement a degree or two in the right direction.

The implementation of this program would require a head on confrontation with the government and the employers. On one level the SIPTU leadership is right, that a “prolonged battle .. would inflict suffering all-round.” But these are not ordinary times and if extraordinary measures are needed then the sooner and more forcefully they are taken the shorter will be the “prolonged battle.” Even the clueless Irish government, which appears to be unable to organize a piss up in a brewery, understands this. That is why they have launched an all out offensive on the public sector as a preliminary to driving down all wages and social welfare. The union’s response to date (and this is wider problem then SIPTU) seems to amount to no more than pleading 'don't make us defend ourselves'.

The nightmare we face

Irish workers, with only a few exceptions, are sleep walking into a nightmare. We are facing a massive attack on our standards of living in order to pay for a crisis we had no part in creating. Tens of thousands already know their houses are under threat as unemployment and wage cuts makes it impossible to keep up with repayments. Close to a couple of hundred thousand have lost their jobs, by the end of the year they will be joined by another two hundred thousand.

We need to move beyond a strategy of individual survival based a combination of belt tightening and hoping that the axe falls on someone else. Bringing sandwiches to work and making your own coffee is not a survival strategy no matter how frequently it gets presented as such on RTE.

We have almost no power as isolated individuals and even SIPTU’s analysis admits that the government and employers are dividing us with the intention of picking us off one by one. Like when wolves attack a herd it is the old, the sick and those on the margins that will be attacked first, although the old, in the form of the pensioners, proved to be a lot tougher to bring down then the wolves expected. They have moved on to what they hope are softer targets.

This is a global crisis, a crisis far deeper that the dot com bust of 2001. Perhaps part of our problem is that many younger workers think we have seen this before and expect that like then there will be a couple of tough months before the party starts up again. This is not the expectation of our rulers, it's why the stock market has continued to fall, and it’s why there is no new investment. Across the world from the USA to China economies have ground to a halt and are going into reverse. Tens of millions of workers are being thrown overboard so that profits can be maintained.

The government now publicly say they expect a budget shortfall of 18 billion. As already pointed out the 36,000 unemployment jump in January will wipe out the bulk of the ‘savings’ of the current attacks on public sector workers. But even if unemployment had not risen this attack was delivering only around 10% of that shortfall. The government has openly proclaimed its intention of “four more years of even steeper cuts”. That is four more years of greater attacks on workers (in both public and private sector) and on the growing army of the unemployed. The capitalist class on the other hand is being bailed out and promised cuts in VAT rates in order to boost their profits.

How should we respond?

Our response to this must be collective. This can happen through the unions, which despite all the flaws of the leadership and frequently undemocratic structures, are also already existing mass organizations that bring hundreds of thousands of us together in defense organizations. If you haven’t got around to joining the union in your workplace do so now. If there isn’t one start talking to your fellow workers and when you’ve a group together approach the unions that organise in your sector and see which ones are serious about recruiting you. In Dell it was only when the closure was announced that workers started to organize in a collective fashion when they realized that as individuals the company was going to give them next to nothing. Don’t make the mistake of waiting for the axe to fall.

But don’t stop there. Years of social partnership mean the unions are flabby. As weird as it seems they are often not even very good at recruiting – there are loads of stories of workers who sent in membership forms and either never heard back or only heard back months later. But in any case things have changed from the old ‘social partnership’ days when the main use of the unions to workers was often for legal and individual bullying cases.

That period is over; today it is no use expecting that a branch official will be able to deal with your problems for you as the result of a phone call. Their strength, our strength is found only in our ability to stand together in workplace after workplace, section after section. The unions provide an existing organizational framework and some legal protection that will help but local organization capable of organizing independently of the branch officials and across unions will be key.

By organising together as workers we can defend ourselves from the cuts that are coming down the line. We can defend ourselves by standing together and returning to the tradition of “an injury to one is the concern of all.” There must be no acceptance of the division that is being sewn between public and private sector workers, nor as we can expect between attempts to set workers against the unemployed.

We will have a hell of a fight to make sure that it’s the capitalist class rather than us that pays for their return to profitability. We need to defend not just our pay and conditions but also the ‘social wage’ that is the healthcare, education, libraries and every other aspect of society that helps make our lives worth living.

The end of the recession

Someday recession will end and capitalism will return to profit for another period. Once again those with capital will make shedloads of money and we will return to long hours, rising prices and false promises, all ahead of the next collapse. This has been the pattern for over a hundred years, the pattern our parents and our grandparents went through, the pattern that breed fascism and the slaughter of world war two. It is a pattern of boon followed by bust that is fundamental to capitalism even if in each new boom some will choose to believe this logic has been escaped.

Unless the system is changed it will be pattern that our children and grandchildren will also endure. But in one-way things have become worse. Capitalism in its boom periods in particular has started to exhaust the planets resources and poison the air and water we all depend on. It’s irrationality in the drive for profit no longer simply threatens us with recession and war when things go wrong, it now threatens the ability of the earth to support the current population.

In the middle of a boom it may have looked like capitalism is working, if you are lucky enough to be in a developed country like Ireland. But even during the boom two billion people were living on less than two dollars a day and tens of millions of children were dying every year of preventable diseases. And now the boom is over, one of the first cuts our government imposed was to slash 95 million off the foreign aid budget.

We need to stop the bust - boom – bust cycle by ending the system based on profit rather than need that drives that cycle. It is true that we cannot but be aware that previous attempts to implement alternatives have ended in disaster; the Russian revolution promised everything just over 90 years ago but delivered only horror. Unlike that generation we cannot fall into the illusion that individual freedom can be weighed up on some scales and exchanged for economic security. In reality this is no more than the reverse of the illusion that free market capitalism has sown in the last decades.

What we must start to organize for is a system that is based not only on satisfying the needs of the many but which also does away with the division into ruler and ruled that led the socialist movement to disaster in the last century. We must organize for a society without leaders and led, without boss and workers whether that boss wears the top hat of the capitalist or the red star of the political commissar.

Written for

* The SIPTU document can be read at,10....html