Thursday, 28 January 2010

Interrogating the Irish model

Peadar Kirby: This week saw a rare mention of political economy models entering the debate on the future of Irish society. Carl O’Brien’s series on the trade unions quoted David Begg as advocating a Nordic model for Ireland to replace the current ‘neoliberal path that we’re on’. Begg added that ‘what’s clear is we don’t have any future in the current model’ (The Irish Times, Jan 26th 2010). It’s not the first time that Begg has tried to stimulate a public debate on political economy models; he made a valiant and lone effort in the run-up to the 2007 election which fell on deaf ears.

It is remarkable how little attention is devoted to interrogating the political economy model that has led us into the present crisis; indeed, it is rare indeed to even find acknowledgement that such exists. For example, in reading the range of recent books by journalists and commentators on the present crisis, what is striking is the personalist nature of the analysis advanced. By this I mean that the many ills analysed – the poor quality of governance, the too close relationship between politicians and so-called ‘developers’, the failures of regulation, the growth of a banking culture that threw caution to the winds in its lending practices – are ultimately attributed to the failures of individuals. There is a deeply ad hominem quality to it all.

It must say something about just how badly we social scientists have educated generations of our students that the most fundamental insights of our trade are largely missing in the public debate – namely that power is structured and that individuals and groups are greatly constrained by the structures in which they operate. During the years of the Celtic Tiger, the term ‘Irish model’ began to be used to describe the state-market relationship in the Irish case, though it was used much more outside Ireland than within. It was a relationship that came to be envied among other latecomers to development in regions such as central and eastern Europe, the Middle East and Latin America where significant effort was devoted to learning and emulating the lessons. Yet, while basking in the international attention, Irish policy makers, politicians and the academic community made no attempt to recognise the nature of structured power that constituted this model. David Begg was very much a lone voice in advocating that a different model was needed.

Even after the collapse of the model, debate remains characterised by an almost total failure to examine the nature of the way that the state-market relationship came to be structured in Ireland, the origins and trajectories of this relationship, and what needs to be done to change it, as advocated by Begg. My own forthcoming book Collapse of the Celtic Tiger (Palgrave Macmillan, April 2010) has as its subtitle Explaining the Weaknesses of the Irish Model and is an attempt to examine the interrogate the particular ways that political, economic and social power have come to interact and mutually constitute one another, particularly over the course of the Celtic Tiger period, the legacies of which enormously constrain the sort of path that Begg advocates that Ireland now take, namely a social democratic Nordic-style model.

Examining the Irish model requires a recognition of the ways in which political power constituted a particular kind of market economy in the Irish case, one characterised by an enormous dependence on multinational capital. This is arguably the most fundamental constraint on moving in the direction that Begg champions; for example, there is a substantial literature in Irish political science, sociology and the more enlightened corners of economics that gives evidence of the ways that this dependence constrains Irish public policy across a wide range of areas. We urgently need more recognition of this and more public debate about it.

Various weaknesses of the Irish political system have come to feature in the current debate but little attention has been devoted to how reforms advocated might result in turning Irish policy making into a space of real deliberation of political economy options. Another feature of the Irish model is the weak and dependent nature of civil society organisations, drawn into far too close and subservient a relationship with the state especially over the course of the economic boom, with the result that it has almost entirely abdicated its function of being the incubator of alternative models from outside the dominant power structures. O’Brien’s two articles in The Irish Times this week illustrated well how the trade union movement is now grappling with overcoming this legacy. The very interesting project entitled Is Féidir Linn is doing something similar for a range of civil society groups. In these spaces the task of moving to a new model is beginning in the most initial, tentative and fragile of ways. It needs recognition and much support.

It is to be hoped that Begg’s advocacy of a Nordic model does not encounter the silence on this occasion that it encountered in mid 2007. For his recognition of the unsustainable nature of the present Irish model and therefore of the need for a new political economy model, relating public and private power in a new and more socially just way, is identifying a framework to analyse our situation that is vital if we are to get to the heart of the current crisis and find a sustainable way out of it. He himself recognises just how difficult it is going to be to move beyond the present model but a necessary first step is to begin to acknowledge that such a model exists and to begin to interrogate its many features.


Rory O'Farrell said...

I would be interesting if a report was made benchmarking Ireland against Denmark in various economic and social aspects. I think it would help back up the arguments put forward by David Begg.

At its most fundamental level economics is about choosing how to allocate scare resources. I think the Irish public need to be educated that there are realistic, plausible, and affordable alternatives to our current model. As a society we can make a choice.

Proposition Joe said...

Attractive as the Nordic model may be, I fear its not so compatible with our national personality.

Depending as it does on low rates of tax evasion and welfare fraud, and high levels of genuine solidarity (of the giving kind, as opposed to the taking, which is what Irish people usually have in mind when they invoke solidarity).

Call me a cynic, but its really hard to see the mé-féin-ism endemic at every level of Irish society just evaporating overnight.

Paul Hunt said...

@Peadar Kirby,

It is difficult to disagree with the thrust of your analysis, but, in two respects, I fear you are confining the Left in Ireland to the bog in which it has been mired since independence.

Firstly, the so-called "neo-liberal" ideology of free markets has nothing to do, per se, with genuinely competitive markets subject to effective policy control and regulation. For example, in the US, the quadrumvirate of Alan Greenspan (Chairman of the Fed), Arthur C Levitt (Chairman of the SEC, Robert Rubin (Treaury Sec and ex-Goldman Sachs) and Larry Summers, egged on by the "freshwater" economists persuaded Bill Clinton to begin to dismantle the entire edifice of financial sector regulation that had been developed since the Great Depression. This continued under the successive Bush administrations. Ostensibly the intent was to "free markets", but the real agenda of the banks and financial firms was to subvert markets, destroy competition and to capture excessive monopoly profits. This does not mean that markets have failed and governments should do more and more. It means that competition law should be applied effectively and regulation reformed and reapplied. Until progressives come to terms with the benefits of genuine markets (rather than demonising the perversion of markets) they will never secure the politcial traction necessary to effect meaningful change.

And as to "why can't we be more like the Scandinavians?", just accept it; we're not. But we have the ability to decide the nature of the economy and society we want - rather than trying to ape others. We need to recognise that in three successive, free and fair elections the Irish people (using a system that is more proportional in representation than most) the Irish people elected the governments that created this mess. What is needed now is a general elections where clear choices are put to the people so that they can decide.

Barry Doyle said...

I too am skeptical that Ireland has the ability to transition from its previous model to Scandinavian social democracy.
Having lived in both Norway and Denmark it is impossible to ignore the cultural differences between them and us and, in particular, their attitudes to government and the role of the state. In Scandinavia, the social contract, governed by social democratic principles is upheld. Taxes are high but government, in the main, delivers on its promise to provide high quality universally accessible public services. This I believe contributes to a generally benign view of government among voters and a genuine belief, underpinned by a strong sense of nationalism, that they are serving the people and not just vested interests.
Ireland is nothing like that. Corruption in the political system is endemic or at least that is the public perception. A party could propose a deal that would see better public services delivered in exchange for extra taxes but the voters would have no faith in them to deliver on that promise. Every time we have a Willie O’Dea type incident- or worse- the credibility of politics is damaged further making it more and more difficult for politicians, even non FF ones, to convince voters that they can deliver a better, fairer brand of politics. In contrast, I remember a Danish Minister resigning because she had failed to pay her TV license.
The fact that Irish people have a strong sense of nationhood and community offers some hope, however, that a system based on the primacy social solidarity rather than individual gain can gain traction here. First, however, the gangsters need to be ousted.