Ireland in Deep Crisis: Fall of another capitalist growth ‘hero’!


After Greece, Ireland is the second European government to declare bankruptcy and seek special bail-out loans from international financial institutions.


After Greece, Ireland is the second European government to declare bankruptcy and seek special bail-out loans from international financial institutions.

During almost two decades, Ireland had been trumpeted as a great performer among the economies of Europe. Tax and interest rates for capitalist corporations were comparatively low in Ireland compared to other countries of Europe. This helped to attract capital investments. Accelerated inflow of capital from abroad spurred the rate of capitalist growth, attracting immigrant labour in large numbers to find work in Ireland.
The high rate of capitalist growth in Ireland during the nineties and early 21st century generated enormous profits in the hands of the capitalist investors. The lion’s share of these profits was claimed by the financial institutions – the big banks, insurance companies, venture capital firms, etc. The wealth of such institutions, headed by the Anglo-Irish Bank, grew much faster than GDP.
High rates of capitalist profit led to a rise in urban property prices. After the initial spurt in productive investments, finance capital flowed into real estate in Ireland, creating a bubble in the urban land market. Speculative lending by the financial institutions for real estate grew rapidly, while production slumped as a result of limited purchasing power of the working people, not only in Ireland but throughout Europe. Coinciding with the worldwide recession in 2008, the Irish success story came crashing down, along with its urban property prices.
By September 2008 the Irish government had declared its economy to be in a severe recession; by 2009 it was said to be in an economic depression. Ireland’s GDP declined by 8.5% in the first quarter of 2009 compared to the same quarter of the previous year. The official unemployment count rose above 11%. About 65,000 working people are reported to have left Ireland in 2009, which figure is estimated to have risen to 120,000 in 2010.
The 2009 budget proposed additional income taxation and withdrawal of essential social programs including vaccines for girls. Working people are being made to suffer for the speculative profiteering of the big banks.
Since early 2009 there have been massive street protests in Ireland, against rising unemployment, against cutbacks in social spending, against the robbery of workers’ pensions to finance bank bail outs, and against attacks on the right to education. Tens of thousands of workers, civil servants and students have repeatedly taken to the streets. Slogans such as “no cutbacks, no fees” and “education is a right not a privilege” have become commonplace in student protests.
Bailing out the capitalist banks resulted in a massive accumulation of government debt. Now the government itself is seeking a bail-out package from the IMF and European institutions. This has further intensified the political crisis in Ireland, with the ruling party having completely lost credibility.
Ireland is not the first or last capitalist ‘hero’ to fall. The economies of the East Asian ‘tigers’ that were promoted as the success story of the eighties and early nineties crashed in 1997. There have been many other cases in the past. What they all collectively demonstrate is that capitalism, by its very nature, is a crisis-ridden system. They show that rapid capitalist growth, fostered by high inflow of capital from all over the globe, is an extremely dangerous course for the working people of any country.
The more rapidly capitalism grows at its present imperialist stage, the more intense becomes the contradiction between social production and private appropriation of its fruits. More concentrated becomes the ownership of the means of production, with the rich growing richer and the super-rich growing at the fastest rates, while uncertainty and poverty stare the toiling majority in the face. The consequences of every crisis are becoming more dangerous, as the scale of concentration of capital and the degree of monopoly are rising over time.
The economy or the country experiencing rapid capitalist growth on the basis of creating a favourable climate for global capitalist investors, is nothing but a super-exploitation hub for global capital. It becomes a favoured location for intense exploitation of labour and plunder of natural resources. Such a country seems to shine for a period of time. However, the conditions for an explosion inevitably develop, until one day everything comes crashing down. Every such bust is more severe than the previous one and has devastating consequences on the livelihood and wellbeing of the toiling majority.
A country whose economy grows by becoming a super-exploitation hub for global capital is on a dangerous course. The experience of Ireland holds a warning for China and India, the present-day ‘heroes’ of rapid capitalist growth, which are super-exploitation hubs for global capital.

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