While working people pay the price for this crisis, it is clear that the bankers, developers and speculators have gotten away lightly. In fact, a recent report by the Boston Consulting Group revealed that the rich got richer despite the crisis, with the worldwide net assets of private investors increasing by 11.5% to $111.5 trillion in 2009! In Ireland, this process is epitomised by the pouring of €14 billion down the drain of Anglo Irish Bank, primarily for the benefit of the speculators who had invested there.
Although Ireland has had a particularly sharp crisis because of the extent of the property bubble, it is not at all an exception. The same process has happened in most major economies - like in the US where unemployment stands close to 10% or Spain where youth unemployment now stands at over 40%. Working people’s lives continue to be wracked by the crisis, while bonuses and salaries are returning to "normal" for the rich.
Why has this happened worldwide? Attempts have been made to lay the blame for this state of affairs on "crony capitalism", "unregulated capitalism" or corruption. Even Eamon Gilmore, leader of the Labour Party has condemned the "crony capitalism" that operates in Ireland. However, we should be clear - the adjectives are superfluous. The crisis in Ireland and around the world is not a case of capitalism performing badly. In fact, it is capitalism working exactly as it is meant to - the rich have gotten richer, while the rest have gotten poorer!
The "Golden Circle"
It is embedded in the very nature of capitalism that policies are shaped in the interests of a small rich and big business elite. A recent report produced by the TASC thinktank called "Mapping the Golden Circle" outlines the close relationships between many of the key figures in Irish capitalism. In an examination of 40 key companies in the Irish economy, it found that 39 individuals held powerful positions in 33 of these 40 companies. These people held more than 93 directorships in these 40 companies as well as an average of ten directorships each in other companies! Over half of these 39 people held board positions in at least one of Ireland’s four biggest banks - Anglo Irish Bank, AIB; Bank of Ireland and Irish Life and Permanent. Unsurprisingly, the report also found that these powerful individuals rewarded themselves handsomely for their "hard work", with their salaries increasing by more than 40% in a two year period!
However, although Ireland’s business elite is particularly well interconnected, there is nothing unusual about that situation. Power under capitalism is held by an extremely small number of people. The key source of this power is the ownership and control of the key sectors of the economy by a small number of private individuals. Their interest is to pursue profit without regard to the interests of their workers, the environment or society as a whole. The example of the BP oil spill is a perfect illustration of the fact that the profit of corporations comes before the environment or the needs of working people.
The establishment parties in Ireland and elsewhere support this rule of big business. Their key funders are often part of the "Golden Circle" and they place the interests of big business before the interests of ordinary people. Normally this is disguised by the need to "maintain employment" by attracting multinationals with low tax rates and wage rates. However, the financial crisis has revealed the genuflection of the Irish government and other governments across Europe to the "wishes of the markets" even more clearly. These markets are primarily rich speculators who profit by gambling on the stock market, often at the expense of working class people. Up to 50% of transactions on the major stock markets are carried out by hedge funds. The minimum investment in a hedge fund is $500,000 or much more - clearly only accessible to tremendously wealthy individuals or institutions. Yet policies of governments worldwide are now explicitly in favour of these people. It should be clear that capitalism means the dictatorship of the markets and the rule of profit.
Can capitalism be regulated?
Regulation is repeatedly put forward by the representatives of capitalism as a way to avoid a repeat of the crisis. Even many of the politicians who supported the neoliberal deregulation now breathlessly call for regulation of banking in particular.
Much of this is hot air that will go nowhere. The banking sector vociferously opposes any serious regulation which will curb their ability to take risk and profit. The Socialist Party is in favour of strong regulation of the banking sector and all aspects of the economy - to minimise excessive risk taking which puts working people in danger.
However, regulation alone will not be enough. The economic crises and boom and bust cycle flow from the fact that profit dominates in society. Therefore, for socialists the key issue is who owns and controls the wealth and economy. The only way to build a society based not on the short-term profiteering of a rich minority but on the needs of the vast majority is to take the key sectors of the economy (banks, construction companies, major corporations) into democratic public ownership and implementing a socialist economic plan.
Nationalisation for the millions, not millionaires
With the bail-outs of banks internationally to benefit speculators, nationalisations have received a bad name for some. The Socialist Party is in favour of something completely different to these "bail-out nationalisations", which have not fundamentally changed the nature or structures of these institutions - they still exist to maximise profit, and will be sold off once they return to profitability.
Socialist nationalisation means compensation only on the basis of proven need. So the millionaire speculators and investors in Anglo Irish ank would have to take their losses, rather than being bailed out. Secondly, democratic workers’ control and management means bringing the industry’s workers and the wider working class to the heart of the control and management of the nationalised enterprises, through elected workers’ councils. In this way, the interests of working people would determine the running of the institution, rather than the insatiable thirst for profits.
Socialist planning of the economy
Through public ownership of the key sectors of the economy, instead of relying on the "invisible hand of the market" (in reality, the drive for profit of big business), through democratic discussion, an economic plan to benefit the mass of people could be put in place.
Democratically planning the economy would mean the elimination of the massive wastage that results from the anarchic nature of capitalism. For example the $1 trillion a year spent on advertising internationally that is primarily aimed at creating new needs or pretending products that are the same are in fact different, is enough to give every family in Africa $1,000. The same amount is spent yearly on arms that are only used to benefit the rich at the expense of deaths like the 1,000,000 killed in Iraq for oil and profit.
More than simply ending the inefficiencies of capitalism, a democratically planned economy would be able to massively increase society’s productivity. On the basis of co-operation rather than competition , massive advances could be made. For example, in the pharmaceutical sector there are a small number of major companies internationally. Currently they invest in research aimed at developing the most profitable (not most necessary) drugs, quicker than their rivals - meaning an expensive race to develop the latest slightly better headache tablet. On the basis of socialist co-operation, the research would be shared and priorities would be shifted - with a new focus on developing those drugs and medicines that would save lives and improve quality of life for billions around the world.
Socialist programme to end the crisis
The irrationality of capitalism from the point of view of ordinary people is demonstrated daily in the crisis in Ireland. One hundred thousand building workers sit on the dole while massive infrastructural problems exist across the state. There are tens of thousands of empty homes across Ireland as a result of the property bubble, while 56,000 families languish on the housing waiting list.
Socialists call for the immediate bringing together of these needs and resources. For example, launching a major national infrastructural programme to improve schools, hospitals and homes across the country, while providing work for those 100,000 builders. The Socialist Party calls for the empty new homes to be taken over by the councils and rented at affordable rates to those without homes. More generally, we demand a 35 hour working week without loss of pay to be introduced immediately, which would take over 150,000 off the dole.
These perfectly rational demands do not take place on the basis of capitalism because there is no profit to be made. However, more than enough resources exist to implement them. Instead of giving away €500 billion worth of oil and gas to Shell and wasting €14 billion to benefit the investors in Anglo Irish Bank, the resources could be used to get people back to work.
Fundamental socialist change is needed to make this happen. The power of working class people has been seen in the combativity and militancy of working people fighting to defend their jobs and against the government’s cutbacks programme. This power has been held back by the sellout policies of the trade union leaders. However, a fighting working class movement armed with a socialist programme in Ireland and internationally can overturn this irrational system and create a democratic socialist society.