Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

The price of freedom, the power of narratives – thoughts on the Parnell Summer School

Earlier in the week, I posted an overview of my talk at this year’s Parnell Summer School, where the theme is Sovereignty & Society, in recognition of the 100th anniversary of the Home Rule Bill. I mentioned towards the end that following my address, there was a panel discussion on Ireland’s economic sovereignty, involving Richard Boyd Barrett (the People Before Profit TD), Paul Murphy (the Socialist Party MEP), Brendan Butler (of IBEC) and Pascal Donoghue (of Fine Gael).

The discussion was in reality four rather separate speeches, each of about 25 minutes in length, followed by audience Q&A. Given their backgrounds, however, the speeches by Boyd Barrett and by Murphy were quite similar in nature. When listening to both, it struck me that – whatever about TV debates, particularly when it comes to elections – there is no sense in trying to engage on particular points. If you disagree, it has to be a disagreement at a fundamental level, the level of the entire narrative. This is not a criticism of either contributor – they are both excellent speakers. In fact, it is a testament to the completeness of their narrative that really means the only fruitful engagement will come from going all the way back to basics.

The Socialist Narrative

I will do my best to sum up the Boyd Barrett-Murphy argument: they believe that the economic crisis that started in 2007 is being used as an opportunity by a global elite in control, who share a common ideology, to embed that ideology permanently and beyond the reach of citizens, i.e. anti-democratically. To them, the global elite’s “neoliberal” ideology is summed up by capitalism, privatisation, deregulation and the market. (By the by, I’ve never understood what was precisely so ominous about being a latter day liberal, other than the tone in which it is used by those who have set themselves against neo-liberals!)

According to the narrative, this elite that is in commanding control is pro-market, pro-1% (i.e. themselves presumably) and anti-worker, hence they are trying to reduce minimum work standards and similar, and impose austerity so that the “ordinary man” pays the cost of them enjoying greater wealth. In that context, the EU’s new fiscal “six-pack” is interpreted easily – as a way for the elite to put their ideology irreversibly beyond democratic control.

Paul Murphy, who spoke second of the two, explain in more detail that the root problem is profit. When the profit motive is king, it tramples on people, according to him – why else would EU companies be sitting on €3,000 billion of cash reserves while there are tens of millions unemployed across the EU?

A complete story is not necessarily a true one…

Listening to both men speak, they are compelling public speakers and likely to tap into public anger. They are likely in the next election to have success with those who believe that it is banks, not deficits, that are the bulk of what’s wrong with Ireland’s problems right now. If you try and tackle one point that they make, their answer will most likely be something that is entirely consistent within their narrative – and leaves the questioner having to go one step further back.

Ultimately, the 21st century’s socialists view of the world, if Boyd-Barrett and Murphy are representative, comes down to control. Socialist or not, we all have to answer the question: why are there so many things wrong in the world right now? From first-world problems like falling birth rates, pension shortfalls and youth unemployment to more pernicious issues ravaging developing countries, the world is not as any of us would like – and any account of the world has to incorporate the economic crisis of the last five years. And it comes down to whether you believe in incompetence or malevolence.

Evil? Or just incompetent?

The root difference between my world-view and and the socialist one is that they believe the world is like it is by design – malevolent forces (the “global neoliberal elite”, the 1%) have crafted a world exactly as they would like it. To me – and I think to very many others – the world is like it is due to the incompetence of those in charge, not because this is their masterplan. Socialists seem furious that the economics of Keynes gave way to the economics of Friedman, oblivious to the fact that the dominant model in economics, the one that has dictated the rules for monetary and fiscal policy for the few decades, is New Keynesian! Keynes believed that output could be controlled by policymakers to dampen business cycles – and mainstream economics has clung dearly to that belief, refining it so that it is the interest rate that is used to do this.

If we step back for a minute, if there is a global elite working against our interests in confident control of the world economy, why is it the case that the typical person is so much better off now than fifty years ago (looking at figures such as inflation-adjusted mean and median incomes)? Why is labour’s share of income so high if capital is in control? Why is the standard of living in the 2010s going to be better than any decade that has gone previously? More fundamentally, why are they allowing democracy to spread? Why are they allowing people’s education levels to get higher and higher? After all, surely, at some point if we keep getting more educated, we’ll eventually cotton on to their plan? And why do they allow mobility between “us” and “them”?

This is not to say for a minute that there are no issues to sort out. But even in those issues, the narrative starts to crumble. Why are so many genuine capitalists (i.e. those who earn money through capital, rather than labour) and “right-wingers” so vehemently against bank bailouts? Well, presumably because a system where some people cannot lose no matter what (bank bondholders, say) is a  subversion of an economy built on risk-taking. Risk means the potential to lose.

Politics and academia also don’t sit easily with the narrative. In the US, for example, the typical lower income household has seen their real income at best static over the last generation and even longer. But in terms of economic policy, this is one of the hottest issues on the campaign trail – if the US elite were truly in control of everything, this is the last thing they would want! In terms of economic theory, static incomes of lower-income households is one of the most active areas of research (at least in the US) – the two candidates for causing this are trade and technology, not – I guess it should be pointed out – a global elite in control of our lives.

Follow the trillions…

For me, the point about three trillion in the bank neatly encapsulates the shortcomings of the 21st-century socialist world-view. When making that point, there is the implicit assumption that if lots of money is left in the bank, it does nothing – a shockingly poor level of understanding of fractional reserve banking! One man’s savings is another’s borrowings. Moreover, there is the explicit accusation that these multinationals are leaving money in the bank instead of hiring unemployed people. As if business people would rather sit on what are assumed to be useless piles of cash than make more money by investing it.

The currency of the world is confidence. It dictates the value of money, the value of wealth, even the business cycle. It is not something that can be managed – either by benign policymakers or malevolent elites. If some businesses are “sitting on hoards of cash”, it is because they are nervous about the future. But at least they are depositing that cash with banks, who can then lend it out to other businesses. If those banks are “sitting on hoards of cash”, it is because they are nervous about the future.

Ultimately, no-one is in control. I’m not sure if that makes the world a scarier place than one in which at least someone, albeit a malevolent elite, is in control. But it’s a reality we need to accept if we are react as best we can to what’s going on around us.

Undoubtedly, any socialist worth their salt will have answers to some or all of these points that restore the cohesive whole of their narrative. I would like to point out that I posted the above at least for myself as for anyone else, as I wanted to crystallize – so soon after hearing the guts of an hour of modern socialist thinking – that world-view and my thoughts on it. As always, I mean to engage (and certainly not caricature or mock). I am currently reading Michael Sandel’s “What Money Can’t Buy – The Moral Limits of Markets” as a way to delve more fully into this topic. When I’m finished the book, I will post a review on the blog. It’s early days in the book and I would already love to write my own book in reply!

  • eamonn moran ,

    “why is it the case that the typical person is so much better off now than 50 years ago?” Are they?
    If you mean in Ireland than yes we are way better off but in America? No. As you say real income is flat since the 70’s. (By the way there was an increase in wealth during at the time and 90% of that went to the top 1%)
    The world in General?
    That would be a complex question to try answer.

    For every other questions you ask in the paragraph I found myself asking, Does it? Are they? I found a lot of your assumptions very presumptuous.

    As for “One man’s savings is another’s borrowings”
    Yes exactly. So if there are excess savings in European banks because MNCs are waiting on tax laws to change or a tax amnesty before they send the profits back to the US it results in excess deposits. How did banks deal with this? As you point out, they released credit. So much credit into peripheral regions of europe that it caused massive increases in Personal debt levels and small business debt levels. Ireland is a case in point.
    However the banks did this, knowing from experience that if the excess credit supply could not be repaid they would be bailed out.
    The large financial institutions are always bailed out. Who did the banks turn to when they were in real trouble? The government.
    UK and American banks did the same.
    Unlike many others on the left I am not anti free market per say. In fact in certain industries (not health or finance) I think it could be the most efficiant way to organise things but what people on the right need to accept and act on more is that, a free market is not what we have now. The only free market capitalism exists in very small business. It looks like it on the way up but when a crash happens the losses of the big boys are socialised. If the free market people are willing to admit that that is what actually happens, then I don’t see how they can justify still arguing for free market conditions. They know that the corrective counterbalance in the system will not be applied. They don’t do nearly enough to show solidarity with the left in their disgust for the corruption of betrayal of the system. Because of this the left believe they are not sincere in their objections to bailouts.
    The conventional lesson from Leighman brothers is that sometimes banks are to big to fail and actually should be saved for the good of the system. But this is an admission that in the financial industry the market can never be free. We cant follow through and punish those who fail because the whole system may fall. The silence from freemarketeers has been deafening. Why have they not sought to amend their current ideology that cannot be implemented?

    As for the question, are there interests (the 1%) out there trying to accumulate and control the majority or is there just no one in control. Actually I think that there are powerful forces that do seek to accumulate masses and masses of wealth. That is their objective. Are they fully in control? No. But that is not their primary objective. Profit is, gaining control of certain elements in peoples lives is a means to that end, not the ultimate objective. They used to do it by force in the western world but as peoples liberties and freedoms were fought for and won they had to find other ways. So we had the birth of Propaganda, advertising marketing and PR. That doesn’t make the world more scary. It makes the system sick and inhumane.

    Noam Chompsky has an funny anecdote.
    There was a quotation attributed to Ghandi. He was asked what do you think of Western democracy. He replied “Sounds like a good idea”
    Chompsky says he has the same answer for when he was asked what he thought of free market capitalism.

    • Damian ,

      Two quick points on your “world view”
      1. Re-policy: New Keynesian or Moneterism?
      2. “Typical person” – the conditions and incomes of much of the world’s migrant manufacturing labour – have worsened in real terms over the last few decades and their share of output vis-a-vis capital considerably declined.

      Sure, there are problems with the ownership/control story – but at the same time it is impossible to dismiss that ownership is somehow irrelevant as the neo-classical/free market ideal might suggest!

      • Ciarán ,

        Sorry Ronan: overlong comment alert!

        Two things: first, I doubt any intelligent person on the left would describe financial capitalism as a product of outright a conspiracy on behalf of evil ‘global elites’ or what have you. No more, for instance, than we would say legal reforms around the enclosures were a consequence of the beneficiaries conspiring against those who paid the penalty. Rather, the range of possible reform is narrowed in such a way that only certain policy options are deemed to be desirable or even possible. The options are those that echo with the ruling class.

        Second, I don’t think it’s strong to point to the wealth of workers (in Europe and North America anyway), or their share of corporate income etc to say that our current flavour of capitalism is not class-driven. For one thing, much of the benefits accruing to workers – share of income, leisure time, are a product not of capitalism but of both state regulation and of the bureaucratic structures of the corporate economy (as in, the fact that large corporate enterprises allowed bargaining between employers and unions towards the interests of both as they saw it). That we’ve seen the product of these dynamics being eroded might suggest that the second half of the Twentieth Century was a phase in capitalism that we’ve left behind.

        My view on later capitalism, not that it’s particularly profound or unique, is that it’s seen various kinds of collaboration between the bureaucratic state and private bureaucracies with feedback of varying strength coming from electorates, markets, unions, the Adam Smith Institute or what have you. Braithwaite’s Regulatory Capitalism stuff is good on much of this.

        As such, the Right’s ‘Crony Capitalism’ complaints could do with losing the surprise on these terms: one can’t exist without the other, explicitly in the likes of G4S or Richard Branson, but also more subtly in terms of, say, how intellectual property regimes are emerging or – of course, how reform in banking has been formulated and by whom. But equally some on the Left are too quick to dismiss many of the benefits of capitalism (though of course Marx didn’t dismiss them at all).

        • killygrogan ,

          “In every stockjobbing swindle every one knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbor, after he himself has caught the shower of gold and placed it in safety.” Karl Marx (From “Capital: Critique of Political Economy,” 1867)It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.

          • Ronan Lyons ,

            For those of us not sharing the same “social existence” as you, to use your own phrase, are we to take from this that we should interpret the world-views of people like Murphy and Boyd-Barrett as products of their up-bringing (term used loosely to include I would imagine who they hung out with 16-23)? Path-dependence is I guess another way of phrasing it.
            Thanks for stopping by,

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