Time to examine the American connection

Some years ago an American friend had a nasty accident while visiting Belfast. Looking to his left, he stepped into the roadway, was struck by a car, and suffered a broken leg. This man was a responsible adult, but his lived experience in New York had caused him to look in the wrong direction.

Something similar is happening at the moment to the Irish economy. With an over-dependence for income on American transnationals, the Republic’s economy finds itself focused on the wrong field as economic power gradually shifts away from America and towards China in particular.

According to the Irish Independent’s technology editor, Adrian Weckler, Apple, Google, Intel, Dell and Facebook now employ about a tenth of the Republic’s work force. That is more than those engaged in farming. When the local businesses that supply these technology companies with a range of services are also taken into account, those five American tech giants are now crucial for as much as a fifth of the southern economy.¹

The Republic’s vulnerability to this narrow band of transnationals was emphasised recently by an estimate by the International Monetary Fund that a quarter of the state’s economic growth in 2017 was due to Apple’s iPhone.

There may be some doubt about how this figure was calculated, but the pattern is clear: if American high-tech transnationals were to leave, for any reason, southern Ireland’s economy, as at present constructed, would suffer as grievous a downturn as that experienced following the financial crisis of 2010.
For long the received wisdom in relation to predominantly American transnationals has been to view them not only as beneficial but as essential to the country’s prosperity. This in turn has led to an emphasis on maintaining their presence through offering tax concessions, contributing grants, providing infrastructure, and enacting corporate-friendly legislation.

Moreover, these virtually unchallenged assumptions are constantly reinforced through an incestuous relationship between state and transnationals. Government or state officials are frequently headhunted to fill positions of influence in these corporations and thereafter given the task of lobbying on behalf of their new employers.
Those among us who question the long-term wisdom or morality of providing a tax haven for the world’s richest technology companies have our objections brushed aside. However dubious the situation might be, we are told, economic reality dictates that Ireland must work within the system, and the middle classes condescendingly nod agreement.

Now, however, the outcome is not within the power of the Irish elite and, more significantly, also out of the control of the American technology companies.
Social media and social networking services, such as Facebook, Google, and Twitter, are subject to consumer whims. Until a short few weeks ago Facebook appeared to be all-powerful and all-conquering. Yet within days of a whistleblower revealing details of the company’s questionable relationship with the English company Cambridge Analytica, its share price plummeted and the chief executive, Mark Zuckerberg, found himself testifying before a joint session of the US Congress, and facing similar demands for answers from other jurisdictions.

Only time will tell how damaging this particular scandal will be for the company, but it indicates a potential vulnerability in a fickle and cut-throat market, where the life span of a product can be remarkably short. How many people, for example, now remember the former technology giants MySpace, Friendster, or Altavista?
Compounding their problems in Europe is the promised General Data Protection Regulation, which will challenge their unhindered and profitable access to individuals’ personal data.

Moreover, a more defined threat is becoming a reality. China’s technological skill base is not only rapidly catching up with that of Silicon Valley but also has the capacity to undercut American companies’ pricing model, and therefore profitability, on a global scale.²
The implications are obvious. As the Irish government and business elite concentrate on the American connection, there is no obvious plan B. The result is an economy as precariously positioned as at any time in the past.

So what can we do to prevent either a financial crisis or market forces producing yet another recession in Ireland, with all the dire consequences this would inevitably have for working people?

We can rule out, from the outset, any practical or helpful intervention from the overwhelming majority of the present members of Dáil Éireann. The two largest parties, as well as a number of independents, are committed to maintaining the status quo at all costs. Moreover, unless progressive elements can bring about a significant change in the political climate, one or other of the two conservative parties, or both, will be part of the next Government, or indeed Governments.
It is vital, therefore, that working people through their representative organisations take the initiative to identify an alternative programme and work to build the structures that can implement viable pro-worker policies. There needs to be a realisation that a permanent solution will not be found within a capitalist economy nor a new era created by those political interests determined to maintain acquired privilege.

It was encouraging, therefore, to learn that the general secretary of the ICTU, Patricia King, drew attention to the need for a major programme of public house-building when she addressed the recent biennial conference of Mandate. More heart-warming still was to read the address of the general secretary of Mandate, John Douglas, to the conference. Speaking under the slogan Organise! Organise!! Organise!!! he told delegates of “the importance of and the relationship between the industrial struggle and the political struggle,” emphasising his commitment to “building a strong industrial movement and a strong political movement.”

These are encouraging sentiments from senior people within organised labour. But while we can recognise this important contribution, the burden cannot be placed on trade unionists alone. All progressive elements in Irish society have to unite to meet the inevitable challenges ahead. We are not only faced with the likelihood of another economic downturn but there is also the serious matter of preserving and reasserting Irish neutrality. There is then that most important issue of the North, where rapidly changing demographics will undoubtedly force the question of reunification onto the political agenda in the Republic in the not-too-distant future.
In the light of this, it is important that the serious left continues to emphasise the holistic nature of the situation and the need for a definitive solution. Capitalism and imperialism lie at the heart of a problem that will only be overcome through socialism built within a workers’ republic.

One hundred and fifty years after James Connolly’s birth we have no excuse for looking in the wrong direction, because we know where we need to go and what is to be done.

1. Adrian Weckler, “How multinational IT firms are influencing on-line safety, housing and taxation,” Sunday Independent, 28 January 2018.
2. See Martin Wolf, “Let knowledge spread around the world,” Financial Times, 25 April 2018