Ireland, Small Open Economies and European Integration. Lost in Transition, by David Begg, Palgrave Macmillan, 238 pp, €68, ISBN: 978-1137559609
With the current fear of chaos surrounding public sector pay policy in Ireland and the flexing of trade union muscle, there has been much talk of a need to return to what Danny McCoy, director general of the employers’ body, IBEC, has called the “orderly framework” of a collective agreement, at least in the public sector. Some – though, according to McCoy, not IBEC – have rediscovered a sympathy for the system of social partnership that was a central feature of the historically greatest era of Irish growth and development which began in 1987. It is perhaps a sign of the times that even Fintan O’Toole, a regular critic of the system throughout its life, has recently been emphasising its positive features.
Social partnership ended abruptly when the global financial crisis hit Ireland like a tsunami in 2009, when finance minister Brian Lenihan forced through a return to the hegemony of the Department of Finance over government policy. This was despite proposals from the Irish Congress of Trade Unions (ICTU) for a negotiated strategy to tackle the national economic emergency, backed up, as now seems to be forgotten, by a hundred-thousand-strong march by trade unionists through Dublin. As Brian Murphy and Mary O’Rourke revealed in their 2014 festschrift for Lenihan, In Calm and Crisis, taoiseach Brian Cowen argued in cabinet in favour of adopting the ICTU approach. Lenihan had his way. However, it appears that social partnership may very well soon be back on the agenda.
Social partnership was of course far more than a system of pay regulation, and encompassed a vast area of national economic, social and developmental strategy. It was no less than a system of nationally negotiated economic development strategy and welfare state building. As Ireland emerges from its economic nightmare, and re-enters a period of developmental growth, progressive thinking is again looking to develop new institutional forms to replace the rather crude and purely economistic governance regime that arguably had become necessary to deal with the financial crisis.
This context makes the appearance of David Begg’s book very timely indeed. Intensely, even passionately, argued, Begg’s work is not specifically about social partnership, but the policy context in which it operated. It is an in-depth examination of the historical performance of Ireland’s economic and policy-making institutions since the 1980s, and reaches even farther back again to examine their roots. The book is all the more significant for the fact that the author was himself a leading player in Irish affairs over that period. Begg was not only general secretary of the Irish Congress of Trade Unions (ICTU) from 2001 to 2015, when it played a central role in social partnership, but before that chief executive of the large third world development NGO, Concern, and before that again general secretary of the Communications Workers’ Union. He was also at the heart of other central institutions of state and civil society during the years of boom, bust and recovery, including as a governor of the Central Bank, as a key figure in that central institution of Irish negotiated policy, the National Economic and Social Council (NESC), and a board member of the Irish Times Trust, which governs the most influential media outlet in the state. He was, as Gary Murphy noted in a review of this book in The Irish Times, “the ultimate insider”. But he was also something else: a trade union leader of some intellectual power and a self-proclaimed social democrat with a strong personal Catholic social outlook. That he would have interesting and insightful things to say could be anticipated.
The reader should be warned, however, that this is no easy read. Nor is it very accessible in the more immediate sense that, as an “academic publication” (a slightly rewritten version of a PhD thesis completed at NUI Maynooth in 2015), it retails at a whopping €68, and hence is destined mainly for university libraries. But it will undoubtedly be widely read among Ireland’s policy elites, and deservedly so, because for all its academic structure, it is not a dry book, but rather a very political, even polemical, work. For Begg takes sides. He presents a treatise that he unapologetically labels “social democratic”. In his conclusions he argues for a restoration of something like social partnership and a more deeply “intellectual” commitment to further European economic and social integration. (His judgement on the historical performance of the Irish state ‑ prefigured in the book’s subtitle: “Lost in Transition” ‑ is, however, less than convincing.)
The period Begg reviews saw Europe challenged by the collapse of Soviet communism, the rise of neo-liberal economics, the emergence of the US as (the) global superstate, the globalisation and financialisation of the world economy, and finally the Great Crash of 2008, resulting from those very developments as well as the ensuing crisis and recovery, whose outcome is as yet very far from clear. The EU, or at least the eurozone, has responded to the crisis with a strategy which, while often conflicted, chaotic in its implementation and very much incomplete, is edging forward towards finalising economic and monetary integration. Or is it?
Begg ranges over the institutional pre-histories of Ireland and the three “comparator” states he has chosen ‑ Holland, Finland and Denmark ‑ as well as the economics and politics of the global crisis, and draws on a wide literature from the theoretical debates interpreting the meaning of it all. The book is peppered with quotes from interviews with an array of leading political and societal actors from all four countries, particularly Ireland. Such quoted views range from the revealing to the glib, and one of the irritating aspects of the book is the author’s tendency all too often to avoid questioning his interviewees’ perceptions and to use quotes from them far too uncritically in support of his argument.
To take just one example of an interviewee getting away with a tall story, Begg quotes John Bruton dismissing the notion of Fine Gael ever having been Ireland’s Christian Democratic party. This of itself is an interesting argument. Christian Democracy indeed created the social partnership systems of Western Europe after the war, while Fine Gael had always been hostile to such an approach in Ireland, though it worked it while briefly in Government in 1994-97). Bruton describes Fine Gael’s traditions as Redmondite parliamentarism and “constitutional nationalism” rather than Christian Democracy. But in something of a howler, he also says that the party’s only real flirtation with Christian Democracy was when it “got caught up in the corporatist thinking” of the 1930s. Begg allows this statement to pass unchallenged. But the “corporatism” espoused by the Fine Gael of the 1930s was not the democratic corporatism of 1930s European Christian Democrats, many of whom were profoundly anti-fascist and, like Konrad Adenauer, spent years in concentration camps. Fine Gael “corporatism”, following its foundation in 1933 under General Eoin O’Duffy, was instead part of its general enthusiasm for the authoritarian and decidedly undemocratic version of “corporatism” implemented in Salazar’s Portugal and Mussolini’s fascist Italy.
But, to return to the substance of the book: one of Begg’s central hypotheses – for there are several – is that the success of the “comparator states”, in contrast to Ireland, lay in their “embedded” systems of “democratic corporatism”. Building on classic works of political economy (notably Polanyi, Lijphart and others), as well as “new institutionalist” theory (as developed by Mark Blythe and others) and comparative studies of small European economies (Katzenstein, Mjoset), Begg defines the “democratic corporatism” that evolved in the comparator countries as characterised by a consensus-orientated political system (proportional representation, coalition governments) allied to centralised bargaining between state, industry and labour, setting both macroeconomic policy and regulating wages and social provision. The whole is buttressed by a “culture of social partnership” which Begg sees in the comparator states as occurring under a broad social democratic ideological “hegemony”, to which even conservative forces subscribe. This views society as requiring a collaboration of classes and social forces, a “negotiated economy”, conducted by the leadership “elites” of the respective “peak organisations”. The glue of the system is a national sense of having to work together to succeed economically in a larger world, a national ideology forged through histories of small state survival. In moments of existential economic challenge, the “default setting” is to return to a negotiated corporatist solution.
To what extent this “social democratic hegemony” can be said to still pertain to any serious degree in the comparator states is not a subject Begg addresses, though even a brief look at any one of them would surely reveal it as very questionable. Indeed, with the Brexit and Trump phenomena, the social democratic consensus of postwar Europe seems ever more to be receding as an historic era. We will return to this point.
Begg sets out, he writes, to “achieve theoretically plausible explanations for Ireland’s somewhat erratic progress over a quarter of a century and compare it with that of Finland, Denmark and the Netherlands through the lens of Euro integration”. He contrasts what he sees as the essential policy robustness of the “democratic corporatist” states to Ireland, which he portrays as more a tale of unrelieved woe. In its ninety-year existence, the Irish state had “four times looked into the abyss of economic desolation”. The causes of Ireland’s “failures” (a word which features all too regularly) are, in his view, many: the lack of a social democratic movement, let alone a social democratic policy consensus, a “failure” to develop an embedded democratic corporatism, a party political system based on “competing nationalisms” rather than class, a dysfunctional form of proportional representation that bred “populism” and “clientelism”, an (unexplained) “obsession with Independence”, and a chronic history of “institutional failure” (there it is again).
In all of these areas Ireland is described as having been as deficient as the comparator states have been proficient. In contrast to those states, which Begg characterises as heavily regulated mixed economies with robust welfare states ‑ “social market economies” ‑ Ireland is an outlier, an open market-driven lightly-regulated “liberal market economy” of the Anglo-American type. Begg sees a saving grace in Ireland’s condition in what he terms the “counter-tendencies” in its political economic makeup hemming in its liberal market tendencies, notably its tradition of state interventionism and experiments in social partnership, and it is on these that he bases a vague hope for a more “democratic corporatist” Irish future. He argues in his lengthy and most interesting Conclusions section that the prospects for such a development have been enhanced by Britain’s anticipated exit from the EU. This, he writes, will leave Ireland as the sole liberal economy in a social market block, whose increasing integration might be expected to shape Irish development steadily towards social-market norms.
In his choice of comparator states, it is fair to ask whether like is really being compared with like. This is especially so given the critical role he assigns to the histories of those states in the long evolution of their corporatist systems. But, unlike Ireland, for hundreds of years’ surely Denmark and Holland were rich, independent, even imperial powers, and democratic polities. Both had successfully industrialised over several hundred years and (as they still remained wealthy) could manage their recent relative political decline to small state status with relative ease. But they still remained wealthy. Holland today has a population and a GDP both about four times that of Ireland; before the Irish economic expansion of the 1990s, Irish GDP was closer to a mere tenth of that of Holland.
Finland, on the other hand, was a later emerging country, but as a former benignly ruled Swedish colony it had developed a significant industrial base and national bourgeoisie of mixed Finnish-Swedish roots. It blossomed economically during the country’s hundred years as part of the Russian empire, when it supplied specialised industrial products to the tsar’s primitive realm . Following independence and a fairly bloody civil war, it fought through World War Two in a pragmatic alliance with Nazi Germany. Its democracy and disciplined corporate structures enabled it to revive thereafter as a semi-command economy and supplier of quality industrial products to the Soviet Union. It achieved this position, rather than experiencing Soviet occupation, in part through a negotiated neutralism in the Cold War. At the time this was a great thorn in the side of NATO and American academics never tired of warning Europeans of the allegedly sinister threat of “Finlandisation” (Begg mentions none of this). Begg’s over-rosy presentation of Finland’s experience as a “successful democratic corporatist state” of the modern type overlooks the fact that this has been a relatively brief, and very recent, affair. The country had its own quite catastrophic financial crisis during its conversion to a western-style market economy and EU member state in the early 1990s (when youth unemployment reached 34 per cent). Its economic revival in the late 1990s and “employment miracle” (Begg), based on SME startups and economic and technological innovation, may not be surviving the collapse of Nokia all that well, and the current crisis has seen the rise of the radical right “True Finns” to second largest party, ahead of the social democrats.
Denmark, Begg’s most glowingly described comparator “model”, has long held a fascination for enthusiasts of economic development in Ireland. Sir Horace Plunkett, in his vision for agricultural cooperatives a hundred years ago, turned to it, as did Raymond Crotty in his plea for an intensive agricultural system in the 1960s. Begg sees the origins of Denmark’s social democratic system in the Prussian defeat of the 1860s, which gave rise to a liberal and proto-socialist internal development, with an “ethos” of “nation” and “class collaboration” to offset external threats. In Holland, the “Polder model” of inter-interest group collaboration had similar roots in a shared survivalist need, as a coastal society largely below sea-level. Its corporatist system – known as “Pillarisation” – arose from the compromise settlement between the roughly equal Catholic and Protestant populations (Begg does not mention this) and the stabilising of society through collaborative institutions representing these “Pillars”. Socio-economic class collaboration was in fact only later grafted onto this structure.
The historical formation of the comparator states is thus fairly far removed from that of Ireland’s. That surely should be grounds for at least a degree of caution regarding those states’ real comparability with Ireland. Although it is now something of a cliché to describe the colonial (and neo-colonial) determinants of Irish economic development, surely the Irish scope for institutional innovation in what for long was a subordinate and destitute region of another economy was extremely limited prior to political independence. While comparisons may be useful and fruitful, jumping to radical conclusions of Ireland’s “failures” in its institutional endeavours on the basis of such comparisons risks the danger of overstatement and distortion.
Begg bases his study strongly within the school of “new institutionalist” theory. This views “institutions” as not just formal public bodies, but as the whole spectrum of institutional relations including evolved policy-making and political structures, interests and lobbies, and even public intellectual discourse. Policy decisions in central institutions of the state arise from a mixture of political competition and bureaucratic rational choice, but are shaped by historically evolved “path-dependent” processes of idea formation, debate and acceptance. This process is known in the academic world as “historical institutionalism”. But it is not a purely structurally determined interpretation. The theory places much emphasis on the very human elements shaping how systems accept (or exclude), interpret, analyse and process ideas through to policy formation. This particular process is known in the jargon of the academy as “ideational institutionalism”. Individuals, leaders and “political innovators” play a central role, particularly in times of crisis, when traditional policy processes and prescriptions fail. Institutional systems that have evolved in such a way as to enable crisis-resolving new ideas to percolate through to policy formation are judged to be functional, creative systems. For Begg, the evolved “democratic corporatism” of the comparator states are examples of such a desirable, institutionally “creative” system of balanced and effective policy innovation and implementation. Ireland, in this study, appears to present a case study of the opposite.
It is a great pity that Begg did not draw more on his own extensive experiences at the heart of Irish partnership and policy-making. Instead he defers to the judgements and assessments of that system by others. He not only writes himself out of the story, but also many other key players. One exception is Seán Lemass, to whom he ascribes a key innovatory role in the 1950s-60s in transforming the initially rather lame agriculturalist plans of the civil servant TK Whitaker into a platform for industrial development. When it was published, the ground-breaking 1958 plan, Economic Development, and its successor, immediately took on an iconic status in Ireland’s industrial expansion and opening to free trade. It even became a popular bestseller and the slim blue volume proudly adorned the bookshelves of many patriotic homes. Today that plan is rarely mentioned without reverential reference to its authorship by “Lemass-Whitaker”, and indeed it would be absurd if it was. But surely its 1987 equivalent, the Programme for National Recovery (PNR), deserves at least equal billing and an equal nod to its authorship, given that the PNR inaugurated a transformation of Ireland that was to be even more thoroughgoing and successful than Economic Development ever had been. The PNR was both government programme and the strategy agreed by consensus among the social partners – the state, trade unions, business and employer bodies and farmer organisations. But the PNR in Begg’s account remains curiously authorless. Charles Haughey, let alone “Haughey-Ó hUiginn” (given the key role in inventing the PNR played by that great civil servant), rarely earns a mention, let alone as the undeniable authors of the historic economic revival that followed from PNR and shaped Ireland’s development to the end of the twentieth century.
Although Begg recognises the deep institutional innovation that social partnership represented in Ireland, he passes over its origins with little comment and does not explain how such an institutional revolution could have occurred in what he is basically assessing as an institutionally failed entity, if not quite the “failed state” postulated in recent years by Fintan O’Toole. Yet surely those origins at least partly refute the charge of endemic Irish institutional failure? Instead, the PNR is presented as simply having “happened” in 1987, replacing previous deeply-rooted confrontational industrial relations, entrepreneurial under-performance and exclusivist bureaucratic government. How or why this fundamental and spectacular break in Irish socio-economic governance traditions might have occurred is simply not discusssed. The PNR and subsequent partnership agreements are presented as simply flowing from an impersonal structural process of “Europeanisation”. At one point Begg does briefly ‑ if unconvincingly – identify the “ideational innovation” that started it all as the 1986 report by the cross-interest institution, the National Economic and Social Council (NESC), Strategy for Development 1986-1990.
The air-brushing of Haughey from the story of the Irish transformation of the 1990s – unthinkable if applied to Lemass and the 1960s – is a common and mysterious flaw in much recent Irish history-writing. The 1987 social partnership agreement had a precedent of a type in the redistributionist state-employer-union agreements of the late seventies (also substantially initiated by Haughey), the National Understandings of 1978-82. But the shift in 1987 to the PNR agreement encompassing a consensus on macroeconomic policy (within a debt reduction framework) as well as on wages, salaries and social provision, represented a profound break in Irish institutional arrangements that went far beyond the earlier purely redistributionist bargaining, and this break should surely be explained by some reference to its historical roots. This Begg does not do, while competently describing similar, though mostly later and less comprehensive transitions in the form of tripartite agreements in the comparator states.
Begg mentions Jacques Delors’s 1986 initiative giving a place to “social dialogue” in the process of the European Single Market as a possible explanation for the mystery of the Irish departure of 1987, but in reality Delors’s programme only gathered steam after 1988 and is rarely even referenced in the copious documentation that accompanied the foundation of the Irish partnership system. Prior to Delors’s initiative the then European Community had played little role in matters of socio-economic governance. The origins of the 1987 Irish agreement were in fact almost entirely home-grown and also predate the NESC 1986 report to which Begg gives some innovatory significance. That report was much more a product than a creator or driver of the process. Haughey, who later wrote that his inspiration for the 1987 initiative arose initially from a discussion on German corporatism he had with Helmut Schmidt (the German social democratic chancellor) in 1982, after which he immediately sought talks with unions and employers on the possibilities of introducing such an approach in Ireland (see his paper on this on the website www.charlesjhaughey.com).
As Begg does not give this vital history, perhaps it is useful to recap on it here. Haughey’s 1982 government collapsed before he could realise this plan, to be replaced by four years of Garret FitzGerald’s Fine Gael coalition government with Labour, which banished any mention of tripartite agreements to the outer wilderness. As two highly regarded scholars, Bacarro and Simoni, have put it, the FitzGerald coalition of 1983-86 dispensed with corporatist “experiments”, “unwilling to regard collective actors, and especially trade unions, as more than ‘lobbying interests’”. Professor Bill Roche has described FitzGerald as even in the 1960s a critic of Lemass’s “vocational-bureaucratic system of government”, and as imposing punitive pay restrictions on unions by diktat in the 1980s. FitzGerald himself, in his memoirs (All in a Life), recalled how under his government “meetings between us and the ICTU were formal, often tense, and on the whole unproductive”. The 1984 government plan – Building on Reality – ignored NESC proposals for industrial strategy and was condemned by the ICTU. Government sidelined the tripartite-governed NESC, to the objections of Congress, setting up instead an “expert”-led “National Planning Board”. By 1985 the FitzGerald government’s relations with the unions were so poor that the ICTU turned down government suggestions of a meeting. The Labour Party for its part, tied to old ideas of statist economic planning, was at least as hostile as FitzGerald to the idea of the state, employers and unions co-managing a market economy.
In opposition, the Schmidt formula became Haughey’s idée fixe for his eventual return to power. At his orders – as Bertie Ahern relates in his memoirs ‑ his ministers-in-waiting worked behind the scenes to build relations with business leaders, unions and others to prepare for a tripartite strategy to implement a programme for prosperity and growth, The Way Forward, on the party’s return to power. Ahern was sent with union officials and businessmen to Austria to examine its corporatist structures and on their return Haughey announced his plan to a Fianna Fáil trade union conference (in those days the great majority of trade unionists were Fianna Fáil voters) for a fundamental shift in Irish socio-economic governance along “European lines”.
Pádraig Ó hUiginn, secretary general of the Department of the Taoiseach was removed by FitzGerald, who didn’t trust him, to the remote role of chairing the NESC, which FitzGerald had made a policy backwater. Ó hUiginn had remained loyal to Haughey’s recovery strategy and coordinated the production of a document to lay the basis for a tripartite consensus on development priorities. In 1985 he sought to interest FitzGerald in the radical proposals emerging, including for a social partnership system, but was met with a deaf ear. The NESC report that emerged was that which Begg refers to (Strategy for Development 1986-1990). On returning to power, Haughey met the ICTU and other “social partners” on virtually a weekly basis until an agreement was thrashed out on the basis of this report plus his own party’s plans developed five years previously. His only condition on the unions in entering a radical, comprehensive agreement was that they accept as the framework strict adherence to a debt reduction strategy. He made it clear that social partnership was not simply a revived form of the old National Understandings, but a new centralised system of social partnership that would govern not only pay issues but also develop consensus strategic plans for virtually all aspects of economic and social development. He called it a new and “permanent … way of doing things”.
Perhaps Begg cannot describe this institutional transformation in the way that it actually occurred because of his attachment to the idea of a fundamental Irish “institutional failure” which was incapable of producing “innovation” at crucial turning points. And also perhaps because he shares the reluctance so prevalent in Irish political commentary and academic writing to ascribe to Haughey any great innovatory role in Irish development.
His description of Ireland’s relationship with Europe is also curious. Approvingly again quoting John Bruton, he describes it as based on an “intellectual failure” to engage with the European project or even to “grasp what the whole thing was about”. Instead the relationship to Europe was purely one of “grant seeking”, devoid of the “intellectual commitment” to European integration he claims was and is the case with the comparator states. It can certainly be argued that Europe itself suffers from an ongoing identity crisis and indeed even from an “intellectual failure” to have produced any convincing narrative of itself or its purpose, beyond the technocratic. But singling out an Irish “failure” in European terms, as Begg does, is not at all convincing. Indeed the very comparator states he chooses have themselves since produced widely popular anti-European movements while nothing comparable has (as yet) arisen in Ireland. And surely it can hardly be disputed that Denmark’s engagement with European integration has been of the most minimalist variety. Begg does, however, concede some sense of an Irish strategy, particularly in the close alliance which Irish political leaders and civil servants carefully and consciously nurtured with the Commission since the 1970s. Was this alliance not itself an expression of a serious Irish commitment to European integration, however conditional? And this was a strategy shared by FitzGerald and Haughey who, for all their other differences, were undoubtedly the two most European taoisigh Ireland has ever had.
Begg approvingly quotes Ruth Barrington, chair of the Irish Times Trust, on the issue of Ireland and Europe:
I shudder to think what this country would be like without Europe – perhaps the Isle of Man would be an example – private affluence and public squalor. EU integration was the best thing that happened to the country. It brought social harmonisation, including equal pay. Left to ourselves that would have taken another generation.
This is the Irish “failure” thesis writ large and expressed through a mind-set that perhaps Begg should have taken less uncritically on board. Ireland in the early 1970s had just come through a decade of extraordinary change, economic growth and social upheaval. Furthermore, liberalism seemed to have found its head, with a wholesale unbanning of thousands of books in 1966 and the introduction of free secondary education in 1968. It was a country in a generous and expansionary mood. The fight by some entrenched, but doomed, interests to prevent equal pay had very much the ring of a last-ditch stand about it. Indeed equal pay had been conceded in Britain in the same context of EEC membership requirements just three years previously, and not before a large strike by women trade unionists forced the state’s hand, where they found a champion in Barbara Castle.
Begg relates how the Irish “developmental” economic strategy of the 1990s gave way to the economics of “speculation” in the early 2000s as neo-liberal ideas gained ascendancy globally and speculative banking “financialised” the world economy. It might be added that this ultimately catastrophic process of financialisation had been initiated by the repeal of the Glass-Steagall Act in the US under the Clinton presidency. Yet in the European context, in one of his most curious comments, Begg describes Britain as “Ireland’s nearest neighbour and closest ally” in the EU. This is a strange assessment. Throughout the 1990s, while Britain was promoting neo-liberalism in Europe against the “socialism” of the Commission, Britain had in fact been anything but Ireland’s “closest ally”. Throughout that decade Ireland’s position had been defined by close alignment with France and, particularly, Germany, engineered by Haughey in 1990 at the time when the Community confronted the prospect of German reunification. Indeed that Franco-German alliance was what drove and bankrolled Ireland’s version of the Marshal Plan in the form of the greatest transfer of Structural Funds ever enjoyed by any EU member state before or since. It was only in the later, post-2002, era of what Begg describes as economic “speculation” that Britain could be said, in its opposition to European integration, to have become Ireland’s “closest ally” in the EU. Like Britain, in this period Ireland too opposed tighter banking regulation as well as measures seen as restricting business freedoms or threatening fiscal sovereignty in the shape of a common corporation tax base. It was on this reactionary agenda that the new-found “closest ally” status developed, as John Bruton himself stated recently (though in his view it was something positive) in an article on Brexit in The Irish Times.
Begg has interesting and perceptive things to say about the impact of globalism and financialisation on the EU itself, and particularly on the neo-liberal turn in European Monetary Union (EMU) policy in this period. He provides considerable detail on the structural weaknesses (the oft-cited “design flaws”) of the euro currency and the need for a revamped, politicised and socially rebalanced programme of economic integration. Although somewhat ambiguous about the direction Europe has been taking, he rightly argues that without such a rebalancing the “European project” could quite easily founder on the rocks of revived reactionary nationalist passions. Despite Europe’s chronic lack of focus, he nevertheless holds that the drive to complete EMU must be pursued and that Ireland should engage more enthusiastically and with greater “intellectual commitment” with that process. Given the weakness of European leadership at this stage, this might be something of a tall order.
In contrast to his nuanced and understanding account of the vicissitudes of Finland’s very uneven path of development in the twentieth century and the outside forces often determining it, Begg’s account of pre-EEC Ireland is disabled by his narrative of repeated “failure”. There is the “failure” of class politics to emerge, due to a polity dominated by “competing nationalisms”. But what do these terms mean? He himself describes how social democracy evolved in Denmark as a “developmentalist” alliance of workers, small farmers and the small business class within an overall national survival “ethos”, and to have itself been very much a “competing nationalism” against the right conservatives and others who would have defined Danish nationalism otherwise. Fianna Fáil was certainly not rooted in the labour movement, and was hence never a classic European-type social democratic movement. But throughout the 1920s-70s period, as indeed in the Sinn Féin movement that preceded it in 1917-22, surely its backbone too included the mass of Irish trade unionists, small farmers and the small business class, bound together by a “developmentalist” programme in which a form of democratic corporatism was certainly implicit, and very often explicit. During the decades of Fianna Fáil political hegemony Irish trade unionism grew to become one of the relatively largest movements in Europe. Indeed both Lemass and Ahern, as Begg notes wearily, were fond of describing Fianna Fáil as “Ireland’s real Labour Party”.
Following its foundation, the Irish state was one of the poorest in 1920s Europe, far poorer and more underdeveloped economically than any of Begg’s “comparator states”. Even Finland had a substantial industrial base inherited from its Swedish-Russian period, while the Irish state began life stripped of the industrial base of Belfast. Ireland had emerged only a generation previously from the dominance of what Michael Davitt described as a form of landed feudalism , was beset by relentless population decline and widespread destitution (in the 1890s it had ten times more workhouses per head of population than any other region of the then UK), and had little in the way of a capital base, despite a significant bourgeois energy that had regularly attempted, heroically but vainly, to break through during the nineteenth century. Yet Begg blithely describes the governments of the 1920s as implementing a “laissez faire agricultural strategy” that, of course, “failed”. This is unfair. Those early governments, contending with chronic economic disadvantages (there was also a postwar world economic slump), did in fact seek to kickstart industrialisation through major infrastructural developments, such as they could afford, most famously the Árd na Crusha scheme on the Shannon, at the time the largest such engineering project in Europe. They also nationalised electricity supply, continued the industrial relations arbitration schemes established by the Republican First Dáil, maintained the rudimentary welfare infrastructure inherited from British rule and legalised the right to strike in the public service when it was still outlawed in Britain. Summarising this mix of pragmatic and visionary innovation in a context of painfully bare resources as a “laissez faire agricultural strategy” hardly does those governments justice.
The protectionist era of what Begg describes as the “import substitute industrialisation” of the de Valera governments he credits with some minor achievements, though it too is charged with a “failure to target industries that might succeed”. But what critics of protectionism never address is the fact that there was no “open economy” option on offer in the world of that time, except that of reverting to regional supplier status within the British market. That was something determinedly resisted by de Valera in the Economic War, to Ireland’s undoubted long-term benefit. Begg disqualifies this as an irrational “obsession with independence”. But the entire world was in recession at the time and in the grip of protectionist policies, and while many economies, including those of the “comparator states”, reeled in deep economic crisis, the de Valera governments managed to create an expanding industrial base, partly through nationalised industries, expanded vocational education, doubled industrial employment and created a welfare state which, while rudimentary and poorer than Britain’s, was not, in the 1930s, less generous in its provision. In the war years the actions of the Irish state in achieving and successfully managing a policy of neutrality (which each of the comparator states also attempted but failed to realise) can surely be described as anything but an “institutional failure”.
The protectionist economy only ended in the 1950s, but what option had there been to end it earlier? Again the 1950s are seen as another era of “failure”. But the wartorn European economies were in no less a desperate state at first, and only revived through an American-financed reconstruction determined by US geopolitical strategy. Begg believes that more could have been made of Irish participation in the structures of the American-driven European recovery. It was a “lost opportunity” from which Ireland “cut itself off”. It is difficult to see just how this was the case. Immediately after the war Ireland attempted to join the new international bodies emerging, including the UN and Bretton Woods, but was prevented from doing so by Soviet veto. It immediately became involved in the US-inspired development bodies the OEEC and OECD, when the option to do so was allowed. The European Free Trade Area (EFTA), on the other hand, which Britain created as a rival to the emerging Common Market, was ‑ though Lemass did consider it ‑ hardly an option, because, as Begg rightly says, Ireland’s history set it against supporting such an obviously a crude project to derail the nascent EEC. Begg sees Ireland’s 1961 application to join the EEC as determined solely by Britain’s decision to seek membership. But this too is a simplification. As recent studies have shown, Irish governments in the 1960s secretly decided to press on with the case for joining even if Britain remained out. When the actual option of opening to free trade and to the EEC arrived, there was little in the nature of “institutional failure” in the Irish state (or popular) response. It might be added that the Irish government also reacted to the surprise British decision three decades later to remain out of the euro with a blunt determination to remain in it, and also, apart from a brief flurry of establishment panic, seems to be equally sanguine at this stage about its ability and capacity to cope with the undoubtedly challenging consequences of Brexit.
Although this book is encumbered by an unrelenting narrative of endemic Irish “institutional failure”, Begg does have interesting things to say about the 1990s economic take-off. The era of high-tech industry arrived at a fortuitous time, rendering peripherality a far less important barrier to open economic development than it had been previously. After all, air-freighting a million micro-chips worth millions of dollars by a single airplane was a far less costly business proposition than the older challenge of moving heavy second-rate industrial goods of much less “added value” by sea and road to markets abroad. Ireland indeed became a test case of “successful” globalisation while much of Europe languished in high unemployment, and ultimately, as Begg concedes, delivered the most impressive employment growth of all the comparator states in that decade (the Irish workforce growing from under one million to over two million). This was accompanied, thanks to social partnership, and especially to the input of the unions, who, as Begg rightly states, saw themselves fulfilling the social democratic function which the ill-focused Irish Labour Party never could achieve, of building a generous and sophisticated welfare state. This strategic perspective of the unions was given a very focused orientation by a substantial pamphlet by SIPTU economist Manus O’Riordan, The voice of a thinking intelligent movement : James Larkin Junior and the ideological modernisation of Irish trade unionism. This had originally appeared as an article in the Labour History journal Saothar, but rapidly gained iconic status among trade union leaders in the mid-1990s.
Begg describes the 1993 strategic (but initially involuntary) devaluation of the Irish pound, which had seemed a desperate measure at the time, as in fact the decisive event kickstarting the industrial take-off by providing a competitive advantage at a critical time in Irish economic development. He describes Ireland’s other trump cards – such as the education policies pursued since the 1960s, the English language, a young and comparatively well-educated and adaptable population – coupled with the interest rate stability of EMU, as simply “the icing” on that cake. This seems an unduly reductionist argument. Also, and equally puzzling, he argues that the 1990s surge in Foreign Direct Investment (FDI) – which he describes as our “imported capitalism” ‑ and the spectacular productivity increases of that period demonstrated a closer affinity to Anglo-American neo-liberalism than to the “European social model”. Nevertheless, the massive structural fund investment secured from Europe (surely by a well-functioning institutional apparatus which had the political foresight to welcome German unification) was what Begg perceptively describes as “Ireland’s Marshall Plan”. The fate of Denmark and the Netherlands in the 1950s-70s, for all their democratic corporatism, would have been a very different one without that American injection. And the structural fund injection in the Irish case was no different.
Begg refers to another Irish problem, the “weakness of the indigenous capitalist class”, but does not greatly develop the point. But surely there were numerous attempts, from the 1920s to the 1980s, to employ government policies to coax such a class into existence. As the take-off after 1990 showed, and indeed as many entrepreneurial activities in the Irish economy back to the nineteenth century had shown, an entrepreneurial spirit itself had never been lacking. But an entrepreneurial class did emerge under opening trade conditions from the late 1960s, and then with a real vengeance from the 1990s. In an interview when he launched his memoirs a few years ago, Jefferson Smurfit remarked how in the 1960s there were at best two Irish entrepreneurs who had made it into the elite of global capitalism (himself included), but that now they could be counted in their hundreds. Ireland’s problem before the 1960s was in fact a chronic absence of development capital. Begg appears to miss this point. He refers to the persistence of a rentier class which saw Ireland as nothing more than a source of extraction for financial investment “abroad”, but treads this issue with care.
A Maynooth University sociologist, Peter Murray (in Facilitating the Future, 2009), has been a lot more specific, describing the continued dominance down to the 1960s of large business and finance by the pre-Independence Protestant commercial elite who had a dogged aversion to investing in domestic enterprise and instead routinely invested their accrued deposits in safe British bonds and securities. This problem had in fact been identified long ago by Arthur Griffith and had been a regular complaint of Ernest Bythe, finance minister in the 1920s Free State, and many others. In the Inter-Party Government of 1948-51 Seán MacBride also identified it as the existential problem stifling the potential for Irish industrial development and proposed a massive injection of state capital to drive it instead. As recently as 1983 Pádraig White, the dynamic ceo of the Industrial Development Authority (IDA), in an influential article in the Journal of the Statistical and Social Inquiry Society of Ireland, argued that to overcome this problem it was essential to prioritise foreign direct investment (FDI) to build an Irish capital base. He criticised the proposed Telesis strategy of building Irish industrial “winners” as Ireland’s weakness was not a lack of enterprise but an absence of venture capital. He condemned the unproductive “rent-seeking” that characterised the old Irish (in fact Anglo-Irish) commercial elite and starved industry of development capital. It was this argument, as expressed by White, more than any other factor that convinced the Haughey governments (and indeed the social partners) to prioritise an ambitious FDI-driven industrialisation, once that option became possible. If the Structural Funds functioned as Ireland’s Marshall Plan, the IDA became its venture capital engine. And once both were in place, an Irish entrepreneurial boom took place from the 1990s that finally put to bed the notion that there was some culturally peculiarity in the Irish which prevented the country generating a capitalism of its own.
Begg gives an interesting account of how the comparator states fared through the challenges of post-1980s globalisation. He effectively concedes that for Holland and Denmark, both suffering chronic unemployment at the start of the 1990s, the price of accommodation to globalisation was to be an extensive “restructuring” of their much vaunted corporatist and welfare structures. Holland “activated” its female population and dismantled its previously generous disability and early retirement provision. Indeed, Dutch corporatism has been greatly weakened by extensive privatisation (including even of health, employment and other social services) and the de-“pillarisation” of its governance structures. Trade union participation has declined to just 17 per cent in the private sector, leading some politicians to declare it “irrelevant” in the modern world. Denmark too has adapted its famous “flexicurity” system to a more workfare-type model, replaced tripartite education boards with a centralised management system, introduced discriminatory welfare provision for immigrants and replaced the state pensions system with sectoral “investment companies”.
For Begg, however, it appears an adequate argument for the survival of “democratic corporatism” in these countries that, despite the hollowing out of their tripartite cultures, national level accords, after being abandoned for a few years, have been returned to and that radical restructuring has been implemented by social democrat-led governments. But in each case this has been through parties long “reformed” along Blairite neo-liberal “New Labour” lines and, in the Dutch case, having severed their organisational links with the unions altogether. Somewhat incredibly, Begg describes this partial return to centralised agreements – a shadow of their former selves - as a “renaissance of democratic corporatism” and proof of its “ultimate sustainability”. Yet, in addition, in all three comparator states ‑ Denmark, Holland and Finland ‑ large, popular, anti-corporatist, anti-European parties have pushed the social democrats into third place. On the health of their democratic corporatist systems the jury must surely be out.
Indeed the undoubted deep crisis of social democracy in general, everywhere on the retreat since its transition to a professionalised, career-based politics, is not something the book addresses. There is a scene in the Danish TV series Borgen where the central figure, the leader of a small Green-Liberal party and aspiring prime minister, herself a former socialist, is chatting with her close friend, an old-dog social democratic trade unionist. He makes a short speech about the death of Old Labour, a long and agonising process that had set in once the “old labour movement goals” of public housing, general education and welfare, and – it might be added ‑ a negotiated economy, had been achieved. Whether the new activist Corbyn phenomenon in Britain is the start of a revitalisation of social democracy that challenges the modern populism of the right remains to be seen. With Trump in the White House it seems clear we are on the verge of a great wave of similar movements, rather than a revitalised social democracy, triumphing across the West. A convincing remake of social democracy dispensing with the neo-liberalism of the Blair era is undoubtedly urgently needed.
Begg sees EMU as the cause of much of the weakening of the democratic corporatist model in that it has imposed severe limitations on what can be decided or negotiated within nation states. This is indeed a very strong argument and addressing it is a prerequisite for any hope of reviving European social democracy. But he nevertheless sees the comparator states as having weathered the storms of globalisation and Europeanisation successfully. This he contrasts with Ireland, which he says had merely closed the material gap, but not the “capability gap”, with Europe, and hence lacked the institutional depth of the comparator countries. Its institutions “failed” at the moment of crisis in 2008, including those of social partnership, which simply “collapsed”. He provides a detailed though conventional narrative of the world financial crisis and refers to the different banking structures that shaped its varied impact on different countries. Perhaps it is there rather than in “institutional failure” that the locus of the forces determining the different experiences of the crisis should be sought. Corporatism did not really collapse in Ireland, and has revived in some sectors of the social state, not to mention its comeback in terms of the governance of public sector pay.
Begg laments the “collapse” of the Irish social partnership system in the face of the crisis in 2009. He ascribes the ease with which the government – driven at that stage chiefly by Lenihan – dispensed with it as being due to the “failure” (again!) to have more deeply embedded it at sectoral and company level. In this writer’s opinion, an impulse to restore a new form of social partnership remains strong in Irish culture, but the embedding argument is also a strong one. Indeed it was the conservatism of Irish trade unionism – a fear of ceding power from union officialdom to workers per se ‑ which arguably meant that ideas of industrial democracy, particularly the introduction of a collaborative European-style works council system, which were much discussed in the early years of partnership, were not proceeded with. This was a missed opportunity and should be returned to in any revival. And neither are Irish employers inherently hostile. Throughout the partnership years even the employer organisation, IBEC, remained fully engaged, including intellectually, in the corporatist experiment. Many critics of the system have blamed it for the rapid fall of private sector trade unionism in the private sector. But this is an insular argument. Private sector trade unionism, with notable exceptions in still industrial economies such as Germany and Sweden, has collapsed across the western world as a consequence of globalisation, not of social partnership. We have been here before – in the 1920s trade unionism similarly faced near extinction across private industry. There is no reason to believe that a relevant, sophisticated and modern form of representation could not revive, and collaborative forms of economic and company governance might very well be the way to bring it about.
The central propositions of this important book, firstly that the “comparator states” (Holland, Denmark and Finland) have come through the crisis because of their “democratic corporatist” systems and with those systems “unscathed”, and secondly that Ireland by comparison represents a case of “institutional failure”, cannot be said to be proven. But many of the points made in constructing the case are well made with often profound insight, and would benefit from further examination. Whether, as Begg suggests, the “counter-tendencies” to a fully-fledged liberal market economy that still stubbornly define the Irish case are sufficient basis on their own for a return to a consensus economic development strategy and a “negotiated economy” remains to be seen. Much will depend on the quality of leadership that emerges at political, social and trade union levels in the stormy Trump era we are now entering.
Philip O’Connor is a historian and occasional political commentator. He is currently researching the politics of the social partnership era in Ireland with the Department of Law and Government, Dublin City University. His most recent publication is an in-depth local history of the Irish revolution, Road to Independence: Howth, Sutton and Baldoyle Play their Part (Howth Free Press, 2016, 310pp.) Available from Books Upstairs, D'Olier St, Dublin.
Space to Think, an anthology bringing together more than fifty of the best pieces to have appeared in the Dublin Review of Books since its foundation ten years ago, was published in October. Selling in the shops at €25, it is also available to order online at a special price of €20 (to collect in Dublin) or €20 + post and packing charges as appropriate for shipping to addresses in Ireland and internationally. To buy online, follow the steps from the home page of our website.
One piece featured in Space to Think is Maurice Earls’s 2014 essay on the education of Catholic elites in Ireland, “One Onion, Many Layers”. Here is an extract:
Elite Catholics, who made up approximately three per cent of the later nineteenth century population, were by no means a homogeneous phenomenon. Some had substantial and long-established landholdings. Others had used capital accumulated in the previous century to buy or buy back land. Others were highly successful professionals whose families had recently graduated from the middle classes. (This is the element which saw significant nineteenth century growth.) Some, like the Murphys and Powers from Cork, were prosperous and long-established merchant families, whereas the commercial prosperity of others was more recent. There were also political differences. Some were quite happy to live under the crown while for others the urge to resist English power persisted.
The modern Catholic elite took its initial form in the wake of the final military defeat suffered at the end of the seventeenth century. Under Protestant hegemony, Catholic behaviour became pragmatic and unassertive. However, as the century neared its end and the urge in Westminster to penalise Catholics abated, anti-Catholic penal measures were gradually disbanded, leading to the partial opening of the restricted profession of law, and even of Trinity College itself, to Catholics.
In response to these changes there was a huge release of pent-up Catholic energy, which ultimately manifested itself politically in the O’Connellite movement. The ultimate objective of this new political phenomenon was to position property-owning Catholics at the heart of government and administration in a transformed Ireland, an Ireland characterised by an organic relationship between the social classes and a shared anglophone culture. It was a hugely ambitious programme, which among other things envisioned an Irish industrial revolution. Indeed, its heyday was perhaps the only time when elements of the Catholic elite came close to resembling a modern bourgeoisie.
When the O’Connellite movement collapsed, the vision and ambition of its tentative bourgeoisie declined correspondingly. But the erosion of Protestant dominance in the legal and administrative worlds continued, and this occurred at a time when the modern growth of the professions had begun. So, if there was to be no substantial Irish industrial bourgeoisie drawn from the Catholic elite, there was to be a growing and confident middle class and elite Catholic professional and administrative class.
The cultural politics which evolved and which were embraced to advance this process essentially involved a continuation of the O’Connellite tactic of appealing to centres of power in London over the heads of the existing and defensive possessors of privilege in Ireland. But this time the objectives were the micro advantages of position rather than legislative autonomy, an objective which did not focus attention again for a generation following O’Connell’s defeat. And when it did revive, in [Ciaran] O’Neill’s estimation, the desire for autonomy did not centrally engage this elite.