Irish Political Economy for

Trade Unionists and

Activists

1.What is Political Economy?

Dr. Conor McCabeUCD School of Social Justice Feb 2014

1.Introduction to political economy

2. The development of the Irish State

3. The IFSC and the global financial system

4. Debt: sovereign, private and mortgage-related

5. Austerity, tax avoidance and privatization

6. Gender and austerity

7. Alternatives (with guest speaker)

8. Conclusion

Political Economy –

Looks to understand economic activity by observing it as part of a dynamic, contradictory social system.

The course of human society “never doth run smooth.”

Political Economy –

Looks to understand economic activity by observing it as part of a dynamic, contradictory social system.

The course of human society “never doth run smooth.”

In terms of Irish political economy, that social system is a capitalist social system.

Looking to understand capitalism through the ‘rules’ of the market is akin to trying to understand football by staring at the linesman.

Political Economy –

Looks to understand economic activity by observing it as part of a dynamic, contradictory social system.

The course of human society “never doth run smooth.”

In terms of Irish political economy, that social system is a capitalist social system.

Looking to understand capitalism through the ‘rules’ of the market is akin to trying to understand football by staring at the linesman.

If you want to know how something works, you have got to watch the forces at play

research

[Lehman collapse, 15 September 2008 - headlines 16 Sep 2008]

activism

Economics is a social subject.

It’s the interactions and relationships between people that make the economy go around.

Debates over economic issues are not technical debates where expertise alone settles the day. They are deeply political debates.

Economics is a social subject.

It’s the interactions and relationships between people that make the economy go around.

Debates over economic issues are not technical debates where expertise alone settles the day. They are deeply political debates.

A society in which ordinary people know more about economics, and recognize the often conflicting interests at stake in the economy, is a society in which more people will feel confident deciding for themselves what’s best – instead of trusting the experts. It will be a more democratic society.

Economics is a social subject.

It’s the interactions and relationships between people that make the economy go around.

Debates over economic issues are not technical debates where expertise alone settles the day. They are deeply political debates.

A society in which ordinary people know more about economics, and recognize the often conflicting interests at stake in the economy, is a society in which more people will feel confident deciding for themselves what’s best – instead of trusting the experts. It will be a more democratic society.

Quite apart from whether you think capitalism is good or bad, capitalism is something we must study. It’s the economy we live in, the economy we know.

Capitalism is first and foremost a historical social system.

Capitalism is first and foremost a historical social system.

What distinguishes the historical social system we are calling historical capitalism is that in this historical system capital came to be used (invested) in a very special way. It came to be used with the primary objective or intent of self-expansion.

Capitalism is first and foremost a historical social system.

What distinguishes the historical social system we are calling historical capitalism is that in this historical system capital came to be used (invested) in a very special way. It came to be used with the primary objective or intent of self-expansion.

It was this relentless and curiously self-regarding goal of the holder of capital, the accumulation of still more capital, and the relations this holder of capital had therefore to establish with other persons in order to achieve this goal, which we denominate as capitalism.

The purpose of capitalism is self-expansion – capital begets capital – and it does so by monetizing social value and human labour.

This is a circuit of transformation.

The purpose of capitalism is self-expansion – capital begets capital – and it does so by monetizing social value and human labour.

This is a circuit of transformation.

Historical capitalism involved therefore the widespread commodification of processes – not merely exchange processes, but production processes, distribution processes, and investment processes – that had previously been conducted other than via a ‘market’.

The purpose of capitalism is self-expansion – capital begets capital – and it does so by monetizing social value and human labour.

This is a circuit of transformation.

Historical capitalism involved therefore the widespread commodification of processes – not merely exchange processes, but production processes, distribution processes, and investment processes – that had previously been conducted other than via a ‘market’.

And, in the course of seeking to accumulate more and more capital, capitalists have sought to commodify more and more of these social processes in all spheres of economic life.

Immanuel Wallerstein, Historical Capitalism (London: Verso, 2011), 15.

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“Marx, for example, emphasizes that all of these forms of capital – merchants’ capital, money capital and rent on land – had an historical existence which stretches back well before the advent of industrial capital in the modern sense.

“Marx, for example, emphasizes that all of these forms of capital – merchants’ capital, money capital and rent on land – had an historical existence which stretches back well before the advent of industrial capital in the modern sense.

We therefore have to consider an historical process of transformation in which these separate and independently powerful forms of capital became integrated into a purely capitalist mode of production.

“Marx, for example, emphasizes that all of these forms of capital – merchants’ capital, money capital and rent on land – had an historical existence which stretches back well before the advent of industrial capital in the modern sense.

We therefore have to consider an historical process of transformation in which these separate and independently powerful forms of capital became integrated into a purely capitalist mode of production.

These different forms of capital had to be rendered subservient to a circulation process dominated by the production of surplus value by wage labour.

“Marx, for example, emphasizes that all of these forms of capital – merchants’ capital, money capital and rent on land – had an historical existence which stretches back well before the advent of industrial capital in the modern sense.

We therefore have to consider an historical process of transformation in which these separate and independently powerful forms of capital became integrated into a purely capitalist mode of production.

These different forms of capital had to be rendered subservient to a circulation process dominated by the production of surplus value by wage labour.

The form and manner of this historical process must therefore be a focus of attention.”

David Harvey, Limits to Capital (London: Verso, 2006), 73.

The purpose of capitalism is self-expansion – capital begets capital – and it does so by monetizing social value and human labour. This is a circuit of transformation.

“Historical capitalism involved therefore the widespread commodification of processes – not merely exchange processes, but production processes, distribution processes, and investment processes – that had previously been conducted other than via a ‘market’. And, in the course of seeking to accumulate more and more capital, capitalists have sought to commodify more and more of these social processes in all spheres of economic life.”

Immanuel Wallerstein, Historical Capitalism (London: Verso, 2011), 15.

“Capitalism only triumphs when it becomes identified with the state, when it is the state.

In its first great phase, that of the Italian city-states of Venice, Genoa and Florence, power lay in the hands of the moneyed elite. In seventeenth-century Holland the aristocracy of the Regents governed for the benefit and even according to the directives of the businessmen, merchants, and money-lenders.

Likewise, in England the Glorious Revolution of 1688 marked the accession of business similar to that in Holland.” (Braudel 1977)

The fusion of state and capital was the vital ingredient in the emergence of a distinctly capitalist layer on top of, and in antithesis to, the layer of market economy.

Over the last quarter of a century something fundamental seems to have changed in the way in which capitalism works.

The tendency since 1970 has been towards greater geographical mobility of capital.

Financialization refers to the increasing importance of financial markets, financial motives, financial institutions and financial elites in the operation of the economy and its governing institutions, both at the national and international levels.

Gerald Epstein, ‘Financialization, Rentier Interests, and Central Bank Policy’,2002

1970s – The Monetarist revolution

1980s – war on labour

1990s – Credit as a substitute for wage increases

2000s – Credit solution for wage stagnation fails

Present day – open conflict over monetary policy once again

“In the case of the United States, financialization during the 1990s led to a closer alignment of large industrial and financial firms in the U.S., leading to a greater emphasis by Alan Greenspan and the U.S. Federal Reserve in financial asset appreciation as a goal of monetary policy.”

Gerald Epstein (2001)

“In the case of the United States, financialization during the 1990s led to a closer alignment of large industrial and financial firms in the U.S., leading to a greater emphasis by Alan Greenspan and the U.S. Federal Reserve in financial asset appreciation as a goal of monetary policy.”

Gerald Epstein (2001)

“The goal of monetary expansion has been to do just enough to stabilize financial asset prices without going far enough to produce catch-up growth in the labor market”

Matthew Yglesias, Rentiers and Financialization (2011)

“What [the wealthy], businesses and banks share is a common interest in supporting asset prices, a lack of interest in seeking full employment unless it is a prerequisite for supporting asset prices, and an aversion to any policies that can trigger wage inflation.”

Ashwin Parameswares (2011)

Irish Political Economy for

Trade Unionists and

Activists

1.What is Political Economy?

Dr. Conor McCabeUCD School of Social Justice Feb 2014