Irish Left Review Journal out now!

Very welcome news, and you can purchase a copy online here or pick one up at Connolly Books. The launch is there on the 2nd of February at 2 pm. Many thanks to Donagh for sending the text of the editorial to reprint in order to get a sense of the contents.

Irish Left Review Vol.1 No.1 January 2013 – Editorial

It is well known that the catalyst for the most recent international financial crisis in 2007 was the collapse in the value of complex financial instruments, mostly sub-prime mortgage-backed securities, following the bursting of the US property bubble. The systemic problems occurred because of the dominance of financialisation over capitalist economies and the increased use of shadow banking within the credit system.

The crisis in the Irish economy however, is seen as occurring as a consequence of an external collapse in banking internationally, following the collapse of Lehman Brothers, which knocked the stilts from under an economy that was unwisely over-reliant on the construction industry and the over-spending of private credit on property.

So when the construction sector collapsed in 2007, and the speculative property bubble burst we were told that economic recovery could only now occur though ‘export led’ growth and that the continuing growth of exports in computer services, financial services, and the pharmaceutical and chemical sector were ‘the only show in town’. This is what characterises the current economic strategy of the Irish government – to weaken the domestic economy through austerity while providing as much support as possible to the export-orientated sector, which is largely dominated by foreign-firms.

What is ignored by government and its supporters, often as they extol the success of attracting so many international export-orientated companies and businesses, is that this “export-led growth” has barely any real impact on the Irish economy.
Moreover, for all the years that the policy of supporting this sector has been in place it has never led to the creation of longer term structures to develop the economy. It is nothing more than a procedure to shift profits and a process of massive international tax avoidance on the part of internationally trading firms. All this export orientated economic growth is a complete fiction.

Ladies and Gentlemen, We Are Floating in Space…

In this issue we are looking at the Financial Services sector, that all-powerful group given complete freedom to create for themselves the conditions that best suits its business even though it occurs at the expense of the wider economy. In the first of two essays, the second to be published in the next issue, Conor McCabe examines Ireland and the Shadow Banking System. Currently over 40% of the world’s alternative investments: hedge funds, managed futures, transferable securities, commodities and derivatives contracts are domiciled in Ireland. While Ireland had been a hub of the shadow banking system before the collapse of the financial system in 2007-8, with many of the major banks at the centre of the drama maintaining a subsidiary in the IFSC, we are now becoming an even more significant part of it.

As Conor mentions in his introduction to the piece, this has come about because of the ‘intermediary/middleman business model’ which ‘maintains and reproduces itself through the structures of the state’. In the past this model was based on selling the nation’s resources to ‘whatever bidder took the middlemen’s fancy’.

“The national resource that is for sale today is the right of an independent state to set its own laws and tax policy. In other words, it is Ireland as a mature democracy and legal jurisdiction, one that is recognised by international law that is traded by this middleman class for the private gain of its privileged players”.

As an understanding of the shadow banking system within modern capitalism is required this first part deals with the rise of the Eurodollar market and the decline of the Betton Woods system.

The other way that Ireland sells its right as an independent state to set its own laws and tax policy is in how Ireland allows MNC’s to use Ireland’s loosely regulated tax regime and laws as a way of avoiding all of their international tax obligations.

As described in Ireland’s For Sale Sign: Corporation Tax, it’s by creating a careful mix of laws and agreements, exceptions and loopholes with a close eye on those gaps that exist in the tax laws in other jurisdictions while also wilfully ignoring the obvious anomalies and lack of disclosures within MNC’s financial structures, that a small sector within Ireland’s capitalist class has created a steady trade in providing tax avoidance services for some of the most highly profitable companies in the world.

While the state puts on the poor mouth by saying it is too small and open to attract investment in the traditional way, it has actively nurtured a particular service for MNC which only accrues economic benefit to financial services firms that administer the Treasury Management companies used by MNCs to move profit across borders tax free. While changing structure of contemporary capitalism with in the last 25 years means that states have increasingly vied for this type of mobile capital with a range of similar strategies, Ireland’s ability to appear slightly less rogue than a tax haven while being one has hardly been examined critically at all.

Mark Malone spends some time exploring what we know about the Clearing House Group, that quasi-governmental organisation – lobby group that is supposed to advise government on financial services policy, but more often than not designs the legislation used to facilitates the business needs of banks, hedge funds, treasury management and insurance companies to launder profits using Ireland’s status as an OECD compliant and legitimate jurisdiction to do so.

In between each of these articles we have been very fortunate to be able to publish poems by Dave Lordan, Sarah Clancy, and Sean Bonny. Each poem deals in one way or another with creative writing and politics – the twinned subjects that mainstream Irish cultural critics demand should be separated at birth.

To cap off this expression of literary writing and politics there is a fine essay by the novelist William Wall, called Riding Against the Lizard – On the Need for Anger Now, which suggests why so many of our internationally celebrated Irish contemporary literary fiction authors appear to be so comfortable within the Gombeen culture. He also points towards other internationally celebrated creative writers who have no problem showing their anger at the obvious injustices of the system while producing art of the highest order.