Ireland votes yes, but austerity won't solve the crisis

The Irish Times reports that as soon as the result of the referendum
on the treaty appeared to be in the bag, Enda Kenny was on the phone to
Angel Merckel presumably for a pat on the head as he reported on the
completion of his mission. However, an Taoiseach and to a much greater
extent Eamon Gilmore should be concerned about the concentration of No
votes in the working class areas of Dublin and the border areas in the
North West.

There is an old proverb which says “Be careful what you wish for,
because it might come true”. In the context of the biggest crisis in the
history of world capitalism, arguing in favour of a treaty which ties
the state to a permanent austerity programme will sooner or later back
fire in the face of the government. But before then it will massively
expose the failure of the labour leadership to carry out their promise
to defend the Irish working class from the worst impact of the Fine Gael
austerity programme.

The bourgeois press in Ireland was rolled out to pressurise workers
into voting for the treaty, but it would be wrong to assume that the
vote is a passport for the coalition to implement more cuts and
austerity. The campain against the household taxes demonstrates the
difficulty that they will face.

Doubtless Eamon Gilmore would argue that the Irish economy will
resolve the problem of austerity on the basis of growth. But under the
current conditions, that optimism, which is based on the fact that
Ireland exports 80% of what it produces, seems utterly misplaced.

Why is that? Very simply Europe stands on the edge of an abyss. The
fiscal treaty won’t stop Greece defaulting and dragging Europe further
into recession. It won’t stop the flight of money, neither from the
Spanish banks nor the Greek banks. But by tying all of the states to the
principle of balanced budgets or budget surpluses on pain of not being
able to access bailout funds, the treaty merely provides a mechanism and
an excuse to attack working people.

That means permanent austerity, which would cut the European market,
which is already in recession. The Irish government might take comfort
in the fact that the economy exports 80% of its production, but that
means that the state is very vulnerable to fluctuations in world trade.
While exports rose by 8% in 2011, GDP growth remained almost flat. If
GDP remains flat or falls on the back of a further crisis in Europe that
will inevitably impact on trade, which will place still further burdens
on the Irish banks and on the state finances.

The next two or three weeks are likely to see a fair amount of
scurrying about on behalf of Michael Noonan, Enda Kenny and Eamon
Gilmore. Certainly they will anxious to try and exchange their Yes vote
in the referendum for a deal on the bailout interest rate. But that is
likely to be overshadowed by the run up to the Greek elections, the
Spanish banking crisis and the generally gloomy outlook in the rest of
the eurozone and in Britain.

One thing is for sure. The grave structural crisis in the world and
particularly the European economy is not going to go away. Trotsky once
observed that: “Each measure to which capitalism is constrained in
order to make a step forward in restoring equilibrium, each and all of
this immediately acquires a decisive significance for the social
equilibrium, tends more and more to undermine it, and ever more
powerfully impels the working class to struggle.” Leon Trotsky – Report on the World Economic Crisis and the New Tasks of the Communist International – 1921

These words, which were written in the context of the years
immediately following the first world war sum up the situation in Europe
very well, and in Ireland more so. The strictures attached by the
Troika to the 2010 bail out have already placed a great burden on the
working class as the government tries to impose the so called reforms in
the public sector which were the flipside of the Croke Park Deal.

The Fiscal Treaty merely ratchets up the pressure, not only the
public sector workers, but on the old, the unemployed, the sick and the
young. Sooner or later these measures will create a backlash from
working people. Already €14,000 for every single person in the state has
contributed to the bailout of the banks. Enough is enough.