Notes on the Front

Don’t scandalise the parish by using the ‘S’ word in public. It will lose you support, relevance and the esteem of broadsheet commentators. To use the ‘S’ word is to confirm you are a dinosaur (or at least fell asleep before the fall of the Berlin Wall and haven’t yet woken), a throwback, a member of some obscure political cult that holds its meetings in a phone booth. Yet, only a short time ago, using the word ‘socialist’ (there, I said it) was not some picking-a-fight ideological badge nor, unlike the song, something shocking, but a matter-of-fact identifier of constructive and relevant ideas. And in – of all areas – the economy.

While rummaging through stacks of old documents, I came across a policy pamphlet entitled ‘Labour’s Agenda: An Economic Programme for the 1990s’ published in 1989. In over 70 pages it covered a comprehensive range of topics from enterprise policy, planning, investment, democratic participation and taxation. Even though many of the issues it addresses are no longer relevant (e.g. use of EU structural funds) and others have to be put in an historical context (unemployment was still a major issue) it is a refreshing and invigorating read – more so for the fact that Labour took economic policy seriously enough to publish such a wide-ranging document.

For how different is it today.

First, the policy calls itself a ‘socialist alternative economic policy’ which is all about a transition to a ‘democratic economy’, immediately distinguishing itself from what it calls a right-wing ‘consensus’ based on ‘radical individual greed’ that had resulted in a ‘de-peopled economy’. This is quite a clarion call, especially as it proudly extols the virtues of ‘equality’ and ‘fraternity’. No one is left in any doubt that it aims to confront the Right, and not just tinker with or humanise essentially conservative policies.

Nor is it shy about wielding the instrument of public intervention in the economy. Indeed, the foundation of the policy lies in ‘democratic economic planning’:

‘Labour believes that moves to tackle the jobs crisis, tax reform, the public finances and the elimination of poverty are only feasible in the context of a clear plan for economic and social development . . . There are difficulties in trying to plan the development of a small open economy . . . however, planning should permit greater flexibility . . . Under Labour planning will be consultative, flexible and decentralised.’

The planning approach would be based not only on a tri-partite structure that we know today as social partnership, but would reach down to the local enterprise itself, with Labour committed to extending the legal basis for worker participation.

This remains profoundly relevant today – the promotion of public intervention, democratic involvement and the development of an indigenous enterprise base. That the policy is rooted in the Telesis Report (an international consultant’s report produced in the early 1980) which recommended a similar active approach to enterprise policy, shows that such thinking was, and still is, part of a rational economic and, dare I say, trans-ideological approach (international management consultancy firms don’t tend to be hotbeds of Leftism). That the success of the Celtic Tiger economy was based on such interventions (e.g. the IDA’s picking winners in the export market, public sector supports for native enterprises in the 1990s) only proves that this approached must be extended and deepened.

Following on from this, it devotes a considerable section to a new and expanded role for public enterprise and, in particular, the National Development Corporation (which subsequently was allowed to whither). This public approach would be buttressed by ‘Employee Investment Funds’ – a tax-based device to direct savings/investment into designated manufacturing and traded service sectors. These funds would fill the gap left behind by ‘short-term stock exchange’ practices and conservative pension fund portfolios which were not investing in indigenous sectors. Though the mechanism might not be as relevant its intent is – Michael Hennigan over at Finfacts continually reminds us that investment is not going to the productive sectors of the economy, rather to property both here and abroad.

Labour market policies would focus on a ‘major priority’: low wages and exploitative labour practices – something still rampant. This would be combined with strategies to reduce working time and support new forms of social enterprise (e.g. cooperatives, co-ownership, etc.). These would also address the problem of poverty traps whereby getting a job or even a pay increase could result in loss of income or benefits (this is still the case – an issue which I will come to eventually).

Nearly 3/4 of the policy document was taken up with creating enterprises, jobs, economic growth and democratic participation. Admittedly, this was a priority as there was an unemployment rate of 14% at the time. But the emphasis is still relevant with our low-waged economy heavily based on property and consumer spending. When it turns to taxation, there are more lessons for today. Recall that Irish taxation was high – at least on certain sectors. There was a top tax rate of 50%, a standard rate of 28% and a corporate tax rate of 40% (excluding the export manufacturing sector). But the document didn’t have time for the tax-cutters. In what the pamphlet calls a ‘socialist tax policy’ (there’s that word again) it attacked tax shelters and reliefs for speculative and unproductive investments. At a time when tax revenue as a % of GDP was some 25% higher than it is today because of low economic wealth, it argued that the tax burden wasn’t too high. Instead, it argued – as part of a reform package – for new taxes on wealth and property:

• A Wealth Tax
• Higher Inheritance Taxes
• A Residential Property Tax linked to income
• A new tax on Discretionary Trusts
• A stronger Capital Gains tax A Development Gains Tax
• An agricultural Land Tax
• A stronger Corporate tax regime, removing regressive reliefs and allowances

It concluded with a new income tax rate structure of four tiers – ranging from 25% to 50%, accompanied by the abolition of mortgage interest relief and VHI relief for private hospitals.

Regardless of the contemporary relevance of particular proposals, what is noteworthy here is that, despite a relatively high taxation regime (relative to today), Labour still argued for more tax measures to ensure greater social equality and prosperity.

So, public economic planning, employee participation in the workplace, reduction of working time, greater taxation measures and an attack on rampant social and individual greed – surely this must have been an electoral suicide note. Well, the first election held after the publication of the document saw Labour score its greatest electoral success since 1922. Was this because of the policy document? No, one can’t argue so mechanistically. It’s not like the masses read the 72 page document in full and enthused over most if not all its proposals.

But what it did do was place Labour at the heart of the economic debate. Further, it created, both in reality and in public perception, a clear separation between itself and the right-wing parties, in particular Fine Gael who was having trouble creating an identity distinct from Fianna Fail (some things never change). Whatever the sub-plots, it was a major contributor to the overall narrative.

There is no doubt the Left needs a new economic policy approach. So, should it be called ‘socialist’?  Let’s not get all nominalist. Mainstream parties of the Left are ‘big-tent’ affairs, welcoming all progressives regardless of nomenclature – socialists, social democrats, radicals, Marxists, anti-globalists, feminists, civil libertarians, etc. Labour’s Agenda uses the term ‘Socialist government’ under a ‘Socialist party’ (i.e. Labour). If some want to use the term ‘social democrat’ or ‘progressive’ or just plain ol’ ‘Left’ – there’s little in it. Travel around the continent and ask Lefties are they socialist or social democratic and they will look at you as if you had two heads. For socialism is the heart of the great European tradition of social democracy.

So however we label it, what does that tradition, expressed in Ireland, have to say about our economy today? To re-read ‘Labour’s Agenda’ is not an invitation to slavishly copy its contents. Rather, it’s to be informed, in the first instance, by the rich policy history of the party and, secondly, a challenge: to dare aspire to the scope, ambition and optimism that Labour’s Agenda had for a Left economic project.

There is much to debate on the economy. But if we don’t have the ambition and confidence in our own analysis, if we’re afraid of taking on the Right, what’s the point of even embarking on such a journey?

We can call ourselves anything we want. The real question is whether we will we have anything to say worth listening to.