The logic of living in a 'free' market economy

Slí Eile22/07/2009

Slí Eile: An interesting feature of the Special Group’s deliberations is the extent to which it went beyond its strict remit and expectations. It said:

Against the background of the fiscal realities outlined in Chapter 1, the Group is strongly of the view that these budgetary consolidation targets should be seen as a minimum to be achieved, not as an upper ceiling, and that the scope for realising expenditure savings should be availed of to the fullest extent possible.
One would have thought that given the appetite and enthusiasm of the Special Group to roll back the role of the State that they would have attended to the significant direct and indirect costs of administrative relocation of central government staff, otherwise known as decentralization. Not a word except to acknowledge in passing that the Office of Public Works will require five fewer staff as ‘decentralisation’ proceeds more slowly. Clearly, some issues are just not touchable politically even now.

Would full implementation of the Report of the Special Group seriously dismantle public services? Let the Report speak for itself:
On this basis, the Group is putting forward proposals for initial reductions in public service numbers of over 17,300 (inclusive of reductions of around 6,000 in the Health sector under the Employment Control Framework introduced in 2008). Initial reductions on this scale are the minimum that must be achieved. These savings will require inter alia a commitment to the nonreplacement of staff and the down-sizing of the public service. Critically, while work efficiencies and redeployment should allow for broad continuity in the delivery of key public services, in other cases full savings will only be delivered where there is a political and public acceptance that the State can no longer afford to continue some services at previous levels, or at all.
One of the bizarre aspects of the Report is the way in which it proposes large reductions of investment in science and technology. It claims:
The Group considers that any further STI investment must yield clear economic returns. The evidence adduced to date for the impact of State STI investment on actual economic activity has not been compelling.
In the absence of a clear business need for the doubling of PhDs currently being funded, the Group is concerned that graduates will be underemployed or forced to emigrate.
No mention of education, research and learning serving anything other than measurable, economic, business returns. Sad.

Standing back from the detail and considering the larger picture. Bord Snip sits within a new and challenging context – internationally as well as nationally. It seems to me that if we think and operate entirely within ’given structures’ – in other words the constraints imposed by international and domestic capitalism and the whole range of assumptions and institutional givens that are not up for discussion then we are forced into the kind of policy response that we now see emerging. To put it plainly, if we live by the rules of free market capitalism then we are forced to rise and fall by its workings. When times turn very rough, as they have, we are constrained to go along with its deadly logic:

• Income cuts for the bottom two thirds of the population to restore profitability;
• Privitisation of services and assets previously provided by the State;

In short if we live by capitalism alone then we must live by its logic. Any progressive movement wishing to operate from within that logic – especially in the context of a small, open economy and member of the European Union its scope for policy discretion is severely limited.

Posted in: EconomicsEconomics

Tagged with: free market capitalismBord Snip Nua


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