Hello, my name’s Ireland and I’m addicted to Capitalism

Today, the traditional Catholic Feast of the Immaculate Conception, used to be a day when Ireland’s country people and farmers would come into the market towns with their hard-earned shillings to make their Christmas purchases.

The Deptford Croppy left the west of Ireland for England in 1996 and doesn’t know whether this quaint custom survived the glitzy cocaine supernova of the Septic Tiger years, when shopping became a way of life as opposed to an infrequent and more considered activity.

Of course, it’s not just the shell-shocked Irish people who can’t see an alternative to this state of affairs.

This is a wider western problem and most people, in most countries, are in raging denial. For a couple of generations now, the increasingly pampered and insulated populations of the western world have become so utterly enthralled by consumerism that they can’t actually see past their addiction.

Even now, as this random cyclone of financial volatility moves off, leaving a ravaged Ireland; in search of another economy to devastate, despondency is so deep that no other way can be contemplated.

The Rusty Wire noted today that ‘Fenian Failure’ Tánaiste Brian Lenihan told Irish national broadcaster RTÉ that "The idea that a bank default would assist Ireland is entirely wrong. No bank in Europe has dishonoured senior debt throughout this crisis."

And there it is right there: one of those established truths that we are supposed to take on faith as being self-evident. Sure, I get it; in a society so beholden to commerce, default creates uncertainty in dealings.

While that’s all fine and dandy in contract law books, the reality is: in the world of business, defaults happen every day and the world keeps spinning. That’s just how the capitalist system works, there are winners and losers (more of the latter than the former) and companies set up, do well or go out of business and they do so in a competitive environment.


So why then are banks considered to be so far beyond the normal rules of global market mechanics as to be propped up by people who had nothing to do with their predicament? It’s an old chestnut perhaps but on a purely philosophical level, it just doesn’t add up (well it does in a cui bono* sort of way but more of that anon).

According to the orthodox view of liberal free market theory, state interference of any kind in the global movement of goods and capital is to be viewed as anathema. Protective tariffs, nationalised industries and regulation; these are the bugbears of a Bull market capitalist.

But then, all of sudden, when the wheel of fortune goes against them, the casino’s house rules which were such immutable straight from Sinai truths in the good times, get flipped.

As if by magic, a vindication for the nationalising of private banking debt is presented to us as equally immutable and inescapable and the simple paraphrasing runs like this: ‘It’s a big shit sandwich and we’re all gonna have to take a bite.’

The logic of it (as I understand it at least) is this: Banks (especially the big ones) cannot be allowed to fail because if they do, they could cause a systemic reaction and thereby also risk causing the collapse of the international financial system, plunging us all into deep recession.

You might then be told that it was the very decision to allow Lehmans Brothers to fail that sparked the crisis in the first place.

But, as anyone following events (and not utterly caught up in the hubris of the rising bubble) could have told you, this was always going to end badly. Lehman Brothers just happened to be where this parcel blew up; if it wasn’t them it would have been someone else and Wall Street decided amongst themselves that it had to Dick Fuld’s Lehman Brothers.  

So, if we accept then  that banks and nations may well be forced to default on their obligations,  why prop up failing banks and dishonest regimes? Let ‘em fail. Because I would have thought, that in the supposedly Darwinian worlds of finance and politics, your competitor’s crisis is your opportunity.

If you, like Brian Lenihan can see no other way than for the country to take a bite of this shit sandwich, it might be worth looking at the cases of Iceland and Kazakhstan as did the Daily Telegraph’s International Business Editor Ambrose Evans-Pritchard.

One of the core contentions of Evans-Pritchard's masterly analysis is that Iceland has started to recover strongly and he cites a battery of stats to buttress that assertion.

“The Nordic economy grew at 1.2% in the third quarter and looks poised to rebound next year,” he tells us. Then he draws the obvious parallels: “The economies of the two "over-banked" countries have both contracted by around 11% of GDP, but Iceland has achieved it with inflation that devalues debt, while Ireland has done it under an EMU deflation regime that raises the burden of debt.”

“Irish unemployment has reached 14.1%, and is still rising. Iceland's peaked at 9.7% and has since fallen to 7.3%,” Evans-Pritchard tells us. “Iceland's budget deficit will be 6.3% this year, and soon in surplus: Ireland's will be 12pc (32% with bank bail-outs) and not much better next year,” he intones.

What is particularly galling however is the IMF’s assessment of Iceland’s handling of the crisis. Iceland has ‘turned the corner’ they said and praised Reykjavik for safeguarding its "valued Nordic social welfare model".

In fact, the way things are going, by 2015/6, defaulting Iceland “may have a lower sovereign debt than Germany,” while Ireland's debt will continue rising for another three years to 120% of GDP under the IMF approved(imposed) package.

And we’re being discouraged from defaulting? Evans-Pritchard’s article (well worth a read) goes on however to highlight the dangers of assuming the Icelandic model is the correct one for the Irish situation and he rightly points to very different economies of scale and international treaty-bound agreements.

And he even offers the Kazakhstani response as one to mull over in the suggestions of a Scandinavian banker: "People should be looking at Kazakhstan, which didn't bail out any creditors and let the three biggest banks fail, yet avoided a recession by letting the currency plunge and using monetary stimulus."

Whether or not you believe the ‘default and let the banks fail’ arguments is probably moot. From a purely economic perspective however, there is a real danger that policy austerity such as that facing the people of Ireland is probably more likely to cause lasting damage to Irish society and its economy than the short sharp (and frankly traumatic) shock of a default and devaluation.

The real question then becomes one of whether Ireland remains in the common currency and how our relations with Europe would change; the ECB says Ireland can’t leave the Euro...That’s a case I’d like to see in European Court.


At the final reckoning, people have to ask themselves why they don’t want to jettison a system that is based on exploitation and reckless consumption of finite resources. Just a little bit more compassionate joined up thinking and the Deptford Croppy is pretty sure the world would be a better place.


Edmund Burke was right you know: ‘The only thing necessary for the triumph of evil is for good men to do nothing.’ But even more so, Maser and Dempsey are: 'In a world full of shame and regret, do something to be proud of'.


*Cui Bono:[From Latin cui bon (est), for whom (it is) of advantage : cui, dative of qu, who + bon, dative of bonum, advantage.]