What Political Conditions Explain the Different Response by the Greek and Irish Government to the Crisis?

This is a link to Channel 4 news coverage of the Greek 24 hour public strike on Wednesday. The government is proposing a 10 per cent cut in current budget spending. A substantial reduction in current spending that has inevitably created massive political tension. The protestors are chanting “this is Greece, not Ireland, we the workers will resist“. A revealing statement that begs a serious question; what are the political conditions that enable Ireland to adopt a harsh fiscal austerity programme and not Greece. Whilst all the attention is being placed on the economics of soaring debt, fiscal retrenchment, bond markets and bail outs, very few are pausing to analyse the diverse political conditions across Europe that mediate differing political responses to the crisis.

Greece and Ireland are being compared because both countries have soaring debt-GNP ratios and both have public deficits that exceed the Growth and Stability Pact.  The EU commission are concerned that a failure of either country to pay its debts will create instability in the euro zone. This will have knock on effects for other economies within the monetary union. The EU commission warmly welcomed the December budget in Ireland. Ireland is now being used as the ‘poster boy’ for how other small open economies in the EMU should tackle their public finance crises.

In the UK, it has started a large public debate about what policies the Conservative party would adopt if elected.  The Guardian are describing the FF-Green party government as the ‘Irish Tories‘. But, again, the political economic context between the two countries is massively significant. Ireland is a small open liberal market economy in the Eurozone. The UK is a large open economy outside the Eurozone. Thus, the constant iterations from the Economist magazine for the Labour government in the UK to follow the policy response of Ireland is empirically and intellectually dishonest (or simplistic).

Trying to compare or encourage diverse political economies such as Greece, Portugal, Italy and Spain to follow the Irish path is based on a spurious logic. It is premised on the assumption that there is a one size fits all approach to how governments can or should respond to the crisis. It assumes that all member countries have the same  political, industrial and fiscal institutions. It is assumed that all countries can converge on the same policy response. Such a convergence thesis is central to an approach that prioritizes a ‘science of the economy’.  It is similar to the basic assumption of neoclassical economics that all economies should and can converge on a competitive liberal-market model. It does not appreciate different historical contexts and differing political-institutional ensembles of how markets are embedded. It does not appreciate that there are a diversity of political economies with their own distinct set of industrial, welfare, pay, labour market, tax and fiscal policies that are supported by different and embedded political-coalitions.

The conditions that enable Ireland to adopt such a harsh austerity programme (with little political resistance) simply do not exist in Greece. The main difference is political.There was very little ideological disagreement on how, where and when the €4bn could be cut from public spending. Ireland does not have an ideologically divided political system. Greece does. Greece, like Ireland has a class divided society and relatively high levels of income inequality. But, its political and class differences have an organisational and political expression in the political system. This enables mass identification of class related issues that inevitably come to the fore when a government attempts to take €10 bn out of the economy; out of public spending.

One might assume that Greece has much higher levels of trade union density than Ireland. This would indicate that Trade Unions have more ‘power resources’ to draw upon when mobilising against public sector cutbacks. This is not the case. They have less than 28 per cent trade union density. Ireland has 31.4 per cent. Ireland has also been able to institutionalize a social partnership approach between organised labour, capital and government. Greece, despite a variety of attempts have not been able to promote such social dialogue. However, almost 100% of Greek workers are covered by collective bargaining arrangements. Thus, all workers gain and have an interest in trade union activity. The coverage in Ireland is 44%.  Most new employment generated over the past twenty years was in industrial and service sectors that have zero trade union coverage. Trade union activity was embedded in the public sector and most activity centred on chasing the pay terms of the national partnership agreements. This difference probably explains the political legitimation of media hostility toward public and private sector workers in Ireland. A hostility that does not exist in Greece.

But the main difference is that Greece has an ideologically divided political party system that gives organisational expression to class differences. Ireland does not. In times of crisis and heightened industrial conflict this ideological difference is clearly observable. The main political actors in Greece face completely different pressures, constraints and opportunities than the political actors in Ireland. It is highly unlikely that even a centre right government could generate the political capacity to carry through a fiscal austerity programme in Greece. It is highly unlikely that a centre left government would not in Ireland. This is not to say political actors do not have choices. They do. But, they are heavily mediated by a whole variety of structural variables outside their control. Dominant ideas are one of them.

One response to “What Political Conditions Explain the Different Response by the Greek and Irish Government to the Crisis?

  1. Pingback: Trade Union Movement now irrelevant,members should resign and save themselves a fewbo

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