What “economic sense” does to Democracy

Photo of a spray painted image no Dublin street. There is an image of the Apple company logo and text saying
Credit: William Murphy / Flikr.

The Irish government’s servile approach to the Apple tax ruling is emblematic of how the power of multinational corporations fundamentally undermines democracy, argues Fiach McKenna.

“Economic Sense”. It’s a term we hear right before every election. It’s a term used by neo-liberals to criticise even the mildest of social democrats who propose a more progressive tax system and more public spending. It’s used by our politicians to justify the harshest of austerity measures. Most recently, it was used to justify letting Apple walk away with €13 billion in unpaid taxes. But do we ever ask ourselves what that term really means? We are led to believe that left-wing economic policies are either short-sighted ideas that will only backfire with horrific consequences, or even just impossible fantasies based on a promise of money that simply does not exist to begin with.

At a quick glance, however, it is easy to see that this money does exist. Our government is happy to pour hundreds of millions of euro each year in rent subsidies straight into landlords’ pockets and, up until the coronavirus outbreak, we were constantly being told that our economy was booming once again. If so, how is it that our country is unable to spare any cash for investment in our healthcare system or public housing? The political establishment scare us into believing that raising taxes will result in mass unemployment. Asking a multi-billion-euro company like Apple or Google to pay a fair rate of tax in no way threatens the existence of these companies, sitting, as they are already, on massive cash reserves. Regardless, an economy that is substantially reliant on multinational corporations will always be vulnerable to their whims, and that should offer pause for thought about ‘economic sense’.

I have canvassed on many doorsteps in Dublin in the lead-up to elections and even in the most economically right-wing of circles, you would be hard-pressed to find anyone defending our corporate tax rate of 12.5% on the grounds of merit. Many will use that term ‘economic sense’ once again but very few will cry out that Mark Zuckerberg is more deserving of the profit he makes from his headquarters in Dublin than any hardworking household in the country deserves to keep their modest wages. Workers must contribute to the upkeep of our schools, roads, hospitals, etc. and it is a basic principle of fairness that those with more money to spare should make a greater contribution.

Any liberal will assure you that as we have multi-party elections where anyone from any part of the political spectrum can run, a free press and all citizens above the voting age are eligible to vote, we must be a democracy. But if a country can only be considered democratic if it serves the interests of the majority of its citizens, how can Ireland be considered a democracy when our corporate tax system, and indeed the wider economy, only serves the interest of a tiny elite? The answer to this one is actually quite simple: Ireland is not a democracy.

Of course, to some degree, the people of Ireland can shape their future. We have seen this with the Marriage Equality campaign in 2015 and the Repeal campaign in 2018 – important campaigns but issues that do not threaten the wealth of the ruling class or the control of the economy by the banks and multinationals.

The globalised economy has empowered large corporations and enabled them to blackmail governments into giving them what they want or face the threat of relocating their major headquarters and flight of capital. The interests of the state become interwoven with the interests of the multinationals and the bankers. Social democrats choose to believe that our government is in a position to regulate businesses and ignore the reality that our government is, ultimately, controlled by business. By defending unethical austerity measures and tax cuts for the wealthy on the grounds of “economic sense”, our political elites have managed to hide the fact that our democracy is severely limited and we do not have control over our own economy. Before we even consider the well-entrenched structural powers the wealthy have to lobby political institutions, we can see that global capital has completely eroded liberal democracy.

Some might like to think of the Irish Republic as a thriving democratic society ever since it broke free from British rule but unfortunately, that is in contrast with the reality of its utter subservience to the interests of capital, both domestic and foreign, over the last century, and its consequent failure to meet the needs of its people. Watching our government fight for four years for the right of Apple to retain their profits, it would be reasonable to say that they were acting as a lobby group for capital more than anything else.

Changing this requires building an economy that works for the benefit of the majority of our citizens. The basis for such a democratic economy, and democratic society, does not lie in groveling before multinational corporations or lobbying for them to be allowed to dodge their taxes so that we can collect their scraps in a global race to the bottom. A democratic economy can be only built on state investment in, and ownership of, industry – and in the era of covid and the climate crisis we urgently need to develop a strategy that can end our reliance on multinational capital.