CMAT's EURO-COUNTRY and the 2008 Financial Crash

CMAT’s latest single EURO-COUNTRY tells the story of the 2008 financial crash and the resulting crisis of capitalism in a way that has struck a chord with many young Irish people growing up in Ireland during this time period. The lyrics at the bridge of the song in particular paint a picture of the harrowing consequences of this crash:

All the big boys, all the Berties All the envelopes, yeah, they hurt me I was twelve when the das started killing themselves all around me (all around me) And it was normal, building houses That stay empty even now, yeah And no one says it out loud but I know we could be better if we hound it

Of course, CMAT is referring to Bertie Ahern, a Fianna Fáil politician who served as Taoiseach from 1997 to 2008, and as Leader of Fianna Fáil from 1994 to 2008, until he resigned from his position in April 2008 following controversy exposed by the Mahon Tribunal. This investigated political corruption pertaining to rezoning and planning for commercial and other developments. It was before this Tribunal that Ahern famously gave evidence “that he did not personally operate any bank account” between the years 1987 and 1993, during which time he was Minister for Labour and subsequently Minister for Finance. The Tribunal further found that the explanations given by Ahern regarding the source of a number of large lump sum lodgements into his bank accounts from 1993 onwards to be untrue. While for many, Ahern has been the poster boy for corrupt politicians during the period of time known as the “Celtic Tiger”, he was not the only one. Some of the less well known “big boys” investigated by the Mahon Tribunal being Fianna Fáil TDs Ray Burke, Frank Dunlop, Pádraig Flynn, Liam Lawlor, and Ray MacSharry, in addition to former Dublin Corporation assistant manager George Redmond, were found to have taken bribes from developers such as Tom Gilmartin, the Bailey Brothers, Owen O’Callaghan, and Jim Kennedy, to name a few.

Ahern was succeeded by Fianna Fáil TD and then Táiniste Brian Cowan, who assumed office as Taoiseach in May 2008. All the while in the backdrop of this controversy, the Economic and Social Research Institute in early 2007 forecast that Ireland’s economy would slow down in 2008, expressing concern in one report that “40% of all new houses built between 2002 and 2006” were vacant. By September 2008, Ireland became the first country in the eurozone to declare it was in a recession. Ireland was not alone however, and by November 2008 the International Monetary Fund predicted a worldwide recession by 2009, with the year 2008 becoming known as the “Global Financial Crisis” or the “Panic of 2008”. And its impacts were devastating for the working class, as CMAT alludes to with her reference to male suicide in Ireland, which by the end of 2012 was 57% higher than pre-recession. These are the very real and violent consequences of the capitalist system, which fundamentally can never place the interests of the working class above the interests of profit and accumulation.

As Marxist-Leninists, we understand that this crisis was not a unique event simply caused by the corruption and brown envelopes of a few “big boys”, but rather as an inevitable result of the natural laws of capitalist production, its internal contradictions, and the anarchy and crisis of overproduction it creates. In the case of the 2008 financial crash, it was what is known in economic terms as “subprime mortgage lending” which played a significant role in facilitating this crisis of overproduction. Subprime mortgage lending involves banks and financial institutions offering loans, generally to individuals with poor credit histories or low borrowing capacity, based on an adjustable-rate mortgage. In plainer terms, this means that the banks were handing out attractive, low interest loans to anyone with a pulse, regardless of their “bad credit” or low capacity to repay loans, and once locked in to a 20-30 year loan, they would hike up the interest rates, justifying the move because the borrower was considered to be at higher risk of defaulting on their repayments. This sounds like a recipe for disaster right? At face value, the answer is yes, but this is exactly what is necessitated by the laws of capitalist production in order to create the most profit.

Let’s peel it back further and consider what loans are exactly. To put it as simply as possible, loans are a type of “fictitious capital”, meaning that they create speculative financial assets, as opposed to physical assets which are created by “real capital” (i.e. labour, machinery, tools, etc.). Borrowing and lending money has become the particular business of banks. As such, a bank represents a centralisation of interest-bearing capital, or money-capital, of the lenders, on the one hand, and on the other a centralisation of the borrowers. Its profit is generally made by borrowing at a lower rate of interest than it receives in loaning. Money-capital is not the same as fictitious capital – in simple terms, money-capital is where a capitalist invests their money into something which will make a profit return for the capitalist based on interest over a specified period of time. In order to ensure that the capitalists money-capital makes a profit, the bank must loan out his money. This money remains money-capital if the bank loans it out only once, and the borrower pays the money back plus the interest, and this money- or interest-bearing capital is then circulated back to the capitalist.

However, as banks become confident in their ability to loan money and collect interest repayments, they begin to hand out multiple loans based on the same one pot of money-capital. This money-capital then becomes fictitious capital. For example, a capitalist gives the bank €1 million that he wants to make an interest based profit from. The bank then loans out 10 €1 millions, each of which have equal claim to the €1 million the capitalist deposited with the bank. This means that 9 of the 10 €1 millions cannot be converted into a use-value, and as such are fictitious capital. The proliferation of such fictitious capital over the last 200 years is the inevitable outcome of the anarchy of capitalism, its endless drive towards overproduction and accumulation. By breaking away from the physical limits of production and creating speculative financial assets, it in turn artificially boosts the value of commodities. Then, when a period of contraction occurs, defaults, bankruptcies, closures, share prices fall, and the smoke and mirrors of fictitious capital collapses in an instant.

In the lead up to the 2008 financial crisis, fictitious capital facilitated a property bubble where the number of people buying houses became saturated and as such houses were over valued through subprime mortgage lending. As the market was now saturated, there were fewer people looking to buy housing, while others were forced to try sell their over valued houses once their interest rates were hiked and they could no longer afford their mortgage repayments. This caused the real estate bubble to pop, triggering a global downturn in the rate of profit for finance capital. And what do the capitalists and bourgeoisie do in the face of economic downturn? They shift the burden to the working class in order to protect their pockets and financial institutions. In this instance, the State bares its true nature in plain sight, as the Dictatorship of the Bourgeoisie it willingly bails out the banks and foots the bill on the backs of the working people through the roll out of austerity measures. One need only look at Ireland, where in 2007, Anglo Irish Bank was considered to be the best performing bank in the world by “experts” Oliver Wyman and the World Economic Forum. Just months later, following September 2008, the Irish Government announced an austerity budget that proposed cuts to medical cards and jobseeker payments, and introduced fees for third level education, among other measures. All the while, the bailout of all Irish banks following the 2008 crash cost Irish workers €64.1 billion, with Anglo Irish Bank considered to have been the most egregious in its flagrant lending and bailout cost to the taxpayer. To add salt to the wound, it was later uncovered that senior Anglo Irish Bank officials purposely underplayed the anticipated cost of the bailout knowing that the Bank would never be able to pay the money back to the State.

It should come as no surprise that the Taoiseach described both the austerity measures rolled out in the 2009 Budget and the bailout of the banks as “necessary”. And in his budget speech of 2009, then Fianna Fáil Minister for Finance Brian Lenihan announced with confidence: “Our plan is working. We have turned the corner.” Which raises the question, working for who? The reality was that Irish workers continued to suffer for a number of years following the 2008 financial crash, and as the economy failed to recover the Irish government brought in successive austerity policies culminating with a four-year austerity plan published by the Government in 2011. Here, the State again clearly demonstrates its true nature, representing the interests of the capitalist class to the bitter end.

These events are also not frozen in time, the effects of the 2008 financial crash has had long term effects on Irish society and those of us who were children during this time. According to the Nevin Economic Research Institute, nearly half a million people, including Irish-born and non-Irish workers, left Ireland in the six years after April 2008. Many families struggled to maintain relationships with loved ones, fathers, siblings and others who had emigrated. The Growing Up in Ireland Report found that unemployment and financial strain experienced by families following the 2008 crash led to worsened parental mental health, having a knock on effect on family relationships, the emotional development of children, and future education and employment opportunities for children.

CMAT speaks to her own experience as a young teen growing up in Ireland following the financial crash in EURO COUNTRY, with her reference to “mooching ‘round shops, and the lack of identity”. Here, she is referring to the construction of large scale retail shopping centres which were characteristic of the commercial development boom in Ireland during the Celtic Tiger. Many young Irish people can relate to growing up without access to community services or extra curricular activities due to cost barriers, leaving them with little to do other than hang around these shopping centres which offered some of the only “public” or “open” space that teenagers could exist in for free. Illustrated most explicitly on the album cover and in the music video for EURO-COUNTRY, the symbolism of these shopping centres as deserts of capitalist production and exchange is stark to the viewer. And regarding our identity, or lack thereof, CMAT has openly criticised the hyper romanticism of Ireland internationally, a role that us Irish willingly play into. She is correct to criticise this, and young Irish people must understand that despite our history and the continued occupation of the 6 counties, we have an indigenous capitalist class that is part of the global imperialist system. These Irish capitalists are no better nor different than the capitalists across the pond, in the UK, across the EU, or across the globe. They are one and the same, and the Capitalists States internationally will continue to represent the interests of their class until the working classes unite, overthrow the Dictatorship of the Bourgeoisie and begin to build a new Socialist future.