‘Malignant shame’ has weighed down the Irish economy since Independence

Irish Independent 21 July, 2011

I am not an economist and for that reason have not taken part in the long debate among economists about the intertwined finances of the Irish state and the Irish banks. But it seems to me that throughout there has been a careless complacency about the problem that underlies the present crisis, as it has underlain all the crises of our economy since Independence.

I refer to what the psychiatrist, Dr Garret O’Connor, in his St Stephen’s Day lecture on RTĒ, called the ‘malignant shame’ which our nation has inherited from its centuries-long mental colonisation. Malignant shame is not the normal, healthy shame which human beings occasionally experience. It is that ‘slave soul’ condition against which our Revolution was expressly and centrally directed.

This hammered-in and long ingrained feeling of inadequacy about one’s Irish self and ability, with its consequent shrinking from risk, has been weighing us down uniquely in Western Europe, to go no farther. It has made us, uniquely in that context, fail to engage in a sufficient degree of economic enterprise to pay our collective way.

Recently, Minister for Jobs, Enterprise and Innovation, Richard Bruton referred indirectly to its effect when he said he was depressed by the fact that 90 per cent of Ireland’s exports come from foreign-owned companies. He might equally have lamented that, in manufacturing, foreign-owned companies account for 78.8 percent of the value of output and 46.2 per cent of employment.

‘Paying our way’ means producing enough saleable goods and services to pay for the standard of living - from public transport, health services and education facilities to personal incomes – which we want to have, and which is therefore necessary to maintain our population at its existing size. It follows, first, that having that desired standard of living has been, and is, our overriding economic necessity and, second, that paying our way would amount to paying for it mainly through our own enterprise and effort.

In the first decades of Independence, relying entirely on our own production, we failed to pay our way. Because our private wealth-producing enterprise was insufficient, the population shrank through emigration. Beginning in 1928 with the Shannon Scheme and the ESB, the state intervened with semi-state enterprises and by using tariffs to protect private manufacturing enterprises from foreign competition. But the population continued to shrink up to and through the economically disastrous ‘50s.

In the 1960s, ignoring - failing to tackle - the underlying deadweight of malignant shame, we tacitly decided that Ireland could not be a normal West European country. We could not like, say, Norway, after Independence in 1905, pay our way by applying indigenous enterprise to existing resources (in Norway, fishing, wood, and ship-building skills) complemented by contributory imports. Ireland could pay its way only with the help of foreign enterprise and funding.

So unlike normal West European countries which bring in foreign producers to strengthen a substantial home-grown economy, we asked foreign enterprise to come to Ireland to rescue the nation from disaster.

Thus the idea took root that we were by nature a nation dependent on outsiders to pay our way. Throughout Ireland in the 1960s the ‘foreign industrialist’ - mostly German if I remember correctly - became the sought-after saviour. And indeed, from the mid-60s onwards, the standard of living rose and the population began a continuous increase.

Through the following decades, while our ability to ‘attract foreign enterprise’ was being increasingly trumpeted as economic success, we became through membership of the united-Europe scheme recipients of successive categories of funding from the tax-payers of the rest of Europe. In addition, the state borrowed abroad to keep up with public demands.

In the second half of the 1990s a confluence of factors, including a big increase of imported American enterprise and our surrender of currency sovereignty to the euro, made Ireland a very rich country. In every material respect the standard of living rose dramatically, and the population with it. Demand for property grew.

The surge culminated in an explosion of indigenous, but irrational, private enterprise in banking and construction. Reckless bank lending drew on loans from foreign banks. While house prices soared, bank and private indebtedness grew. The collapse of this bubble in 2008 left the Republic in 2011 with a shortfall of 18 billion euros in its public accounts and in hock to the EU and IMF for something like 200 billion.

In reaction to this misfortune, we have been concentrating minds and efforts, disproportionately, on dealing with the mountain of debt. Surely the time has now come when we should be revising that decision of the 1960s that we are by nature a country economically dependent on foreign help. Surely we should be devoting at the very least equal effort to establishing ourselves on the only bedrock of enduring economic wellbeing by making the Republic, as our Revolution intended, a country paying its way largely through indigenous enterprise.

But there is no sign of this. The assumption that Ireland is by nature dependent on foreign enterprise and funding still holds public sway. It underlies our fanatical defence of our low corporation tax, openly on the grounds that only thereby can we attract sufficient foreign investment. The same mindset inspires every RTĒ interview of a young man who cannot find a job when the interviewer asks him, ‘Are you thinking of emigrating?’, never ‘Are you thinking of starting up something yourself?’

The notion of ‘the Government creating jobs’ has become tiresomely part of the public discourse. Tiresomely because, first, the Government cannot create the kind of jobs, productive jobs, that matter; and second, the talk should be of the Government encouraging citizens to become entrepreneurs - and thereby rich. Famously and with great effect, Deng Xiaoping encouraged enterprise in China with the slogan ‘To become rich is glorious’.

Of course, a small number of Irishmen, having managed to discard the inherited discouragement of malignant shame, have built up great international ventures. But they are insufficiently celebrated heroes. And there are simply not enough Irish entrepreneurs operating on a worldwide scale, and too many of them, short on courage and ambition, selling off their company to a foreign multinational when it has achieved a modest success.

Enterprise Ireland is doing good work, but in the shadows relative to the glare focused on the EU-IMF bailout; on easing its terms and implementing its dictates. Enterprise Ireland is not surrounded by front-page publicity and by constant prominent encouragement from Government and commentators to fill that 18 billion euros gap.

But let it be very clear that any effort to awaken a normal degree of productive enterprise in Ireland must frontally recognise that we have not, as a nation, had a normal West European history. (The underlying great illusion of the Celtic Tiger was to believe that we had broken free from our history!). It must, in other words, be a campaign that frontally recognises the inherited psychological damage of our colonised experience, and which addresses that malaise directly.

The late Raymond Crotty, economist and historian, is the only Irishman to my knowledge who has written a history of the world. He believed – see his books on the impact of colonisation by individualistic capitalism – that a nation subjected to such colonisation remains irreparably in a state of what he called ‘undevelopment’. The socio-cultural vessel it had created for its life having been smashed irreparably by that impact, it must exist for ever more in a struggling dependency without take-off.

Perhaps because he was an Irishman, Crotty put forward hesitant arguments why Ireland, alone among such nations, might be an exception to the rule. So the campaign to make Ireland a normally entrepreneurial nation would in effect be an effort to prove, against the odds, Crotty’s hesitant arguments right. It is an effort that seems to me worth making, so that at the very least we will have made it.