Monday, January 16, 2017

Vulture Funds and Diarmaid Feritter

Vulture Capital
Paddy Hackett

 Diarmaid Ferriter, in a piece of his published in The Irish Times, is of the mistaken view that there is good and bad capital. He cannot understand that all capital is based on the exploitation of labour power. It is profit driven. Capital cannot be regulated. Capitalism in a small open economy such as is the Irish economy is even less open to significant regulation. At most the effects of capitalism in the Irish Republic can be marginally modified.

Factory closures and rationalisations that throw workers out of work is no worse than   “vulture capital” that throws tenants out of their apartments. There is ample evidence that there has been much of this. It compares well with the adverse effects of “vulture capital” in Ireland.

Feritter describes this capital as foreign. But indigenous capital is just as capable of taking on a vulture quality as is foreign capital. Indeed Irish capital is on the record for having engaged in this kind of conduct. The increasing centralisation and concentration of capitalist farming is another example of vulture capital. It forces small farmers out of existence. Capital, in general, has an inherently vulture nature. It would not be capital if it did not have this nature. The large scale offshoring of manufacturing capital from the US economy to the Chinese economy is as much a form of “vulture capital” as any other kind of capital. Offshoring has resulted in the casting of thousands of American workers out of employment and into destitution.

The imposition of taxes on incoming vulture capital cannot stop vulture capital penetrating the Irish economy. At most it may modify its volume. Even that depends on global circumstances that transcend the diminutive Irish economy.

The point is that capital, by its very nature, is fluid. Without this fluidity it would collapse and then the Irish economy would  be in an even more acute state. Ferriter is pushing a narrow nationalist agenda which is unrealisable in today’s capitalist world. It is a utopian programme designed to delude the working class of Ireland.
The “horrendous consequences for homeowners left at the mercy of the vultures” don't just apply to homeowners. Such “horrendous consequences” apply universally to workers in New York, Dublin and Aleppo. Capitalism, by its very nature produces “horrendous consequences”: wars, famine, unemployment, homelessness etc. There is no possibility of eliminating these serious problems under capitalism. Capitalism cannot be modified to eliminate them. Feritter misleadingly claims that the Irish government can take us down this road. The “horrendous consequences”for homeowners in Ireland cannot be divorced from “the horrendous consequences” of war and famine. They are all inevitable and related products of capitalism. The only solution is the elimination of capitalism by its forcible overthrowal through social revolution.

“the State was already prepared to ignore one of the lessons of the crisis by aggressively encouraging and facilitating the unregulated vulture funds to offload the toxic assets from the banks, whose very lack of regulation created such a mess in the first place.”
Even had it tried the Irish government, given its inherent limitations, would have been unable to prevent “vulture capital”, Irish or foreign, from picking up Irish based devalued assets. In a crash weaker capital crashes and is devalued and then picked up by stronger capital. This is a law of capital that has a universal character. This law occurs for diverse forms of capital such as industrial capital and capital in its property form. In the absence of this law capital could not recover from crashes. Indeed it would not exist.

The crash that hit Ireland formed part of the world crash. It was not simply caused by unregulated Irish banks. Narrow nationalism mistakenly endeavours to disconnect the two. The global crisis merely exposed the limitations of the Irish economy including its banking sector.
“The notion of collective responsibility has been conveniently used to distract from failures of leadership, and the prioritisation of private capital over public purpose.”
 There is no choice here. The inherent limitations of the governmental form prevent the prioritisation of private capital over public purpose. Under capitalism society is profit driven and based on the exploitation of labour power. Consequently  “public purpose” cannot serve as the driving force of society. To establish public purpose capitalism must be replaced with communist society.
“a relatively small number were able to skew the market through speculation, reckless lending and a refusal to reduce the inflation of the property market”
The property boom was not the cause of economic meltdown. The property boom in the Irish Republic  was a manifestation of the global economic crisis. Neither was it a product of subjective factors: “a small number”engaged in market manipulation. The latter, in so far as it existed, was a symptom of the unfolding cycle of objective economic events.
“Taking a stand against the vulture fund and the state that supports them” deludes the working class thereby impeding the class struggle. The source of the problem is not a particular form of capital –“vulture capital. There is no good and bad capital. All capital has an inherently vulture form. The source of the problem is capital in general. This being so capitalism must be challenged –not a particular form of it.

 “it is not “all about the economy”, it is about people and their right to a home.”

Alas, under the current social system, it is not “about people and their right to a home.” It is about profit maximisation. Feritter misunderstands the very nature of Irish society. In this way he is spinning an ideology that envelops the working class in illusion thereby assisting in the perpetuation of capitalism.