Ireland and Libya: Two Sides of the Rentier State

national | anti-capitalism | opinion/analysis Tuesday October 09, 2012 14:50 by Irish Anti-Imperialist

Ireland and Libya: Two Sides of the Rentier State

Paper presented at the 2nd James Connolly Day School, 12th November, 2011, Connolly Books, Dublin.

Karl Marx first used the term “rentier state” to describe Britain as a state that lives off the rents on exported capital. Britain exported capital to its empire, and lived off the revenues or rents on this capital. Marx noted that the Working Class in England was very reluctant to seriously oppose the British state, as the rents on capital allowed the state to give the skilled Working Class just enough to make them feel they have something to lose if they rose up against the bourgeoisie. This could not have been the case, if the British state was dependent on revenues from domestic production only.

In the 1970s, academics began to use the term Rentier State to describe any state that structures its economy on the export of a single, unprocessed, commodity. It was particularly used to describe the Arab oil states.

Until the early 1970s, the export of live cattle was Ireland’s main source of export revenue. One couldn’t really say that it was a source of foreign reserves, as the Irish Punt was, in effect, still Sterling, and nearly all of Irish live cattle went to England for processing there.

Agriculture was, by far, the largest Irish industry, and within Irish agriculture, the landed grazier was king. The breeding of cattle for the meat factories of England structured Irish agriculture from the largest ranch down to the smallest holding. The small holdings of the West bred claves up to one or sometimes two years of age. They were then sold to the graziers of Munster and Leinster, who kept then for another six months to two years, and finally, they were sold to the large graziers for final fattening and export to England. This structure of cattle rearing still holds to this day.

By the mid 1970s, manufacture had taken over from agriculture in the free state as the main source of export revenue. But, this did not in any way alter the basic structure of the free state economy. From the Lamass period on, i.e. the 1950s, the free state decided to give up an any hope of an indigenous Irish industrialisation, and opted instead for giving large grants and tax breaks to foreign, particularly American, companies to set up operations in Ireland. Ireland, in effect, was renting itself out as a kind of low cost aircraft carrier for US industry exporting into Britain.

This might lead us to believe that the Irish Ruling Class, i.e. the Irish Grazier Class, did, after all, care something for the landless worker. Nothing could be further from the truth.

Since the genocide of the 1840s, the land had been cleared of the Irish people and turned over to the grazing of cattle and sheep – mostly cattle. This process saw the rise of a new native Irish ruling class – the grazier class. They were the power behind the Irish Party and the Land League. They had been more than happy to suffer Michael Davitt and his idea of nationalizing the land – for as long as he was able to bring the rural proletariat behind him, i.e. the vast majority of the people, but, once they had gotten what they wanted from the British government, i.e. the land for themselves – they stabbed Davitt in the back and exiled him into obscurity.

From now on, Ireland would belong to this grazier class, and anyone who stood against them would be crushed. Most of the Irish people were superfluous. Exile to the industrial cities of the Anglo-Saxon would was to be their fate. The grazier class only needed a small population to function – and a large landless proletariat was always to be considered a subversive threat.

So, the drive to bring in foreign companies, in the 1950s, was not at all an effort to give a livelihood to the Working Class. It had a very specific function. As part of the Marshall Plan, in 1947, the free state had gotten funds of 46.7 million pounds. 40.7 million had to be repaid in dollars. This money was used for land reclamation – not for industry, as was the case in the rest of Europe. However, the free state now needed dollars to repay the loan.

What any normal country would have done would be to invest that 47 million in setting up meat processing and production facilities, and using the output to generate sales in dollars. But, the grazier class were having none of this idea. They didn’t want to risk their old relations with England and the guarantee of power and privilege it gave them in Ireland. So, Fianna Fáil was forced to come up with another way of accumulating dollars. Of course, it decided to bring in US companies, and use the taxes on their earnings as the way of repaying the Marshall Plan loans.

And this was a very nice solution, as it didn’t even threaten to generate too much of an Irish Working Class, as these companies were not in labour intensive fields.

As Conor McCabe demonstrates, in his Sins of the Father – Tracing the Decisions that Shaped the Irish Economy, the influx of US companies led to a wonderful windfall for the grazier class. These companies needed land, and were willing to pay very high prices. Irish land speculation took off in a big way. By the 1960s, Fianna Fáil and the graziers had come together to create a new beast on the Irish scene – the property developer.

So, even though, as we said above, by the early 1970s, cattle was no longer the main free state export, the grazier, as principal landowner, was still the principle structuring factor in the Irish economy.

In the 1970s, most of the land around Dublin had been bought up by wealthy grazier families, and was still in use for the fattening of cattle. But, cattle was not the reason these families had bought the land. They were sitting on that land, waiting for their puppets in Fianna Fáil and Fine Gael to rezone the land for commercial and residential speculation.

So, we see that in every way, the wealth and privilege of the native Irish ruling class was and is based on the land of Ireland, and the revenues that this ruling class accumulate comes, not from any form of entrepreneurship or innovation, but from rents on that land – be that the export of live cattle, or the rents paid by foreign companies for use of that land.

Libya is, of course, a state who’s economy is structured on the export of a single, unprocessed, commodity, i.e. oil. However, in complete contrast to Ireland, this gift of nature is not owned by a tiny group of private owners. Under the leadership of Colonel Muammar Gaddafi, Libya’s oil has been nationalized, and used for the benefit of the whole population.

The renting of property was outlawed in 1978, and no person was allowed to own more than one house. Gaddafi used oil revenues to being a huge home building program. Unlike Ireland, where owning a home meant paying a huge fee to the wealthy landowner class, in Libya, everyone got a house for a tiny fee, if they could afford it, and for free if they couldn’t. Gaddafi promised a home to every Libyan before his own parents were housed, and he and his family lived in ordinary quarters in an army barracks. His father died before he could be housed. But, by the 1980s, every Libyan had a home – and no mortgage or rent worries.

Gaddafi also told workers to take over their workplaces, and run them according to Direct Democracy. He insisted that all who work in a business should share in the profits.

Needless to say, such measures upset a lot of powerful forces in Libya. The landowners and the wealthy merchants were furious. Gaddafi also brought in measures to make sure that doctors and other professions could not use the education that had been given to them by the Libyan people to extort huge fees from the people. He capped the fees they could charge. However, unlike the USSR or Cuba, he did not prevent anyone from going abroad. There was a huge exodus of Libyan doctors etc., to places like Ireland, where they were free to use their education to exploit the Irish people.

This exodus was a huge drain on Libya, and made it very difficult for Gaddafi to modernize the country. These exiles also made alliance with the CIA, and carried out many terrorist attacks against Libyan officials in Europe and against Libyan interests. They also organised sabotage and murder inside Libya.
However for all these terrorist attacks and the brain drain caused by professions going abroad, the Jamahiriya did manage to drag Libya out of the middle ages, and to achieve amazing feats of engineering - such as the great man made river, which turned the desert into green fields.

Gaddafi also managed to enrage Muslim traditionalists, by declaring that, since everyone could read Arabic, everyone could interpret the Quran – the word of the clergy was no longer to be the final word. He also encouraged the people to take over their mosques and run them democratically. How different to Ireland, where the grazier class used the Catholic church as a thought police to keep the people mentally and economically subjugated, and to turn the children of the poor and the unmarried mothers into economic slaves and sex slaves.

However, like all Rentier States, Libya has been generally unable to diversify from oil revenues, which still account for over 90% of export revenues.

In Ireland, as we see above, it is the strangle hold the grazier class has on Ireland that has prevented the growth of an indigenous industrial base. For example, in 2006, there was 11 billion euro spent on land speculation by Irish citizens (9 billion of that was spent on buying foreign land and buildings.) In the same year, there was only 196 million euro in venture capital available to Irish industry (including state sources.) In short, land speculation simply froze Irish industry out of the market.

In Libya, the problem has been much more complex.

By the early 1980s, Libya had a government that wanted to turn the gifts of nature to the benefit of the whole people of Libya. But, such a government automatically comes under attack from the bourgeois classes, who feel that the wealth of a country should be their own private property, and that the great majority should be their serfs - as is the case in Ireland and other capitalist countries.

By 1982, 100,000 of the most educated Libyans had moved abroad. We can imagine the destruction that 100,000 of the most educated leaving did to the hopes of Libyans to modernize their country and build a native industrial base. The problem was made very much worse by the fact that many of these traitors devoted themselves to blackening the name of the Jamahiriya abroad, and collaborating with CIA schemes to subvert Libyan development.

1985 saw a huge drop in oil prices. Libya's income was cut in half. The massive development plans of the Jamahiriya had to be curtailed. But, Gaddafi did not want to abandon them altogether. He asked the people to suffer a reduction in the enjoyment of consumer goods, so that vital infrastructural projects could go ahead.

Since 1978, Gaddafi had turned over supreme power to the people, through a system of people's congresses. Every city and industry had their own Direct Democratic congresses, where they could discuss and vote on vital national policy.

The former bourgeois classes saw their opportunity to hi-jack the Direct Democratic system, and use it against Gaddafi's plans for modernization. All through 1986 and 1987 the People's Congresses severely criticized Gaddafi and demanded that the economy be "liberalized" to allow for private enterprise.

We are now told that Gaddafi was a dictator, who did not listen to the people. Nothing could be further from the truth. Gaddafi did not stand in the way of the decision of the People's Congresses to "liberalize" the economy - even though he knew that this was a great mistake. From that point on, the business class has grown and grown its power in Libya, and the great plans to develop Libyan industry have had to take second place.

Of course, this situation was greatly worsened by the criminal sanctions placed on Libya after the Lockerbie bombing.

So, by 2011, a situation had developed in Libya that was identical to the situation in Ireland in 1922. In Ireland, a people's revolution had taken political power out of the hands of the grazier class, and put in in the hands of Sinn Féin, the IRA and hundreds of Soviets - particularly in Munster. The graziers still had the wealth - but they had lost grip on political power.

In Libya, by 2011, the business class had very large amounts of wealth - but the political power was still vested in the People's Congresses - and, worst of all, the oil wealth was not in the private hands of the business class.

Ireland 1922
Venezeula 2002
Bolivia 2008
Libya 2011

What are the similarities? A business class that feels that it is not enjoying the usual perks of Western democracy, i.e. that the business class owns everything, and has all political power - and the plebs content themselves with scribbling some numbers on a page every four years, and then shutting up.

In Ireland and Libya, the grazier \ business class made an unholy alliance with former colonial powers, and effected a coup d'état against states that they did not control. In both Libya and Ireland, this business class used their money to hire lumpenproletariat mobs to overthrow the people's state. We see the sheer criminality of the Nato rebels on our screens. We should also remember that in 1922 - 1923, about 70% of all cases coming before the courts involved free state soldiers, and the crimes varied from robbery to rape and murder.

In Ireland in 1922, the free state army would have been nothing without British arms and the British navy operating a blockade. The invasion of Munster was carried out by the British navy transporting the free state army behind IRA lines, into Cork and Limerick.

In the same way, the Libyan "rebels" were nothing without Nato and the Qatari army.

But, the free state grazier elite has never trusted the free state army. At all times, it is the presence of the British army on Irish soil that has guaranteed the wealth and privilege of the free state landowners. We saw, all through the 1970s and 1980s, how desperate they were to keep the British army in Ireland. In 1976, when the British were thinking of leaving, the landowners sent Jack Lynch and Garrett Fitzgerald to meet Harold Wilson to beg him not to withdraw the British army - and leave the Irish ruling class to face the anger of the people.

It is already the same with the Nato rebels. They are already begging Nato not to leave.