(en) WSM.ie: Irish Anarchist Review #10 - Middle Men and Market Forces - An interview with Conor McCabe

The following is an edited transcript of an interview cum dialogue with Conor McCabe, 
author of the 2011 book ?Sins of the Father? on the economy of Ireland since independence 
and researcher on financial shenanigans and corporate misdeeds in the Republic. I keeping 
with the theme of this issue of IAR on the institutions of power in Ireland, we wanted to 
explore how money and market forces operate through the specific structures and class 
composition of Irish society. ---- Paul Bowman: When we?re talking about how market forces 
rule here in Ireland, presumably they have to do that via a local capitalist class or 
people who are the interface between market forces and so on. What would you say were the 
main things that were different in Ireland about how that class works with both local 
capital markets and international capital markets, as opposed to how it works with our 
neighbours next door in the UK.

Conor McCabe: Yeah. The main thesis I put forward is that if you see it in the global 
chain/system, there?s kind of a middle-man class in Ireland whose job is not at the 
receiving end, it?s not at the production end. It?s the class that gets sent away in the 
Hitchhiker?s Guide to the Galaxy. You seen that?

PB: [laughs] yeah - the phone sanitisers...

CM: There?s those that own everything and there?s those that do everything, and then 
there?s those in the middle who just seem to do stuff. That?s kinda who runs Ireland at 
the moment. One of the problems in talking about Ireland in terms of structure is that, 
you can talk about Ireland in terms of the economic structure of the country, and then 
there?s the economic power in the country and there?s an assumption that they?re both the 
same. And I would question that.

A lot of what happens in Ireland is in spite of the economic policy decisions that are 
being made, not because of it. If you look at what?s actually keeping Ireland going now, 
it?s not the IFSC. It?s not tax from that, it pays only about half a billion in tax 
anyway. It?s the 1.9 million people who are working day in, day out. That?s your backbone. 
It?s your 300,000 public sector workers, that?s your backbone thats what stops us falling 
into the Atlantic.

The narrative is that it?s exports and it?s Intel and it?s Google. No its not. That?s what 
makes a certain class in Ireland very, very rich. That doesn?t actually mean because 
they?re the ones that?s setting economic policy, that?s what?s actually ticking over the 
country itself. Ireland?s agricultural exports are in value around 12 billion a year. But 
the sector employs about 140,000 people, including secondary services.

If you take the half [by value] of Ireland?s exports, which are pharmachemicals, it 
employs 38,000 people that?s less than 1.8% of the workforce. It?s absolutely huge because 
it?s pharmachemicals, intellectual property, etc. And also if you start looking at the 
imports of physicals in Ireland, there seems to be a lot of creative accounting going on 
there as well because they?ve been able to do more with less. Because Ireland imports all 
these chemicals and the imports have been dropping but the exports have been rising. Which 
is a little suspect. Unless they?ve done a ?Scotty? and broken the laws of physics. I 
don?t know how they?re doing this. This goes back to creative accounting which is at the 
heart of it.
So one of the problems of dealing with the structure of the Irish economy is that there?s 
an assumption that when we talk about the power in Ireland, that that?s what keeps Ireland 
going and it?s not. I would say that no, it?s actually different things. I would say that 
Ireland keeps going in spite of this class, not because of it. Even down to the latest 
OECD report that said that Ireland was a victim, which is really funny, of tax avoidance - 
which has been national policy since 1952, or 49 even. But even they said, if you were to 
tighten up all this tax avoidance rules you wouldn?t really lose any jobs, because there 
aren?t any jobs here anyway. Companies like Matheson, Goodbody, Arthur Cox, McCann 
Fitzgerald, KPMG, they?re the ones who would lose out, Davy Stockbrokers. Because they?re 
the ones who have all the contracts. And they?re the ones who have the ear, or the pocket 
(maybe) of the political class.

So I would see that disconnect with where decisions are made on a national level. Of how 
this class uses the state to protect itself from the state - which is quite interesting - 
uses the very structures of the state to protect itself from the actual citizens. And yet 
what actually keeps all this shit going, theres a Venn diagram, a cross-over, but its not 
as big as they make out. So if we are to talk of the economic structure of the country 
that would be a different narrative, quite boring as well, I?d say, that would start with 
jobs, at a local level?

PB: I guess a lot of that is the kinda social reproduction stuff that has to go on everywhere?

CM: That has to go on anyway. What?s keeping Ireland going is not exports it?s the 
internal dynamics. 85% of jobs in Ireland are in the non-export sector, and that?s being 
generous giving 15% to the export sector. Its about 7.5% in indigenous Irish exports and 
then 7.5% in foreign-owned exports, roughly the same. The difference in volume is 
enormous. The Irish-owned is certainly less that 20 bn but the foreign exports maybe 65-70 
bn per year

PB: Are some of those figures distorted by the flow of intellectual property revenue, like 
the Googles and Apples etc, shift through Ireland on the way to Bermuda or wherever?

CM: Yeah. The CSO in its Mapping Irish Progress, 2012, talked about this and said if you 
looked at Ireland?s GDP and GNI, there?s a real disconnect. The only other other country 
where there?s a gap of more than 7% between these two figures is, for some reason, 
Luxemburg [PB: that makes sense - laughs]. So they talk about all these flows and then 
they say: that shows the importance of foreign direct investment into Ireland. Now I find 
that really funny. Its quite Orwellian how you set up a statement that these flows don?t 
seem to have any real impact on national income? and that?s why its important? to national 
income. That?s Orwellian language, that?s just crazy.

Now the central bank is a lot more forthcoming. In their Quarterly report in 2011. Donagh 
Brennan has done some really good work on this in Irish Left Review. They just call it. 
Under OECD definitions, investment does not really mean investment as such. Investment 
means ownership. So it?s foreign ownership - foreign direct investment under the way the 
OECD sets up what is investment, means that the funds or the company is owned by a foreign 
party. It?s not that its an investment in the country. So it?s ownership not investment, 
but it?s called investment. So you have a situation where the single largest source of 
foreign direct investment into the Irish state is Bermuda. But Ireland exports? it?s also 
a contributor to investment outside its borders. The largest single recipient, in 2011, of 
investment from Ireland was Bermuda. The money comes in, the money comes out again.

PB: The popular understanding of investment would be that people were putting money into 
some kind of physical capital, some kind of plant in order to do something?

CM: OECD hasn?t had that definition for 25-30 years, maybe more. [PB: so it?s a pure 
monetary flow?] Well its about ownership. As the nature of profit seeking in capital has 
shifted into monetary flows, rather than production? it hasn?t replaced it, but there 
certainly has been a shift in profit-seeking then maybe that investment ownership... Maybe 
that would have made sense 30 years ago. But ownership of a plant, ownership of an 
investment fund in some lawyers filing cabinet, is not the same thing as far as 
investment. But no, it hasn?t been that way now for decades. But that?s the narrative. But 
that?s how you get into the whole thing of dancing on the edges of Gramsci here - 
hegemonic language and how the language then is used.

So, if you look at what?s traded now. I make the argument that this middle-man class has 
its origins really in... it?s there from the 1700s onwards. But it really takes off after 
the Famine clearances and the move into grazing. Whereas 50-60 years ago, what Ireland 
exported, Ireland?s selling point then, was cattle. A raw material for value creation in 
the UK. What that class sells now is the ability of the sovereign state to sell its own 
tax laws and have those tax laws then recognised internationally. That?s highly profitable 
if you?re part of that.

Now what I don?t go into in any of my work, and its something that I have to address, is 
that I tend to treat that business class in Ireland as one homogenous block. There?s a 
danger in that as well. In 1978/79 there was a push, I think from elements within the 
department of finance, to open Ireland up as a proper tax haven. It had been used for hot 
money in the UK for decades. But to actually go full haven. I think the Central Bank shot 
it down, saying ?this smacks of being a banana republic?. Now I may have gotten my two 
blocs mixed up It may have been the Central Bank who were arguing for it and Finance shot 
it down. But one of them said ?this smacks of being a banana republic?. But in less than 
10 years it was national state policy.

There?s a tension going on in that class that I don?t really delve into. But see, in their 
spats I don?t think we should confuse an intra-class spat from inter-class spat. Its like 
in Julius Caesar, nobody, none of the senators are arguing for the plebs to be part of 
this decision-making process, once we?ve killed Caesar. None of them are saying that. 
They?re saying, no, we kill Caesar but - there?s no debate about this - we?ll still be in 
charge. So they?re having their fights, and it?s all drama, but it?s in their class. 
That?s kinda how I see it. We?re still outside, the menders of bad soles. That?s all of us 
on the edge.

So if that is the selling point now for this class. That?s where you get into the myths of 
what around what actually generates activity in this country. Now we know from other tax 
havens or financial city states, that a city is pretty much the size of what can benefit 
from this activity. Look at Ireland you see that all over again. In the UK of course 
that?s London.

PB: I?ve just written about this recently in relation to the Scottish referendum and Paul 
Mason did a piece a few weeks back on how increasingly the UK economy is dividing into 
London and ?the rest?. Something about financialisation seems to be focusing activity onto 
the city where the money and credit flows are traded and then just the hinterland.

CM: Yeah, I need to do some more work on them myself. I?m sure geographers have done some 
really good work on it. There?s definitely something about that. You have a single port. 
There?s something about city states or island states that really seems to work for this. 
Ireland seems to be the very same. Anyone who drives past the M50 [Dublin?s M25] you get a 
sense of the so-called boom.

PB: Bearing in mind our international audience - I heard a figure around the region of, 
nearly half the working population of the Republic are working either in Dublin or in some 
environment connected to Dublin.

CM: That rings true to me. If you take the Dublin catchment area which goes, up North, not 
quite as far as Dundalk, just shy of it, as far West as Mullingar, talking 50 miles. So 
you?re talking 50 miles, 80 km, circle all around. You?ve got about half the jobs. [PB: 
which makes it one of the most centralised countries in Western Europe] Yeah and it?s a 
highly centralised state anyway and that?s a legacy of Dublin Castle. When the pro-Treaty 
side took over, they had the state apparatus that was all set up to coerce a hostile 
population. For the pro-Treatyites they said ?this is brilliant, this is absolutely 
perfect? and when Fianna Fail came along they said we?ll just keep on using it then. The 
whole kinda city managers system, the county managers system. There?s no local government 
in Ireland. It all goes through this highly centralised state. For the size of it, its 
incredible.

PB: While there seems to be this tension we?ve already talked about, between sections of 
the ruling class on occasion, there still seems to be much more consensus on a number of 
issues. Particularly the relationship with Europe. There?s no UKIP in Ireland and there?s 
not about to be. It appears from the outside that the ruling class here, is completely 
agreed that we don?t want to piss off Frankfurt or in some way endanger the relationship 
to those capital markets. Is that a fair comment?

CM: I don?t know if I?d see it purely in economic terms. I?d see it very much in 
cultural/ideological terms as well. If you look - again this an argument I put forward in 
the book briefly, it?s up for discussion - how I make sense of it in my own head is that, 
Ireland never had that post-war, welfare, ?spirit of ?45? contract. But it still had 
something there, in place. What it had in place was this corporatist, neo-corporatist, 
Catholic social teaching view of things. However weak that may have been as a social 
contract, that is our social contract. That didn?t start breaking down at the same time as 
neoliberalism. it?s actually breaking down now. This is what I?m putting forward. So it 
didn?t break down in 1987, its actually breaking down since 1997, so its a bit slower. But 
because it was already a right-wing compromise, we didn?t quite notice it as being a 
compromise until probably quite recently. And that?s what?s under attack right now. And I 
think that;s where there?s a lot of confusion among the Irish middle class. Because their 
frame of what this country is, is being changed at the moment. Britain went through this 
in the 1980s, they?re going through it in the last ten years. And they?re rabbits caught 
in the headlight. However weak of a compromise that may have been, it was still one. It 
involves the whole social partnership model. That doesn?t start in 1987, that goes back to 
1946 with the Labour Courts being set up and the first wage agreements already in the 
1950s and then there?s ones in the 1960s. So this kind of corporatist or neo-corporatist 
spirit, a very Catholic way of dealing with class conflict. That?s what passes for 
liberalism in this country. A great example of is Fintan O?Toole. I always think that 
Fintan O?Toole?s hands must be porcelain at this stage, you know? He?s always wringing 
them. It?s that thing about fairness and justice, and blah, blah, blah. Its never about 
power, and its never about rights. It?s always about justice and fairness and that. I see 
Rerum Novarum in that. I see that going back to 1880s. So that also goes through the right 
wing in Ireland and it has a strange mutative effect on them. So you?ll still get, even in 
the right wing in Ireland, you?ll still have struggles of that kind of Catholic social 
teaching running through them.

PB: How does this relate to attitude towards Europe?

CM: I think - and this is the more advanced elements - what they see is a transnational 
capitalist class in formation in Europe, and they want to make sure that they have the 
same role in that transnational capitalist class as they have now in terms of finance and 
what was once the British Empire. That they?ll be there bidding for them, that they?ll 
look after all the books for them, they?ll be back-room boys for this transnational 
European capitalist class, that is in formation.

PB: There?s always this mentality that we exist, economically, always in relation to 
something larger than ourselves

CM: Yes. And we have to. Because our job is to administer these things rather than 
actually run them.

PB: To be the middle-man, you actually need things to be in the middle of...

CM: Yeah. But it?s also what our education system was set up for. At pre-independence it 
was to be civil servants for the Empire. After 1922 it was to be civil servants for Rome. 
They were teaching Latin in the primary schools in Ireland up until the 1960s. There?s a 
deep culture in there of having that position. Its not as homogenised as I?m making out. I 
do think they have more punch than the other elements, the Dermot Desmond's maybe, who 
would be genuine capitalist class. He wouldn?t be a middle man anywhere. And also a lot of 
Northern indigenous capitalist class after partition as well. They kinda died out in the 
North. But in 1922 there was the like, where was the capitalist class in Ireland? Well, 
that?s where it was.

PB: To come back to financial flows and last week?s OECD report promising to cut down on 
the ?double Irish sandwich? and all the rest. Is there any chance of that actually 
happening? Are all the blazing headlines on the Irish Independent that this is going to be 
the end of the world, and so on, does any of that matter?

CM: Its a strange thing because I?m still trying to work out where the pressure for this 
is actually coming from because its not coming from the social movements. There has to be 
something happening at that level that they say that we have to sort this out

PB: I guess from the USA the Obama administration has expressed frustration about not 
being able to collect taxes from their companies?

CM: The reason why Ireland had to end its special status from 1987 up to 2003, [was] 
because Germany and France were going crazy because the amount of tax that they were 
losing because their companies were using Ireland as a tax haven. Since the crash or 
crisis of 2008 those countries have been suffering in terms of income. The pressure is 
definitely coming from the top rather than the bottom. Which means that we have no say 
over its direction. It also shows that what will happen in Ireland as was pointed out by 
the OECD, its never about 12.5%, its always about the secondary benefits. If they start 
going after them, there?s always a chance that the Irish state will start to get more 
income. Because since 2003, you do not have anymore special zones for foreign companies. 
[PB: so like the IFSC no longer?]

There was a controller and auditor report done for 2011 and buried in, like, chapter 8, 
paragraph 31, there?s this gem saying that most Irish companies don?t pay corporation tax. 
There?s like 38,000 companies paid any level of corporation tax and 2/3rds of it came from 
the 200 most profitable companies in the country anyway. Which means that that year there 
was around 190,000 active enterprises in the Irish state, employing over 1.3 million 
people. Less than 20% of them were paying corporation tax at any level, So instead of 
having a special tax zone up until 2003, it was told to either close it down or lower the 
tax level for everyone, and Ireland lowered the tax rate for every single company in this 
state. So the entire state now is a tax haven. Which means if they have to close down some 
of those tax loopholes that would apply to foreign as well.

If you take your man Gallagher who ran for president a couple of years ago, like the 
Fianna Failer who wasn?t a Fianna Failer. He was doing exactly what Google were doing. He 
had two companies. One was based in Bermuda, had a patent on some device he had, he?d 
created. It charged one company he had in Ireland for the use of that. It was then used as 
a cash write-off. This is exactly what Google does with its search engine. And that was 
entirely legal.

So what?s killing us is not the multinationals. Wherever corporation tax is paid in 
Ireland, they?re the ones that actually pay it. Its the Irish companies out there that are 
getting away with paying absolutely nothing in corporation tax. The Marian Finucane's of 
this world who are set up as a company. The Joe Duffys - Joe Duffy?s company is named 
after the Dublin Corporation street he was brought up on in Ballyfermot. He actually names 
his tax avoidance? [PB: that?s cause he?s a man of the people...] Claddagh Green its 
called, right? He actually named his tax avoidance structure, right, - because it?s called 
a company, but give me a break, it?s a tax avoidance structure - after the very social 
housing that put a roof over his head [PB: remembering his roots!] you know what I mean? I 
mean talk about two fingers, you know? But that?s what we?re talking about. And they know it!

There?s that element to it as well. It?s never mentioned in any kind of debate around tax 
in Ireland that any of the benefits of the multinationals applies, even this place [Irish 
Film Institute, where this interview was held] applies for every single company in Ireland 
if they have enough revenue coming in to justify the avoidance - you know to hire all the? 
There was a great clip from Tony O'Reilly about the oil company that he runs, and he talks 
about how they had gotten in some big investors to come in and look for oil off the coast 
of Cork. And he?s asked, he said ?and what do you bring to the table?? he says, ?youse 
don?t drill, youse don?t look for any oil. What do you bring?? and he goes ?we bring all 
the local expertise. We know how to get through all the labyrinth of the Irish rules and 
all the loopholes and that?s what these companies like. They like to bring on somebody 
who?s local who knows how to hold their hand and walk them through all Ireland?s tax laws? 
that?s where we get into why?

PB: And you?d find people in China saying that?s what we do for companies here.

CM: And that?s what the name comprador comes from, it comes from China. It comes from the 
local people who?d work for the Portuguese who would manage the companies and who know how 
to get things done. And how to deal with all the locals. Because you are one of the locals 
and you know how to sell this shit to them. So that?s what it sells.

PB: OK, I?m going to move on the final area which is really to ask you what your areas of 
research have been since the publication of Sins of the Father. What you?re looking at, at 
the moment.

CM: I?ve just gotten more and more into finance and Ireland. And its really about Ireland 
and its position in the global financial system. That?s basically what I look at now.

PB: People have vaguely heard of the ?Dutch Sandwich? and the ?Double Irish? and so on. 
But is there other stuff out there that people haven?t become aware of yet? Or are you 
looking at the mechanics of how that all actually works?

CM: Yeah, it isn?t quite drilling down into it at that level, its more looking into who 
are the players in all of this. When you see certain names keep popping up again and 
again. Certain law firms keep on popping up. Certain accountancy firms keep on popping up. 
[PB: Davy...]. Davy? Yeah. I mean they walk between the raindrops. Absolutely. They?re 
ensconced on Dawson Street there [i.e. next door to the Dail]. Arthur Cox, Matheson - huge 
one, they have a lot of that directorship market as well. There?s new aspects of it 
happening. I?m still trying to catch it. Aubrey Robinson has been doing a lot of work on 
it. It?s more looking at it from a power point of view. The finance is interesting, but 
its more about the power relations, is really what I?m interested in. And how they play 
out in an Irish context.

One of the things about doing a kinda systems analysis is that? If you start drilling 
down, you?re fucked basically. My strength is, its a big weakness as well, my job is to 
know a little about a lot. And then see how the mechanism works. Then hopefully that will 
paint enough of a picture for then other people to? to actually find out what the hell is 
going on. So it?s one of the problems is that, if I start getting into? like I have 
Ireland?s tax law on my shelf and I have the guides of how to avoid tax in Ireland. How I 
dip into that is if I need to find out stuff that doesn?t make sense to me, then I dip 
into it. But its only in part of painting that whole picture.

So hopefully that will bring something to the table in terms of the Irish activist 
movement. But that?s all that it can do. Then hopefully that?s enough to say, listen this 
is worthwhile and then they?ll find out more and more and more. The other thing is that 
the work I do, it can only be at best a sketch. Did you ever do chemical engineering at 
school or technical drawing? [PB: No]. If you?re doing any kind of technical drawing, 
there?s your guidelines you draw in very light pen, and then you rub out afterwards. 
That?s what I do. All of my research, if I do it right, it should be out of date in a few 
years time. Because other people have done more and more work with it. I don?t think its 
there at the moment, but if you get that bit done, then that might bring a bit more 
clarity into how power works in Ireland. And hopefully it?ll be out of date in ten years 
time because more and more research will have been done. So in terms of actually drilling 
down into the actual every single tax avoidance one. I can?t do that, because I?m trying 
to get a sense of the whole thing.

PB: No, well, the whole notion of the machine is to make something complex enough that you 
need armies of specialists to guide you through this system that allows you to create 
loopholes. So its not something that as an individual researcher you can afford the time 
to get ensnared in too much.

CM: No. However I do know enough now that, as a fundraiser we should?

PB: Set up a company [laughs]

CM: Hire a room in the Shelbourne Hotel. Get someone from Asia and from either Austria or 
Germany over. Have them launch some kind of investment fund, saying that its for a new 
business park outside of Hong Kong. There?s a new train line being built to it. You?d make 
a mint from it. Because as you can see now, its almost back to... they?ve hit the restart. 
We should get in now at the bottom [PB: laughs] and make some real money for the WSM, you 
know? No more fucking garages up in Mountjoy Square. And its taking money from upper class 
idiots. It?s a victimless crime....[both: laughter]

PB: I like that. I guess that?s a good enough place to finish. Thanks again Conor.


Words: Paul Bowman