Michael O'Sullivan asks whether we are at risk of losing control of our destiny
In its review of the Irish economy, published this week, the IMF praised the performance of the economy but warned that it was becoming increasingly unbalanced and vulnerable to external shocks. This judgment should come as no surprise given that the media is increasingly dominated by topics that highlight the side-effects of the burgeoning economy, such as high inflation in property and consumer prices.
However, the troubling aspect of many of these issues is that they appear to be beyond the control of policy-makers. For example, a steady stream of economic news items on rising wealth, debt and inflation - all of which are intrinsically linked - gives the impression of a runaway economy, while the general failure of important measures of human development, such as the quality of healthcare, to match the pace of economic growth also suggests that recent prosperity has not been harnessed as effectively as it could be.
In this context it is not out of place to ask whether, as a result of globalisation, Ireland is losing control of its economic and social destiny. Indeed, only a few months after the celebrations of the 90th anniversary of the 1916 Rising, it does not stretch the point to wonder if a highly-globalised country can aspire to the "unfettered control of Irish destinies, to be sovereign" in a world which is now highly integrated and interdependent.
Can a small, open nation independently manage the effects that globalisation has on its economy, society and public life? Although bodies such as Forfás and the NESC have mapped out some of the shortcomings facing Ireland's economy (like falling competitiveness and poor infrastructure), there is no framework in the public sphere that we could use to organise and make sense of the many changes occurring in Ireland today.
One starting point may be to use the political philosophy framework of republicanism. A republic, to use the definition of the philosopher Philip Pettit, is a state where citizens are free from domination.
This definition is particularly relevant to the case of a globalised society, because it centres on whether globalisation emasculates, takes away the power of sovereign states and citizens and leaves them in thrall to powerful market forces. In globalised Ireland, it is hard to escape the feeling that people are dominated by the "Celtic Tiger", its causes, effects and the expectations it gives rise to. In turn, this raises the question of whether the ebb and flow of globalisation is being managed in Ireland.
To some extent, the response of a small country like Ireland to globalisation is pre-determined. It is simply neither large enough nor powerful enough to have a direct and lasting bearing on the globalisation process. At the other extreme, the economic successes of Ireland's experience of globalisation, such as the fall in unemployment from over 15 per cent to below 5 per cent, leave it understandably unreceptive to the arguments of anti-globalists who demand the slowing or even ending of the globalisation process. Instead, Ireland must accept globalisation, but adapt to it with innovative strategic thinking and policy-making.
The ways in which this can be done are already becoming clear. One is the need for a larger role for government in buffering the effects of globalisation. In this regard, Ireland is unique among the smaller globalised economies of the world in that the size of government (ie government spending as a share of GDP) is relatively small.
Typically, in other small countries such as Denmark, there is an inverse relationship between the size of government and the openness of the economy because a high level of government involvement counterbalances the large external risks posed to small, open economies.
However, in Ireland, government spending has not grown in tandem with the pace of globalisation, leaving both the domestic economy and society vulnerable and undernourished in terms of the investment they require. The challenge, therefore, is to use the bounty from a strong economy to fuel investment in public services and infrastructure.
Another related response is institution-building. High-quality institutions such as its civil service allowed Ireland to behave like a first-world country through most of the 20th century although its economy was, at best, a second-world one. In the future, new institutions will have to be created to deal with new problems which arise from trends such as the rise of serious organised crime, immigration, new technologies and the increasing power and size of financial markets.
The creation of bodies like the National Pension Reserve Fund, the Equality Authority and National Criminal Intelligence Agency, among others, is a pointer of things to come.
In general, like most policy issues in Ireland, globalisation has been treated with a far greater dose of pragmatism than it has with careful strategic thought. As the IMF report underlines, Ireland is at a crucial juncture with regard to the next stage of its economic development, as well as to its place in the world, the wellbeing of public life and the structure of its society. The present danger is that delaying a close and serious examination of what Ireland's engagement with globalisation means could squander recent successes.
• Michael O'Sullivan is the author of Ireland and the Global Question, published by Cork University Press