The political dictatorship of the middle class

Last October, in an issue which included pieces on "The Next Magic Kingdom" and "The Next President", the New Yorker magazine…

Last October, in an issue which included pieces on "The Next Magic Kingdom" and "The Next President", the New Yorker magazine published an essay on Marx and called it "The Next Thinker".

The Marx in question was Karl, not Groucho; the theme was surprising, too: "Why Wall Street should be consulting the curse of capitalism."

In December there it was again, the same piece under a slightly different heading, this time in the Sunday Review, the magazine of the London In- dependent on Sunday: "The Next Big Thinker".

"Communism may be dead," ran the introduction, "but Karl Marx's critique of capitalism suddenly makes perfect sense - and even right-wing economists can be heard praising his views."

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But why should Marx's critique make sense in the late 1990s? When the question facing the all-powerful middle classes is not how to make ends meet but where to stash their surplus funds?

The Berlin Wall fell in 1989; and with it went the hopes of those who still believed a socialist phoenix might rise from Stalinism's ashes. The lumpen right triumphantly announced the experiment was over and celebrated the end of history.

So why should John Cassidy, an economist by training and by all accounts a respected commentator on financial affairs, find an audience for his views on Marx the thinker in fashionable journals on either side of the Atlantic?

Cassidy anticipated the question. "Marx's legacy," he wrote, "has been obscured by the failure of communism, which wasn't his primary interest. Marx was a student of capitalism, and that is how he should be judged.

"Many of the contradictions that he saw in Victorian capitalism and that were subsequently addressed by reformist governments have begun reappearing in new guises, like mutant viruses.

"When he wasn't driving the reader to distraction, he wrote riveting passages about globalisation, inequality, political corruption, monopolisation, technical progress, the decline of high culture, and the enervating nature of modern existence - issues that economists are now confronting anew, sometimes without realising that they are walking in Marx's footsteps."

Globalisation, inequality, corruption: the issues confront politicians as well as economists, and also those who boast of the fastest-growing economy in the European Union as well as the readers of the New Yorker and the London Independent on Sunday.

Cassidy's - or Marx's - terms may sound like highfalutin abstractions. They are easily brought to Earth.

Take globalisation. An international company, Seagate, suddenly decides to quit Clonmel, Co Tipperary, with the loss of 1,400 jobs, partly because of turbulence on the Far East's money markets.

Those who've made their fortunes in Ireland find easy escape routes to the Isle of Man, the Channel Islands and the Caymans, facilitated by the organisers of Ansbacher accounts and how many more pillars of our society?

Now we discover up to 40,000 non-resident companies are registered here: some to hide money from their own tax authorities, others to launder the proceeds of crime. How many for legitimate purposes? Who knows?

According to Siobhan Creaton, the reporter who disclosed this extraordinary business in The Irish Times yesterday, some £20 billion may have passed through these companies. And, in passing, generated £40 million a year for Irish accountants, solicitors, company formation groups and others involved in financial services.

This may not be what the local chatterboxes - faint echoes of Hello magazine - have in mind when they prattle on about global villages, or even what free trade advocates expected when they said we should find a place in the 1990s New World Order.

Barriers, they say, are coming down, thanks to globalisation, technology and the end of history. This is true, up to a point.

But the barriers of inequality remain, at home and in the wider world. And they tend to be raised, not lowered, by globalisation and technology. Barriers of inequality divide the poorest of the poor in subSaharan Africa from the rest of the world; and the rest of us are reinforcing barriers to keep them out.

At home the barriers are being raised against Peter McVerry SJ's people and Sister Stanislaus Kennedy's people and those for whom Sean Healy SMA speaks but the Fianna Fail-Progressive Democrats Coalition - fulfilling its pre-election promise - does not.

Because to speak for those who are deliberately excluded would mean taking on the allpowerful middle classes, not to mention the friends of the party. And if you think Charlie McCreevy is about to do that you haven't heard about payback time or you've forgotten what it means.

And what it means is this: when it comes to taxation, you lean heavily in the direction of the better-off, even at the expense of the poor. It doesn't matter whether women seeking refuge have to be turned away from overcrowded hostels or children run homeless in the streets.

The Fianna Fail-Progressive Democrats Coalition is pledged to promote equality in Northern Ireland, as indeed it ought to be. Equality in the Republic is another matter, as the Budget showed.

Last week Liz McManus of Democratic Left asked how much it cost to halve the rate of capital gains tax and referred to reports suggesting that "some wealthy individuals have already benefited from substantial windfalls arising from this decision."

The rate, you may remember, was cut from 40 per cent, and Mr McCreevy estimated it would cost £19 million in a full year. Last week he said: "On a purely static basis, the Revenue Commissioners have estimated that . . . would cost £40 million in a full year."

On the same day he was asked by another DL deputy, Eamon Gilmore, about research by the Revenue. This, according to Mr Gilmore's information, showed that "a sizeable number of people earning over £250,000 per year are using substantial income-tax avoidance measures and that nearly one in five pay tax at an effective rate of 20 per cent."

Mr McCreevy said in the course of his reply: "As might be expected, high earners tend to make fairly wide use of available incentives to reduce their tax bills. In general I have no difficulty with this. Tax incentives are there to be used and to encourage investment which would not otherwise be made . . ."

He agreed that about one-fifth of those earning more than £250,000 were able to reduce their final tax bills below 20 per cent. Which, in case you don't know, compares with 48 per cent for those who pay as they earn.

Isn't it about time Mr McCreevy gave up the guff about his experience as an accountant and took his present job seriously; time the Revenue Commissioners and the Central Bank stopped making excuses for themselves and set about regulation?

As DL's spokesman, Tony Heffernan, said when he passed on the other statements: "It's the Cayman Islands without the weather."

I'll get back to Marx and corruption.