This short booklet of essays and collected newspaper articles was published in August 1966 by Rayner O'Connor Lysaght under the imprint 'Aisti Eireannacha', being no 2 in a series of which the first was a polemic by Martin O Cadhain 'Mr Hill: Mr Tara' which was concerned with the politics of the language movement. It was JJ's last attempt to address the lay public with economic arguments. I give his Foreword in full, and mostly abstracts of the successive essays, some of them in full. I give also, at the end, a copy of my own review which I published in Tuairisc #7, the Dublin Wolfe Tone Society newsletter, in August 1966.

Foreword

As a student of Irish history I am concerned to apply the lessons of the past, and especially the more recent past, to the problems of the present and of the more immediate future. Writing the history of the future is a somewhat dangerous occupation, but we cannot begin to plan intelligently for the future unless we have a true diagnosis of the real causes of the present problems, of which we are acutely conscious, and of the real limitations on the power of a small sovereign state to solve them.

Irish history is full of ironies, paradoxes and anomalies. With the establishment of a national government in 26 counties of our island in 1922 one would have thought that the future of the Gaeltacht was assured, and with it the possibility of restoring the language as a second vernacular in an increasing proportion of our total area. Actually, if statistics mean anything (and they sometimes do) the survival value of Gaelic as a spoken language was greater under alien rule than it has been under a succession of native governments. An attempt is made in the following pages to explain the forces which have operated to undermine the economic position of the small farmer in Ireland. The problem of preserving the Gaeltacht is part and parcel of the general problem of assuring the future of the small farmer. If one aspect of it is primarily concerned with preserving an essential element in our cultural heritage, another is concerned with maintaining (or restoring) a sound human foundation for our national economy as a whole.

Much of our history deals with the cruder forms of invasion, confiscation, dragooning and exploitation. In modern international conditions it is much easier (and less bloody) for a major economy to exploit a formerly occupied minor one, if the major economy takes the precaution of "liberating" it beforehand. The USA liberated the Philippines and then it became possible to tax imported Philippine sugar if it inconvenienced the growers of beet sugar in USA.

It is suggested in the following pages that it has been possible for the UK government, inadvertently, to exploit our economy more effectively than if we were still politically a part of the United Kingdom. The 1920 Act under which Northern Ireland is governed could have been an instrument of tyranny. As it has actually turned out, it has become an instrument by which our Northern neighbours can exploit the British taxpayer most effectively. Agricultural support prices and welfare services must add up to something between £60 and £100 millions annually, mainly contributed by British taxpayers, but circulating fruitfully among their small population. The agricultural stimulus has vastly increased their agricultural output. If our agricultural output could have increased in the same ratio it would now be £100 millions annually more than it is and our national income about £170 millions more.

As regards their UK welfare services, the cynics up there say that all that is necessary for a comfortable living is to have a sore back, a fertile wife and a house full of children!

There is probably something "phony" about the whole situation up there, but one of the facts we need to realise is that our Northern neighbours have managed to escape all the disadvantages of the UK relationship while fully profiting by all its privileges. Thanks to the convenient existence of a local reluctant minority they managed to escape conscription in both world wars.

Not having the British Treasury either at our back or on our back, we have to try and solve our internal problems within the limits of our own resources. The most serious of these are, in my view, really insoluble on a purely national basis no matter which of our major parties is in power. They are of international origin and our negotiators will have to work overtime in operating Article 20 of the new Free Trade Agreement if a just solution is to be reached. Meanwhile, if we are to achieve the maximum of the possibilities of national freedom, we must realise the de facto limitations of any minor national economy, however sovereign it may be in a political sense. We cannot all have an Imperial standard of living in a Republican State and if large sections of our people do nevertheless succeed in having it, the effect is to force down the living standards of our urban slum dwellers and the small farm population elsewhere, below the Republican level that would otherwise.be possible for all.

If, collectively, we give the highest priority to National Sovereignty, and have ended the status of being British subjects, why is it that, individually, we cherish the right to emigrate and become British subjects again under the terms of the UK Ireland Act? Is excessive willingness to exercise that right not a form of treason to the Republic?

Much of the material contained in the following pages has already appeared as articles in Business and Finance, Commerce, The Cork Examiner and the Dublin daily papers. It is included in the present collection of essays with grateful acknowledgment to the publications mentioned.

An Econonmic Basis for the Gaeltacht

Vital Statistics of Two Gaeltacht Areas

Possibilities for Agricultural Expansion

(Unfortunately these results proved to be a 'false dawn', as the reclaimed bog became heavily infested with liver-fluke, to the extent that the main utility of Glenamoy became the scientific study of the life-cycle of this parasite. In my 1970s Irish Times series I reviewed this situation. The commonage model however was valid and was later adopted by Father McDyer in Glenamoy, Co Donegal. RJ July 2000)

Glenamoy Techniques

Given the existence of the liver-fluke problem in reclaimed bogland, the Mayo blanket bog has turned out to be a suitable location for wind-farms, the maintenance of which involves some local labour. The question of how to translate co-operative rights over commonage into an effective method of social organisation remains on the agenda.

This concludes the first main section of the booklet, which I suspect stimulated the publisher's motivation to publish it in a series which had commenced with Mairtin O Cadhain. The remainder looks at various aspects of Irish economic problems in a global context. RJ July 2000.)

The Free Trade Agreement

I find the latter part of this, his last, polemic somewhat difficult to review; I think he attempted too much, and fell between several stools; he was 76 when he put the material together from collected earlier articles. His main attention at this time was on the Querist, and he had lost heart in his battle to get the Irish public to understand the paradoxes which underlay the workings of the Irish economy.

In the rest of the booklet he attacked the British 'deficiency payment' system, and suggested that much of her then current economic difficulty in competing in the international market for industrial goods was a consequence of the amount of resources devoted to the artificial support of her agriculture at the expense of the taxpayer (to the tune of £300M annually).

He urged universal free trade in agricultural products, and the sending of 'sacred cows' to the knackers. He accused organised capital and organised labour in the developed countries of together exploiting the people of the developing economies, in a neo-colonial system. He commented adversely on the 'arms race'.

He had things to say about money, inflation and the long-term rate of interest, the Irish external assets (a consequence of Irish farming prosperity during World War 1), the Economic War, Anglo-Irish trade in general, productivity, the Korean War... all in all a somewhat rambling survey as the world as seen in the mid-60s with a somewhat jaundiced eye, in contrast to the constructive approaches demonstrated in the earlier chapters. In his final chapter, which I give in full, he comes round to his 'consumer demand theory of credit' and conveys a cohesive and basically progressive message. RJ July 2000.

The Relevance of Berkeley's Querist

Such discussions remain in an atmosphere of money. So one may well, ask what is money anyway. Berkeley gave the answer 230 years ago as indeed Aristotle did about 2300 years ago.

Money is a claim to goods and services available in the community. It is a credit redeemable ultimately in goods and services and in no other way. All money is credit and all money is debt. Berkeley queries "whether all circulation be not like a circulation of credit, whatsoever medium (metal or paper) is employed, and whether gold be any more than credit for so much power."

Money is an essential institution of the exchange economy and its true significance is in the relative prices and incomes that prevail within such an economy whether it be national or international. Freedom of exchange is essential to the perfect functioning of an exchange economy and any limitation of such freedom must have repercussions on the monetary relationships between the various sections of an exchange economy.

Any theory of credit that is concerned with the mere monetary aspect of things and ignores the commercial aspect bears a certain resemblance to pre-Copernican astronomy.

It used to be said or implied that the basis of bank-manipulated credit money was the gold reserve maintained by the Bank of England. In 1903 there was only £30 millions of gold in the Bank of England and the credit of the British economy was beyond question. Nowadays with £800 millions of gold in the national coffers there are occasional doubts about the international solvency of the British economy. Since then there have been two World Wars and a Great Depression sandwiched in between them. Post-war domestic policies and the increasing cost of "Defence" have delayed the re-establishment of the UK's commercial relations with other countries on a sound basis of reciprocal exchanges. These are the major causes of the present unsatisfactory British position.

The all important fact is that the soundness of credit depends on the terms on which goods and services are being exchanged for goods and services through the medium of money.

What 'is needed is a pattern of consumption appropriate to the potential pattern of production in the exchange economy as a whole.

The matter has an international as well as a national aspect for the exchange economy transcends the frontiers of even the largest and most self-sufficient national economy. Credit may be unsound because the toiling masses at home or abroad are paid too little, or perhaps because they, or some of them, are paid too much, or because a vertical section of the economic structure is obtaining an excessive share of what is available for all.

Berkeley considered that a more equitable distribution of the national income was necessary to a sound credit situation. He queries "suppose the bulk of our inhabitants had shoes to their feet, clothes to their backs, and beef in their bellies, might not such a state be eligible for the public, even though the squires were condemned to drink ale and cider."

Consumer demand he regarded as the dynamic of production and therefore the basis of the credit necessary to a self-liquidating and self-perpetuating economic expansion. The income elasticity of demand for more food and clothing and shelter is very high among the poorest sections of most communities. He queries "whether comfortable living doth not produce wants and wants industry and industry wealth?"

If by an application of social justice the "submerged tenth" at home and the submerged two thirds abroad can be stimulated to desire a higher standard of living, and facilitated in exerting themselves to produce the products which they can exchange for its material basis, then a twice blessed reciprocal process will begin which will enrich the world economy as a whole. As he queries "whether to provide plentifully for the poor be not feeding the root the substance whereof will shoot upwards into the branches and cause the top to flourish."

The real basis of credit requires a certain flexibility of relative prices and incomes in the exchange economy because such flexibility is necessary to the continuous process of economic adjustment. But it is possible to overstress the desirability of mere flexibility. The incomes of over 60,000 small farmers in the West of Ireland, whose family incomes are estimated at £200 a year, are only too flexible -- in a downward direction. The same might be said of the present populations of most South American countries and for a similar reason. The unorganised producers of primary products have little bargaining power in any country; they are in some sense the victims of the inflexible upward movement of prices, profits and wages in the more privileged economies and in the more privileged sections of their own national economies.

Thus the real basis of credit depends not only on flexibility of relative prices but also on an equitable distribution of property and income. Social justice within national economies is thus part of the essential basis of credit. Social justice as between the rich and the "developing" national economies is equally necessary if a sound credit basis is to be preserved (or restored?) for an international economy developing smoothly in all its parts.

Within national economies social justice does not require merely a liberalising of "social services" though it may do so at times. It does require a determined effort by the public authorities to strengthen the bargaining power of useful producers whose bargaining power is weak, and equally a determination to resist the anti-social pretensions of pressure groups whether of Capital or Labour in Agriculture, Commerce and Industry.

Thus credit in the true sense is intimately bound up with the social and economic welfare of consumers as a whole. Since this also depends on specialisation of production and freedom of exchange we must regard freedom of commerce and flexibility of price relations, in conditions of justice as necessary conditions of the soundness of the credit structure. Only under such conditions can the maximum productive energies of the community -- and of humanity -- find an outlet in desirable forms of economic consumption.

If this analysis is sound the theory that credit is based on consumer demand has many possible applications both in national affairs and in international commercial relationships. But it must be emphasised that social justice requires that useful producers whose bargaining power is weak should be helped to produce more and come more fully into the exchange economy.

In Brazil there are 15.5 million workers gainfully occupied in producing the basic wealth of the country and 11 million employed in industrial production; the latter cater for a demand in which the vast majority of the primary producers have no share, for they are hardly part of the exchange economy at all. The output per acre of maize, wheat, etc is pathetically low by normal standards and could be vastly increased if social justice unmuzzled the labouring (peasant) ox and facilitated him in increasing his productivity. A similar situation exists in the small farm economies of the West in the Republic of Ireland and Father McDyer has shown how the problem can be and is being solved. The solution of the rural proletariat problem will go far to solve the problem of our urban proletariat for the former is a major cause of the latter.

Summarising, the growth of consumer demand is the dynamic of economic production, and the true basis of credit. In the absence of social justice, within nations and between nations the growth of consumer demand is limited and distorted. Social justice is therefore an essential condition of any economic expansion which has a' moral as well as an economic justification.

Review by RJ August 1966

Some navigational notes:

Copyright Dr Roy Johnston 1999