The paper was published by Tuairim, London, in a publication described as 'an occasional bulletin', May 1961.

There are a number of alternative approaches to the problem of Irish prosperity:

(a) agricultural development
(b) industrialisation by foreign capital
(c) independent Irish industrialisation.

It is generally conceded that any economy which relies on agriculture is not in a position to support an expanding population in increasing prosperity. Technical progress snakes it possible to produce more food from the land with ever-decreasing manpower. Further, there is a world trend for agricultural prices to increase less rapidly than industrial (the 'price scissors'). The impact of technical progress on Irish agriculture has in fact led merely to the maintenance of a static volume of output with declining manpower.

Consequently it is necessary to industrialise Leaving aside the raw materials problem, which is not really serious where there are good land and sea transport facilities, one may consider two lines of development:

(a) to build consumer goods industry based on imported machinery
(b) to build producer goods industries.

The rate of growth of the economy depends ultimately on the balance that is struck between these two lines of development. This is the major technical problem of economic growth. No economy that relies entirely on the first can hope to achieve long-term stable growth.

Partition as an obstacle

These two technical problems are rendered more acute by the existence of Partition. which deprived Ireland of her main heavy engineering potential and reduced the size of her home market.

In parentheses, let it be stated that most producers goods made by the engineering industry are custom-built or made in small batches. It so happens that the Belfast engineering industry has specialised in custom-built ships and small batches of aircraft. However, there is absolutely nothing to prevent it from building a refinery, a sugar factory or a fertiliser plant should the need arise. The argument 'what would the republic do with all the ships and aircraft?' holds no water. A united republic would certainly need ships and aircraft, but it would encourage Belfast engineering to diversify. Diversification in economics is strength. Nothing is weaker than the one-crop or one-product economy.

The Commonwealth Lobby

This has been the classical pattern adopted by the larger Irish firms. There seems to be no other action possible under the rules of the economic game as it is played.

There is, in fact, another procedure possible. Instead of building plant in the export country, to diversify at home. This however has not been typical of private industry in Ireland. Why bother to learn new tricks when the old ones still make money when you go and perform them somewhere else ? Thus have originated a proportion of the famous 'external assets' the interest on which is said to be 'beneficial' in that it 'helps the balance of payments.' But how much would the gross national product have been increased if this capital had been diversely invested at home? I suggest that the interest figure would cease to sound so interesting.

Thus then is constituted one major pressure-group in Irish politics. Let us call it the Common- wealth Lobby; it has thriven on the connection with Britain and wants this to be maintained and strengthened. It is not seriously interested in a prosperous and expanding home market in Ireland, although it may from time to time pay lip service to this principle in the interests of good public relations.

Obstacles to Government Action

But the the reaseon why such measures were never imposed in Ireland is simply that the existence of Partition put considerable technical difficulty in the way. In effect, we would have read to partition the banking system; we would probably have had to cope with problems such as currency smuggling on the border. etc. No wonder it was never tried.

Twenty-six County Economic Possibilities

(a) direct State industrialisation,
(b) the offering of inducements to Irish capital to remain at home,
(c) the offering of inducements to foreign investors.

These inducements amount to a direct subsidy out of taxation.

The first method is the only one that can claim any conspicuous success. It is gratifying that the sugar company should be the first major firm in Ireland which, after saturating the home market, chose to expand further by diversifying.

On the other hand it is a pity that the same company should allow emotion to cloud its judgement and reject an offer of trade with Cuba, a nation whose economic problems are rather similar to ours in the twenties and thirties, and which is now going through its 'economic war' period. Our own respected elder statesman was, in that epoch was public enemy #1 in the British press. The acceptance of this trade offer would have strengthened the Irish economy by diversifying our exports. Its rejection will of course strengthen Cuba's ties with the USSR.

These two contradictory policies of a major state industry are a consequence of a vacillating attitude towards the principle of national economic independence via direct state industrialisation. On the one hand it is recognised that there is no serious economic development without it; on the other hand the virtues of private enterprise are proclaimed. The result: shame faced Government intervention. half measures, inconsistent policies.

The second method has resulted in a crop of 'hot house' tariff-protected industries. It is now fashionable to deplore these. However, let us not write the whole thing off. A body of plant and skill has been collected. The reason for their low productivity, where this exists, is simply that in order to have high productivity a firm must be large enough to carry a research and development section. The threshold for this seems to be assets of the order of some millions of pounds. There are probably ten firms in the republic capable of supporting their own research and development work.

State Sponsored Research

In an article on on scientific research in Ireland, first given as a paper to Tuairim on the presence of the Minister for Industry and Commerce, Mr Frank Winder called for a 'factor of ten increase'. This is not far wrong.

Again: shamefaced government intervention, half measures.

Foreign Investment

With the exception of the Cork shipyard, for which the government put up the capital, and the refinery, for which by threatening to build one itself the government exacted an agreement that the staff should be Irish, all one gets is a few small branch factories, with foreign staff and Irishmen wheeling the barrows. These factories are regarded as marginal by the parent firms, they would be closed down at a week's notice if there was a hint of a recession and it suited the parent firm to do so. This is recent six-county experience in Derry.

Again, there is a positive side. Skill and experience is being accumulated. After all, the plant is there. If they were closed down, there is nothing to stop the state stepping in and running them as a state industry.

Let us face the fact that in order to set a backward economy on its feet, state intervention, large-scale and whole-hearted, is necessary. If the principle of free movement of capital is in conflict with the maximization of the gross national product, then the former must be restricted. But within the restrictions there can be plenty of room for money to be made.

If the present government does not act along these lines, it is going to be necessary to elect one which will, or else we will find ourselves like the Highlands of Scotland.

The Emigrants

The Irish in Britain have a right to exact that the British Government shall cease to maintain obstacles in the path of Irish economic development. They have a right to demand the Ulster be coerced, if withdrawal of troops and subsidies amounts to coercion. More immediately, they have a right to demand that obstacles to political development, such as Special Powers Acts and gerrymandered constituencies, shall be removed by Act of British Parliament, which has explicit power to do so under the various Ireland Acts. All these are politically realisable aims for the Irish in Britain.

Six countries left to themselves might find the experience traumatic for a short period, but at least then the question could be decided genuinely between Irishmen and we would then really have ourselves to blame if we failed to make a viable economy. Good government by intelligent people would be necessary to solve the problems, but they are soluble. Indeed they are inherently less difficult than those connected with making the partitioned country function despite the obstacles indicated in this essay.

Finally, the Ulsterman who says, 'Ulster must not be coerced', does he know what he really is saying? He is really saying, 'Dear master, please don't stop bribing me!' Does this attitude become a proud and independent people, who once revered the name of Henry Joy McCracken?

Some navigational notes:

Copyright Dr Roy Johnston 2005