ANALYSIS: Our problems do not derive from inadequacies of the Constitution
IT IS fascinating to see how the economic crisis has stimulated a wide debate on Renewing the Republic, part of which has been based on the assumption that the 1937 Constitution and the institutions which it established are somehow inadequate to meet the needs of the 21st century.
For a democracy it is generally healthy to discuss its basic structures and creeds from time to time – if only to reassert them and own them more firmly than before. From this point of view, the current debate is to be welcomed. However, the underlying hypothesis that a different political constitution would have secured a better management of the economy is, to say the least, counterintuitive.
The Irish Constitution – like most democratic documents of this kind – is about fundamental principles, the national identity, citizens’ rights, the institutions which defend them and the process of representation and decision making. It identifies the institutions to which specific economic policy-making powers are devolved, but cannot guarantee that their choices will be right, or that the country will be insulated from the consequences of worldwide financial crises.
In this respect the current crisis provides us with a unique opportunity to consider whether alternative constitutional arrangements would have been more effective. If the question is whether a different constitution would have helped Ireland to avoid the recent financial mess, what we have to do is look around and see whether other nations were better served. The countries most seriously affected exemplify a wide range of constitutional arrangements. If we limit our sample to three of the earliest victims – Iceland, the USA and the UK – they encompass parliamentary and presidential republics and a parliamentary monarchy with an exemplary record of financial rectitude (at least in the sense of Britain being one of the few European countries never to have defaulted on its debt). Despite the variety and the rich constitutional experience on which each of them could draw, none of them was able to avoid the credit crunch.
True, the US seems to have recovered sooner and more effectively, but is this a reflection of its constitution, or, rather of the size, complexity and vitality of its economy? In order to answer this question let us consider three other examples: Germany, France and Italy. They have weathered the credit crunch much better than any of the above-mentioned north Atlantic countries, without becoming crippled by debt in the way the latter did. Can this be explained in terms of anything specifically constitutional in their complexion? France is a centralised presidential republic with a national assembly elected by the second ballot or ballotage system. Germany is a parliamentary federal republic, whose Bundestag is returned by a mixture of proportional representation and single-member constituencies. And Italy is a decentralising republic, which switched from the proportional system to a particularly brutal version of the first-past-the-post in the early 1990s. Therefore, in constitutional terms, they differ quite considerably, although all of them have a bicameral legislature. What they really hold in common, however, is the structure of their economies, which are propelled by industry and industrial exports rather than primarily by banking. Unlike Britain, which allowed the withering of its manufacturing sector between 1981 and the end of the century, the three Continental powers were able to devise policies which allowed their industrial systems to adapt and thrive in the new millennium. Here is the crux of our problem, the reason for the vulnerability of the Irish and British economies, neither of which is likely to be able to match the achievements of their neighbours on the Continent. There may be a constitutional dimension in the long-term decline of British manufacturing – particularly because of the unrepresentative nature of the electoral system, a problem compounded by the periodical degeneration of parliamentary into prime-ministerial government. Both problems contributed to limit the debate and skewed decision making in favour of the financial sectors, traditionally close to the centre of power and unaffected by trade union militancy and industrial decline.
Is the predicament of the Republic similar or even comparable? Would a stronger Seanad have prevented the crisis? No more than the US Senate did. Would it – or its abolition – contribute in any way to the creation of conditions under which a more varied national economy could evolve? Given the size and resources of the Republic this is very doubtful. European integration was the turning point for Ireland. Foreign investments attracted by a stable democracy with a highly educated but comparatively cheap labour force transformed the country’s economic landscape and potential. Later, the cost of labour increased dramatically, and there would have been a good case for a fiscal cold shower to cool down the economy: but the Tiger was fed (artificially) on financial policies which at the time enjoyed popular support.
In hindsight we can see that mistakes were made, but whether in the heyday of easy credit and the housing boom any government could have got away with inflicting on its electors a Scrooge-like approach to property tax is an open question. If we try to answer it by looking again at what other countries – and indeed Ireland – did, the answer is that democracies are usually reluctant to swallow bitter fiscal pills, and are especially reluctant when the case for such cure is not universally established (it certainly was not in 2007). This is so much the case that many countries have recognised the need to establish a powerful central bank, independent from democratic pressures, to act as a regulator. Ireland did as much in 1943, and there are now moves towards strengthening its powers. This may be the way forward, but it has nothing to do with the Constitution. Whether the latter should be further reformed or not is a different question. However, the answer – whatever it is – will have no bearing on the Republic’s ability to avoid future financial crises or global slumps.
Eugenio Biagini is reader in modern British and European history at the University of Cambridge. He is author of
British Democracy and Irish Nationalism 1876-1906