Market: Neo-liberalism Irish-style

Abstract

The Irish economy is essentially a free-market economy with a shrinking state-owned sector. However, since independence the state has played a key role in creating the conditions in which the private sector operates and, even though the Celtic Tiger period saw the emergence of a dynamic private sector in some areas of the economy, the role of the state remains crucial (in terms of spending on research and development for example). Chapter 6 quoted Susan Strange when she wrote that ‘it is not only the direct power of authority over markets that matters; it is also the indirect effect of authority on the context or surrounding conditions within which the market functions’ (Strange, 1994: 23). This draws attention to the central insight of the political economy approach adopted in this book to analyses of the economy, namely that it is the interrelationship of state and market, of public and private authority, that requires examination in order to understand the particular and distinctive configuration of any economy. This is particularly true in a case like that of Ireland in which the indigenous private sector has shown weak capacity to develop dynamic economic sectors so that the state has been the key agent in fostering the upgrading of the productive economy, from agriculture, to industry and, very recently, to an economy dominated by the service sector and, as the opening quote above states, has relied heavily on foreign investment to do this.

A unique feature of the Irish system [is] officials’ awareness of just how important foreign investment is for the country’s prosperity. The imperative of attracting and keeping foreign firms has soaked deep into every nook and cranny of the apparatus of the state in a way not to be observed elsewhere.

Dan O’Brien (quoted in Collins, 2007: 118)