Kieran Allen


Is southern Ireland a neo-colony?


4. A neo-colony of the multinationals?

THE TRADITIONAL nationalist case, which stressed the direct links between the southern economy and Britain, has clearly begun to wear thin. A more left-wing variant has arisen, however, to claim that the south is a neo-colony of the multinational corporations. Support for this view has come from a tiny strain of academic Marxism which has characterised the south as an example of “dependent” capitalism. World capitalism is seen as divided into a “core” and a “periphery”, where the “core” exploits and dominates the “periphery” – and the multinationals are the principal mechanism by which this exploitation takes place.

Two writers in particular may be cited as supporters of this view. The Brazilian sociologist F.H. Carduso has argued that there exists a form of “dependent” capitalism in countries such as Brazil. Capital goods industries remain concentrated in the world’s core regions while only assembly industries are allowed to develop in the periphery. The monopoly of the “production of the means of production” allows the core countries to exploit the periphery. [1]

The Greek Marxist Nicos Poulantzas took up these arguments and applied them to some of the less-developed countries in Europe – Greece, Portugal and Spain. The bourgeoisie in these countries, he claimed, was divided. The “comprador bourgeoisie” in such countries sought to preserve links with the USA and keep the old neo-colonial structures, while the “domestic bourgeoisie” sought links with the EEC and to re-negotiate the terms of their dependence. According to Poulantzas the only solution was “a process of independence and national liberation”. [2]

Carduso, Poulantzas and writers within this general tradition focus on the development of their countries. They argue for temporary alliances with those sections of the bourgeoisie that are least dominated by the multinationals. The aim is the achievement of “genuine” national independence – which is identified as a break from the world economy and complete economic sovereignty. (The mind boggles at the notion that the key issue facing the former imperial states of Spain and Portugal was the seeking of “genuine national independence”.) Effectively, these writers are attempting to translate socialism into the terms of left nationalism.

The argument, therefore, is that Ireland is being exploited by the multinationals, which are concerned to transfer wealth to the “core” of the world system. The Irish state, supposedly, is completely under the thumb of these forces. Irish workers are viewed as defenceless victims of these multinationals. It is crucial therefore, the argument goes, to push for genuine’ national independence before one can organise for normal class politics.

There are a number of problems both with this general analysis and with the way it is applied to Ireland - by which it completely misjudges the role of the Irish state. The first problem is that the general analysis starts out from the notion of “national economic development”. In the minds of nationalists a country is not “genuinely” independent until it has an economy characterised by self-reliance and self-sustaining growth. Essentially, the main sectors of the world economy have to be reproduced in miniature within the boundaries of the nation-state.

Now this pattern of development did characterise the first major industrial economies of the nineteenth century such as Britain, France and Germany. The scale of the world economy today, however, and the levels of productivity that it allows, mean that a retreat to a national economy is neither possible nor desirable. That simple truth is underlined by the collapse of the Stalinist system in Eastern Europe today. These regimes attempted to develop “national economies” through state capitalism, a capitalist economy run not by the usual national bourgeoisie but by a centralised state bureaucracy. The result has been a massive gap between the levels of productivity prevailing in Eastern Europe and the world economy as a whole.

The argument put by revolutionary socialists – that workers must aim to transform the whole world economy, not retreat from it – is more valid than ever. Only in this way can the resources now bottled up in the advanced countries be made available to the whole world.

The second problem with the “dependent capitalism” argument is that it replaces an analysis of capitalism with concepts drawn from geography. There is simply no united “core” in the world system. The giant companies of the “core”, and the states themselves, are engaged in a deadly competition that drives them to ever-increasing heights of accumulation. American capital is terrified of the prospect of a “fortress Europe” in 1992. Japanese capital faces the continual threat that protectionist measures may be taken against it by the US government.

Third, and most important, it is not the case that regions or nations as a whole are exploited – it is class exploitation that is at the root of capitalist accumulation. Workers in the “core” countries still generate the bulk of profits for the giant multinationals. That is why investment in the advanced capitalist countries still vastly outweighs investment in the “periphery”: 75 per cent of US subsidiaries, 82 per cent of German subsidiaries, and 60 per cent of French subsidiaries are in other advanced capitalist countries rather than the Third World. [3] Workers in the “periphery” are, of course, subject to super-exploitation – but often, as we shall see in the case of Ireland, at the hands of their own local ruling class as well as the multinationals.

When the left-nationalist analysis is applied to southern Ireland it focuses entirely on the multinationals and virtually excludes reference to native Irish capital. Revolutionary socialists share with the left nationalists a hatred of the multinationals. These companies have been given massive grants and tax breaks by the Irish state and have been allowed full freedom to repatriate their profits. The outflow of profits from foreign-owned companies in Ireland, for example, has increased from 2.8 per cent of the country’s gross domestic product in 1980 to 6.6 per cent in 1987. [4] We share none of the illusions of the Workers Party, which argues that the multinationals play a progressive role because they are not contaminated by the “laziness” of the Irish bourgeoisie.

Nevertheless, it is a downright distortion to claim that the southern state is simply an exclusive tool of the multinationals. The southern state operates to protect the joint interests of both native and foreign capital. Indeed it has actively promoted the interests of Irish capital by fostering its links with the multinationals.

The figures for government grants to industry show how the southern state promotes the interests of both foreign and native capital. Native Irish capitalists received 40 per cent of these grants. Since they had lower levels of capital to start with, this meant they got proportionately more than the multinationals. Between 1973 and 1979, the Telesis Report conducted for the National Economic and Social Council showed that the average grant for every anticipated job in industries set up by foreign capital was 7,400. The equivalent grant for native-owned industry was 12,500. [5]

Contrary to the aims of the state planners, indigenous capital has not grown as quickly as they hoped through its links with foreign capital. But it grew nevertheless. Between 1973 and 1980, 1,300 indigenous Irish companies were created in manufacturing, 70 per cent of them employing fewer than 30 workers. [6] A prime example of this growth was in the metal and engineering sector, where employment in indigenous Irish companies grew by 30 per cent until recession set in after 1980. [7]

The last decade has seen a major re-structuring of native Irish capital. Employment overall has certainly declined in native Irish manufacturing industry. But this does not imply that native Irish capitalists are making a loss. A prime example here is Henry Lund’s Clondalkin Paper Mills. After sacking his workforce after a bitter struggle, Lund went on to make a fortune in other areas of investment. A commentator sympathetic to the left-nationalist arguments has shown that even if new foreign-owned industry is left aside, the rest of industry in Ireland has grown by 3.6 per cent a year since 1960. [8] This is a distinct improvement for Irish capitalists when compared with the period of protectionist isolation in the 1950s.

Gerry Adams has written of the south that “even within the terms of domestic capitalism it is an absurd situation.” [9] This is clearly nonsense. Domestic capitalism is enjoying all the benefits that the southern state can bestow on it. Since the White Paper on Industrial Policy in 1984, the southern state has in fact switched strategies in order to put even more resources into building up southern capital. Since that date a series of new measures have been taken to make life easier for the native Irish rich. These schemes include: the Business Expansion Scheme, which has cut tax on dividends; the National Linkage Programme, which has generated an extra 140 million worth of business for Irish suppliers of the multinationals; Technology Acquisition grants, which give local capital a 50 per cent grant towards the cost of acquiring new technology; and a Company Development Programme that allows the state agencies to channel extra resources and money towards 200 participating Irish companies. In 1987, when spending on industrial development was being cut back by around 17 per cent, these new schemes, which predominantly benefited the Irish rich, were therefore a highly “rational” state of affairs for this sector of society!

The manner in which the left-nationalist analysis falls completely flat on its face is shown by the question of the “national debt”. The left nationalists see the national debt as money paid to greedy foreign bankers, who are robbing Ireland. No doubt the bankers are ripping off the working class and the poor of Ireland. But what the left-nationalist account ignores is the extent and scale of the involvement of the Irish rich in this process. More than half the interest payments on the national debt go to the Irish rich.

Table 5: Interest payments on the national debt ( millions) [10]






















The singular fact about southern Ireland is the high degree of unity between the native and foreign sections of the bourgeoisie. No serious section of employers criticised the opening of the economy after 1958. No substantial section of Fianna Fail, which had championed economic sovereignty since the 1930s, objected to it. Since 1958, no employers’ organisation has complained that Irish bosses were being discriminated against by the southern state in favour of the multinationals. It has been a record of absolute harmony. Why is this?

Part of the answer lies in the fact that, as we have seen, the industrialisation programme was not just about hand-outs to the multinationals – the Irish rich got more than their fair share. Another part of the answer lies in the fact that protectionism had become a disaster by the 1950s. While Ireland was stagnant, the rest of the capitalist world was enjoying the longest boom in history. But the other crucial reason was that there was simply no objective basis for conflict of any sort between the foreign and native sections of Irish capitalism. The multinationals were not invading the native capitalists’ markets in order to drive them out of business. Table 6 shows that, with the exception of British capital, the multinationals were in fact geared for markets outside Ireland:

Table 6: Exports as percentage of production
by foreign capital in Ireland [11]


91.8 per cent


46.8 per cent


66.6 per cent


92.4 per cent


86.6 per cent

These factors help account for the unity of the bourgeoisie. They also explain why Fianna Fail, representing the most nationalist section of the Irish bourgeoisie, was the party that was most enthusiastic for links with the multinationals. It shows that the search for fractions of the bourgeoisie who are seeking an independent road back to “genuine national economic development” is a wholly utopian and reactionary dream.

By contrast, the industrialisation programme has led to the tremendous strengthening of the Irish working class. Between 1945 and 1984 trade-union membership increased from 170,000 to 501,800. In the 1970s the Irish working class took second place in the strike league of the EEC ten. According to an employer-dominated Commission of Inquiry into Industrial Relations in 1981, the numbers of workers involved in strikes had trebled since 1958.

The working-class movement has clearly been forced to retreat since the 1980s. But the notion that it is rendered automatically defenceless by the high proportion of multinational-owned companies is an invention by those who want to fade class conflict in southern Ireland into a haze of nationalist or reformist rhetoric.




1. F.H. Carduso, Dependent Capitalism, in New Left Review (London) no.74.

2. N. Poulantzas, The Crisis in the Dictatorships (Verso: London 1976).

3. M. Beaud, A History of Capitalism 1500-1980 (Macmillan: London 1984) p.198.

4. E. O Malley, Industry and Economic Development: The Challenge of the Latecomer (Gill and Macmillan: Dublin 1989), p.181.

5. National Economic and Social Council, A Review of Industrial Policy, pp.187-8.

6. J. Blackwell and E. O Malley, The Impact of EEC Membership on Irish Industry, in Irish Studies (Cambridge University Press 1983) no.3.

7. E. O Malley, The Irish Engineering Industry (Economic and Social Research Institute: Dublin 1987), p.73.

8. O Malley, Industry and Economic Development, p.104.

9. Adams, Pathways to Peace, p.39.

10. Central Statistics Office, National Income and Expenditure 1987.

11. This note is missing in the pamphlet.


Last updated on 17.7.2001