The Atlantic Economy: Britain, the US and Ireland

Published by EH.NET (February 2003)

Denis O’Hearn, The Atlantic Economy: Britain, the US and Ireland.

Manchester and New York: Manchester University Press and Palgrave, 2001. xiii +

241 pp. ?45/$79.95 (hardcover), ISBN: 0-7190-5973-9.

Reviewed for EH.NET by Jane Gray, Department of Sociology, National University

of Ireland, Maynooth.

This book has two aims. First, it seeks to explain Irish economic development

within the theoretical framework of world-systems theory by locating Ireland in

the context of its history as an ‘intermediating zone’ within the Atlantic

economy dominated first by Britain and then by the United States. Second, the

book uses the Irish case to develop world-systems concepts and to transcend

some of the limitations of the paradigm. Denis O’Hearn (Reader in Sociology at

Queen’s University, Belfast) correctly points out that most definitions of

‘coreness’ and ‘perhipherality’ within the world-systems literature are

descriptive rather than analytical. For example coreness is often defined in

terms of the degree to which economic activities are capital-intensive, labor

is skilled and wages and profits high, in contrast to peripherality where the

opposite characteristics are true. The problem with these definitions is that

they cannot explain why historical core-periphery configurations are reproduced

over time, nor can they explain why some places change their position within

the hierarchy. O’Hearn argues that coreness should be defined in terms of the

ability to capture and localize innovative economic activities that have the

capacity to generate wider economic growth. Thus he argues that at key

‘switching points’ the hegemonic powers of the Atlantic economy prevented Irish

economic and political actors from industrializing in innovative economic

clusters, redirecting the Irish economy towards activities that served their

own strategic interests, and leaving Irish industrial firms and sectors to try

to compete on the basis of semi-peripheral ‘adaptive response’ — that is by

lowering wages and intensifying worker effort. In describing and explaining

this process O’Hearn seeks to transcend another shortcoming of world-systems

theory — its tendency towards teleological accounts of particular local and

regional economic histories that leave little room for contingency. He

understands the actions of Irish political and economic elites in terms of

‘iterative problem solving.’ Their attempts to industrialize were constrained

by the institutional consequences of Ireland’s initial incorporation to the

evolving world-economy, and by the paths taken at earlier ‘switch points,’ but

the outcomes of their efforts — and of those of core elites — were never

pre-determined.

O’Hearn identifies three cycles of industrialization in Ireland associated with

three cycles of change within the Atlantic economy. In the first cycle, Britain

sought to challenge Dutch supremacy within the world economy by shifting its

center from the Baltic to the Atlantic. During this period, British interests

led to the suppression of the (potentially innovative) Irish woollen industry,

and to the promotion of linen manufacturing which, according to O’Hearn, was

clearly semi-peripheral in character. In the second cycle, efforts to

industrialize on the basis of the innovative cotton manufacture were frustrated

by British trade policies that ultimately led Irish factory entrepreneurs to

revert to the linen industry. The third cycle was associated with the rise of

U.S. hegemony within the Atlantic economy after the Second World War. The newly

independent Irish state had experienced a phase of ‘easy industrialization’

under import-substitution policies between the wars, but switched to a policy

of export-led industrialization by the late1950s, partly in response to the

structural limitations of ISI, but also under pressure from the United States,

which had made Ireland a beneficiary of Marshall Aid, despite its stance of

neutrality during the war. In an influential article published in 1989, O’Hearn

argued that export-led industrialization had created slow economic growth in

Ireland because trans-national corporations repatriated profits, failed to

establish linkages to the local economy, and because the policy of ‘radical’

free trade led to the collapse of indigenous industry. He elaborates on these

arguments and provides more detailed evidence in Chapter 6 of this book. At the

end of the 1980s, when Ireland was experiencing economic stagnation, and high

levels of unemployment and emigration, the thesis that export-led

industrialization simply created new forms of ‘dependency’ seemed highly

plausible. But the boom that began in Ireland in the mid-1990s has made the

dependency argument less fashionable. Has the ‘Celtic Tiger’ undermined

O’Hearn’s case? In Chapter 7 he argues that the extraordinary levels of growth

achieved after 1994 can be explained by the sheer size of the flow of

U.S.-based trans-national corporation (TNC) investments. This in turn was due

to: the resurgence of the United States in the world-economy; the new strategy

of ‘flexible specialisation’ that encouraged TNCs to agglomerate their

off-shore investments in foreign-investment complexes; the skill of the Irish

Industrial Development Authority in attracting inward investment; and the

‘pro-business’ environment created by Ireland’s ‘social partnership’ model of

industrial relations together with its low corporate tax regime. He suggests

that once investment flows slow down, Ireland remains at risk of slow economic

growth due to the scale of foreign investment stocks. TNCs continue to

repatriate profits and, according to O’Hearn, the extent to which they have

established linkages to domestic firms has been overstated, as has the

potential of the indigenous software industry. He emphasizes the extent to

which the ‘Celtic Tiger’ has increased social inequality due to labor-market

segmentation and a relative decline in state spending. In the absence of

articulated economic growth based on a national system of innovation, the Irish

state must attempt to sustain economic growth through the continued adoption of

liberal policies that impede social development.

This book makes an important contribution to the understanding of Irish

socio-economic change by placing it in a comparative and theoretical

perspective. This is in contrast to much of the sociological scholarship on

Ireland, which continues to be ahistorical, showing little understanding or

appreciation of social change before the twentieth century. More importantly,

perhaps, it makes a significant contribution to world-systems theory — indeed

it has recently won the ‘Distinguished Scholarship’ book award from the

Political Economy of the World-System Section of the American Sociological

Association. O’Hearn has created a dynamic model of socio-economic change

within the modern world-system that links the emergence and development of

historical regularities to the contingent ‘problem-solving’ of elite actors at

particular historical moments. In my view the model would be enhanced by more

attention to non-elite agency. For example, in his account of the ‘first cycle

of industrial transformation’ (Chapter 3), O’Hearn describes the shift from

woollens to linen as “a shift away from an industry with the potential to

develop core production relations to one that clearly induced the expansion of

semi-peripheral domestic production” (pp. 67-68). This was because woollens

(and later cottons) tended to be organized under putting-out systems, whereas

the Irish linen industry was organized under the ‘Kaufsystem’ whereby “cottage

producers supplied their own raw materials, which they processed and wove into

textiles in an integrated production system, until they sold the cloth to

merchants in the marketplace” (p. 68). It is true that linen was more likely to

be organized under the Kaufsystem because the nature of the raw material meant

that small-holders were able to supply enough from their own resources to

absorb the labor capacity of their households. However that in itself did not

prevent the development of more complex ways of organizing production in other

European linen manufacturing regions. In my view, in order to understand why

the Kaufsystem persisted in Ireland, it is necessary to take account of the

household strategies of the producers themselves, strategies that were not

entirely determined by the actions of British or Irish elites. Of course taking

account of non-elite strategies is not inconsistent with O’Hearn’s analysis.

For example, household decisions might be traced, in part, to some of the

institutional consequences of incorporation described in Chapter 2.

Nonetheless, including non-elite strategies would add another dimension of

contingency and variance to this sophisticated account of the relationships

between particular, local events and long-term patterns of global economic

change.

Reference:

O’Hearn, Denis. 1989. “The Irish Case of Dependency: An Exception to the

Exceptions?” American Sociological Review, 54, 4: 578-596.

Jane Gray is Lecturer in Sociology at the National University of Ireland,

Maynooth. Her chapter on “The Irish, Scottish and Flemish Linen Industries

during the Long Eighteenth Century” is forthcoming in B. Collins and P.

Ollerenshaw, editors, The European Linen Industry in Historical

Perspective (Oxford) and she has recently completed a book manuscript on

the Irish linen industry.