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.