Will Hutton, the first speaker at ICTU's series of lectures on the economy and society

Ireland must build an economic recovery based on investment in people and innovation if it is to avoid a return to over-reliance on a bloated and over-paid financial sector. That's according to renowned British journalist and economist Will Hutton, who spoke at an ICTU-sponsored lecture in Dublin in May.

The Executive Vice-Chair of the British Work Foundation put public services - especially education, research, regulation and public procurement - at the heart of the government initiatives required to build lasting economic and social security.

He said a knowledge economy based on innovation was required to lead us out of recession. This required an "innovation ecosystem," which was currently absent from Ireland. This ecosystem would encourage genuine entrepreneurs, improve spending and outcomes in education and research, direct public procurement to support innovation, upskill workers, build consumer confidence though good regulation, and create an appropriate financial system.

He also called for a "new bargain at work" and a modern system of social security based on the 'flexicurity' model of generous short-term unemployment benefit and high-quality retraining - linked to an early return to employment.

"Working class men and women will have to take more risk" as the lifetime of firms becomes shorter and company wind-ups become the norm. "We need institutions to mitigate risk as we become the authors of our own lives in a riskier world," he said.

In this world, Hutton says trade unions must develop into "enlightenment organisations" that act as checks and balances on capitalism, rather than as vehicles to a "new Jerusalem of socialism."

Speaking in the week that Goodbody stockbrokers declared the Irish recession "over," he said the Irish deficit, coupled with Irish debt levels, continued to present an existential threat to the state. He said one of the reasons Ireland had so far come under less market pressure than Greece, Portugal and Spain was that we were a "solidaristic society" - a positive feature that credit rating agencies were now taking into account.

The former editor of the Observer said finance sector pay systems, with rewards disproportionate to both effort and broader economic outcomes, were at the root of current global economic problems. "Fairness is the indispensible value that makes capitalism function. In Ireland and the UK we let capitalism forget this basic human trait," he said.

Up to 2008, Ireland had been living in "la-la land." Describing a "stunning and unsustainable" rise in the Irish banking sector, Hutton said banks were still capable of bankrupting the country if there was another economic downturn. He said NAMA was "fundamentally necessary" to shrink the banking sector, and called for pan-European financial legislation, control of hedge funds and private equity, and a European monetary fund to make the Euro work.

He was pessimistic about the prospects of growth in the Euro zone in the immediate years ahead, saying too many large countries were prioritising debt reduction, which collectively could create a huge global recession.

Responding to Will Hutton's address, Labour Deputy leader Joan Burton said the right had seized the moment of crisis to further its ideology and that social democratic parties across Europe had so far failed to find resurgence on foot of the recent collapse. "Irish people do have a sense of outrage and want to punish those who created the mess, especially the banks. But this hasn't yet formed into a political programme," she said.

Bernard Harbor is a member of the Oxmantown Branch, Dublin Central.

A video of Will Hutton's lecture is available on the ICTU website. Check the website for future lectures in this series.