COMMENTARY Contradictions of austerity (original) (raw)
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Architects of Austerity is a well-researched, clearly written, and convincingly argued book on the political history of international finance regulation of the post-WWII period. I don't think I exaggerate when I say that, with this book, Aaron Major establishes himself as a leading voice among analysts who, over the past decade or so, have done some serious rethinking of the common wisdom surrounding our understanding of this crucial period. This common wisdom looks something like this: the end of the Second World War coincides with the emergence of a new international regime broadly governed by a logic of "embedded liberalism." Unlike the gold standard regime and its focus on monetary stability at the expense of all else, under embedded liberalism new economic priorities become dominant, and among those priorities the primacy of growth and full employment over the need for stability takes pride of place. But for reasons having to do with the weak political will of the forces underlying this regime, the tension created by the Cold War and the rise and decline of US hegemony, and the contradictions of the regime itself, embedded liberalism falls apart under the weight of stagflation and international volatility, to be replaced surprisingly by a resurgent liberal doctrine. While neo-liberalism is not free of problems and contradictions, it acquires an uncontested, hegemonic status that to this day sets strict limits on the financial and fiscal autonomy of national governments. Neoliberalism underpins the current politics of austerity. In what ways is this common wisdom incorrect? Scholars from a variety of fields and approaches have taken issue with its lack of nuance: neoliberalism is surely dominant, but its rise has been uneven to say the least, and understanding the sources of this unevenness yields insight into the political processes that underlie it. Put differently, understanding neoliberalism as a reaction to the economic failure of embedded liberalism hides the institutional foundations of neoliberalism, and the identity and shape of the political constellations that have facilitated its diffusion. But ignoring those institutional foundations means implicitly accepting that neoliberal success is a function of its effectiveness as an economic solution. The search for institutional differences in the intensity, timing, and configuration of neoliberalism, in turn, has unearthed unexpected evidence about the political coalitions where important ideas that neoliberalism later appropriates come from (see in this respect Monica Prasad's book The Politics of Free Markets). Major's book joins this conversation by pointing not to national differences, but to institutional continuity at the international level in order to explain neoliberalism's resurgence. In fact, Major's argument is that classical liberalism never went away; rather, it constituted the ideological terrain of international financial institutions throughout the period of embedded liberalism, and exercised important constraints on national governments even at the height of Keynesianism. Architects of Austerity engages in sustained historical research in order to substantiate this argument. The story begins in the 1950s, when the Organisation for Economic Cooperation and Development (OECD) takes a strong position on the perennial question of the trade-off between stability and growth by reasserting the classical liberal orthodoxy in favor of stability. Consistent with this economic orientation, the OECD begins a drawn-out political and ideological battle aimed at preserving the stability of the international balance of payments while delegitimizing the demand for flexibility originating with national policies targeting domestic This work is licensed rmder a Creative Commons Attribution 4.0 United States License.
The Neoliberal Resurgence and the Threat of Austerity
The enormity of the current crisis (known superficially as the GFC), prompts one to ask why is it that neoliberalism still dominates both government policy practice and university economics theory and, moreover, why has it actually gained a new and possibly stronger lease of life?
In line with interest in varieties of capitalism, one might expect to find varieties of austerity. This is confirmed by the historical record: austerity has different origins, dynamics, and effects in different periods; and by comparisons in the same periods. Another source of variation is how (and how far) pursuit of austerity re-articulates the economic and political in terms of policy, politics, and polity. This chapter explores these issues through cultural political economy (CPE). This heterodox theoretical approach takes the cultural turn seriously but not one-sidedly in the critique of political economy. It can be said to combine interest in the economic, political and social imaginaries that shape capital accumulation and state projects with a critical analysis of the changing articulation of the economic and political in capitalist social formations. After brief comments in these terms on austerity policies in the ‘golden age’ of Atlantic Fordism, the analysis concentrates on post-Fordist accumulation regimes. To illustrate the variegation of austerity policies, politics and political transformation in this context, the US and UK serve as exemplars of neoliberal finance-dominated accumulation. Attention then turns to economic and fisco-financial crises in Continental Europe as organised in the shadow of a German-led neo-mercantilist bloc. European efforts to address contagion effects from the North Atlantic Financial Crisis (NAFC) as well as the Eurozone’s sui generis crisis dynamics involve other forms of austerity policies and politics. This is illustrated from Germany and Greece. The conclusion considers the limits to neoliberal austerity and the catastrophic equilibrium of forces that is blocking efforts to overcome them.
Austerity: Neoliberal dreams come true?
Critical Social Policy, 2018
The 2008 global economic crisis paved the way for the construction of a new, elite-driven, capitalcentric, shrunken welfare state project founded on ideology disguised as pragmatism and objective 'truths'. Today, welfare states exist in a context in which a new politics of austerity sets the parameters of the debate. Austerity incorporates the neoliberal desire to shrink the (social welfare) state, deregulate labour markets and emphasise private markets as the drivers of growth, enabling a reconfiguration of the interests of capital, the needs of people and the role of the state. The new politics of austerity looks like a 'dream come true' for neoliberals. Or is it? There is also a powerful counter-narrative that suggests that the global crisis exposed the fundamental weaknesses and limitations of neoliberalism and forced policy makers to question core principles and change direction. Focusing on the International Monetary Fund (IMF), perhaps the preeminent global neoliberal interlocutor, and using quantitative textual analysis, the article locates some evidence of movement, but little to suggest that the fundamental assumptions of neoliberalism have been displaced.
Alternatives to austerity? Post-crisis policy advice from global institutions
The 2008 global financial crisis caused major anxiety about the stability of the neoliberal economic regime. This affected the financial and banking systems and also raised the spectre of mass unemployment and social unrest. A 'post-crisis' world was widely proclaimed in 2010. This was premature; by 2012 Europe was embroiled in a sovereign debt crisis and the US economy showed few signs of real recovery. A second recession seemed likely and austerity emerged as the standard response. Austerity, 'the quality or state of being austere' and 'enforced or extreme economy', became a buzzword. In practice, austerity means an economic and social policy based on balanced budgets to be achieved by reduced government spending, especially on employment and social policies, an approach entirely consistent with the neoliberal paradigm that has dominated policymaking for several decades. Yet the depth of the crisis provided an opportunity for rethinking the neoliberal policy package that had replaced the Keynesian welfare state, established after the Second World War. Cognizant of the fact that the development of alternatives to dominant paradigms may have many sources, this article probes the policy advice provided by two global organizations -the OECD and the ILO. As well as tracing the austerity motif, the article seeks to identify the extent to which alternatives were canvassed at the global social policy level.
The Credit Crunch: Neo-Liberalism, Financialisation and the Gekkoisation of Society
Sociological Research Online, 2009
This paper offers a broad overview and analysis of some of the main causes and consequences of the current economic crisis. While attempting to flag up some of the key continuities between the conditions contributing to the current crisis and those that produced the ‘great crash’ of 1929, it is argued that the ‘credit crunch’ must be understood in broad historical context. Specifically, it is suggested that the turn to neo-liberal economics in the late 1970's, principally in the UK and US, restored many of the structures and socio-economic characteristics that were prevalent in the 1920's, inevitably producing a highly similar outcome. Overall, it is argued that the (re)financialisation of the economy, the deregulation of markets, together with the cultivation of a culture of rampant individualism and acquisition, pervading the markets and wider society, have coalesced to sow the seeds of reckless profit seeking that have led to the current crisis. Moreover, given that latte...