Review of Architects of Austerity: International Finance and the Politics of Growth, by Aaron Major, Stanford University Press, 2014 (original) (raw)

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.