The origins of austerity and its relationship to capitalist ideology and practice extend far beyond the 2010s, or even the 1970s. Despite the recent emergence of an ‘Austerity 2.0’, it never went away. It has always been around in some form or another, from Tories to Labour, liberals to Keynesians.
Austerity is popularly sold as a necessary set of economic policies to reduce government spending and increase taxes to ‘balance’ the government budget – i.e. bring in more than it gives out.
But austerity is not just a response to an economy in recession. It is a calculated defensive mechanism designed to prevent the collapse of capitalism and maintain the status quo of existing power structures. It seeks to keep the working class in submission and prevent meaningful social change.
Unholy trinity
Clara Mattei argues that austerity happens through a ‘trinity’ of fiscal, monetary and industrial austerity. You are likely already familiar with these in practice. Cuts to welfare payments (i.e. budget cuts) and increases in council tax (regressive taxation)? Fiscal policies. Raising interest rates? Monetary policy. Layoffs, wage repression, strike busting, anti-union legislation? Industrial policies. These three pillars mutually reinforce each other.
Mattei sees austerity as more than just policies – it is also the theoretical framework used to justify them. Despite orthodox economists’ claims, policy and theory cannot be neatly separated. Economists often attempt to absolve themselves of responsibility by claiming their recommendations are simply based on objective economic theory. This is a fallacy.
Finally, Mattei argues against the simplistic narrative that austerity is just flawed economic theory that informs damaging policy. Its true nature runs much deeper. If we pry further, we see austerity not as a tool that stabilises economies – a claim Mark Blyth has effectively debunked – but one that cements class relations. It has never been about solving inflation or balancing budgets. It preserves the continuity of private ownership of the means of production and of wage relations.
Fighting back
It is not enough to simply be against austerity, we have to be anti-austerity. We must challenge, critique and cut apart the economic theory that is used to mould and rationalise austerity policies in all their forms. Opposing only one or two of the pillars is a continuation of the austerity paradigm. The three pillars must be combated as a whole.
The most effective way to do this? Join a union and get organising. Only through fiery comradely discussion, working-class political education and collective action can the austerity trinity be torn apart.
We should see austerity not as something that comes and goes but as something that society enters through periods of intensification. Under capitalism, it is constantly present. Its grip on society is not transient, but a continuous, ever-present reality of the capitalist system.
Further reading
- Clara Mattei, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism (University of Chicago Press, 2022)
- Mark Blyth, Austerity: The Myth of a Dangerous Idea (Oxford University Press, 2013)
- John Cassidy, The Reinhart and Rogoff Controversy: A Summing Up (The New Yorker, 2013)
