Austerity: Neoliberal dreams come true?

Among critical social scientists and progressive activists alike, analysis of neoliberalism has become inseparable from the examination of the crisis that has engulfed the global economy since 2007. When the crisis began, it was interpreted by many, not least the mainstream media and even some of the staunchest advocates of neoliberalism, as a crisis of the model of capitalism that had dominated global economic policy for the previous two-and-a-half decades. Moreover, neoliberal policies promoting financialization were widely held to be responsible for the onset of crisis. As states responded to the crisis with (what appeared to be) new restrictions on finance capital and the nationalization of some of the world's largest banks and financial corporations, many thought it reasonable to conclude that the neoliberal era was coming to an end. Yet, as the global economic crisis continues, so does the rollout of recognizably neoliberal policies of austerity, privatization, deregulation and more and more features of the welfare states built in the postwar era. They have been used as tools of crisis management, even as states have experimented with new forms of economic regulation, such as quantitative easing. Particularly in those countries worst hit by recession, such tools have deepened and (provisionally) channelled abroad the economic crisis, instead of resolving it, while contributing to the stagnation of demand and miring ordinary people in perpetual austerity. It is perhaps unsurprising then that contestation over post-crisis neoliberalism is evident in many of the recent seismic political developments across the globe. Most obviously, the rise of radical left-wing parties in Greece, Spain, Portugal and elsewhere, and the popularity of leaders such as British Labour's Jeremy Corbyn, or Bernie Sanders in the USA, are direct reactions to the devastating effects of enforced neoliberal austerity. These follow earlier political movements against some of the harshest forms of neoliberalism in the Global South – such as the so-called 'Pink Tide' that carried a series of (more-or-less radical) left-wing parties to government across Latin America. But the echoes of dissent against neoliberalism, however distorted, can also be heard in the successful 'leave' campaign in the British referendum on its EU membership, in some of Donald Trump's economic policies (even as he is so obviously one of the world's leading beneficiaries of neoliberalization), and in the rise of the National Front, in France, alongside the mobilization of racial prejudices and national imaginaries in many countries. The premise of this special issue of Critical Sociology is that an understanding of neoliberalism since the crisis is crucial for comprehending the contradictions, conflicts and social forces reshaping the contemporary global political economy. Despite scholarship on, about and around neoliberalism having burgeoned since the onset of the global crisis, a settled definition of neoliberalism remains

Critical Public Health, 22(3): 257-265, 2012

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.

The global economic and financial crisis has been marked by the following paradox. A much more severe depression than the global slump of 2008-09 was prevented by determined state intervention in the form of bank bailouts and fiscal stimuli. Yet this bout of apparently successful Keynesianism has been followed by a turn to fiscal austerity justified in terms reminiscent of the Treasury View against which Keynes relentlessly polemicised in the 1930s. This article explores the sources of this policy shift. Among the factors considered are the ideology of neoliberalism, the economic and political power of the banks, and the relative weight of finance in individual economies. The broader context of financialisation is also considered. The conclusion is reached that an oscillation between bouts of austerity and laxer policies encouraging the development of asset bubbles may be built into neoliberalism as an economic policy regime. The implication is that alternatives to austerity must embrace broad institutional transformation.

Dialogues in Human Geography, 2020

The COVID-19 pandemic is a global event, but what became apparent almost immediately was that while the virus seems indiscriminate, vulnerability and the capacity to mitigate its impact are not spread equally, either between or within countries. Years of austere neoliberalism in Europe have exacerbated inequality and precarity, acting as a 'pre-existing condition' onto which the virus has now landed. The question we ask is: when the pandemic subsides, can the underlying conditions of contemporary neoliberalism remain? And what may replace it?

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.

2012

"There are many key questions concerning the current status of the notion of neoliberalism. What is it? Is it an appropriate concept to describe a political and intellectual movement or form of state? What are its prospects as a framework of public policy after the global financial crisis? The article proposes a way of answering these questions by regarding neoliberalism as a definite ‘thought collective’ and a regime of government of and by the state. It exemplifies these by shifts within neoliberalism regarding the question of monopoly, its relationship to classical liberalism and its approach to crisis management. In regard to the latter, it further proposes an emergent rationality of the government of and by the state concerning the fostering of resilience in the anticipation of catastrophe."

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.