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Does austerity have a hidden agenda?

David Brancaccio and Ariana Rosas Feb 8, 2023
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Pensioners march in Athens in 2018 during a demonstration to demand the return of pension funds lost as part of austerity measures. Clara Mattei, author of "The Capital Order," argues that austerity reflects a deeper history of labor force suppression. Angelos Tzortzinis/AFP via Getty Images

Does austerity have a hidden agenda?

David Brancaccio and Ariana Rosas Feb 8, 2023
Heard on:
Pensioners march in Athens in 2018 during a demonstration to demand the return of pension funds lost as part of austerity measures. Clara Mattei, author of "The Capital Order," argues that austerity reflects a deeper history of labor force suppression. Angelos Tzortzinis/AFP via Getty Images
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Amid the brinksmanship about hitting the debt ceiling — the treasury’s ability to pay could run out in June — there are two very different views on the costs or benefits of reining in government spending. According to Michael Boskin, professor of economics at Stanford University, who also served as chair of the first President Bush’s Council of Economic Advisors, running up government debt is dangerous.

And then there is a recent work about austerity that made it to a list of top economics books of the last year in the Financial Times. It’s called “The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism,” and uses the historical record in Europe to argue that austerity — tightening the belt, cutting government programs — is less about budgets and debt and more about deliberately making the labor force feel insecure.

The book’s author is Clara Mattei, an economics professor at the New School for Social Research in New York. She recently spoke with Marketplace’s David Brancaccio about how austerity can be tied to much more than a desire to rein in government spending.

Below is an edited transcript of their conversation.

David Brancaccio: Professor, your close reading of the 20th-century historical record, finds that austerity may have a hidden agenda?

Clara Mattei: Absolutely. First of all, we should stop looking at the economy in the aggregate, because a capitalist economy has winners and losers. And for a capitalist economy to be stable, we need to stabilize class relations, which means that we need to avoid people complaining about their conditions in society. And in a moment in which we see that there’s more and more strikes … 50% increases in strikes in 2021… 2022, with respect to the previous years, this is a moment in which austerity has to strike hard in getting us all back to accept the current status quo.

Brancaccio: To understand this better, you have to understand your argument that by creating scarcity, which is what austerity can do by reining in government spending and social programs, and so forth, it makes people you would say, afraid and insecure so that they won’t demand for instance, higher wages?

Mattei: Yes. The idea here is that austerity is all about getting us all to have to depend more on having money in our pocket in order to make a living. Together with the precariousness that an economic downturn brings about has the political effect of silencing demands for better conditions or even demands for more radical social changes towards a society that is based on different principles, and not on the exploitation of wage work.

Brancaccio: The subtitle of this book is “How economists invented austerity and paved the way to fascism.” The historical record in Italy after the First World War gets examined, and a picture emerges of Britain and the U.S. being OK with Italian dictator Mussolini’s brutal tactics because it’s under the umbrella of austerity that makes Italy a safer place for investors.

Mattei: If we look close enough, what we see historically is that Mussolini was the best student of austerity. He was able to implement austerity policies very efficiently. And this provided him with the material and political support of the whole liberal, elite international establishment from the Bank of England to JPMorgan Chase to the U.S. Treasury applauding Mussolini, because of his capacity to silence the working population in Italy, which in those years, was very turbulent, quote, unquote, because it was asking for radical changes and claims of economic democracy were emerging.

Brancaccio: One thing that you certainly don’t accept is the idea that when a group of economists comes trying to promote policies of austerity, that it’s just a clinical decision. That it’s technocratic. That politics isn’t really involved because it’s economics.

Mattei: Absolutely. Economics is not a neutral discipline. Under austerity capitalism, it is necessary to shift resources away from the people in favor of the few because it increases the precariousness of our livelihoods and silences the possibilities towards change that would be democratic.

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