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Reviewed by:
  • Austerity: The History of a Dangerous Idea by Mark Blyth
  • Mara Fridell
Mark Blyth, Austerity: The History of a Dangerous Idea (New York: Oxford University Press 2013)

An accessible, brisk read, Mark Blyth’s Austerity: The History of a Dangerous Idea is a valuable aid to understanding the implacable siren song of austerity, even as it progressively decimates the capitalist-core working class, the institutions they fought for, and ultimately the global economy and liberatory liberal trajectory that may, after all, be dependent upon working-class leadership and welfare. Blyth anchors Austerity’s analysis in an orderly historical and theoretical counterpoint, documenting scissor-happy austerity’s corroding trajectory, opposition to democracy, and impotency – its [End Page 425] relentless incapacity to “right” sinking growth – presented in explicit contrast with conservative economists’ fantastical promotions and defenses.

The irrational, haunting fear of state debt that animates austerity, Blyth warns, is hardwired into liberalism. Early liberal defenders of capitalist ascension, including Locke, Hume, and Smith, laid the foundation when they railed against monarchies borrowing money from merchants for wars, and defaulting. Liberalism was larded with the tendentious assumptions that states are profligate opponents of markets, and that capitalists are naturally disciplined and productive. From the late 19th century onward, as wealth accumulation, reproductive problems, and democratic social movements spurred state institutions to support not only capital accumulation, but also working-class consumption and citizenship capacity in the capitalist core, liberals fought back with austerity – though, under auspicious conditions, they helped articulate its Keynesian and social democratic alternatives as well. From liberalism’s founding phobia spills our societies’ interminable “The state: can’t live with it, can’t live without it, don’t want to pay for it” neurosis, exemplified in David Ricardo and J.S. Mill’s contrasting positions on the naturalism of poverty and inequality, and the proper role of the state in using debt to manage the economy or in disciplining the poor.

While the Great Depression’s Herbert Hoover followed the austerity credo, forbidding the US to “squander itself to prosperity on the ruin of its taxpayers,” and Andrew Mellon commanded the state to “liquidate labor,” (119) the 20th century generals of austerity diffused from the smoldering ruins of the Austro-Hungarian Empire. Hayek, Mises, and Schumpeter fed austerity logic and strategies to generations of voracious American and European financializing funders, and their economists, political scientists, and policymakers. They deployed and elaborated strategies and rationales to overcome democracy with “independent” central banks like the European Central Bank, and to siphon wealth to financial capital’s enclaves and to Germany’s high-value exports trade-surplus economic niche. German ordoliberalism – deregulate capital, pin the state down with rules – reinforced technocratic Italian and American (inter alia) economists’ Nobel-wreathed austerity modeling and marketing. Hyper-publicized work by, among others, Alberto Alesina and the Italian Bocconi School, Virginia Public Choice theory political scientists, and American economists such as Carmen M. Reinhardt and Kenneth Rogoff (This Time Is Different: Eight Centuries of Financial Folly, [Princeton: Princeton University Press, 2010]) justified institutionalizing austerity. Embraced by the banking community, the liberal-conservative theories echoed Hobbes and Burke, promoting a vision of omniscient-rational (in contrast to Keynes’ “animal spirits”) business or investor “confidence” (or even, as it came to it, consumer “expectations”) as our delicate sovereign and guardian of virtue.

Historical austerity failure notables include the capitalist class’ dependables, the US, UK, Germany and Japan in the 1920s and 1930s. By the 1980s and 1990s, the International Monetary Fund adopted the Washington Consensus, “road testing” austerity again with democracy-curing Structural Adjustment Policies (saps) inflicted upon Latin America, among other developing regions. Neoliberal saps cut back growth in these regions, gouged their state capacities, and impoverished working families. Today, the shame-tagged piigs (Portugal, Ireland, Italy and Greece) have had their democratically elected leaders supplanted by austerity technocrats, and have mined their infrastructure to, in the case of [End Page 426] Greece, pay off loans originally oversold to them by mercenary US banks, or more typically, to restuff their undisciplined and imploding national private banks. These countries have suffered soaring unemployment and plummeting growth.

What of the poster children for austerity apologetics, Denmark and...

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