Neoliberal economists present themselves as neutral technocrats, but theyre actually partisans for the status quo. Dont fall for it
The outcome of austerity policies in Britain and elsewhere has become painfully clear: increased child poverty and social misery; declining life expectancy; an increase in racial inequality; decaying public schools and public health and other public services; and all-around catastrophe for disabled people.
Yet the Financial Times columnist Martin Wolf recently recommended the book Austerity: When it Works and When it Doesnt as his top book to read this summer. The book is a qualified defense of austerity policies written by Alberto Alesina, Carlo Favero, and Francesco Giavazzi, an influential trio of economists and rising stars known for advising major economic institutions. This is an extremely important book, Wolf said. The economist Kenneth Rogoff agreed, recently describing Austerity as a towering scholarly achievement.
We agree with Wolff that this is an extremely important book but not because of its scholarly achievements as Rogoff claims, but rather because of its ideological character that serves to unabashedly justify oppressive neoliberal policies that are still being implemented worldwide.
Alesina and his co-authors attempt to save austerity from its demise by positing an empirical distinction between two types of austerity. One, based on tax increases, hurts the economy they say, while the other, based on spending cuts, has less recessionary effects and can even expand the economy. By putting forth this distinction, the authors end up defending the harmful economic policies occurring in most Western countries, including the US: aggressive cuts to taxes (especially to corporate taxes) and to public welfare expenditure.
In other words, this book and its public acclamation in the mainstream media – is a telling example of the way in which neoliberal economic discourse is rendered technical and seemingly depoliticized in order to justify coercive state policies in favor of the one percent.
Through technical language and appeals to science and expertise, neoliberal economic prescriptions are presented as natural givens that society must accept as matters of fact. Economists can therefore claim to be neutral scientific commentators rather than ideologues of the status quo and technocrats can treat those economists prescriptions as indisputable and inevitable.
This is most visible in the books emphasis on economic growth and its tendency to ignore class differences in favor of a vaguely defined general or national interest. For economic experts like Alesina, Favero and Giavazzi, the sole criterion that matters seems to be the effect of austerity on GDP. Their preference for this metric is a reminder of just how out of touch they are with the real-life needs of most citizens.
This preoccupation with GDP growth fails to ask an important question: for whom, exactly, is GDP growth beneficial? There is no automatic correlation between GDP growth and prosperity for everyone. According to the standard neoliberal argument, cutting welfare expenditure lowers taxes and increases the pool of wealth available for private investment. This line of thinking is based on the strange assumption that the interests of the top one percent and the interests of the nation as a whole are the same, and that the rest of us should stomach harsh cuts to social spending while waiting for wealth to spread to ordinary people.
Neoliberal rhetoric always disguises the coercion underlying austerity – a policy agenda to enhance capitalist growth while reallocating the burden of capitalisms failures to the majority of the population. This requires the subordination of the working people by rising unemployment, forcing wage cuts, cutting welfare expenditures, eroding social solidarities, demonizing immigrants, tearing apart communities and ultimately increasing levels of exploitation.
We must never forget that the fundamental question is not when does austerity work and when doesnt it? but for whom does austerity work, and for whom doesnt it?
Clara Mattei is Assistant Professor of economics at the New School for Social Research and is currently writing a book on Austerity policies after WWI titled Capitalism, Crisis, Austerity: Britain and Italy after WWI. Sam Salour is a PhD Candidate in Sociology at the University of Santa Barbara and holds an MA in Economics from the New School for Social Research, New York City