Popular in Economics

Economics

Gender and Economics

University of California Santa Barbara Shelly Lundberg

Banks and Policy Organisations

Greening the financial sector

European Investment Bank Matteo Ferrazzi

Economic History

Gravity with Gravitas: A Solution to the Border Puzzle

Boston College James E. Anderson

Economic Inequalities

Visions of Inequality

City University of New York Branko Milanovic

Economics

School Finance Equalization Increases Intergenerational Mobility

Yale University Barbara Biasi

Economics

Olivier Blanchard on U.S. Pandemic-Era Inflation

Peterson Institute for International Economics Olivier Blanchard

Generating Workspace

Export as PDF

This video video discusses the concept of austerity within the framework of capitalism, arguing that austerity is often perceived as a technical solution to economic problems, yet it operates as a political tool supporting the capitalist system. The speaker critiques the tendency to focus on budgetary measures without recognizing the deeper implications of who benefits and who suffers under austerity policies.

Key points include:

1. **Depoliticization of Austerity**: Austerity is often seen merely as a technical approach to balancing budgets, rather than as a project that stabilizes and protects the capitalist order.

2. **Austerity's Impact**: Austerity measures primarily lead to cuts in social expenditures (e.g., housing, education, health care) while subsidizing the wealthy and entities profiting from capital. This video video results in regressive taxation, burdening working people while favoring the elite.

3. **Monetary Policy**: Increases in interest rates (monetary austerity) further disadvantage working individuals by making borrowing harder and exacerbating unemployment, which also suppresses wages.

4. **Industrial Disparity**: Austerity contributes to privatization and strikes against labor rights, diminishing workers' bargaining power and fostering competition.

5. **Historical Context**: The speaker reflects on how the theory and practice of austerity emerged as a response to crises, particularly post-World War I—a time when labor movements sought alternatives to capitalist economic conditions.

6. **Connection to Fascism**: This video video argues that austerity can be effectively implemented in non-democratic contexts, as exemplified by Mussolini's Italy, where repression allowed rigorous austerity measures.

7. **Economic Theory and Class Struggle**: Austerity is tied to the dominance of neoclassical economics, which often strengthens elite interests at the expense of democratic governance and social equity.

8. **Resilience of Austerity**: Despite critiques from economic literature regarding its effectiveness, austerity persists as a feature of capitalist societies, protecting elite interests and undermining alternatives.

9. **Call to Action**: The speaker urges collective political engagement to challenge austerity's role in perpetuating inequality and environmental crises, advocating for a re-envisioning of economic systems that prioritize the needs of the majority.

Overall, the text posits that austerity is not just an economic strategy but a politically motivated mechanism that reinforces socio-economic hierarchies, and encourages a reexamination of economic policies in light of their social implications.

Language:

Export as PDF

X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

00:00.075 --> 00:02.965
This is a question that, ought to be answered

00:03.075 --> 00:07.925
because not only is the term by now rarely used,

00:08.425 --> 00:10.845
and not because it doesn't happen, but

00:10.845 --> 00:14.285
because it's kind of synonymous with virtuous,

00:14.545 --> 00:16.205
and prudent economic policy.

00:16.585 --> 00:19.405
But when it is used, is used in a way that tends

00:19.405 --> 00:22.485
to depoliticize austerity in the sense

00:22.485 --> 00:27.445
that it is not really understood as a powerful project

00:27.785 --> 00:32.245
to stabilize what is fundamental to our capitalist economy.

00:32.745 --> 00:35.805
Um, it is rather understood as a technical toolbox to

00:36.435 --> 00:41.005
toolbox that only serves to deal with balancing the budget

00:41.385 --> 00:44.245
and, and, promoting growth.

00:44.745 --> 00:48.645
In the work I do, I really try to look at austerity as,

00:49.125 --> 00:53.115
a tool to foster

00:53.225 --> 00:55.355
what is foundational to a capitalist economy,

00:55.425 --> 00:58.395
meaning the capital order, and this is indeed the title

00:58.975 --> 01:00.275
and austerity needs

01:00.275 --> 01:02.395
to be understood in the sense much more than just

01:03.495 --> 01:06.075
budget cuts and PR and tax increases.

01:06.385 --> 01:09.195
This definition in its own, it's a definition

01:09.195 --> 01:11.875
that economists love because it tells you very little of

01:11.895 --> 01:13.155
who wins and who loses

01:13.155 --> 01:14.995
because it tends to look at the aggregate.

01:15.455 --> 01:18.195
The question is not, just budget cuts.

01:18.225 --> 01:22.915
It's where the state decides to cut and the state, cuts.

01:23.095 --> 01:26.515
Um, what we see is under the austerity state is a state

01:26.515 --> 01:30.555
that cuts social expenditures, so housing, education,

01:30.565 --> 01:33.675
healthcare, all the social benefits, while it

01:34.235 --> 01:36.595
actively subsidizes the elite

01:36.815 --> 01:39.115
and those who make income out of capital.

01:39.415 --> 01:43.235
So military, industrial complex bail out banks,

01:43.565 --> 01:45.915
de-risking, private asset managers

01:46.015 --> 01:47.795
and for example, the green turn.

01:48.055 --> 01:51.035
All of this is, again, it's not about if the state spends,

01:51.035 --> 01:52.355
it's where the state spends,

01:52.655 --> 01:54.475
and it's not whether the state taxes,

01:54.695 --> 01:55.875
but who the state taxes.

01:56.175 --> 01:57.995
And this is why we have to look at the fact

01:57.995 --> 02:00.355
that austerity is regressive taxation, meaning

02:00.355 --> 02:03.515
that taxes do increase on the working people,

02:04.095 --> 02:05.635
but they actually diminish

02:05.775 --> 02:08.715
and structurally diminish for those at the top.

02:08.735 --> 02:13.035
So inheritance tax, corporate tax, capital gains tax,

02:13.215 --> 02:16.355
all of this, are usually drastically curtailed.

02:16.575 --> 02:18.155
And this is fiscal austerity.

02:18.185 --> 02:20.795
Then we have monetary austerity that works with it.

02:21.055 --> 02:23.515
And monetary austerity is increases in interest rates,

02:23.515 --> 02:26.275
something that we have been become quite familiar

02:26.275 --> 02:29.355
with in the last year and a half, throughout the globe.

02:29.975 --> 02:33.035
And increases interest rate is not just a technical tool

02:33.095 --> 02:36.275
to manage inflation because it actually hits,

02:36.275 --> 02:37.555
once more working people.

02:37.935 --> 02:38.995
It hits working people

02:38.995 --> 02:42.195
because, not only it makes it more difficult to borrow,

02:42.295 --> 02:45.675
but the reality is that it actually, kills,

02:46.055 --> 02:47.675
the labor market.

02:47.975 --> 02:49.835
It, increases unemployment

02:49.935 --> 02:53.035
and unemployment serves as a disciplinary mechanism

02:53.695 --> 02:55.115
to keep wages low.

02:55.375 --> 02:58.475
And, our, lives more precarious

02:58.815 --> 03:01.005
and in competition with other workers.

03:01.545 --> 03:04.285
And then we have industrial disparity in which the state

03:04.805 --> 03:07.605
directly intervenes to curb the bargaining power

03:07.605 --> 03:09.085
of workers by privatizing.

03:09.665 --> 03:12.245
So increasing the competition in the private sector

03:12.745 --> 03:16.645
and the dependence on in personal market forces, cutting

03:17.175 --> 03:20.885
wages, deregulating labor, all of these measures.

03:20.885 --> 03:23.925
So the austerity trinity, if you like, is very important

03:23.925 --> 03:27.205
to keep in mind as a systematic, force

03:27.205 --> 03:29.165
because fiscal, monetary,

03:29.165 --> 03:32.125
industrial austerity work reinforcing one another.

03:32.465 --> 03:35.165
And moreover, it tells you that fiscal

03:35.465 --> 03:38.125
and monetary issues are not something separate

03:38.555 --> 03:39.685
from our daily lives.

03:39.795 --> 03:42.525
They actually hit us primarily as working people

03:42.745 --> 03:45.685
and really do shape our possibilities to exist.

03:46.305 --> 03:50.325
The theoretical, results, about

03:50.425 --> 03:55.005
how Sta serves a purpose, I discovered by looking at

03:55.845 --> 03:57.285
a precise historical moment,

03:57.645 --> 04:00.925
a historical moment in which we could say the system

04:01.195 --> 04:03.725
underwent a profound economic crisis.

04:04.025 --> 04:07.525
And this was, the period after the first world war.

04:07.985 --> 04:10.445
Um, and, and when I talk about crisis

04:10.665 --> 04:14.285
of our economic system, I mean a real challenge

04:14.905 --> 04:17.965
of the basic pillars that make up our capitalist economy,

04:18.075 --> 04:21.125
meaning wage relations, again, the fact that the majority

04:21.185 --> 04:23.485
of us is forced and has no other option

04:23.625 --> 04:26.685
but to go work for a wage and usually a low wage

04:26.705 --> 04:31.005
and have very little agency on how they work,

04:31.825 --> 04:33.405
and of course do not get

04:33.405 --> 04:35.365
to keep the output of, of their work.

04:35.945 --> 04:38.045
And finally, private property

04:38.045 --> 04:39.085
of the means of production.

04:39.385 --> 04:42.765
So, after the first World War triggered by the

04:43.455 --> 04:46.525
great experiments that the Great War had brought about on

04:46.525 --> 04:49.205
how the economy could be ac actually understood differently

04:49.745 --> 04:52.165
and managed, much more politically.

04:52.435 --> 04:57.415
This is a moment in which workers, in many places

04:57.795 --> 05:00.735
around the world, but especially also in Western Europe,

05:00.785 --> 05:03.095
which is something that historians have not paid enough

05:03.095 --> 05:05.775
attention to, really were demanding,

05:05.995 --> 05:08.575
and were enacting a lot of experiments

05:08.795 --> 05:10.775
to overcome capitalist relations

05:10.875 --> 05:14.295
to actually promote production for use,

05:14.295 --> 05:15.655
democracy in the workplace.

05:16.155 --> 05:18.255
Um, really a different understanding of

05:18.255 --> 05:20.255
how we can organize production and distribution.

05:20.595 --> 05:23.375
It is here in this moment of exceptional crisis

05:23.395 --> 05:28.175
of capitalism that, austerity emerges very vividly

05:28.715 --> 05:30.535
as a reaction,

05:30.535 --> 05:33.095
to foreclose these alternatives to capitalism.

05:33.395 --> 05:35.695
So what you see is that there's a very strong alliance

05:35.695 --> 05:39.295
between economists, who are brought to advise,

05:39.295 --> 05:41.855
governments and these governments in order

05:41.855 --> 05:43.975
to impose the austerity trinity

05:44.115 --> 05:46.895
and thus compel people to accept

05:47.045 --> 05:48.935
that there is really no alternative.

05:49.435 --> 05:54.295
Of course, these policies that had the, result

05:54.355 --> 05:59.005
of weakening workers went with, this theory

05:59.005 --> 06:00.525
that justifies these policies,

06:00.525 --> 06:02.405
and this theory is still very powerful today.

06:02.585 --> 06:05.005
So what I tried to do is actually look at the

06:05.075 --> 06:06.285
origins of austerity.

06:06.285 --> 06:10.165
That is also the moment in which mainstream economics,

06:10.195 --> 06:11.485
started becoming dominant

06:11.945 --> 06:14.765
and still dominates our economic textbooks

06:14.945 --> 06:17.365
and our brains, as we speak.

06:17.865 --> 06:19.405
So it is interesting to notice

06:19.585 --> 06:22.845
how actually neoclassical economics has a story

06:22.845 --> 06:26.605
that is deeply, deeply ingrained in the class struggle

06:26.825 --> 06:31.685
and deeply, deeply, utilized to actually quash demands

06:31.685 --> 06:33.045
for an alternative society.

06:33.475 --> 06:36.205
What I, explore is

06:36.265 --> 06:39.725
how actually austerity is quite structural to capitalism,

06:40.075 --> 06:42.805
because again, of this necessity

06:43.025 --> 06:45.485
to preserve the capital order, which is the title

06:45.505 --> 06:48.725
of the book, again, capital meaning the social relation

06:48.725 --> 06:51.365
that is at the basis of the possibility of economic growth,

06:51.705 --> 06:54.525
of money accumulation, is the fact

06:54.525 --> 06:56.685
that the majority is technically exploited.

06:56.685 --> 06:59.565
Meaning that we do not, we actually produce much more value

06:59.985 --> 07:03.525
as workers than the value we get to keep, in our,

07:03.525 --> 07:05.205
and that we get in our paychecks.

07:05.585 --> 07:09.695
So, understood in these terms, we understand

07:09.695 --> 07:11.375
that austerity is structurally repressive,

07:12.075 --> 07:14.735
and what happens is that actually austerity functions quite

07:14.805 --> 07:19.175
well in societies that have given up any form of democracy.

07:19.675 --> 07:22.735
And this is why, I look at the case of,

07:23.795 --> 07:27.535
the originator of fascism, Benito Mussolini in my work,

07:27.835 --> 07:31.535
and really show how Mussolini strengthened his power

07:31.535 --> 07:32.855
because of his capacity

07:32.875 --> 07:34.815
to implement austerity so effectively.

07:34.955 --> 07:36.215
And he could do that, of course,

07:36.215 --> 07:40.015
because he, jailed political opposition,

07:40.245 --> 07:43.815
made strikes illegal, and so made unions illegal.

07:44.275 --> 07:46.335
But at the same time, he did this well

07:46.335 --> 07:50.935
because he received the support of a lot of the elites

07:50.935 --> 07:53.935
of the establishment that understood that it was only

07:53.935 --> 07:56.535
through a strong repressive state

07:56.565 --> 07:58.415
that one could implement austerity.

07:58.435 --> 08:01.055
So effectively, and this happens throughout the history,

08:01.075 --> 08:04.135
we can just, mention the case of Pino, she

08:04.135 --> 08:06.095
and Sheila that is most known.

08:06.955 --> 08:10.375
Um, but this is just the extreme place in which you really

08:10.375 --> 08:11.415
see how austerity

08:11.435 --> 08:14.215
to safeguard capitalism works very well hand

08:14.215 --> 08:15.335
in hand with fascism.

08:15.755 --> 08:19.775
The reality is that unfortunately, we see how,

08:20.235 --> 08:24.375
it is kind of a tendency of our economic system,

08:24.375 --> 08:27.295
and the type of political organization that goes with it

08:27.635 --> 08:30.375
to insulate decision making,

08:30.805 --> 08:34.615
that regard the fundamentals about our economy,

08:34.925 --> 08:36.375
from democratic processes.

08:36.715 --> 08:40.135
So the, ne necessity to actually expel

08:40.675 --> 08:45.335
and, people from participating in decisions,

08:45.335 --> 08:47.975
for example, about monetary policies

08:48.075 --> 08:49.935
or fiscal policies that we take

08:49.955 --> 08:52.255
for granted are left in the hands of the experts.

08:52.675 --> 08:55.055
But this has been actively institutionally constructed

08:55.280 --> 08:58.645
because in moments in which people do want to participate,

08:58.705 --> 09:00.645
as it has happened after the first World War,

09:00.785 --> 09:01.965
in which people understood

09:01.965 --> 09:04.605
that the economy was not a natural given,

09:04.705 --> 09:07.125
it was actually a political outcome,

09:07.145 --> 09:10.725
and thus things could take different priorities from the one

09:10.725 --> 09:12.765
of private capital accumulation.

09:13.315 --> 09:16.565
This is a moment in which then experts worked very

09:16.565 --> 09:19.565
intelligently to create these spaces

09:20.345 --> 09:23.685
for technocratic decision making in which people were really

09:24.105 --> 09:26.365
let, let out of the conversation.

09:26.465 --> 09:28.205
And the typical example is of course,

09:28.205 --> 09:32.805
central bank independence that we take again, as something

09:32.805 --> 09:34.965
that we accept, but has a history.

09:34.985 --> 09:39.205
And the history was the experts, of my book, in,

09:39.205 --> 09:41.365
in-house economists of the British Treasury

09:41.995 --> 09:44.725
tell Ralph Hatchery, who was telling everyone

09:44.785 --> 09:47.885
how the central bank, the Bank of England should be capable

09:48.025 --> 09:50.245
of never explaining, never regretting,

09:50.485 --> 09:52.365
and never apologizing exactly,

09:52.365 --> 09:57.205
because it was clear that monetary austerity required,

09:57.305 --> 09:59.925
to stabilize the capitalist economy went

09:59.925 --> 10:01.525
with the sacrifice of the majority.

10:01.665 --> 10:04.245
And if the majority did participate in these decisions,

10:04.245 --> 10:07.525
they would clearly potentially pick another route.

10:07.985 --> 10:10.285
So it is very interesting that I would say yes.

10:10.385 --> 10:14.765
The reality is that if we want a, a prudent, management

10:14.985 --> 10:19.205
of the capitalist economy, this has to go with,

10:19.515 --> 10:22.525
excluding people from participating

10:22.525 --> 10:23.645
and from claiming agency.

10:23.645 --> 10:25.565
And this is something that we need to keep in mind

10:25.565 --> 10:27.605
because fascism is one case,

10:27.985 --> 10:29.245
but then there's all these ways

10:29.315 --> 10:31.325
that in which this can become

10:31.385 --> 10:33.885
institutionalized in many countries.

10:33.905 --> 10:36.565
Now, there's balanced budgets in the constitution, right?

10:36.585 --> 10:39.445
So a way to actually eliminate any conversation

10:39.445 --> 10:42.245
that is political about questions that then have to just

10:43.075 --> 10:45.965
been taken just accepted by citizens.

10:46.785 --> 10:48.765
The whole purpose of the book,

10:49.305 --> 10:50.885
and the reason why I wanted

10:50.905 --> 10:54.805
to look at austerity historically was to try

10:54.805 --> 10:57.565
to answer the question, why is austerity so resilient?

10:58.065 --> 10:59.245
Why is it that

10:59.295 --> 11:03.405
after there's all this literature of kings in economics

11:03.405 --> 11:07.365
that tells you that actual austerity is bad policy

11:07.395 --> 11:09.925
because it does not achieve the goal

11:10.105 --> 11:12.125
of increasing growth necessarily,

11:12.425 --> 11:15.325
nor does it most of the time,

11:15.475 --> 11:17.365
help actually balance the budget.

11:17.785 --> 11:21.965
Um, why is it then that it constantly shapes,

11:21.965 --> 11:23.045
capitalist societies?

11:23.225 --> 11:25.765
And I would say that it is indeed a structural feature

11:25.785 --> 11:29.125
of capitalism dating from the very beginnings of,

11:29.345 --> 11:31.965
of the history of our society, right?

11:31.965 --> 11:35.045
It just becomes more visible after the first world war.

11:35.065 --> 11:38.005
But the reality is that austerity was in place just not

11:38.005 --> 11:39.805
noticed, before,

11:40.665 --> 11:43.805
and it continues to be how is it that is so resilient

11:43.805 --> 11:47.965
after there is so much, you know, scientific literature

11:47.965 --> 11:50.805
that tells you that, it doesn't make much sense?

11:51.155 --> 11:52.885
This is where I think we need to really take,

11:52.950 --> 11:54.370
Take seriously the fact that,

11:54.425 --> 11:57.485
the economy is a political, sphere

11:57.665 --> 11:59.085
and it's about class struggle

11:59.665 --> 12:03.935
and how, you know, truth

12:04.635 --> 12:07.295
or, non-truth, need

12:07.295 --> 12:09.175
to be understood in a political sense

12:09.395 --> 12:13.255
of mobilizing forces in the direction that actually

12:13.935 --> 12:15.855
preserve, in a way the power of the elite

12:15.955 --> 12:18.295
and preserve our society as one

12:18.405 --> 12:21.535
that is indeed based on the subordination of the majority.

12:21.955 --> 12:24.575
So we could say, you know, austerity works,

12:24.835 --> 12:27.375
if you look at it from a point of view of who it protects,

12:27.435 --> 12:29.495
it protects the foundation of capitalism

12:29.835 --> 12:33.455
and it does protect, the winners of our system who

12:33.475 --> 12:34.855
of course are very, very few.

12:35.435 --> 12:37.815
Um, so in this sense, if you look at it from the lens

12:37.815 --> 12:41.175
of class struggle, it is a very, very powerful weapon to,

12:41.235 --> 12:43.215
maintain capitalism in place

12:43.435 --> 12:44.815
as the only possible system.

12:45.235 --> 12:48.615
And of course, especially by weakening our imagination

12:48.835 --> 12:50.175
for an alternative society.

12:50.175 --> 12:53.015
Because if we have to spend a majority of our time,

12:53.605 --> 12:56.375
working in order to pay for our health, to pay

12:56.375 --> 13:00.615
for our education, to have a house to avoid, you know,

13:00.665 --> 13:03.455
going hungry, this is how the majority of the people live

13:03.455 --> 13:07.015
around the globe is worried about their like bare survival.

13:07.555 --> 13:10.735
And this means that this impedes any understanding of us

13:10.835 --> 13:12.975
as political agents that can take action

13:12.975 --> 13:14.095
because the time left

13:14.155 --> 13:16.575
for political discussion is of course very little.

13:17.075 --> 13:19.865
Now, you could tell me, does this work in general,

13:20.415 --> 13:22.545
what I would like to say is that under capitalism,

13:22.605 --> 13:24.665
and this is important, we don't live in an

13:24.665 --> 13:25.745
economy in general.

13:25.885 --> 13:28.185
We live specifically in a capitalist economy

13:28.525 --> 13:30.585
and in a capitalist economy, there's nothing

13:30.585 --> 13:31.665
that works in general.

13:31.885 --> 13:33.705
It als always works for some

13:34.005 --> 13:36.025
and to the detriment, of others.

13:36.405 --> 13:39.145
And so this is very important is to expose once more

13:39.205 --> 13:42.265
how capitalism and democracy are not necessarily compatible.

13:42.455 --> 13:45.305
Neither is capitalism and the wellbeing of people.

13:45.925 --> 13:48.305
So, this is where, we can say

13:48.765 --> 13:50.745
how does it work for the benefit of people?

13:50.745 --> 13:53.065
Of course not. And we see this everywhere from Britain

13:53.205 --> 13:55.745
to the United States, to South Africa, to even Sweden

13:56.075 --> 13:57.185
where I was last week,

13:57.475 --> 13:59.465
presenting the translated version of the book.

13:59.765 --> 14:03.225
Um, even places where we think there must be a great life,

14:03.985 --> 14:05.425
actually, there's impoverishment,

14:05.475 --> 14:08.465
there is constant privatization attacks on welfare

14:09.045 --> 14:10.145
and regressive taxes.

14:10.765 --> 14:15.245
So we can say, how long can this work for? Right?

14:15.385 --> 14:18.005
How long can we actually keep impoverishing, the majority

14:18.525 --> 14:21.165
actually, bringing all of these countries in the south

14:21.165 --> 14:23.165
of a globe to the brick of collapse, right?

14:23.525 --> 14:26.085
SSRI Lanka is just one case of the fact that the IMF,

14:26.345 --> 14:29.365
the International Monetary Fund has been insisting on

14:29.365 --> 14:32.045
austerity policies on these countries for decades,

14:32.425 --> 14:34.765
and the result is a disaster

14:34.765 --> 14:37.485
because they have been expropriate of everything.

14:37.485 --> 14:39.965
Multinational corporations own everything

14:40.025 --> 14:41.805
and the people have nothing left.

14:42.465 --> 14:45.245
Um, this I think again, exposes

14:45.245 --> 14:47.205
how capitalism is a system without a vision.

14:47.495 --> 14:49.685
There is no long-term vision for the future

14:49.685 --> 14:52.405
of humanity under capitalism because that's not its logic.

14:52.585 --> 14:54.965
The logic of capital accumulation is a short term,

14:55.465 --> 14:56.845
myopic logic.

14:56.985 --> 14:59.365
Individualistic logic is not the logic

14:59.365 --> 15:01.405
that looks at the collective at the whole

15:01.465 --> 15:04.405
and the future of, humankind.

15:04.785 --> 15:07.005
And this is where I think we will see

15:07.005 --> 15:10.485
that austerity does produce even greater contradictions,

15:10.485 --> 15:13.525
even greater crisis, both in terms of inequality

15:13.585 --> 15:15.205
and in terms of climate disasters.

15:15.425 --> 15:17.805
And this is where I think it is the case

15:17.805 --> 15:19.525
that people then have to step in

15:20.025 --> 15:23.205
and even if they're oppressed by austerity, if we understand

15:23.225 --> 15:24.725
how it operates, and we understand

15:24.725 --> 15:28.405
that economists are not neutral actors that should do what

15:29.335 --> 15:32.725
stuff instead of us, if we then want to really understand

15:32.745 --> 15:35.965
how economics is political and our system is political

15:36.345 --> 15:37.805
and fundamental and just this is

15:37.805 --> 15:40.885
where I think we can start mobilizing indeed

15:40.905 --> 15:43.725
to create the type of society in which we can discuss the

15:43.725 --> 15:47.205
economy as being something that works for everyone,

15:47.225 --> 15:48.365
or at least for the majority.

00:00 - This is a question that, ought to be answered because not only is the term by now rarely used, and not because it doesn't happen, but because it's kind of synonymous with virtuous, and prudent economic policy. But when it is used, is used in a way that tends

00:19 - to depoliticize austerity in the sense that it is not really understood as a powerful project to stabilize what is fundamental to our capitalist economy. it is rather understood as a technical toolbox to toolbox that only serves to deal with balancing the budget and, and, promoting growth. In the work I do, I really try to look at austerity as, a tool to foster what is foundational to a capitalist economy, meaning the capital order, and this is indeed the title

00:58 - and austerity needs to be understood in the sense much more than just budget cuts and PR and tax increases. This definition in its own, it's a definition that economists love because it tells you very little of who wins and who loses because it tends to look at the aggregate. The question is not, just budget cuts. It's where the state decides to cut and the state, cuts. what we see is under the austerity state is a state

01:26 - that cuts social expenditures, so housing, education, healthcare, all the social benefits, while it actively subsidizes the elite and those who make income out of capital. So military, industrial complex bail out banks, de-risking, private asset managers and for example, the green turn. All of this is, again, it's not about if the state spends, it's where the state spends, and it's not whether the state taxes,

01:54 - but who the state taxes. And this is why we have to look at the fact that austerity is regressive taxation, meaning that taxes do increase on the working people, but they actually diminish and structurally diminish for those at the top. So inheritance tax, corporate tax, capital gains tax, all of this, are usually drastically curtailed. And this is fiscal austerity. Then we have monetary austerity that works with it.

02:21 - And monetary austerity is increases in interest rates, something that we have been become quite familiar with in the last year and a half, throughout the globe. And increases interest rate is not just a technical tool to manage inflation because it actually hits, once more working people. It hits working people because, not only it makes it more difficult to borrow, but the reality is that it actually, kills, the labor market.

02:47 - It, increases unemployment and unemployment serves as a disciplinary mechanism to keep wages low. And, our, lives more precarious and in competition with other workers. And then we have industrial disparity in which the state directly intervenes to curb the bargaining power of workers by privatizing. So increasing the competition in the private sector and the dependence on in personal market forces, cutting

03:17 - wages, deregulating labor, all of these measures. So the austerity trinity, if you like, is very important to keep in mind as a systematic, force because fiscal, monetary, industrial austerity work reinforcing one another. And moreover, it tells you that fiscal and monetary issues are not something separate from our daily lives. They actually hit us primarily as working people and really do shape our possibilities to exist.

03:46 - The theoretical, results, about how Sta serves a purpose, I discovered by looking at a precise historical moment, a historical moment in which we could say the system underwent a profound economic crisis. And this was, the period after the first world war. and, and when I talk about crisis of our economic system, I mean a real challenge of the basic pillars that make up our capitalist economy, meaning wage relations, again, the fact that the majority

04:21 - of us is forced and has no other option but to go work for a wage and usually a low wage and have very little agency on how they work, and of course do not get to keep the output of, of their work. And finally, private property of the means of production. So, after the first World War triggered by the great experiments that the Great War had brought about on how the economy could be ac actually understood differently

04:49 - and managed, much more politically. This is a moment in which workers, in many places around the world, but especially also in Western Europe, which is something that historians have not paid enough attention to, really were demanding, and were enacting a lot of experiments to overcome capitalist relations to actually promote production for use, democracy in the workplace. really a different understanding of

05:18 - how we can organize production and distribution. It is here in this moment of exceptional crisis of capitalism that, austerity emerges very vividly as a reaction, to foreclose these alternatives to capitalism. So what you see is that there's a very strong alliance between economists, who are brought to advise, governments and these governments in order to impose the austerity trinity and thus compel people to accept

05:47 - that there is really no alternative. Of course, these policies that had the, result of weakening workers went with, this theory that justifies these policies, and this theory is still very powerful today. So what I tried to do is actually look at the origins of austerity. That is also the moment in which mainstream economics, started becoming dominant and still dominates our economic textbooks

06:14 - and our brains, as we speak. So it is interesting to notice how actually neoclassical economics has a story that is deeply, deeply ingrained in the class struggle and deeply, deeply, utilized to actually quash demands for an alternative society. What I, explore is how actually austerity is quite structural to capitalism, because again, of this necessity to preserve the capital order, which is the title

06:45 - of the book, again, capital meaning the social relation that is at the basis of the possibility of economic growth, of money accumulation, is the fact that the majority is technically exploited. Meaning that we do not, we actually produce much more value as workers than the value we get to keep, in our, and that we get in our paychecks. So, understood in these terms, we understand that austerity is structurally repressive, and what happens is that actually austerity functions quite

07:14 - well in societies that have given up any form of democracy. And this is why, I look at the case of, the originator of fascism, Benito Mussolini in my work, and really show how Mussolini strengthened his power because of his capacity to implement austerity so effectively. And he could do that, of course, because he, jailed political opposition, made strikes illegal, and so made unions illegal. But at the same time, he did this well

07:46 - because he received the support of a lot of the elites of the establishment that understood that it was only through a strong repressive state that one could implement austerity. So effectively, and this happens throughout the history, we can just, mention the case of Pino, she and Sheila that is most known. but this is just the extreme place in which you really see how austerity to safeguard capitalism works very well hand

08:14 - in hand with fascism. The reality is that unfortunately, we see how, it is kind of a tendency of our economic system, and the type of political organization that goes with it to insulate decision making, that regard the fundamentals about our economy, from democratic processes. So the, ne necessity to actually expel and, people from participating in decisions, for example, about monetary policies

08:48 - or fiscal policies that we take for granted are left in the hands of the experts. But this has been actively institutionally constructed because in moments in which people do want to participate, as it has happened after the first World War, in which people understood that the economy was not a natural given, it was actually a political outcome, and thus things could take different priorities from the one of private capital accumulation.

09:13 - This is a moment in which then experts worked very intelligently to create these spaces for technocratic decision making in which people were really let, let out of the conversation. And the typical example is of course, central bank independence that we take again, as something that we accept, but has a history. And the history was the experts, of my book, in, in-house economists of the British Treasury tell Ralph Hatchery, who was telling everyone

09:44 - how the central bank, the Bank of England should be capable of never explaining, never regretting, and never apologizing exactly, because it was clear that monetary austerity required, to stabilize the capitalist economy went with the sacrifice of the majority. And if the majority did participate in these decisions, they would clearly potentially pick another route. So it is very interesting that I would say yes. The reality is that if we want a, a prudent, management

10:14 - of the capitalist economy, this has to go with, excluding people from participating and from claiming agency. And this is something that we need to keep in mind because fascism is one case, but then there's all these ways that in which this can become institutionalized in many countries. Now, there's balanced budgets in the constitution, right? So a way to actually eliminate any conversation

10:39 - that is political about questions that then have to just been taken just accepted by citizens. The whole purpose of the book, and the reason why I wanted to look at austerity historically was to try to answer the question, why is austerity so resilient? Why is it that after there's all this literature of kings in economics that tells you that actual austerity is bad policy because it does not achieve the goal

11:10 - of increasing growth necessarily, nor does it most of the time, help actually balance the budget. why is it then that it constantly shapes, capitalist societies? And I would say that it is indeed a structural feature of capitalism dating from the very beginnings of, of the history of our society, right? It just becomes more visible after the first world war. But the reality is that austerity was in place just not

11:38 - noticed, before, and it continues to be how is it that is so resilient after there is so much, you know, scientific literature that tells you that, it doesn't make much sense? This is where I think we need to really take, Take seriously the fact that, the economy is a political, sphere and it's about class struggle and how, you know, truth or, non-truth, need

12:07 - to be understood in a political sense of mobilizing forces in the direction that actually preserve, in a way the power of the elite and preserve our society as one that is indeed based on the subordination of the majority. So we could say, you know, austerity works, if you look at it from a point of view of who it protects, it protects the foundation of capitalism and it does protect, the winners of our system who of course are very, very few.

12:35 - so in this sense, if you look at it from the lens of class struggle, it is a very, very powerful weapon to, maintain capitalism in place as the only possible system. And of course, especially by weakening our imagination for an alternative society. Because if we have to spend a majority of our time, working in order to pay for our health, to pay for our education, to have a house to avoid, you know, going hungry, this is how the majority of the people live

13:03 - around the globe is worried about their like bare survival. And this means that this impedes any understanding of us as political agents that can take action because the time left for political discussion is of course very little. Now, you could tell me, does this work in general, what I would like to say is that under capitalism, and this is important, we don't live in an economy in general. We live specifically in a capitalist economy

13:28 - and in a capitalist economy, there's nothing that works in general. It als always works for some and to the detriment, of others. And so this is very important is to expose once more how capitalism and democracy are not necessarily compatible. Neither is capitalism and the wellbeing of people. So, this is where, we can say how does it work for the benefit of people? Of course not. And we see this everywhere from Britain

13:53 - to the United States, to South Africa, to even Sweden where I was last week, presenting the translated version of the book. even places where we think there must be a great life, actually, there's impoverishment, there is constant privatization attacks on welfare and regressive taxes. So we can say, how long can this work for? Right? How long can we actually keep impoverishing, the majority actually, bringing all of these countries in the south

14:21 - of a globe to the brick of collapse, right? SSRI Lanka is just one case of the fact that the IMF, the International Monetary Fund has been insisting on austerity policies on these countries for decades, and the result is a disaster because they have been expropriate of everything. Multinational corporations own everything and the people have nothing left. this I think again, exposes how capitalism is a system without a vision.

14:47 - There is no long-term vision for the future of humanity under capitalism because that's not its logic. The logic of capital accumulation is a short term, myopic logic. Individualistic logic is not the logic that looks at the collective at the whole and the future of, humankind. And this is where I think we will see that austerity does produce even greater contradictions, even greater crisis, both in terms of inequality

15:13 - and in terms of climate disasters. And this is where I think it is the case that people then have to step in and even if they're oppressed by austerity, if we understand how it operates, and we understand that economists are not neutral actors that should do what stuff instead of us, if we then want to really understand how economics is political and our system is political and fundamental and just this is where I think we can start mobilizing indeed

15:40 - to create the type of society in which we can discuss the economy as being something that works for everyone, or at least for the majority.

Faculti AI can make mistakes