A Few Notes on Austerity

There's no doubt that the global economic crisis has precipitated a wave of austerity measures across Europe and North America. As banking crises mutated into sovereign debt crises, austerity has been forced upon working people from California to Catalonia. In "peripheral" European economies, the continued existence of the welfare state---a virtually unchallenged feature of the political landscape for at least a generation---is by no means assured. That wasn't the case before the crisis.

In the United States, we have not faced austerity drives as severe as those faced by the Greek working class, but we are still witnessing historic, unprecedented attacks on basic social programs at the federal level, combined with deep cuts and anti-labor restructuring at the city and state levels.

This would make it easy to think that austerity is a relatively new development---an outgrowth of the crisis that began with the collapse of big banks in late 2007. That, however, would be a mistake, and it's worth reviewing why.

The politics of austerity dates all the way back to the origins of neoliberalism in the early 1970s.  David Harvey's account of this is process is as good as any. He argues that the post-war Keynesian consensus breaks down after stagflation and global recession set in by the early 70s. The fiscal and monetary policies that had prevailed a generation were no longer capable of restoring profitability to a world economy that was in protracted crisis. After a number of fits and starts, a strategy for restoring profits began to emerge.

This new strategy involved, first of all, breaking the power of organized labor in order to push labor costs down, reduce the number of strikes, and drastically speed up production on the shop floor. It also involved eliminating all barriers to the flow of capital across the globe---a move which opened up huge pools of the global industrial reserve army to corporations in core capitalist economies. The rest of the neoliberal package is well-known: deregulation, big tax cuts for business, drastic reductions in social spending, privatization, an emphasis on reducing inflation rather than aiming at full employment, and so forth. These policies weren't confined to specific countries, but were implemented on a global scale---from Deng's China to Thatcher's Britain to Pinochet's Chile. We could continue, but you get the point.

What this makes clear is that austerity has been a permanent feature of the neoliberal era. It has been ratcheted up ten-fold as a result of the crisis, but it is not a new development. The idea that austerity produces growth is a cornerstone of neoliberalism which, although new cracks in the edifice emerge every day, remains the default theory and practice of capitalist states across the globe.

The fact is that the working class all over the globe has, by and large, been enduring austerity for more than 40 years. It has by no means been a one-note symphony---it has varied in form and intensity in different times and places. But austerity is definitely the word we should use to describe the punishing "shock therapy" applied to Russia after the collapse of the USSR as well as to the brutal regimes of "structural adjustment" forced upon Africa, Latin America and elsewhere during the 80s and 90s. (I note, in passing, that Egypt, now the site of intense social struggles with global ramifications, was the first country in the world to undergo IMF-imposed structural adjustment). The same goes for developments in Europe and the US---think, for instance, of Clinton's decision to "end welfare as we know it".

This has important ramifications for understanding social struggles in the context of the current crisis. There have been a number of fights against austerity all over the world since the crisis began. But they have not yet been able to turn the tide. This is, to be sure, a frustrating fact that the left has to soberly assess, but it is less depressing when we keep in mind that we aren't simply organizing against a policy---austerity---that began with the financial meltdown in 2007/08. We are pushing up against a ruling class offensive that has dominated world economic and political affairs for more than four decades. During that time---especially during the "irrationally exuberant", triumphalist years of the 1990s---neoliberalism was, as Perry Anderson put it, on pace to become the most successful ideological/political movement in the history of the planet---more so than any of the major world religions. To expect, as many leftists did, that all of that momentum could be shattered by a few flare-ups of militant class struggle was unreasonable, to say the least.  

This should not be cause for pessimism. Sure, it's true that the left is not on the offensive and it's undeniable that the working class is taking it on the chin all over the globe. But that has been an enduring feature of the whole neoliberal period. What's different about where are today is that the neoliberal configuration is experiencing a deep, protracted internal crisis. This crisis is both structural as well as ideological. Structurally, there is not yet a clear path out of the stagnation and anemic growth brought on by the Great Recession. Overproduction on a world scale and sovereign debt crises in Europe remain unresolved, although temporary solutions have been found. Ideologically, neoliberalism is no longer the ascendant, up-up-and-away set of ideas it was in the mid 1990s. By now, an entire generation has lost confidence in the absurd technophilic triumphalism that underpinned the internet boom of the late 90s. Growing numbers of people see that the notion of the "free market" has always been a facade for the socialization of costs and the privatization of profits. Young people today in the United States say that they look more favorably on "socialism" (49%, according to a recent Pew Poll) than "capitalism" (46%). In 2012, the number one, most highly-searched word on Miriam Webster's website was "socialism". It is by no means unambiguous what these figures mean---or what the participants understand the word "socialism" to mean---but they do show, at the very least, that growing numbers of people are interested in systemic alternatives to what they see around them. We can imagine their reasoning going something like this: if capitalism means war, ecological disaster, insecurity and economic crisis, then it's opposite---socialism---can't be all bad. It stands to reason that the politics of socialism-from-below will continue to be best placed to appeal to young, newly radicalizing people who are unlikely to be inspired by the grey bureaucratic domination of Stalinism and its progeny.

In the United States, we've seen no shortage of resistance---think of Wisconsin, Occupy, the wave of protests against the murder of Trayvon Martin, the successful teachers' strike in Chicago, and so forth. The last four decades have left the labor movement and the left in shambles. Many have no direct memory of what mass movements look like. It is inevitable, therefore, that the first flashpoints in the growing resistance to neoliberalism will be works in progress. A collective learning process will have to occur within the working class whereby it re-gains, by means of these struggles, some of the confidence and militancy that has been shattered by a 40 year class war from above.

This won't happen overnight. But there is more space to build this fight now than there has been in a generation. What looked unassailable 10 years ago is now vulnerable and open to a challenge from below. The future is uncertain, but the potential to re-bulid the left is greater today than it has been since the demise of the movements of the 60s. We should be sober about what has happened since the crisis broke in late '07. But we should not lose sight of the fact that there is an opening today that did not exist for decades. We have to keep that in mind when soberly assessing recent defeats and setbacks in the class struggle.