I know this post isn’t immediately topical, particularly with the focus on the fallout from the ‘Panama Papers’. But, sadly, austerity remains topical after eight long years now and it’s a point I’ve wanted to make for a while, so here goes…
Is austerity ideological?
Very often we hear left-wing critics of this and many other governments’ programmes of austerity describe these policies as ‘ideological’. Indeed, here is the widely read blogger ‘Another Angry Voice’ calling it ‘ideological austerity’. Here’s another example on alternet. And here’s the opposite claim: Donald Tusk, President of the European Council, a crucial figure in the imposition of austerity, labelling critics as ideologues (the original source of Tusk’s comments are behind a paywall on the FT’s site).
These accusations of ideology seem to come more from the social-democratic, reformist left-of-centre rather than the more radical and revolutionary left. This is not surprising because the claims betray a somewhat naive misunderstanding of the nature of both austerity and ideology that springs from an initial unquestioning acceptance of the permanence of the current political-economic order and a desire merely to ameliorate conditions within it. In stark contrast, a more radical position – one that literally gets to the ‘roots’ of issues – situates itself, as best as possible, outside of the system, seeing, in this case, capitalism’s historical contingency and ultimately terminal contradictions, and imagining and building alternative futures.
Permit me then, dear reader, to make the following two points:
First, since ideology is the name we give the intellectual apparatus that allows us to make sense of our world, everything is ideological. We could not imagine human life nor society without ideology. Consequently, austerity as economic strategy is obviously ideological; equally ideological are all alternative strategies.They are both the products of beliefs and assumptions about: the nature of the problems in the economy, their origins, and how to fix them; the nature of an economy itself; the ethics of economic production, labour, exchange, consumption, and distribution; the nature of an economy as a discrete social realm of action; the nature of human beings as economic agents; and far more besides.
Second, by labelling austerity as ‘ideological’, Keynesian reformists seek to assert that the strategy is irrational, i.e. that, since it should be patently clear to all that the policies of austerity are economically damaging and counter-productive, the only possible explanation for their continuance is a blind ideological devotion on the part of policymakers to a discredited neo-classical economics. However, from a different perspective – the perspective of capital itself – austerity is totally rational. Through the austerity strategy, capital can: put the cost of the crisis onto workers; accumulate further through the regressive policies of austerity and the state support for financialisation, asset inflation, and debt-based money creation; and, perhaps most crucially, depress workers’ wages to a point that profitability can be revived. This perspective is revealed by a Marxist critical political economy that recognises capital as wealth/social power in continuous need of expanding accumulation. The same perspective identifies the contradictions within capitalism that austerity exacerbates, particularly politically destabilising inequality and poverty and the impoverishment of the working people needed to keep buying commodities that exacerbates a debt crisis and depresses economic recovery, and, of course, first and foremost, the labour-capital contradiction that defines and cannot be reconciled within capitalism. Finally, it is also a perspective that recognises that the current crisis is not, as the Keynesians insist, a crisis of ‘effective demand’, but is, fundamentally, rather a crisis of profitability. However cheap central banks have made their money (and now we even have negative interest rate policies (NIRPs!) in countries like Sweden and Japan and even talk of the need for ‘helicopter money‘!), banks and ‘investors’ are taking it and sticking it in financial markets and property rather than investing it in productive economic sectors. This is resulting in dangerous asset market bubbles and is also turning many economies, the UK economy above all, into perfect structures for parasitism, sucking up the money of the poor (and middle class) through rent and debt. This will soon end in a new, more violent financial and subsequent economic crisis that will lead to far more serious political turbulence across the world that will, once more, lead us to fascism or democratic political revolution.
For far more details and for a Marxist political-economic perspective from a real economic expert, check out Michael Roberts’ outstanding blog, The Next Recession. I urge you to read it.
Thanks, as ever, for reading my blog. I’m off now to Aarhus, Denmark to go to this!