A common understanding in the UK is that the austerity project started as a response to the 2008 bank bailouts. American Economist Clara Mattie (2022) traced the birth of austerity to the 1920s in the UK and then to Italy. Following the horror of the war, the British and Italian governments initially promised to build more new homes, introduce universal education, and support worker involvement and ownership of production. A few years later, austerity policies were introduced to reign in workers' power and enable capital to regain control of the economy.

Austerity takes three forms. Fiscal retraction reduces government spending on welfare, especially unemployment benefits and pensions, and targets cutbacks in health, education, and social care. Industrial retraction reduces spending on infrastructure projects. Monetary austerity maintains high interest rates. Together, these shrink the expenditures on and consumption of the poorest section of society.

Those three forms of austerity: fiscal, industrial, and monetary reinforce each other to reduce workers' consumption and power while re-establishing the wealth and power of the wealthiest in society. This is the austerity playbook, which is more than a century old.

Hosted on Acast. See acast.com/privacy for more information.