Varieties of Austerity

262 Pages·2021·1.645 MB·English

by  Heather Whiteside, Stephen McBride, Bryan Evans

VARIETIES OF
AUSTERITY
Heather Whiteside, Stephen McBride
and Bryan M. Evans
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First published in Great Britain in 2021 by
Bristol University Press
University of Bristol
1-9 Old Park Hill
Bristol
BS2 8BB
UK
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[email protected]
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© Bristol University Press 2021
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN 978-1-5292-1224-2 hardcover
ISBN 978-1-5292-1226-6 ePub
ISBN 978-1-5292-1225-9 ePdf
The right of Heather Whiteside, Stephen McBride and Bryan M. Evans to be identifed as
authors of this work has been asserted by them in accordance with the Copyright, Designs
and Patents Act 1988.
All rights reserved: no part of this publication may be reproduced, stored in a retrieval system,
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Contents
List of Figures and Tables iv
About the Authors v
Acknowledgements vi
1 Introduction: Varieties of Austerity 1
2 Spending in an Austere Era 29
3 Selling Restraint 55
4 Transforming the Public Sector 81
5 Class Struggle from Above 103
6 Insecurity and Poverty 135
7 Limits and Possibilities of Resistance 157
8 Conclusion: Beyond Austerity 177
Notes 199
References 201
Index 245
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iii
List of Figures and Tables
Figures
1 General government debt (% of GDP) 17
2 Government defcit (% of GDP) 18
3 Short-term interest rates 19
4 Long-term interest rates 19
5 Public sector employment (% of total labour force) 20
6 Employment rate (%) 21
7 Unemployment rate (%) 21
8 Long-term unemployment rate (%) 22
9 Combined part-time and temporary employment rate (%) 22
10 Unit labour costs (2007 to 2018) 23
Tables
1 Varieties of austerity – dynamics or degrees 25
2 Varieties of austerity – dynamics or degrees of debt and fnance 53
3 Varieties of austerity – dynamics or degrees of public money 78
4 Varieties of austerity – dynamics or degrees of public sector 101
restructuring
5 Varieties of austerity – dynamics or degrees of labour 132
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r sthg 7 Varieties of austerity – dynamics or degrees of resistance 176
ir llA 8 Varieties of austerity – summary of dynamics and degrees 180
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iv
About the Authors
Heather Whiteside is Associate Professor of Political Science at the
University of Waterloo and Fellow at the Balsillie School of International
Afairs, Canada. Her research centres on the political economy of
privatization, fnancialization and fscal austerity. Her books include Purchase
for Proft: Public-Private Partnerships and Canada’s Public Health Care System
(2015), Canadian Political Economy (2020) and Capitalist Political Economy:
Thinkers and Theories (2020). She has published in journals such as Cambridge
Journal of Regions, Economy and Society, Economic Geography, Environment and
Planning A, Review of International Political Economy and Urban Studies.
Stephen McBride is Professor of Political Science and Canada Research
Chair in Public Policy and Globalization at McMaster University. Recent
publications include: Working? Employment Policy in Canada (2017);
Austerity: 12 Myths Exposed (2019) (co-edited with Dieter Plehwe, Moritz
Neujefski and Bryan Evans); Austerity: The Lived Experience (2017) and
The Austerity State (2017) (both co-edited with Bryan Evans), as well as
journal articles in Global Policy, Transfer: European Review of Labour and
Research and Studies in Political Economy.
Bryan Evans is Professor, Department of Politics and Public
Administration, Ryerson University, Toronto. Prior to his appointment
at Ryerson he worked as a policy researcher, adviser and manager at the
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se centres on co-governance, policy work and processes, policy analysis in
r sth non-government organizations, state restructuring and recomposition, and
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.sse Policy Innovation and Public Engagement. Recent publications include:
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tsirB Carlo Fanelli); Divided Province: Ontario Politics in the Age of Neoliberalism
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v
Acknowledgements
The authors gratefully acknowledge funding from the Social Sciences and
Humanities Research Council of Canada (SSHRC) through an Insight
Grant (number 435-2016-0638) on varieties of austerity. We would like
to thank the research assistants who worked on various aspects of the
project and made valuable contributions over the years: Nour Afara, Juan
Arasanz, Sylvie Babadjide, Skylar Brooks, Siu Mee Cheng, Matt Corbeil,
Lily Eskin, Mohammad Ferdosi, Rasmus Hovedskov Hansen, John Hayes,
Sorin Mitrea, Colette Nyirakamana, Justin Rain, Sune Sandbeck, Joy
Schnittker, and James Watson. Our research was also enriched by insights
from not-for-attribution interviews in all four of our case countries. We
would like to thank the government and legislative ofcials, representatives
of trade unions and business associations, academic experts and think-tank
personnel who generously gave their time and expertise.
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vi
1
Introduction: Varieties
of Austerity
Industry-wide bargaining to be suspended, €50 billion to be raised
through privatization, social security to be cut by more than €4 billion
over four years, nominal public sector wages to be slashed by 20 per
cent, and on it went. Such was the list, so named were the targets. It was
2011, the Eurozone was in chaos, the global economy was in tatters, and
the stimulus era proved feeting. Austerity was widely en vogue and it was
being visited in dramatic fashion on Greece: the Troika bailout demanded
it, capitalist interests needed it, and the government and its people were
put on notice (BBC, 2011). Greece is an exceptional case, but it is far
from an isolated one.
The global fnancial crisis of 2008, the ensuing and prolonged
economic crisis, and policies of austerity implemented from 2010 have
imposed major costs on most Western societies. These include direct
economic costs such as lower GDP, slower economic growth, higher
unemployment and lost output, various forms of underemployment,
much of it in precarious and poorly paid jobs, and increased household
debt obligations that drag down disposable income. Other, perhaps less
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se such as inequality (a legacy of the entire neoliberal period: see Piketty,
r sth 2014; Atkinson, 2015) increased in the post-crisis years (Schneider et al,
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.sse austerity measures such as cuts in social and health care spending, and
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VARIETIES OF AUSTERITY
(on the gendered efects of the global fnancial crisis, see Hozic and True,
2016, part I). For youth in Ireland and Spain, for example, the damage
to their employment and economic prospects was so severe that talk of a
‘lost generation’ became commonplace.
With some exceptions, the initial panic-induced response to the 2008
crisis was not one of austerity. Rather, as the prospect of a complete
fnancial and economic meltdown loomed, most states and international
organizations resorted to economic stimulus on a scale not previously
witnessed in the neoliberal years. Stimulus was short-lived. Once signs
of economic stabilization appeared, most states, such as those in the
G20, declared austerity (in the sense of defcit and debt reduction) to
be a policy priority. Some countries experienced successive rounds
of austerity. Picking up on the Greek example once more, numerous
austerity packages, each one consisting of some combination of public
sector freezes and cuts to budgets, services, programmes and employment
were implemented after 2010.
The COVID-19 crisis of 2020, a crisis of public health caused by the
global spread of a life-threatening virus, revealed the consequences of
years of austerity. Austerity did not cause this crisis but it was responsible
for a lack of public capacity to deal with it efectively. National and
international responses to the pandemic and the economic shocks caused
by job losses, lock-downs, and the collapse of some economic sectors like
tourism and hospitality show signifcant departures from orthodox public
fnance in the age of austerity. Countries in North America and Europe
have allowed unprecedented monetary stimulus through central bank
interventions, and fscal rules limiting defcits and public debt have been
ignored, at least temporarily. Fiscal austerity has therefore been abandoned
for now, but a lively debate is beginning about whether fscal orthodoxy
and its correlates – a diminished public sector and fexibilization of labour
markets – will be reintroduced once the crisis is over, or whether this
exogenous crisis provides an opportunity to fundamentally change the
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se In our concluding chapter we ofer some comments on how austerity
r sth and the COVID-19 health crisis intersect, and survey some debates on
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.sse Austerity was applied to varying degrees and in unique ways within
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INTRODUCTION: VARIETIES OF AUSTERITY
Whiteside, 2018), went hand-in-hand with punitive austerity measures
aimed at stabilizing the island’s afairs: pension spending reduced by 10 per
cent, Christmas bonuses cut, health care spending slashed by at least
USD$3001 million, employee furloughs, fewer government agencies,
employee redundancies, and temporary workers severed. And, indeed,
across the US, the post-2008 period meant deep austerity and associated
hardships for many jurisdictions (some examples can be seen in Peck and
Whiteside, 2016; Hinkley, 2017).
Worldwide, opposition to austerity ranged from marches, demonstrations
and protests, to general strikes and political party organizing around anti-
austerity platforms (see Chapter 7). Sometimes nationally determined, at
other times imposed by supranational organizations or otherwise more
empowered levels of government, austerity raised alarm among social
movements around the world for its deleterious repercussions and the
troublesome relationship between cause (crisis) and efect (burden).
‘Against a backdrop of violent protests against the latest tough austerity
measures,’ writes Konzelmann (2019: 109), ‘the second Troika bailout,
ratifed in February 2012 […] worth €130 billion ([USD]$173 billion),
included €48 billion for recapitalizing the four largest Greek banks.’
There was nothing novel about the turn to austerity after 2008.
Neoliberalism had always involved fscal constraints for the state, at least
as far as its capacity to engage in any socially progressive measures was
concerned (Konzelmann, 2019; Shefner and Blad, 2020). Books quickly
emerged demonstrating the lengthy history of austerity as a familiar idea
towards which elites quickly gravitate in times of trouble. Blyth (2013:
98–9) argued that elite concerns about the state were part of liberalism
from its inception (a point later picked up by Konzelmann, 2019, as
well). The state was as necessary for the development and protection
of the capitalist system in its early days as it remains today. As we shall
see in Chapter 2, that can involve lavishing resources on capital even in
the midst of austerity for others, yet the state also represents a potential
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r sth the state by curtailing state actions through spending constraints in the
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.sse debt to fnance its activities. Moreover, according to Blyth (2013: 115)
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