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| São Paulo, Brazil - The view from Paraisópolis on the left is almost as enhanced by Morumbi on the right as the view from Morumbi is enhanced by Paraisópolis |
Between 1923 and 1924, the Fascist state removed 27,000 railway workers (15 percent of the total employees) and made arrangements to dismiss a further 13,000 and to curtail sick leave. -- From The Capital Order by Clara Mattei, 2022 (my italics)
As I'm reading Clara Mattei's The Capital Order, the history of how neoclassical economists invented the governmental strategy of austerity following the first World War 100 years ago as a way of staving off the threat of the global spread of socialism and thereby securing the, by no means assured, future of capitalism indefinitely, I am experiencing a keen sense of familiarity (as the author intended).
Mattei reconstructs the sequence of events. Capitalism gets much of Europe embroiled in world war. By conventional wisdom which sounds terribly familiar, the virtues of the free market were expected to devise profitable ways out of the conflict. In a now familiar pattern, it was demonstrated that in this time of scarcity, the profit motive of industrialists could not be marshaled to behave to the benefit of anyone but industrialists resulting in the manufacture of shoddy equipment made at low wages and sold for high prices, threatening social welfare and the public good across the capitalist world, resulting not only in inadequate materiel, but inflation, poverty for the masses and good times only for the industrialists. In response to the crisis, for the first time since the dominance of capitalism in the 18th century, states across Europe commandeered the reins of industry, raising wages, providing safety nets for workers both at work and at home including among many other novelties, governmental supply of daycare to women entering the workforce in large numbers. Following the war, the now demonstrated ability of the state to intervene in the economy on a massive scale in ways that produced successes and booms that capitalism had failed on its own to produce (even against a backdrop of the spread of worker's revolutions to the east and the growing power and solidarity of labor everywhere else) inspired a brief, minor burgeoning of the welfare state. Mattei catalogs a worker's dream of programs and innovations that appeared within a brief window following the armistice: universal suffrage, rising wages, unemployment benefits, adult education, worker's councils, guaranteed health care, wealth redistribution and anti-poverty programs. demands for worker control of production. This was a period largely lost to History since those in charge of it forgot to record it.
All of this was about to change forever in short order, thanks to ideas fomented in two little remembered international economic conferences, one in Brussels in 1920, the other in Genoa in 1922 out of which emerged strategies for stemming the spread of well-being and happiness among the lower classes at the expense of capital accumulation at the top. Sensing the slip of civilization toward the pole of commonality, the technocrats at the Brussels and Genoa conferences devised rationales and strategies for governments to seize back the space opening up to public ownership of the means of production and a restructuring of the order of social relations as a means of restoring the wisdom of the market. Happiness it seemed was possible only by virtue of politics. To reign in profligate spending on human welfare, the "science" of economics commanded governments to impose measures of misery in three depoliticized realms: Fiscal (low taxes for business, high taxes for workers; government budget and department cuts; entitlement and social welfare cuts), Industrial (eg privatization, wage reduction, benefit reduction, hour increases), and Monetary (the painful return to the gold standard, the imposition of high interest rates by independent central banks, inflation management, budget balancing v deficit spending to keep the paper currency in circulation to a minimum leaving more for capitalists to invest.)
Characterizing the conclusions that came out of the Brussels and Genoa conferences, Mattei quotes Hannah Arendt:
The search for the best form of government reveals itself to be the search for the best government for philosophers”—the people doing the search—“which turns out to be the governments in which philosophers have become the rulers of the city."
From the perspective of workers and the poor, the resurgence of state-prescribed austerity derailed progress as the freedom of solidarity was supplanted with the need of individuals to compete for jobs offered strictly on the boss’ terms. For the capitalist class, it proved to be the magic formula that revived the zombie of capitalism. While austerity gained strong footholds across Europe and North America, Mattei’s study focuses on the UK and Italy. In the UK with a strong economy and a milder degree of inequality between a numerous upper class and a less politicized working class, the capitalist reclaiming of the economic agenda was achieved mostly through upper class solidarity. In Italy, only recently united into a nationality, with a much smaller elite that nevertheless was able to impose greater wealth inequality on a highly politicized working class, more extreme measures were required. This came in the form of the populist, originally socialist Benito Mussolini whose rise to power in 1922 was the blank slate on which austerity it turned out could be written. The neoclassical economists who drew inspiration from the Brussels and Genoa conferences provided Mussolini with an animating spirit for his authoritarian fascism. To British neoclassical economists (and their media outlet, The Economist magazine) Mussolini's fascism was applauded as brilliant for the unruly, child-like Italians. The physical brutality of outright fascism would never fly in genteel Britain it could be agreed. Conveniently, it didn't need to be.
In both countries, economists won the day. Taxes were eased for the wealthy, while the limit for tax exemption was lowered to increase the number of working class taxpayers by 300% in one year in the UK. Italy privatized rail, telephone, health insurance and the construction and management of motorways. It was therefore not profligate social spending but unfettered capitalism that was behind capitalism's next big crisis with the collapse of the stock market causing ripples across the world in ways that led to the rise of Mussolini's ally Hitler in Germany and the New Deal in the United States. Roosevelt's aggressive response to the crisis was modeled on the prescriptions of John Maynard Keynes, an early austerity adopter who circumstances inspired to come around to advocate governmental intervention in the economy in the name of preserving capitalism for another day.
For 30 years, in addition to less exploitation of the workforce, proportional tax rates for corporations and the wealthy and a more robust economy, Keynesian stimulation of the economy through social spending fueled a renaissance of public works and expansion of welfare for the sick, the old and the poor, resulting in the introduction of massively popular social programs which by the 1960's threatened to eclipse the original purpose of the New Deal which was cryogenic preservation of free market capitalism. By the late 70's however, austerity was back-- first floated by a new type of Democrat in Jimmy Carter before it was enshrined by the neoliberal revolution of Reagan, Thatcher and free market economists out of such places as the University of Chicago in the US and Bocconi University in Italy.
According to Mattei:
Economists modeled the market society as one in which all people, if sufficiently rational and virtuous, could potentially thrive. This seemingly emancipatory insight was actually among the most classist: social hierarchies were reflections of individual merit, meaning that those who weren’t at the top didn’t deserve to be.
Filtering everything through the lens of austerity became the signature of the "serious" politician or journalist. It's why discussions about universal healthcare are programmed to terminate on the rhetorical question "How will we pay for it?" whatever answer is supplied. It's also why any measure to provide savings to taxpayers is treated with more urgency than the crisis of the climate that promises to splinter the relevance of budget battles on the rocky shore of planetary catastrophe. But concern for the future of life of earth is frivolous and profligate when it comes from the fancies of the young. If there is a solution, the invisible hand of the free market will surely provide it.
When you hear Chuck Todd asking some faceless Republican Senator what he intends to do about the social security deficit or Joe Biden darkly hinting about what must be done about entitlements, when the ruling class acts in concert to put a stop to overworked union member's ability to strike for sick leave rather than forcing members of their own class to pony up, don't think of it as grownups asking hard questions and doing hard work for the good of the economy. Think of it as the Sociopath Class maintaining the relations of the rest of us to itself. The class that brought us Capitalism, Hierarchy, Organized Religion, Inequity, Inequality, Colonialism, Slavery, Race, Racism, Mass Incarceration, Thermonuclear War, Anthropogenic Climate Change also gave us Austerity for us, Squandering for themselves.
Many of them, particularly those who were born into the class, think of wealth as an identity and not as an injustice they perpetrate and perpetuate on society and the planet usually by availing themselves of the lucky accident of the circumstances of their birth. Those who aspire to wealth as a life goal have objectively poor taste and character. As an idly wealthy character in the first season of HBO's series The White Lotus says in response to the woke radicalism of his collegiate daughter, "Nobody cedes their privilege." It's an echo of Martin Luther King's observation that "Privileged groups seldom give up their privileges voluntarily." It's both a valid rationale for the sociopath class and a directive for the rest of us.
