Against Austerity: How we Can Fix the Crisis they Made

By Richard Seymour

Five years into capitalism's deepest crisis, which has led to cuts and economic pain across the world, Against Austerity addresses a puzzling aspect of the current conjuncture: why are the rich still getting away with it? Why is protest so ephemeral? Why does the left appear to be marginal to political life?

In an analysis which challenges our understanding of capitalism, class and ideology, Richard Seymour shows how 'austerity' is just one part of a wider elite plan to radically re-engineer society and everyday life in the interests of profit, consumerism and speculative finance.

But Against Austerity is not a gospel of despair. Seymour argues that once we turn to face the headwinds of this new reality, dispensing with reassuring dogmas, we can forge new collective resistance and alternatives to the current system. Following Brecht, Against Austerity argues that the good old things are over, it's time to confront the bad new ones.

• Language: English
• Publisher: Pluto Press
• Release date: Mar 19, 2014
• ISBN: 9781783710201

Richard Seymour

Richard Seymour is an emerging voice on the radical left, providing expert analysis on British politics across international media. He co-founded the magazine Salvage, a quarterly of revolutionary arts and letters, and has authored numerous books. He is the author Against Austerity: How we Can Fix the Crisis they Made (Pluto, 2014), Corbyn: The Strange Rebirth of Radical Politics (Verso, 2016), Unhitched: The Trial of Christopher Hitchens (Verso, 2013) and The Liberal Defence of Murder (Verso, 2012).

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Against Austerity

Against Austerity

How We Can Fix the Crisis They Made

Richard Seymour

art

First published 2014 by Pluto Press

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Copyright © Richard Seymour 2014

The right of Richard Seymour to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.

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Contents

Preface

Acknowledgements

Index

Preface

If the case for austerity was an email, it would be the rough equivalent of one of those badly spelled inducements to join an organ trafficking ring or give your bank details to a penis enlargement specialist. Most people would have figuratively clicked ‘delete’ and moved on to some other specimen of the exhausted culture of late capitalism – a veritable lolocaust. But the rulers of the world aren’t so easy to ignore. Their resources are infinitely more sophisticated than spammers, their appeals are insidiously effective, as are the false cues and misdirection.

I hope this book can be useful in disentangling some of this. Each chapter does indeed attempt to unfold the real processes behind the convenient label, ‘austerity’. However, it shouldn’t be seen as one of the many volumes debunking austerity. The crucial problem which this book addresses is that the current opponents of austerity – primarily Left and labour movements – are in the main poorly placed to stop it, or even significantly impede it. How can it be, for example, that we have come this far without – figuratively, of course – ornamenting the major financial centres with the entrails and severed heads of bankers? I said, figuratively. And how is it that, far from expunging this swarm of parasites, we are more dependent on them than ever before? Doesn’t such dependency make a mockery of the term ‘parasite’?

I think our analysis of what austerity is, how it works, and what strategies can best stop it, has been badly wrong. But it is not simply a question of flawed perspectives – this is merely symptomatic. There are a range of political styles on the Left, a set of discursive habits, and models of organisation, which were inherited from past failure. These need to be broken with. This is not a cause for resignation, but for reviewing and rethinking. It is a cause for breaking with consolatory ideology and convenient forgetting. Understanding the problem is an essential part of overcoming it.

I should warn the reader to expect a certain sneering negativity to very occasionally peep through in this book. That is because, well, I’m frankly a bit fucked off about all this. Like practically everyone else on the Left, I expected to be able to meet the worst crisis of capitalism in generations with more aplomb than has hitherto been evident. Particularly when our opponents are, as Glen Cullen put it in The Thick of It, a bunch of ‘six-toed, born-to-rule ponyfuckers’.

But this is good news. Gramsci said that he didn’t like to throw stones in the dark. He needed something to oppose in order to stimulate his thinking about situations, historical controversies, philosophical problems, or political struggles. The advantage of writing a polemical book like this is that there is no danger of throwing stones in the dark. Highly visible targets are everywhere: and as Daphne and Celeste would put it, they ain’t got no alibi.

There is also a certain familiar use of esoteric political theory and rococo ornamentation that some readers will find off-putting. I hope so anyway. Those readers would be far better off reading something else. (Or, alternatively, stay and have your middlebrow sensibilities challenged.) This book comes with swearing and unapologetic intellectual swagger.

I imagine you’re scanning this page while still in the bookshop, calculating whether you’d be willing to be seen reading this book on the train. If the above appeals to you, you’re probably a bit ‘wrong’ in some way, but I welcome you. If it doesn’t, then make your way to the holy apotheosis of bookshops that is the ‘3 for 2’ section. And buy yet more inconsequential shit with which to line your shelf of good intentions.

Acknowledgements

This book was written with indecent haste and mainly involved solidifying thoughts and ideas that had been developing for some time. But even in that short time, a number of friends provided references, feedback and (goddamn them) criticism. For example, I road-tested some of these ideas in front of a room full of American friends and comrades, who had the good sense to disagree with almost all of them.

China Miéville and Rosie Warren provided invaluable, sarcy comments on the drafts – huge thanks to them. Thanks also to Sebastian Budgen for an almost daily supply of references, many of which ended up in this book. And above all, thanks to the editor at Pluto Press, David Shulman, who offered kindly and intelligent guidance, and made me take out the jokes that didn’t work.

Introduction:

The Bad News Gospel

The crisis creates situations which are dangerous in the short run, since the various strata of the population are not all capable of orienting themselves equally swiftly, or of reorganizing with the same rhythm. The traditional ruling class, which has numerous trained cadres, changes men and programmes and, with greater speed than is achieved by subordinate classes, reabsorbs the control that was slipping from its grasp. Perhaps it may make sacrifices, and expose itself to an uncertain future by demagogic promises; but it retains power, reinforces it for the time being, and uses it to crush its adversary and disperse his leading cadres, who cannot be very numerous or highly trained. – Antonio Gramsci.¹

Rather than witnessing a shift in the balance of class forces toward workers and popular movements, the course of the crisis has favored the capitalist class. – Greg Albo, Sam Gindin and Leo Panitch²

Five Years of Glorious Failure

The fifth anniversary of the collapse of Lehman Brothers will have passed before this book is published. If, between now and then, the Left has got its shit together, this book will make a nice gift for someone you don’t like. In the more probable scenario that it hasn’t, I invite the reader to linger on this salient fact. A week is an eternity in politics. Five years of crisis with nothing to show for it is jaw dropping, particularly when set against what might have been expected. This book is thus about a historical missed opportunity, a failure. It accentuates the negative. It is ‘pessimistic’. Deal with it.

It is not just the practical irrelevance of most of the Left’s actions to date that have to be audited, but also the outstanding success (to date) of what is called ‘austerity’. This will immediately raise the heckles of those on the Left who argue that austerity is a calamitous failure. But that claim is based on a misunderstanding of what austerity is.

Admittedly, the label ‘austerity’ covers a multitude of sins. For parts of the Right, the argument is simple. You can’t spend more than you take in; sound finances means clearing debts as quickly as possible. In this version of events, the state is something like a household, and austerity nothing more than a little belt-tightening. For the Left, which knows that the state is nothing like a household, it looks like a simple bait and switch job, transferring the costs of a crisis of the banks onto the public sector, thus harming working people and protecting the rich.

But that is to reduce austerity to spending cuts, when what is going on is a lot broader and more complex. To grasp this, it is necessary to distinguish austerity from the general constraints on spending imposed under neoliberalism – as institutionalised, for example, in the EU Stability and Growth Pact, which limits borrowing and deficits. The latter could be called ‘austerity lite’ or ‘permanent austerity’, but it really doesn’t have the same political function as the kinds of austerity programmes I will discuss in this book. For example, Obama’s spending cuts are characteristic of his fiscal conservatism and acceptance of basic neoliberal orthodoxy, but they are far removed from the kinds of austerity programmes implemented by Republican governors. And the latter go far beyond spending cuts.

Take the policies implemented under austerity in the United Kingdom. Whether it is cuts to the minimum wage, the introduction of private provision in the National Health Service and schools, or changes in the tax structure to benefit the wealthy, these are policies whose overall thrust is unlikely to increase revenues to the Treasury. In fact, as regards the changes to public services, the involvement of private companies such as Virgin, as well as the wasteful ‘markets’ imposed on providers, will probably drive up costs and lead to further fiscal crises. No one is suggesting that the state will stop collecting the taxes to fund core services such as pensions, healthcare and education. And even if they are under-funded, and the provision is rationed in ways that favour residents of relatively wealthy, middle-class areas, it is highly unlikely that the tendency for costs to increase will subside.

Services and benefits can be pared down, and cost-suppressing measures implemented. But there is reason to doubt that the British state will cost much less in ten years’ time, as a proportion of GDP, than it has over the preceding twenty years. In the period from 1987 to 2007, during which there was only one recession of medium severity, public spending was generally kept at or below 40 per cent of GDP, a feat last accomplished during the high growth years of the 1950s. In a period of sustained crisis, this becomes extremely difficult not only because growth is depressed and social overheads are inflated, but because the costs of investment relative to profits are higher, and capital constantly needs incentives from the state to put its money into circulation. Even once the crisis recedes and a period of relative capitalist dynamism resumes, this particular neoliberal format of capitalist dependency on the state will continue to drive up costs.

What we are witnessing, under the auspices of austerity, is not simply spending cuts. It is a shift in the entire civilisational edifice of capitalism, deepening an equivalent shift that began in the mid 1970s. These processes include:

Not all of these processes are under the control of national states, but states do anticipate, organise and promote them in crucial ways. It is in this respect that the term ‘austerity’ has some uses here: it gives a political name to these processes and identifies the dominant role of politics in their formation.

This is important, because austerity is justified primarily as an economic strategy, in response to an economic crisis. We pay off the debt, capitalists gain confidence in the likely future condition of the economy and start to invest – growth and employment ensues. However, if austerity was just an attempt to deal with an economic crisis in this sense, it would have been terminated already. It would have failed.

But a crisis of capitalism is not just an economic crisis. Inevitably, since the state is so profoundly involved in the organisation of the economy, and since it chose to exercise its clout by guaranteeing a privatised banking system against failure, it became a political crisis. But it also – as the ensuing recession accentuated a crisis of profitability for the newspapers, undermined faith in parliament and the established parties, and intersected in the UK with a long-developing scandal involving the Murdoch press, the dominant political parties and the police – became an ideological crisis.

Here it might be useful to apply Gramsci’s term ‘organic crisis’, to refer to a general impasse of society and state, not merely of the capitalist market. Certainly, it begins with acute economic dysfunction, but it is rapidly overdetermined by multiple other breakdowns. It eventually constitutes a crisis of authority, of the dominant political and cultural institutions, of the forms of consent and coercion. It results in unpredictable breakdowns at various levels and outbreaks of insubordination by heterogeneous social groups – students, women, precarious workers, trade unionists, young people and so on.

Gramsci insisted that in such a situation the ‘traditional ruling class’ is at a considerable advantage over opponents, because of its existing power. Its control over the dominant institutions, its loyal cadres of supporters in think-tanks and the media, its economic and political strength, all enable it to adapt better to the crisis and propose solutions which meet its interests. Proactively, it seeks to meet the crisis on every level on which it manifests itself by changing strategies, winning over popular layers with ‘demagogic promises’, and preempting and isolating opponents. This is a conception of crisis as a moment of urgent, bitterly contested struggle, rather than as simply something akin to a natural catastrophe or an act of the gods.

The austerity project, seen in this light, is not just a matter of good husbandry, but neither is it simply a short-sighted attempt by the rich to shirk the costs of economic failure. Rather, it is a multi-dimensional response to crisis. In the short term, as a tactical response, it preempts opponents by providing an explanation for the crisis – high levels of public and private debt, lack of competitiveness – which resonates with elements of common experience and which is connotatively linked to its proposed solutions. While oppositional forces slowly and warily begin to formulate an analysis, some objectives, some strategies and tactics, those advancing the austerity project have already begun the battle in the chambers of commerce, the business and parliamentary lobbies, the newspapers, and so on. By the time a demand is articulated – nationalise the banks!, tax the rich! – the austerians have already subtly shifted the agenda and perspective. Yes, they concede the point about irresponsible financiers, who must be ‘regulated’, but they are far more concerned about the feckless poor suckling off the welfare teat, maxing out their credit cards, and draining the productive layers of society. Remove this irresponsible burden, let the wealth creators create, and the good old days will return.

This tactical success would be of no use, however, if it was not linked to a long-term, strategic response to crisis, which recognises that things must change drastically if they are to stay the same. In this sense, austerity is an attempt to shift the material foundations of society in a fashion which partially addresses the causes of crisis, but which does so on terms compatible with the interests of the ‘traditional ruling class’. And it is at the level of politics, not economics, that this response is organised.

If much of the Left has been slow to respond to the crisis, it has been because it either misunderstood the politics involved, assuming that bailouts equalled the end of neoliberalism, or it expected something else more akin to a ‘classic’ economic crisis with mass unemployment and wage cuts resulting in strikes and flying pickets. Since both of these positions have proven to be inadequate, it is necessary to re-examine some founding assumptions.

Austerity, Bailouts and Neoliberalism

One of the most widespread notions after the credit crunch began was the belief that neoliberalism had collapsed. On both the Left and the Right, nothing was more certain. The US government, under the lame duck Bush administration, was engaged in activism on a scale unseen since FDR. There were nationalisations and untold billions of public money invested in bailouts for financial institutions. This looked a great deal like the right-wing vision of ‘socialism’.

The BBC journalist Paul Mason, in one of the first detailed books on the crisis and the global institutional response, exhorted his readers to realise that neoliberalism ‘is over: as an ideology, as an economic model. Get used to it and move on.’⁴ The choice, he insisted, was between the immediate nationalisation of the banks and a massive public works programme, implying a greatly expanded productivist state, or a prolonged global slump. The rich texture of Mason’s analysis and reportage, displaying his unusual critical intelligence, makes it doubly compelling that he was so wrong. The principal reason why he and others were wrong is because they reduced neoliberalism to ‘free market fundamentalism’. The national state’s emergence as a major factor in the global economy seemed to spell the end of such ‘free market’ ideologies, and allowed people to imagine that the end of the neoliberal era was afoot.

Others such as David Harvey were more realistic in allowing that the type of neoliberalism that dominated government was a ‘pragmatic neoliberalism’, distinct from the popular ‘free market’ justifications. In this version, bailing out the banks was the permitted exception to the liberalising, free market writ. Moreover, Harvey correctly anticipated that the ruling class might actually prefer to retreat behind the fortress walls and accept a period of global slump rather than support the implementation of an agenda of public spending and demand management that could strengthen unions and significantly reduce the political power of investors.⁵ Nonetheless, this overall perspective accepts too much of the idea that what neoliberals are interested in is a minimal, ‘night watchman’ state. This is not how neoliberals see the state.

Neoliberalism is not a simple reiteration of the principles of classical liberalism – a defence of the ‘market society’. It has its origins in an authoritarian reconfiguration of liberalism, beginning in the early twentieth century, specifically designed to meet the challenge of mass democracy and the welfarist demands that came with it.⁶ The great pioneer of this shift was Friedrich Hayek, subsequently the éminence grise of what the economist Philip Mirowski dubs the ‘Neoliberal Thought Collective’, and a great influence on Mrs Thatcher.

Hayek obscured his real sympathies regarding the state with talk of the ‘spontaneous order’ of the market. But it is clear that he thought a very strong state necessary for various reasons. One such was to cope with the pathologies of democracy, which lent itself to collectivism and welfarism. The modern democratic state allowed workers to become politically active and to demand the protection of their interests and some attempt at ‘planning’ the economy in accord with a general interest in full employment, growth and so on. Through monopolistic organisations such as trade unions workers were able to flex political muscle in the pursuit of these ends. For Hayek, no general interest existed – or at least, it was impossible to calculate such a general interest. All that welfare institutions accomplished was the distortion of the universality of the ‘rule of law’ by making it serve particular interests. By entangling the sovereign state in a mesh of claims and counter-claims, demands for intervention, demands for help, mass democracy had weakened the state.

In his later writings – particularly Law, Legislation and Liberty – the attempt to contain democracy became a far more explicit aspect of Hayek’s agenda. Intriguingly, Hayek scholars tend to agree that his authoritarian liberalism owed far more to the Nazi legal scholar Carl Schmitt than he was willing to admit. His critique of the welfare state in particular was strikingly close to Schmitt’s critique of the party political state. None of this is to say that Hayek outright opposed democracy. He felt it had certain provisional advantages. It was a source of political legitimacy and stability, and if properly handled it could gradually teach a population to abhor socialism.⁷ Nonetheless, his comment on the Pinochet regime in 1981 – that he preferred a liberal dictatorship to a democracy lacking all liberalism – characteristically expressed his order of preferences.

As a rule, neoliberals maintain a strict distinction between liberalism and democracy. A