Debt, Crisis and Austerity - Reflections on Week 5

What is Austerity? - after the 2013 election debate, this was the most searched term on google

For the sake of simplicity 'Austerity' refers to the period after  the 2008 global financial crisis until the present day.

Systemic accounts of Austerity frame its emergence as the product of deep-seated global structural inequalities between debtor and credit nations, the relative decline of the US dollar as a reserve currency, and financialisation of the economy (Varoufakis, 2011 ; Coggan, 2012 ). From this, Austerity is the present-day manifestation of a much longer trajectory of transformations in statecraft: where debt eclipses taxes as the source of funding for maturing welfare states, which when combined with financial market bailouts puts unsustainable pressure on democratic economic governance (Streeck, 2014 ).

Systemic accounts can observe the existence of inequality in terms of income and wealth distribution (Piketty, 2014; Krugman, 2015 ) but do not consider how the intensifying inequality is meted out through the already well-established unequal gender processes that make and reproduce class, gender and race. Inequality is gendered, which is precisely why Austerity is powerful.

Everyday political economy accounts of the power of Austerity derives from how ideas and norms are used to create economic stories, in other words the focus is on ‘who acts in everyday politics, and how everyday narratives are formed and maintained’ (Seabrooke and Thomsen, 2016 , p. 251). From this perspective Austerity has power because the narrative can mobilise common-sense metaphors to communicate political ideas that inform acts of ‘meaning-making’ in everyday life. For example, Liam Stanley (2014) explains how focus group participants narrate Austerity in terms of a deep sense of moral responsibility for personal or household-level financial profligacy during the boom times – periods of excess require periods of retrenchment.

Forging common-sense understandings of economic change can both legitimate but also challenge the normative framing of policy making narratives (Stanley and Jackson, 2016). Still, it is one thing to explain how the Austerity narrative has agency to effect change, but it is another thing altogether to engage with established understandings of how unequal everyday life is, in practice.

From these two accounts we need to consider more closely the power of economic storytelling, not just in terms of what is told but also what is strategically not told about Austerity.

The Austerity story articulates coherence out of the chaotic realities of the post-2008 political response to the financial market crisis and subsequent economic malaise. Political choices become acts of economic storytelling by using simple metaphors to offer common-sense understandings of policy proscriptions.

The Case of the United Kingdom

Table 1 gives a basic overview of the historical buildup of stocks of government and household debt

We're in this mess because of too much debt—too much government debt; too much corporate debt; too much personal debt. This is Labour's Debt Crisis, and it becomes clearer all the time that the scale of Britain's debts puts us in a much weaker position than other countries. 

David Cameron, 2009 Conservative Party Conference

In this case Austerity relies heavily on common-sense gendered metaphors of the public and private household and the moral imperative of sound budget management. This ensures the normative story about the need for Austerity triumphs over the political economic reality.