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The political economics of austerity

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  • Suzanne J. Konzelmann

Abstract

The 2007/08 financial crisis has reignited the debate about economic austerity. With the aim of understanding why a government would pursue such a policy in the current context of persistent economic recession, this article traces the social, political and economic developments that have together shaped the evolution of ideas about austerity, from the earliest theorising by the classical political economists some 300 years ago. Throughout the historical narrative, important analytical themes revolve around the arguments used to justify austerity—notably appeals to ethics and morality (reinforced by misleading analogies drawn between government budgets and the accounts of firms and households). These include concerns about inflation and the observed relationship between inflation and unemployment; ‘Ricardian equivalence’ and ‘non-Keynesian’ effects of austerity; and the correlation between public debt levels and economic growth. The class analytics of austerity—who bears the burden of austerity and who benefits—and the process by which alternative ideas penetrate the mainstream and reconstitute the conventional wisdom are also important analytical themes.

Suggested Citation

  • Suzanne J. Konzelmann, 2014. "The political economics of austerity," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(4), pages 701-741.
    • Handle: RePEc:oup:cambje:v:38:y:2014:i:4:p:701-741.
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    File URL: http://hdl.handle.net/10.1093/cje/bet076
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    Cited by:

    1. Lorenzo Esposito & Giuseppe Mastromatteo, 2019. "Defaultnomics: Making Sense of the Barro-Ricardo Equivalence in a Financialized World," Economics Working Paper Archive wp_933, Levy Economics Institute.
    2. Andrew Robson & David Hart, 2019. "The post-Brexit donor: segmenting the UK charitable marketplace using political attitudes and national identity," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 16(2), pages 313-334, December.
    3. Ana Luíza Matos Oliveira & Magali N. Alloatti, 2022. "Gendering the crisis: austerity and the Covid-19 pandemic in Brazil," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(1), pages 203-224, April.
    4. Hulya Dagdeviren & Jiayi Balasuriya & Christopher Nicholas, 2022. "Spatial dynamics of post-crisis deleveraging [Financial geography II: financial geographies of housing and real estate]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1225-1246.
    5. Sheila C Dow, 2015. "The role of belief in the case for austerity policies," The Economic and Labour Relations Review, , vol. 26(1), pages 29-42, March.
    6. Klaus Gründler & Niklas Potrafke, 2019. "Ideologically-charged terminology: austerity, fiscal consolidation, and sustainable governance," CESifo Working Paper Series 7613, CESifo.
    7. Petra Došenoviæ Bonèa & Maks Tajnikar, 2018. "Austerity policies, economic growth and fiscal balance: lessons from Slovenia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(1), pages 287-308.
    8. Shaukat Ansari, 2022. "Cash Transfers, International Finance and Neoliberal Debt Relations: The Case of Post‐apartheid South Africa," Development and Change, International Institute of Social Studies, vol. 53(3), pages 551-575, May.
    9. Perugini, Cristiano & Žarković Rakić, Jelena & Vladisavljević, Marko, 2016. "Austerity and gender wage inequality in EU countries," MPRA Paper 76306, University Library of Munich, Germany.
    10. Juergen Amann & Paul Middleditch, 2017. "Growth in a time of austerity: evidence from the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(4), pages 349-375, September.
    11. Giovanni Covi, 2020. "Euro area growth differentials: diverging and reinforcing factors in a Kaleckian SVAR approach," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(1), pages 147-180, February.
    12. Kamanda Espoir, Delphin, 2024. "Investigating the dynamic impacts of public debt on economic growth in the Democratic Republic of Congo: a case of quantile on quantile regression," MPRA Paper 122415, University Library of Munich, Germany.
    13. Bill Lucarelli, 2014. "The Euro: A currency in search of a state," The Economic and Labour Relations Review, , vol. 25(3), pages 484-496, September.
    14. Philipp Heimberger, 2023. "Do higher public debt levels reduce economic growth?," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1061-1089, September.
    15. David Harvie & Robert Ogman, 2019. "The broken promises of the social investment market," Environment and Planning A, , vol. 51(4), pages 980-1004, June.
    16. K. B. Usha, 2014. "Social Consequences of Neoliberal Economic Crisis and Austerity Policy in the Baltic States," International Studies, , vol. 51(1-4), pages 72-100, January.
    17. Philipp Heimberger, 2021. "Do Higher Public Debt Levels Reduce Economic Growth?," wiiw Working Papers 211, The Vienna Institute for International Economic Studies, wiiw.
    18. Tania Arrieta, 2022. "Austerity in the United Kingdom and its legacy: Lessons from the COVID-19 pandemic," The Economic and Labour Relations Review, , vol. 33(2), pages 238-255, June.
    19. Yoann Queyroi & David Carassus, 2021. "Analysis of the evolution of local management tools from a paradigm of control to that of steering: application to real estate management [Analyse de l'évolution des outils de la gestion locale d'u," Post-Print hal-03523814, HAL.
    20. Pompeo Della Posta & Enrico Marelli & Marcello Signorelli, 2022. "COVID-19, Economic Policies and Public Debt Sustainability in Italy," Sustainability, MDPI, vol. 14(8), pages 1-20, April.
    21. Pompeo Della Posta & Enrico Marelli & Marcello Signorelli, 2020. "A market‐financed and growth‐enhancing investment plan for the euro area," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 604-632, July.
    22. Marcel Guenoun & François Meyssonnier & Emil Turc, 2015. "Les démarches de réduction des coûts dans les collectivités territoriales françaises : enjeux et état des lieux," Working Papers hal-01228461, HAL.
    23. Friebel, Rocco & Yoo, Katelyn Jison & Maynou, Laia, 2022. "Opioid abuse and austerity: Evidence on health service use and mortality in England," Social Science & Medicine, Elsevier, vol. 298(C).

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