Kevin Farnsworth and Zoë Irving (eds), Social Policy in Times of Austerity: Global economic crisis and the new politics of welfare, Policy Press, 2015, ix + 185 pp, 1 44731 911 5, hbk, £24.99, 1 44731 912 2, pbk, £70
As the editors put it, following the 2008 financial crisis, the notion of austerity ‘is shaping the welfare states in the most powerful economies and redrawing the terms of development in the less powerful ones’ (p. 1), mainly by enabling ideas associated with neoliberalism to dominate policy discourse: so they are tackling an important agenda when they bring together a range of contributions on different aspects of the idea and practice of austerity.
The editors’ own first chapter studies a variety of different aspects of austerity: short and long term expenditure cuts, the ways in which welfare states are being reshaped, and, in their view, a development unique to this particular era of austerity: the significant difficulty that any future government will experience in trying to reverse current and planned expenditure cuts. The chapter concludes with the irony that neoliberalism has required significant state action to ensure its own survival; and with the anxiety that the way in which the protection of capital has been prioritised over the protection of labour will leave scars in the social fabric that will be difficult to heal.
Michael Hill’s historical chapter compares periods of austerity during the Great Depression of the 1920s and 30s; during and after the Second World War; and during the 1970s and 80s following the oil price rise of the early 1970s: the era that gave birth to neoliberalism. Hill identifies a significant difference between the period following the Second World War and periods of austerity since then: that during the 1940s and 1950s, governments in the UK understood the need to protect, and indeed to enhance, the life chances of those most likely to be affected. This approach has not been a priority during subsequent eras of austerity.
In chapter 3, Stephen McBride finds that in the current period of austerity social costs have become economic costs and have contributed to the pressure for fiscal tightening, and yet no alternative strategy has achieved sufficient political traction to ensure its implementation anywhere. McBride draws attention to the fact that the very possibility of governments stimulating their economies is increasingly under threat in the European Union, and to the fact that rising private debt is just as much of a problem, and should be just as much a matter of public policy, as rising government debt.
Bob Jessop takes a ‘cultural political economy’ approach that studies the ways in which the word and idea of ‘austerity’ have come to dominate debate, and he locates this domination within a highly complex international context in which national governments now have little control over their own currencies or economic policies. Jessop quite rightly suggests that an embedded neoliberalism, and an increasingly embedded ‘austerity’ agenda, are giving birth to an ‘austerity state’ as a relatively unquestioned reality. Jessop calls this a ‘neoliberal variant of authoritarian statism’ (p. 106). It is that, but perhaps its ascendancy is due to the fact that in the midst of such complexity a conceptual framework that is coherent within its own terms looks like a welcome harbour in a stormy sea rather than to anything else. As Jessop points out, the TINA (‘there is no alternative’) narrative soon led to neoliberal austerity vanquishing any other option in Greece.
In chapter five, Whitfield and Spoehr offer an alternative policy agenda based on a Keynesian investment strategy. A lot of the other ideas that they discuss, such as the prevention of tax evasion, the regulation of financial institutions, and the bringing back into the public sector of outsourced public services that private companies are struggling to manage, are just plain common sense, and in many countries they are already happening. Several European countries will implement a small Financial Transaction Tax in 2016 ( – the UK has opposed the tax). The tax will not only provide some useful additional government revenue, but it will also to some extent slow the kind of trading that helped to bring about the financial crisis in the first place. It is quite simply a good idea. The authors also identify means-tested in-work benefits as unhelpful subsidies to capital. What they do not say is that a significant element of the subsidy effect is generated by the dynamic nature of the benefits – that is, the means-tested benefits, and therefore the subsidy to capital, increase as wage rates fall. A non-means-tested benefit for every citizen would continue to help to protect families on low incomes, but it would be a static subsidy rather than a dynamic one: that is, it would not change if wage rates fell. Falls in wage rates would no longer increase the subsidy to capital.
The final chapter, by Fox Piven and Minnite, shows how globalisation, financialisation, neoliberalism, and the financial crisis, have increased poverty rates and inequality, and have made it difficult for the public’s voice to be heard. In Latin America, on the other hand, public pressure has resulted in increasing coverage of benefits for poor families. The authors identify the dispersed nature of power in Western democracies ( – a dispersion that involves the courts as well as executives and legislatures at a variety of different levels) as a major reason for protest movements in the West failing to deliver the kinds of success achieved in Latin America.
The editors end their introduction with the conclusion that ‘progressive social policies offer a better way to cure the present economic condition than is offered by austerity’ (p. 8), and they end their concluding chapter with the suggestion that ‘alongside its failure to deliver on its economic promise, politics can determine whether austerity may yet reach its limits’ (p. 176). Whitfield’s and Spoehr’s chapter in particular offers legitimacy to these conclusions.