The Guardians of Capitalism: International Consensus and the Technocratic Implementation of Austerity
| DOI | http://doi.org/10.1111/jols.12012 |
| Published date | 01 March 2017 |
| Author | Clara E. Mattei |
| Date | 01 March 2017 |
JOURNAL OF LAW AND SOCIETY
VOLUME 44, NUMBER 1, MARCH 2017
ISSN: 0263-323X, pp. 10±31
The Guardians of Capitalism: International Consensus and
the Technocratic Implementation of Austerity
Clara E. Mattei*
Current debates on austerity often forget that these policies are almost
a hundred years old. This article explores how the combination of
austerity and technocracy acted as a powerful tool to secure the com-
pliance of European countries with socio-economic stabilization after
the First World War. Austerity emerged as an economic, moral, and
technocratic message as economic experts sought to educate restless
post-war civil society. The article analyses primary austerity docu-
ments from the international economic conferences of Brussels (1920)
and Genoa (1922). In addition, I use a case study of Italy (1922±1925)
to show how austerity succeeded under the first years of Fascism, when
the government authorized prominent economics professors to
implement the international financial codes devised at Brussels and
Genoa. I also consider the scientific writings of De Stefani, Ricci, and
Pantaleoni in order to examine the theoretical roots of the technocratic
nature of austerity.
INTRODUCTION
After the First World War, social and economic turmoil brought an unprece-
dented challenge to capitalism that was crushed by a strong and conservative
commitment to uphold the socio-economic status quo.
1
I demonstrate that the
combination of economic technocracy and austerity acted as a powerful tool
for securing the plausibility of, and especially compliance with, post-war
stabilization. This twofold tool evolved at the international economic
conferences of Brussels (1920) and Genoa (1922), the first worldwide inter-
10
*Economics Department, New School for Social Research, 6 E 16th St, New
York, NY 10003, United States of America
matteic@newschool.edu
1 C. Maier, Recasting Bourgeois Europe (1975); A. Tooze, The Deluge: The Great War
and the Remaking of Global Order 1916±1931 (2014).
ß2017 The Author. Journal of Law and Society ß2017 Cardiff University Law School
national financial conferences in history. These conferences are largely
overlooked by scholarship, yet they were of major ideological significance.
Genoa and Brussels formally articulated austerity as a technocratic solution in
a major capitalist crisis. For a contemporary reader, the striking similarity with
the present remedies for the European debt crisis immediately emerges. I will
show how the `financial code' drafted at Brussels and Genoa was successfully
implemented: Italy, a country noted for its post-war social upheavals and
progressive claims, became one of the best `students' of austerity, thanks to
the direct intervention of economic experts in Mussolini's cabinet.
Tooze and Maier identify the economic deflationary wave of the 1920s as
the main driver for the restoration of order on t he continent, both
domestically and internationally. I supplement their masterful analysis with
a thorough discussion of the austerity rationale and the role of economic
experts as novel and decisive legitimizing tools. In this article, `austerity'
does not merely refer to the economic policy of budget cuts and price
deflation
2
but, rather, to a full-blown rationality,
3
which is intrinsically
theory and practice, policy and pedagogy. Austerity was an economic, moral,
and technocratic message with which the economic experts sought to educate
and civilize a restless post-war civil society. I will show that Fascist Italy
achieved this objective in a particularly efficient way; in a country of
extraordinary upheavals, austerity measures were rigorously applied. Social
11
2
Austerity as an economic policy comes in both fiscal and monetary forms. Most
scholars consider austerity's fiscal form, which may be defined as deliberate govern-
ment budget cuts and deficit curtailment for the purpose of increasing investors'
confidence in the government's ability to manage its finances (S.J. Konzelmann, The
Economics of Austerity (2014) xiv). The purpose implies that austerity is usually a
response to actual or anticipated economic crisis. Austerity measures include tax
increases (mostly re gressive taxation ), privatizations , and public payroll cut s.
Austerity's monetary form is considered by fewer scholars but goes hand in hand
with the fiscal form. Mark Blyth defines it as a `form of voluntary deflation': M. Blyth,
Austerity: The History of a Dangerous Idea (2013) 2. More precisely, monetary
austerity may be defined as deliberate monetary contraction by the central bank for the
purpose of deflating prices in general or increasing interest rates, thereby increasing
confidence in the value of money or the central bank's ability to maintain a fixed
exchange rate. The fiscal and monetary forms of austerity are not only similar in aim,
but are interconnected: by constraining the government's ability to finance its spending
with money creation, monetary austerity tends to impel fiscal austerity. Yet it may be
possible to practice one form but not the other. After the First World War, both forms
were put into practice in most European countries and in the United States. After the
2008 crisis, fiscal austerity predominated in Europe. Austerity becomes a valid
response to capitalist crisis once one separates what is good for profit from what is good
for people. Privatizing state activities, increasing unemployment, and even contracting
the economy to weaken labour and to cause smaller companies to fail ± all of this can
serve the interests of bigger companies and international capital. What is called `market
friendly' is actually `profit friendly'. In any case, neither need be `people friendly'.
3 The term austerity `rationality', rather than rationale, has been chosen to stress the
relationship between austerity policies and standard economic rationality, an all-
encompassing view that weds practical policies and economic theory.
ß2017 The Author. Journal of Law and Society ß2017 Cardiff University Law School
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