The ideational foundations of social democratic austerity in the context of the great recession

Abstract

The ‘austerity settlement’ has come to define the post-crisis European political economy. Since 2010, parties from across Europe’s political mainstream have implemented austerity and despite the apparent conflict with the interests of their traditional constituents, even social democratic parties have acquiesced to this settlement. However, within the existing literature ‘social democratic austerity’ is currently under-theorized as it is assumed to involve a rather straightforward adaptation of social democrats to neo- and/or ordoliberal ideas. Utilizing rich and original evidence from over 60 elite interviews with key social democratic stakeholders in France, Germany and the UK, this article contests this view. It demonstrates instead that a distinct set of ideas based on New Keynesianism, supply-side economics, and the social investment paradigm provide the ideational foundations for social democratic austerity post-crisis. Understanding this, it is argued, is critical in order to fully appreciate how and why austerity has become dominant in post-crisis Europe.

Social policy in the face of a global pandemic: Policy responses to the COVID‐19 crisis

“…During massive and sudden economic crises, it is expected that governments will act swiftly to enact bold emergency programs to stabilize incomes and avoid an economic freefall. This is consistent with “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439; on this issue see also Hall, 2013), which can help save capitalism from itself through emergency economic and social programs aimed at avoiding the recession to become an outright depression, like in the 1930s.…”

“…Second, these responses are generally grounded in “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439) and, at a deeper level, they are an integral part of a broad historical trend according to which welfare states work to preserve rather than challenge the core institutions underpinning capitalist market economies. As in the 2008 financial crisis, social security systems proved to be very strong automatic stabilisers.…”

“…Despite these dissimilarities, all these theories stress the importance of existing policy legacies to assess and explain the level and nature of social policy stability and change in each country, in periods of crisis and beyond. When responding to the sudden economic downturn stemming in part from confinement and public health measures, while drawing on “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439) political actors are likely to first rely on existing programs and approaches associated with their welfare regime or, at least, the specific policy areas particularly affected by the crisis. This is true when we consider issues such as the relationship between targeted and universal programs but also the territorial organization of the welfare state, which is particularly crucial in federal and devolved states.…”

“…The conclusions we draw from these studies are threefold: First, these social policy responses, while entailing new developments in many countries, nonetheless reflect, at least in part, existing national policy legacies. Second, these responses can be understood as a form of “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439), which is characterized by the massive use of deficit spending during economic crises, with the aim of to supporting rather than challenging core capitalist institutions. Third, there are clear differences in terms of the nature of the reforms enacted during the initial phase of the COVID‐19 crisis as compared to reforms enacted as a response to the 2008 financial crisis.…”

Paper Stones Revisited: Class Voting, Unionization and the Electoral Decline of the Mainstream Left

“…Globalization in general and immigration in particular threaten the economic status of workers to a far greater extent than they threaten the economic status of middle-class professionals. At the same time, the policy platforms on which mainstream Left parties have campaigned in elections (and implemented in government) have typically prioritized structural reforms designed to promote labor-market flexibility and fiscal consolidation at the expense of redistributive social spending (see, e.g., Rathgeb 2018, Horn 2018, and Bremer 2019). Against this background, it seems reasonable to suppose that workers who abandon the mainstream Left do so with other options in mind than their middle-class counterparts.…”