“Austerity is the best weapon they have to try to convince. And if they can't convince, they can't coerce. So in my book, I say austerity plays with a double strategy: coercion and consensus.”

Clara Mattei is the author of The Capital Order: How Economists Invented Austerity & Paved the Way to Fascism, published this month. Steve Grumbine, who uses the Twitter display name “Austerity is murder,” was drawn to her position that austerity is not just bad economic theory prescribing bad economic policy. That is a simplistic framing that ultimately depoliticizes austerity.

Many on the left tie the birth of austerity to the birth of neoliberalism – which some identify with Reagan/Thatcherism, while others say it goes back to Jimmy Carter and the 70s. Clara traces it back a full century, to the years immediately following the First World War, when capitalism was in crisis. It’s no coincidence that WW1, the Bolshevik revolution and the dawn of fascism all occurred during this period. The post-war period was full of socialist stirrings in Europe and the US. Squashing them required a brutal economic response.

US and British capitalists openly celebrated the defeat of labor at home and expressed admiration for Mussolini. The head of the Bank of England wrote to Jack Morgan (son of Pierpont), "Fascism has surely brought order out of chaos over the last few years. Something of the kind was no doubt needed if the pendulum was not to swing too far in quite the other direction.” The alliance of liberalism and fascism in its diverse forms should not be a surprise; they are achieving the same ends. To understand austerity, don’t look to the form of government. Look to capitalism itself.

We are reminded there are class antagonisms between countries as well as within. When the US exploits and plunders other nations, it is acting on behalf of the ruling class – the same ruling class that is exploiting American citizens and plundering our communities.

Clara says, “If you look at austerity just as a tool to manage the economy, which is a typical stance that most Keynesians take, then you cannot really understand why austerity is so persistent and present and structural to our societies.” Austerity is required to enforce society's organization by class divisions, based on wage labor and exploitation. Destabilizing the economy in terms of economic growth is necessary to preserve the capital order.

Clara E. Mattei is an Assistant Professor in the Economics Department of The New School for Social Research and was a 2018-2019 member of the School of Social Sciences at the Institute for Advanced Studies. Her research contributes to the history of capitalism, exploring the critical relation between economic ideas and technocratic policy making.

@claraemattei on Twitter

Austerity, I would like to say, is more than just policy.

It's also the theory justifying the policy.

And, of course, the theory came out in

direct opposition to a theory that was instead trying to empower the workers.

Jack Morgan was a big supporter of

Mussolini and supported him financially from the very beginning.

So, the connection between Mussolini and the financial establishment in the United

States, and especially Wall Street, is something that is also well documented, in

the book of Gian Giacomo Migone called "The United States and Fascist Italy".

Now, let's see if we can avoid the apocalypse altogether.

Here's another episode of Macro N Cheese with your host, Steve Grumbine.

All right. This is Steve with Macro N Cheese.

I am super excited.

I go by the tagline "Austerity is Murder".

And I am frequently talking about ending neoliberalism and attacking neoliberalism.

So imagine my surprise when somebody says,

you got to check out this book by Clara Mattei and it's called "The Capital Order:

How Economists Invented Austerity and Paved the Way to Fascism".

So I'm looking all over YouTube and all these fantastic interviews with this lady

I've not heard of and I'm getting super excited.

She seems to have the right references.

James Galbraith is on the back you've got

Mariana Mazzucato on the back, Mark Blyth, a bunch of really big names.

And so I get the book and I read it and

sure enough, reach out to her and she says, yeah, I'll do an interview with you.

So I have the pleasure of bringing on Professor Clara Mattei.

She is an assistant professor of economics

at the New School for Social Research in New York City.

And as I already stated, she is the author of the must-read "The Capital Order: How

Economists Invented Austerity and Paved the Way to Fascism".

And with that, Clara, thank you so much for joining me today.

It's an absolute pleasure to be here.

Thank you for inviting me.

You better believe it.

This word, austerity is not normalized enough in the United States.

I think people wonder a lot of times what it even means.

What about austerity brought you to even think about writing about it?

And can you give us a definition of what austerity is?

Yes, definitely.

I recently wrote a piece in The Guardian

pointing out how austerity, the A word, is everywhere but unspoken.

Especially after social breakdown, after the 2009 sovereign debt crisis in which

austerity was wielded throughout the world and we saw the devastating social effects.

Now the new norm is to apply austerity without mentioning the word.

And this is something that makes sense because ultimately our society--and this

is what I argue in the book--has been shaped by austerity policies more or less

for the last 100 years, with brief exceptions.

And ultimately the point here is that austerity is not just an exception to how

capitalism functions but it's quite the norm to capitalism itself.

That's why we need to trace the origins

of austerity much prior to the neoliberal turn of the late 1970s and see it as

something that is ultimately foundational and I would say in the DNA of capitalism.

It's a mainstay of the capital order.

And I will get to what capital order is in a minute.

But to answer your question, austerity.

Austerity underscores all the common

tropes of contemporary economic policy, to the point that we can even just see it as

synonymous of what is considered good economic policy.

So I see austerity as made up of three

main spheres that interconnect and help support one another.

First is fiscal austerity.

Fiscal austerity is fundamentally cuts in the budget but not generalized cuts.

So again, we can't see this in the

aggregate, but it's about where you're cutting.

It's about cutting social expenditures.

So if a country is spending a lot for the war and the entire budget is not

decreasing, this does not mean that fiscal austerity isn't in place.

Because if you go look, potentially

there are additions to the expenditures on military expenditure, for example and this

is very topical right now, but cuts in all of the social spheres.

So of course schools, housing, transportation, and you name it.

So fiscal austerity is where you spend

and where you cut, but also where the revenue of the state comes from.

And this is why fiscal austerity is also about regressive taxation.

And regressive taxation is fundamentally

the fact that more and more we see everywhere that the majority of citizens

pay in relative terms much more taxes than the elite and the upper bracket.

So part of regressive taxation is

fundamentally increasing, for example, consumption taxes, which we are all paying

the same, me and Jeff Bezos pay the same consumption tax on bread, for example.

Or a cut in corporate taxes, something

that we've of course seen in the last United States administration--

somehow the fact that once more the top pays less taxes than the bottom majority.

That's fiscal austerity.

So how you spend and where the revenue of the state comes in.

Then we have monetary austerity, which of

course is exactly what we're seeing right now everywhere in the globe.

Interest rate hikes is an austerity

measure because it rewards the saving investing classes, big creditors at the

expense of the rest of society that not only has to consume less, but it also

usually has to face harsher labor market dynamics.

And we see even in the United States today, the Financial Times were showing

how the economy is cooling, the labor market is cooling down.

And this is a big effect of monetary austerity.

And finally we have what I call in the

book industrial austerity which is directly an attack on labor relations.

Privatization is big in which you increase the dependence on the market of people

rather than being hired by the public sector with a stable job and certain

rights, you end up having to face the market competition.

And precarious.

It's attacks on organized labor, wage

repression, that can also happen directly in many settings.

So this trinity of austerity, fiscal, monetary, industrial in The Capital Order,

I show how it works together and ultimately has the fundamental effect of

preserving what in my book I call the capital order.

Without understanding, it seems like what

we're experiencing at this moment with the interest rate hikes and Joe Biden

celebrating $2 trillion in deficit reduction, this is a form of that

disciplining of labor that is going on currently.

It's a reshuffling after the COVID

pandemic and people got something extra and they were not forced back to work.

So we've got to discipline labor, we've got to get them back to where we can

control things, where the capital order can be satisfied.

Is that kind of a modern day version of what we're talking about here?

Definitely. So I'm not that surprised by it.

But in a way it's more than obvious in the

last months how the same dynamics that I talk about in the book, and I must say the

book reconstructs the origins of austerity after the First World War.

And there's a reason for this.

And the reason being that it was during

the First World War that forces were triggered that allowed for the capital

order to be fully questioned and put into crisis.

In the 'red biennium,' the years immediately following the Great War.

So 1918, 1920, years in which the majority of citizens--and I looked specifically at

Europe because it was the place in the world in which there was a larger

democratization process going on in a moment of large scale democratization and

large scale demands for socioeconomic change that was extremely radical.

It was not just about reforms.

And of course that was a moment in which, for example, the modern welfare state was

born in Britain and Italy and in other countries.

But it was more than just reforming the system.

It was the idea of completely

uprooting the fundamentals, the pillars of capitalism.

And by pillars of capitalism, I mean what ultimately governs our society today,

which is the private property of means of production.

The fact that investment is done by private businesses and entities.

And wage relations.

The fact that the majority of us has no

other choice to make a living but to sell one's labor power in return for a wage.

Now these are pillars of capitalism that

as citizens of capitalism we tend to take for granted during our daily lives.

And part of the mission of the book is actually to reproblematize them by saying,

actually 100 years ago there was a moment in which nobody thought these were going

to be the founding principles of the society to come.

Everyone was convinced that capitalism,

with its foundation in private property of means of production, and wage relations to

achieve profits, as a way to organize our production process was going to last.

Everyone thought it was over and this was true both for the workers, the majority

who are challenging the system and those who are trying to protect the system.

So while of course the years after that

are years that we can without a problem define revolutionary or the most

revolutionary given the history of capitalism and again capitalism even if we

do grow up thinking that it is an eternal natural given.

I always remind my students that homo

sapiens, so human beings, have been on the planet for 300,000 years and capitalism is

more or less only a little bit more than 300 years old.

Now there's debates on when exactly we can

start defining our societies as capitalist.

But certainly this means that fundamentally we've been in a capitalist

society for only 0.1% of the history of humankind.

So once we realize this and we realize

that capital--and again I have not defined it yet for the audience--capital is the

social relation that is necessary to stand in order for

economic growth in our system to even take place.

In order for GDPs to grow in our society and for the economy to run smoothly and

investment to happen, we need to secure the fact that the majority of us is

willing to sell, once more, one's labor power in return for a wage.

The fact that we are willing to go to work in exchange for a wage.

And this is again something that we are in

a way forced to do without anyone forcing us physically.

But it's the typical impersonal coercion

that someone like Karl Marx described very well.

This impersonal coercion is not against

something that is going to be always present, unless you protect it.

So the mission of austerity is to protect capital as a social relation that governs

our society, and it is in fact the social relation that allows for capital in the

money form, all the commodities we see to even be produced.

And this social relation requires constant protection.

In some moments more than others.

And I think, historically speaking, now we

are in a phase in which, even if economic experts try to hide and deny this truth,

they are very well aware of how much the labor market is, in a way, going through a

phase that is definitely a phase of crisis, in the sense that there is deep

questioning of the very conditions people find themselves in.

We saw the phenomenon of the great

resignation that was very big in the United States.

It's still happening right now, even if

the economy is cooling and the unemployment rate is starting to go up.

It is still the case that many people

refuse to sell their labor power in return for a wage.

And of course this was triggered by, I think many factors.

Certainly also the fact that with the pandemic there were some forms of social

redistribution that were unusual for the American economy.

This has helped problematize our condition

that we usually take for granted as wage workers.

So in this sense, I think today, of course, we cannot say that we were in the

same revolutionary setting as the Red Biennium after the First World War.

But certainly the inflationary pressures are triggering a breakdown of the dominant

ideology--by which the system is the most efficient we can have.

And an eternal system.

And people are realizing that capitalism is not the best and only possible world.

And that's why austerity is fundamental, because we know that with interest rate

hikes and at the same time by curbing social expenditures, you are cooling down

the economy--using the terms economists like to use.

And this will in their terms, fix the

labor market in the sense that they will be able to produce conditions that will

force people to accept lower wages and of course accept to go and work for wage.

And this is something that, once more, is

not something that has to be politically enforced.

And this is why austerity cannot just be reduced to bad economic theory that

prescribes bad economic policy, which is somehow I think, a very simplistic way of

framing things that ultimately depoliticizes austerity.

If you look at austerity just as a tool to manage the economy, which is a typical

stance that most Keynesians take, then you cannot really understand why austerity is

so persistent and present and structural to our societies.

It's not merely madness as it has often been described.

There's method to the madness and the

method to the madness is the fact that we do need austerity in order to enforce a

certain organization of society, which is a classist organization based on wage

labor and exploitation that otherwise people would be not so content to accept.

I look at your book and the way you frame this, going back to originally saying that

the end of World War One was in essence the crisis of capital.

In Russia, you have the Bolshevik Revolution of 1917, you have the returning

Russian troops who didn't kill all the Bolsheviks.

It had a massive change and this was, as

you stated, the overreaction to that revolutionary moment.

Can you take us through what the material conditions and the existing situation at

that point in time were that created this crisis of capitalism?

Yes.

In the book, the capital order is built in two parts.

The first part reconstructs the existential crisis of capitalism, while

the second part is devoted to the understanding of how this crisis was fixed

and was preempted by technocracy and austerity.

So let's focus on the first part.

Crisis of capitalism is more than just an economic downturn.

High inflation and budgetary problems were not only an economic problem at the time,

they actually triggered a fundamental political crisis.

And by political crisis the fact once more that there was a deep challenge of wage

labor and the private property of the means of production.

After the First World War, the majority of citizens were not any more willing to

accept the foundations of the capitalist society.

Why? There are many factors that were involved.

What I tried to reconstruct is the role of war collectivism as one important trigger.

What do I mean by war collectivism?

The fact that the First World War was a massive shock to the economy because it

was the first time that the state had to intervene in the economy, intruding in

what had been until then considered the natural sphere of the market, and

intervened to become the main producer, the main employer, the main exporter.

And this meant the fundamental

repoliticisation of the pillars of capitalism.

It was no longer the impersonal laws of the market that govern society, but it was

clear that the state had a fundamental role in deciding economic policies.

And this was not because the elite and the

establishment just wanted to break with laissez-faire, but they had to break with

laissez-faire because of the necessity to produce for the war.

In order to win the war effort.

So major nationalization of factories made control of the labor force and this

fundamentally made it such that many workers realized the fact that they were

being exploited was a political decision coming from the state.

So in this sense, this escalated a whole

bunch of different degrees of demands for a new society.

In the book, chapter two, three and four

go into the details of the different practices and agendas that were put to the

fore in order to overcome the old status quo.

Everyone, not just the Gramsci and the revolutionary shop stewards in Britain who

were following in a way much of ideas of Lenin, were asking for a new world.

It was actually the elite itself.

So if you read what someone like Lloyd

George was writing in the Times, or anyone who was actually in the state bureaucracy,

it was the time for "Homes Fit for Heroes," for a new world.

All this war sacrifice--now people should get something in return.

So from measures that were going to be about distributing resources.

So the whole reconstructionist trend of the bureaucracy all the way to the Workers

Council movement in Italy led by Antonio Gramsci and Palmiro Togliatti.

So I look at a whole spectrum of

possibilities from the more reformist to the most radical.

And it's very fascinating to see how in the workers council movements, for

example, and in Italy they had a big impact, to the point that everyone in the

summer of 1920, in which for a whole month, the factories in the whole country,

in the whole peninsula--and including, by the way, the countryside in which peasants

were occupying land--the factories were being run by the workers.

They emblematically sat at the desk of

Agnelli in the Fiat factory, and they were running the show.

And these workers movements in Italy had

as direct inspires not just of course the original idea of the Soviets in Russia but

also what was going on in Britain with the revolutionary shop stewards, in which war

was declared both against the capitalist state and against the capitalist market.

And the idea here was that you could only

achieve political democracy if you really achieve economic democracy, which meant

that there needed to be self-government in the production process.

And thus the abolition of wage labor

substituted with the idea of the council, which was fundamentally an understanding

of direct democratic assemblies that would decide on the production process.

And from there the idea that this would be the nucleus of a new state, a state that

was not alienated from the people, but was of the people, for the people.

So I don't want to get into too much detail, I go through of course L'Ordine

Nuovo, was a newspaper, and this was the big thing at the time was that these

changes in action, these new practices required new ways of thinking.

So the concept of praxis that Gramsci

comes up with and lucidly theorizes in his Prison Notebooks was of course the outcome

of his actual militancy during the 1919 -1920 years of the factory councils.

And the point of praxis was that you could not act differently if you didn't think

differently and how thought and action mutually reinforce one another.

So that L'Ordine Nuovo was also a journal in which not just intellectuals, but

workers and workers intellectuals were working hand in hand, would actually think

about novel ways of understanding the economy and new economic theories that put

at the center the worker, rather than, of course, what we see today with the

neoclassical framework that was, of course, emerging at the time in reaction

to these theories that were actually empowering for the people.

Austerity, I would like to say, is more than just policy, it's also the theory

justifying the policy and of course this theory was a theory that came out in

direct opposition to a theory that was instead trying to empower the workers.

So while the L'Ordine Nuovo movement was

putting at the center stage the worker as producer, saying there should not be any

classes, we should all be producers--the abolition of class hierarchies or a common

understanding of all men and women as producers--to a model that instead expels

the worker and puts the entrepreneur at the head of the economic framework and

says the worker is nothing but ultimately a passive add-on that depends on the

virtuous capacity to save and invest of those who can abstain.

And that is the neoclassical framework

that was coined at the time and that is still dominant today.

And it's what students learn when they go to school, though they learn it in a way

that takes impersonal form of the textbook.

So they forget about the origins of this

very theoretical framework that, once more, was embedded in certain historical

moment which was a historical moment of clear class struggle.

So in this I would like to end by saying that it's very interesting to see how a

theoretical framework that explicitly expels class struggle from its model.

So if you look at the neoclassical framework, the foundations of micro

and macro that students learn, there are no classes in the models, there are only

fundamentally agents, individual agents, and the outcome is harmonious.

And it's interesting to see how this harmony amongst individuals was thought

about in a moment in which there was clear conflict amongst classes.

So the expulsion of class struggle and conflict and exploitation from the

economic theory was clearly a very political choice in order to make it such

that people would consent once more to an order that presupposes in fact class

conflict and exploitation in order to even function.

Part of the effort of this book is to again show how the world we live in is

shaped clearly by some economic policies that have as their main objective that of

shifting resources from the majority to the minority.

And this is austerity in its threefold form that I just described.

But these policies would not be active in shaping our daily lives if they weren't

backed and justified by specific economic theory.

And that's why for me austerity is more than fiscal austerity.

It's fiscal, monetary, industrial.

And it's also more than just policy.

It's policy and theory that go hand in

order to preserve consensus for a system that often shakes, often is in crisis.

And once more, I think that we are today experiencing quite a big crisis of it.

Of course not as revolutionary, but yet something is happening nonetheless.

It's enough to think about all the

unionization efforts that are taking place in unknown spheres of our economy in the

United States, the whole Amazon, Starbucks, all the service sectors.

This is unusual and it's something that frightens the establishment.

And even if they portray austerity as an apolitical necessity in order to fix

inflation, it is very clear that of course they need to fix inflation.

But the reason why you need to fix inflation is because inflation expands the

discontent for a system that clearly is not delivering in satisfying the majority.

And if this majority escalates its dissatisfaction, then there's a problem.

There's a political problem that requires fixing.

And that's why austerity is portrayed as a necessity and one that is only technical.

And that's why we should leave it to the

experts of the Fed and other independent institutions while in fact they know

themselves that it's the most political action of all, backed by theory that

pretends to be non political but it's the most political.

It's a very powerful weapon in order to

subjugate the majority to accept what's going on.

That brings to mind something very important.

I'm inundated with positive people who believe that we can simply vote our way

out of this, that they just don't understand.

And I can say that clearly because every

aspect of our life is inundated, as you stated, with austerity messages, with the

concept of austerity baked directly into it.

And your book quite clearly says how economists invented austerity.

So somebody understands the essence of austerity because it was created.

It is not some natural thing that happens.

This power dynamic has played out for over a hundred years.

Is it possible that the people doing this

simply don't understand what they're doing?

I feel it's almost impossible to believe the level of incompetence it would require

for economists and world leaders to not fully understand what is at play here.

Is this a well known thing that is talked

about in smoky rooms or is this just the way it is?

This is a very tricky, fascinating

and difficult question in the sense that there's multiple aspects.

One is for sure that part of why working

as a historian of economic thought is a fascinating task is that any historian

knows that intentionality is not really a metric that makes much sense because how

do you actually figure out what is intentional and what is not?

And part of this, of course, is the fascination with the concept of ideology,

which is the idea, of course, that people may well be convinced to actually be doing

the best of possible actions for their fellow citizens.

But structurally speaking, what their actions and policies turn out

to be is clearly something that is detrimental for the majority.

I'm quite sure that a lot of these mainstream economic experts truly believe

in the virtuosity of their models and nonetheless they pursue it.

Also, my book is not just numbers and abstract concepts.

Even if I tended to give that take right now in the interview.

The book is actually made of people.

I tried to narrate a story, to give it life somehow.

So the experts in my story who are the most authoritative economists, for

example, in Italy under Mussolini's first ten years of fascist rule, and in Britain,

they are the experts for running the Treasury and the Bank of England.

These people are true believers in their models.

Yet at the same time models do prescribe

what they themselves say very clearly:

the sacrifice of the majority.

what they themselves say very clearly:

The motto 'Consume less, produce more' is not a motto I made up.

what they themselves say very clearly:

It's actually a motto that was during these international financial conferences

what they themselves say very clearly:

in 1919 and 1922 in Brussels and Genoa, in which experts came together.

what they themselves say very clearly:

They were the first international

what they themselves say very clearly:

financial conferences in which states and their experts and their bureaucrats sat

what they themselves say very clearly:

together and said what are we going to do about this situation?

what they themselves say very clearly:

And so 'produce more, consume less' became the motto.

what they themselves say very clearly:

And for them that was the only way to preserve our society.

what they themselves say very clearly:

So in a way, for them, given that they were convinced that the best and only

what they themselves say very clearly:

possible society was a capitalist society, then of course, for them, that recipe was

what they themselves say very clearly:

going to be a recipe for the good of the whole.

what they themselves say very clearly:

Because the idea was people cannot understand the hard truth, that the only

what they themselves say very clearly:

way to actually have economic recovery is to give up something now.

what they themselves say very clearly:

The reason why we're in a crisis, that people are just too entitled and cannot

what they themselves say very clearly:

understand the fundamentals of economics and ultimately the words they used are not

what they themselves say very clearly:

very different from the words we hear today, as you were stressing.

what they themselves say very clearly:

And just to read you a quote that for me was very fascinating.

what they themselves say very clearly:

And there's many. But Sunak, who now runs the British state,

what they themselves say very clearly:

has resigned from his old position as Chancellor under Johnson.

what they themselves say very clearly:

And he uses words that are exactly the

what they themselves say very clearly:

same words that we can find in my book of those years.

what they themselves say very clearly:

He says, "we both want a low tax, high growth economy and worldclass public

what they themselves say very clearly:

services, but this can only be reasonably delivered if we are prepared to work hard,

what they themselves say very clearly:

make sacrifice and take difficult decisions.

what they themselves say very clearly:

I firmly believe that public are ready to hear that truth.

what they themselves say very clearly:

People need to know that whilst there is a

what they themselves say very clearly:

path to a better future, it is not an easy one." So the depiction of this all is that

what they themselves say very clearly:

we are all on the same boat, we will all sacrifice now for a better future.

what they themselves say very clearly:

And ultimately, I do think that if one

what they themselves say very clearly:

gets the training in mainstream economics, you believe in what you stand for.

what they themselves say very clearly:

This said, again, intentions are not a very good metric historically because the

what they themselves say very clearly:

point is to see, structurally speaking, what these words

what they themselves say very clearly:

and these policies are doing for the material conditions of the majority.

what they themselves say very clearly:

And there is when you realize that actually these experts are playing a

what they themselves say very clearly:

fundamental role in the class struggle, in preserving the class hierarchies of today,

what they themselves say very clearly:

in which the elite constantly gains both in a crisis and in an upturn of the

what they themselves say very clearly:

economy, and the majority constantly loses.

what they themselves say very clearly:

And this is why I think the point here of austerity is that even if interest rate

what they themselves say very clearly:

hikes and cuts in the budget will cause a downturn, this is for economists,

what they themselves say very clearly:

ultimately a short term cost for longer term gain, which is that of stabilizing

what they themselves say very clearly:

the class relations that are more foundational to the system.

what they themselves say very clearly:

So this is why you cannot avoid seeing their agency as part of a bigger picture.

what they themselves say very clearly:

So apart from their intentions, and again, I'm sure that ultimately they do think

what they themselves say very clearly:

that they're doing stuff for the good of everyone.

what they themselves say very clearly:

We need to figure out what their historical role is as actors in

what they themselves say very clearly:

reaffirming a society that is clearly a society that has failed.

what they themselves say very clearly:

And this is under the eyes of everybody at this point.

what they themselves say very clearly:

And the American society is at a level of

what they themselves say very clearly:

social failure that you can just feel and breathe if you walk down the streets of

what they themselves say very clearly:

any city, even the cities are the richest of the country.

what they themselves say very clearly:

You go in San Francisco, you go in New York City, the hub of advanced capitalism,

what they themselves say very clearly:

western capitalism, and it's a complete nightmare.

what they themselves say very clearly:

Dehumanized people everywhere.

what they themselves say very clearly:

The level of dehumanization is so obvious that I think now more than ever the effort

what they themselves say very clearly:

of the experts to try to still build up a rhetoric that has us think that anyway,

what they themselves say very clearly:

this is the best way we can go, becomes more and more difficult.

what they themselves say very clearly:

And that's the role of austerity, because

what they themselves say very clearly:

austerity is the best weapon they have to try to convince.

what they themselves say very clearly:

And if they can't convince, they can't coerce.

what they themselves say very clearly:

So in my book, I say austerity plays with a double strategy: coercion and consensus.

what they themselves say very clearly:

If you can't convince people that, as

what they themselves say very clearly:

Rishi Sunak and my guys say, the truth, they have to learn the truth and we have

what they themselves say very clearly:

the truth in our hands and we can try to convince them, we can try to educate them.

what they themselves say very clearly:

So the whole idea of educating people to the importance of paying back the debt and

what they themselves say very clearly:

the importance of healthy economic growth and flexible wages and as you were

what they themselves say very clearly:

pointing out things that then trickled down at all levels of our society.

what they themselves say very clearly:

You were pointing out how we're bombarded by these messages.

what they themselves say very clearly:

And of course it's messages that have been simplified and are conveyed through

what they themselves say very clearly:

different means, but ultimately they are foundational to the economic,

what they themselves say very clearly:

sophisticated, mathematically -based economic models.

what they themselves say very clearly:

In the sense, if you cannot convince

what they themselves say very clearly:

people of this hard truth through education, through propaganda of various

what they themselves say very clearly:

sorts done with all the new media things we have, you can do it through coercion.

what they themselves say very clearly:

Meaning that, well, if you create a

what they themselves say very clearly:

downturn, an economic downturn will act as a disciplinary mechanism.

what they themselves say very clearly:

And this is not me saying it, as anyone

what they themselves say very clearly:

who has read any work of political economy, starting from the classic of

what they themselves say very clearly:

Michal Kalecki of 1943, the Political Aspects of Full Employment, in which he

what they themselves say very clearly:

clearly says that in order for capitalist economic growth to function smoothly, you

what they themselves say very clearly:

need the sack, the fright of being fired, to discipline workers.

what they themselves say very clearly:

Otherwise why would they accept the

what they themselves say very clearly:

conditions they're in as not being in charge of their labor and getting paid

what they themselves say very clearly:

lower wages than the amount of value they're producing?

what they themselves say very clearly:

So at that point it's clear that if you can't convince people, you can force

what they themselves say very clearly:

people, because once you create an economic downturn, higher levels of

what they themselves say very clearly:

unemployment will necessarily kill the bargaining power of the workers.

what they themselves say very clearly:

Silence the workers.

what they themselves say very clearly:

We're seeing now that layoffs have started once more in the tech industry, but it's

what they themselves say very clearly:

going in all sectors, the unemployment rate is slowly raising.

what they themselves say very clearly:

The UK is already in a recession.

what they themselves say very clearly:

And so that's the game.

what they themselves say very clearly:

And I think in a sense, deep down, and this is why it's a tricky question,

what they themselves say very clearly:

because from one point of view, I would like to say with the power of ideology and

what they themselves say very clearly:

the power of ideology, what hegemony stands when the ideas that are beneficial

what they themselves say very clearly:

to the ruling class ultimately are the ideas that everyone shares as their own.

what they themselves say very clearly:

And the fact that the experts at the top do somehow think that they are wielding

what they themselves say very clearly:

the eternal universal, objective truth of how to run a society.

what they themselves say very clearly:

But at the same time, these experts, even today are also very explicit about the

what they themselves say very clearly:

fact that monetary policy is not just about the monetary sphere, but in order

what they themselves say very clearly:

for it to work, it has to impact labor relations.

what they themselves say very clearly:

So you can read any mainstream economist of political wage right now.

what they themselves say very clearly:

Look at someone like Larry Summers.

what they themselves say very clearly:

He's quite explicit.

what they themselves say very clearly:

In order for our labor market to be

what they themselves say very clearly:

healthy again, we need 7-8% unemployment rate.

what they themselves say very clearly:

So you see there that even if they're convinced to have the truth that is good

what they themselves say very clearly:

for all in their hand, at the same time it seems to me that there is a fundamental

what they themselves say very clearly:

awareness of how the system only works if the majority suffers.

what they themselves say very clearly:

So it's almost a paradox because in a way the power of ideology, so their intentions

what they themselves say very clearly:

are good and ultimately we don't really care about their intentions though,

what they themselves say very clearly:

because what matters is what their actions ultimately structurally mean.

what they themselves say very clearly:

But at the same time, the fact that they're quite overt in the impact that

what they themselves say very clearly:

fiscal and monetary austerity will have on the labor market.

what they themselves say very clearly:

That's why my colleague Duncan Foley has a

what they themselves say very clearly:

really nice line saying that raising interest rate is not necessarily just

what they themselves say very clearly:

about targeting inflation, but it's also about targeting the rate of exploitation.

what they themselves say very clearly:

And this is something that the experts

what they themselves say very clearly:

that I look at, in my time, had understood.

what they themselves say very clearly:

If you think about the birth of

what they themselves say very clearly:

macroeconomic policy and Ralph Hawtrey, who is a big protagonist of my book,

what they themselves say very clearly:

someone who has deeply influenced John Maynard Keynes, and Keynes himself--the

what they themselves say very clearly:

whole point here was to realize how monetary management was going to be

what they themselves say very clearly:

effective only if you are able to shape the behavior of the majority of the

what they themselves say very clearly:

economic agents and thus the direct impact that interest rate hikes will have on

what they themselves say very clearly:

consumers, enforcing them to consume less so that the aggregate demand would go down

what they themselves say very clearly:

and thus you could manage monetary stability.

what they themselves say very clearly:

So this is something that is in the

what they themselves say very clearly:

reflection of economists always, even if we think about monetary policy as

what they themselves say very clearly:

something very detached from our daily lives.

what they themselves say very clearly:

The whole point of monetary policy is actually to show you how it has a direct

what they themselves say very clearly:

impact on the consumption behavior of the majority.

what they themselves say very clearly:

So a downturn will in a way avoid

what they themselves say very clearly:

unproductive consumption and austerity instead should help productive

what they themselves say very clearly:

consumption, which is ultimately investment.

what they themselves say very clearly:

And this is why you need to shift the

what they themselves say very clearly:

resources towards the investing classes, which of course are the top classes.

what they themselves say very clearly:

And this is why you need the austerity trinity.

what they themselves say very clearly:

You are listening to Macro N Cheese, a

what they themselves say very clearly:

podcast brought to you by Real Progressives, a nonprofit organization

what they themselves say very clearly:

dedicated to teaching the masses about MMT, or Modern Monetary Theory.

what they themselves say very clearly:

Please help our efforts and become a

what they themselves say very clearly:

monthly donor at PayPal or Patreon, like and follow our pages on Facebook and

what they themselves say very clearly:

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what they themselves say very clearly:

I love that austerity trinity.

what they themselves say very clearly:

It's very easy to understand.

what they themselves say very clearly:

I'm a systems guy.

what they themselves say very clearly:

And that brings me to another point.

what they themselves say very clearly:

You explicitly focus your efforts for your

what they themselves say very clearly:

storytelling in the second half of the book on England and Italy.

what they themselves say very clearly:

But this is trying to tie what you've produced into modern reflection.

what they themselves say very clearly:

We have a situation where the global south has been basically used, where we take

what they themselves say very clearly:

what we want, we steal their resources through exploitation, through the IMF and

what they themselves say very clearly:

structural adjustments, where we have them eliminate their social safety nets and

what they themselves say very clearly:

stop nationalizing protections of their own industry, all in the name of opening

what they themselves say very clearly:

markets as part of the carrot and stick of the IMF to receive loans.

what they themselves say very clearly:

And when the United States raises interest rates, it makes it more challenging for

what they themselves say very clearly:

those whose national unit of account is not the US dollar.

what they themselves say very clearly:

So they have to find a way to get those

what they themselves say very clearly:

reserves to be able to keep their economies going.

what they themselves say very clearly:

And with the interest rate hikes, it's

what they themselves say very clearly:

having an incredibly negative effect around the world.

what they themselves say very clearly:

As you look at the framing of international finance.

what they themselves say very clearly:

I know going back to Lenin, in his book What is to Be Done?

what they themselves say very clearly:

And Imperialism, the Highest Stage of

what they themselves say very clearly:

Capitalism, he was talking about it way back then.

what they themselves say very clearly:

And you see it happening now, and you saw

what they themselves say very clearly:

it happen with Greece, and you saw a lot of this happen in the EU.

what they themselves say very clearly:

This model seems to be not just shared by one country or another.

what they themselves say very clearly:

It seems to be a universal ideological

what they themselves say very clearly:

unification--almost polar hegemony of sorts--of thought.

what they themselves say very clearly:

Nations have their own rules and laws, and

what they themselves say very clearly:

they have their own unit of account in most cases, minus the EU.

what they themselves say very clearly:

How does that come to be?

what they themselves say very clearly:

Is this the United States strength in

what they themselves say very clearly:

terms of domination of the world through empire?

what they themselves say very clearly:

Or is this more academic?

what they themselves say very clearly:

How does this thought process come to be in this?

what they themselves say very clearly:

I would say that a book that for me is very good, also talking about these points

what they themselves say very clearly:

is Michael Hudson's book Super Imperialism that I would definitely recommend.

what they themselves say very clearly:

It's a very, very good book.

what they themselves say very clearly:

What is certain is that I think we need to keep the class dimension.

what they themselves say very clearly:

That's why I tried to focus on the West

what they themselves say very clearly:

and two European countries, because it's interesting to see how austerity is

what they themselves say very clearly:

wielded by the elite against its own citizens.

what they themselves say very clearly:

That's when I would like also to go back

what they themselves say very clearly:

to try to maybe compare what was going on in a democratic setting like Britain and

what they themselves say very clearly:

what's going on today with respect to a fascist one.

what they themselves say very clearly:

This class struggle that is happening

what they themselves say very clearly:

within nations is also a class struggle that is going on between nations.

what they themselves say very clearly:

But I also think it's very important also

what they themselves say very clearly:

when we talk about America and Greece and Italy...

what they themselves say very clearly:

Again, the idea of taking as a unit and analysis a country is always very tricky

what they themselves say very clearly:

because the countries within the country, there's so many class antagonisms and

what they themselves say very clearly:

hierarchies that then, of course, the whole point is that the elites in all the

what they themselves say very clearly:

financial institutions in the west are gaining massively, not only from increases

what they themselves say very clearly:

in mortgages of American citizens, but also from the increase in the debt

what they themselves say very clearly:

repayment of all these countries in the south of the globe that, of course, are

what they themselves say very clearly:

countries in which, once more, the resources are really the resources of

what they themselves say very clearly:

the majority and not of the elite of that country.

what they themselves say very clearly:

So again, we see how the class struggle plays off at an international level and

what they themselves say very clearly:

austerity will definitely trigger further austerity.

what they themselves say very clearly:

And also austerity in the North is triggering greater austerity in the South

what they themselves say very clearly:

also because there is a clear grip in which these countries are in, in the sense

what they themselves say very clearly:

that, in fact, we are seeing what Sri Lanka is experiencing right now.

what they themselves say very clearly:

It is a huge problem when the North

what they themselves say very clearly:

decides to speculate against your debt in terms of possibilities.

what they themselves say very clearly:

And this I'm seeing as an Italian, that it is happening in Italy as well.

what they themselves say very clearly:

Italy is a country that wants to affirm

what they themselves say very clearly:

its positioning with NATO and with the Anglo-American block.

what they themselves say very clearly:

But we are a periphery and we well know

what they themselves say very clearly:

that there is no national sovereignty until we are indebted at these levels.

what they themselves say very clearly:

And once speculation starts and the spread of German bonds goes up, then it is easy

what they themselves say very clearly:

for the heads of the state to use the usual talking points and describe

what they themselves say very clearly:

austerity as the only necessary way forward.

what they themselves say very clearly:

In fact, the hands are much more tied than a country like the United States.

what they themselves say very clearly:

And you being someone who knows about MMT,

what they themselves say very clearly:

we know that there's many people talk about it.

what they themselves say very clearly:

While of course there are some structural limits to capitalism, certain countries

what they themselves say very clearly:

experience these limits in a slightly less strong form.

what they themselves say very clearly:

And the United States is a country that could in fact push the limits of

what they themselves say very clearly:

capitalism towards potentially more distributive forms.

what they themselves say very clearly:

But again, I think there's limits

what they themselves say very clearly:

everywhere, including again--because the capital order we've seen with the small

what they themselves say very clearly:

amount of money that people have gotten with the pandemic relief, people got

what they themselves say very clearly:

nothing with respect to what the big corporations and the actual financial

what they themselves say very clearly:

institutions got, yet even breaching that limit of giving

what they themselves say very clearly:

something as an entitlement--so the fact that people receive resources just because

what they themselves say very clearly:

they are citizens and alive, economic means just because they live--is

what they themselves say very clearly:

already something that breaches the capital order a little bit.

what they themselves say very clearly:

Because for the capital order, you're only

what they themselves say very clearly:

going to make a living if you sell your labor power, right?

what they themselves say very clearly:

So already there we see how economists are

what they themselves say very clearly:

the first ones to blame these pandemic reliefs, these, like, nothing, by the way.

what they themselves say very clearly:

Still, ideologically speaking, these reliefs open up spaces to imagine

what they themselves say very clearly:

possibilities of organizing our society differently.

what they themselves say very clearly:

People start thinking, if the state can give me a thousand, why can't it actually

what they themselves say very clearly:

make it such that I can have enough to eat and live daily?

what they themselves say very clearly:

Why isn't this possible?

what they themselves say very clearly:

So this is something that is problematic

what they themselves say very clearly:

for those who want to preserve the capital order.

what they themselves say very clearly:

So again, there's clear limits to what can

what they themselves say very clearly:

be done even in a country like the United States, because once social policies start

what they themselves say very clearly:

questioning what are taboo obvious facts that we do need to go work for a wage,

what they themselves say very clearly:

then people might decide not to go work anymore.

what they themselves say very clearly:

And this was something that you saw after

what they themselves say very clearly:

the First World War, and I think it's something that, to a minimal degree, we

what they themselves say very clearly:

are also seeing in the United States, and that's something to consider.

what they themselves say very clearly:

So going back to this historical parallel with the present is in fact what happened

what they themselves say very clearly:

to Mussolini when he was governing in the 1920s.

what they themselves say very clearly:

And if I can, I would like to spend a couple of words on this in the sense that

what they themselves say very clearly:

Mussolini himself was one of the best students of austerity in the 1920s.

what they themselves say very clearly:

Mussolini came to power, by the way, not

what they themselves say very clearly:

through a coup, but he was called by the King to fix a political crisis.

what they themselves say very clearly:

Okay? So once more, it's very important for us

what they themselves say very clearly:

to stop thinking with the eyes of the present.

what they themselves say very clearly:

In the past, people who were living in the

what they themselves say very clearly:

1920s didn't necessarily recognize that a fascist dictatorship was being built.

what they themselves say very clearly:

So, now we can say, oh, those were the 20

what they themselves say very clearly:

years in which there was a fascist dictatorship in Italy, people living in

So there's this guy, he's clearly a very charismatic, strong man.

The King has brought him to fix the

political crisis because our country was not governable.

There were too many workers' strikes, too many factory councils.

We needed some order, and he was the right man at the right time.

And so Mussolini came to power and he realized that if he did austerity, that

was the best way to secure the establishment of his dictatorship.

In fact, he gained the praise of the whole liberal establishment.

By liberal, I mean classical liberalism.

I just wrote this piece for Jacobin

America called when liberals fell in love with Mussolini.

And you can see that he gained the praise of the whole liberal establishment, not

just in Italy, but also abroad, mainly in the United States and in Britain.

If you read what people were writing in the Economist, in the Times, there are

only phrases for the efficient economic policies of someone like Mussolini, who

was able to enforce industrial peace, kill strikes, repress wages, privatize, get

finally the market back on its feet, take away all that work collectivism and state

intervention of the economy, and so on and so forth.

And this, of course, Mussolini did

strategically to gain power, but he also had to do it somehow by economic necessity

exactly by what you were saying before, because the fact that the United States

were deflating the economy so much in 1919-1920 made it such that all other

countries needed to impose austerity as well.

And it was again the fact that debt became

more expensive, and in order for the exchange rate to be maintained, both the

British and the Italian elite were forced into austerity.

So once more we see how what's happening at the level of domestic policies in terms

of class struggle cannot be really separable from the fact that these

capitalist nation states in a globalized economy in which the more powerful nations

can set the tone for greater austerity everywhere else.

What you've said is very powerful.

And I appreciate you, by the way, taking a step outside of just the confines of the

book because your book brought me into rethinking a lot of things, really

reconnecting some points that maybe I had gotten wrong.

For example, really hyper focusing on

neoliberalism when in reality, even though neoliberalism is its own animal and it

serves a purpose for conversation and for explanation, it goes back so much further

and I think that your book really exposed that for me.

It really comes down to an understanding that very few have.

Mussolini was celebrated in his day, even Hitler was celebrated by many in his day.

As you describe the more democratic British version of things and then Italy.

What do you think are the main differences between the two?

One powerful message of the book is:

fascism and liberalism, parliamentary

One powerful message of the book is:

democracy and authoritarian state, we tend to think of these as polar opposite

One powerful message of the book is:

institutional settings and ideological spheres.

One powerful message of the book is:

Actually, once you focus on austerity and what the state was wielding as correct

One powerful message of the book is:

economic policies in those years, which is what we still see now again,

One powerful message of the book is:

you realize that they're not so different after all and they were just reaching same

One powerful message of the book is:

objectives through slightly different means.

One powerful message of the book is:

The reason why I focus on these two countries is exactly

One powerful message of the book is:

the provocative idea that capitalism in a democratic setting and capitalism in an

One powerful message of the book is:

authoritarian setting requires the same type of policies in order to run smoothly.

One powerful message of the book is:

And they were also supporting one another as countries and as economies.

One powerful message of the book is:

So let me be more specific.

One powerful message of the book is:

Mussolini could directly curb the

One powerful message of the book is:

revolutionary strength and the prospective for change of the workers through laws.

One powerful message of the book is:

So the state imposing wage repression by law.

One powerful message of the book is:

And this happened especially in 1926, in combination with the need to deflate, in

One powerful message of the book is:

order to regain the exchange rate of the lira and anchor it back to gold.

One powerful message of the book is:

Fundamentally austerity by direct state repression.

One powerful message of the book is:

Mussolini outlawed strikes, outlawed unions--except for the fascist union

One powerful message of the book is:

--undertook the greatest privatization campaign in the history of modern

One powerful message of the book is:

capitalism until that point, laid off thousands of public employees.

One powerful message of the book is:

It could do this with state force and with the black shirts and the secret police

One powerful message of the book is:

jailing, killing, and beating any political opposition.

One powerful message of the book is:

Now the same was happening in the UK, just not directly, but a little bit more

One powerful message of the book is:

indirectly with the same outcome in the sense that it was the experts at the head

One powerful message of the book is:

of established institutions of the Bank of England and the Treasury.

One powerful message of the book is:

So technical institutions with experts that were not elected democratically, so

One powerful message of the book is:

they did not have the problem of having to stand elections in the following term

One powerful message of the book is:

because they were state bureaucrats or bureaucrats of the bank.

One powerful message of the book is:

They wielded the power of macroeconomic management by tweaking the dials, for

One powerful message of the book is:

example, by the interest rate hikes or curbing public expenditures.

One powerful message of the book is:

And this created a downturn.

One powerful message of the book is:

So the famous 1919-1920 power of the workers, I have a chapter

One powerful message of the book is:

that looks at it also from a point of view of stylized facts.

One powerful message of the book is:

If you look at the wage share--it was very

One powerful message of the book is:

high at that moment--with the recession that was induced in large part, and I

One powerful message of the book is:

would say for the greatest extent, by monetary and fiscal austerity.

One powerful message of the book is:

The results were depression.

One powerful message of the book is:

Unemployment soared like never before.

One powerful message of the book is:

It reached almost 20% of the insured workforce.

One powerful message of the book is:

And from then on, you see very clearly

One powerful message of the book is:

from the data I provide in the book, is that the immediate result of higher

One powerful message of the book is:

unemployment was that strikes basically stopped.

One powerful message of the book is:

And then after that, profit rates surged

One powerful message of the book is:

again and the wage share went down and the capital share went up.

One powerful message of the book is:

And when I talk about wage share, I mean

One powerful message of the book is:

the portion of the GDP that goes to wages rather than profits.

One powerful message of the book is:

And this is where I study marginalist economists.

One powerful message of the book is:

So the founders of the neoclassical

One powerful message of the book is:

mainstream economic framework that still dominates the worldviews of economic

One powerful message of the book is:

experts at the head of the Fed and other big institutions today.

One powerful message of the book is:

These experts that were actually building

One powerful message of the book is:

the strength of their theory in those years, the neoclassical framework was

One powerful message of the book is:

actually not a framework that was dominant yet.

One powerful message of the book is:

Because, for example, in Italy we had the historical school of economics that was

One powerful message of the book is:

much more influenced by the German tradition.

One powerful message of the book is:

So these experts that were battling a battle in academia to dominate in terms of

One powerful message of the book is:

theory were provided with an opportunity of a lifetime of seeing their models being

One powerful message of the book is:

directly implemented without any political liability through an authoritarian state.

One powerful message of the book is:

So Maffeo Pantaleoni, Umberto Ricci, all these famous economists at the time

One powerful message of the book is:

thought this was a great opportunity to work for Mussolini's cabinet and implement

One powerful message of the book is:

austerity, which was the direct outcome of their economic theory.

One powerful message of the book is:

And they could do this without any political opposition and actually with

One powerful message of the book is:

state law that was directly appeasing the workers.

One powerful message of the book is:

And once more, this industrial peace by force was what the liberal world,

One powerful message of the book is:

especially in the United States, were so excited about.

One powerful message of the book is:

I did a lot of archival work for this book, and it's quite fascinating when you

One powerful message of the book is:

find some quotes that speak so obviously to the situation.

One powerful message of the book is:

I could not even imagine this.

One powerful message of the book is:

This is Montagu Norman, the head of the

One powerful message of the book is:

Bank of England, who's writing to Jack Morgan of JP Morgan Chase.

One powerful message of the book is:

Jack Morgan was a big supporter of

One powerful message of the book is:

Mussolini and supported him financially from the very beginning.

One powerful message of the book is:

So the connection between Mussolini and the financial establishment in the United

One powerful message of the book is:

States and especially Wall Street is something that is also well documented in

One powerful message of the book is:

the book of Gian Giacomo Migone called The United States and Fascist Italy.

One powerful message of the book is:

This letter I found in the archive of the bank when I went to do some research.

One powerful message of the book is:

Montagu writes, "Fascism has surely

One powerful message of the book is:

brought order out of chaos over the last few years.

One powerful message of the book is:

Something of the kind was no doubt needed

One powerful message of the book is:

if the pendulum was not to swing too far in quite the other direction.

One powerful message of the book is:

The Duce was the right man at a critical

One powerful message of the book is:

moment." So Montagu Norman in this letter is of course describing the fact that

One powerful message of the book is:

freedom of press has been suspended and that there's all these killings going on.

One powerful message of the book is:

But this is 1926, so when he writes this

One powerful message of the book is:

letter, it's been already four years of fascist regime.

One powerful message of the book is:

But he's very clear about the fact that

One powerful message of the book is:

the Italian population was too turbulent and they needed to be disciplined.

One powerful message of the book is:

Churchill says, "Different nations have different ways of doing the same thing.

One powerful message of the book is:

Had I been an Italian, I'm sure that I should have been with you from the start

One powerful message of the book is:

to finish in your victorious struggle against Leninism.

One powerful message of the book is:

But in Britain we have not yet had to face this danger in the same poisonous form.

One powerful message of the book is:

But I do not have the least doubt that in

One powerful message of the book is:

our struggle we shall be able to strangle communism." So we see here that even some

One powerful message of the book is:

like Churchill is pointing out the fact that we Brits are also strangling

One powerful message of the book is:

alternatives by austerity, just in less direct ways.

One powerful message of the book is:

So we see a complete reversal of the bargaining power of the worker and

One powerful message of the book is:

fundamentally the silencing of the workers.

One powerful message of the book is:

So I want to read this quote from GDH Cole.

One powerful message of the book is:

For me it's a very important quote.

One powerful message of the book is:

GDH Cole was a guild socialist who was not

One powerful message of the book is:

only intellectual, he was actually active at that time with the whole guild

One powerful message of the book is:

socialist movement in the building industry.

One powerful message of the book is:

And he observed very sharply what was going on.

One powerful message of the book is:

And especially in one quote that really points to the coercive effect of

One powerful message of the book is:

austerity, even in supposedly democratic setting.

One powerful message of the book is:

He basically is talking about 1922, after two years of austerity that brought the

One powerful message of the book is:

economy into the doldrums, as Pigou put it.

One powerful message of the book is:

So a state of fundamental, permanent under-utilization of resources.

One powerful message of the book is:

"The big working class offensive had been

One powerful message of the book is:

successfully stalled off and British capitalism, though threatened with

One powerful message of the book is:

economic adversity, felt itself once more safely in the saddle and well able to cope

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both industrially and politically with any attempt that might still be made from the

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labor side once seated." So this is very obvious.

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So again, short term cost? Of course.

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Immediately there will be a downturn and capitalists will lose in the short term.

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But then if you look at, for example, the data on the profit rate, you see that

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really it's very briefly after that, the trend is reversed and that you are able to

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stabilize what is more foundational, which is the capital order.

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So again, if austerity does not stabilize the economy, it stabilizes capital order.

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Or better, destabilizing the economy in terms of economic growth helps preserve

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the capital order, which is much more structural to capitalism in the long run.

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So in fact, like Cole put it, capitalism

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was once more safely in the saddle because labor was defeated.

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So this is for me, a very important

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message of the book is that, historically speaking, we've constantly seen

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parliamentary democracies hailing the successes of authoritarian regimes.

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You can imagine what happened under Pinochet's dictatorship in Chile,

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what happened in the Suharto government in Indonesia, what happened with Boris

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Yeltsin in 1992 with the fall of the Soviet Union.

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All of these authoritarian regimes that were explicitly repressing political

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opposition were hailed in the main liberal press.

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If you go into the archives of The Economist, it's impressive how much

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someone, for example, like Larry Summers, had no doubt that Boris Yeltsin was doing

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the right thing at the right time in order to impose much necessary austerity that

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was supposedly going to be for the benefit of the Russian people.

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So in my book, the last chapter tries to show how the story that I tell more in

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detail in the 1920s recurs throughout the 20th and the 21st century.

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And once more, the alliance of liberalism

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and fascism in its diverse forms is a constant, not just because they actually

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support each other politically, but also because ultimately they're achieving

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the same ends with slightly different means.

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This reminds me very much of the Democrats and Republicans in the United States.

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We often talk about the two wings of the same bird and the Democrats.

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As a UK version of this.

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Clara, in some of your talks you talk about future projects, Michal Kalecki and

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full employment, which is near and dear to my heart, being that MMT is foundational

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to the job guarantee as part of its core tenet.

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What are you working on in the future?

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Where can we find more of your work?

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Actually I'm envisaging a trilogy, so this would be the first one of three.

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And the next book, I just recently signed a contract for Chicago Press since they've

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been really wonderful to me, especially Chad Zimmerman, my editor.

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He's fantastic and I owe a lot to him if the book came out as well as it did.

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The next book is actually going to be

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about challenging the Keynesian epoch after the Second World War.

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So I'm going to be looking at exactly what

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happened, not after the First World War, but after the Second World War, because I

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think there is a lot to be said about the idealization of the golden epoch of

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capitalism, in which, in fact, it seemed like the system could guarantee a

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democratic well-being that was, in fact, much more diffused.

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And I think in a way this is important politically, because I think there was

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much more austerity than what it's normally thought about, both in terms of

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the type of economic theory the experts that were advising governments were

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bringing out, but also in terms of the policy.

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So I think I'm going to be looking more closely to the United States.

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In the book, The Capital Order, the United States is an actor in the background.

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But the second book will be more focused,

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I think, on the United States, to breach the common narrative.

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Also politically, I find it very problematic that as we face all of these

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unprecedented challenges to our system right now, from the social catastrophe to

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the climate catastrophe, that people then tend to revert to, 'oh, we can just have a

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New Deal once more, or a new Bretton Woods,' or...

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In a sense, the idea that, 'yes,

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capitalism has gone astray because we're in this neoliberal period.

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But ultimately there was a virtuous moment in which the real essence of capitalism

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can be a good one, if only we can reform it in the right direction.' And I think

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this is very problematic because I think, especially today, in which all these

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challenges are new and we are living the deepest contradictions of our system, we

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cannot just be, in a way, blinded by the idea that we can just revert to the past,

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especially when the past is an idealized one.

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And I really do think that this Keynesian

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epoch was not as rosy as a lot of progressives want us to think, and that we

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should really try to think anew for the future to come.

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So that's going to be the next step, is to try to see what is the relationship

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between austerity and Keynesianism after the Second World War.

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Because in my first book, I very well show

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how Keynes himself was one of the biggest fans of austerity in the early 1920s.

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Then he reverts to critique of austerity

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only once the capital order was fully re-established.

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So Keynes himself is not a main actor in my book, but he is present and he is

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someone who clearly said that in the hot years and the revolution years, 1919-1920,

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there was no way out but austerity because we needed to preserve the capital order.

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Then once that was done, once the workers were defeated, then you could envisage

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potentially some public spending, but certainly not in a moment in which public

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spending could escalate further demand for social change.

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Wow, I cannot wait.

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We have a bookstore that we prop up the

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books of the people we interview, and this is definitely going to go in that.

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We're very interested in buying bulk and

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getting them out there to people, especially when they have an impact.

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And I believe this book is a must-read for

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every single person that wants to see change.

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You have to understand where we come from to know where we're going.

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And this really has opened my eyes quite a bit.

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This is such a powerful book, and Clara, I

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really appreciate the effort and time you took with me today.

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I hope we can have you back on in the future.

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I have so much more to ask you, but we'll save that for another time.

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For sure. I would like to end maybe by reading you

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the last quote of the ending words of chapter ten.

"Austerity is a political project

arising out of the need to preserve capitalist class relations of domination.

It is the outcome of collective action to foreclose any alternatives to capitalism.

It can thus be subverted through collective counteraction.

The study of its logic and purpose is a

first step in that direction." So I'm writing this book because I think we

really need to understand how our society works in order to actually change it.

And this is the first step, is to really stop idealizing what's going on.

And this is why history is so important to really grasp the logic and the dynamics

and thus potentially open our eyes to a different future.

This just made my day.

So Clara, thank you so much for joining me.

I really appreciate it. Thank you.

I feel so honored and it was such a pleasure.

This is Steve Grumbine with my guest, Clara Mattei.

Macro N cheese.

We are outta here.

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