After the outbreak of the 2008 global economic crisis, extreme neoliberal austerity policies prevailed in many parts of the developed capitalist world, especially in the European Union (EU) and the Euro-area (EA). Austerity has been criticized as an irrational policy, which afflicts the vast majority of society, as it further deteriorates the economic crisis by creating a vicious cycle of falling effective demand, recession and over-indebtedness. However, these criticisms can hardly explain why this “irrational” or “wrong” policy persists, despite its “failures”. In reality, economic crises express themselves not only in a lack of effective demand, but above all in a reduction of profitability of the capitalist class. Austerity constitutes a strategy for raising capital’s profit rate.
This paper examines under which conditions the prevailing capitalist strategy of neoliberalism and austerity may mould a broader anti-labour social coalition, by enforcing the consensus of a part of the “middle classes”, defined as (i) the traditional petty bourgeoisie, (ii) the new petty bourgeoisie and (iii) middle bourgeoisie.
John Milios is a professor of Political Economy at the National Technical University of Athens and author and co-author of many books, including Rethinking Imperialism: A Study of Capitalist Rule and A Political Economy of Contemporary Capitalism: Demystifying Finance. He was chief economic advisor of Syriza until March 2015.