Process
Status Items Highlights Done See section below Claims None Questions None Output None
Highlights
Page 3
although austerity has not “worked” in the sense of achieving its stated goals across history (e.g., reducing debt or boosting economic growth), it has nonetheless been employed by governments over and over again. Blyth refers to this pattern of compulsive repetition as a form of madness. However, if we view austerity in this book’s terms-as a response not just to economic crises (e.g., contraction of output and heightened inflation), but to crises of capitalism-we can begin to see method in the madness: austerity is a vital bulwark in defense of the capitalist system.
✏️ Austerity is capitalism’s protector 📖 (Page 3)
Page 3
When I refer to a crisis of capitalism, I do not mean an economic crisis-say, a slowdown in growth or an uptick in inflation. Capitalism is in crisis when its core relationship (the sale of production for profit) and its two enabling pillars (private property in the means of production and wage relations between owners and workers) are contested by the public, in particular by the workers who make capitalism run.
✏️ What a crisis in capitalism means 📖 (Page 3)
Page 4
Most austerity serves to quash public outcry and worker strikes…
📖 (Page 4)
Page 4
Austerity as we know it today emerged after World War I as a method for preventing capitalism’s collapse: economists in political positions used policy levers to make all classes of society more invested in private, capitalist production, even when these changes amounted to profound (if also involuntary) personal sacrifices. In the early 1920s, austerity functioned as a powerful counteroffensive to strikes and other forms of social unrest that exploded on an unprecedented scale after the war
✏️ Birth of austerity 📖 (Page 4)
Page 5
The collective anti-capitalist awakening was facilitated by the extraordinary governmental measures during the war to temporarily interrupt capital accumulation by the owners of private industry. In order to confront the enormities of the war production effort, the governments of all warring nations were forced to intervene in what had been, until then, the untarnished realm of the market. As governments collectivized key industries—munitions, mines, shipping, and railways—they also employed workers and regulated the cost and supply of labor. State interventionism not only allowed the Allies to win the war; it also made clear that wage relations and the privatization of production—far from being “natural”—were political choices of a class-minded society.
✏️ The Great War showed what a planned economy looked like. Crises are always when change can happen and things can be seen clearly. Pandemic was the same way. 📖 (Page 5)
Page 9
our experts’ fixation on debt repayment, balanced budgets, foreign exchanges, and inflation reveals a more fundamental purpose: taming class conflict, which is essential for the continued reproduction of capitalism.
📖 (Page 9)
Page 12
through the economists’ lens, the productive class in a society was not the working class, but the capitalist class—the people who could save, invest, and thus contribute to the private accumulation of capital. Economic theory was no longer a tool for critical thought and action; it was a mold for imposing passive consent and maintaining a topdown status quo.
✏️ Reframing who is productive makes all the difference. 📖 (Page 12)
Page 12
Under a veneer of apolitical science, technocrat economists were undertaking the most political action of all-bending the working classes to the wills and needs of the capital owning classes for the enrichment of a small minority.
✏️ This is calling to mind how veneer theory, hobbes, etc keep telling us that civilization is what we need to keep man safe from becoming monsters. #xref And here we are being told that economics are just a natural law of how things should be to keep us all going, and it means we have to be controlled for our own good.. Our excesses doom us and we need to work hard, take low wages, sacrifice economically, etc. All the while, in both cases, this is in service to a select few in power, for their benefit only. 📖 (Page 12)
Page 28
Britain went to war convinced of the power of what Adam Smith described as the invisible hand: relying upon private enterprise and the law of supply and demand to secure the most efficient outcomes, even in war. E. M. H. Lloyd, a civil servant employed in the British war office, described the British establishment’s approach to the war effort: “the doctrine implicitly acted upon was that the higher the price and the greater the freedom allowed to the private contractor, the greater would be the increase in the supply; it followed that if only the Government paid high enough prices and left private firms to their own devices, munitions would be forthcoming in abundance” (Lloyd 1924, 23). Before long, business as usual did not deliver. By 1916 the failure of laissezfaire and the free price mechanism was unmistakable. Increased government demand and price increases led to profiteering, but did not bring increased supplies. While the country suffered supply shortages and inflation, private businesses diverted resources to the more profitable business lanes of the moment-luxury goods and exports.
✏️ Government expected capitalism to work as it was sold to them.. We give you more money, you give us more product. Instead, capitalism worked as it has always intended.. Make more profit always. For them, that meant luxury goods and exports, not war shit. 📖 (Page 28)
Page 29
Once the war broke out, the contrast between public needs and private interest plainly surfaced: it was highly profitable to sell British ships to foreigners, and the British nation lost enormous tonnage (see Chiozza Money 1920, 73). By February 1917, private shipowners sold ships abroad at such a rate that “the fate of Britain literally hung in the balance” (Hurwitz 1949, 194). There were not even sufficient ships to import the bare necessities of a nation at war.
✏️ Another example of clashed motivations. Private just wanted more profit.. Even at expense of national needs. 📖 (Page 29)
Page 29
“National organization and centralized control were found to be more effective than high prices and laissez-faire in stimulating supply” (Lloyd, 1924, 23).
✏️ In times of crises, is this the way to go? At least, when contrasted against capitalism, yes it is. But in general, is there a better way than to have one person with all the power in times of crisis? What’s the checks and balances? What are viable alternatives? questions 📖 (Page 29)
Page 31
The second major shift was toward a stronger state: executive power grew to the detriment of the legislative (to meet the need for rapid decisions, with no obstacles from political opposition)³ and it executed sweeping repressive practices over the population to annihilate political dissent. This phenomenon in Italy reached extents that were unknown in other parliamentary democracies (Procacci 1999, 13). With the royal decree against defeatism of October 1917 (known as the Sacchi decree), the state criminalized all freedom of opinion and thought, and citizens lived in terror of being prosecutedeven for a mere complaint about the high price of bread
✏️ This is what I’m getting at. Concentrated power leads to authoritarian tendencies that hurt the populace instead of help them. How do you avoid this slippery slope? 📖 (Page 31)
Page 35
In sum, in all the ways discussed above - from industrial production to land cultivation and price-fixing - the British and Italian states barged into the realm of the economic. For the first time, capitalism witnessed a threat to the inviolability of private property. Private property had to subordinate its prerogatives to a political and national interest and even to people’s basic needs. In this way the state shook one of the supposedly unshakeable pillars of capital accumulation.
✏️ Private property and ownership of the means of production being used at the whim of government for the needs of national security, but also the people. One of the pillars of capitalism wasn’t so natural and unshakeable as it once seemed. People got a taste for better or more stable quality of life. 📖 (Page 35)
Page 36
The implicit coercion of the laws of the capitalist market was now replaced with unprecedented political coercion.22 This was to a great extent the expression of the state’s crude reaction to a labor force that was firmly anti-statist and pacifist; suffice to say that the Italian state did not enjoy the wartime support of its public majority. Indeed, Italy was the only European country that went to war without the official support of any working-class party or any union. The disgruntled rank and file shared the opinion that “the horrendous war is the fatal outcome of the capitalist system, which, born in violence deludes itself by finding in violence the solution of its crisis.”23 As General Dallolio, head of the Ministry of War and Munitions, spelled out, the work of Italy’s regional committees had as a priority to tackle “the very delicate problem of maintaining control on the working class, whose union and political organizations had openly manifested an aversion for war intervention.”
✏️ Italy’s challenge was that the people were against the war. So the government resorted to more authoritarian means to coerce people into the war machine. 📖 (Page 36)
Page 39
It became increasingly obvious to officials that law and order alone might not suffice to mollify workers. Following the British model, the government offered a semblance of involvement of workers in industrial mobilization. For example, within the Regional Industrial Committees, the representatives of the industrialists nominated by the Ministry were joined by an equal number of labor representatives, often union members such as Buozzi, who joined the Committee of the Lombardy region. Most importantly, in both countries internal factory committees took on an increasingly representative role. These were grievance committees elected by union members within a factory to handle everyday problems of discipline, arbitration, and the like. The war boosted the development of workers’ assemblies to elect their representatives in the committees, 28 increasing union membership within the unskilled rank and file (see Tomassini in Menozzi et al. 2010, 43-44; see also Bezza 1982). In this way, in both countries, the seeds of workers’ selforganization were planted during the war. As will be detailed in chapter 4, by 1919 these committees would grow into a concrete alternative to the capitalist mode of production.
✏️ When push comes to shove, people can make others include them, and allow them to have representation.. But it has to be demanded. It doesn’t seem to be given otherwise. The war economies gave rise to worker self organization. 📖 (Page 39)
Page 86
Private initiative and private profit as the motives of production were put on trial, thoroughly examined, and publicly rebuked.
✏️ The Sankey Committee of 1919, between the miners, government, and mine owners. Here, capitalism itself was on trial. 📖 (Page 86)
Page 88
… argued for a binding relation between workers’ control and nationalization (in the form of abolition of royalties and state ownership of coal seams): “Just as national ownership is inadequate without workers’ control, so workers’ control is inadequate without national ownership” (Cole, in Arnot 1919, 33). Indeed, nationalization in itself did not secure the abolition of the wage system, under which “the worker sells his labour to an employer in return for a wage, and by this sale is supposed to forgo all right over the manner in which his labour is used” (ibid.). The bold demand was for economic democracy: joint control, shared between miners and the state.
✏️ Economic democracy in the form of joint control between state and workers. 📖 (Page 88)
Page 113
Zino Zini gave the inaugural lecture of the newly founded Turin school of socialist culture, a speech titled “From Citizen to Producer” [Da cittadino a produttore], in February 1920. He argued that the citizen, as typically understood in bourgeois democracy, is an abstract individual, one who is “[s]overeign in theory, [when] in fact he is only such on the day of elections, all the rest of his time he is nothing but a subordinate to laws and rules drafted outside of his contribution.”33 An individual’s political servitude is founded upon eco nomic servitude [servitu’ economica]. The inequality of economic conditions (or better, the inequality of the positions within the relations of production) impedes any genuinely democratic relations among free and equal human beings. On the other hand, Zini wrote, the postcapitalist society will give rise to “a new man” [un uomo nuovo]-the “conscious producer” [produttore cosciente]-who exercises at once economic and political freedom. It will be “the new society of free and equal producers”
✏️ Political vs economic democracy, as true now as it was then 📖 (Page 113)
Page 119
Production continued at its normal pace (still under obstructionist orders from the unions), even with financial and technical restraints, with workers without wages, 48 and with difficulties in securing supplies of materials. Here the workers’ cause was aided by the solidarity of the railwaymen, who regularly supplied truckloads of raw materials and fuel to the occupied plants. The council likewise organized exchanges of raw materials among different factories (L’Avanti, September 10, 1920). The struggle was meant as a demonstration-and glorification-of industrial production in the absence of hierarchies and in the hands of the workers’ councils.
✏️ 1920, occupation of factories in Italy 📖 (Page 119)
Page 120
In the words of Antonio Oberti, a worker at the Ansaldo Factory in Turin, “we had to demonstrate to industrialists that also without them, and notwithstanding all the difficulties, we could produce the same and at maximum capacity.” Another worker, Piera Stangalini, an apprentice in the Rotondi factory in the city of Novara, recalled, “[o]ne worked with alacrity since we were all euphoric for being there and it was a great party because on the flagpole of the factory we hoisted the red flag and that was all euphoric because I saw that red flag flapping and I was thrilled. I was happy
✏️ The joy and drive of wanting to make a point and to work together, for each other. 📖 (Page 120)
Page 120
the head of the government, Giovanni Giolitti, categorically refused to intervene due to the inordinate martial effort that the task would entail. Giolitti told parliament, “How could I stop the occupation? It is a question of 600 factories in the metallurgical industries. To prevent the occupation, I would have had to put a garrison in each of them, a hundred men in the small, several thousand in the large. To occupy the factories I would have had to use all the forces at my disposal! And who would exercise surveillance over the 500,000 workers outside the factory? Who would guard the security of the country?” (Acts of Parliament, session of September 26, 1920, ACS, Legislaturua 22, 1st session, 1711-12). The heads of the Banca Commerciale likewise assured FIOM of their benevolent neutrality, while requesting assurances in case the movement should have a revolutionary outcome. Benito Mussolini himself—the leader of the newly founded Fascist movement took political precautions by declaring sympathy for the occupations.
✏️ People power spelled fear and deference from the other powers. 📖 (Page 120)
Page 120
The revolutionary tension reached its peak on September 6 and 7, when the movement expanded beyond factories to include land occupations in the agricultural southern provinces.
✏️ They came extremely close to full on revolution against the state. But there was lack of national coordination on a common direction. 📖 (Page 120)
Page 121
The workers’ brief, heady experiment with free production eventually came to an end with an agreement between the newly founded union of industrialists (called Confindustria), FIOM, and CGdL. The industrialists had capitulated, under heavy pressure from the government: the owners signed a contract that a month prior they had refused to even discuss. They had to accept unions’ control of industry, which they previously strongly opposed, as well as significant wage improvements, paid holidays, and compensation for workers who were dismissed.
✏️ The end of the revolution 📖 (Page 121)
Page 122
Once back at his desk at Fiat, Agnelli himself formally proposed to transform his whole company into a cooperative. In an interview with La gazzetta del popolo he explained: “under the present system, relations between managers and workers are simply impossible. The masses today no longer have a mind to work. They are moved only by political notions. Their recent gains are nothing to them… How can one build anything with the help of 25,000 enemies?” A few years later, Gaetano Salvemini would remark that “[t]he bankers, the big industrialists, the big landowners, were waiting for the socialist revolution like a ram waits to be led to the slaughterhouse
✏️ Still, there seemed to be a residual fear of the people power, and a kowtowing by the industrialists to not piss them off again. 📖 (Page 122)
Page 124
The industrialists had undergone a transformative psychological shock, and they emerged belligerent. They accused Giolitti’s government of “complete absenteeism and connivance with the violators of the law?” They further lamented that not one soldier or police officer was sent to defend “property” and “personal liberty”
✏️ The start of the counterrevolution by the industrialists. 📖 (Page 124)
Page 124
The neutralist behavior of the government was not the only factor that incensed industrialists and agrarian capitalists. They viewed the events’ concluding agreement in apocalyptic terms. There was also the presence in parliament of a socialist minister of labour, Arturo Labriola, who in interviews and statements spoke openly of a phase of transition from a capitalist to a socialist economy. Moreover, as we have seen in chapter 3, those years marked an assault on capital through reforms, including measures against speculation, the taxation of excess war profits, the extraordinary tax on property, the compulsory registration of shares in the owners’ names, steeper death duties, the legalization of land occupation, and much more.
✏️ Things that pissed off the industrialists and got them working to dismantle things 📖 (Page 124)
Page 124
In March 1920 the Confindustria had situated itself as a national organization, complete with its own general political line and tactics. Industrialists could now think of themselves as a national political poweran “industrialist class” (Il corriere della sera, March 9, 1920) with a centralized membership. Seventy-two associations were federated, with 11,000 members. All large industries, and threequarters of the medium- and small-scale industries, adhered to this association. That August the agriculturalists had done the same: they founded La Confederazione Generale dell’Agricoltura, which united large and small agricultural property and industry. It was a new “political body of battle and resistance to coordinate all the forces of property and agriculture industry
✏️ They formed their political parties 📖 (Page 124)
Page 125
Both Lenin and Gramsci foresaw the unleashing of a bourgeois reaction of a new type, one that went beyond the traditional liberal democratic framework-it was the coming of a violent civil war. The impulse of revenge (an impulse the government failed to address) was to be satisfied with Fascist violence. Fires would soon burn down many worker organizations’ headquarters. Camere del lavoro (chambers of labor), le case del popolo (citizen centers), cooperatives, and newspaper offices were reduced to ash. Armed attacks would kill thousands, from socialist majors to rank-and-file workers, until the ultimate advent of the Fascist government in October 1922.65
✏️ Epic retaliation and establishing a fascist government 📖 (Page 125)
Page 127
The coercion of workers was clear in the motto of austerity that was formulated at two pivotal international financial conferences, in Brussels (1920) and in Genoa (1922): “work more, consume less.” The capitalist states and their economic experts secured capital accumulation through policies that imposed the “proper” (i.e., class-appropriate) behavior on the majority of their citizens. The three forms of austerity policies-fiscal, monetary, and industrial-worked in unison to disarm the working classes and exert downward pressure on wages.
✏️ Austerity motto and purpose 📖 (Page 127)
Page 130
main achievement of fiscal and monetary austerity was identical to that of industrial austerity: the subjugation of the working class to the impersonal laws of the market. Indeed, all three forms of austerity served to recreate the divide between economics and politics that war collectivism had temporarily suspended. Once the state stepped down as an economic actor (and as an employer), wage relations would again be subjected to impersonal market sures. Austerity ensured and facilitated this retreat to the norm.
📖 (Page 130)
Page 130
Here emerges a core argument of this book: the main objective of austerity was the depoliticization of the economic-or, the reinstallation of a divide between politics and e economy-after the wartime political landscape had dissolved it.
📖 (Page 130)
Page 130
three conventions were mutually supportive. Cultivating a notion of economic objectivity (3), for example, first required the rehabilitation of the rule of the impersonal laws of the market (1). This, particularly in a moment of high contestation, could only be achieved through their unchecked governance (2). Hence, austerity found its primary ally in technocracy-a belief in the power of economists as guardians of an indisputable science.
✏️ The three forms of depoliticization of the economic and how technocracy empowered it 📖 (Page 130)
Page 131
economic experts-in their high position within the state apparatusconstructed consensus through economic models that excluded capital (as a social relation of production) as a variable; instead it became a given. By embedding hierarchical social relations within their equation, these neoclassical models also replace the concept of exploitation as the basis of profit with an idea of “market freedom”; labor is no longer the central motor of the economic machine, it is a choice or calling. Meanwhile it is the entrepreneur’s capacity to save and invest that drives the economy (note the vernacular switch from “capitalist” to “entrepreneur,” which connotes a sense of individual achievement). Indeed, these models do not envisage class conflicts between the capitalists and the workers, but rather postulate a society of individuals who can all potentially save (and invest) their money (that is, if they act virtuously) and whose interests harmonize with those of the other members of society. In this way, technocrats counteracted any critique regarding vertical relations of production and justified capitalism as a system that benefits society as a whole. The austerity economists conflated the good of the whole with the good of the capitalist class. They postulated the national interest as congruent with the interest of private capitalism. These beliefs imbue austerity today, as then.
✏️ Propaganda at the core of establishing capitalism as the inevitable and uncontested default setting of the world 📖 (Page 131)
Page 141
After the presentation of empirical evidence of the financial predicament,” the conferences did not portray the causes of such evil as, say, structural economic contradictions or the decision to wage a big, expensive war; rather, they laid the blame at the feet of the nations’ citizens. Citizens were guilty of a desire to live above their means and of pressuring governments to satisfy these “excessive” desires not just through social measures, but through the subversion of the pillars of capitalism. This, as the financier R. H. Brand put it, was a historical paradox: It is a paradox of the situation that, urgent as is this limitation of expenditure on financial and economic grounds, the whole force of public opinion still seems to be exerted in the opposite direction. The war has led to an almost universal demand for the extension of Government functions. Everyone has grown accustomed to State assistance and State activity. Socialism and nationalism are the order of the day. The manual workers… were encouraged to expect, and do expect, some new way of life, some great betterment of their lot. These changes, they believe can be achieved if the system of private industry is replaced by a sort of Government or common ownership. They do not realize the hard truth that… a better life can, owing to the losses of the war, be now reached only through labour and suffering.
✏️ At Brussels conference 1920, setting the stage for how to blame financial troubles on individuals for wanting too much 📖 (Page 141)
Page 141
… the “hard truth” lay in their “mode of treatment”: citizens’ behavior had to be shaped and controlled according to the principles of economic science that would rehabilitate the conditions of capital accumulation. Individuals had to work harder, consume less, expect less from the government as a social actor, and renounce any form of labor action that would impede the flow of production. Lord Chalmers had stated it succinctly: “work hard, live hard, save hard.”
📖 (Page 141)
Page 142
.. labour efficiency will have to be increased, in the first place by avoiding strikes, but further also by a more intensive supply of labour-service.” Moderation, too, could serve to complement workers’ discipline. Economic recovery required “reducing the home-consumption to the strictly necessary and avoiding the superfluous, e.g., excessive consumption of butter, sugar, etc.”
📖 (Page 142)
Page 145
“The Conference considers that every Government should abandon at the earliest practicable date all uneconomical and artificial measures which conceal from the people the true economic situation.”
✏️ The trick they’re applying here is to paint certain things as uneconomical and artifical… As if to say that there is a natural state that’s being obscured. 📖 (Page 145)
Page 145
Such measures included welfare and social expenses, price controls over primary goods such as “bread and other foodstuff” unemployment benefits, and low transportation service fares and postal rates. The resolutions condemned the existence of these policies as “wasteful” and “extravagant” public expenditures and interferences with markets.
✏️ These are the things that are “artifical”.. Anything that takes care of the people. 📖 (Page 145)
Page 145
Cuts in welfare expenditures and social services increased the pool of surplus, which could be used for private investment or paying back government debt, which would in turn reward creditors (i.e., the virtuous savers in society
✏️ Money flows away from the people and towards the elite 📖 (Page 145)
Page 146
Increases in universal taxation contributed to a transfer of wealth from the many to the few, under the guise of benefit for all. Resolution VI of Brussels read, “fresh taxation must be imposed to meet the deficit, and this process must be ruthlessly continued” (Resolution VI, Commission on Public Finance, Brussels 1920, vol. 1, 14). Of course, there was a central caveat: taxation which “might be a burden on private industry” was to be avoided.
✏️ Again, money taken from the many, the poor.. But not the rich and elite. 📖 (Page 146)
Page 146
Swedish banker Oscar Rydbeck sang the praises of consumption taxation (the quintessence of regressive taxation) as “a method of taxing which directly promotes savings [of the popular masses],” since “everyone who wants to buy an article on which he has to pay a certain tax has to consider whether he can afford it or not, whether he can save the expense or not” (Verbatim Record, Brussels 1920, vol. 2, 33). The larger point was clear: a re-education of the general population, which would learn the “virtue” of thrift. The Swedish banker Rydbeck was adamant that his people had to cut back on their daily purchases: “When speaking of saving, we must not forget that if saving is not effected by the general masses of the people, who at the present time have come into possession of more money than they were accustomed to, very little good will be done. In order to induce the broad masses to save, indirect taxation must be introduced.
✏️ The guise of teaching people to be better.. They don’t know how to save, how to be competent, so we’ll force it thru taxation. 📖 (Page 146)
Page 148
Where consensus failed, coercion was the substitute. Indeed, even in cases where public opinion opposed these economic “truths,” the beauty of budget cuts was such that, once set in motion, they secured compliance anyway; the elimination of welfare programs imposed thrift on the majority. Moreover, fiscal austerity meant that workers were left to compete in the free market with no social safety net. Thus, the survival instinct would kick in, killing strikes, bottling demands for higher wages, and penalizing all manner of insubordinate behavior.
✏️ Consensus and coercion.. One way or another, people will be brought to heel. 📖 (Page 148)
Page 352
What is clear is that many in the establishment were certain that a major blowup was near at hand. In Luigi Einaudi’s words from 1933: “The situation would really have become revolutionary if the leaders of the socialist movement had exploited the revolt of the factory workers and moved to an assault on the regime” (Einaudi 1933, 332).
✏️ Quote from footnote about how extremely close this was to a revolution. 📖 (Page 352)