European officials pushed austerity during the G20 and ended global Keynesianism

Evidence

Days before the G20 meeting, ECB chief Trichet explicitly rejected Keynesian demand-deficiency arguments, citing the need for “a budget policy … that we would call confidence building” that centered upon the reduction of debt. Two days later, the German finance minister Wolfgang Schäuble published an extended piece in the Financial Times in which he stressed the need for “expansionary fiscal consolidation.” Invoking the specter of future inflation, he declared that “we [Germany] … are … more preoccupied with the implications of excessive deficits and the dangers of high inflation.” As such, Germany would not respond to the crisis by “piling up public debt.” By the time of the Toronto meeting, the Canadians and the British had sided with the Germans, leaving the Americans isolated. The final communiqué of the Toronto meeting repeated the meme, authored by Trichet and amplified by Schäuble, of “growth friendly fiscal consolidation.” Seen at the time as a fudge between the Keynesian and orthodox positions, what it actually signaled was the end of global Keynesianism. — Mark Blyth, Austerity, 173

Categorization

• XREF: Connects directly to Mattei’s history of austerity and to the broader narrative of the 2008 crisis response giving way to consolidation orthodoxy. — connects to: The June 2010 G20 marked the global policy shift from Keynesian stimulus to austerity — Mark Blyth, Austerity: The History of a Dangerous…, 13; Neoliberal ideas were displaced by Keynesianism only briefly — Mark Blyth, Austerity: The History of a Dangerous…, 157; The global Keynesian stimulus push lasted barely a year before backsliding — Mark Blyth, Austerity: The History of a Dangerous…, 160 (+5 more)
• SEED: The ‘growth friendly fiscal consolidation’ slogan as a case study in how euphemistic policy language launders contested ideology into apparent consensus.

Broader Connections

• Global interdependence weakened national economic control and Keynesian policy #corroborates (0.75) — Anthony Giddens, The Consequences of Modernity, 188
• The Reagan-Thatcher era redistributed wealth from poor to rich rather than abandoning Keynesianism #complicates (0.72) — Alex Callinicos, Against Postmodernism, 601