Neoliberal economists saw wage cuts as necessary for small states to compete globally.
Evidence
Haberler thought wages in postwar Austria must fall to restore competitiveness. He put it plainly in a newspaper article in Vienna in 1933: “The dismantlement of tariffs will bring pain to a series of economic sectors … but the pains of transition will not be long term, they will also definitely not be worse than the unhappiness that we have been plunged into by years of tariff addiction.” He asked the question: “How can an economy that is more poorly equipped in almost every re spect withstand the competition of an industry and agriculture working with better production conditions without protecting itself with extra- high tariffs?” The answer was simple: “The poor economy can compete with the rich when the wages and all other forms of income are correspondingly smaller.” He put it bluntly: “When we have faced the necessary consequences completely, when the standard of living has sunk low enough, income has fallen far enough, then the economy can progress, business as usual… . When the skilled workers in export industry have moved into the coal mines, maybe into agriculture and other economic sectors too, whose products can be better exchanged for qualified export goods and the rest of the workers, insofar as possible, have emigrated, then maybe all will be employed again, granted at a pronouncedly lower standard of living.” For Haberler, Austria was a prototypical case of small state in the storms of globalization. As he had written a few years earlier, huge countries like the United States and the British “world empire” might be able to follow policies of stabilizing the internal price level, but small countries needed to remain attractive to foreign investment and therefore had to concentrate on stabilizing their currency. There was no escape from the discipline of the world economy. — Quinn Slobodian, Globalists, 185
Categorization
- DEFINE: Early articulation of the core neoliberal axiom that small economies must submit to the ‘discipline of the world economy’ through wage deflation rather than tariff protection.
- XREF: Connects to later chapters on the Washington Consensus and structural adjustment where this logic was exported to the Global South. — connects to: Early neoliberals saw large unions as monopoly threats distorting wages — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 968; Austerity economists framed state restraint as protecting productive citizens. — Clara E. Mattei, The Capital Order: How Economists…, 1710; Neoliberals wanted an international order forcing anti-inflationary policy onto states — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 425 (+1 more)
Broader Connections
- Early neoliberals saw large unions as monopoly threats distorting wages
#corroborates(0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 968 - Austerity is voluntary deflation achieved by cutting state budgets to restore competitiveness
#corroborates(0.85) — Mark Blyth, Austerity, 25 - Austerity economists framed state restraint as protecting productive citizens.
#corroborates(0.80) — Clara E. Mattei, The Capital Order, 1710 - Neoliberals wanted an international order forcing anti-inflationary policy onto states
#corroborates(0.80) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 425