EP2 — Who Actually Pays
I’m doing a story about a policy sold as shared sacrifice — and it’s interesting because the sacrifice was never actually shared, and the people designing the policy knew that from the start. Episode 1 dismantled the household analogy. This episode asks the question the analogy exists to obscure: once the false comparison is gone, who is actually footing the bill?
Chain of Thought
Clara Mattei’s The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism argues that in both liberal Great Britain and fascist Italy after World War I, austerity “imposed steep costs in the short term but in the long term proved beneficial to capital” — and the mechanism was specific, not incidental: “by forcing the working class to rely on the private” market and private employers for wages and security, rather than on state spending and public provision, austerity systematically shifted bargaining power away from labor and toward owners of capital. Wage cuts, unemployment, and reduced public spending don’t distribute pain evenly across an economy. They fall overwhelmingly on people who depend on wages and public services, while asset holders and creditors are comparatively insulated, and often actively benefit, since a weakened labor market and a deflating economy raise the real value of what they’re owed and lower the cost of what they can buy.
The New Synthesis
Here’s what Mattei’s framing does that the “shared sacrifice” language never allows: it makes visible that austerity has a winner and a loser built into its design, not merely into its outcome — which reframes every subsequent argument in this season away from “did austerity work” (an efficiency question) and toward “who was it built to work for” (a distributional one), a question the technocratic framing of austerity is specifically constructed to keep off the table.
Landing
Which raises the obvious question about where, exactly, this design was first tested at national scale — and the answer is Britain in the 1920s, choosing to return to a monetary standard nearly everyone involved privately doubted. EP03 - 1920s Britain’s Return to Gold goes there next.
Notes for the room
- North Star: austerity’s costs fall on labor, not capital, from the outset.
- Sources: Clara E. Mattei, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, via Tavily — Dissent Magazine, “The Dawn of Austerity”; Exploring Economics summary.