Must-read: Simon Wren-Lewis: “The Financial Crisis, Austerity and the Shift from the Centre”

Must-Read: Simon Wren-Lewis: The Financial Crisis, Austerity and the Shift from the Centre: “Think of two separate one dimensional continuums…

…one economic, with neoliberal at one end and statist at the other, and the other something like identity. Identity can take many forms. It can be national identity (nationalism at one end and internationalism at the other), or race, or religion, or culture, or class. Identity politics is stronger on the right…. For the political right identity in terms of class can work happily with neoliberalism, but identity in terms of the nation state, culture and perhaps race less so…. When neoliberalism is discredited, this potential contradiction on the right becomes more evident… [as] politicians on the right use identity politics to deflect attention from the consequences of neoliberalism…. Identity has always been strong on the right, so it is a little misleading to see it as only something that the right uses in an instrumental way….

None of this detracts from the basic point that Quiggin makes: the apparent drift from the political centre ground is a consequence, for both left and right, of the financial crisis…. One interesting question for me is how much the current situation has been magnified by austerity. If a larger fiscal stimulus had been put in place in 2009, and we had not shifted to austerity in 2010, would the political fragmentation we are now seeing have still occurred? If the answer is no, to what extent was austerity an inevitable political consequence of the financial crisis, or did it owe much more to opportunism by neoliberals on the right, using popular concern about the deficit as a means by which to achieve a smaller state? Why did we have austerity in this recession and not in earlier recessions? I think these are questions a lot more people on the right as well as the left should be asking.

April 7, 2016


Brad DeLong
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