Austerity: The Intellectual History of a Dangerous Idea
Mark Blyth, Brown University
The debate over austerity as the appropriate economic policy response to the euro crisis continues.
Recent warnings by the IMF regarding extremely large negative multipliers on government spending
cuts came on top of increasing political resistance to austerity measures throughout the European
periphery and European economic data that continue to disappoint. Austerity advocates cite successes
in the Baltic states, but close examination reveals them to have been less than successful. In the
face of such evidence, why does the policy continue to, as Keynes put it eighty years ago, “dominate
the minds of the governing classes of this generation”? A look at the intellectual history of austerity
as an economic idea as reflected in the writings of Locke, Hume, Smith, Ricardo, Mill, Schumpeter,
and Keynes as well as in ordoliberalism, monetarism, public choice theory and other recent approaches
will enable us to answer Keynes’s question.
Mark Blyth is Professor of International
Political Economy and faculty fellow of the Watson Institute for International
Studies at Brown University in Providence, USA. He is particularly interested in how uncertainty and randomness impact
complex systems, particularly economic systems. He is the author of several books including Great Transformations:
Economic Ideas and Institutional Change in the Twentieth Century (2002) and, most recently, Austerity: The History
of a Dangerous Idea (2013), which questions the return to prominence of financial orthodoxy following the global financial crisis.