The Capital Order
For more than a century, governments facing financial crisis have resorted to the economic policies of austerity—cuts to wages, fiscal spending, and public benefits—as a path to solvency. While these policies have been successful in appeasing creditors, they’ve had devastating effects on social and economic welfare in countries all over the world. Today, as austerity remains a favored policy among troubled states, an important question remains: what if solvency was never really the goal? In The Capital Order, political economist Clara E. Mattei explores the intellectual origins of austerity to uncover its originating motives: the protection of capital—and indeed capitalism—in times of social upheaval from below. Mattei traces modern austerity to its origins in interwar Britain and Italy, revealing how the threat of working-class power in the years after World War I animated a set of top-down economic policies that elevated owners, smothered workers, and imposed a rigid economic hierarchy across their societies. Where these policies “succeeded,” relatively speaking, was in their enrichment of certain parties, including employers and foreign-trade interests, who accumulated power and capital at the expense of labor. Here, Mattei argues, is where the true value of austerity can be observed: its insulation of entrenched privilege and its elimination of all alternatives to capitalism.
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6recommend
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What Hacker News says
- For a similar thesis, that the austerity policies are manufactured by the well-off, I recommend Clara Mattei's Capital Order (as well as her YT channel).
- The book "The Capital Order" by Clara Mattei is recommended. Subtitle is "How economists invented austerity and paved the way to fascism".
It's a study of WW1 and the early 1920s from an economic and social POV.
- The title is linkbait-ish and the author is ideological, but the book reviewed in the OP, "The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism," by Clara Mattei, is truly worth a read.
Recommended by economists as different as Tyler Cowen and Thomas Pikkety, the book won Best Book of the Year by the Financial Times.
Ignore the OP's review of the book. Instead, read the book itself:
https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...
https://www.amazon.com/Capital-Order-Economists-Invented-Aus...
- I just finished a book called the capital order which addressed an alternative theory that I thought was fairly compelling.
https://www.amazon.com/Capital-Order-Economists-Invented-Aus...
Here is the summary from the publisher:
https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...
Obviously not mainstream theory (that primary theory is that capitalism has intrinsic boom and bust cycles) but I found it compelling. It’s important to understand that in Jane Austin’s books price and wealth was so stable that she used their annual allowances and salaries to identify the social classes of who she was talking about — that didn’t change in her era nearly as rapidly as the modern world, so much so that salaries and allowances were stable enough to be used in this way. Imagine how crazy the book would sound if it was someone in 2024 trying to make references with 1970s salaries! So the modern monetary system has a rather large amount of drift due to fiat currency’s inherent loss of value.
It’s important to separate the boom and bust cycle from fiat currency cycles, as a lot of stability we feel in the modern world is actually the constantly collapsing value of our medium of exchange… it creates a lot of price / asset distortions and “investment” opportunities where simply holding onto a capital asset unproductively provides a return as the value of the currency used to purchase the asset rather than an improvement in the assets actual underlying value. This pushes speculation and the accumulation of assets to the top of the wealth strategy pile, which leads to speculative asset bubbles. And in order to make this deeply profitable derivatives — pure financial instruments that represent “bets” on assets — become widespread, even further distorting real markets. These derivative markets are beyond conception large at this point. It’s not necessarily causative but I would suggest enhances their severity and scale.
There’s so many distortions it’s hard to pull apart one from the other, but that’s what I’ve been thinking about. Capitalism bad is trendy thinking and nonsensical. This system, despite its very deep problems, is responsible for pulling 2/3 of the world out of poverty and is the most consistent force for positive civilization we have ever discovered. We simply need to adjust the systems incentives and harness the very same system that’s causing so much destruction to help reverse its own negative effects. This is common sense, but the current trend is towards self-hated and it’s very trendy to call for the downfall of the entire current system.
Capitalism can have socialism incorporated: plenty of countries do it. There isn’t a pure approach that’s going to work in the broader world, but it’s incredibly important to understand assets, fiat, bubbles and the system that allows them as a spectrum of various systems and not reduce it down to the convenient but nonsensical talking points people use on social media.
I could go on and on about this subject. The biggest issue we have with our current system is that it’s been taken up as a cause de jour by respective sides of passionate but supposedly opposite political parties and people are invested in their viewpoints as self-ideology and find different views therefore ideologically and personally threatening, and also try to assign any conversation to a familiar political stripe. It can make conversation difficult.
- I have really been enjoying listening to The Capital Order on Audible. Worth checking out.
The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism
https://www.amazon.com/Capital-Order-Economists-Invented-Aus...
I seriously doubt it’s going to get on the reading list of the IMF however.
- An interesting recent book that traces the ideological tinges of neo-liberal, "austerity", politics back to WW1 is The Capital Order by Clara E Mattei [0]. It's a very well written (if also frequently depressing) example of political economy used to make a clear and distinct point about something like "austerity" which we often perceive as a "natural" requirement of the economy.
[0}: https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...
