Introduction

What do we mean by austerity? Taking a very wide view, Schui (2014), without explicitly defining austerity, writes that ‘The notion that individuals, states and societies benefit from limiting their consumption is almost as old as humanity’ (taken from a Kindle edition, location 20). This leads him on to an analysis of austerity that roots economic theories in philosophical, even psychological, frameworks. In terms of the approach to the ‘politics of austerity’ adopted in this chapter there are two different issues: (1) about austerity as applied to government, where there is a history as old as government itself concerned with government living within its means – as exemplified in disputes about extravagant monarchs (Magna Carta, Charles I), or (2) government requiring austerity of citizens, which after all would have been a non-issue until the emergence in the twentieth century when politics began to be about aspects of welfare and the securing of decent employment for all. It is in the second sense that Mark Blyth defines austerity as ‘a form of voluntary deflation in which the economy adjusts though reduction of wages, prices and public spending to restore competitiveness, which is (supposedly) best achieved by cutting the state's budgets, debts and deficits’ (Blyth, 2013, p 2). However, even then there is a need to pause to ask: on whom is government imposing austerity?

I am approaching these issues from the perspective of a political sociologist concerned to elucidate the ideas, with implications for the form austerity takes, in government approaches to the management of the economy. Hence, although I probably cannot hide my preferences between the competing ideas, because of their implications for citizens, I do not intend to express judgements about their efficacy (or indeed necessity) for the management of the economy.

While the overview of this subject goes back to the nineteenth century, the main focus is on three periods: the late 1920s and early 1930s, the immediate post-1945 period and the 1970s–80s. It will be suggested that in the first of those periods the dominant idea was still that the government could do little to manage the economy in ways that advanced welfare. Then in the second one austerity (in both senses) posed massive political problems about rebalancing public accounts and achieving post-war prosperity for a clearly welfare oriented government.