In the long period of neoliberal hegemony there have been marked and overlapping transfers of political authority: from the national to international levels; from institutions where popular sovereignty might be exercised, to opaque technocratic, expert bodies where complex networks of public and private actors arrive at decisions; and, from public authorities to private ones. These processes have often been termed ‘depoliticization’, a term that connotes the removal of issue areas from the scope of normal politics and their transfer to geographically, or institutionally remote and unaccountable decision-making bodies. Despite the label, such processes are, of course, highly political, and the type of ‘depoliticization’ achieved is only with respect to democratic and popular impact (McBride and Schnittker 2021). The periodic crises experienced in the neoliberal era have provided opportunities to intensify these trends or, potentially at least, reverse them.

Austerity, defined as fiscal consolidation, public sector structural reforms and flexibilization of labour markets, presents a common thread among capitalist states in the neoliberal era and received particular prominence as a, slightly delayed, response to the economic crisis following 2007– 08. It had long been a central component of neoliberal ideology, and its associated policies considered as a capital accumulation strategy (Harvey 2005). Viewed as a policy response to the 2007– 08 financial crisis austerity has a number of dimensions extending to fiscal matters of budget balances and debt ceilings, repurposing and privatizing, or marketizing as much of the public sector as possible, and restructuring social and labour market policies. The language of balanced budgets and debt limits is presented as a contribution to sustainable public finance, restructuring the public service on market lines is seen as a means of enhancing efficiency, and labour market reform as a means to competitiveness (see Whiteside et al 2021).

The defects of austerity received much attention (Gough 2011; Guajardo et al 2011; Blyth 2013; Herndon et al 2013) yet the critics made little progress in reversing the priorities of states or international organizations. Indeed, the needed policy debate was partially stifled by institutional measures intended to ‘depoliticize’ debates on economic policy and render a variety of policies subject to the application of permanent and fixed rules. In the process democracy was diminished and a prerequisite of good policy undermined.

Austerity, defined broadly as a compound of fiscal consolidation, public sector restructuring and labour market flexibilization, has played a key role in the decades-long hegemony of neoliberalism, and in its subsequent crisis. After a brief period of fiscal stimulus after the Great Financial Crisis of 2007–08, there was an intensification of austerity, albeit with some variety within a common theme (see Whiteside et al 2021). Its effects have influenced experience of the COVID-19 pandemic.

Considered as a ‘solution’ to the financial and economic crisis austerity policies were an abject failure. In a global system experiencing multiple crises austerity had nothing positive to contribute. Its intellectual rationale was subjected to lethal critique (Stiglitz 2011; Blyth 2013; Herndon et al 2013; Krugman 2013;). Yet the national and international economic and political elites, international organizations and national governments remained in lockstep, imposing austerity as a necessary and productive response.

Though clearly not directly responsible for the health crisis that emerged as a result of the spread of the COVID-19 virus in early 2020, some effects of austerity (and of neoliberal globalization more generally) exacerbated the situation. These included diminished public services, a precarious and low-waged labour force in affected sectors such as long-term care, the intrusion of the profit motive into such facilities where returns could be maximized through over-crowding, labour economies involving a just-in-time workforce often working in several facilities and therefore liable to spread the infection, eroded capacity of national governments and diminished industrial capacity where ‘advanced’ industrial societies were unable to supply protective equipment in a timely fashion. Austerity thus contributed to the severity of the pandemic and the lived experience of it for many.

Driven by finance and producing extreme inequality of wealth and income, austerity sustained its own economic crisis for a decade after the GFC and contributed to the multiple other crises the world is experiencing – environmental-ecological, food security, dislocation of peoples and migration, stagnant economies and now health. Compounding all this is the failure of institutions to represent popular will and respond democratically.

This chapter deals with the impact of austerity and, more broadly, neoliberalism on one of the mechanisms used by labour to shape or modify the political-economic environment that it encounters in its dealings with capital. We refer here to social concertation as an umbrella term encapsulating processes and institutions of social partnership/social dialogue/social concertation/and neo-corporatism. Labour has other instruments. These include political action – either through endorsement or participation in political parties representing its interests, or through lobbying or otherwise seeking to influence political decision makers; direct action of various types – general strikes, boycotts, civil disobedience, use of legal processes and the courts; and various forms of industrial action. Here we focus on one aspect of labour's representative role. Through unions, or trade union federations at various geographic scales, labour has engaged in joint negotiations or discussions with employers’ federations and the state in processes and institutions designed to promote cooperation on various policy issues through partnership and dialogue.

As Guy Standing noted (1999, 43) regarding voice regulation of labour markets, these arrangements will work best where there is a relatively even balance between the social actors. Without such balance capital will see little need to participate (arguably this is the Canadian case); or the structure will simply be an exercise in which the weaker party (labour) receives symbolic recognition but whose participation functions mostly to legitimate decisions over which it has little control. One of the ingredients for the success of this type of regulation is the ‘shadow of the future’ – the realization by all sides that they have to deal with each other on a continuing basis, and hence that the maximization of some short-term advantages may not be desirable. Absent that, little meaningful dialogue or partnership can occur, though top-down concertation remains a possibility.

Various forms of social concertation between trade unions, capital and the state emerged in much of Europe in the process of post-war reconstruction. Over time, a variety of terms have been applied to the practices of social concertation including corporatism, neo-corporatism, tripartism, social dialogue and social partnership. These are, in essence, an institutionalized process of social dialogue expressed through ‘institutional arrangements … that directly involves major interest groups in policy development and implementation’ (Bradford and Stevens 1996, 146).

On 21–22 February 2019, more than a hundred university and non-government organization-based researchers from across Europe, Canada and Australia gathered in Berlin to participate in the ‘Austerity: Coping Is Not Enough’ conference. The chapters collected in this volume emerge from this international event which was hosted by the German Social Democratic Party's think tank, the FES. The conference itself grew out of a collaboration between FES and Stephen McBride's ‘Austerity and Its Alternatives’ Canadian-based project funded by the Social Sciences and Humanities Research Council of Canada. The conference participants sought to move the study of post-2008 crisis austerity forward through both a rigorous diagnosis of actually existing austerity as well as imagining the pathways out of permanent austerity. Among the key questions the conference sought to address were: how do social and economic relations change under conditions of permanent austerity? How do international, national and regional political institutions influence the development of austerity-regimes? What commonalities and differences exist between nations? And which alternatives exist to overcome the status quo of austerity politics? To analyze the causes, connections and effects of this new age of austerity-capitalism, a broad debate that questions the core ideas and dominant paradigms that animated politics, explores political alternatives and develops new and far-reaching perspectives is necessary to move beyond the contemporary stasis of coping. And coping is demonstrably not enough. The project of this book is to contribute to moving on.

In the wake of the 2008 crisis, as the ‘clean-up’ rolled out, critics of market liberalization, globalization and financialization saw their initial expectations dashed. Initial optimism was understandable, encouraged as it was by a rapid revival of the largely dormant ‘institutional legacy of Keynesianism’ (Strange 2012, 121) by governments and central banks, and doing so regardless of partisan hue. Such a coherent and broad response was seen to herald ‘the end of the Reagan-Thatcher counter-revolution’, nothing less than the demise of the era of neoliberalism (Collignon 2008, 8). It was a profoundly erroneous reading of the historical moment. Instead of witnessing the unravelling of a paradigm, it became an abject lesson in the stickiness of an established social order where neoliberalism, post-crisis, remained very nearly entirely intact, has even been solidified (Crouch 2011, 179; Mirowski 2013).

The neoliberal era has been one of increased inequality in both income and wealth distribution. The trend started in the 1970s in the US and has been most dramatic in the North Atlantic world but is also apparent in most of Europe. An OECD report (2017) noted that income inequality in Europe had grown over several decades. In Canada, gains in income were similarly concentrated at the top of the spectrum. Between 1982 and 2015, ‘The average real pre-tax income of the top 1 per cent of tax filers more than doubled, increasing by $320,000 – but the bottom 50 per cent of tax filers did not even keep up with inflation – their real income fell by an average of $1,546’ (Osberg, 2017: 28).

More generally, various scholars have made the case that the neoliberal period has been characterized by the rapid growth of transnational firms and finance, and the ongoing transfer of income and wealth to the wealthy few (see Piketty, 2014; Atkinson, 2015; Peters, 2020). As Faroohar (2016: 15) summarizes, ‘the share of financiers within the top 1 per cent of the income distribution nearly doubled between 1979 and 2005’. By this calculation, an unprecedented level of inequality was already in place when the crisis struck. While income inequality earned through bonuses, super-salaries and a dismantling of progressive income tax systems is one part of the story, wealth (and finance) is particularly implicated because, again quoting Faroohar (2016: 15):

This type of income often escapes even quasi-progressive payroll-based income tax systems. Thus, in the US, ‘the top twenty-five hedge fund managers in America make more than all the country's kindergarten teachers combined’ (Faroohar, 2016: 15–16).

Austerity itself is not the whole cause of inequality. Processes of financialization and wealth inequality began well before the 2008 crisis and subsequent austerity measures.