Clara Mattei: Capitalism is incompatible with democracy – 02/15/2024 – Market

Celebrated by figures such as Thomas Piketty and Martin Wolf, the book “The Order of Capital” proposes a new way of seeing the austerity policies adopted by different countries.

Not as an unpopular and painful exception used only to reduce the budget deficit in moments of greater imbalance in public accounts, but as “the mainstay of modern capitalism”, according to Italian Clara Mattei.

In the book, the researcher goes back to the 1920s to show how austerity emerged after the First World War in countries like England and Italy, when organized workers demanded more social rights.

For Mattei, austerity was at that time — and continues to be today — “an anti-democratic reaction to threats of social change coming from below”. Hence the subtitle of the work: “How economists invented austerity and paved the way for fascism”.

In an interview with Sheetshe says that “economic decisions are largely political decisions”, but that “capitalism is incompatible with democracy in the sense of people’s participation in economic decisions”.

In her book, Mrs. states that austerity programs should be seen not as an exception, but as the mainstay of modern capitalism. What is the analytical gain from this perspective?
My definition has the advantage of being a political definition, in which it is clear who wins and who loses from austerity policies. This definition tries to go beyond the idea that austerity is just a reduction in the size of the State.

Talking about “less State” is a very ideological way of understanding the history of capitalism and our current economic situation. The point is not to see if the State spends less, but where the State spends. Because austerity does not mean less State, but State spending in favor of the elites to the detriment of the majority of the population.

The trinity of austerity policies — fiscal, monetary and industrial — are aimed at weakening unions and keeping workers in check. And this while the State spends a lot of money on the military industrial complex, for example, or subsidizing and relieving private investments in green energy, or rescuing banks.

His research goes back to the 1920s to detect the origins of austerity in England and Italy. What explains the emergence of this prescription?
Austerity is not a product of the exception of the neoliberal system. What I try to show is how, in fact, austerity is functional and structural for capitalism. It is particularly useful when people want an alternative economic system, they want more social rights. Then austerity is very important for the elite, in order to preserve the status quo.

After the First World War [1914-1918], this was very clear, because it was a moment when, at the heart of capitalism, citizens were demanding post-capitalist societies, breaking with wage relations, breaking with private ownership of the means of production in favor of economic democracy. In other words, people wanted workers to participate in the production and distribution process. That’s when austerity was born.

The book’s subtitle makes a strong connection between austerity and fascism, but England did not have a fascist government. Is it possible to generalize the connection?
The point is to show that Mussolini became so powerful because he was very good at implementing austerity, exactly the same policies that liberals in Italy, the United States and the United Kingdom were sponsoring.

The ability to subjugate workers, make them accept lower wages and stop strikes; the ability to privatize, to cut social spending and revalue the lira: all of this made Mussolini who he became, a fascist dictator who remained in government for more than 20 years.

Capitalism is quite incompatible with democracy in the sense of people’s participation in economic decisions and the distribution of resources.

Of course capitalism is compatible with electoral democracy, but that is superficial. In contemporary capitalism, you can become fascist to support the priorities of the economy. That’s what happened in Italy under Mussolini, in Chile under Pinochet and what’s happening now in Argentina with Milei.

In other countries it is not so different, if you look at the need to protect economic decisions from people’s interference. And this is done with the independence of the Central Bank, with the idea of ​​placing balanced budgets in the Constitution, with technical mechanisms that have the same effect of dedemocratizing the economy.

There is a tension between capitalism and democracy. Fascist governments, obviously, are undemocratic. But what is generalizable is that supposedly liberal democracies also have antidemocratic tendencies that are much more associated with fascism than used to be thought.

What lessons can be learned regarding the far right today?
Far-right governments are very good at implementing austerity and, for this reason, they gain the trust of the market and are viewed favorably by technocrats internationally.

But the context now is very different. When Mussolini came to power, he was there explicitly to crush those who were mobilizing. Today, people vote for far-right governments because they have been disempowered by a century of austerity policies.

The success of austerity is in individualizing us, making us very precarious, making us very insecure, so that we don’t feel that we are united as workers. The reason these far-right governments come to power is because they ultimately represent an expression of dissatisfaction with the current economic system, which people understand as a system in favor of the rich and powerful.

The problem is that people vote for the right, but the right is better at implementing austerity.

In Brazil, austerity policies are not exclusive to right-wing governments. Why does it happen?
This is another very important lesson that we can draw from historical study: unfortunately, austerity crosses party lines. It is the expression of the false pluralism in the economy that our electoral democracies present. They give us the impression that, if we vote for Lula instead of Bolsonaro, we will have a complete change in economic policies, but it is more complicated than that.

Under capitalism, the priority of any government, right or left, is to secure the foundations for capital accumulation, which means not disturbing private investors.

So we cannot think that we vote once every four years and our work is done, because there are very strong pressures coming from the market. If the Brazilian people, like any other people, want serious social change, they need to fight for it.

If you look historically, you will realize that there is much more potential for alternative economic systems than we are used to thinking, because the main objective of the economists in power is to tell us that there is no possible alternative.

Alternatives exist, but to obtain them, it is not enough to elect someone who says they will do something different. We need greater participation by the people in the economy.

But how can we escape the logic that controls the economy on a global scale today?
The main message that emerges from the book is that economic decisions are largely political decisions, in the sense that there is nothing that is a technical necessity. These are political decisions that take place within a system that operates under specific pressures.

You can go against these pressures, but you will have to bear the consequences. This change will not happen smoothly. If you want to truly subvert the capitalist state from within, you need to understand that it won’t be easy.

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Clara E. Mattei, 35
With a degree in philosophy, a master’s degree in the same discipline and a PhD in economics, she is an associate professor in the Department of Economics at the New School for Social Research (New York)