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Austerity, I would like to
say, is more than just policy.

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It's also the theory
justifying the policy.

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And, of course, the theory came out in

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direct opposition to a theory that was
instead trying to empower the workers.

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Jack Morgan was a big supporter of

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Mussolini and supported him
financially from the very beginning.

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So, the connection between Mussolini and
the financial establishment in the United

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States, and especially Wall Street, is
something that is also well documented, in

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the book of Gian Giacomo Migone called
"The United States and Fascist Italy".

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Now, let's see if we can avoid
the apocalypse altogether.

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Here's another episode of Macro N
Cheese with your host, Steve Grumbine.

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All right.
This is Steve with Macro N Cheese.

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I am super excited.

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I go by the tagline "Austerity is Murder".

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And I am frequently talking about ending
neoliberalism and attacking neoliberalism.

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So imagine my surprise when somebody says,

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you got to check out this book by Clara
Mattei and it's called "The Capital Order:

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How Economists Invented Austerity
and Paved the Way to Fascism".

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So I'm looking all over YouTube and all
these fantastic interviews with this lady

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I've not heard of and I'm
getting super excited.

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She seems to have the right references.

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James Galbraith is on the back you've got

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Mariana Mazzucato on the back, Mark
Blyth, a bunch of really big names.

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And so I get the book and I read it and

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sure enough, reach out to her and she
says, yeah, I'll do an interview with you.

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So I have the pleasure of bringing
on Professor Clara Mattei.

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She is an assistant professor of economics

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at the New School for Social
Research in New York City.

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And as I already stated, she is the author
of the must-read "The Capital Order: How

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Economists Invented Austerity
and Paved the Way to Fascism".

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And with that, Clara, thank you
so much for joining me today.

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It's an absolute pleasure to be here.

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Thank you for inviting me.

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You better believe it.

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This word, austerity is not normalized
enough in the United States.

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I think people wonder a lot
of times what it even means.

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What about austerity brought you to
even think about writing about it?

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And can you give us a definition
of what austerity is?

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Yes, definitely.

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I recently wrote a piece in The Guardian

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pointing out how austerity, the A
word, is everywhere but unspoken.

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Especially after social breakdown, after
the 2009 sovereign debt crisis in which

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austerity was wielded throughout the world
and we saw the devastating social effects.

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Now the new norm is to apply austerity
without mentioning the word.

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And this is something that makes sense
because ultimately our society--and this

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is what I argue in the book--has been
shaped by austerity policies more or less

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for the last 100 years,
with brief exceptions.

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And ultimately the point here is that
austerity is not just an exception to how

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capitalism functions but it's quite
the norm to capitalism itself.

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That's why we need to trace the origins

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of austerity much prior to the neoliberal
turn of the late 1970s and see it as

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something that is ultimately foundational
and I would say in the DNA of capitalism.

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It's a mainstay of the capital order.

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And I will get to what
capital order is in a minute.

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But to answer your question, austerity.

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Austerity underscores all the common

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tropes of contemporary economic policy, to
the point that we can even just see it as

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synonymous of what is considered
good economic policy.

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So I see austerity as made up of three

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main spheres that interconnect
and help support one another.

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First is fiscal austerity.

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Fiscal austerity is fundamentally cuts
in the budget but not generalized cuts.

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So again, we can't see this in the

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aggregate, but it's about
where you're cutting.

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It's about cutting social expenditures.

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So if a country is spending a lot for the
war and the entire budget is not

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decreasing, this does not mean that
fiscal austerity isn't in place.

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Because if you go look, potentially

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there are additions to the expenditures on
military expenditure, for example and this

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is very topical right now, but
cuts in all of the social spheres.

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So of course schools, housing,
transportation, and you name it.

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So fiscal austerity is where you spend

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and where you cut, but also where
the revenue of the state comes from.

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And this is why fiscal austerity
is also about regressive taxation.

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And regressive taxation is fundamentally

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the fact that more and more we see
everywhere that the majority of citizens

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pay in relative terms much more taxes
than the elite and the upper bracket.

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So part of regressive taxation is

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fundamentally increasing, for example,
consumption taxes, which we are all paying

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the same, me and Jeff Bezos pay the same
consumption tax on bread, for example.

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Or a cut in corporate taxes, something

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that we've of course seen in the last
United States administration--

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somehow the fact that once more the top
pays less taxes than the bottom majority.

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That's fiscal austerity.

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So how you spend and where the
revenue of the state comes in.

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Then we have monetary austerity, which of

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course is exactly what we're seeing
right now everywhere in the globe.

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Interest rate hikes is an austerity

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measure because it rewards the saving
investing classes, big creditors at the

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expense of the rest of society that not
only has to consume less, but it also

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usually has to face harsher
labor market dynamics.

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00:07:17,850 --> 00:07:22,060
And we see even in the United States
today, the Financial Times were showing

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how the economy is cooling, the
labor market is cooling down.

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And this is a big effect
of monetary austerity.

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00:07:29,840 --> 00:07:31,560
And finally we have what I call in the

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00:07:31,590 --> 00:07:37,220
book industrial austerity which is
directly an attack on labor relations.

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Privatization is big in which you increase
the dependence on the market of people

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rather than being hired by the public
sector with a stable job and certain

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rights, you end up having to
face the market competition.

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And precarious.

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It's attacks on organized labor, wage

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repression, that can also happen
directly in many settings.

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00:08:01,770 --> 00:08:07,320
So this trinity of austerity, fiscal,
monetary, industrial in The Capital Order,

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I show how it works together and
ultimately has the fundamental effect of

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preserving what in my book
I call the capital order.

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Without understanding, it seems like what

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we're experiencing at this moment with the
interest rate hikes and Joe Biden

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celebrating $2 trillion in deficit
reduction, this is a form of that

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disciplining of labor that
is going on currently.

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It's a reshuffling after the COVID

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pandemic and people got something extra
and they were not forced back to work.

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So we've got to discipline labor, we've
got to get them back to where we can

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control things, where the
capital order can be satisfied.

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Is that kind of a modern day version
of what we're talking about here?

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Definitely.
So I'm not that surprised by it.

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But in a way it's more than obvious in the

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last months how the same dynamics that I
talk about in the book, and I must say the

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book reconstructs the origins of
austerity after the First World War.

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And there's a reason for this.

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And the reason being that it was during

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the First World War that forces were
triggered that allowed for the capital

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order to be fully questioned
and put into crisis.

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In the 'red biennium,' the years
immediately following the Great War.

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So 1918, 1920, years in which the majority
of citizens--and I looked specifically at

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Europe because it was the place in the
world in which there was a larger

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democratization process going on in a
moment of large scale democratization and

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large scale demands for socioeconomic
change that was extremely radical.

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It was not just about reforms.

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And of course that was a moment in which,
for example, the modern welfare state was

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born in Britain and Italy
and in other countries.

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But it was more than just
reforming the system.

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It was the idea of completely

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uprooting the fundamentals,
the pillars of capitalism.

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And by pillars of capitalism, I mean what
ultimately governs our society today,

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which is the private property
of means of production.

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The fact that investment is done by
private businesses and entities.

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And wage relations.

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00:10:29,690 --> 00:10:32,460
The fact that the majority of us has no

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other choice to make a living but to sell
one's labor power in return for a wage.

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Now these are pillars of capitalism that

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as citizens of capitalism we tend to
take for granted during our daily lives.

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And part of the mission of the book is
actually to reproblematize them by saying,

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actually 100 years ago there was a moment
in which nobody thought these were going

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to be the founding principles
of the society to come.

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Everyone was convinced that capitalism,

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00:11:05,650 --> 00:11:10,800
with its foundation in private property of
means of production, and wage relations to

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00:11:10,830 --> 00:11:15,940
achieve profits, as a way to organize our
production process was going to last.

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Everyone thought it was over and this was
true both for the workers, the majority

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00:11:20,490 --> 00:11:24,780
who are challenging the system and those
who are trying to protect the system.

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00:11:24,810 --> 00:11:28,060
So while of course the years after that

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00:11:28,080 --> 00:11:32,860
are years that we can without a problem
define revolutionary or the most

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00:11:32,890 --> 00:11:38,980
revolutionary given the history of
capitalism and again capitalism even if we

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do grow up thinking that it
is an eternal natural given.

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I always remind my students that homo

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sapiens, so human beings, have been on the
planet for 300,000 years and capitalism is

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00:11:54,210 --> 00:11:57,540
more or less only a little
bit more than 300 years old.

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Now there's debates on when exactly we can

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00:12:00,330 --> 00:12:02,740
start defining our
societies as capitalist.

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00:12:02,770 --> 00:12:07,320
But certainly this means that
fundamentally we've been in a capitalist

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00:12:07,350 --> 00:12:12,060
society for only 0.1% of
the history of humankind.

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So once we realize this and we realize

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that capital--and again I have not defined
it yet for the audience--capital is the

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00:12:20,770 --> 00:12:26,580
social relation
that is necessary to stand in order for

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economic growth in our
system to even take place.

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In order for GDPs to grow in our society
and for the economy to run smoothly and

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investment to happen, we need to secure
the fact that the majority of us is

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willing to sell, once more, one's
labor power in return for a wage.

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The fact that we are willing to go
to work in exchange for a wage.

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And this is again something that we are in

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a way forced to do without
anyone forcing us physically.

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00:13:01,810 --> 00:13:04,740
But it's the typical impersonal coercion

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that someone like Karl
Marx described very well.

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This impersonal coercion is not against

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00:13:10,770 --> 00:13:15,340
something that is going to be always
present, unless you protect it.

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So the mission of austerity is to protect
capital as a social relation that governs

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our society, and it is in fact the social
relation that allows for capital in the

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money form, all the commodities
we see to even be produced.

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And this social relation
requires constant protection.

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In some moments more than others.

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And I think, historically speaking, now we

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are in a phase in which, even if economic
experts try to hide and deny this truth,

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they are very well aware of how much the
labor market is, in a way, going through a

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phase that is definitely a phase of
crisis, in the sense that there is deep

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questioning of the very conditions
people find themselves in.

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00:14:05,850 --> 00:14:08,140
We saw the phenomenon of the great

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00:14:08,170 --> 00:14:10,940
resignation that was very
big in the United States.

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00:14:10,970 --> 00:14:12,960
It's still happening right now, even if

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00:14:12,990 --> 00:14:17,420
the economy is cooling and the
unemployment rate is starting to go up.

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00:14:17,450 --> 00:14:19,780
It is still the case that many people

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00:14:19,810 --> 00:14:23,620
refuse to sell their labor
power in return for a wage.

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00:14:23,650 --> 00:14:28,420
And of course this was triggered
by, I think many factors.

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00:14:28,450 --> 00:14:33,620
Certainly also the fact that with the
pandemic there were some forms of social

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00:14:33,650 --> 00:14:37,540
redistribution that were unusual
for the American economy.

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00:14:37,570 --> 00:14:41,980
This has helped problematize our condition

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00:14:42,010 --> 00:14:45,940
that we usually take for
granted as wage workers.

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00:14:45,970 --> 00:14:51,480
So in this sense, I think today, of
course, we cannot say that we were in the

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00:14:51,510 --> 00:14:55,900
same revolutionary setting as the Red
Biennium after the First World War.

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00:14:55,930 --> 00:15:03,380
But certainly the inflationary pressures
are triggering a breakdown of the dominant

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00:15:03,410 --> 00:15:08,340
ideology--by which the system is
the most efficient we can have.

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00:15:08,370 --> 00:15:10,380
And an eternal system.

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00:15:10,410 --> 00:15:16,020
And people are realizing that capitalism
is not the best and only possible world.

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00:15:16,050 --> 00:15:20,820
And that's why austerity is fundamental,
because we know that with interest rate

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00:15:20,850 --> 00:15:27,260
hikes and at the same time by curbing
social expenditures, you are cooling down

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00:15:27,290 --> 00:15:31,180
the economy--using the terms
economists like to use.

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00:15:31,210 --> 00:15:33,660
And this will in their terms, fix the

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00:15:33,690 --> 00:15:39,620
labor market in the sense that they will
be able to produce conditions that will

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00:15:39,650 --> 00:15:47,020
force people to accept lower wages and of
course accept to go and work for wage.

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00:15:47,050 --> 00:15:49,420
And this is something that, once more, is

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00:15:49,450 --> 00:15:52,220
not something that has to
be politically enforced.

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00:15:52,250 --> 00:15:57,740
And this is why austerity cannot just be
reduced to bad economic theory that

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00:15:57,770 --> 00:16:04,540
prescribes bad economic policy, which is
somehow I think, a very simplistic way of

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00:16:04,570 --> 00:16:07,980
framing things that ultimately
depoliticizes austerity.

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00:16:08,010 --> 00:16:12,100
If you look at austerity just as a tool to
manage the economy, which is a typical

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00:16:12,130 --> 00:16:17,520
stance that most Keynesians take, then you
cannot really understand why austerity is

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00:16:17,550 --> 00:16:22,940
so persistent and present and
structural to our societies.

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00:16:22,970 --> 00:16:27,700
It's not merely madness as
it has often been described.

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00:16:27,730 --> 00:16:31,180
There's method to the madness and the

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00:16:31,210 --> 00:16:37,940
method to the madness is the fact that we
do need austerity in order to enforce a

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00:16:37,970 --> 00:16:43,460
certain organization of society, which is
a classist organization based on wage

220
00:16:43,490 --> 00:16:50,340
labor and exploitation that otherwise
people would be not so content to accept.

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00:16:50,370 --> 00:16:56,100
I look at your book and the way you frame
this, going back to originally saying that

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00:16:56,130 --> 00:17:00,420
the end of World War One was in
essence the crisis of capital.

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00:17:00,450 --> 00:17:06,200
In Russia, you have the Bolshevik
Revolution of 1917, you have the returning

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00:17:06,230 --> 00:17:09,180
Russian troops who didn't
kill all the Bolsheviks.

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00:17:09,210 --> 00:17:12,570
It had a massive change and this was, as

226
00:17:12,600 --> 00:17:18,250
you stated, the overreaction
to that revolutionary moment.

227
00:17:18,280 --> 00:17:23,700
Can you take us through what the material
conditions and the existing situation at

228
00:17:23,730 --> 00:17:29,250
that point in time were that
created this crisis of capitalism?

229
00:17:29,280 --> 00:17:30,290
Yes.

230
00:17:30,320 --> 00:17:34,500
In the book, the capital
order is built in two parts.

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00:17:34,530 --> 00:17:39,140
The first part reconstructs the
existential crisis of capitalism, while

232
00:17:39,170 --> 00:17:44,860
the second part is devoted to the
understanding of how this crisis was fixed

233
00:17:44,890 --> 00:17:49,860
and was preempted by
technocracy and austerity.

234
00:17:49,890 --> 00:17:51,900
So let's focus on the first part.

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00:17:51,930 --> 00:17:55,500
Crisis of capitalism is more
than just an economic downturn.

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00:17:55,530 --> 00:18:02,290
High inflation and budgetary problems were
not only an economic problem at the time,

237
00:18:02,320 --> 00:18:06,900
they actually triggered a
fundamental political crisis.

238
00:18:06,930 --> 00:18:13,570
And by political crisis the fact once more
that there was a deep challenge of wage

239
00:18:13,600 --> 00:18:18,770
labor and the private property
of the means of production.

240
00:18:18,800 --> 00:18:25,460
After the First World War, the majority of
citizens were not any more willing to

241
00:18:25,490 --> 00:18:28,940
accept the foundations of
the capitalist society.

242
00:18:28,970 --> 00:18:31,700
Why?
There are many factors that were involved.

243
00:18:31,730 --> 00:18:38,940
What I tried to reconstruct is the role of
war collectivism as one important trigger.

244
00:18:38,970 --> 00:18:41,050
What do I mean by war collectivism?

245
00:18:41,080 --> 00:18:46,420
The fact that the First World War was a
massive shock to the economy because it

246
00:18:46,450 --> 00:18:52,090
was the first time that the state had to
intervene in the economy, intruding in

247
00:18:52,120 --> 00:18:57,660
what had been until then considered the
natural sphere of the market, and

248
00:18:57,690 --> 00:19:03,660
intervened to become the main producer,
the main employer, the main exporter.

249
00:19:03,690 --> 00:19:05,810
And this meant the fundamental

250
00:19:05,840 --> 00:19:08,980
repoliticisation of the
pillars of capitalism.

251
00:19:09,010 --> 00:19:13,620
It was no longer the impersonal laws of
the market that govern society, but it was

252
00:19:13,650 --> 00:19:20,250
clear that the state had a fundamental
role in deciding economic policies.

253
00:19:20,280 --> 00:19:24,000
And this was not because the elite and the

254
00:19:24,030 --> 00:19:28,250
establishment just wanted to break with
laissez-faire, but they had to break with

255
00:19:28,280 --> 00:19:33,180
laissez-faire because of the
necessity to produce for the war.

256
00:19:33,210 --> 00:19:35,250
In order to win the war effort.

257
00:19:35,280 --> 00:19:43,290
So major nationalization of factories
made control of the labor force and this

258
00:19:43,320 --> 00:19:49,250
fundamentally made it such that many
workers realized the fact that they were

259
00:19:49,280 --> 00:19:53,770
being exploited was a political
decision coming from the state.

260
00:19:53,800 --> 00:19:58,050
So in this sense, this escalated a whole

261
00:19:58,080 --> 00:20:03,980
bunch of different degrees of
demands for a new society.

262
00:20:04,010 --> 00:20:06,980
In the book, chapter two, three and four

263
00:20:07,010 --> 00:20:13,010
go into the details of the different
practices and agendas that were put to the

264
00:20:13,040 --> 00:20:18,180
fore in order to overcome
the old status quo.

265
00:20:18,210 --> 00:20:25,330
Everyone, not just the Gramsci and the
revolutionary shop stewards in Britain who

266
00:20:25,360 --> 00:20:31,500
were following in a way much of ideas
of Lenin, were asking for a new world.

267
00:20:31,530 --> 00:20:33,180
It was actually the elite itself.

268
00:20:33,210 --> 00:20:36,040
So if you read what someone like Lloyd

269
00:20:36,070 --> 00:20:42,220
George was writing in the Times, or anyone
who was actually in the state bureaucracy,

270
00:20:42,250 --> 00:20:45,500
it was the time for "Homes Fit
for Heroes," for a new world.

271
00:20:45,530 --> 00:20:49,420
All this war sacrifice--now people
should get something in return.

272
00:20:49,450 --> 00:20:54,420
So from measures that were going to
be about distributing resources.

273
00:20:54,450 --> 00:21:00,700
So the whole reconstructionist trend of
the bureaucracy all the way to the Workers

274
00:21:00,730 --> 00:21:07,050
Council movement in Italy led by
Antonio Gramsci and Palmiro Togliatti.

275
00:21:07,080 --> 00:21:09,250
So I look at a whole spectrum of

276
00:21:09,280 --> 00:21:13,660
possibilities from the more
reformist to the most radical.

277
00:21:13,690 --> 00:21:18,570
And it's very fascinating to see how in
the workers council movements, for

278
00:21:18,600 --> 00:21:24,090
example, and in Italy they had a big
impact, to the point that everyone in the

279
00:21:24,120 --> 00:21:30,090
summer of 1920, in which for a whole
month, the factories in the whole country,

280
00:21:30,120 --> 00:21:34,810
in the whole peninsula--and including, by
the way, the countryside in which peasants

281
00:21:34,840 --> 00:21:39,420
were occupying land--the factories
were being run by the workers.

282
00:21:39,450 --> 00:21:42,530
They emblematically sat at the desk of

283
00:21:42,560 --> 00:21:46,530
Agnelli in the Fiat factory,
and they were running the show.

284
00:21:46,560 --> 00:21:49,530
And these workers movements in Italy had

285
00:21:49,560 --> 00:21:55,380
as direct inspires not just of course the
original idea of the Soviets in Russia but

286
00:21:55,410 --> 00:22:00,260
also what was going on in Britain with the
revolutionary shop stewards, in which war

287
00:22:00,290 --> 00:22:04,780
was declared both against the capitalist
state and against the capitalist market.

288
00:22:04,810 --> 00:22:07,420
And the idea here was that you could only

289
00:22:07,450 --> 00:22:12,810
achieve political democracy if you really
achieve economic democracy, which meant

290
00:22:12,840 --> 00:22:17,940
that there needed to be self-government
in the production process.

291
00:22:17,970 --> 00:22:20,140
And thus the abolition of wage labor

292
00:22:20,170 --> 00:22:25,500
substituted with the idea of the council,
which was fundamentally an understanding

293
00:22:25,530 --> 00:22:32,860
of direct democratic assemblies that
would decide on the production process.

294
00:22:32,890 --> 00:22:38,090
And from there the idea that this would be
the nucleus of a new state, a state that

295
00:22:38,120 --> 00:22:43,420
was not alienated from the people, but
was of the people, for the people.

296
00:22:43,450 --> 00:22:47,980
So I don't want to get into too much
detail, I go through of course L'Ordine

297
00:22:48,010 --> 00:22:52,660
Nuovo, was a newspaper, and this was the
big thing at the time was that these

298
00:22:52,690 --> 00:22:57,540
changes in action, these new practices
required new ways of thinking.

299
00:22:57,570 --> 00:23:00,200
So the concept of praxis that Gramsci

300
00:23:00,230 --> 00:23:06,460
comes up with and lucidly theorizes in his
Prison Notebooks was of course the outcome

301
00:23:06,490 --> 00:23:12,140
of his actual militancy during the 1919
-1920 years of the factory councils.

302
00:23:12,170 --> 00:23:16,900
And the point of praxis was that you could
not act differently if you didn't think

303
00:23:16,930 --> 00:23:21,290
differently and how thought and action
mutually reinforce one another.

304
00:23:21,320 --> 00:23:25,900
So that L'Ordine Nuovo was also a journal
in which not just intellectuals, but

305
00:23:25,930 --> 00:23:30,860
workers and workers intellectuals were
working hand in hand, would actually think

306
00:23:30,890 --> 00:23:36,180
about novel ways of understanding the
economy and new economic theories that put

307
00:23:36,210 --> 00:23:40,600
at the center the worker, rather than, of
course, what we see today with the

308
00:23:40,630 --> 00:23:46,020
neoclassical framework that was, of
course, emerging at the time in reaction

309
00:23:46,050 --> 00:23:49,700
to these theories that were
actually empowering for the people.

310
00:23:49,730 --> 00:23:54,460
Austerity, I would like to say, is more
than just policy, it's also the theory

311
00:23:54,490 --> 00:23:58,860
justifying the policy and of course this
theory was a theory that came out in

312
00:23:58,890 --> 00:24:03,940
direct opposition to a theory that was
instead trying to empower the workers.

313
00:24:03,970 --> 00:24:06,940
So while the L'Ordine Nuovo movement was

314
00:24:06,960 --> 00:24:10,980
putting at the center stage the worker as
producer, saying there should not be any

315
00:24:11,010 --> 00:24:16,220
classes, we should all be producers--the
abolition of class hierarchies or a common

316
00:24:16,250 --> 00:24:21,460
understanding of all men and women as
producers--to a model that instead expels

317
00:24:21,490 --> 00:24:25,920
the worker and puts the entrepreneur at
the head of the economic framework and

318
00:24:25,950 --> 00:24:31,780
says the worker is nothing but ultimately
a passive add-on that depends on the

319
00:24:31,810 --> 00:24:36,140
virtuous capacity to save and
invest of those who can abstain.

320
00:24:36,170 --> 00:24:38,420
And that is the neoclassical framework

321
00:24:38,450 --> 00:24:42,180
that was coined at the time and
that is still dominant today.

322
00:24:42,210 --> 00:24:47,740
And it's what students learn when they go
to school, though they learn it in a way

323
00:24:47,770 --> 00:24:50,330
that takes impersonal
form of the textbook.

324
00:24:50,360 --> 00:24:54,420
So they forget about the origins of this

325
00:24:54,450 --> 00:24:59,500
very theoretical framework that, once
more, was embedded in certain historical

326
00:24:59,530 --> 00:25:03,860
moment which was a historical
moment of clear class struggle.

327
00:25:03,890 --> 00:25:08,090
So in this I would like to end by saying
that it's very interesting to see how a

328
00:25:08,120 --> 00:25:14,660
theoretical framework that explicitly
expels class struggle from its model.

329
00:25:14,690 --> 00:25:19,570
So if you look at the neoclassical
framework, the foundations of micro

330
00:25:19,600 --> 00:25:24,180
and macro that students learn, there are
no classes in the models, there are only

331
00:25:24,210 --> 00:25:29,980
fundamentally agents, individual
agents, and the outcome is harmonious.

332
00:25:30,010 --> 00:25:35,220
And it's interesting to see how this
harmony amongst individuals was thought

333
00:25:35,250 --> 00:25:41,460
about in a moment in which there was clear
conflict amongst classes.

334
00:25:41,490 --> 00:25:47,090
So the expulsion of class struggle and
conflict and exploitation from the

335
00:25:47,120 --> 00:25:54,570
economic theory was clearly a very
political choice in order to make it such

336
00:25:54,600 --> 00:26:02,500
that people would consent once more to an
order that presupposes in fact class

337
00:26:02,530 --> 00:26:06,330
conflict and exploitation
in order to even function.

338
00:26:06,360 --> 00:26:12,420
Part of the effort of this book is to
again show how the world we live in is

339
00:26:12,450 --> 00:26:19,090
shaped clearly by some economic policies
that have as their main objective that of

340
00:26:19,120 --> 00:26:23,260
shifting resources from the
majority to the minority.

341
00:26:23,290 --> 00:26:28,540
And this is austerity in its
threefold form that I just described.

342
00:26:28,570 --> 00:26:35,500
But these policies would not be active in
shaping our daily lives if they weren't

343
00:26:35,530 --> 00:26:39,570
backed and justified by
specific economic theory.

344
00:26:39,600 --> 00:26:44,220
And that's why for me austerity
is more than fiscal austerity.

345
00:26:44,250 --> 00:26:46,140
It's fiscal, monetary, industrial.

346
00:26:46,170 --> 00:26:48,940
And it's also more than just policy.

347
00:26:48,970 --> 00:26:51,940
It's policy and theory that go hand in

348
00:26:51,970 --> 00:26:58,180
order to preserve consensus for a system
that often shakes, often is in crisis.

349
00:26:58,210 --> 00:27:02,900
And once more, I think that we are today
experiencing quite a big crisis of it.

350
00:27:02,930 --> 00:27:08,500
Of course not as revolutionary, but yet
something is happening nonetheless.

351
00:27:08,520 --> 00:27:10,200
It's enough to think about all the

352
00:27:10,230 --> 00:27:16,560
unionization efforts that are taking place
in unknown spheres of our economy in the

353
00:27:16,590 --> 00:27:22,140
United States, the whole Amazon,
Starbucks, all the service sectors.

354
00:27:22,170 --> 00:27:26,380
This is unusual and it's something
that frightens the establishment.

355
00:27:26,410 --> 00:27:33,260
And even if they portray austerity as an
apolitical necessity in order to fix

356
00:27:33,290 --> 00:27:38,260
inflation, it is very clear that of
course they need to fix inflation.

357
00:27:38,290 --> 00:27:43,380
But the reason why you need to fix
inflation is because inflation expands the

358
00:27:43,410 --> 00:27:48,860
discontent for a system that clearly is
not delivering in satisfying the majority.

359
00:27:48,890 --> 00:27:54,220
And if this majority escalates its
dissatisfaction, then there's a problem.

360
00:27:54,250 --> 00:27:57,330
There's a political problem
that requires fixing.

361
00:27:57,360 --> 00:28:04,180
And that's why austerity is portrayed as a
necessity and one that is only technical.

362
00:28:04,200 --> 00:28:05,900
And that's why we should leave it to the

363
00:28:05,930 --> 00:28:12,460
experts of the Fed and other independent
institutions while in fact they know

364
00:28:12,490 --> 00:28:18,020
themselves that it's the most political
action of all, backed by theory that

365
00:28:18,050 --> 00:28:22,140
pretends to be non political
but it's the most political.

366
00:28:22,170 --> 00:28:25,800
It's a very powerful weapon in order to

367
00:28:25,830 --> 00:28:30,090
subjugate the majority to
accept what's going on.

368
00:28:30,120 --> 00:28:32,180
That brings to mind
something very important.

369
00:28:32,210 --> 00:28:38,220
I'm inundated with positive people who
believe that we can simply vote our way

370
00:28:38,250 --> 00:28:40,570
out of this, that they
just don't understand.

371
00:28:40,600 --> 00:28:43,380
And I can say that clearly because every

372
00:28:43,410 --> 00:28:48,780
aspect of our life is inundated, as you
stated, with austerity messages, with the

373
00:28:48,810 --> 00:28:51,740
concept of austerity
baked directly into it.

374
00:28:51,770 --> 00:28:56,780
And your book quite clearly says
how economists invented austerity.

375
00:28:56,810 --> 00:29:01,460
So somebody understands the essence
of austerity because it was created.

376
00:29:01,490 --> 00:29:04,380
It is not some natural thing that happens.

377
00:29:04,410 --> 00:29:09,090
This power dynamic has played
out for over a hundred years.

378
00:29:09,120 --> 00:29:12,570
Is it possible that the people doing this

379
00:29:12,600 --> 00:29:14,860
simply don't understand
what they're doing?

380
00:29:14,890 --> 00:29:21,140
I feel it's almost impossible to believe
the level of incompetence it would require

381
00:29:21,170 --> 00:29:26,050
for economists and world leaders to not
fully understand what is at play here.

382
00:29:26,080 --> 00:29:28,380
Is this a well known thing that is talked

383
00:29:28,410 --> 00:29:33,460
about in smoky rooms or is
this just the way it is?

384
00:29:33,490 --> 00:29:37,050
This is a very tricky, fascinating

385
00:29:37,080 --> 00:29:41,860
and difficult question in the sense
that there's multiple aspects.

386
00:29:41,890 --> 00:29:46,290
One is for sure that part of why working

387
00:29:46,320 --> 00:29:53,780
as a historian of economic thought is a
fascinating task is that any historian

388
00:29:53,810 --> 00:29:59,290
knows that intentionality is not really a
metric that makes much sense because how

389
00:29:59,320 --> 00:30:02,740
do you actually figure out what
is intentional and what is not?

390
00:30:02,770 --> 00:30:07,740
And part of this, of course, is the
fascination with the concept of ideology,

391
00:30:07,770 --> 00:30:14,220
which is the idea, of course, that people
may well be convinced to actually be doing

392
00:30:14,250 --> 00:30:19,050
the best of possible actions
for their fellow citizens.

393
00:30:19,080 --> 00:30:25,090
But structurally speaking,
what their actions and policies turn out

394
00:30:25,120 --> 00:30:30,940
to be is clearly something that
is detrimental for the majority.

395
00:30:30,970 --> 00:30:36,050
I'm quite sure that a lot of these
mainstream economic experts truly believe

396
00:30:36,080 --> 00:30:40,660
in the virtuosity of their models
and nonetheless they pursue it.

397
00:30:40,690 --> 00:30:45,700
Also, my book is not just
numbers and abstract concepts.

398
00:30:45,730 --> 00:30:49,500
Even if I tended to give that
take right now in the interview.

399
00:30:49,530 --> 00:30:51,940
The book is actually made of people.

400
00:30:51,970 --> 00:30:57,220
I tried to narrate a story,
to give it life somehow.

401
00:30:57,250 --> 00:31:02,400
So the experts in my story who are the
most authoritative economists, for

402
00:31:02,430 --> 00:31:10,780
example, in Italy under Mussolini's first
ten years of fascist rule, and in Britain,

403
00:31:10,810 --> 00:31:15,330
they are the experts for running the
Treasury and the Bank of England.

404
00:31:15,360 --> 00:31:18,500
These people are true
believers in their models.

405
00:31:18,530 --> 00:31:22,900
Yet at the same time models do prescribe

406
00:31:22,930 --> 00:31:28,780
what they themselves say very clearly:
the sacrifice of the majority.

407
00:31:28,810 --> 00:31:34,740
The motto 'Consume less, produce
more' is not a motto I made up.

408
00:31:34,770 --> 00:31:39,570
It's actually a motto that was during
these international financial conferences

409
00:31:39,600 --> 00:31:46,380
in 1919 and 1922 in Brussels and
Genoa, in which experts came together.

410
00:31:46,400 --> 00:31:47,940
They were the first international

411
00:31:47,970 --> 00:31:53,260
financial conferences in which states and
their experts and their bureaucrats sat

412
00:31:53,290 --> 00:31:56,500
together and said what are we
going to do about this situation?

413
00:31:56,530 --> 00:31:59,860
And so 'produce more, consume
less' became the motto.

414
00:31:59,890 --> 00:32:03,980
And for them that was the only
way to preserve our society.

415
00:32:04,010 --> 00:32:08,050
So in a way, for them, given that they
were convinced that the best and only

416
00:32:08,080 --> 00:32:13,570
possible society was a capitalist society,
then of course, for them, that recipe was

417
00:32:13,600 --> 00:32:15,940
going to be a recipe for
the good of the whole.

418
00:32:15,970 --> 00:32:22,570
Because the idea was people cannot
understand the hard truth, that the only

419
00:32:22,600 --> 00:32:28,220
way to actually have economic
recovery is to give up something now.

420
00:32:28,250 --> 00:32:32,330
The reason why we're in a crisis, that
people are just too entitled and cannot

421
00:32:32,360 --> 00:32:37,780
understand the fundamentals of economics
and ultimately the words they used are not

422
00:32:37,810 --> 00:32:41,700
very different from the words we
hear today, as you were stressing.

423
00:32:41,730 --> 00:32:45,290
And just to read you a quote that
for me was very fascinating.

424
00:32:45,320 --> 00:32:50,380
And there's many.
But Sunak, who now runs the British state,

425
00:32:50,410 --> 00:32:56,620
has resigned from his old position
as Chancellor under Johnson.

426
00:32:56,650 --> 00:32:59,090
And he uses words that are exactly the

427
00:32:59,120 --> 00:33:01,570
same words that we can find
in my book of those years.

428
00:33:01,600 --> 00:33:06,980
He says, "we both want a low tax, high
growth economy and worldclass public

429
00:33:07,010 --> 00:33:12,020
services, but this can only be reasonably
delivered if we are prepared to work hard,

430
00:33:12,050 --> 00:33:15,050
make sacrifice and take
difficult decisions.

431
00:33:15,080 --> 00:33:19,660
I firmly believe that public
are ready to hear that truth.

432
00:33:19,680 --> 00:33:21,680
People need to know that whilst there is a

433
00:33:21,710 --> 00:33:26,660
path to a better future, it is not an easy
one." So the depiction of this all is that

434
00:33:26,690 --> 00:33:31,740
we are all on the same boat, we will
all sacrifice now for a better future.

435
00:33:31,770 --> 00:33:34,900
And ultimately, I do think that if one

436
00:33:34,930 --> 00:33:40,570
gets the training in mainstream economics,
you believe in what you stand for.

437
00:33:40,600 --> 00:33:45,290
This said, again, intentions are not a
very good metric historically because the

438
00:33:45,320 --> 00:33:51,090
point is to see, structurally speaking,
what these words

439
00:33:51,120 --> 00:33:56,940
and these policies are doing for the
material conditions of the majority.

440
00:33:56,970 --> 00:34:01,380
And there is when you realize that
actually these experts are playing a

441
00:34:01,410 --> 00:34:07,540
fundamental role in the class struggle, in
preserving the class hierarchies of today,

442
00:34:07,570 --> 00:34:13,640
in which the elite constantly gains both
in a crisis and in an upturn of the

443
00:34:13,670 --> 00:34:16,060
economy, and the majority
constantly loses.

444
00:34:16,090 --> 00:34:20,940
And this is why I think the point here of
austerity is that even if interest rate

445
00:34:20,970 --> 00:34:27,580
hikes and cuts in the budget will cause a
downturn, this is for economists,

446
00:34:27,610 --> 00:34:32,860
ultimately a short term cost for longer
term gain, which is that of stabilizing

447
00:34:32,890 --> 00:34:36,780
the class relations that are
more foundational to the system.

448
00:34:36,810 --> 00:34:45,820
So this is why you cannot avoid seeing
their agency as part of a bigger picture.

449
00:34:45,850 --> 00:34:49,920
So apart from their intentions, and again,
I'm sure that ultimately they do think

450
00:34:49,950 --> 00:34:52,580
that they're doing stuff
for the good of everyone.

451
00:34:52,610 --> 00:34:57,500
We need to figure out what their
historical role is as actors in

452
00:34:57,530 --> 00:35:03,170
reaffirming a society that is
clearly a society that has failed.

453
00:35:03,200 --> 00:35:05,900
And this is under the eyes
of everybody at this point.

454
00:35:05,930 --> 00:35:08,460
And the American society is at a level of

455
00:35:08,490 --> 00:35:14,100
social failure that you can just feel and
breathe if you walk down the streets of

456
00:35:14,130 --> 00:35:18,460
any city, even the cities are
the richest of the country.

457
00:35:18,490 --> 00:35:24,060
You go in San Francisco, you go in New
York City, the hub of advanced capitalism,

458
00:35:24,090 --> 00:35:27,690
western capitalism, and
it's a complete nightmare.

459
00:35:27,720 --> 00:35:29,940
Dehumanized people everywhere.

460
00:35:29,970 --> 00:35:35,340
The level of dehumanization is so obvious
that I think now more than ever the effort

461
00:35:35,370 --> 00:35:41,860
of the experts to try to still build up a
rhetoric that has us think that anyway,

462
00:35:41,890 --> 00:35:45,340
this is the best way we can go,
becomes more and more difficult.

463
00:35:45,360 --> 00:35:47,130
And that's the role of austerity, because

464
00:35:47,160 --> 00:35:50,460
austerity is the best weapon
they have to try to convince.

465
00:35:50,490 --> 00:35:54,300
And if they can't convince,
they can't coerce.

466
00:35:54,330 --> 00:35:59,300
So in my book, I say austerity plays with
a double strategy: coercion and consensus.

467
00:35:59,330 --> 00:36:02,520
If you can't convince people that, as

468
00:36:02,550 --> 00:36:08,400
Rishi Sunak and my guys say, the truth,
they have to learn the truth and we have

469
00:36:08,400 --> 00:36:12,000
the truth in our hands and we can try to
convince them, we can try to educate them.

470
00:36:12,030 --> 00:36:17,900
So the whole idea of educating people to
the importance of paying back the debt and

471
00:36:17,930 --> 00:36:23,540
the importance of healthy economic growth
and flexible wages and as you were

472
00:36:23,570 --> 00:36:27,620
pointing out things that then trickled
down at all levels of our society.

473
00:36:27,650 --> 00:36:31,130
You were pointing out how we're
bombarded by these messages.

474
00:36:31,160 --> 00:36:35,580
And of course it's messages that have been
simplified and are conveyed through

475
00:36:35,610 --> 00:36:40,210
different means, but ultimately they are
foundational to the economic,

476
00:36:40,240 --> 00:36:44,260
sophisticated, mathematically
-based economic models.

477
00:36:44,290 --> 00:36:47,170
In the sense, if you cannot convince

478
00:36:47,200 --> 00:36:52,020
people of this hard truth through
education, through propaganda of various

479
00:36:52,050 --> 00:36:58,060
sorts done with all the new media things
we have, you can do it through coercion.

480
00:36:58,090 --> 00:37:00,650
Meaning that, well, if you create a

481
00:37:00,680 --> 00:37:05,460
downturn, an economic downturn will
act as a disciplinary mechanism.

482
00:37:05,490 --> 00:37:07,580
And this is not me saying it, as anyone

483
00:37:07,610 --> 00:37:12,120
who has read any work of political
economy, starting from the classic of

484
00:37:12,150 --> 00:37:17,840
Michal Kalecki of 1943, the Political
Aspects of Full Employment, in which he

485
00:37:17,870 --> 00:37:23,500
clearly says that in order for capitalist
economic growth to function smoothly, you

486
00:37:23,530 --> 00:37:28,980
need the sack, the fright of being
fired, to discipline workers.

487
00:37:29,010 --> 00:37:31,100
Otherwise why would they accept the

488
00:37:31,130 --> 00:37:36,060
conditions they're in as not being in
charge of their labor and getting paid

489
00:37:36,090 --> 00:37:40,130
lower wages than the amount
of value they're producing?

490
00:37:40,160 --> 00:37:45,130
So at that point it's clear that if you
can't convince people, you can force

491
00:37:45,160 --> 00:37:49,260
people, because once you create an
economic downturn, higher levels of

492
00:37:49,290 --> 00:37:53,210
unemployment will necessarily kill
the bargaining power of the workers.

493
00:37:53,240 --> 00:37:54,460
Silence the workers.

494
00:37:54,490 --> 00:37:59,460
We're seeing now that layoffs have started
once more in the tech industry, but it's

495
00:37:59,490 --> 00:38:04,260
going in all sectors, the
unemployment rate is slowly raising.

496
00:38:04,290 --> 00:38:07,900
The UK is already in a recession.

497
00:38:07,930 --> 00:38:09,940
And so that's the game.

498
00:38:09,970 --> 00:38:14,420
And I think in a sense, deep down, and
this is why it's a tricky question,

499
00:38:14,450 --> 00:38:18,580
because from one point of view, I would
like to say with the power of ideology and

500
00:38:18,610 --> 00:38:24,060
the power of ideology, what hegemony
stands when the ideas that are beneficial

501
00:38:24,090 --> 00:38:29,260
to the ruling class ultimately are the
ideas that everyone shares as their own.

502
00:38:29,290 --> 00:38:35,740
And the fact that the experts at the top
do somehow think that they are wielding

503
00:38:35,770 --> 00:38:41,260
the eternal universal, objective
truth of how to run a society.

504
00:38:41,290 --> 00:38:47,460
But at the same time, these experts, even
today are also very explicit about the

505
00:38:47,490 --> 00:38:53,260
fact that monetary policy is not just
about the monetary sphere, but in order

506
00:38:53,290 --> 00:38:57,260
for it to work, it has to
impact labor relations.

507
00:38:57,290 --> 00:39:01,980
So you can read any mainstream
economist of political wage right now.

508
00:39:02,000 --> 00:39:03,740
Look at someone like Larry Summers.

509
00:39:03,770 --> 00:39:05,020
He's quite explicit.

510
00:39:05,050 --> 00:39:07,320
In order for our labor market to be

511
00:39:07,350 --> 00:39:11,170
healthy again, we need
7-8% unemployment rate.

512
00:39:11,200 --> 00:39:15,940
So you see there that even if they're
convinced to have the truth that is good

513
00:39:15,970 --> 00:39:21,170
for all in their hand, at the same time it
seems to me that there is a fundamental

514
00:39:21,200 --> 00:39:25,740
awareness of how the system only
works if the majority suffers.

515
00:39:25,770 --> 00:39:31,020
So it's almost a paradox because in a way
the power of ideology, so their intentions

516
00:39:31,040 --> 00:39:33,900
are good and ultimately we don't really
care about their intentions though,

517
00:39:33,930 --> 00:39:38,380
because what matters is what their
actions ultimately structurally mean.

518
00:39:38,410 --> 00:39:43,300
But at the same time, the fact that
they're quite overt in the impact that

519
00:39:43,330 --> 00:39:47,100
fiscal and monetary austerity
will have on the labor market.

520
00:39:47,130 --> 00:39:50,580
That's why my colleague Duncan Foley has a

521
00:39:50,610 --> 00:39:55,060
really nice line saying that raising
interest rate is not necessarily just

522
00:39:55,090 --> 00:40:00,980
about targeting inflation, but it's also
about targeting the rate of exploitation.

523
00:40:01,010 --> 00:40:03,020
And this is something that the experts

524
00:40:03,050 --> 00:40:05,580
that I look at, in my
time, had understood.

525
00:40:05,610 --> 00:40:07,800
If you think about the birth of

526
00:40:07,830 --> 00:40:13,060
macroeconomic policy and Ralph Hawtrey,
who is a big protagonist of my book,

527
00:40:13,090 --> 00:40:19,160
someone who has deeply influenced John
Maynard Keynes, and Keynes himself--the

528
00:40:19,190 --> 00:40:24,120
whole point here was to realize how
monetary management was going to be

529
00:40:24,150 --> 00:40:30,000
effective only if you are able to shape
the behavior of the majority of the

530
00:40:30,030 --> 00:40:38,500
economic agents and thus the direct impact
that interest rate hikes will have on

531
00:40:38,530 --> 00:40:44,980
consumers, enforcing them to consume less
so that the aggregate demand would go down

532
00:40:45,010 --> 00:40:48,900
and thus you could manage
monetary stability.

533
00:40:48,920 --> 00:40:50,540
So this is something that is in the

534
00:40:50,570 --> 00:40:54,600
reflection of economists always, even if
we think about monetary policy as

535
00:40:54,630 --> 00:40:57,210
something very detached
from our daily lives.

536
00:40:57,240 --> 00:41:01,300
The whole point of monetary policy is
actually to show you how it has a direct

537
00:41:01,330 --> 00:41:05,690
impact on the consumption
behavior of the majority.

538
00:41:05,720 --> 00:41:09,460
So a downturn will in a way avoid

539
00:41:09,490 --> 00:41:14,060
unproductive consumption and austerity
instead should help productive

540
00:41:14,090 --> 00:41:17,060
consumption, which is
ultimately investment.

541
00:41:17,090 --> 00:41:19,160
And this is why you need to shift the

542
00:41:19,190 --> 00:41:23,690
resources towards the investing classes,
which of course are the top classes.

543
00:41:23,720 --> 00:41:28,080
And this is why you
need the austerity trinity.

544
00:41:37,920 --> 00:41:41,100
You are listening to Macro N Cheese, a

545
00:41:41,130 --> 00:41:45,420
podcast brought to you by Real
Progressives, a nonprofit organization

546
00:41:45,450 --> 00:41:50,690
dedicated to teaching the masses
about MMT, or Modern Monetary Theory.

547
00:41:50,720 --> 00:41:52,690
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548
00:41:52,720 --> 00:41:57,780
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549
00:41:57,810 --> 00:42:05,760
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550
00:42:28,920 --> 00:42:31,020
I love that austerity trinity.

551
00:42:31,050 --> 00:42:32,540
It's very easy to understand.

552
00:42:32,570 --> 00:42:33,940
I'm a systems guy.

553
00:42:33,970 --> 00:42:36,100
And that brings me to another point.

554
00:42:36,130 --> 00:42:38,680
You explicitly focus your efforts for your

555
00:42:38,710 --> 00:42:42,620
storytelling in the second half
of the book on England and Italy.

556
00:42:42,650 --> 00:42:48,540
But this is trying to tie what you've
produced into modern reflection.

557
00:42:48,570 --> 00:42:53,340
We have a situation where the global south
has been basically used, where we take

558
00:42:53,370 --> 00:42:58,620
what we want, we steal their resources
through exploitation, through the IMF and

559
00:42:58,650 --> 00:43:04,940
structural adjustments, where we have them
eliminate their social safety nets and

560
00:43:04,970 --> 00:43:09,940
stop nationalizing protections of their
own industry, all in the name of opening

561
00:43:09,970 --> 00:43:15,020
markets as part of the carrot and
stick of the IMF to receive loans.

562
00:43:15,050 --> 00:43:20,460
And when the United States raises interest
rates, it makes it more challenging for

563
00:43:20,490 --> 00:43:24,170
those whose national unit of
account is not the US dollar.

564
00:43:24,200 --> 00:43:25,820
So they have to find a way to get those

565
00:43:25,850 --> 00:43:29,820
reserves to be able to keep
their economies going.

566
00:43:29,850 --> 00:43:31,920
And with the interest rate hikes, it's

567
00:43:31,950 --> 00:43:35,780
having an incredibly negative
effect around the world.

568
00:43:35,810 --> 00:43:39,340
As you look at the framing
of international finance.

569
00:43:39,370 --> 00:43:43,260
I know going back to Lenin, in
his book What is to Be Done?

570
00:43:43,290 --> 00:43:45,580
And Imperialism, the Highest Stage of

571
00:43:45,610 --> 00:43:48,380
Capitalism, he was talking
about it way back then.

572
00:43:48,410 --> 00:43:51,140
And you see it happening now, and you saw

573
00:43:51,170 --> 00:43:54,980
it happen with Greece, and you saw
a lot of this happen in the EU.

574
00:43:55,010 --> 00:43:59,140
This model seems to be not just
shared by one country or another.

575
00:43:59,170 --> 00:44:02,580
It seems to be a universal ideological

576
00:44:02,610 --> 00:44:07,380
unification--almost polar
hegemony of sorts--of thought.

577
00:44:07,410 --> 00:44:10,420
Nations have their own rules and laws, and

578
00:44:10,450 --> 00:44:14,180
they have their own unit of account
in most cases, minus the EU.

579
00:44:14,210 --> 00:44:15,500
How does that come to be?

580
00:44:15,530 --> 00:44:17,760
Is this the United States strength in

581
00:44:17,790 --> 00:44:20,980
terms of domination of
the world through empire?

582
00:44:21,010 --> 00:44:23,460
Or is this more academic?

583
00:44:23,490 --> 00:44:27,900
How does this thought
process come to be in this?

584
00:44:27,930 --> 00:44:33,100
I would say that a book that for me is
very good, also talking about these points

585
00:44:33,130 --> 00:44:38,020
is Michael Hudson's book Super Imperialism
that I would definitely recommend.

586
00:44:38,050 --> 00:44:39,620
It's a very, very good book.

587
00:44:39,650 --> 00:44:45,620
What is certain is that I think we
need to keep the class dimension.

588
00:44:45,650 --> 00:44:48,460
That's why I tried to focus on the West

589
00:44:48,490 --> 00:44:54,500
and two European countries, because it's
interesting to see how austerity is

590
00:44:54,530 --> 00:44:58,460
wielded by the elite
against its own citizens.

591
00:44:58,480 --> 00:45:00,420
That's when I would like also to go back

592
00:45:00,450 --> 00:45:05,100
to try to maybe compare what was going on
in a democratic setting like Britain and

593
00:45:05,130 --> 00:45:08,780
what's going on today with
respect to a fascist one.

594
00:45:08,810 --> 00:45:10,980
This class struggle that is happening

595
00:45:11,010 --> 00:45:16,980
within nations is also a class struggle
that is going on between nations.

596
00:45:17,010 --> 00:45:19,320
But I also think it's very important also

597
00:45:19,350 --> 00:45:23,860
when we talk about America
and Greece and Italy...

598
00:45:23,890 --> 00:45:28,460
Again, the idea of taking as a unit and
analysis a country is always very tricky

599
00:45:28,490 --> 00:45:33,780
because the countries within the country,
there's so many class antagonisms and

600
00:45:33,810 --> 00:45:39,820
hierarchies that then, of course, the
whole point is that the elites in all the

601
00:45:39,850 --> 00:45:46,740
financial institutions in the west are
gaining massively, not only from increases

602
00:45:46,770 --> 00:45:52,320
in mortgages of American citizens, but
also from the increase in the debt

603
00:45:52,350 --> 00:45:57,260
repayment of all these countries in the
south of the globe that, of course, are

604
00:45:57,290 --> 00:46:01,640
countries in which, once more,
the resources are really the resources of

605
00:46:01,670 --> 00:46:04,620
the majority and not of
the elite of that country.

606
00:46:04,650 --> 00:46:11,580
So again, we see how the class struggle
plays off at an international level and

607
00:46:11,610 --> 00:46:14,860
austerity will definitely
trigger further austerity.

608
00:46:14,890 --> 00:46:20,260
And also austerity in the North is
triggering greater austerity in the South

609
00:46:20,290 --> 00:46:25,020
also because there is a clear grip in
which these countries are in, in the sense

610
00:46:25,050 --> 00:46:29,420
that, in fact, we are seeing what
Sri Lanka is experiencing right now.

611
00:46:29,450 --> 00:46:31,900
It is a huge problem when the North

612
00:46:31,930 --> 00:46:36,860
decides to speculate against your debt
in terms of possibilities.

613
00:46:36,890 --> 00:46:40,980
And this I'm seeing as an Italian,
that it is happening in Italy as well.

614
00:46:41,010 --> 00:46:43,660
Italy is a country that wants to affirm

615
00:46:43,690 --> 00:46:48,740
its positioning with NATO and
with the Anglo-American block.

616
00:46:48,770 --> 00:46:52,060
But we are a periphery and we well know

617
00:46:52,090 --> 00:46:58,210
that there is no national sovereignty
until we are indebted at these levels.

618
00:46:58,240 --> 00:47:05,620
And once speculation starts and the spread
of German bonds goes up, then it is easy

619
00:47:05,650 --> 00:47:11,210
for the heads of the state to use the
usual talking points and describe

620
00:47:11,240 --> 00:47:14,900
austerity as the only
necessary way forward.

621
00:47:14,930 --> 00:47:18,860
In fact, the hands are much more tied
than a country like the United States.

622
00:47:18,890 --> 00:47:21,740
And you being someone who knows about MMT,

623
00:47:21,770 --> 00:47:24,380
we know that there's many
people talk about it.

624
00:47:24,410 --> 00:47:29,340
While of course there are some structural
limits to capitalism, certain countries

625
00:47:29,370 --> 00:47:33,620
experience these limits in a
slightly less strong form.

626
00:47:33,640 --> 00:47:36,900
And the United States is a country that
could in fact push the limits of

627
00:47:36,930 --> 00:47:40,420
capitalism towards potentially
more distributive forms.

628
00:47:40,440 --> 00:47:41,820
But again, I think there's limits

629
00:47:41,850 --> 00:47:47,500
everywhere, including again--because the
capital order we've seen with the small

630
00:47:47,530 --> 00:47:53,140
amount of money that people have gotten
with the pandemic relief, people got

631
00:47:53,170 --> 00:47:57,260
nothing with respect to what the big
corporations and the actual financial

632
00:47:57,290 --> 00:48:01,940
institutions got, yet
even breaching that limit of giving

633
00:48:01,970 --> 00:48:07,420
something as an entitlement--so the fact
that people receive resources just because

634
00:48:07,450 --> 00:48:13,140
they are citizens and alive,
economic means just because they live--is

635
00:48:13,170 --> 00:48:16,460
already something that breaches
the capital order a little bit.

636
00:48:16,480 --> 00:48:18,420
Because for the capital order, you're only

637
00:48:18,440 --> 00:48:21,180
going to make a living if you
sell your labor power, right?

638
00:48:21,210 --> 00:48:23,460
So already there we see how economists are

639
00:48:23,490 --> 00:48:28,740
the first ones to blame these pandemic
reliefs, these, like, nothing, by the way.

640
00:48:28,770 --> 00:48:34,780
Still, ideologically speaking, these
reliefs open up spaces to imagine

641
00:48:34,810 --> 00:48:38,140
possibilities of organizing
our society differently.

642
00:48:38,170 --> 00:48:42,780
People start thinking, if the state can
give me a thousand, why can't it actually

643
00:48:42,810 --> 00:48:46,340
make it such that I can have
enough to eat and live daily?

644
00:48:46,370 --> 00:48:48,340
Why isn't this possible?

645
00:48:48,370 --> 00:48:51,700
So this is something that is problematic

646
00:48:51,730 --> 00:48:54,500
for those who want to
preserve the capital order.

647
00:48:54,530 --> 00:48:57,300
So again, there's clear limits to what can

648
00:48:57,330 --> 00:49:03,580
be done even in a country like the United
States, because once social policies start

649
00:49:03,610 --> 00:49:09,620
questioning what are taboo obvious facts
that we do need to go work for a wage,

650
00:49:09,650 --> 00:49:12,780
then people might decide
not to go work anymore.

651
00:49:12,810 --> 00:49:14,980
And this was something that you saw after

652
00:49:15,000 --> 00:49:18,740
the First World War, and I think it's
something that, to a minimal degree, we

653
00:49:18,760 --> 00:49:21,980
are also seeing in the United States,
and that's something to consider.

654
00:49:22,010 --> 00:49:26,210
So going back to this historical parallel
with the present is in fact what happened

655
00:49:26,240 --> 00:49:29,760
to Mussolini when he was
governing in the 1920s.

656
00:49:29,760 --> 00:49:33,180
And if I can, I would like to spend a
couple of words on this in the sense that

657
00:49:33,210 --> 00:49:39,180
Mussolini himself was one of the best
students of austerity in the 1920s.

658
00:49:39,210 --> 00:49:41,900
Mussolini came to power, by the way, not

659
00:49:41,930 --> 00:49:47,700
through a coup, but he was called by
the King to fix a political crisis.

660
00:49:47,730 --> 00:49:50,660
Okay?
So once more, it's very important for us

661
00:49:50,690 --> 00:49:54,180
to stop thinking with
the eyes of the present.

662
00:49:54,210 --> 00:49:56,820
In the past, people who were living in the

663
00:49:56,850 --> 00:50:03,660
1920s didn't necessarily recognize that
a fascist dictatorship was being built.

664
00:50:03,680 --> 00:50:05,660
So, now we can say, oh, those were the 20

665
00:50:05,680 --> 00:50:09,260
years in which there was a fascist
dictatorship in Italy, people living in

666
00:50:09,290 --> 00:50:14,620
1922: So there's this guy, he's clearly
a very charismatic, strong man.

667
00:50:14,650 --> 00:50:16,720
The King has brought him to fix the

668
00:50:16,750 --> 00:50:20,020
political crisis because our
country was not governable.

669
00:50:20,050 --> 00:50:23,760
There were too many workers'
strikes, too many factory councils.

670
00:50:23,790 --> 00:50:27,700
We needed some order, and he was
the right man at the right time.

671
00:50:27,730 --> 00:50:33,260
And so Mussolini came to power and he
realized that if he did austerity, that

672
00:50:33,290 --> 00:50:38,460
was the best way to secure the
establishment of his dictatorship.

673
00:50:38,490 --> 00:50:42,340
In fact, he gained the praise of
the whole liberal establishment.

674
00:50:42,370 --> 00:50:44,700
By liberal, I mean classical liberalism.

675
00:50:44,730 --> 00:50:47,020
I just wrote this piece for Jacobin

676
00:50:47,050 --> 00:50:51,100
America called when liberals
fell in love with Mussolini.

677
00:50:51,130 --> 00:50:55,980
And you can see that he gained the praise
of the whole liberal establishment, not

678
00:50:56,010 --> 00:51:01,420
just in Italy, but also abroad, mainly
in the United States and in Britain.

679
00:51:01,450 --> 00:51:06,000
If you read what people were writing in
the Economist, in the Times, there are

680
00:51:06,030 --> 00:51:10,460
only phrases for the efficient economic
policies of someone like Mussolini, who

681
00:51:10,490 --> 00:51:18,940
was able to enforce industrial peace, kill
strikes, repress wages, privatize, get

682
00:51:18,970 --> 00:51:24,540
finally the market back on its feet, take
away all that work collectivism and state

683
00:51:24,570 --> 00:51:27,420
intervention of the economy,
and so on and so forth.

684
00:51:27,450 --> 00:51:29,340
And this, of course, Mussolini did

685
00:51:29,370 --> 00:51:35,260
strategically to gain power, but he also
had to do it somehow by economic necessity

686
00:51:35,280 --> 00:51:38,620
exactly by what you were saying before,
because the fact that the United States

687
00:51:38,650 --> 00:51:45,700
were deflating the economy so much in
1919-1920 made it such that all other

688
00:51:45,730 --> 00:51:49,210
countries needed to
impose austerity as well.

689
00:51:49,240 --> 00:51:52,300
And it was again the fact that debt became

690
00:51:52,330 --> 00:51:59,540
more expensive, and in order for the
exchange rate to be maintained, both the

691
00:51:59,570 --> 00:52:04,900
British and the Italian elite
were forced into austerity.

692
00:52:04,930 --> 00:52:10,320
So once more we see how what's happening
at the level of domestic policies in terms

693
00:52:10,350 --> 00:52:14,020
of class struggle cannot be really
separable from the fact that these

694
00:52:14,050 --> 00:52:20,260
capitalist nation states in a globalized
economy in which the more powerful nations

695
00:52:20,290 --> 00:52:25,820
can set the tone for greater
austerity everywhere else.

696
00:52:25,840 --> 00:52:27,260
What you've said is very powerful.

697
00:52:27,290 --> 00:52:31,740
And I appreciate you, by the way, taking a
step outside of just the confines of the

698
00:52:31,770 --> 00:52:36,340
book because your book brought me into
rethinking a lot of things, really

699
00:52:36,370 --> 00:52:40,980
reconnecting some points that
maybe I had gotten wrong.

700
00:52:41,010 --> 00:52:43,420
For example, really hyper focusing on

701
00:52:43,450 --> 00:52:48,720
neoliberalism when in reality, even though
neoliberalism is its own animal and it

702
00:52:48,750 --> 00:52:54,420
serves a purpose for conversation and for
explanation, it goes back so much further

703
00:52:54,450 --> 00:52:57,940
and I think that your book
really exposed that for me.

704
00:52:57,970 --> 00:53:02,210
It really comes down to an
understanding that very few have.

705
00:53:02,240 --> 00:53:09,260
Mussolini was celebrated in his day, even
Hitler was celebrated by many in his day.

706
00:53:09,290 --> 00:53:14,460
As you describe the more democratic
British version of things and then Italy.

707
00:53:14,490 --> 00:53:19,060
What do you think are the main
differences between the two?

708
00:53:19,090 --> 00:53:26,180
One powerful message of the book is:
fascism and liberalism, parliamentary

709
00:53:26,210 --> 00:53:33,210
democracy and authoritarian state, we tend
to think of these as polar opposite

710
00:53:33,240 --> 00:53:37,140
institutional settings
and ideological spheres.

711
00:53:37,170 --> 00:53:43,740
Actually, once you focus on austerity and
what the state was wielding as correct

712
00:53:43,770 --> 00:53:48,380
economic policies in those years, which is
what we still see now again,

713
00:53:48,410 --> 00:53:54,020
you realize that they're not so different
after all and they were just reaching same

714
00:53:54,050 --> 00:53:57,300
objectives through
slightly different means.

715
00:53:57,330 --> 00:54:02,180
The reason why I focus on these two
countries is exactly

716
00:54:02,210 --> 00:54:09,000
the provocative idea that capitalism in a
democratic setting and capitalism in an

717
00:54:09,030 --> 00:54:15,060
authoritarian setting requires the same
type of policies in order to run smoothly.

718
00:54:15,090 --> 00:54:20,300
And they were also supporting one
another as countries and as economies.

719
00:54:20,330 --> 00:54:21,700
So let me be more specific.

720
00:54:21,730 --> 00:54:25,420
Mussolini could directly curb the

721
00:54:25,450 --> 00:54:32,740
revolutionary strength and the prospective
for change of the workers through laws.

722
00:54:32,770 --> 00:54:37,100
So the state imposing
wage repression by law.

723
00:54:37,130 --> 00:54:43,200
And this happened especially in 1926, in
combination with the need to deflate, in

724
00:54:43,230 --> 00:54:49,180
order to regain the exchange rate of
the lira and anchor it back to gold.

725
00:54:49,210 --> 00:54:53,660
Fundamentally austerity by
direct state repression.

726
00:54:53,690 --> 00:54:59,140
Mussolini outlawed strikes, outlawed
unions--except for the fascist union

727
00:54:59,170 --> 00:55:03,420
--undertook the greatest privatization
campaign in the history of modern

728
00:55:03,450 --> 00:55:10,020
capitalism until that point,
laid off thousands of public employees.

729
00:55:10,050 --> 00:55:16,780
It could do this with state force and with
the black shirts and the secret police

730
00:55:16,810 --> 00:55:21,700
jailing, killing, and beating
any political opposition.

731
00:55:21,730 --> 00:55:29,620
Now the same was happening in the UK, just
not directly, but a little bit more

732
00:55:29,650 --> 00:55:36,020
indirectly with the same outcome in the
sense that it was the experts at the head

733
00:55:36,050 --> 00:55:40,500
of established institutions of the
Bank of England and the Treasury.

734
00:55:40,530 --> 00:55:47,580
So technical institutions with experts
that were not elected democratically, so

735
00:55:47,610 --> 00:55:51,780
they did not have the problem of having to
stand elections in the following term

736
00:55:51,810 --> 00:55:56,620
because they were state bureaucrats
or bureaucrats of the bank.

737
00:55:56,650 --> 00:56:01,700
They wielded the power of macroeconomic
management by tweaking the dials, for

738
00:56:01,730 --> 00:56:06,780
example, by the interest rate hikes
or curbing public expenditures.

739
00:56:06,810 --> 00:56:08,700
And this created a downturn.

740
00:56:08,730 --> 00:56:15,860
So the famous 1919-1920
power of the workers, I have a chapter

741
00:56:15,880 --> 00:56:18,660
that looks at it also from a
point of view of stylized facts.

742
00:56:18,690 --> 00:56:20,940
If you look at the wage share--it was very

743
00:56:20,970 --> 00:56:27,680
high at that moment--with the recession
that was induced in large part, and I

744
00:56:27,710 --> 00:56:33,210
would say for the greatest extent,
by monetary and fiscal austerity.

745
00:56:33,240 --> 00:56:36,700
The results were depression.

746
00:56:36,730 --> 00:56:39,180
Unemployment soared like never before.

747
00:56:39,210 --> 00:56:44,300
It reached almost 20% of
the insured workforce.

748
00:56:44,330 --> 00:56:46,660
And from then on, you see very clearly

749
00:56:46,690 --> 00:56:50,660
from the data I provide in the book, is
that the immediate result of higher

750
00:56:50,690 --> 00:56:53,740
unemployment was that
strikes basically stopped.

751
00:56:53,770 --> 00:56:56,260
And then after that, profit rates surged

752
00:56:56,290 --> 00:57:00,540
again and the wage share went down
and the capital share went up.

753
00:57:00,560 --> 00:57:02,540
And when I talk about wage share, I mean

754
00:57:02,570 --> 00:57:06,980
the portion of the GDP that goes
to wages rather than profits.

755
00:57:07,010 --> 00:57:10,980
And this is where I study
marginalist economists.

756
00:57:11,010 --> 00:57:13,820
So the founders of the neoclassical

757
00:57:13,850 --> 00:57:19,420
mainstream economic framework that still
dominates the worldviews of economic

758
00:57:19,450 --> 00:57:24,460
experts at the head of the Fed
and other big institutions today.

759
00:57:24,490 --> 00:57:27,060
These experts that were actually building

760
00:57:27,090 --> 00:57:31,980
the strength of their theory in those
years, the neoclassical framework was

761
00:57:32,010 --> 00:57:35,140
actually not a framework
that was dominant yet.

762
00:57:35,170 --> 00:57:39,660
Because, for example, in Italy we had the
historical school of economics that was

763
00:57:39,690 --> 00:57:42,340
much more influenced by
the German tradition.

764
00:57:42,370 --> 00:57:48,260
So these experts that were battling a
battle in academia to dominate in terms of

765
00:57:48,290 --> 00:57:55,500
theory were provided with an opportunity
of a lifetime of seeing their models being

766
00:57:55,530 --> 00:58:02,100
directly implemented without any political
liability through an authoritarian state.

767
00:58:02,130 --> 00:58:08,620
So Maffeo Pantaleoni, Umberto Ricci, all
these famous economists at the time

768
00:58:08,650 --> 00:58:13,740
thought this was a great opportunity to
work for Mussolini's cabinet and implement

769
00:58:13,770 --> 00:58:18,020
austerity, which was the direct
outcome of their economic theory.

770
00:58:18,050 --> 00:58:22,060
And they could do this without any
political opposition and actually with

771
00:58:22,090 --> 00:58:26,380
state law that was directly
appeasing the workers.

772
00:58:26,410 --> 00:58:32,460
And once more, this industrial peace by
force was what the liberal world,

773
00:58:32,490 --> 00:58:37,060
especially in the United
States, were so excited about.

774
00:58:37,090 --> 00:58:41,700
I did a lot of archival work for this
book, and it's quite fascinating when you

775
00:58:41,730 --> 00:58:45,580
find some quotes that speak so
obviously to the situation.

776
00:58:45,610 --> 00:58:47,500
I could not even imagine this.

777
00:58:47,530 --> 00:58:49,640
This is Montagu Norman, the head of the

778
00:58:49,670 --> 00:58:54,700
Bank of England, who's writing to
Jack Morgan of JP Morgan Chase.

779
00:58:54,730 --> 00:58:57,500
Jack Morgan was a big supporter of

780
00:58:57,530 --> 00:59:01,060
Mussolini and supported him
financially from the very beginning.

781
00:59:01,090 --> 00:59:06,180
So the connection between Mussolini and
the financial establishment in the United

782
00:59:06,210 --> 00:59:10,560
States and especially Wall Street is
something that is also well documented in

783
00:59:10,590 --> 00:59:15,180
the book of Gian Giacomo Migone called
The United States and Fascist Italy.

784
00:59:15,200 --> 00:59:19,060
This letter I found in the archive of the
bank when I went to do some research.

785
00:59:19,090 --> 00:59:22,060
Montagu writes, "Fascism has surely

786
00:59:22,090 --> 00:59:25,700
brought order out of chaos
over the last few years.

787
00:59:25,730 --> 00:59:28,100
Something of the kind was no doubt needed

788
00:59:28,130 --> 00:59:33,260
if the pendulum was not to swing too
far in quite the other direction.

789
00:59:33,290 --> 00:59:35,860
The Duce was the right man at a critical

790
00:59:35,890 --> 00:59:41,260
moment." So Montagu Norman in this letter
is of course describing the fact that

791
00:59:41,290 --> 00:59:46,540
freedom of press has been suspended and
that there's all these killings going on.

792
00:59:46,570 --> 00:59:50,140
But this is 1926, so when he writes this

793
00:59:50,170 --> 00:59:54,460
letter, it's been already
four years of fascist regime.

794
00:59:54,490 --> 00:59:56,500
But he's very clear about the fact that

795
00:59:56,530 --> 01:00:00,940
the Italian population was too turbulent
and they needed to be disciplined.

796
01:00:00,970 --> 01:00:05,380
Churchill says, "Different nations have
different ways of doing the same thing.

797
01:00:05,410 --> 01:00:09,660
Had I been an Italian, I'm sure that I
should have been with you from the start

798
01:00:09,690 --> 01:00:13,140
to finish in your victorious
struggle against Leninism.

799
01:00:13,170 --> 01:00:18,100
But in Britain we have not yet had to face
this danger in the same poisonous form.

800
01:00:18,130 --> 01:00:20,380
But I do not have the least doubt that in

801
01:00:20,410 --> 01:00:26,380
our struggle we shall be able to strangle
communism." So we see here that even some

802
01:00:26,410 --> 01:00:30,460
like Churchill is pointing out the fact
that we Brits are also strangling

803
01:00:30,490 --> 01:00:34,900
alternatives by austerity,
just in less direct ways.

804
01:00:34,930 --> 01:00:38,580
So we see a complete reversal of the
bargaining power of the worker and

805
01:00:38,610 --> 01:00:41,380
fundamentally the
silencing of the workers.

806
01:00:41,410 --> 01:00:44,500
So I want to read this
quote from GDH Cole.

807
01:00:44,520 --> 01:00:46,260
For me it's a very important quote.

808
01:00:46,290 --> 01:00:49,940
GDH Cole was a guild socialist who was not

809
01:00:49,970 --> 01:00:54,700
only intellectual, he was actually active
at that time with the whole guild

810
01:00:54,730 --> 01:00:57,940
socialist movement in
the building industry.

811
01:00:57,970 --> 01:01:02,340
And he observed very
sharply what was going on.

812
01:01:02,370 --> 01:01:07,040
And especially in one quote that really
points to the coercive effect of

813
01:01:07,070 --> 01:01:10,660
austerity, even in supposedly
democratic setting.

814
01:01:10,690 --> 01:01:17,460
He basically is talking about 1922, after
two years of austerity that brought the

815
01:01:17,490 --> 01:01:21,180
economy into the doldrums,
as Pigou put it.

816
01:01:21,210 --> 01:01:25,460
So a state of fundamental, permanent
under-utilization of resources.

817
01:01:25,490 --> 01:01:27,720
"The big working class offensive had been

818
01:01:27,750 --> 01:01:31,720
successfully stalled off and British
capitalism, though threatened with

819
01:01:31,750 --> 01:01:37,340
economic adversity, felt itself once more
safely in the saddle and well able to cope

820
01:01:37,370 --> 01:01:42,140
both industrially and politically with any
attempt that might still be made from the

821
01:01:42,170 --> 01:01:45,740
labor side once seated."
So this is very obvious.

822
01:01:45,770 --> 01:01:48,210
So again, short term cost?
Of course.

823
01:01:48,240 --> 01:01:53,500
Immediately there will be a downturn and
capitalists will lose in the short term.

824
01:01:53,530 --> 01:01:57,620
But then if you look at, for example, the
data on the profit rate, you see that

825
01:01:57,650 --> 01:02:04,460
really it's very briefly after that, the
trend is reversed and that you are able to

826
01:02:04,490 --> 01:02:07,980
stabilize what is more foundational,
which is the capital order.

827
01:02:08,010 --> 01:02:13,940
So again, if austerity does not stabilize
the economy, it stabilizes capital order.

828
01:02:13,970 --> 01:02:20,460
Or better, destabilizing the economy in
terms of economic growth helps preserve

829
01:02:20,480 --> 01:02:24,340
the capital order, which is much more
structural to capitalism in the long run.

830
01:02:24,370 --> 01:02:27,100
So in fact, like Cole put it, capitalism

831
01:02:27,130 --> 01:02:31,880
was once more safely in the saddle
because labor was defeated.

832
01:02:32,200 --> 01:02:34,700
So this is for me, a very important

833
01:02:34,730 --> 01:02:40,740
message of the book is that, historically
speaking, we've constantly seen

834
01:02:40,770 --> 01:02:47,060
parliamentary democracies hailing the
successes of authoritarian regimes.

835
01:02:47,090 --> 01:02:52,300
You can imagine what happened under
Pinochet's dictatorship in Chile,

836
01:02:52,330 --> 01:02:58,420
what happened in the Suharto government in
Indonesia, what happened with Boris

837
01:02:58,450 --> 01:03:03,380
Yeltsin in 1992 with the
fall of the Soviet Union.

838
01:03:03,410 --> 01:03:07,500
All of these authoritarian regimes that
were explicitly repressing political

839
01:03:07,530 --> 01:03:13,300
opposition were hailed in
the main liberal press.

840
01:03:13,330 --> 01:03:18,210
If you go into the archives of The
Economist, it's impressive how much

841
01:03:18,240 --> 01:03:22,540
someone, for example, like Larry Summers,
had no doubt that Boris Yeltsin was doing

842
01:03:22,570 --> 01:03:28,020
the right thing at the right time in order
to impose much necessary austerity that

843
01:03:28,050 --> 01:03:31,580
was supposedly going to be for the
benefit of the Russian people.

844
01:03:31,610 --> 01:03:36,860
So in my book, the last chapter tries to
show how the story that I tell more in

845
01:03:36,890 --> 01:03:44,140
detail in the 1920s recurs throughout
the 20th and the 21st century.

846
01:03:44,170 --> 01:03:48,300
And once more, the alliance of liberalism

847
01:03:48,330 --> 01:03:54,500
and fascism in its diverse forms is a
constant, not just because they actually

848
01:03:54,530 --> 01:03:58,340
support each other politically, but also
because ultimately they're achieving

849
01:03:58,370 --> 01:04:02,120
the same ends with
slightly different means.

850
01:04:03,360 --> 01:04:08,980
This reminds me very much of the Democrats
and Republicans in the United States.

851
01:04:09,010 --> 01:04:13,980
We often talk about the two wings
of the same bird and the Democrats.

852
01:04:14,010 --> 01:04:16,300
As a UK version of this.

853
01:04:16,330 --> 01:04:21,660
Clara, in some of your talks you talk
about future projects, Michal Kalecki and

854
01:04:21,690 --> 01:04:27,260
full employment, which is near and dear to
my heart, being that MMT is foundational

855
01:04:27,290 --> 01:04:30,700
to the job guarantee as
part of its core tenet.

856
01:04:30,720 --> 01:04:32,420
What are you working on in the future?

857
01:04:32,450 --> 01:04:35,340
Where can we find more of your work?

858
01:04:35,370 --> 01:04:41,180
Actually I'm envisaging a trilogy, so
this would be the first one of three.

859
01:04:41,210 --> 01:04:47,060
And the next book, I just recently signed
a contract for Chicago Press since they've

860
01:04:47,090 --> 01:04:51,700
been really wonderful to me,
especially Chad Zimmerman, my editor.

861
01:04:51,730 --> 01:04:57,460
He's fantastic and I owe a lot to him
if the book came out as well as it did.

862
01:04:57,480 --> 01:04:59,300
The next book is actually going to be

863
01:04:59,330 --> 01:05:03,780
about challenging the Keynesian
epoch after the Second World War.

864
01:05:03,810 --> 01:05:06,340
So I'm going to be looking at exactly what

865
01:05:06,370 --> 01:05:10,800
happened, not after the First World War,
but after the Second World War, because I

866
01:05:10,830 --> 01:05:16,460
think there is a lot to be said about the
idealization of the golden epoch of

867
01:05:16,490 --> 01:05:21,660
capitalism, in which, in fact, it seemed
like the system could guarantee a

868
01:05:21,690 --> 01:05:26,340
democratic well-being that was,
in fact, much more diffused.

869
01:05:26,370 --> 01:05:30,900
And I think in a way this is important
politically, because I think there was

870
01:05:30,930 --> 01:05:35,160
much more austerity than what it's
normally thought about, both in terms of

871
01:05:35,190 --> 01:05:40,420
the type of economic theory the experts
that were advising governments were

872
01:05:40,450 --> 01:05:43,180
bringing out, but also
in terms of the policy.

873
01:05:43,200 --> 01:05:46,540
So I think I'm going to be looking
more closely to the United States.

874
01:05:46,570 --> 01:05:51,580
In the book, The Capital Order, the United
States is an actor in the background.

875
01:05:51,610 --> 01:05:54,060
But the second book will be more focused,

876
01:05:54,090 --> 01:05:58,300
I think, on the United States,
to breach the common narrative.

877
01:05:58,330 --> 01:06:03,460
Also politically, I find it very
problematic that as we face all of these

878
01:06:03,490 --> 01:06:08,320
unprecedented challenges to our system
right now, from the social catastrophe to

879
01:06:08,350 --> 01:06:15,060
the climate catastrophe, that people then
tend to revert to, 'oh, we can just have a

880
01:06:15,090 --> 01:06:18,740
New Deal once more, or a
new Bretton Woods,' or...

881
01:06:18,770 --> 01:06:20,700
In a sense, the idea that, 'yes,

882
01:06:20,730 --> 01:06:24,180
capitalism has gone astray because
we're in this neoliberal period.

883
01:06:24,210 --> 01:06:30,060
But ultimately there was a virtuous moment
in which the real essence of capitalism

884
01:06:30,090 --> 01:06:35,140
can be a good one, if only we can reform
it in the right direction.' And I think

885
01:06:35,170 --> 01:06:39,120
this is very problematic because I think,
especially today, in which all these

886
01:06:39,150 --> 01:06:45,180
challenges are new and we are living the
deepest contradictions of our system, we

887
01:06:45,210 --> 01:06:51,700
cannot just be, in a way, blinded by the
idea that we can just revert to the past,

888
01:06:51,730 --> 01:06:54,460
especially when the past
is an idealized one.

889
01:06:54,490 --> 01:06:56,660
And I really do think that this Keynesian

890
01:06:56,690 --> 01:07:02,120
epoch was not as rosy as a lot of
progressives want us to think, and that we

891
01:07:02,150 --> 01:07:06,020
should really try to think
anew for the future to come.

892
01:07:06,050 --> 01:07:10,700
So that's going to be the next step, is to
try to see what is the relationship

893
01:07:10,730 --> 01:07:13,940
between austerity and Keynesianism
after the Second World War.

894
01:07:13,970 --> 01:07:16,140
Because in my first book, I very well show

895
01:07:16,170 --> 01:07:23,380
how Keynes himself was one of the biggest
fans of austerity in the early 1920s.

896
01:07:23,410 --> 01:07:25,860
Then he reverts to critique of austerity

897
01:07:25,890 --> 01:07:30,140
only once the capital order
was fully re-established.

898
01:07:30,170 --> 01:07:37,380
So Keynes himself is not a main actor in
my book, but he is present and he is

899
01:07:37,410 --> 01:07:43,540
someone who clearly said that in the hot
years and the revolution years, 1919-1920,

900
01:07:43,570 --> 01:07:49,100
there was no way out but austerity because
we needed to preserve the capital order.

901
01:07:49,130 --> 01:07:54,020
Then once that was done, once the workers
were defeated, then you could envisage

902
01:07:54,040 --> 01:07:57,900
potentially some public spending, but
certainly not in a moment in which public

903
01:07:57,930 --> 01:08:02,060
spending could escalate further
demand for social change.

904
01:08:02,090 --> 01:08:04,500
Wow, I cannot wait.

905
01:08:04,530 --> 01:08:06,780
We have a bookstore that we prop up the

906
01:08:06,810 --> 01:08:10,980
books of the people we interview, and
this is definitely going to go in that.

907
01:08:11,010 --> 01:08:13,700
We're very interested in buying bulk and

908
01:08:13,720 --> 01:08:16,540
getting them out there to people,
especially when they have an impact.

909
01:08:16,570 --> 01:08:19,540
And I believe this book is a must-read for

910
01:08:19,570 --> 01:08:22,180
every single person that
wants to see change.

911
01:08:22,200 --> 01:08:25,420
You have to understand where we come
from to know where we're going.

912
01:08:25,450 --> 01:08:28,740
And this really has opened
my eyes quite a bit.

913
01:08:28,760 --> 01:08:32,060
This is such a powerful book, and Clara, I

914
01:08:32,090 --> 01:08:35,420
really appreciate the effort and
time you took with me today.

915
01:08:35,450 --> 01:08:38,020
I hope we can have you
back on in the future.

916
01:08:38,050 --> 01:08:42,140
I have so much more to ask you, but
we'll save that for another time.

917
01:08:42,170 --> 01:08:45,460
For sure.
I would like to end maybe by reading you

918
01:08:45,490 --> 01:08:49,060
the last quote of the ending
words of chapter ten.

919
01:08:49,090 --> 01:08:51,740
I wrote: "Austerity is a political project

920
01:08:51,760 --> 01:08:56,180
arising out of the need to preserve
capitalist class relations of domination.

921
01:08:56,210 --> 01:09:00,900
It is the outcome of collective action to
foreclose any alternatives to capitalism.

922
01:09:00,920 --> 01:09:04,740
It can thus be subverted through
collective counteraction.

923
01:09:04,760 --> 01:09:07,340
The study of its logic and purpose is a

924
01:09:07,370 --> 01:09:11,740
first step in that direction." So I'm
writing this book because I think we

925
01:09:11,760 --> 01:09:15,740
really need to understand how our society
works in order to actually change it.

926
01:09:15,760 --> 01:09:19,300
And this is the first step, is to
really stop idealizing what's going on.

927
01:09:19,330 --> 01:09:25,380
And this is why history is so important to
really grasp the logic and the dynamics

928
01:09:25,410 --> 01:09:30,680
and thus potentially open our
eyes to a different future.

929
01:09:30,720 --> 01:09:32,380
This just made my day.

930
01:09:32,410 --> 01:09:34,640
So Clara, thank you so
much for joining me.

931
01:09:34,670 --> 01:09:37,300
I really appreciate it.
Thank you.

932
01:09:37,330 --> 01:09:40,300
I feel so honored and
it was such a pleasure.

933
01:09:40,330 --> 01:09:44,140
This is Steve Grumbine with
my guest, Clara Mattei.

934
01:09:44,170 --> 01:09:45,580
Macro N cheese.

935
01:09:45,610 --> 01:09:49,040
We are outta here.

936
01:09:53,000 --> 01:09:58,060
Macro N Cheese is produced by Andy
Kennedy, descriptive writing by Virginia

937
01:09:58,090 --> 01:10:01,620
Cotts, and promotional
artwork by Andy Kennedy.

938
01:10:01,640 --> 01:10:06,500
Macro N Cheese is publicly funded by
our Real Progressives Patreon account.

939
01:10:06,530 --> 01:10:08,480
If you would like to donate to Macro N

940
01:10:08,500 --> 01:10:12,240
Cheese, please visit
patreon.com/realprogressives.