by Robert Knox
The below is one of the essays published in Salvage #6: Evidence of Things Not Seen. All of the essays published in print are released online in the months after their print publication. Each issue of Salvage includes a perspectives pamphlet and many other essays, as well as print-exclusive art, fiction and poetry – and a postcard. Please subscribe; subscriptions are our lifeblood.
In a 2015 interview, Jean Claude Juncker, President of the European Commission, upon learning of the election of Syriza in Greece, stated that ‘[t]here can be no democratic choice against the European treaties’. Since those treaties mandated that Greece implement austerity, no mere election could overturn them.
Here Juncker was explicitly voicing an implicit element of our neoliberal present: the tendency to wrench political and economic decisions from even meagre popular control. This has been particularly clear in the case of the rhetoric of austerity, with its advocates arguing that it is not a political choice, but an economic necessity. This rhetoric has a doubly depoliticising effect. On an ideological level, it casts austerity as a neutral or technocratic matter, transcending political alignment or class conflict. On a substantive level, the effect of this is to further isolate economic decisions from political control.
However, Juncker does not refer directly to economic necessity. Whilst this undoubtedly undergirds Juncker’s pronouncement, it is to the European treaties – that is to say to law – that he turns to argue for the political inevitability of austerity. This is not an isolated incident. Although austerity is frequently counterposed to law – with austerity seen as marked by ‘cutting regulation’, or as violating various social rights – an examination of the past thirty years reveals that austerity is in fact a deeply juridical phenomenon. We might speak, then, of a phenomenon of ‘law-sterity’.
This law-sterity is particularly evident in the context of the European Union, the existence of which has been associated with an embedding of a neoliberal economic model; it was for this reason that some on the Left chose to vote to leave the EU in the 2016 referendum. But this is not simply a European issue; on the international, regional, national and ‘local’ levels, legal frameworks have been at the core of embedding and depoliticising austerity.
Law has a number of features that make it ideal for implementing austerity. On the most basic level, legal ‘rules’ purport to stand above political action, and so form an external restraint on politics. Although laws may be the product of particular democratic institutions, once made they stand beyond the everyday life of politics. Thus, law serves to insulate particular decisions from everyday popular control.
Law’s basic distance from popular control is buttressed by a number of other anti-democratic features. Firstly, law is a specialised language, governed by complex arguments, rules of interpretation and so on. Accordingly, legal arguments must be mediated through legal experts. Unsurprisingly, then, political issues contested through the law generally involve consulting with legal professionals. The fights around these issues will then be conducted through the courts and resolved by the judiciary. Thus, insofar as political battles are conducted through law, they tend to be alienated from popular mobilisation.
Secondly, law is abstracting and individualising; when something is addressed through the medium of law it tends to be removed from its wider context. Law does not address broader questions about who benefits from particular policies, or what broader issues are in play in a particular situation. At best, law can address a particular situation and decide whether or not it is ‘within the rules’. In this way, the law tends to be concerned with formal and procedural questions, as opposed to substantive political ones.
Linked, though not reducible to, these two points is the ideological effect of couching something in the language of law. Framing an issue as ‘political’ invites the idea that it is contestable. By contrast, law has a special power in capitalist societies; insofar as something is legally mandated (or illegal) it tends to have a special force beyond the violence of the state. This can be overcome in certain circumstances, but the ideological aura of legality is powerful.
In this way, relocating political (and economic) decisions to the ‘legal’ level is an effective way of removing them from popular control. This has made the juridical sphere the perfect vessel for the implementation of austerity politics. By mandating austerity at a legal level, economic decisions can to be moved – both substantively and ideologically – from the sphere of political contestation into the realm of technocratic necessity.
One final feature of the law is of particular importance here. Law-making is – as Karl Klare puts it in ‘Law-Making as Praxis’ – ‘constitutive’. That is to say that law, in creating a system of material and ideological compulsions and incentives, plays a key role in shaping and transforming political terrain. This is the ultimate aim of juridicalised austerity. By creating a system of incentives, the legal framework of austerity ultimately forces ‘progressive’ governments into implementing austerity on their own.
International Law and the Invention of Austerity
The above considerations are not just abstract reflections. The great pioneers of neoliberalism explicitly understood the role of law in their political project. Friedrich von Hayek, for example, devoted at least as much attention to the production of legal treatises as he did to economics. InThe Constitution of Liberty, he argued that any attempt to enforce social justice would violate the rule of law, since it would involve differentiating between different classes or groups of people. The ‘rule of law’ was a weapon for use against ‘socialism’.
This basic intuition was shared by those jurists who played a part in designing the regimes of international economic law. In ‘The Ordo-Liberal Origins of Modern International Investment Law’, Konstantina Tzouvala has shown how the modern regime of international investment law was decisively shaped by German ‘ordoliberals’. These economists foregrounded the role of ‘generalised competition’ in promoting an orderly capitalism. Their greatest fear was the ‘distortions’ introduced to the economy through political interventions. Their solution to this was to limit such intervention by governing economic practices through rules. Specifically, in the international context, they thought it necessary to ‘limit national sovereignty’ by transferring powers to international legal bodies.
Such intuitions lie at the heart of a number of international financial institutions, which have been key in the struggle against domestic left-wing policies. In particular, many of the techniques of contemporary austerity were first invented and deployed in the 1970s, 80s and 90s in Latin America, Asia and Africa under the auspices of the International Monetary Fund (IMF) and the World Bank. Although the IMF has become notorious for its role in spreading neoliberalism, it did not start out that way. The IMF was founded in the aftermath of the Second World War as part of a global economic architecture designed to secure ‘economic stability’. It was linked to a system of pegged exchange rates, in which the value of currencies was fixed in relation to gold. The IMF had a series of ‘hard’ powers designed to forbid any state from floating its currency on the open market. The US dollar, then operating on the gold standard, underpinned this system as the key global currency.
When, in 1971, the US suspended the convertibility of the dollar into gold the system of pegged exchange rates became obsolete. Accordingly, the IMF needed a new purpose; this purpose was forged in the economic transformations of the 1970s, with the IMF helping to birth and consolidate neoliberalism.
The first step was to purge the Keynesians from the IMF and replace them with monetarist economists. This change in personnel was coupled with legal changes to the role and purpose of the IMF. Since exchange-rate stability could no longer be guaranteed on the international plane, the IMF shifted its focus to the domestic economic policies that impact upon their exchange rates. Since all domestic policies could plausibly affect exchange-rate stability, this extended the legitimate jurisdiction of the IMF to the entire internal life of states.
In theory, this represented a diminution in the IMF’s power, since it now lacked the ‘hard’ legal tools to forbid currency floating. Instead, it was limited to the role of exercising ‘[s]urveillance over exchange arrangements’. This limitation was combined with another, namely that the IMF has a duty to ‘respect the domestic social and political policies of members’.
This combination could have reduced the IMF to a powerless non-entity. However, when combined with the debt crises of the 1980s (beginning with the 1982 Mexican debt crisis), it enabled the IMF to essentially invent the modern form of austerity. This was achieved through the IMF’s ‘structural loan’ facility. The IMF was empowered to lend money to countries undergoing ‘balance of payment emergencies’ (that is, economic crises). These loans were subject to conditions. Specifically, the state had to agree to ‘structural’ reforms which would achieve ‘exchange rate stability’. For the neoliberals helming the IMF, these reforms involved privatising state industries, ‘liberalising’ labour law and ‘reducing bureaucracy’. In the face of an economic crisis brought about through the fluctuations of capitalist finance, the burden of ‘fixing’ that crisis was shifted to the public sector and popular classes. This, of course, is the essence of contemporary austerity.
Although in theory voluntary, this system created a vicious circle. States, particularly developing states, are forced to rely on private finance. When the burden of repaying these debts becomes too onerous, the IMF ‘saves’ the states but imposes legal obligations on them to engage in structural reforms.
Crucially, the IMF has had to argue that such transformations remain within its duty to ‘respect the domestic social and political policies of its members’. The IMF argues that its legal duty is to ‘promote exchange-rate stability’. It then argues that the only way this can be done is through ‘structural adjustments’ to make the economy more effective and efficient. Accordingly, the IMF’s austerity programmes are not the imposition of a ‘domestic social or economic policy’ but rather a technocratic requirement to achieve exchange-rate stability.
In this way, the IMF’s legal framework proved the perfect vehicle for the creation of austerity. The IMF, as a legal creation standing above states, is able to impose a set of policy choices from above. These policies are couched as legal obligations, which bind the recipient state. In this way, in a very real sense, the IMF – as a body entirely inaccessible to popular mobilisation – removes economic choices from the possibility of popular control. At the same time, the IMF juridically frames austerity policies; treating them not as objects of class struggle, but simply as technocratic requirements of growth.
Over the years, the IMF’s main target has been states in the developing world. However, its legal techniques have become the key inspiration for austerity across the globe. In particular, its legal techniques have been perfected by the European Union.
Chris Bickerton’s European Integration: From Nation-States to Member States, documents that when the precursor organisations to the EU first came into being, European states had all adopted Keynesian policies to some degree. In the 1970s, as the Keynesian consensus fell apart, the governments of European states looked to European institutions to help them consolidate neoliberal restructuring at home. Insofar as neoliberalism could be transformed into a binding legal obligation, opposition to it could be quietened.
This was achieved during the 1970s and 1980s through a series of treaties which first established a common European exchange-rate mechanism, and then moved towards the creation of a single European market, which prioritised breaking down barriers to competition. This was buttressed by an activist European judiciary which extended the power of European law over domestic law whilst simultaneously reading the promotion of competition as the overriding objective of the treaties. By the 1990s, the EU had embedded neoliberalism at its heart. In the process, the EU drew on the IMF’s tactics, raising austerity to a legal obligation, rooted in the need for ‘economic stability’. However, the EU has deepened this process, essentially constitutionalising austerity.
This began in 1992 with the conclusion of the Maastricht Treaty of European Union. Article 104c of that Treaty explicitly committed Member States to avoiding ‘excessive government deficits’, empowering the European Commission to ‘monitor’ the economies of Member States. Should the Commission decide that a Member State had made a ‘gross error’, it was to make a recommendation to the Council of Ministers, which could then impose sanctions. This was supplemented by a Protocol ‘On the Excessive Deficit Procedure’ with its mathematical equation for what counted as ‘excessive’.
In the Maastricht Treaty, then, the avoidance of budget deficits was accorded a fundamental legal status. As with the IMF, this is administered at the institutional level and placed beyond political contestation. However, the Maastricht Treaty deepened the logic of the IMF. Firstly, in setting out a mathematical formula for the ‘excessive deficit’, it represented a further depoliticisation. Secondly, it explicitly referred to budget deficits in a constitutional document.
This ‘constitutionalisation of austerity’ has remained a key part of the EU’s DNA. In 1997, the Council proposed a strengthening of the excessive-deficit procedure. Through a number of Resolutions, the Council established the Stability and Growth Pact, which required Member States to outline ‘stability programmes’ detailing how they would reach a balanced budget or surplus. In 2012, in the wake of the sovereign-debt crisis, this was superseded by the European Fiscal Compact, which requires that states implement a balanced-budget law within their domestic legal system. All of these measures were again mediated by mathematical formulae.
Although the EU has gone beyond the IMF in terms of constitutionalising austerity, it still lacks the ‘hard’ enforcement powers. Like the IMF, it has been through lending in times of crisis that the EU legal architecture has been able to put law-sterity to work. This has been particularly true in the European periphery following the 2008 crisis. In 2009, Greek Prime Minister George Papandreou announced that the previous government had concealed the true level of Greek debt, creating a crisis in confidence. The EU leadership knew that much Greek debt was held by European banks.
Accordingly, the EU kicked into action with the classic austerity model; bail out the banks by lending Greece financial aid, and impose austerity on the Greek populace. In May 2010, the EU, in concert with the IMF, agreed on a bailout package composed of 80 billion Euros pooled from the EU countries, and 30 billion from the IMF. In order to deal with the situation the EU threw together a set of ad hoc legal rules. In essence, in order to accept the money, Greece signed a ‘Memorandum of Understanding’ (MoU) – a legal agreement – imposing strict conditions. The programme’s short-term objective was ‘fiscal consolidation’, involving ‘measures that generate savings in public-sector expenditure’, with the medium-term objectives lifted straight from the IMF’s playbook, calling for:
Reforms … to modernise the public sector, to render product and labour markets more efficient and flexible, and create a more open and accessible business environment for domestic and foreign investors, including a reduction of the state’s direct participation in domestic industries.
This was coupled with a detailed timetable for the implementation of said ‘reforms’ and a series of quantitative targets. All of this was to be monitored by the European Commission. Once again, the net effect of the legal intervention was to remove control of economic decisions from the Greek people, and replace them with a series of binding legal targets.
The Greek experience was used to forge new European legal institutions which could more stably implement the austerity project. Thus, in the wake of the Greek crisis, the European Financial Stability Facility was set up. States would be entitled to receive financial assistance, subject to MoUs on budgetary discipline. This was soon superseded by a more permanent body, the European Stability Mechanism, providing emergency funding on the basis of ‘strict conditionality’, as implemented by MOUs. Coming full circle, states are only eligible for such help if they are members of the European Fiscal Compact.
The EU, then, has embedded austerity at its heart. This has been achieved through strengthening and extension of the EU’s legal apparatus. Through the provision of binding legal objectives and targets, the EU’s legal architecture has enforced austerity by tying the hands of political actors. This has been achieved through the ‘constitutionalisation of austerity’, and the surveillance of quantitative targets in the emergency lending framework. Once again, the legal framework has been essential in positioning this removal of control as a neutral and technical matter beyond political choice.
Law-sterity at Home
From the above considerations, we might be led to believe that law-sterity is a project imposed from above the nation-state. Indeed, this was precisely the insight of the ordoliberals. This is the sentiment which has animated left-wing critiques of the European Union, and is an element of the anti-globalisation movement more broadly. There is a grain of truth to this: supra-national institutions are particularly inaccessible to popular mobilisation as compared to the nation-state. However, we should also be cautious of such an approach. Supra-national institutions are not simply imposed upon nation-states; they are themselves composed of nation-states, and generally staffed and run by personnel drawn from those states.
Indeed – and Chris Bickerton outlines this argument as it relates to the EU – these institutions were often crafted by the governments of nation-states with the explicit aim of tying their own hands. Many of the contemporary interventions of international and regional institutions are conducted in collaboration with national governments. If these national governments can argue that austerity is a requirement that is imposed by these institutions, they are able to mitigate their own political responsibility for austerity politics.
However, it is not simply international institutions that enable this to occur. Insofar as national governments can appeal to any set of ‘rules’, they can attempt to defuse resistance to, and disavow political responsibility for, austerity. Law is able to do this irrespective of whether it is international or domestic. Most importantly, insofar as such laws can be passed there is the possibility – depending on particular constitutional arrangements – of binding future governments to implement austerity.
As such, there has been a trend for domestic governments to try and hem themselves in through governing their economic behaviour through the provision of ‘rules’, up to and including legal rules. The most obvious example of this is through legal provisions guaranteeing the ‘independence’ of central banks, which must then respond to legal targets. However, as the example of Britain demonstrates, law-sterity goes deeper than this.
There, this project most visibly began in 1997 with the victory of New Labour. Then-Chancellor Gordon Brown, in an attempt to restore ‘economic credibility’, set out a series of ‘fiscal rules’. The first of these rules was ‘the golden rule’ that the government would maintain a balanced budget or a budget surplus over the economic cycle. The second was the ‘sustainable investment rule’, requiring that government debt remain at less than 40 per cent of GDP.
Although these Golden Rules were not always abided by, they represented an attempt to codify the logic of austerity. In the wake of the 2008 crisis, the British government went even further. Echoing the EU’s constitutionalisation of austerity, the Fiscal Responsibility Act 2010 imposed binding legal rules under which the Treasury had to ensure public sector borrowing decreased yearly, with a series of numerical targets.
In effect, the Labour government was attempting to use the law to create ‘external’ compulsions to austerity on itself. The Fiscal Responsibility Act was widely mocked, with George Osborne declaring ‘either [Brown] does not trust himself to secure sound public finances, or he knows that the public do not trust him to secure them’.
Despite his mockery, Osborne adopted a very similar set of techniques as Chancellor. In March 2011, the coalition government passed the Budget Responsibility and National Audit Act. The Act required the Treasury to publish a Charter of Budget Responsibility, outlining the Treasury’s ‘policy for the management of the National Debt’ and setting out fiscal targets. Any future budgets were to conform to these targets. The Act also established the ‘Office for Budget Responsibility’, an ‘independent’ body whose duty was to ‘objectively, transparently and impartially’ analyse the Charter. Famously, in the first Charter the Coalition set itself the target to have public debt falling by 2015.
Just as with New Labour, then, the Coalition government attempted to craft a series of rules to push their economic policy in the direction of austerity. Once again, this was achieved through using the law to craft ‘external’ compulsions for the promotion of austerity. In 2015, in a direct reproduction of Brown’s behaviour, Osborne suggested that he enact a ‘budget surplus’ law. Alas, Osborne never had a chance to do so. In the face of the economic uncertainty occasioned by the EU Referendum result, Theresa May repudiated the proposed law, but the basic framework remains in place.
Think Globally, Cut Locally
British austerity has not primarily operated at the level of central government. Conservative governments have been loath to directly attack centrally run services and accordingly local government has tended to feel the brunt of austerity. It is thus in the relationship between central and local government that we can most clearly observe the patterns of law-sterity.
In Legality and Locality: The Role of Law in Central-Local Government RelationsMartin Loughlin mapped the changing role of law in shaping the relationship between central and local government. Loughlin’s account demonstrates that law has played a long and inauspicious role in imposing spending limits on local government. Prior to the early 1900s, local government was largely legally unregulated. Local authorities raised funding via the ‘rates’ system of local taxation, with local government functions not particularly extensive in nature.
This changed in the 1920s, with the rise of the Labour Party. At this point that the conservative judiciary stepped in. Famously, in the case of Roberts v Hopwood, it was held that Poplar Borough Council – in electing to pay a generous minimum wage, one equal between its male and female employees – had breached its ‘fiduciary duty’ to ratepayers. This duty meant, in the words of Lord Atkinson, that the Council had to act ‘in a fairly business-like manner with reasonable care, skill and caution’ and not be motivated by ‘eccentric principles of socialist philanthropy, or by a feminist ambition’.
This could not survive Keynesianism, and from the 1940s until the 1970s there was a new settlement. Local government was seen as an adjunct to the delivery of the welfare state. It was funded by a mixture of rates and grants from central government and given broad powers allowing them to avoid the supervision of the courts. This changed with the 1979 Thatcher-led Conservative government, which came to power pledging to cut spending.
The process first began in 1980 with the Local Government Finance Act. This Act replaced central grants with ‘Block Grants’. This mechanism was underlain by two aspects, ‘Grant Related Expenditure’ (GRE) and ‘Grant Related Poundage’ (GRP). The former was a figure which represented the cost of services a council should provide, the latter the resources theoretically available to a council, both estimated by central government. Through a calculation of the relationship between the GRE and GRP, the basic government grant would be established. Any spending above the GRE would not be fully compensated, with funding being ‘tapered’, and – in cases where the council had a high GRP – might even be ‘negative’.
Here, the law aimed to produce incentives for local councils to cut spending. The theory was that local councils would introduce cuts themselves, rather than risk the political fallout of increasing the rates. However, this policy came up against the Labour Left’s ‘municipal socialism’, which sought to use local government to resist Thatcherism. Rather than implement cuts, these councils raised the rates and put forward ambitious spending plans.
Particularly important in this respect was the Greater London Council’s (GLC) ‘Fare’s Fair’ scheme, which subsidised public transport. In response Bromley Borough Council – a Conservative authority – brought an action in judicial review. In the case of Bromley v GLC, the House of Lords found that the GLC had breached its fiduciary duty, because the scheme was contrary to ‘ordinary business principles’.
These judicial decisions were buttressed by legislative changes. The centrepiece of these was the 1984 Rates Act, which enabled the government to set a rate limit (or cap) for local authorities which spent ‘excessively’. Any local authority which spent above a certain target, set by the Secretary of State, would be ‘designated’ and would not be able to raise its rates. Once designated, a local authority could apply for a ‘re-determination’ but the Secretary of State could demand changes in expenditure.
The Act created a double pressure towards austerity. By limiting the rates, a local authority simply did not have the funds to implement programmes. At the same, in order to raise the rates, a local authority would have to directly invite central government in to make cuts.
In the face of this approach, many of the Labour Left argued that central government would not let local government fail, and proposed refusing to set a rate, or running a deficit budget. Such tactics had worked for Liverpool City Council in 1983. However, by 1985 – in the wake of the defeat of the miners’ strike – a newly confident Conservative government relished the confrontation.
The District Auditor for Liverpool found that the Liverpool Council’s refusal to set a budget had resulted in ‘losses’ of £106,103 in central government grants. Since this loss had been caused by the ‘wilful misconduct’ of the Labour councillors, they were personally liable for such losses. Moreover, since the losses were over £2,000, the councillors were disqualified from holding office. This chilling example killed off any chance of the strategy of deficit budgets.
The Thatcher period was marked by an intense juridification of local politics. This juridification marked an extension of centralised state power, providing a series of material incentives and compulsions to implement austerity. This was mediated through the neutral language of ‘excessive spending’ and mathematical formulae, in an attempt to depoliticise such decisions.
By 1992, the basic framework for local government had been put into place with the Local Government Finance Acts 1988 and 1992. This framework consolidated the trends of the Thatcher area, positing local government as a vehicle for the delivery of austerity. Under this system, Councils have three basic sources of income. Replacing the rates is Council Tax, a tax set by local authorities based on property values. Although local authorities have the power to set the level of Council Tax, the 1992 Act retained the power for the Secretary of State to ‘designate’ councils.
The second source of funding are business rates (local businesses taxes). At present, the level of business rates is set centrally and local business rates are pooled regionally and redistributed. The final source of funding for local government remains the centrally allocated ‘Revenue Support Grant’, calculated by central government, taking into account previous local authority spending and the total amount central government is ‘able to afford’.
Under section 32 of the Act, local authorities have a duty to produce a balanced budget. Should they fail to do so, the Chief Financial Officer is obliged to issue a notice, leading to the possibility of legal action being taken against the councillors. Most importantly, under section 15, should a balanced budget not be set, the Secretary of State for Local Government has the power to step in and exercise any function of local government.
This legal framework created the perfect storm of austerity. Central government is able to control the flow of income to a local authority. Faced with a shortfall, local authorities – with their legal obligation to balance budgets – have to cut spending, or could face legal action. If local authorities opt to contest this, they will not be able to prevent cuts, as the Secretary of State will step in and implement austerity directly.
Under New Labour, this framework remained in place, but it was largely dormant. Since the 2008 crash and the successive Conservative governments, things have changed. The overall money available to the revenue support grant has fallen massively, and whilst the government did not designate any councils, it heavily incentivised a council tax freeze. The Coalition and Conservative governments accelerated this process through their (unevenly implemented) ‘decentralisation’ agenda. The 2011 Localism Act maintained the basic shape of the system but altered the structure of council funding. Under the Act, the Secretary of State no longer designates councils spending excessively. If Council Tax is ‘excessive’ a local authority will no longer be automatically capped. Instead, it will have a duty to hold a ‘local referendum’ on the issue of a council-tax raise. This coincides with plans to devolve the power of setting business rates directly to local government, and remove pooling and redistribution. This is coupled with an explicit aim that these sources of revenue come to replace the Revenue Support Grant.
By casting council-tax rises as ‘excessive’, then forcing them to be decided in specific ‘referenda’ (as opposed to a general council election), the gamble is that such rises will generally fail. Similarly, the government’s initial proposals only give local authorities the power to reduce business rates, so as to ‘increase growth’, without a corresponding power to raise them. The aim is to encourage ‘competition’ between local authorities. Decentralisation is designed to starve local authorities of funding and force them to implement permanent austerity. Should they attempt a deficit budget, the Secretary of State remains empowered to step in.
Faced with such a situation, local authorities have generally decided that it is better to implement austerity themselves, so that they might choose where the burden falls. Most notably, in 2015 Jeremy Corbyn and John McDonnell issued a letter in which they argued that although Labour was an ‘anti-austerity party’, Labour councils should set ‘legal budgets’, rather than have to face the possibility of ‘Tory ministers deciding council spending priorities’.
Thatcher’s neoliberal project was not simply to limit public spending: as she famously put it, ‘[e]conomics are the method: the object is to transform the soul’. Thus, in the case of local government, the aim was not just to force them into making spending cuts, but rather to create the environment in which they would be forced to choose to do so themselves. In this way, local governments would be transformed into ‘austere subjects’. The aim was to make local government internalise austerity.
At the level of local government, the law is able to directly threaten coercion; it can impose fines, which can lead to the disqualification of councillors and – in the case of contempt of court – prison. However, by far the greater threat is that attempts to resist authority will be met by threat of the imposition of harsher austerity, with central government stepping in to implement austerity should an illegal budget be set. In this sense, a progressive local government will be presented with a choice: implement ‘progressive’ austerity; allow the right to implement a harsher regime of austerity; or consciously violate the law and hope for a radical rupture with the status quo.
This aspect of law-sterity does not simply exist at the local level. As we’ve seen, austerity has been accompanied by the extension and intensification of legal frameworks into politics. These legal frameworks circumscribe the limits of political intervention into the economy and oblige governments to implement austerity. Should governments fail to do this, they will be in breach of their legal obligations, and so suffer the legal consequences.
At the international and regional level these consequences will be the loss of funding, and frequently some form of sanction. Accordingly, progressive governments are faced with the prospect of implementing ‘progressive’ austerity as mandated by law; the harsher austerity occasioned by a lack of funds and sanctions; or the prospect of resigning in protest and enabling a right-wing (or technocratic) government to implement austerity.
This is the brutal brilliance of law-sterity. On the one hand, it enables governments to argue that austerity is not a choice but a technocratic and legal necessity. At the same time, ostensibly anti-austerity governments are faced with a huge problem. If they contest austerity, then the law will visit greater austerity upon them. The choice effectively becomes gambling on a radical break with the existing order – which could overturn the legal obligations – or implementing ‘progressive’ austerity to avoid harsher consequences. In this way, law-sterity makes ‘austerity-lite’ the ‘rational choice’ for any government that is not explicitly revolutionary in its orientation. This was precisely the situation in which the Syriza government found itself following the 2015 bailout referendum, ultimately capitulating to the law-sterity of the EU and IMF.
The Syriza example points us particularly to two decisive features of law-sterity. Firstly, by posing the situation as essentially ‘radical break’ or ‘progressive austerity’, it operates as a wedge with which to split the radical and moderate components of any political coalition, generally leaving the latter in power. Secondly, whilst ‘progressive austerity’ may be implemented under protest, one cannot implement such a regime without being fundamentally transformed. Such a government will – necessarily – become alienated from its social base and continue to make compromises, eventually internalising the very logic of austerity (particularly as the more radical elements in its ranks are driven away). In this way, there is a double movement towards transforming progressive governments into austere subjects.
Law has played a huge role in the creation and consolidation of austerity. On every level – international, regional, domestic and local – the power of law has served the crucial role of separating the economic from popular intervention. This is true in the literal sense that by juridifying austerity it is removed from the political process, but also because by framing an issue as one of law it appears as a ‘neutral’ and ‘technical’ matter. At the same time, law’s constitutive role in the social field has been crucial in the creation of ‘austere subjects’.
How, then, might we resist, contest and overthrow law-sterity? Immediately, two answers come to mind. The first, the now-familiar and longstanding argument of the Eurosceptic Left, is to avoid law-sterity by withdrawing from those ‘external’ structures like the EU which impose it. There is certainly something to this position. It recognises the role that these institutions play in removing economic decisions from popular control, and their broader ideological effects. However, such a position neglects the crucial role of law-sterity ‘at home’. Moreover, in the short to medium term, this seems a difficult operation to conduct. Even when leaving a regional body such as the EU, a state will remain within the aegis of international bodies like the IMF. Whilst the jurisdiction of such bodies is ostensibly voluntary, the experience of peripheral states in the grip of capitalist crises illustrates that such bodies cannot simply be ignored. Given the current importance of law to the governance of global capitalism, there is no immediate ‘outside’ of law to which we can retreat.
This leads us on to the second position. Insofar as we recognise that law plays a key role in structuring political life, we might argue that it is necessary to transform the law, thus moving away from the production of austere subjects. Again, there is something to this position. It recognises the pervasiveness of the law, and our inability to simply escape it. Yet this perspective does not grasp the fact that law is fundamentally inimical to popular mobilisation, and so is profoundly compatible with the logic of austerity.
In order to truly reckon with law-sterity we need to overturn a number of common-sense ideas about law. Rather than think of law as a set of neutral rules standing above politics, we must understand law as an expression of politics. At the same time, we cannot think of law as a neutral vessel which can express all political concerns equally. Whilst we must ‘respect’ the law for its power, it must be accorded no more respect than that. We must understand that it has been through the extension of law into politics that austerity has been embedded. This makes law a fundamentally hostile terrain in our struggle against austerity.
Crucially, then, as a strategic goal, opposing law-sterity will involve serious structural transformations – fighting for and creating structures that enable popular intervention and control into ‘economic’ policy (and thus end the legalisation of that sphere). But tactically, we have to recognise that this is not immediately on the agenda. Part of the brilliance of law-sterity – by forcing a choice between ‘progressive austerity’ and a radical break – is that it forces an immediate choice between strategic goal and tactical negotiation. The challenge is to think beyond this.
A break with the project of law-sterity will involve navigating the legal terrain. But this terrain cannot be our primary front, and we cannot imagine that other legal regimes – say, those of human rights – are ‘really’ on our side. Thus, legal struggle must be openly subordinated to the wider struggle for popular control of the economy, which is inimical to the juridicalisation of that sphere. Insofar as legal struggles are pursued, we must understand the limits that law imposes on those struggles, and seek to mitigate them. We need to chart a path in which we take advantages of those legal avenues to resist austerity where we can, but refuse to allow ourselves to endorse the legalisation of politics which lies at the heart of austerity.
Robert Knox is a Lecturer in Law at the University of Liverpool and a member of the Historical Materialism Editorial Board.If you like this article, please subscribe or donate.