Austerity: An Economy of Words? – Pt. 1

By Keith Hart

This essay starts with a personal account of the near starvation of Europe after the Second World War. We called it rationing then. The memory of Britain’s “finest hour” in standing alone against Germany for two years was harnessed to the idea of “shared sacrifice”. The word “austerity” is Roman, a cousin of the Greek oikonomia (economy). Both expressed the interests of conservative land-holders in their millennial struggle against the power of money. Keynes fought this idea between the wars and the developmental states that flourished for 30 years after 1945 temporarily followed the opposite path of increasing popular spending power. Keynes provided a class analysis of who benefits and loses from inflation and deflation. The term “austerity” has been revived by the western regimes thatsucceeded the 1980 neoliberal counter-revolution against Keynesianism. This time the political power is based on money not land, but “national capitalism”, with its origins in the 1860s, was always based on an alliance between capitalists and the traditional enforcers. Increasingly it seems that economy has become a smokescreen of misleading words. The essay examines the austerity programs implemented in Britain and Europe after the 2008 financial crash and asks if we can still excavate the power that lies behind the words. A coda is added in 2022 as the transition from national capitalism to a new era of war, revolution and economic collapse increases the stakes in this old struggle over ideas and politics.

The Age of Austerity

I don’t think we called it austerity then. Its general name was rationing and it began during the war, when Britain imported much of its food across hostile seas. The Labour government of 1945-1951 had to justify rationing even though cargo ships were no longer being sunk by U-boats. The country was broke and sometimes the harvest failed. Sugar, eggs, bread, butter, meat, bacon, tea and potatoes were rationed for varying periods, along with non-food items like soap, petrol and clothes. Most milk was used to make cheese, known as ‘Government Cheddar’. A delightful memoir of those times – 84 Charing Cross Road (Helen Hanff, 1980) – recalls the excitement of receiving a food parcel from America or Australia. But foreign gift food parcels of 5lb or more were soon deducted from a family’s rations in the name of equality.

Austerity then did not mean cutting levels of private and public expenditure, but sharing deprivation on an egalitarian basis. The stuff was simply not available and the priority was to ensure that inequality wasn’t made worse. Of course there was an illegal black market –widely believed to be concentrated in London – which boosted inequality in another way. The National Health Service was explicitly egalitarian. At the age of 9, I went into hospital to have my tonsils out. My parents bribed me with two large packets of sweets. I was knocked out and the operation performed. When I woke up, I couldn’t find my sweets anywhere. Naturally I kicked up a fuss. The nurses explained that there were lots of poor boys in the hospital and their policy was to share out whatever came in among everyone. They later found a few (inferior) sweets for me. This was the principle of ‘shared sacrifice’, lame descendant of ‘their finest hour’ in wartime. My personal economy hinged on being given sweets for good behaviour. They were so scarce that one at a time did the job. My pocket money was threepence a week plus a rationing coupon for 2 oz. of sugar. My favourites were kept for me by a local shopkeeper. One day my mother announced that rationing of sugar was over. I rushed to the sweet shop and ordered to the limit of my imagination – three packets of 2 oz. “That will be nine pence please.” “But I only have threepence. They told me I could have as many sweets as I like now!” “You need the money too”. That is how I discovered that money is a rationing device.The British economy as a whole had to learn that lesson when rationing ended.

These conditions of chronic shortage lasted well beyond rationing. The British economy only regained its 1939 level by 1957 – and 1939 was the Great Depression! The cheese market was depressed for decades after the end of rationing, since the Milk Marketing Board’s monopoly wiped out almost all other cheese production in the country. It was hard to take, given that Britain was supposed to have won the war, indeed had fought the Germans for a couple of years when no-one else did. Where I grew up in Manchester, one in three houses were destroyed by bombing; there were large vacant areas of cinders, rubble and broken glass, known as ‘crofts’, where we played football and scratched our knees every time we fell over. This mess was only cleared up in the late 1950s, if then. I couldn’t wait to get out.

The enforced scarcity of those times was later confused with the extraordinary solidarity of the war years. As a baby in a night shelter I gave the adults something to talk about while they waited for the next bomb to hit. The rationing era was hardly a matter of life and death; it just extended economic misery for no apparent reason. A collection, The Age of Austerity 1945-1951, edited by Michael Sissons and Philip French (1986), draws on authors from a similar background – provincial grammar school, good degree, national service, employment with the BBC or a quality newspaper — to provide vignettes of the social issues and consumption — sport, films, food and fashion. David Kynaston’s Austerity Britain, 1945-1951 (2008) is even more powerful, combining hundreds of street voices. The front cover (a woman and her boy wandering in a bleak industrial city) captures the period for me.

Imagine what I felt when I searched for “age of austerity” and kept getting a 2009 David Cameron speech. He promised massive cuts in public expenditure when the Tories came to power, a huge retrenchment of the welfare state, reversing the achievements of that post-war Labour government, indeed restoring inequality that we thought had gone for ever. Talk about the defeat of the working class! The weird thing was Cameron’s emphasis not on public spending cuts, but on controlling public sector salaries, which he claimed had soared under Blair and Brown. Even weirder, the “Missouri Accountability Portal” was wheeled out as a model for publishing all government spending online, so that “citizens will know how their money is being spent”.

Politics today, more than before, is smoke and mirrors. Language hides public and private interests and the ruling class origins of a strategy like austerity (or on the United States’ role in bankrupting the Labour government). But passive conformity to this strategy depends on a mix of opaque language and actual social power. In what follows I ask what ‘austerity’ meant for the Romans and the Greeks; and show how factions based on property in land and in money respectively dominated agrarian civilization for three millennia and persist in modern societies. I then turn to the general crisis of the interwar years and finally to the aftermath of the 2008 financial crisis, showing how words and social power both maintain the hegemony of the creditor class. The American cultural anthropologist, Douglas Holmes, in Economy of Words (2014), a study of central banking, claims that words are now more important than money in economics. In contrast I hold that to demystify the politics of austerity, we must distinguish between language and the power it expresses and conceals.

Ancient Austerity

The word ‘austere’/‘austerity’ comes from Latin when Rome was a kingdom and later a republic aiming to subdue neighbouring Italian cities and finally Carthage, its North African rival. Its root meaning was ‘sour’ or ‘bitter’, also ‘dark’ or ‘sombre’, but it was later identified as a moral quality, meaning severe or unbending. Roman conservatives made of austerity an ideology, program and style. There was a craze among the Italian city states at the time to import expensive Greek luxuries without worrying about how to pay for them; and so austerity for some Romans meant doing without luxuries in the name of domestic self-sufficiency. A citizen’s first responsibility was to their own home and second to their public duties. This stance was symbolized by wearing traditional clothes of sombre hue and avoiding flash and glitter.

The principal advocate of austerity was Cato the Elder, the man who insisted that ‘Carthage must be destroyed’. He was a prominent politician, soldier and writer. His most famous work was a farming manual, De agri cultura. It is a measure of Cato’s pragmatism that he highlighted the need to cultivate wine. This might seem odd for a believer in economic autarky. But wine was then the leading export commodity and Cato valued balancing the books more than austerity. When Augustus created the Empire, there was again concern that imported luxuries were undermining the Roman economy and traditional moral virtues. A leading figure in this movement was Seneca the Elder, a writer and rhetorician. His son, Seneca the Younger, was Nero’s tutor and a stoic philosopher. Stoicism held that ‘virtue is sufficient for happiness’ and lent austerity some philosophical weight.

Roman austerity had a strong affinity with Greek oikonomia or ‘economy’, which meant ‘household management’ — manorial estates more than ordinary houses. Economy is a polyvalent term today: Order, management; Efficient conservation of resources; Practical affairs; Money, Wealth; and The market.

It applies to a wide range of social units and covers from natural conservation to money-making. A core meaning of ‘economy’ and its derivatives like ‘economize’ is making the best of what you have with the least effort.¹ Aristotle gave economy its theoretical definition. It was adopted by one side in a Mediterranean civil war that lasted for a millennium. We would call the two sides ‘feudalism’ and ‘capitalism’, systems of property and politics based on control of the land and money respectively. A military aristocracy extracted rents from a servile agricultural labour force, while cities sustained by seaborne trade fed their populations through commerce. They called their systems ‘aristocracy’ and ‘democracy’, respectively rule by the best and rule by the people. The factions contending for power in particular places formed alliances with like-minded parties elsewhere. An endless series of wars and revolutions ranged in scale from local fights to international conflicts lasting decades. Rome put an end to all this when it defeated Carthage and annexed the Eastern Mediterranean to its empire. Military landlordism triumphed over water-borne commerce. 1500 years later merchants took on landed power again and won, this time in north-west Europe. England was the main site of that victory, but its ex-colony the United States soon took over. Marx and Engels concluded that the history of class struggle was between town and countryside, meaning money and land.

Aristotle held that we were meant to live in society. He called humanity a zoon politikon, a ‘political creature’ that needs the collective order of a community, a city or polis with its rural hinterland. Society expresses both human nature and the natural world’s logic. Its core is a house occupied by a family (oikos). He had in mind the semi-fortified great houses of the landowners, with their slaves, retainers, craftsmen, fields, orchards and livestock. These houses should aim for self-sufficiency (autarkia), pursuing frugal management of their resources through budgeting and thrift (oikonomia). But the great estates also needed money for luxurious expenditures and above all for their wars. So Aristotle inveighed against the market and business (khrematistike) as the antisocial pursuit of profit by individuals leading the unnatural life of trading without frontiers, rather than bankrolling the local military. This discourse can be traced back two millennia earlier to Mesopotamia, where tribute, gift and theft were the preferred methods for transferring goods. Market trade seems to have emerged there as an activity of wealthy, public households. It was deprecated by landed elites and suppressed when polities collapsed.