Episode 222 – RP Live! with Clara Mattei

If you’re one of the lucky ones who attended our webinar, RP Live with Clara E. Mattei, then you’ve already heard this episode. Or you may have watched the video of that event. This podcast episode is the audio version, but we’re asking you to play it anyway. It never hurts to hear information a few times, and by playing it, you’re also helping us grow Macro N Cheese. Because algorithms.   

On Tuesday, May 2nd, Professor Mattei will be joining us for the first of two sessions of RP Book Club on “The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism.” There’s still time to register using the link at the bottom of this page.  

At the end of “The Capital Order” Mattei writes:  

“This book has detailed a set of influential economic patterns that are pervasive across the globe and that shape our daily lives. Contrary to what the proponents of austerity would have us think, however, the socioeconomic system we live in is not inevitable, nor is it to be grudgingly accepted as the only way forward. Austerity is a political project arising out of the need to preserve capitalist class relations of domination. It is the outcome of collective action to foreclose any alternatives to capitalism. It can thus be subverted through collective counteraction. The study of its logic and purpose is the first step in that direction.”  

Join us for RP Book Club, May 2nd and 16th. To register, go to https://realprogressives.org/rp-book-club/ 

Clara E. Mattei is an Assistant Professor in the Economics Department of The New School for Social Research and was a 2018-2019 member of the School of Social Sciences at the Institute for Advanced Studies. Her research contributes to the history of capitalism, exploring the critical relation between economic ideas and technocratic policy making.  

@claraemattei on Twitter 

https://realprogressives.org/podcast_episode/episode-198-the-trinity-of-austerity-with-clara-mattei/ 

Macro N Cheese – Episode 222
RP Live! with Clara Mattei
April 29, 2023

[00:00:00] Clara Mattei [Intro/music]: We are meant to believe that there’s nothing more distant than liberal democracy with respect to fascist institutions and ideologies. But if you actually look at austerity as your main focus, what you see is that the treatment the Brits imposed on their citizens and the treatment the fascist dictatorship imposed on the Italians was very similar.

[00:00:30] Ultimately, austerity speaks the truth of capitalism, which is it’s a society that structurally speaking, has very few winners and many losers.

[00:01:35] Geoff Ginter [Intro/music]: Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43] Steve Grumbine: All right. This is Steve with Macro N Cheese. Our regular followers might be surprised that the guest speaker in this webinar says some things that are not exactly MMT compliant, but we think Clara Mattei’s message about austerity and class is too valuable to ignore. Real Progressives welcomes people with an open mind.

[00:02:04] Professor Mattei expresses an interest in learning MMT and seeing how it is compatible with her framework. That’s exciting. That’s the kind of thing that we’re looking to build upon. So our upcoming book club will be the perfect opportunity to have a discussion with her about MMT and the Capital Order. So we need you to come and be a part of that.

[00:02:28] The book club registration link is in the description below. And let me say this as well. Clara Mattei asked us to make the book club more interactive, to have a conversation, to see how this plays into our lives and how it makes sense to us, and how we can integrate the things that matter to us into this framework so we too can build the future that we want. So without further ado, I give you RP Live with Clara Mattei.

[00:02:56] Hey everybody, it is Steve. I am the founder and CEO of Real Progressives and Real Progress in Action. For those of you who know me, you know that I have been living the world of austerity is murder now for quite a while.

[00:03:14] And this particular book that Clara wrote really spoke to my activism and it gave form the thoughts that I had had and it became something very important to me. Much like Modern Monetary Theory and the other things that we had been doing. I’ve been working diligently to try and marry the two together in my head, and they work perfectly hand in glove. We will be having a book club,

[00:03:41] Virginia Cotts: May 2nd and 16th.

[00:03:45] Grumbine: and let me just tell you, we worked with the publisher and we were able to secure 50 copies of the ebook that will be given away to people that join up for the book club, but we also got a 40% discount on the hardback book. So if you’re interested in getting a copy of the book, interested in being a part of the book club, you’ll have two ways you can get it.

[00:04:10] We only have 50 free books to give out. We want to have more than that show up. So if you can afford to purchase the book on your own or already have a copy of the book, when we put the registration link up there, you can let us know you’ve got it covered. You don’t need a copy of the book, and that will preserve it for someone else who maybe doesn’t have the funds for it.

[00:04:31] Cotts: The hardbound book at the 40% discount you have to buy yourself, but we will make the discount code available to everybody who registers. So it’s a really good deal. I think they told you it was like 18 bucks a copy or something. Steve.

[00:04:46] Grumbine: Something like that.

[00:04:48] Cotts: It’s a good price. The ebook we’ll give to the first 50 people who want it, but if you can buy it yourself, if you don’t need it, then please don’t accept it because that means other people can get it.

[00:05:01] Grumbine: So let me just give a proper introduction. Clara E. Mattei is an assistant professor in the economics department of the New School for Social Research, was a 2018- 2019 member of the School of Social Sciences at the Institute for Advanced Studies. Her research contributes to the history of capitalism, exploring the critical relation between economic ideas and technocratic policymaking, and of course, is the author of the book that we’re going to be spending our time on, The Capital Order – How Economists invented Austerity.

[00:05:38] If you haven’t listened to it yet, please go back a few episodes and check out my interview with Clara. I don’t get starstruck very often. But because of the subject matter, it was really exciting to me to be able to talk to her and meet her, and then to find out that she’s so approachable and wonderful, made it all the better. So without further ado, Clara, thank you so much for taking the time to be with us today.

[00:06:01] Mattei: Thank you. Thank you.

[00:06:03] Grumbine: And I’m gonna turn it over to Commie John.

[00:06:06] John Siener: And I’m gonna turn it over to Clara pretty quickly. I’m a big fan and this book is awesome and I’m just real excited. I just need to pay some bills quick. Let everybody know that if you feel like helping out the cause, because we are completely volunteer, small donation driven. You can go to our website, Real Progressives.org.

[00:06:27] It’s a treasure trove of resources and there’s a donate link. Or you could go to our Patreon, which is patreon.com/real progressives, and also check out our podcast Macro N Cheese that comes out every Saturday at 8:00 AM Eastern. There’s actually a recent episode with Professor Mattei that is fantastic.

[00:06:49] Also, you just saw Steve, he does a livestream Monday, Wednesday, and Friday called the Rogue Scholar at noon, Eastern. It’s good stuff. Check it out. And check us out on Facebook, Twitter, Instagram, YouTube – real progressives, real progress in action. And I am gonna hand the mic over to you, professor Mattei.

[00:07:08] Mattei: Thank you so much. It’s a real pleasure to be here. So I gotta get you guys curious to read the book. So, uh, not say too much about it I guess, but I can explain to you what is the thrust of the argument I’m trying to make, because I do think that unfortunately it is quite timely given that austerity is back with a vengeance and has been shaping our lives, in my argument, since the very birth of capitalism fundamentally.

[00:07:41] So the reason why I wrote this book was that I was very dissatisfied with the type of debate that was going on around austerity, both in circles of economists and more general, the public debate at large. So what you see is that the conversation reduces austerity to a technical tool to manage the economy.

[00:08:06] And so the whole conversation is about whether austerity works or not to increase economic growth and balance the budget. And so the critics of austerity are saying, well, you know, austerity is not working and what it’s supposed to do, it’s not actually boosting growth. It’s not balancing the budget.

[00:08:26] So what’s the point of austerity? It must be pure irrationality. Most of the criticisms from the supposed lefties it is all about how austerity is just a policy mistake. I keep hearing this. Austerity is a policy mistake. Austerity is just bad economic theory, which I think is kind of a weak argument if we think about how resilient austerity has been in shaping our lives and how it constantly crops up and it crops up also in the policy advice coming from Keynesians themselves, and this is what we’re seeing a lot right now with the increases in interest rates and monetary austerity.

[00:09:08] So the idea here of the book is to say, actually, let’s look deeper and let’s adopt a lens that is usually forgotten and considered not cool enough, which is the lens of class analysis. And really see how austerity is not just a technical tool. We need to re-politicize the debate around austerity.

[00:09:31] Avoid what is typical of economists of dividing the economic from the political and considering just economic technical problems and actually reassert that you cannot understand economic problems if you don’t understand the very political nature of these economic problems.

[00:09:48] And in this sense, how austerity ends up being a political project to stabilize what is most fundamental for a capitalist economy to thrive and to reproduce itself, which is capital, the title, the Capital Order. Capital, as a social relation by which you ensure that the majority of the people on the globe have no other choice but to accept their condition of precarious and low paid wage workers.

[00:10:26] So the idea here is that capital as wealth, capital as GDP growth, capital as money, so the commodity capital, presupposes capital as this fundamental social relation by which we accept a hierarchical way of organizing production and distribution. And this is not, of course, my intuition it’s the basic intuition that grounds the Marxian critique to political economy.

[00:10:53] But I do think that it’s more important than ever in order to understand why austerity is fundamentally structural to capitalism. So austerity unfortunately, is not just a policy mistake, it’s much more, it’s actually the political project of subordination of the majority of the working people that is in fact required in order to preserve capitalism.

[00:11:21] So in this sense, what we see right now, and I hope we can go back to looking at the present, because the idea here is that this work in historical political economy can give us conceptual tools that are, I think, very important to look critically at what is happening right now at the present moment.

[00:11:42] And the reason why history matters is that if you focus on certain moments in history in which class warfare was more explicit, you can see traits that were more obvious then and still though identify them today. So what you see still now is that there is a great understanding that it is okay to induce a recession and ultimately a recession.

[00:12:13] You know, soft landing might not happen, but that’s okay. The IMF is telling us there will be one third of the world, at least, in a recession very soon. Because ultimately an economic downturn is the short-term price to pay for something much more fundamental, which is that of assuring that the capital order as the social relation is stabilized.

[00:12:36] So the message here is austerity may not be successful in stabilizing the economy immediately, but indeed this is because it ultimately serves to stabilize class relations – that is much more fundamental for the capitalist economy to remain intact. So this is the argument. And again, in order to make this argument, I didn’t come with this argument out of nowhere, I actually analyzed a specific historical moment in which this structural purpose of austerity as ultimate protector of the capital order becomes very obvious.

[00:13:13] And the moment in history that the book looks into is what happens a hundred years ago, immediately after the First World War, the Great War. The reason why I focus on the immediate post World War I moment is that in my analysis, it is the moment in history in which capitalism had to undertake and had to really face the biggest existential crisis.

[00:13:43] So it wasn’t just a matter of high inflation or low economic growth. It was a matter of people questioning the very fundamentals of our capitalist economy. The first chapter of The Capital Order begins with the chapter on the Great War. I’ll just spend a couple of words and then you can go into the concreteness and the thickness of the historical cases directly.

[00:14:09] What you see is fundamentally that the war had provoked an enormous shock to the economy because it was the first time in the history of capitalism that the state had to take on an enormous role as producer and distributor and employer. Why? Well, because ultimately, once the war started lasting for more than one or two years, it became clear that this war was an industrial war in the first place, that in order to win the war, the belligerent countries had to in fact, boost their productivity like never before.

[00:14:44] So capital accumulation had to happen quick, and if you left it to the invisible hand, workers had to immediately notice how, in fact, the invisible hand was not operating efficiently as most people had expected. This is EMH Lloyd, a civil servant employed in British War office, and he said “The doctrine implicitly acted upon was that the higher the price and the greater the freedom allowed to the private contractor, the greater would be the increase in the supply.

[00:15:16] It followed that if only the government paid high enough prices and left private firms to their own devices, munitions would be forthcoming in abundance.” But very quickly, it was clear that munitions were not coming in abundance. And actually what happened was that, for example, in Britain, private ship makers were selling their ships to the Germans, and the majority of the resources was being diverted to luxury goods.

[00:15:43] So in order to make sure that the political priority of the national interests were met, the state stepped in. And what this meant is that it fundamentally re politicized the pillars of capitalism, which are private property of the means of production and wage relations. What do I mean by re-politicized?

[00:16:03] I mean that what became obvious to citizens living in that moment was that these were not at all natural givens, necessities to accept, but were the outcome of explicit political decisions coming out of indeed the government itself. So the work is a comparison between Italy and Britain, and what you see is that in both countries, the state stepped in to increase the rate of exploitation of the working class in a moment in which, in fact, the bargaining power of the workers had increased.

[00:16:37] Why? Because many people were recruited to go fight at the front. And by the way, there is a beautiful movie taken from the famous book, All Quiet On The Western Front that is now on Netflix that I was just watching the other day, which is quite impressive in showing you how indeed these capitalist economies were sending their own population to absolute massacre.

[00:17:01] So fundamentally what you see is that in a moment in which actually workers had increased their bargaining power because the supply of labor had diminished and the demand for labor was very high, what we’re seeing in this historical moment, by the way, the labor market was tight during the war because of all the people recruited at the front.

[00:17:23] Well, it was in this moment that actually the state stepped in and disciplined the labor force quite actively in many ways that you can read in the book. For example, in Italy, they militarized the workforce, meaning that if you did not show up to work, you would get fined. And they disciplined the workforce also by increasing the pool of available labor.

[00:17:43] So they had children and women work in the factories. They decided wages by decree. So all of these is just to give you a sense that what before was left to the impersonal compulsion of the market. Wages before were decided by the impersonal laws of supply and demand were all of a sudden clearly about political compulsion.

[00:18:07] And this had a trigger effect in the post World War I moment, in which, of course, there was the sense by which society should be rebuilt upon a completely different foundation in which workers realized that the war had been won, thanks to them. Both by their work in the factories and by their sacrifice at the front.

[00:18:28] And it is in this historical moment that all of these variety of practices and projects for a post capitalist society emerge. And they are fascinating examples. And this, the first part of the book to me speaks to possibilities that I think could be really revived, especially in this moment of absolute crisis of our society and economy at large.

[00:18:54] Because you really see how a hundred years ago these experiments were not just abstractions, they were very much being put into practice and they vary. Chapter two is on the reconstructionists who were basically proto Keynesian, but more radical than Keynes and putting political priorities above economic ones.

[00:19:17] And here I would like to read you potentially a quote from Alfred D. Hall, who was a British civil servant. And I think captures well, the whole rethinking of the fundamentals of society that were thoughts that were circulating amongst the bourgeoisie itself, not just the radical workers.

[00:19:35] He says, “if you can fail to feel the force of inspiration and experience, which is being born of the war, or to recognize the strengths of the new hope with which the people are looking forward to the future, the nation Britain already desires to order its life in accordance with those principles of freedom and justice.

[00:19:57] For no one can doubt that we are at a turning point in our national history. A new era has come upon us. We cannot stand still. We cannot return to the old ways the old abuses, the old stupidities. The public not only has its conscious aroused, its heart stirred, but also has its mind open, receptive of new ideas to an unprecedented degree.”

[00:20:21] So this is just one testimony out of like many and all of my work is based on primary sources, so I took a long time to dig into the archives, read the newspapers of the time to really try to do justice to the spirit of the epoch. And this is something that I value very much because actually, unfortunately, I think that many historians often describe history and interpret historical moments with the benefit of hindsight in the sense that they often actually use, for example, in this case, of course, the 1919, 1920 experiments did not win.

[00:21:05] They were foreclosed. And, as I argue, by austerity fundamentally. But this aura of pessimism of the historians, have really failed then to really do, I think, a good job at reconstructing how people in 1918, 1919, 1920, were convinced at large , the society at large was convinced that capitalism was not going to last for very long at all, and with the idea that there were all these more exciting alternatives that were being concretely put on the ground.

[00:21:42] Another example I give is the Sankey Committee, which was all about nationalizing the coal mines, which of course were the main source of energy at the moment. And this would be like the first case of nationalization that was accompanied by self-governance of the industry. So workers control; workers participating democratically in the production process.

[00:22:04] So chapter two, three, and four, look at these varieties of attempts to substitute production for profit with production for need. To substitute wage relations with collective management of production, both in the countryside and in the factories, and fundamentally with the idea that we would also eliminate private property of the means production in favor of some form of communal or national property.

[00:22:34] My favorite experiment here that I spend much time describing in chapter four is that of the workers’ council movement that was largely inspired, not only of course, by the Soviets in Russia, but also by the radical shop steward movement in Great Britain that had been growing during the First World War.

[00:22:57] And in Italy it was in Turin that Antonio Gramsci was one of the leaders of L’Ordine Nuovo, which means the New Order, and L’Ordine Nuovo was a magazine, but was also actually a journal that was directly participating in the struggle within these factory workshop councils. So chapter four is all about how in order to bring about these novel institutions, you required a new way of thinking about the world.

[00:23:30] And this is the concept of Praxis that Gramsci then develops in his prison notebooks when he is incarcerated by Mussolini later in the thirties. But in 1919, 1920, they were really experiencing the idea that novel knowledge, knowledge that was in fact, emancipatory and knowledge that would lead to social transformation, could only really come out of concrete experience.

[00:23:59] And this is why they’re saying knowledge does not come from books, does not come from pamphlets. The biggest source of knowledge, the biggest school for the workers was actually their participation in these democratic assemblies that were electing the representatives and finding ways to actually organize production from the base in a horizontal manner.

[00:24:23] So I go through what for me, are like maybe the most important pages of the first part of the book, which are pages from 108 to 116 that are basically, I call it the foundations for an emancipatory form of knowledge. And I go through what were, in fact, really, I think radical paradigm shifts in the way we think about the world.

[00:24:47] This novel lens that put back the agency of the worker, and especially reconnected the divide between the economic and the political with the idea that you could only have political democracy if you grounded it in economic democracy. And this economic democracy meant that there could not be any longer hierarchical labor relations, but instead, we should all be collectively producers.

[00:25:13] And if you bear with me, I want to just read the last quote, which I love very much. And this is from page 113. The Italian philosopher and academic, Zino Zini gave the inaugural lecture of the newly founded Turin School of Socialist Culture. A speech titled, From Citizen to Producer in February, 1920.

[00:25:34] He argued that the citizen, as typically understood in bourgeois democracy, is an abstract individual, one who is sovereign in theory, when in fact he’s only such on the day of elections. All the rest of his time, he is nothing but a subordinate to laws and rules drafted outside of his contribution.

[00:25:54] An individual’s political servitude is founded upon economic servitude. Inequality of economic conditions are better than inequality of the positions within the relations of production impedes any generally democratic relations among free and equal human beings. On the other hand, Zini wrote, the post capitalist society will give rise to new man, the conscious producer who exercises at once economic and political freedom.

[00:26:21] It will be the new society of free and equal producers. So I do a poor job because I think the book does a much better job in trying to really get you to participate in these fabulous, I think breakthroughs in knowledge production and in institutional construction. And the factory occupation in Italy had its peak with a full month in which workers councils took over all the factories in the Italian peninsula, so it’s spread like oil.

[00:26:56] And while the workers occupied the factories, there were peasants who were actually taking over the land. And it’s very interesting to reconstruct firsthand what this meant for the bourgeois in power. The fear was enormous. Also because Giovanni Giolitti, who was at the time the minister, he made it very clear in his secreted communication that now is available, that there was not at all enough armed forces to stop this type of revolution in process.

[00:27:30] So he gave up in sending the police and the military because he said, by sheer numbers, there’s nothing we can do about this. And so you can imagine the fright of the ruling class in realizing that a change in the basics of society and economy until that moment could actually be shaken and overcome.

[00:27:55] So this is the first part of the book. It’s about this existential crisis, about the dwindling of the pillars of capitalism. Again, wage relations and private property of the means of production. And this whole bunch of different visions that though took a concrete form. The guild socialist is another one, and so on and so forth.

[00:28:17] So in this explosive scenario for capitalism, it was in this moment, I argue that austerity emerges very distinctly as a militant counter offensive to make sure to close and foreclose all of these alternatives to capitalism. And it’s intelligent, it’s powerful. It’s so successful that after 3, 4, 5 years of its application, by the end of the twenties, all the surge in strikes, all the surge in the wage share, all the turmoil was completely defeated.

[00:28:59] And in many ways, I show this in chapter nine, you can look statistically how I show that actually the wave of strikes just collapses with the increase in unemployment that was produced actively and consciously by, for example, the interest rate hikes in Britain in 1920, which completely defeated organized labor by increasing unemployment, and thus basically disciplining the workforce into accepting the old state of things.

[00:29:34] So fundamentally, the second part of the book has protagonists. The protagonists are economists, my colleagues, who for the first time, and this is really interesting, that economists are called to advise governments because they’re considered experts who are above and beyond class struggle in their objectivity, their authority, their neutrality.

[00:30:01] They’re called to advise the best way out in order to refurbish the capital order. And so this story begins at these international financial conferences that have been basically ignored by historians, more or less until my reconstruction in the book. And what you see is that a full-blown code of austerity is put together and this code is made up of the trinity.

[00:30:27] I call austerity a trinity. And this is very important I think, for analyzing the current state of affairs. When you usually talk about austerity in the news and not just in the news, even if you read academic papers, they define austerity as cuts in the budget and increases in taxes. So they take a view that is basically a view of the aggregate typical economists.

[00:30:56] In my work, what I tell you is that doesn’t tell us anything about the type of policies that are being implemented. What matters is to look at the trinity and what matters is to look at how this trinity operates to shift resources from the majority of the working people to the minority of savers investors.

[00:31:17] So it is here that you need to look at fiscal austerity, not just as cuts in the budget in general, but as cuts in social expenditures in order to use this money to pay back the debt, for example. And what happens there, of course, the money goes, the resources go from rights of citizens such as education, health, unemployment benefits, housing, all the welfare measures to paying back the debt, which is again, money that goes directly in the hands of savers investors.

[00:31:51] So this is part of fiscal austerity. The other part of fiscal austerity is of course, not increasing in taxes in general, but regressive taxation, which is again about increasing the taxes on the majority. For example, through consumption taxes, while you structurally eliminate taxes on wealth; you diminish corporate taxes, you cut inheritant taxes, you cut the highest income brackets, so on and so forth. This is fiscal austerity.

[00:32:23] Then there’s monetary austerity, which is interest rate hikes followed by industrial austerity, which is all about directly disempowering workers by deregulating the labor market, privatizing, blocking unionization, and even directly repressing wages. So this treaty that was thought about at these international financial conferences was then applied very efficiently throughout Europe.

[00:32:53] And what I focus on, which I think is very important, is the parallel and combined stories of two supposedly very different social economic contexts, namely liberal Britain on the one hand, and fascist Italy on the other. So the cradle of capitalism, the empire, the representative democracy for excellence compared to the birthplace of the fascist regime of Benito Mussulini.

[00:33:28] This parallelism is extremely important. Why? Because it is thought provoking, because it leads you to think. We are meant to believe that there’s nothing more distant than liberal democracy with respect to fascist institutions and ideologies. But if you actually look at austerity as your main focus, what you see is that the treatment the Brits imposed on their citizens and the treatment the fascist dictatorship imposed on the Italians, was ultimately very similar, surprisingly stunningly similar.

[00:34:07] It was all about once more, making sure that the capital order was reconstructed by taming literal words used by experts taming the general population into accepting, sacrificing their livelihoods in the name of the supposed good of the whole, which is the capitalist economy.

[00:34:30] So I think what is important here is maybe I can highlight a couple of themes of the book and then we can continue the conversation once you’ve read it. Hopefully. One theme that is for me very important is the theme of the role of economic theory in justifying austerity policies.

[00:34:51] And so the book is a reconstruction of the assumptions that are still grounding economic models today, and are the same models that are actually used by the Fed, the treasury. What you study at school, if you take econ classes and what you see is that these economic models, which were diffusing and refining themselves in the 1920s were extremely classist.

[00:35:16] They had imbued in them classism. How? Well, there’s many ways, but just to point one is the fact that instead of seeing the worker as being central to the production process, the worker was expelled in favor of the saver entrepreneur. So instead of seeing class antagonism under capitalism, you would see harmony amongst individuals, and especially the idea that the saver entrepreneurs were the ones who really mattered and were the virtuous few who are leading the economy forward.

[00:35:48] So this shift of focus, which was exactly the opposite of the Gramscian analysis that was circulating, was really a great way to disempower the minds of people. The first way in which austerity disempowers us is mentally is by having us accept the status quo as ultimately being the one that mirrors the merit in society.

[00:36:12] If I’m poor, I should be ashamed because probably I’m too lazy and I don’t deserve to be richer. So the first theme that is important of the book is the role of economic expertise in justifying austerity, justifying this extraction of resources from the majority to the minority, but especially giving a justification that was really about values and theory that was very important in trapping our minds.

[00:36:40] So I call it disempowering apolitical theory, which of course they present themselves as apolitical, but they’re all but apolitical, of course. And I claim that the most political weapon of all was to present oneself as apolitical in order to gain authority, which is something that we see right now, because now we have completely internalized and normalized the idea that we should leave economics to the experts, and we should have no say, because ultimately we’re ignorant.

[00:37:08] We don’t understand. Let’s leave it to the experts. Well, this is not something that is obvious. It was actively constructed by economists at that time. Other very important theme is the relationship between authoritarianism and technocracy. And while in Italy you saw fascism actually jail and kill political opposition.

[00:37:34] In Britain, you saw independent central banks taking on decision making and excluding the general public from participating in what ultimately mattered the most, which was decisions about where the money goes and how our money is spent. This is a theme. And then of course, the theme about the parallelism between liberalism and fascism.

[00:37:55] To the point that actually one of my favorite chapters is chapter eight. I’m very proud because this is the chapter I did completely from scratch because there is nothing of secondary literature. And I went in the archives of the Bank of England. I went in the archives of the British Treasury, the foreign Office, and what you see is that not only the Brits were implementing austerity like Mussolini, They’re also very proud of Mussolini’s doings.

[00:38:21] So it’s a chapter that reconstructs what the liberal intelligentsia, what the liberal elites, both in Britain and the United States were thinking of Mussolini’s dictatorship in the 1920s. And unsurprisingly, what you see is that they were very proud of a strong man who was capable of ultimately silencing the struggles from below.

[00:38:42] So I would like to end maybe with this quote from Montagu Norman, who embodies liberalism, and he was the governor of the Bank of England in the 1920s. So the book says, even Montagu Norman, the governor of the Bank of England, who expressed wariness of the fact that under fascism, anything in the way of otherness was eliminated and opposition in any form was gone, added in the same breath: “this state of affairs is suitable at present, and may provide for the moment the administration best adapted for Italy”.

[00:39:16] He continued: “fascism has surely brought order out of chaos over the last few years. Something of the kind was no doubt needed if the pendulum was not to swing too far in quite the other direction. The Duche was the right man at a critical moment”. This is from the archives of the Bank of England.

[00:39:33] He was writing to Jack Morgan of JP Morgan Chase, another big admirer and material supporter of Benito Mussolini. So to conclude, these are just some of the themes that emerged from the book that really tries to look at the operation of austerity historically to really understand its logic and functioning still today.

[00:39:53] This is why the last chapter basically brings you back to the present by looking at the long history of the operation of austerity throughout the 20th century. And it’s fascinating, I think, to see how the type of jargon, the type of rhetoric that was really refined in the 1920s to impose sacrifice on the majority is still the same type of jargon and rhetoric we are very much used to right now.

[00:40:24] So, I don’t wanna end in a pessimistic note. I would like to end with an optimistic note potentially by reading you the very last lines of the book. I write, “This book has detailed a set of influential economic patterns that are pervasive across the globe and that shape our daily lives.

[00:40:43] Contrary to what the proponents of austerity would have us think, however, the socioeconomic system we live in is not inevitable, nor is it to be grudgingly accepted as the only way forward. Austerity is a political project arising out of the need to preserve capitalist class relations of domination.

[00:41:03] It is the outcome of collective action to foreclose any alternatives to capitalism. It can thus be subverted through collective counteraction. The study of its logic and purpose is the first step in that direction.” So this is how I would like to conclude to say the message of this book is all but pessimistic. It’s a message of empowerment, and the idea is that we need to stop idealizing our system to truly understand what’s going on in order to, again, realize that the elite in power is very always scared because they know much better than a lot of supposed lefties how the capital order is not a given.

[00:41:44] Once more, it’s something that needs constant protection because it can be shaken, given that it is a social relation. And any social relation is bound to shift, change, move, and be overcome potentially. So if we study how experts and elite protect the capital order, we can also I think have better tools to understand how our economy actually works.

[00:42:11] And ultimately maybe to see how we can even imagine a better future for ourselves and our children and grandchildren. So thank you very much for listening. And I’m sorry I went a little bit long, but it’s a long book, so there’s a lot to say. Thank you.

[00:42:41] Intermission: You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a non-profit organization dedicated to teaching the masses about MMT or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube and follow us on Periscope, Twitter, Twitch, Rokfin, and Instagram.

[00:43:32] Siener: It’s a great book too. We have a bunch of questions and I see we have our buddy Derick Varn out in the audience. But before we get started, Virginia has a little something.

[00:43:45] Cotts: I want to remind people about the free books. We will get to you within a week of registering for book club. We’ll send you the link if you request the ebook, and we’ll send you the discount code. The other thing is these things cost money and this Zoom platform costs money and all of our platforms cost money.

[00:44:07] And if you guys help us raise money or donate, we can even buy more than 50 books. We can get another batch. So I just wanna encourage people, go to our realprogressives.org, there’s a donate link, and go to our patreon, patreon.com/realprogressives and share those links and encourage other people to donate.

[00:44:32] So I wanna start with a question myself, because this was really great and I love your interview with Steve on Macro N Cheese. And I’m not a scholar, I’m an activist. But the advantage to having been an activist for a half a century and having a class analysis that makes sense of things is that I’ve seen patterns.

[00:44:56] And when I was coming up, nobody talked about the Bolshevik Revolution and that awareness that socialism was a real possibility. The left was very critical of the Soviet Union. So all those fears within the capitalist class that were going on in the period you start talking about weren’t around.

[00:45:20] There wasn’t that awareness, but then there was this explosion of the new left, the anti-war movement and the student movement and some rumblings about socialism. And that peaked, and then it sort of went away. And then I guess the next one was Occupy Wall Street.

[00:45:40] There was a movement about globalization in the nineties, then Occupy Wall Street. And so there are these kind of peaks and valleys and I’m wondering how conscious the ruling class is. Of that danger. I’m seeing patterns from my side of the street, but are there the same kind of patterns on their side?

[00:46:05] Mattei: Two things about this. What is that I think related to what you’re saying is that one point that I think can strengthen a further wave to emerge. And by the way, I do think we are in another wave. I don’t know Virginia, what you think, but I do think we are in a wave right now of rise again of profound contestation of the capital order, and this I think is visible in many different ways.

[00:46:28] First is the fact that we have a surge in unionization efforts, especially in the service sector, which is of course historically the weakest one. And this is very interesting in the United States. We have strikes going on in multiple places, hundreds of strikes going on right now as we speak.

[00:46:46] And we have another phenomenon that I find quite fascinating, which is the phenomenon of the great resignation that I’m sure you guys heard about, by which 46 million Americans have actively left their job in 2022 because they were really ultimately fed up about their working conditions.

[00:47:03] So this is a form of potentially more spontaneous rebellion against wage relations. But I do think that we are in a moment in which there is a wave of upheaval. Perhaps against less organized, but not even that much so, because I do think that these new unions are very radical actually in their demands, especially in also wanting to step outside of the box of the usual union elitism somehow.

[00:47:28] So in the sense, as you put it, waves of contestation come and go. And I would tell you that how conscious is the ruling class? Well, this is why I think history is useful, is because it allows to actually dig deeper in thoughts and the actions of the ruling class. And the time I look at, and especially my lens of course of focus is specifically on economists.

[00:47:54] And there were many other actors I zoomed into the Economist in which you really see that the threat was palpable and that they’re actively construing both a policy and a theory that would restabilize. And silence the general public. And I do think that if you then adopt a similar historical lens that I adopt in the book to look at other moments in history, you don’t fail to see exactly the same type of anxiety and of strategy to fix this anxiety.

[00:48:33] And this is real. Just to give you one more example before I conclude the unsecreted document that Janet Yellen wrote for Alan Greenspan in the nineties, she was working at the Fed at the time. Now Janet Yellen, of course, is at the Treasury, and she was really quite explicit in saying we can have low interest rates when the working class is weak.

[00:48:58] If the working class is strong, then the only way out of it is increases in interest rates. So this understanding of how political economic issues are, the fact that actually political economic issues are unseparable, especially when you think about inflation and issues that have to do with the labor market is really evident if you look at the primary sources that these elites themselves are producing.

[00:49:24] And then you can think about the Powell Memorandum as another very obvious case in which there was a clear understanding of the various strategies one needed to use to avoid this upsurge in contestation. And this required censorship at all levels, including at the universities. I always give that memorandum for my students to read.

[00:49:49] It’s another very clear example of how the ruling elites clearly is scared and aware and intentionally bringing in. But anyway, the point of the argument here is that it’s not just intentionality historically is very difficult to actually assess, but actually my point is more structural. Okay, let’s see what actually austerity produces, which ultimately produces an increase in market dependence, an increase of precariousness.

[00:50:15] The fact that we ultimately end up having to purchase everything that before perhaps we could have out of rights of being a citizen and the fact that unemployment goes up. All of this, of course, increases the market dependence and thus disempowers collective organization for social change. Austerity cuts across party lines.

[00:50:34] That’s another big message of the book, is that it’s not just the Republicans that do austerity the right wing, supposed it does austerity action. Unfortunately, austerity has been taken in a lot by Labor governments in the UK. Even by Berlinguer and Italy in the seventies. Another moment that was again, a heated moment.

[00:50:54] It was this communist party that once they had accepted the capital order as the governing way of organizing society, then they went into hardcore disparity in the seventies. So it cut across party lines completely. And so that’s why we really need to understand how it operates.

[00:51:13] Siener: Absolutely. right, we’re gonna get into some questions and we’re gonna start with Benjamin who had asked us to read it for him and he asks. Sales tax in my area has nearly doubled in the past 20 years. Local governments are on a building spree with schools, parks, and recreation centers. Also, our state gas tax is more than doubled. My question is, what is the role of regressive taxation in the capitalist order? There seems to be no limit on regressive taxation.

[00:51:43] Mattei: Absolutely. Yeah. It’s terrifying. So for me, regressive taxation is really a core element of the trinity of austerity, of the fiscal austerity part. And again, I think this is really important because it really shows you how the rhetoric of balancing the budget, it is complete bollocks in the sense that really, if you did wanna balance the budget, everyone knows that you should take in more revenue from the people that actually have the money.

[00:52:11] And we know how much the very few have, and it’s absurd. The concentration of wealth in this country and the level of inequalities, I don’t need to tell you this, the statistics speaks for themselves, but the point here is that it, the state really was interested in balancing the budget. Then of course it would be doing progressive taxation.

[00:52:31] That would be the best way to actually gain more revenue. But this is clearly a case regressive taxation, which you see that the purpose of austerity is exactly to shift resources, to take resources to force abstention on the general working population in order to incentivize, protect.

[00:52:54] The few who the models tell you are those indeed are guiding the economic machine. So it is very rational to invoke austerity if you espouse the models that economists go by. By which ultimately the working public is passive, that ultimately unproductive consumption is only going to bring about inflation.

[00:53:16] We can read it now, and what you need to do is actually make sure that people consume less and produce more. This is the model to invent it at the time. Consume less and produce more. How do you consume less? Well, you increase consumption taxes, taxes on oil, all the taxes that you mentioned, and in the meantime, you make sure that those at the top pay less taxes.

[00:53:37] Why? Well, because like this, you incentivize investment. And again, this is where I potentially clash with a Keynesian vision of the world. And maybe we can discuss more of this after you guys have read the book, because the book is quite critical of Keynes himself, who was very much supporting of austerity in the early twenties, and of the Keynesian framework as well.

[00:53:59] If you read the afterword, that’s where I make my point on Keynesianism. Where I clash with Keynesians, is that ultimately austerity in a way speaks the truth of capitalism in the sense that there are clear limits to how capital accumulation happens in a society driven by private accumulation or profit.

[00:54:19] And what you see is that indeed it is the case that under capitalism, if investors don’t invest, the system fails. So ultimately austerity speaks the truth of capitalism, which is it’s a society that structurally speaking has very few winners and many losers. The capitalist economy is never going to deliver the good of the whole because it’s not in its purpose, it’s not in its function, it’s not in the logic of accumulation for profit.

[00:54:50] So austerity just amplifies what is a reality of capitalism, which is that the majority loses and the minority wins. And this is also very contradictory in the ultimate sense because it does create all these contradictions, but then create a very explosive situation both economically and politically.

[00:55:09] Siener: Indeed actually we’ve got Derick Varn with a question and I gotta say if you guys haven’t checked out that Macro N Cheese episode with Derick Varn, it is amazing. So, Derick, go ahead.

[00:55:20] C. Derick Varn: Hi. How much do you think that class analysis needs to be reintroduced into chartalist discourse? And specific, in what ways do you think that Keynesian and chartalist assumption of class neutrality in the law has skewed their historical research? And this goes all the way back to Friedrich Knapp himself.

[00:55:40] And at what point can we assume that just this framing the problem as merely bad policy or merely misinformed, is actually an effective apologia for a current capital order?

[00:55:54] Mattei: Absolutely. I think that chartalism is a position that ultimately doesn’t understand what I think is one of the most important intuition of Marxian political economy, which is the rule of the value form and how this actually emerges out of the very economic activity is under capitalism. So it’s not just a state decision to actually print money.

[00:56:19] That’s not enough to explain why we are ruled by the value form, A. B, I do think that absolutely, one of the big points that you will see also in the book is this critique of technocracy, which of course Keynes himself and then the Keynesians after Keynes completely espouse.

[00:56:38] And one fundamental point of technocracy is the idea of neutrality of the experts, and of course the experts running government. So the complete misunderstanding of the role of the state in a capitalist economy fundamentally, in my view which again, is it a misunderstanding or is it, as you put it, ideology in the Marxist sense of saying, instead of explaining how things happen, ideology is all meant to conceal, to hide, to confuse people.

[00:57:10] And I do think there is a lot of that there. And talking about austerity as a mistake is exactly a way to confuse people. And what I think is paradoxical is that it comes out of the mouth of many people who supposedly are critical of the system. And I do think that it actually is a way to show how Keynesianism is not so far distant from austerity.

[00:57:34] If you look at exactly the idea that expert is neutral, that there are issues that are only economic and not political, and that ultimately a Keynesian framework has eliminated class analysis from the model. I’m actually seven years that I teach the General Theory to the grad students.

[00:57:52] We were just reading it today again, and you know, Keynes is very explicit in the fact that he does take the part of the educated bourgeoisie , and he does think that capitalism is the only possible solution to human organization. So in this sense, I do think that if we do want social change, we really need to expose how ideological a lot of the Keynesiasan positions are ultimately, and how this really does not do a service for the people, but actually I think produces this confusion by which we have the sense that the state is the solution.

[00:58:31] The state in a capitalist economy is not the solution to the current injustice. And this is why I think the first part of the book is interesting is because I really tried to give a sense by which economic democracy was not a statist demand. The idea was actually of self-government, of industry that was very critical of the state in its alienated form that it takes within capitalism.

[00:58:55] So I don’t know if I answered you because this is a question that takes a long time, but I can also share with you a small book review of the great book that I strongly suggest reading, which is Geoff Mann’s book called In the Long Run We’re All Dead: Keynesianism, Political Economy and Revolution.

[00:59:13] I think that’s a very good reading of the role of keynesianism in preserving the status quo. And my book had this in the background and I get a lot of pushback by the way, from my critique of Keynes because of course it’s a hot topic. So it would be very interesting to know after you’ve read it and you’ve seen, especially in the afterward, I point out all the elements of Keynesianism that I feel are very similar to austerity and this is actually gonna be my second book project.

[00:59:40] I have a contract with Chicago to write a reassessment of the golden age of capitalism. Once we had this austerity framework, can we rethink of the golden age in a way that actually exposes a lot of the austerity that was foundational to that historical moment too.

[00:59:55] Cotts: Derick, do you have anything you wanna follow up with?

[01:00:00] Varn: I’ve read the book you mentioned and when you were talking, I was reminded of it. So it’s interesting that you are inspired by it. I have just listened to a lot of market socialist adjacent neochartalists. I mean, I’ve just been surprised how much they frame this as a mistaken ideology and… it’s a mistake for whom? It’s obviously benefiting somebody or they wouldn’t do it. It’s not just because of a bad idea.

[01:00:27] Mattei: Right. Yeah, that’s exactly the thing. Actually the book starts with the idea Blyth talks about austerity as madness, this compulsive repetition of austerity as madness. And I say, well, actually there’s method in the madness. Exactly. If you point out who austerity is benefiting and who austerity is not and why this is happening. Otherwise, you just don’t understand historically what is going on. And I think this is very weak also, from a point of view of trying to explain how the world works.

[01:00:54] Siener: And I just wanted to say something. One of the things that resonated with me was that you said something to the effect of, it’s not just the austerity policies, but the ideology and the justification of them. Everything to me intersects with MMT, but it just made me really think, that’s why it’s important to understand how the monetary system works. It really cuts through a lot of the nonsense of like, oh, we gotta tighten our belts. Awesome stuff. Anyways, we’ll get onto our next question, Aditya.

[01:01:24] Aditya Paul: Hi. Thanks, John. This is Aditya from Boston. So thank you Clara, for your time and congratulations on this work. I’m really enjoying the almost first 100 pages so far. So I had a question, the way I framed it before you started talking was specifically about paradigm shifts, and you actually used the term paradigm shifts at some point, and you kind of addressed what I was gonna say was the way to effectuate a paradigm shift is to learn the logic of the prevailing order.

[01:01:52] So I’ll take it one further. This is also, I think, the subject because the fragility of paradigm shifts and then maybe secondarily gives you, you are analogizing the present moment to a century ago. And so maybe you can also comment on what might be advantages we have compared to them, and also similarly unique challenges we may have.

[01:02:11] And of course, using your long view as a historian. So I think the fragility point, I guess is the primary part of that. Thank you.

[01:02:21] Mattei: This is a really interesting question. The advantages and the disadvantages of our current moment. There’s so much there. Ah. The concentration of capital right now has reached levels. I was just reading this great book by the way, which I also suggest reading by Brett Christopher’s called Our Lives in Their Portfolios: Why Asset Managers Own the World. It’s coming out now with Verso.

[01:02:49] I had to comment on it on a panel. And it’s scary the way in which, in fact it’s become biopolitical power in the sense that these great asset managers ultimately are taking over our homes, the infrastructure. So the interference of capital at all levels of our lives, I think, is something that clearly is something to confront at present, but maybe it will end up politicizing people more because in fact, once people have to pay higher rent and get evicted and once people have to pay higher fees…

[01:03:23] I know that my argument in the book is that of course this will increase actually the disempowerment somehow because of course you get weaker and weaker and more precarious and more market dependent. But there is an ultimate sense by which potentially lives of people will be more wide open to the very granular way in which there is really biopolitics in the way capital shapes our lives in a way that is much more profound.

[01:03:55] So I wonder there, of course, this will increase the precariousness of our lives, but it might also impact us so directly that there are spaces of greater organization perhaps. There’s so much there. I do think though that especially today, there are a lot of struggles that are just not spoken about at all.

[01:04:16] And that’s where I think part of the effort of the first part of the book is to say all this was going on at the time, but there is still a lot going on right now that is just not talked about by the media. Of course, I have for example, a student in Sri Lanka who just defended his PhD with me at the New School and then went back to his own country.

[01:04:35] But he’s been very mobile and we know in Sri Lanka austerity is hitting really hard again. But it’s interesting because. It started hitting again once they had actually kicked out the president. But it’s not just about kicking out the president, the point is that actually in the countryside there’s a lot of council movement, a lot of actually peasants, self-organizing, and this is something of course we never speak about and hear about, but it is something that is happening. I think there’s a lot to be said in that question, and I’ll keep thinking about it.

[01:05:08] Siener: That would be awesome. All right, up next we have our good friend, Jonathan Kadmon. Go ahead buddy.

[01:05:15] Jonathan Kadmon: Firstly, it’s a, a true honor as an amateur sleuth of the dark history of capitalism. I’ve read quite a few books, but I think it’s fair to call this one paradigm shifting, eye-opening, maybe even a little bit life changing. And one of the things that struck me in reading the book was the centrality of the gold standard and the rules around the gold standard.

[01:05:41] And its use in constraining alternative options to the point where it was so essential to them that even today they continue to pretend and act as though a gold standard is still in place. And I wondered if you might talk a little bit about why that’s so important and so central to what they’re doing.

[01:06:05] Mattei: So, what can I say about this? Well, I can say that there’s different ways in which the gold standard still operates. One, as you pointed out, is in the minds. I guess this is a very institutionalist intuition you’re having and how ultimately what matters is the performative effect of these ways of framing the limits and of trapping the limits of the imaginable.

[01:06:31] So there’s gold standards, in a way, everywhere, and at different levels. A very concrete gold standard, of course, is the European Union and the Euro for European countries, for example, and that’s the most direct, I think, example of how once you eliminate monetary sovereignty from a country, then of course it becomes naturalized once more that the only way to boost economic competitiveness of a country is to supress wages and to deregulate labor.

[01:07:01] And this is something that of course, European countries have been victims to in a very obvious way. So as for the historical example, for me, the gold standard issue was actually an important point of entry because I don’t know if you guys know a little bit the literature on it, but the famous Golden Fetters by Barry Eichengreen is an example of a great book which stresses all the technical requirements so as to make it sound like the gold standard was in fact the natural endpoint of a series of economic obstacles and problems that were becoming larger after the fall of the gold standard, after the first World War.

[01:07:42] So actually, the whole point of the book is to say, listen, the gold standard was of course a very political decision exactly to ultimately de-democratize economic spheres. In the book I talk about depoliticized economic sphere, but I think actually the best word would be de-democratized because that’s ultimately what the gold standard did.

[01:08:03] It allowed for governments to make it seem as if they had no say in the decisions to fundamentally do deflation and to fundamentally cut social expenditures because the gold comes and goes on its own. We have no say in this. So I think this is ultimately, I guess something that we can still see today in your idea that there’s many gold standards and how they operate is that they sense is that the gold standard at the time was extremely successful in de-politicizing the economics.

[01:08:40] So that the idea was that its operations that we have nothing to say about and we are justified in normalizing austerity because austerity is in fact the only recipe that is compatible with the gold standard. And I think this is something that. Is a great way to disempower people both institutionally and politically, and I think there’s various strategies that shows how this is still happening right now.

[01:09:09] It was also in the chapter. She is a historian or she’s an economist. I am an economist by training, but of course a lot of economists don’t consider me to be an economist fundamentally because I’m actually understanding what the discipline does in a much wider sense.

[01:09:25] The story I tell in the book is exactly the story of how it was an active decision also to understand economics as the way we are meant without even problematizing it. Understand it today. Right? Part of this book is to say, austerity is an active choice, but also the way we think of the world is an active choice.

[01:09:47] And neoclassical economics was construed in a way that was actively trying to take away agency of the working class from these models. So I think this is really important is to see actually how the role of academia in perpetuating the sense of disempowerment is terrifying. And it’s not for nothing by the way, this is banal, but actually it’s interesting to note that actually the reason why there’s very few women that get to the graduate level studies in economics, there’s studies that show that is also due to the fact that of course, the discipline is able to make itself seem so completely desensitized to the actual world that people who are interested in understanding how the world works escape from studying economics.

[01:10:43] Cotts: I want to call on Jeffrey Reisberg. And Jeff, why don’t you tell Clara who you are and what you do, because he has a question about labor.

[01:10:54] Jeff Reisberg: Hi Clara. Thanks for coming here tonight. My name is Jeff Reisberg. I’m a union representative for the Association of Flight Attendants. And very excited to read your book here. It’s been along the lines of what I’ve been thinking and the question is how do we get the labor movement to the point where it can combat the politics of austerity from where it is now?

[01:11:19] Because you mentioned earlier that austerity is used to beat down labor and keep it weak. But we also need labor to grow and be strong for us to combat it. So what are the intermediate steps?

[01:11:33] Mattei: So this is where I think that I really deeply, deeply believe. That it’s not my role from here to predict this. I think that what I’m noticing, I was, for example, in South Africa, I presented my book to a bunch of activists and what I was noticing is that knowledge needs to come from the organizing, the assemblies, the political discussions themselves.

[01:12:00] So I think that’s the space in which imagination for future steps, political imagination for future steps only can come out of actual practical engagement, practical experiments, practical clashes and participation. So then this sense, I really deeply believe in Gramsci’s methodological point of praxis.

[01:12:25] I did a work as historian to show you how in fact, workers had a variety of ways in which they mobilized in 1919. Ways that were actually also critical of traditional unions in many ways, right? Because traditional unions ultimately were doing, the sectoral interest of certain groups were often systemically corrupted in the sense that they were participating with the elites separate from the rank and file in the base.

[01:12:53] And all of these critiques of the unions were made even stronger with the first World War because during the first World War unions had actually accepted the imposition of what the shop stewards called this survival state. The unions had actually ultimately compromised with the exploitative state in saying, okay, sure, you can exploit us more, but we’ll get a slightly larger say in this or that issue.

[01:13:17] So it was a struggle moment, I think, in which the idea of actually finding new vital energy from the base, from the rank and file is something that can be very inspirational at present. But I also really do think that it’s, by participating in what’s going on right now, from what I’m reading it, and I’m only reading at this point, these things, it does seem to me that there is much more radical approaches that are coming from the young generations of students and of workers.

[01:13:51] So this is what I would say is that actually, I think my book can help broaden our political imagination because of these historical, concrete examples. But I do think that the broadening of political imagination happens on the ground, and it is what you want to have with you is also some theory that can empower you rather than disempower you.

[01:14:16] And that’s why I do think that studying radical political economy could be something that would be very useful also for your colleagues and your activities because it could help sharpen the tools that can help the concrete battle, if that makes sense.

[01:14:32] Reisberg: Yeah. Thank you.

[01:14:34] Siener: All right. It’s getting pretty late. Do you have time for one more question and then we’ll get you outta here? Sure. Karen, would you like to unmute and ask your question?

[01:14:42] Karen: Sure. Clara, thank you so much for coming to speak to us. I just had a quick question about the efforts to raise the retirement age in France and then also in the United States. They’ve had those proposals here and then in my state, they actually have rolled back child labor laws all in an effort to increase the number of people in the workforce – then at the same time we’ve got monetary policy that’s trying to increase unemployment.

[01:15:10] And so it feels like those two things shouldn’t work together. I assume the capital order likes this, but I’m not exactly sure why. I wondered what your thoughts are. Do you think it’s intentional that they’re wanting to roll back these protections, et cetera, but also kick people out of the workforce? Thank you.

[01:15:32] Mattei: I think it’s quite coherent as a set of policies. What’s going on in France is really indicative of how, between what Mussolini was doing in the twenties and what Macron is doing right now, not caring at all about the fact that nobody in France wants to increase the retirement age and he’s doing it anyway.

[01:15:49] You again wonder the degrees of authoritarianism that also supposed liberal democracies take on when it’s about imposing economic policies that are completely unpopular, those supposedly necessary to keep the creditors’ confidence and the market ratings of France up. So that’s the first point.

[01:16:08] It’s complete [inaudible] in the sense that right now the problem is that labor market is too tight, and this is something the Fed officials are saying very clearly. You need to increase interest rates in order to increase the unemployment rate so that this will allow you to keep wages lower.

[01:16:22] Because right now what we’re seeing is not only that the labor market is tight, so actually there’s way more job openings than people willing to accept the jobs. And this is unprecedented, historically. And this actually going back, I think, to Jeff’s point, I think this is really a point of enormous power right now of the workers.

[01:16:43] But of course, so the intention here is we need to increase the unemployment rate. Larry Summers is saying the unemployment rate should go up to at least 5% in order for the labor market to run smoothly again, which really means people have to sacrifice their livelihoods because we need to have wages that are not going up.

[01:17:02] And right now we see that nominal wages have gone up quite a lot in the last year, and this is exactly what happened, what Marx would say when the reserve army of labor is depleted, so there’s less unemployed people. Then of course this is when wages go up. And this is not good for the capital order because it’s based on profit expectations, which are higher if the wages are lower.

[01:17:26] And so you see, if you’re depleting the reserve army of labor, the fact that you’re passing laws to let child labor actually be legal is a way in which the state is trying to actively enlarge the reserve army of labor. Marx thought that the latent reserve army – children, women, when they used to not work, those were all part of the latent reserve army people that could potentially be employed if it was allowed legally.

[01:17:54] And so this is exactly what the state is doing right now. In a moment in which the reserve army of labor is shrinking, they are trying to increase it. You can increase it by increasing the interest rates, which induces a recession or at least slows down the economy so that people are laid off and unemployment rate goes up.

[01:18:12] But you can also increase the reserve army of labor by having new components of the workforce – or the potentially employable like the children – join the workforce. You see what I mean? So it’s very coherent policies. It’s all done to basically defeat the bargaining power of organized labor by increasing the competition amongst workers.

[01:18:33] And again, if you read Janet Yellen, she clearly says it. Unemployment is a disciplinary mechanism and you need it for the capitalist economy to work. And this is exactly what the state under capitalism is doing at this moment. And this is why a very important message of the book is austerity is not “less state, more market.”

[01:18:52] This is a wrong analysis to the same level of saying that austerity is a policy mistake. It’s not less state, it’s actually the state doing certain things and not doing others. So it’s the state actively taking on classist policy measures that are defeating the majority in favor of the minority.

[01:19:11] So here we clearly see the capitalist state in the various institutions, the government, parliament, but also the Fed because the Fed is ultimately an institution that pertains to the state institutions. They’re all collaborating to increasing the reserve army of labor and killing the momentary force of the workers.

[01:19:30] And that’s why I would just like to conclude about what I just answered a minute ago to Jeff about the unions and what is to be done now with the workers. I really do think that, again, even if I do think that the knowledge should come from the ground and the organizing base, my thought is that I think there needs to be a double strategy always in operation.

[01:19:52] It should be defense – so pushing back against this austerity measures that are constantly encroaching in our livelihood. But defense is not enough. So anti austerity movement is not enough. It has to also come with an offense. And I think the offense is really in creating alternative self-sufficient councils in which you can really think about organizing the economy independently from the market and from state institutions.

[01:20:21] So basically taking back on some form of breaching market dependence, fundamentally. I think this is something that can happen, is happening, and this is where really the force of the workers’ lives is actually realizing that power is in their own hands, in being able to somehow create spaces for self-sufficiency. It’s not easy, but it has happened historically, and I think this is something that can be done.

[01:20:47] Siener: Awesome. Fantastic. You’ve been so generous with your time. We appreciate it.

[01:20:52] Mattei: Keep this material so that we can brainstorm on it. And then next time, I would suggest that it would be great if other people intervened as well. It could be more kind of a general conversation, so of course questions, but we can all try to answer them together. I gave my contribution through the book, but then everyone should interpret the book according to a different sensitivity, so then at that point we’re all on the same level and we can just have a conversation at large, if you guys agree.

[01:21:19] Cotts: And you know we are MMTers.

[01:21:21] Mattei: Right. And I would like to learn more about how you guys look at MMT, because it’s not really my field. So I would really love some knowledge from you guys and to see how my framework is compatible and how, if so, if not, we could have that discussion. I would learn a lot from it.

[01:21:37] Yeah. So it’d be great.

[01:21:39] Siener: Well, thanks everyone for joining us. Appreciate your generous time, Clara. Awesome stuff. Thank you. Great book. Thank.

[01:21:46] Cotts: I wanna remind people, go to real progressives.org. Find our podcast. Macro N Cheese. Go to the media drop down menu. Clara was the guest back in November. I think it was. Lots of good things coming up, some more political, some more MMT focused and we are trying to weave them together. A lot of the MMT community doesn’t have a class analysis and we’re trying to make it all work.

[01:22:17] Siener: I try to tell all my Marxist Leninist friends, learn MMT and people that know MMT read Marx and Lenin because it intersects. And I think your book does a great job of connecting a lot of the dots too. It’s a good book and hope everybody reads it

[01:22:32] Mattei: Thank you so much for this opportunity. It was great.

[01:22:36] Siener: We’ll talk to you soon. Take care everyone.

[01:22:37] Mattei: Bye.

[01:22:44] End Credits: Macro N Cheese is produced by Andy Kennedy. Descriptive Writing by Virginia Cotts and promotional artwork by Andy Kennedy. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.

“Economics is not a science of the economic reality “as it is” but is a science of the reality as “men want to build it” – Antonio Gramsci 

Guest Bio 

Clara E. Mattei is an Assistant Professor in the Economics Department of The New School for Social Research, and was a 2018-2019 member of the School of Social Sciences at the Institute for Advanced Studies. Dr. Mattei’s focus is primarily on post-WWI monetary and fiscal policies, and the history of economic thought and methodology. 

Her research contributes to the history of capitalism, exploring the critical relation between economic ideas and technocratic policy making. She recently published her first book, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism and it investigates the origins of austerity after the WWI crisis to understand its logic as a tool of reaction against alternatives to capitalism. 

Clara holds the the following degrees and honors:  

PhD (jointly), Sant’Anna School of Advanced Studies (SSSUP) and Université de Strasbourg, Ecole Doctorale Augustine Cournot in Strasbourg 

MA in Philosophy, Pavia

BA in Philosophy, Cambridge 

Young Scholar Award of the History of Economics Society (June 2015) for the working paper presented at the annual conference: “The Guardians of Capitalism. International Consensus and Fascist Technocratic Implementation of Austerity” 

Young Scholar Award off the European Society for the History of Economic Thought (May 2015) for the working paper presented at the annual conference: “Austerity and Repressive Politics: Italian Economists in the EarlyYears of the Fascist Government 1922-1925” 

https://www.newschool.edu/nssr/faculty/clara-mattei/ 

“…the mission of austerity is to protect capital as a social relation that governs our society, and it is in fact the social relation that allows for capital in the money form, all the commodities we see to even be produced. And this social relation requires constant protection. In some moments more than others. And I think, historically speaking, now we are in a phase in which, even if economic experts try to hide and deny this truth, they are very well aware of how much the labor market is, in a way, going through a phase that is definitely a phase of crisis, in the sense that there is deep questioning of the very conditions people find themselves in.” 

-Clara Mattei, Macro N Cheese episode 198, The Trinity of Austerity 

PEOPLE 

Antonio Gramsci 

was a socialist activist, cultural commentator and, later, communist party leader in Italy. Most of his writings are concerned with assessing the immediate political situation and, particularly, the prospects for revolution in interwar Italy. 

https://plato.stanford.edu/entries/gramsci/ 

https://www.britannica.com/biography/Antonio-Gramsci 

Karl Marx 

Karl Heinrich Marx was born in 1818 in the Rhine province of Prussa and was a  revolutionary, sociologist, historian, and economist. “Marx was before all else a revolutionist” eulogized his associate, and fellow traveler, Friedrich Engels saying he was “the best-hated and most-calumniated man of his time,” yet he also died “beloved, revered and mourned by millions of revolutionary fellow-workers.” 

https://www.britannica.com/biography/Karl-Marx 

https://www.investopedia.com/terms/k/karl-marx.asp 

https://plato.stanford.edu/Entries/marx/ 

Benito Mussolini 

Benito Amilcare Andrea Mussolini was the founder of Fascism and leader of Italy from 1922 to 1943. He allied Italy with Nazi Germany and Japan in World War Two. 

https://www.bbc.co.uk/history/historic_figures/mussolini_benito.shtml 

E.M.H. Lloyd   

Edward Mayow Hastings Lloyd was a 19th century civil servant and internationalist. 

https://snaccooperative.org/ark:/99166/w68f2999 

Giovanni Giolitti 

was an Italian statesman and Prime Minister of Italy five times between 1892 and 1921. 

https://en.wikipedia.org/wiki/Giovanni_Giolitti#:~:text=Giovanni%20Giolitti%20(Italian%20pronunciation%3A%20%5B,Prime%20Minister%20in%20Italian%20history. 

https://www.britannica.com/place/Italy/The-Giolitti-era-1900-14 

Montague Norman 

was an English banker, best known for his role as the Governor of the Bank of England from 1920 to 1944. 

https://en.wikipedia.org/wiki/Montagu_Norman,_1st_Baron_Norman 

Jack Morgan 

John Pierpont Morgan Jr. was an American banker, finance executive, and philanthropist. He inherited the family fortune and took over the business interests including J.P. Morgan & Co. after his father J. P. Morgan died in 1913. 

https://en.wikipedia.org/wiki/J._P._Morgan_Jr. 

Janet Yellen  

was the former head of the US Federal Reserve Bank and is current Secretary of the Treasury in the Biden Administration  

https://www.federalreservehistory.org/people/janet-l-yellen 

https://home.treasury.gov/about/general-information/officials/janet-yellen 

Alan Greenspan  

was the former head of the US Federal Reserve Bank 

https://www.federalreservehistory.org/people/alan-greenspan 

Frederick Knapp 

was a 19th century clergyman, teacher, and superintendent of the Special Relief Department, U.S. Sanitary Commission, during the Civil War. 

https://www.masshist.org/collection-guides/view/fa0380 

Larry Summers 

Lawrence H. Summers is the Charles W. Eliot University Professor and President Emeritus at Harvard University. He served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama. 

https://larrysummers.com 

https://www.hks.harvard.edu/faculty/lawrence-h-summers 

“But I do think that it’s more important than ever in order to understand why austerity is fundamentally structural to capitalism. So, austerity, unfortunately, is not just a policy mistake, it’s much more. It’s actually the political project of subordination of the majority of working people that is in fact required in order to preserve capitalism.” 

-Clara Mattei, Macro N Cheese Episode 222 

INSTITUTIONS  

Sankey Commission  

The Coal Industry Commission Act 1919 (c 1) was an Act of Parliament of the United Kingdom, which set up a commission, led by Mr Justice Sankey (and so known as the “Sankey Commission”), to consider joint management or nationalisation of the coal mines. It also considered the issues of working conditions, wage and hours. 

https://en.wikipedia.org/wiki/Coal_Industry_Commission_Act_1919 

L’Ordine Nuovo 

(Italian for “The New Order”) was a weekly newspaper established in May 1919, in Turin, Italy, by a group, including Antonio Gramsci, Angelo Tasca and Palmiro Togliatti, within the Italian Socialist Party. 

https://en.wikipedia.org/wiki/L%27Ordine_Nuovo#:~:text=L%27Ordine%20Nuovo%20(Italian%20for,Città%20futura%2C%20a%20broadsheet%20newspaper. 

EVENTS 

Workers Council Movement 

https://soviethistory.msu.edu/1956-2/hungarian-crisis/hungarian-crisis-texts/the-workers-council-movement/ 

https://www.marxists.org/archive/gramsci/1921/03/turin_councils.htm 

https://en.wikipedia.org/wiki/Workers%27_council 

Shop Steward Movement  

was a movement which brought together shop stewards from across the United Kingdom during the First World War.  

https://en.wikipedia.org/wiki/Shop_Stewards_Movement 

http://www.workerscontrol.net/theorists/italian-factory-occupations-1920 

The Great Resignation  

also known as the Big Quit and the Great Reshuffle, is an ongoing economic trend in which employees have voluntarily resigned from their jobs en masse, beginning in early 2021 in the wake of the COVID-19 pandemic.  

https://en.wikipedia.org/wiki/Great_Resignation 

https://hbr.org/2022/03/the-great-resignation-didnt-start-with-the-pandemic 

https://www.bls.gov/opub/mlr/2022/article/the-great-resignation-in-perspective.htm 

2023 France Demonstrations  

More than one million protestors took to the streets in France on March 24, 2023, in response to President Emmanuel Macron’s proposed pension reforms, which would raise the country’s retirement age from 62 to 64. 

https://www.brookings.edu/blog/order-from-chaos/2023/03/31/unrest-in-france-challenges-macrons-ambitions/ 

Powell Memorandum  

was written in 1971 by Lewis Powell, lawyer and future Supreme Court Justice, to the U.S. Chamber of Commerce as a blueprint for corporate domination of American Democracy. 

https://billmoyers.com/content/the-powell-memo-a-call-to-arms-for-corporations/ 

https://realprogressives.org/2017-05-19-response-to-the-powell-memo-a-progressive-blueprint/ 

https://lpeproject.org/wp-content/uploads/2021/06/Powell-Memo.pdf 

https://www.greenpeace.org/usa/democracy/the-lewis-powell-memo-a-corporate-blueprint-to-dominate-democracy/ 

Golden Age of Capitalism  

spanned from the end of the Second World War in 1945 to the early 1970s, when the Bretton Woods monetary system collapsed. It was a period of economic prosperity with the achievement of high and sustained levels of economic and productivity growth. During the Golden Age, the themes taken up by World Economic and Social Survey, henceforth referred to as the Survey, varied from year to year, in response to pressing development concerns. 

https://www.un.org/development/desa/dpad/tag/golden-age-of-capitalism/#:~:text=The%20Golden%20Age%20of%20Capitalism%20spanned%20from%20the%20end%20of,of%20economic%20and%20productivity%20growth. 

https://www.thisiscapitalism.com/world-war-ii-and-the-golden-age-of-capitalism/ 

“Ultimately, austerity speaks the truth of capitalism, which is, it’s a society, that structurally speaking, has very few winners and many losers. The capitalist economy is never going to deliver the good of the whole because it’s not in its purpose, it’s not its function, it’s not in the logic of accumulation for profit.” 

-Clara Mattei Macro N Cheese Episode 222 

CONCEPTS 

Austerity 

refers to a set of economic policies that a government implements in order to control public sector debt, or alternatively, along with industrial austerity, as a means to discipline labor 

https://www.investopedia.com/terms/a/austerity.asp 

https://www.britannica.com/topic/austerity 

Keynesianism 

Keynesian economics are a body of ideas set forth by John Maynard Keynes in his General Theory of Employment, Interest and Money, and other works, intended to provide a theoretical basis for government full-employment policies. It was the dominant school of macroeconomics and represented the prevailing approach to economic policy among most Western governments until the 1970s. 

https://www.britannica.com/topic/Keynesian-economics 

https://www.investopedia.com/terms/k/keynesianeconomics.asp 

Class Analysis 

is research in sociology, politics and economics from the point of view of the stratification of the society into dynamic classes. 

https://en.wikipedia.org/wiki/Class_analysis 

Commodity  

is a basic good used in commerce that is interchangeable with other goods of the same type.  

https://www.investopedia.com/terms/c/commodity.asp 

Class Warfare  

Class conflict (also class struggle, class warfare, capital-labour conflict) identifies the political tension and economic antagonism that exist among the social classes a society, because of socio-economic competition for resources among the social classes, between the rich and the poor. 

https://en.wikipedia.org/wiki/Class_conflict 

Invisible Hand  

is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production and consumption, the best interest of society, as a whole, are fulfilled. The constant interplay of individual pressures on market supply and demand causes the natural movement of prices and the flow of trade. 

https://www.investopedia.com/terms/i/invisiblehand.asp#:~:text=The%20invisible%20hand%20is%20a,as%20a%20whole%2C%20are%20fulfilled 

https://www.britannica.com/topic/invisible-hand 

Authoritarianism  

in politics and government, the blind submission to authority and the repression of individual freedom of thought and action. 

https://www.britannica.com/topic/authoritarianism 

Technocracy 

is government by technicians who are guided solely by the imperatives of their technology.  

https://www.britannica.com/topic/technocracy 

Fascism  

is a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition. –From Mirriam Webster 

https://www.britannica.com/topic/fascism 

https://www.openculture.com/2016/11/umberto-eco-makes-a-list-of-the-14-common-features-of-fascism.html 

Praxis 

Literally “process” by which a theory, lesson, or skill is enacted, embodied, or realized. “Praxis” may also refer to the act of engaging, applying, exercising, realizing, or practicing ideas. Gramsci conceives as a “philosophy of praxis”—his name for Marxism as “people become[ing] conscious of their social position on the terrain of the superstructures” and this was one key political point of departure for his efforts to stake out positions and strategies against both “economism” and “voluntarism.” 

https://en.wikipedia.org/wiki/Praxis_(process) 

https://link.springer.com/chapter/10.1057/9781137334183_6 

https://territorialmasquerades.net/hegemony-and-philosophy-of-praxis/ 

Regressive Taxation  

is a type of tax that is assessed regardless of income, in which low- and high-income earners pay the same dollar amount. This kind of tax is a bigger burden on low-income earners than high-income earners, for whom the same dollar amount equates to a much larger percentage of total income earned. 

https://www.investopedia.com/terms/r/regressivetax.asp 

Progressive Taxation  

involves a tax rate that increases as taxable income increases. 

https://www.investopedia.com/terms/p/progressivetax.asp 

Chartalism 

is a monetary theory that defines money as a creation of the government that derives its value from its status as legal tender. It argues that money is valuable in use because governments require that you pay taxes on that money. 

https://www.investopedia.com/terms/c/chartalism.asp#:~:text=Chartalism%20is%20a%20monetary%20theory,pay%20taxes%20on%20that%20money. 

https://www.levyinstitute.org/topics/chartalism 

Rule of the Value Form 

refers to a regulative principle of the economic exchange of the products of human work, as theorized by Marx 

https://en.wikipedia.org/wiki/Law_of_value 

https://www.marxists.org/archive/kuruma/value-form/pt_01.htm 

Gold Standard  

is a monetary system where a country’s currency or paper money has a value directly linked to gold. 

https://www.investopedia.com/ask/answers/09/gold-standard.asp 

Neoclassical Economics  

is a broad theory that focuses on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services. It emerged in around 1900 to compete with the earlier theories of classical economics. 

https://www.investopedia.com/terms/n/neoclassical.asp 

https://www.investopedia.com/ask/answers/063015/how-does-neoclassical-economics-relate-neoliberalism.asp 

Reserve/Latent Reserve-Army of Labor 

Marx discusses the army of labor and the reserve army in Capital Volume III. The army of labor consists in those working class people employed in average or better than average jobs. Not every one in the working class gets one of these jobs. There are then four other categories where members of the working class might find themselves: the stagnant pool, the floating reserves, the latent reserve and pauperdom. Finally, people may leave the army and the reserve army by turning to criminality, Marx refers to such people as lumpenproletariat. 

https://www.ppesydney.net/content/uploads/2020/04/Marxs-reserve-army-still-relevant-100-years-on.pdf 

https://en.wikipedia.org/wiki/Reserve_army_of_labour 

Modern Monetary Theory (MMT) 

is a heterodox macroeconomic supposition that asserts that monetarily sovereign countries (such as the U.S., U.K., Japan, and Canada) which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending. 

https://www.investopedia.com/modern-monetary-theory-mmt-4588060 

https://gimms.org.uk 

Capital Order 

Clara Mattei, in her book The Capital Order, asserts the primacy of capital over labor in the hierarchy of social relations within the capitalist production process. That primacy was threatened after World War I in what she claims was the greatest crisis in the history of capitalism. 

https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707138.html#:~:text=“The%20capital%20order%20asserts%20the,history%20of%20capitalism.%20.%20.%20. 

Guild Socialism  

was a movement that called for workers’ control of industry through a system of national guilds operating in an implied contractual relationship with the public. 

https://www.britannica.com/event/Guild-Socialism 

PUBLICATIONS 

The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism by Clara Mattei 

https://bookshop.org/p/books/the-capital-order-how-economists-invented-austerity-and-paved-the-way-to-fascism-clara-e-mattei/18335391?ean=9780226818399  

In the Long Run We Are All Dead: Keynesianism, Political Economy, and Revolution by Geoff Mann 

https://bookshop.org/p/books/in-the-long-run-we-are-all-dead-keynesianism-political-economy-and-revolution-geoff-mann/11837485?ean=9781784786007 

Our Lives in Their Portfolios: Why Asset Managers Own the World by Brett Christophers  

https://bookshop.org/p/books/our-lives-in-their-portfolios-why-asset-managers-own-the-world-brett-christophers/18688191?ean=9781839768989 

Golden Fetters:The Gold Standard and the Great Depression, 1919-1939 by Barry Eichengreen 

https://bookshop.org/p/books/golden-fetters-the-gold-standard-and-the-great-depression-1919-1939-barry-eichengreen/14560695?ean=9780195101133  

All Quiet on the Western Front  by Erich Maria Remarque 

https://bookshop.org/p/books/all-quiet-on-the-western-front-erich-maria-remarque/18924003?ean=9780881039825 

https://www.netflix.com/title/81260280 

“However, the socioeconomic system we live in is not inevitable, nor is it to be grudgingly accepted as the only way forward. Austerity is a political project arising out of the need to preserve capitalist class relations on domination. It is the outcome of collective action to foreclose any alternatives to capitalism. It can thus be subverted through collective counteraction. The study of its logic and purpose is the first step in that direction.” 

Clara Mattei, The Capital Order, p305 

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