Austerity from the Left: Social Democratic Parties in the Shadow of the Great Recession

Austerity became the predominant fiscal policy response to the Great Recession in Europe. After a brief period of 'emergency Keynesianism' from 2008 to 2010, even the centre-left abandoned plans for deficit spending and accepted austerity as the dogma of the day. In this book, Björn Bremer explains how this came about and explores its political consequences, combining qualitative and quantitative methods and drawing on a wide range of empirical evidence to study both the demand- and supply-side of politics. Based on this evidence, the book argues that a complex interaction of electoral and ideational pressures pushed social democratic parties towards orthodox fiscal policies. As government debt became a taboo following the Greek sovereign debt crisis, social democratic parties endorsed austerity to increase their perceived economic competence and fiscal credibility. This decision was legitimized by economic ideas inspired by supply-side economics, which had become popular among social democrats at the end of the twentieth century. Although the book shows that social democratic austerity was not inevitable, powerful feedback effects of the Third Way thus trapped and divided the centre-left during the crisis. This undermined the ability of social democratic parties to oppose austerity and eventually contributed to their electoral crisis in the shadow of the Great Recession.

Table of Contents:
1: Introduction 2: Theoretical Framework 3: The Programmatic Response 4: Attitudes towards Austerity 5: Public Opinion Regarding Fiscal Consolidation in the Face of Trade-Offs 6: The Fiscal Policies of the British Labour Party in Times of Crisis 7: The Fiscal Policies of the German SPD in Times of Crisis 8: The Electoral Effects of Social Democratic Austerity Conclusion Appendices Bibliography

About the Author :
Björn Bremer is a Senior Researcher in Comparative and International Political Economy at the Max Planck Institute for the Study of Societies in Cologne. He obtained his PhD from the European University Institute in 2019, and his research lies at the intersection of comparative politics, political economy, and political behaviour.

Review :
Bremer has written a profoundly important book on European economic policymaking. Combining deep case based research with analysis of media coverage and original survey data, he explains why mainstream political parties converged in supporting austerity policies during the 2010s. In a rich and deeply insightful book, he carefully connects the left's limited demand side policies to its earlier attempts to employ new supply side policies, and in so doing offers a novel theorization of the way ideas and electoral incentives come together to shape partisan economic policies. Why do social democrats embrace austerity policies, especially in moments when the conditions are ripe for their rejection? Bjorn Bremer answers this question by reference to a double dilemma that confounds social democrats. To win elections they must attract voters for whom pro-spending policies ring deficit alarm bells. But to do so they must embrace ideas and policies that undermine their ability to provide any alternatives to deficit reduction. Coping with his dilemma leads to a constant search for 'credibility' by the left that alienates their core constituencies and invites internal strife. Social Democrats constantly seek 'credibility' on the economy. That is, to reassure the more affluent votes that they need to win elections that they will not pump up the debt and the deficit. In an exceptionally well-articulated and documented argument, Bremer explains the puzzling acquiescence of European social democratic parties to the austerity widely adopted after the 2008 financial meltdown. With his book, Bremer provides one of the most impressive analyses of social democracy after the financial crisis to date.