Alternatives to austerity? Post-crisis policy advice from global institutions

Abstract

The 2008 global financial crisis caused major anxiety about the stability of the neoliberal economic regime. This affected the financial and banking systems and also raised the spectre of mass unemployment and social unrest. A ‘post-crisis’ world was widely proclaimed in 2010. This was premature; by 2012 Europe was embroiled in a sovereign debt crisis and the US economy showed few signs of real recovery. A second recession seemed likely and austerity emerged as the standard response. Austerity, ‘the quality or state of being austere’ and ‘enforced or extreme economy’, became a buzzword. In practice, austerity means an economic and social policy based on balanced budgets to be achieved by reduced government spending, especially on employment and social policies, an approach entirely consistent with the neoliberal paradigm that has dominated policy-making for several decades. Yet the depth of the crisis provided an opportunity for rethinking the neoliberal policy package that had replaced the Keynesian welfare state, established after the Second World War. Cognizant of the fact that the development of alternatives to dominant paradigms may have many sources, this article probes the policy advice provided by two global organizations – the OECD and the ILO. As well as tracing the austerity motif, the article seeks to identify the extent to which alternatives were canvassed at the global social policy level.