The Politics of Austerity and Disembedded Recovery in the EU Periphery

This paper has two goals. First, it explores the causes of recovery in EU periphery countries that experienced austerity. Second, it explores the politics of distribution that attended these recoveries. Specifically, the paper introduces the concept of disembedded recovery to define the process through which a country overcomes a recession in ways that redistribute income and opportunities upwards. By looking at the most robust cases of recovery of medium sized EU countries that experienced bailouts outside the euro area (Ireland, Spain) and outside it (Romania and Hungary), the paper finds that despite the fact that they embody distinct capitalist pathways and social models, all these countries experienced convergence along disembedded recovery pathways. The evidence suggests that this trend can be traced not only to similar forms of external coercion and constitutionalization of economic policy at the supranational level, but also to different modes of incorporation in transnational supply chains and domestic politics. Finally, the paper rejects the claim that these recoveries were substantially enabled by austerity. Instead, it shows that the explanatory heavy lifting belongs to the informal renegotiation of fiscal space limits with and significant fiscal support from Brussels, the expansion of access to stable external supply chains and the political pressure represent by the rise of left-leaning anti-austerity forces on both the left and the right. The paper closes by exploring the political limits of disembedded recovery.