Varieties of Austerity: Ordoliberal, Neoliberal, and `Social Democratic’ Paths to Fiscal Consolidation?

As the predominant policy response to the economic crisis in Europe since 2010, austerity has defined the post-crisis European political economy. The existing literature almost universally views austerity as the product of resilient neo- or ordoliberal ideas. Yet, this approach entangles different political ideas and masks different processes surrounding austerity’s legitimisation. In order to properly understand the way in which austerity has been differentially constructed, legitimised, and implemented across Europe, it is necessary to disaggregate the different forms of neo- and ordoliberal austerity, and to conceptualise a third variant: ‘social democratic austerity’. In this paper, we argue that rather than neo- or ordoliberal ideas, New Keynesian ideas underpin the way in which social democratic actors approach austerity. To make this argument we build on an ideational literature, which has advanced the way we think about how policy makers react to periods of economic crisis. In particular, we operate Schmidt’s (2002; 2008) ‘discursive institutionalism’ as an analytical framework, allowing us to consider the relationship between technical economic arguments and wider normative considerations that shaped how social democrats engaged with austerity. We draw upon three context-diverse cases to develop the argument: British Labour in opposition (2010-15), Germany’s SPD in coalition (2013-17), and the French Socialist government (2012-17). Understanding the legitimisation of austerity in these contexts is of critical importance because the acceptance and implementation of austerity by social democratic parties has been a key component in its mainstreaming across Europe, as well as a source of significant political tumult on the Left.