Austerity: The History of a Dangerous Idea Illustrated Edition

by Mark Blyth (Author)

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ISBN-13: 978-0199389445

ISBN-10: 0199389446

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Selected as a Financial Times Best Book of 2013

Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts--austerity--to solve the financial crisis. We are told that we have all
lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private
debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer.

That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn't work. As
the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened
the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and
opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we austerity for what it is, and what it costs us.

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Editorial Reviews

Review

"One of the especially good things in Mark Blyth's Austerity: The History of a Dangerous Idea is the way he traces the rise and fall of the idea of 'expansionary austerity', the proposition that cutting spending would actually lead to higher output. As Blyth documents, this idea 'spread like
wildfire.'" --Paul Krugman, The New York Review of Books

"An important polemic... valid and compelling."--Lawrence Summers, Financial Times

"Essential reading... The economy is much too important to leave to economists. We need to understand how ideas shape it, and Blyth's new book provides an excellent starting point."--Washington Monthly

"Splendid new book." --Martin Wolf, Financial Times

"Austerity is an economic policy strategy, but is also an ideology and an approach to economic management freighted with politics. In this book Mark Blyth uncovers these successive strata. In doing so he wields his spade in a way that shows no patience for fools and foolishness." --Barry
Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science University of California, Berkeley

"Of all the zombie ideas that have been reanimated in the wake of the global financial crisis, austerity is the most dangerous. Mark Blyth shows how austerity created the disasters of the 1930s, and contributed to the descent of the world into global war. He shows how European austerity policies
have prevented any recovery from the crisis of 2009, while rescuing and protecting the banks and financial institutions that created the crisis. An essential guide for anyone who wants to understand the current depression." --John Quiggin, author of Zombie Economics

"Most fascinating is the author's discussion of the historical underpinnings of austerity, first formulated by Enlightenment thinkers Locke, Hume and Adam Smith, around the (good) idea of parsimony and the (bad) idea of debt. Ultimately, writes Blyth, austerity is a 'zombie economic idea because it
has been disproven time and again, but it just keeps coming.' A clear explanation of a complicated, and severely flawed, idea." --Kirkus Reviews

"Informed, passionate." --Dissent Magazine

"Mark Blyth's fascinating analysis guides the reader through 'the historical ideology which has classified debt as problematic.' In doing so he outlines the relevance of century-old debates between the advocates and opponents of laissez faire, and explains why, after a
brief reemergence in 2008-09, and despite the lack of evidence supporting austerity, the world turned its back on Keynesian policies."
--Robert Skidelsky, author of Keynes: The Return of the Master

"Among all the calamities spawned by the global financial crisis, none was as easily avoidable as the idea that austerity policies were the only way out. In this feisty book, noted political scientist Mark Blyth covers new territory by recounting the intellectual history of this failed idea and how
it came to exert a hold on the imagination of economists and politicians. It is an indication of the sorry state of macroeconomics that it takes a political scientist to expose so thoroughly one of the economics profession's most dangerous delusions."
--Dani Rodrik, Rafiq Hariri Professor of International Political Economy, The John F. Kennedy School of Government, Harvard University

"Blyth makes a compelling case that governments should give pause before embarking on
a course of austerity. He approaches the subject with a seriousness that is to be welcomed and applauded." --Benjamin Grob-Fitzgibbon, University of Arkansas, International Social Science Review

About the Author

Mark Blyth is Professor of International Political Economy at Brown University. He is the author of Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century.

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Product details

Publisher ‏ : ‎ Oxford University Press; Illustrated edition (January 2, 2015)
Language ‏ : ‎ English
Paperback ‏ : ‎ 336 pages
ISBN-10 ‏ : ‎ 0199389446
ISBN-13 ‏ : ‎ 978-0199389445
Item Weight ‏ : ‎ 14.2 ounces
Dimensions ‏ : ‎ 8.8 x 0.8 x 5.3 inches

Best Sellers Rank: #783,323 in Books (See Top 100 in Books)
- #200 in Public Finance (Books)
- #598 in Money & Monetary Policy (Books)
- #930 in Public Policy (Books)

Customer Reviews:
309 ratings

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Mark Blyth

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I am Professor of International Political Economy in the Department of Political Science at Brown University and a Faculty Fellow at Brown's Watson Institute for International Studies. I grew up in Dundee, Scotland. I received my PhD in political science from Columbia University in 1999 and taught at the Johns Hopkins University from 1997 until 2009.

My research interests lie in the of field international political economy. More specifically, my research trespasses several fields and aims to be as interdisciplinary as possible, drawing from political science, economics, sociology, complexity theory and evolutionary theory. My work falls into several related areas: the politics of ideas, how institutions (and disciplines) change, political parties, and the politics of finance.

Customer reviews

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3 star		5%
2 star		2%
1 star		2%

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Top reviews from the United States

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S. Menescardi

Excellent Analysis

Reviewed in the United States on September 11, 2019

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This book puts austerity as a policy under the microscope. There is a history of the idea, an analysis of how it has worked throughout that history (not well), an intellectual history of the idea and an analysis of the most recent advocacy of the idea. The intellectual history differs from the other history in the sense that Blyth compares how austerity has been implemented, along with the effects and consequences of those applications versus the idea of austerity as explained or espoused by numerous economists, particularly those of the Austrian School of Economics and the Chicago School of Economics it inspired.

The perspective of the author is from the left, but does not divert him from forming a substantive and critical analysis of austerity as an idea and as a policy. In a broader sense, this book is an indictment or a critique of neoliberalism, since this economic model implements austerity by definition.

2 people found this helpful

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Amy

Well-Researched & Excellently Argued

Reviewed in the United States on December 27, 2017

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Austerity: The History of a Dangerous Idea is an overview of the history of austerity economic policy, an explanation of how austerity as a policy works (or, more accurately, does not work), and an examination of austerity policies as they have been implemented in the real world. As one can surmise from the book's subtitle, Blyth does not hold a rosy view of austerity as a policy but, though his disdain is clear, he still treats the idea with fairness throughout the book.

What I most appreciated about Austerity was the way that most chapters (with the exception of the introduction and conclusion) was set up a bit like a textbook. The intent of the internal sections was to convey information and examine the scholarly research regarding austerity economic theory in light of criticism from other economists and - mainly - actual economies. However, Blyth took pains to make this information as accessible as possible to readers with little/no finance background by clearly explaining what measures meant and why things were important in the context of their real-world implications. I probably could have gotten more out of the analysis if I came to the book with a background in finance or math, but Austerity was understandable and highly educational nonetheless.

12 people found this helpful

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James

Lacking an argument

Reviewed in the United States on March 4, 2020

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The book is a list of examples of austerity measures taken during very complicated times of distress. This is then used as the argument to show austerity doesn't work.

There is little discussion of how austerity actually causes situations to become worse, and when there is, circular logic is employed. "Austerity hurt this country because austerity is bad and they used it" sums up his argument. His writing style is convoluted largely because most of what he says boils down to that circular logic.

It should have been obvious that anyone who makes such grand-sweeping statements about complex systems such as the economy would have little content to their argument.

2 people found this helpful

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Mary H. S. Wold

Mark Blyth has earned himself a NOBEL PRIZE in Economics

Reviewed in the United States on November 17, 2020

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and if he doesn't get one, well that tells you all you need to know about the Nobel Prizes.... Watch him on youtube, and buy his books. Probably the most important one is the most recent which documents 3 STEPS to restore EQUALITY in the US without passing a darn bill, in fact THEY ARE ACTS that could be passed ASAP....

One person found this helpful

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W. P. Gardner

Good content, some of the sentences are unreadable

Reviewed in the United States on April 20, 2013

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I really enjoyed this book; it summarized the debates about austerity for me and taught me a lot of things I didn't know about European austerity. I was aware of Keynes' The Economic Consequences of the Peace after WW I, for example, but not aware of how much the French at that time counted on reparations from Germany to heal their war-torn economy, while also trying to return to the gold standard. This led to French austerity, including cuts to their military while the Germans were inflating away their debts and rearming.

I only gave it 4 stars because some of the writing is awkward; it needs a better proofreader. Many sentences involve mixed metaphors and there seem to be a few that say the opposite of what the author really means to say. At several points the author talks about how austerity is good for us all, when it is plain from the wider context that this is not what he thinks at all. Phrases like this are just confusing while trying to digest technical information about banking and economics. The author should have put these things into quotes or used some other rhetorical device. Austerity is not good for us.

I totally agree that you cannot run a democracy on the gold standard for very long.

If a 2nd edition comes out that cleans up some of the murky writing, I would give it 5 stars.

10 people found this helpful

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William G Pritting Jr

Liberal Perspective of Political Economics

Reviewed in the United States on June 12, 2020

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In order to better understand Mark Blyth's arguments against austerity, every political economist should first read, "Who Stole the American Dream?" by Hedrick Smith. Then read, " The Power Game" also by Hedrick Smith.

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Top reviews from other countries

Erudite, well argued and empirically solidly supported case against the current austerity mantra

Reviewed in the United Kingdom on April 29, 2014

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If this book is representative of his other work, Mark Blyth possesses that rare quality in an economist of being able to distill the concepts of his field into an easy to read and comprehend format. In the current book he focuses on austerity, the poster child economic ideaof our post 2008 time and takes the reader on a journey of its intellectual / theoretical background, covers the factual support for its success from prior real life applications and finally offers both some conclusions on the likelihood of it succeeding, as well as on possible alternative futures.

As is apprent from the title, there is not a neoliberal bone in the author's body. While some may call him an unashamed Keynesian, he has the (to some) annoying characteristic of working both the economic literature and the real life factual examples down to the bottom line, which often leaves the austerity arguments severely wanting. He also clearly points out the redistribution aspects of the austerity message - and not in a Marxist manner - and how those affect the popularity of the policy.

The book is built up around several main facets. The first one being that the current predicament came about as a result of a banking crisis and not of public spending running amok (with the exception of Greece). This then led to the 'too big to fail' meme in the US and the consequent state bailout. In Europe some countries drew the same conclusion, however the banking sector is different - being accoridng to the author very much in the 'too big to bail' category. The moral hazard that played out is covered next - but make no mistake - the author by no means attacks the integrity or morality of bankers, just points out how the structure of the system encouraged certain behaviour, which turned out to be very counterproductive for society as a whole in the long run.

Following that the intellectual history of the austeriy idea is covered from Hume, Hobbes, Smith and Ricardo to the present day, with the Austrian school, the German ordoliberal thinking and the Bocconi support all getting appropriate air time. The author is openly critical of most of their approaches from both a theoretical and empirical point of view but makes a good case for a reasonable debate (as in not being uniformly and rabidly against on ideological grounds).

All the real life poster children for austerity working are examined next, including a short rerun of the austerity approaches in the post WW1 world (US, UK, Sweden, France, Germany and Japan being amongst the cases), the 1980s, where the standard cases of Ireland, Sweden, Denmark and Australia are examined and the currently popular Irish case and the REBLL alliance. As a counterpoint from today's world he brings the case of Iceland, a rare example of banks being allowed to fail and which alone amongst the examples has a truly positive development to show post crisis.

Where I find the book earns the last star is in the author doing an excellent job in distinguishing the cases, where austerity may work from those, where we only have rhetoric at play. Another reason for the high score in my opinion is that the author manages to pull off something of a Heilbroner (famous for his The Worldly Philosophers: The Lives, Times, and Ideas of the Great Economic Thinkers (Penguin Business Library) ) here - namely ensuring that complex concepts are broken down to be both understandable to the regular reader, while at the same time not sounding inane to someone familiar with the topic.

The only slight fly in the ointment is the relative paucity of advice how alternative solutions could look like. Sure enough, the author presents some plausible next steps but these are nowhere as comprehensively covered as the subjects in the rest of the book.

Irrespective, this is a very important book and one would do well to read it and understand the consequences of where current policies are likely to lead the countries implementing the austerity mantra. Not perhaps for the hardcore neoliberal but thoughtful enough to let the other readers seriously reconsider the current path the world is following.

21 people found this helpful

James

A superb book, that shines a light on the financial crisis, how it happened, and who was to blame

Reviewed in the United Kingdom on November 7, 2018

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Ever wonder how the world ended up in so much debt?
Why do we suffer the austere government policies and why the public was left footing the bill for the risky money practices of a few fat cats at the top?
This book covers all that and more, from the bailout of the US and the EU, to the neoliberal politics that brought that about. How the Euro compounded that problem in the EU and why the rich got away with the greatest Ponzi scheme ever at the taxpayer's expense.

Mark Blyth shows us the folly of austerity and the nonsense of expansionary austerity. Well worth reading and should be compulsory for everyone who wishes to understand governments economic policies.

One person found this helpful

Wirplit

A brilliant clear demolition of a False economic theory so loved by politicians

Reviewed in the United Kingdom on April 6, 2017

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A great book which shows that Austerity as an economic answer is a Lie and cannot work except in very rare situations. How such nonsense ideas gain traction and keep coming back despite all the evidence is the broader subject of Mark Blyth's excellent book. His videos on the subject are also well worth watching. From now on Austerity should not be weakly resisted while the idea is apparently accepted..the idea is False ans should be actively and strongly argued as such both here in the UK and in Europe.

5 people found this helpful

Bo Soegaard-Pedersen

One of the most relevant books on economy for the ...

Reviewed in the United Kingdom on September 3, 2018

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One of the most relevant books on economy for the pat 20 years.
As a former external advisor To President Barack Obama, it is a shame how the Republican party blocked some of his most ambitious plans. Aimed to improve life for American Families.

One person found this helpful

mark

Talkative style, and very knowledgeable

Reviewed in the United Kingdom on May 21, 2017

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Mark is clearly very knowledgeable and extremely well read on the topic, because he has countless references and deeply explores the history from many angles. And he has a talkative writing style which makes the book feel very personal, to the point where you can almost read it in his distinct Scottish voice.

However his talkative style gets out of hand when he's being technical, because it can be very hard to follow, and you find yourself having to re read segments because your brain has almost given up on deciphering when you're reading

3 people found this helpful

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Austerity: The History of a Dangerous Idea Illustrated Edition

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