The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism

Let’s get any accusations of author bias out of the way first before reviewing this fine, timely, pertinent book. The author’s great uncle was a chemist in Italy under the Mussolini regime who designed bombs to counterattack the oppressive capitalist fascists and committed suicide in prison after days of torture rather than betray his comrades in the anti-fascist movement. This is found in the “Acknowledgements” in the back of the book for full disclosure purposes. Nonetheless, I did not find bias or imbalance in the history of fascism put forth in the text; albeit the author leans in favor of labor outside her work as a historian.The thesis of Mattei’s book is that historically government and corporate austerity brings about oligarchic (monopoly) capitalist fascism. Just as today, Mattei details how Fascism sprang up in Italy and Britain in the 1920’s, not solely as an ideology but as a form of capitalist economic crisis management due to the increasing working-class wage demands being accommodated by government, trade imbalances and de-valuation of the Italian Lira (by 4/5ths and foreign trade imbalances). Capitalist oligarchs in Europe were threatened by government spending and the specter that debt would “crowd out” a shrinking pie of capital from private industry during economic contraction. The European economic backdrop in the 1920’s has similarities to the U.S. today.Corporations responded to this economic crisis by taking over governments in Italy and Britain to impose a Policy of Austerity on the working class by: 1) engineered money inflation, 2) attacking government fiscal policy of balanced budgets and large expenditures for social programs, and 3) direct industrial policies of wage controls, privatization and oppressive direct corporate regimentation of the labor force without government as intermediary. Mattei defines Fascist Capitalism as a system that “punishes the many in favor of the few” and defines Austerity as “preserving the primacy and indisputability of capitalism (excess profit taking) in times when capitalism is under threat”. Mattei points out that austerity has never worked historically to pay down national debt or restore a consumer economy without enriching monopoly corporate capitalism to the expense of the working class and small businesses. As one unknown person defined austerity: government and corporate “belt-tighteners’ reach for other people’s belts” not theirs.According to Mattei, Globalist Fascism expresses itself as a class war, not a civil war or a race war. She doesn’t say this, but the class war aspect is often misperceived in America because of a past social and religious cultural value of classlessness. She further describes some historical corporate concessions to the working class from the oppressive nature of Fascism in Italy and Britain, such as workers grievance committees, beneficial co-optation by the Ruling Class, strikes and labor negotiations.However, Mattei does not gloss over Fascism’s oppressive nature as experienced in Europe. She describes the historical precedents of Fascism that are now also being rolled out in the U.S.: criminalization of free speech, nationalization and rationing of the food supply and fuels, mechanization and slavishness of labor, and diminution of property and small business values so as not crowd out capital for corporate Fascist Capitalism. Mattei states that historically under Fascism in Italy, 50 percent of workers were fined for insubordination, obstruction, sabotage and “strikomania”. Moreover, she details how the “common sense rationality that had justified” a Laissez-Faire Capitalist system was destroyed on the way to Fascism.But none of this poses the question that Mattei raises: is there a better alternative type of economy than working class oppressive (Crony) Capitalist Fascism? The author doesn’t venture much of an answer to her own question in her balanced and impartial history of nationalist Fascism in Europe. The strength of the book is that it allows the reader to see the corporate and the working-class viewpoints without disparaging either of the protagonists; albeit, to repeat, she makes it clear she is on the side of the working class if for no other reason than both government and corporate fascism have ganged up on them leaving them mostly powerless. The heavy Orwellian boot of Globalist Fascism is irreversible unless it is first accurately defined rather than mistaken as Socialism, Bolshevism, Communism, Leftism, Transexualism, Environmentalism or Medical Mandates; unless it is seen for what it is – a murderous class war not a race war or civil war; and the names of the oligarchs and corporations that are privately funding mayhem and madness are identified. Its major contribution is clarifying that Fascism emanates as a crisis management response, not an ideology per se, to perceived existential threats with an Austerity Policy that should not be confused with mere tax reductions, or environmental conservation or saving and prudence in contrast to massive government waste on wars mainly used as an economic stimulus to industry.This book is likely to run against the inclinations of fiscal conservatives who reflexively want balanced budgets, tax cuts, and deregulation, which is what Fascist corporations want in a time of economic contraction so that they can survive by putting the conservative political base of farmers, workers and small businesses out of business. Likewise, liberals who want to restore funding for entitlement programs and have paradoxically embraced Globalist Fascism only to find that fascism, coupled with its Austerity Policy, is no solution to the coming insolvency of those programs. The current political status quo is thus of no benefit to either party as no viable real alternative solution has been attempted and existing political victories are hollow and merely symbolic.If you’re like me having difficulty sorting out the seeming political madness and “Capital Disorder” that has come to America, one of the best places to start to make sense of it all is Mattei’s The Capital Order. If Mattei’s call for an alternative is to emerge to tyrannical Globalist Capitalist Fascism, Mattei’s book is must reading.

When I read The Capital Order, I was intrigued at its argument about the origins of austerity coming not from sound economic policy but a need to restore capitalist hierarchy after WWI wartime economics. Framing this as such makes far more sense than "get poor for the economy!", a slogan that is propagated among the masses just to make sure that they do not realize that their poverty is by design and not by hapless circumstances. Austerity could not be democratically imposed: it had to be enforced by "The Experts" and Fascist thugs in office.The author, in my opinion, has nailed the true intentions of austerity in this book. And in this day and age where the idea of a shadowy elite pulling the strings of power and making sure that the masses are permanently kept down does have some truth to this idea: because that was how austerity was invented and enforced in Britain and Italy in the 1920s.This worth a recommendation.

I have to admit that I was a bit skeptical about the thesis of the book about the role of austerity as a mechanism to enforce class discipline among workers. But the author provides compelling evidence that, at least during the 1920's that was the main goal being pursued by the policy makers in England and Italy. And she builds upon those cases to provide a political economy analysis of austerity , which is of a very different kind than the traditional analysis of austerity as a tool among others at the disposal of policy makers to stabilize output and inflation. Written with clarity and with tons of references, I highly recommend it.

The Capital Order, How Economists Invented Austerity and Paved the Way to Fascism, University of Chicago Press (2022)The Capital Order by Clara E. Mattei is a timely and important book. Her historical analysis is comprehensive and her ability to connect the genesis of modern day monetary (and fiscal) policy to current events is useful, enlightening and alarming. For example, anyone watching the news can see that the Biden Administration is working hard to demonstrate that the economy is improving, with record lows in unemployment and slow but steady economic growth. In the meantime, Jerome Powell, Chairman of the Federal Reserve, in spite of recently lowered inflation trends, still speaks about the “pain” that must be administered in order to keep the economy healthy. The conflicting stated policy goals of Biden and Powell are not compatible. If history is any guide, a history that is well explained and expounded upon in this book, Biden’s goals do not stand a chance and we will certainly experience a recession in 2023.I started out critically reading many of the author’s generalizations in her introduction to Part I of her book. As an example, she takes the position that World War I was “primarily an industrial war.” I am sure there is truth to this statement, but I would counter that World War I was “primarily” a war motivated by the desire to create and expand upon colonial empires. Regardless, as I continued to read, critique turned quickly to amazement. Mostly, I was amazed at how much history from this time was foreign to me. When I was in school, we learned about World War I, our country’s reluctance to get involved, its devastation measured in human lives and property. The war ended with the Treaty of Versailles, which we were told was overly punitive towards Germany, which then pushed us towards a second world war. After the first world war, the United States went isolationist. We had a decade known as the roaring twenties. Speculation was rampant and eventually the economy crashed.Reading the Capital Order filled in so much important history, which I believe is mostly ignored or skimmed over. I did not know, for instance, that so much of Europe was on the verge of embracing socialism at that time. I never heard of the Brussels or Genoa economic conferences or the role they played in defining international monetary and trade policy that resonates to this day. I never knew about the support Mussolini received from our banks and political leaders.What Mattei does in this book, with remarkable insight and historical detail, demonstrates that the current efforts by the Federal Reserve to fight inflation is part of an ongoing class struggle that dates back to the end of the first world war. The focus on fighting inflation, regardless of its impact on the majority of citizens, is based upon maintaining the Capital Order. And by “Capital Order” the author means that there must be a fixed and favorable sociopolitical order for capitalism to sustain itself and thrive. That order relates to hierarchical social relations between labor and the so-called “productive class.” To quote directly, “the social relation of capital – people selling their labor power for a wage – must be uniform across a society.” Of course, it goes beyond that, but we will explore that in more depth below.To make her case, Mattei uses the examples of post-World War I Britain and Italy to show that capitalism was under siege at the conclusion of the war and how each employed the same austerity principles, while using different approaches in employing those principles. Austerity measures were employed in those two countries to counter labor agency and collective power. Without this approach, it is likely that not only would government find it necessary to heed calls for better working conditions, shorter hours, and higher pay, but the very foundations of liberal democracy would likely have been replaced by some form of socialism.Government mobilization of the economy during World War I demonstrated to labor that capital could be socialized, and operated without stratifying divisions between the ownership of capital and labor. The war brought not only better conditions and higher wages to the workers of both countries, but also near full employment. Labor had a seat at the table and a role in the operation of the war time production economy. In short, workers became more than objectivized production units. Workers had agency and labor had collective power, which brought about better working conditions, shorter hours and higher wages. With the war at an end and the ownership class looking to restore its dominion over all aspects of production, labor used its power to retain and expand upon these gains.In the full employment conditions of the immediate post-war period, workers resorted to strikes, work stoppages, and more in order to leverage more concessions at the workplace. Concurrently, unions and labor leaders worked to politicize economic operations. And, consistent with the neo-Marxist teachings and advocacy of Antonio Gramsci and others, the economy was politicized through publication, the arts, education, organizing and electoral activity. Worker committees were formed in an attempt to democratize industry. At its height, the labor movement in Italy took actual control of factories in 1920, when “some half-million workers occupied factories throughout Italy” and through “direct seizure of the private means of production” took control of the production process. This lasted about a month.There were intense battles, and many lives were lost. Labor lost the war. Austerity, through physical and economic violence, was the tool used to suppress labor and restore the sociopolitical order. As mentioned, the means employed to suppress labor and re-establish the primacy of capital were somewhat different in Britain and Italy. Italy enforced so-called “pure economics” through neo-liberal policies, combined with repressive legislation and violence against organized labor. Britain enforced the same primarily through high interest rates, control of the currency, return to the gold standard, cuts to public employment, privatization, and other means that we would also define as “neo-liberal” economic policy. Later in the book, the author helps us to understand how the techniques used for the protection of the Capital Order during this period continues to this day, whether we are speaking about IMF “structural adjustment” programs enforced on countries in the Southern hemisphere (utilizing the postwar British approach), or Fascist, Mussolini-style violent repression as used in modern times in Pinochet’s Chile, Yeltsin’s Russia, and Suharto’s Indonesia, to cite to just a few examples.Some other important themes/highlights/takeaways of this book include:• The biggest threat to capitalism comes from two circumstances: economic depression and full employment. The first is dangerous because it undermines the legitimacy of capitalism and its supposed “natural order.” The latter is dangerous because it gives too much power to the workers, to the majority whose interests do not align with the Capital Order.• For capitalism to thrive, there is a need to have a public perception and acceptance of capitalism as the natural order of things. In some ways, economists and the elite sought to enforce this belief through a combination of repression and violence, but also through public relations. Knowingly or unknowingly, they proceeded to instill on the public a Gramscian form of cultural hegemony. Gramsci, of course, pushed for acceptance of socialism through “cultural hegemony” realized through the education of workers to improve economic performance, foster and enhance political sophistication, and eliminate the owning class entirely. Pure economy elites sought to impose their preferred cultural hegemony through popular acceptance of and existential belief in the understanding that without capitalism the only other option was destitution.• To establish and maintain the Capital Order, it was necessary to disengage economics from politics. In other words, it was necessary to “depoliticize” economics and place its management in the hands of technocrats. Chief among its advocates was the Italian economist Pantaleoni, who referred to democracy as "the management of the state and its functions by the most ignorant, the most incapable." This sentiment was not unique. At about the same time, here in the United States, author Walter Lippman was referring to average citizens as a "bewildered herd," positing that "the specialized class, the responsible men, carry out the executive function, which means they do the thinking and planning and understand the common interests...the bewildered herd, [are little more than] ‘spectators,’ not participants in action." Over time, monetary decisions became the exclusive province of central banks, operating outside of the political process and beyond political accountability. Out of public sight, the prevailing operations of the economy reinforced the idea that the Capital Order, the economic order, was a natural order guided by the rational and unbiassed market, a fiction that needed to be reinforced continually by protecting private property, advancing and protecting profits (“savings” which otherwise would be squandered on the shiftless and spendthrift working class), destroying unions and depressing wages. So much for the "apolitical" and natural operations of the market.• Austerity is defined by the elite “pure” economists of the time as increased production and decreased consumption. In essence, profit (seen as the revered "savings" of the productive class) was to be realized through a combination of cheap export products produced by way of labor exploitation. The author makes the point that austerity did not succeed in its purported attempt to protect the economy, except to the extent that it developed and maintained the “capacity to impose and reinforce class structure.”• Much of what the author describes as non-Fascist austerity measures, measures that had the same impact on labor as it had in Fascist Italy, can also be described as neo-liberal. Without the rampant violence, Britain relied on government cutbacks, privatization, open domestic markets to foreign investment, cheap goods, low taxes on the “saving/Investor/responsible” class, and minimal labor protections.• What is missing from the above neo-liberal analogy is free trade. As interesting as the author’s analysis of history and the analogy to current times is, the author fails to consider the rampant consumerism that has come to define the U.S. and other Western political economies and how that fits into her stated and now deep-rooted austerity legacy. It would be difficult, if not impossible, to state that our economic policy pushes increased production and decreased consumption, while assuming that corporate profits can be protected through the mercantilist approach of relying on export trade. Instead, we support cheap imports and advance foreign policy that is friendly to corporate interests (and profits) abroad. We emphasize the domestic service and finance sectors, promote foreign production of cheap goods; we push ever-increasing consumption by our own citizens while encouraging or accepting ever-burgeoning private debt. Regardless, then and now, labor has no power. Workers have limited agency, resulting in outright and total reliance and subservience to those who hire workers. In many ways the dependent wage worker, or wage slave, of yesteryear is the commodified labor input and debt peon of present time. Either way, the Capital Order is preserved and with a vengeance, with inequality at a level now that surpasses the inequality of the World Wars’ interregnum period.So yes, we are headed for a recession. There is little difference between Bank of England monetary policy in the 1920s and the policies of our own Federal Reserve in the 21st Century. Consider the following quotes:“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” said Powell. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.” Statement from Federal Reserve Chairman Jerome Powell 8/26/22“Without paying your way as a nation, without getting that equilibrium and stability which is at the basis of confidence, there can be no hope whatsoever. To that we have to devote all our energies. How are we to do it? I think the answer is a very painful one…work hard, live hard, save hard.” Statement from Lord Chalmers, Brussels, 1920Again, this book is a worthwhile read, which I highly recommend. Whether you are an economist, an organizer, an advocate, or a history buff, there is much in this book that you will find useful, educational, enlightening and enjoyable. And it could not have come at a better time.

A thoroughly researched topic by the author, laying bare the major antecedent to fascist regimes.

An Important book to understand the march toward the abys

If you would like to know the history behind this so-call economic theory, then this a must read. Austerity is a fraud economic ‘theory’ that began in the early 20’s and continues today. A must read.

Mark Blythe in his 2013 book 'Austerity: The History of a Dangerous Idea' (available on Amazon too) tried to show us the truth about austerity by giving us many fine examples of it not actually having worked. For those of you who still want the facts about austerity's failings in 'purely' economic terms, Mattei generously provides one in Chapter 9. But was anyone listening to Blyth? I don't think so - especially in British politics.But do you know why? Because as Mattei's history of the gestation of austerity shows us, it was never meant to work in the way it was portrayed to the public - as a means of - the best way - to control inflation. And our politicians know that too. Why? Because the capital order today and its sustainment is where aspiring political parties who like using austerity get their funding from - and lots of it.What emerges from Mattei's erudition and hard research using original materials is the story of basically a big lie - a confection - created to ensure the primacy of capital and moneyed vested interests, to ensure that the 'social order' is indeed the capital order - with capital and wealth firmly at the top and calling the shots. Mattei's research enables the real intentions of those who created austerity in Britain and Italy to reveal and condemn themselves using their own words. These people were bad actors for sure.Austerity emerges from Mattei's pages as a deliberate economic dirty bomb to destabilise and deny the economic and social means workers have to organise - the same basic means capital has access to and wants for itself only. Apparently, only the rich have the right to organise themselves to protect their interests - no one else.Austerity is also reactionary as well as deliberate - after WW1, there was a popular clamour for a better world (and why not after so much death and destruction?). This clamour expressed itself in sometimes revolutionary terms but any form of worker or bottom up attempts to organise for a better world were seen as a threat to the wealthy at the top of society. Austerity was used to curb society's ambition - the culling of wages, redundancies, the culling of rights, the culling of union status and ultimately it seems, the culling of democracy.On this last point, how skilfully does Mattei bring to the fore the natural alignment of austerity with Fascism. Austerity is therefore an authoritarian project - it is an exercise in pure power upon those who have less power - or should we say 'less money'? Because ultimately that is what it is about. Here, Mattei's delving into Italian inter-war historical record is peerless and delivers the facts.Mattei is not the first writer to allude to and also use the words of neo-liberal/classical economists to betray their authoritarian bent - see Phillip Mirowski in 2013's 'Never Let A Serious Crises Go to Waste' (also available on Amazon) where he uses von Hayek's and Friedmann's own words that favour authoritarianism (look at Friedmann's blindness to the cruelty seen in Chile). The tri-angulation here is important because it reveals the naked power ambition of a capital order that just wants to exploit society totally unopposed for the sake of generating more and more money in order to have power to buy politics.If you are someone who is over-sensitive to such dodgy concepts as 'cultural Marxism', you may find the writing and the book hard going, and may wish to read any of the 'pure' economic orthodox texts that are out there. But make no mistake, Marxist power relationship analysis or not, Mattei proves beyond all doubt austerity's motivations are NOT scientific and based on economic facts - it is based on nothing more than bias towards wealth, with wealth being portrayed as more deserving and pious.But wait! It's more complicated than that - Austerity - real austerity and how it actually works - IS based on economic facts and those facts are its consequences , that if you divert the money supply of wages and investment away from society at large, it's ability to stick up for itself will be undermined and it will be easier to control. This applies to the workplace and public spaces too, where society might wish to air its concerns about climate change and the erosion of its rights for example.Finally, the other huge contribution Mattei makes is to that of social history. In Britain, I had no idea for example that there was a movement to create guilds (pp.95-99) and her placement of the Geddes Axe in the context of austerity and its linkages to contemporaneous events in Italy are a real eye opener as to what was REALLY going on. It just goes to question what our school curricula are teaching us in our schools about our history in this country.But also, Mattei has change my perception of the world we live in. A question? Have we ever been in a period where there has not been some form of austerity? Is not the neo liberal project of 'rolling back of the state' not just a slow-motion form of austerity as state help for families and people is reduced, public services privatised? 'Slo-mo' is punctuated by 'fast austerity' whenever the private banking sector destroys the world economy through its greed and criminality, and capital uses it own self-made chaos as an excuse to hurt and supress those who did not cause it? It just speeds up the inevitable conforming marketisation of everyday life as the objective - for us all to be obedient consumers. It makes you wonder!Clara Mattei has written a very powerful book - it reminds me of Nancy MacLean's 'Democracy in Chains' - where she - like MacLean - has gone into the dark places and uses the very words of the architects of lies to tell us the truth and incriminate the false economic orthodoxy we live under. Mattei is essential reading for all our time.Indispensable!

A must-read book in order to understand two faces of capital against the working class, liberalism and fascism

日本人の日常道徳にフィットするだろうか、緊縮策（austerity)の生命力はじつに強い。だいぶ前に、Mark Blythの「Austerity」という本を読んだが、そこでは緊縮策の実務上の大失敗の歴史が詳しく語られていた。また最近読んだ中野剛司氏の「どうする財源」でも、緊縮財政は戦争の防止ではなく、むしろファシズムの生みの母なのだという刺激的なメッセージが最後に提示されており、その流れから、前から気になっていた本書を読むことと相成った。というのは、本書の副題は、「How economists invented austerity and paved the way to fascism、いかにして経済学者は緊縮策という考えを生み出し、ファシズムへの道を切り開いたか」というそのものずばりなのだ。期待が高すぎたせいだろうか。読み始めて、すぐに気が付いたのが、この作品、いわゆるマルクス主義の影響が濃厚な作品なのだ。マルクシズムの資本と労働者という図式が前面に出てくる。著者によると、第一次大戦に伴う経済運営は、それまでの古典派の経済学の世界とは切断された戦争経済運営とそれを支える思想を生み出した。戦争遂行という錦の旗の目的の前には緊縮財政や自由放任思想という二義的な思想は背後に退き、政府が民間経済の運営に深くかかわるようになった。また、戦争に伴う労働者の不足は、労働者の経済運営への参加を必要とするようになったのだ。この思想の転換は、ロシア革命の影響もあり、戦争直後も、大きな影響力を持つようになったというのだ。この関連で、英国のギルド社会主義や協同組合運動やイタリアでの過激なサンディカリスムによる労働者による工場支配などが詳しく語られる。この辺の流れに詳しくない私にはこの辺の分析にコメントはできない。この一連の流れに、資本主義という体制の危機を感じとったのが、資本家側だ。資本主義というシステムの存続の危機を感じた体制側は、金本位制への復帰、経済学という「中立的な装いをまとった道具」の処方箋、そして中央銀行制度という民主主義制度から遮断されたテクノクラート組織の重視（「中央銀行の独立性！」）を通じて、資本の利益の復権と労働側の打倒を図ったというわけだ。結局のところ、この流れに、労働側は抵抗できず、英国では緊縮財政を基にする、いわゆる英国財務省の経済運営の考え方が主流となり、イタリアではムッソリーニによる政権奪取とファシズムの確立となるわけだ。イタリアの古典派経済学者はこのムッソリーニ政権に経済運営担当者としてかかわることになり、緊縮策を中心としたその古典的な経済運営は英米の国際金融資本からの好意的な評価を受けたというのだ。中野氏の作品では、緊縮策が生み出した経済運営の失敗が社会的な不満を引き起こし、それが日本型ファシズムを受け入れる土壌になったという位置づけだったのだが、この作品では、緊縮策とファシズムの位置付けが若干異なる。緊縮策がファシズムを引き起こしたのではなく、ファシズムの経済運営自体が緊縮策に基づいていたのだというのだ。本書が対象とする時代は、金本位制が経済運営のスタンダードとなっていた100年前の話で、不換紙幣に基づく現代とは異なる。というわけで、当時の経済運営の評価は私にはできない。が、本書は、著者のこのイタリアのサンディカリスムへの強い共感が作品全体を覆っており、そこには強い違和感が残る。