2025/06/19 by Colm Murphy, Patrick Diamond · 1 voice
Economics, Econometrics and Finance · Social Sciences · #Housing, Finance, and Neoliberalism #Political and Economic history of UK and US #Social Policy and Reform Studies
paper · doi:10.1177/13691481251329769
openalex publication_date 2025/06/19 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/04
The political science debate over macroeconomic policy in western Europe has focused extensively on critiquing ‘austerity’ policies since the Great Financial Crash of 2008. That includes the literature on ‘austerity from the left’, which sought to explain the decisions of social-democratic parties to adopt policies that undermined the capacity of the state to intervene in the economy, the ideological goals of conventional social democracy, and ironically the electoral support of those parties. However, by focusing on the 2010s, this literature risks descriptively conflating ‘orthodox fiscal policies’ with ‘austerity’, and in doing so, misdiagnosing the former in a different political and economic context. Adopting a long-term historical perspective challenges this conflation. This article examines the historical case study of the British left’s attempt to navigate the politics of fiscal restraint since 1945, advancing two central arguments. First, strategies of economic restraint, including but not limited to fiscal consolidation, have been endorsed by an assortment of social democrats and socialists at various junctures of post-war history, even at the height of Keynesian influence in economic policymaking. The left has turned to ‘prudential’ macroeconomics because of perceived economic and electoral constraints, but also due to a persistently powerful ‘moral economy’ that attempts to rein in private consumption to boost production and strengthen the public realm. Second, strategies that acknowledge those constraints and draw on that moral economy have been used by political actors to introduce policies broadly favourable to traditional social democratic ends. While the emphasis on fiscal sustainability and monetary stability is, no doubt, a restraint on governing autonomy in capitalist economies, it is also a potential resource , creating governing space to enact distinctive progressive policies. Understanding this point raises the possibility for centre-left governments of enacting public, social and green investment strategies from the left that are compatible with policy frameworks committed to forms of macroeconomic restraint.