Publics are recurrently told by their leaders that they must tighten their belts, settle for less, forget their personal needs, their private dreams, for the greater good. The reasons given for this call for austerity are various. War made necessary by foreign aggressors, pestilence visited upon us by higher powers, or maybe merely crop failure. We the people must sacrifice for the greater good. But the call for sacrifice, for austerity, often obscures a strategy for extraction by those who have more from those who have less.

Not so long ago, there was reason to believe that at least in the wealthier nations of the world, poverty and the extreme inequality to which it is related were becoming problems of the past (Marshall, 1950). An important reason for this confidence was the steady expansion of government policies that regulated market actors, largely to limit externalities, and also to offset market-generated income inequalities through redistribution in the form of taxation and subsidies. Recent developments, most dating from before the financial meltdown that began in 2007, but escalating since, have badly shaken that confidence.

The bifurcated welfare state

In a large number of the rich countries that were earlier the pioneers in creating the welfare state, social spending is under attack. In Europe, the financial crisis, originating in manipulation and chicanery in the US housing market and spreading to Europe through the international financial markets, has now morphed into a banker and business led push for austerity, meaning cutbacks in welfare state spending and in wages (Blyth, 2013; Irwin, 2013; Streeck, 2014). This is not only happening in beleaguered Greece and Spain, but in the United States and the United Kingdom, and less dramatically in the other settler countries spawned by the British Empire (Huber and Stephens, 2005). Moreover, the emergence of campaigns for austerity elsewhere in Europe suggests the trend could spread to other rich nations that were once heralded as welfare state leaders, with consequences of increased poverty and inequality (see Figure 6.1).

Neoliberalism, an effort to unfetter capitalism from the constraints imposed by the inroads of democratic politics, has been advancing for more than three decades (Harvey, 2005). It is not hard to assess what it has wrought. Public policies in the lead neoliberal nations have been transformed. Business regulations, including regulations intended to improve workplace safety, reduce environmental hazards, and protect consumers, have been rolled back.