Will Austerity lead to a Social Explosion?

Greeks riot outside Parliament

In the debate over the austerity treaty the General Secretary, John Douglas, of the trade Mandate union told its Biennial Delegate in Wexford that:

“There are over 400,000 Irish workers without jobs, 50,000 are leaving the country each year, tens of thousands of families are being crushed under the burden of unsustainable mortgages and living in fear of eviction. Living standards, welfare and services are being slashed, the government is introducing a raft of regressive charges and taxes, a recent Irish League of Credit Unions report showed that 50% of those surveyed had less than €100 left to spend at the end of the month after paying all bills – what sort of an existence is this?”

“The imposition of austerity measures across Europe has resulted in over 25 million workers unemployed, of which 5.5 million are under the age of 25. This is a scandal, human waste of mega proportions – but still, our government at the behest of our European banking masters continues with these failed policies and ideologies, condemning future generations of Irish citizens to a mere existence on the margins of society.”

The treaty “may even shrink domestic demand further leading to mass unemployment, decades of emigration and sow the seeds for future social conflict.”

Irish workers are now well versed in watching scenes of riots outside the Greek parliament on RTE news bulletins.  It has been noted by just about every commentator that similar scenes have not been a regular occurrence in Merion Square or Kildare Street.

Is John Douglas therefore wrong?  A recent academic paper suggests not.*

Study

Employing the mathematical tool of regression analysis, using a wide range of indicators of social unrest – demonstrations, riots, strikes, assassinations and attempted revolutions – in  26 European countries, including Ireland, over 90 years – 1919 to 2009 – the authors look specifically at the relationship between austerity and social unrest.  They note previous studies of the same issue and a study of seven countries in South America during the period 1981 to 1990 which found that the run-up to austerity measures is associated with higher levels of unrest but that this declines after implementation.

Using the various indicators the authors create a single measure of instability which they call CHAOS which averaged 1.5 for the various countries over this period and peaked in Italy in 1947 where there were 38 incidents including 7 general strikes, 19 riots and 9 anti-government demonstrations.  The careful reader will wonder at a country with 7 general strikes but only 9 demonstrations.  We will not delve into the definition of the variables.  This does not mean we should cease to be sceptical of the results but we are obliged not simply to dismiss what we might not like, nor perhaps – more easily – simply accept that which fits our existing opinions.

Results

So what are the results of the study?

There are apparently relatively few protests caused by austerity but when they happen they are large and tend to be peaceful.  It should be remembered this study does not look at all protests, strikes and demonstrations etc. but only those linked to austerity measures.

It identifies no clear-cut patter over time but the interwar period, that immediately after World War II and the 1968 to 1994 periods show unusually high levels of unrest.  It also notes that the years since 1994 have been unusually tranquil.

Higher levels of expenditure and faster growth are associated with less unrest.  This might seem unsurprising but would appear to conflict with an assumption of socialists that lower levels of unemployment, usually associated with higher capitalist growth, allows the working class to rebuild its organisation and confidence and engage in more struggles to advance their social position.  The authors however note that while output growth is correlated negatively with assassinations, riots and revolutions it is not correlated in this way with strikes.

In the years after 1945 the authors observe that more growth lead to more unrest and state that “it seems that high rates of output growth may have encouraged worker militancy more generally.  At a time when many countries reached full employment, this effect seems to have become dominant.  The normal pattern of GDP growth reducing unrest reasserts itself after 1965, when there is also still a clear negative effect of higher government expenditure.”

State expenditure increases are relatively powerful in reducing instability while expenditure cuts are strongly correlated with increasing unrest and tax increases having a similar but weaker effect.

Expenditure cuts are linked to significant increases in demonstration’s, riots, assassinations and attempted revolutions but with less impact on the occurrence of general strikes.  These effects were strongest between the World Wars.

The authors note that after the fall of the Berlin wall the overall connection between austerity and social instability changes sign (in other words increased austerity is associated with less instability) but that it appears this relationship is statistically not significant. The authors conclude that non-economic factors become dominant in this period.

Politics

The importance of politics is emphasised when the authors look at the robustness of their results.  They find that unrest is particularly strong to budget cuts if the level of unrest generally is already high.  They also argue that the more democratic the political system in which austerity is implemented the lesser its impact in fostering unrest.

Increases in state expenditure do not reduce unrest to a large extent but this result of the statistical testing is not significant.  On the other hand state expenditure cuts “matter a great deal for unrest.”   Economic growth also does “much to cut unrest” while declines in growth do not set off unrest to the same degree.

The authors do not find that the spread of the mass media facilitates the rise of mass protest.

Finally the authors point to other literature which suggests that “there is no significant punishment at the polls for governments pursuing cut-backs . . . and no evidence of gains in response to budget expansion.”

The analysis would thus appear to confirm the view that political factors appear to be very important, which should be no surprise to Marxists.  Indeed they should find in it confirmation of their view that in questions of class struggle political questions such as the level of class consciousness and political organisation are paramount.

Thus whatever shortcomings, or suspicions, that might arise over the methods and assumptions employed in this academic paper its findings would not on the face of it appear at odds with general Marxist analysis.  It would confirm the view that austerity will generally lead to resistance, that this resistance is crucially framed by political factors and these factors will go some way to determining whether it occurs and is significant.

But what about the character of the political response to austerity?  What does history have to teach us about this?  What sort of politics arises in response to hard times and austerity?  In the next blog I will look at a second recent academic paper that carries out a statistical analysis of the political reaction to the great depression during the 1930s.

*  ‘Austerity and Anarchy: Budget cuts and social unrest in Europe 1919-2009’, Jacopo Ponticelli and Hans-Joachim Voth, CEPR Discussion Paper Series August 2011.

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