Contesting Austerity

A Socio-Legal Inquiry

Anuscheh Farahat, Xabier Arzoz, Anuscheh Farahat, Xabier Arzoz

• Publisher: Hart Publishing
• Year: 2021
• ISBN:
  9781509942824
• Edition: 1
• Topic: Law
• Subtopic: Public Law
• Index: Law

This book addresses the different forms of austerity, contestation and resistance, in order to understand how they relate to one another and the impact they have on the democratic quality of public debates, the trust in public institutions and the legitimacy of law. Contestation of austerity includes not only traditional activism strategies such as human rights litigation and direct democracy instruments, but also new forms of collective action and collaborative resistance. Most importantly, many of the new anti-austerity initiatives also aim to renovate existing modes of democratic decision-making on the European, national, regional and local levels. The book focuses on different types of contesting austerity measures and the interaction between institutional and civil society actors. It will enhance understanding of how the various actors frame not only their goal but also the underlying social conflict to contest austerity and through which means they try to achieve political and legal changes. With 16 chapters written by contributors from Spain, Germany, Greece, Portugal and the UK, the book approaches 3 crucial areas of austerity policies: cuts in payment and pensions, labour law reform, and old and new poverty. In each field, the contributors analyse the processes of decision-making and contestation from 3 perspectives: institutions, democratic theory and societal responses.

1

Contestation and Integration in Times of Crisis: The Law and the Challenge of Austerity

ANUSCHEH FARAHAT AND XABIER ARZOZ

What commenced in the United States in summer 2007 with the turmoil surrounding the subprime mortgage market triggered a global financial crisis, which took hold of all areas of the world’s economy in the years that followed. The breakdown of credit markets undermined confidence in debt-based growth. The global financial and economic crisis hit the eurozone and its Member States hard. In the less competitive southern countries, where significant parts of the national banking sector became insolvent, Member States found themselves unable to refinance and service their debts on the credit market. The economies of the more competitive Member States were able to absorb most of the shocks. The economic asymmetry of the eurozone both brought about severe consequences for less competitive Member States and structured the power relations that shaped the reaction to the crisis. The so-called ‘eurozone crisis’ was comprised of a banking crisis, a sovereign debt crisis and a severe economic crisis with grave political repercussions at both European and domestic levels. The seriousness and political impact of this manifold crisis was a crucial test for the stability of the European Economic and Monetary Union. Although the financial markets were ultimately stabilised, the depreciation of the euro turned out to be moderate and the disintegration of the eurozone was ultimately averted, continuing or even deepening European economic integration during this critical period came at a high price.

The primary means of limiting the damage caused by the crisis and upholding the principles of the Pact on Stability and Growth was a ‘conditional solidarity approach’¹ in which eurozone Member States unable to refinance their public expenditures and deficits received credits under conditions of strict austerity. During the crisis, austerity became the dominant political paradigm. Austerity can be defined as ‘voluntary deflation’,² trimming public expenditure, cutting state budgets, decreasing wages and reducing debt in order to stimulate export-led growth. Taken together with the privatisation of state-run companies and the further deregulation of labour markets, this form of crisis management has primarily impinged upon Europe’s social promises.³ Built upon neoclassical economic paradigms and modelled around neoliberal policy prescriptions, the ‘new governance of “packs and pacts”’⁴ imposed on so-called debtor states has reduced the political leeway for market-correcting policies at the nation-state level. Consequentially, primary crisis instruments such as the Euro-Plus-Pact, the Six-Pack, the European Fiscal Compact or the Two-Pack have radicalised the structural asymmetry between ‘negative’ and ‘positive’ integration built into the European polity.⁵ These instruments have not only reshaped European economic governance architecture, but also affected the national social systems of debtor states in a profound and unprecedented way. Throughout the crisis, the latter became ‘adjustment variables’⁶ for the sake of price stability, losing their capacity to cope with the serious rise in unemployment rates, pauperisation and emigration processes through redistributive policies.

Based on the apodictic discourses of ‘no alternative’ and ‘exceptionalism’,⁷ trust in financial markets was held to be the main objective of crisis management, and austerity the only path to recovery. In turn, crisis management brought on a strengthening of technocratic and executive-biased institutions at the expense of legislative bodies.⁸ Not only in crisis-hit countries have democratic politics been constrained by alleged necessities. Technocratic blockage of economic and budgetary issues has not only meant a reduction in the capacity of national social systems to absorb and compensate for need induced by the economic crisis but has also undermined the impact of elections and the idea of meaningful choices as part and parcel of democratic politics; power shifts in democratic elections may not result in alternative government policies.⁹ Thus, the eurozone crisis has put the hidden conflict, inherent in democratic capitalism, on the table.¹⁰ Indeed, during the crisis years, the paradigms of economic necessity, urgency, efficiency and reliable risk management openly clashed with the ideas of discretionary choice, majority-based decision-making, and the openness, volatilities and contingencies built into democratic processes of will-formation. In this tense arena, the capitalist end of the spectrum has prevailed as the dominant austerity paradigm, a fact that has created a series of practical and theoretical problems for democratic politics and representation. In turn, governing parties have struggled to reconcile the growing tension between governmental ‘responsibility’ towards the markets and democratic ‘responsivity’ towards citizens.¹¹ The result was the dealignment of party–voter bonds and a transformation of party systems with voters turning away from long-established parties and giving their vote to new political groupings, which aggregated frustrated demands and in some cases proposed regulatory alternatives to the status quo.¹² It is in this context that the eurozone crisis has turned into a multifaceted crisis, in which financial, economic, social and political aspects all intertwine and become part of a disintegrative ‘self-dynamical process’.¹³ During the crisis, a solution to one problem – for example, a series of austerity measures adopted to stabilise the credit market – triggered harmful side-effects in other social fields – for example, within the political system, where the policy frustrated voters and undermined the government’s bases of support – with the latter spilling back into the original problem – in this case, into the credit market by decreasing political reliability and planning security.

The eurozone crisis did not yield a one-to-one relation between the severity of a financial crisis and the scope of political upheavals and power shifts.¹⁴ But even if there is no empirical evidence for a causal determination, the crisis provided favourable opportunity structures for new political entrepreneurs and their counter-hegemonic political projects. It led to manifold politicisation processes, which challenged not only the measures and decisions themselves (policy), but also the underlying power asymmetries (politics) and the institutional settings struggling to adapt to a much more conflictual and polarised environment (polity). The result was increasingly polarised political spaces, with new salience for and mobilisation around European issues. This holds true at the national as well as the supranational (European) level. As to the latter, the crisis revealed a multiplicity of political conflicts in terms of the distribution of costs and benefits built into a highly interdependent transnational polity. Today, more than ten years after the eruption of the eurozone crisis, a new and perhaps even more devastating economic crisis following the COVID-19 pandemic is lurking. While the full extent and impact of this new crisis cannot yet be estimated, it is already apparent that the transnational conflicts surrounding solidarity in Europe have been fuelled by the COVID-19 pandemic. While strict austerity seems to become less convincing the longer the pandemic lasts, conditionality still seems to be a feature of mutual financial assistance in Europe. Other effects of the eurozone crisis also seem to persist.

As one of the major consequences of the eurozone crisis, European governance witnessed unprecedented politicisation.¹⁵ While European integration has largely been sheathed by ‘permissive consensus’ in the twentieth century, the eurozone crisis dismantled its underlying conflictive dimension and further boosted ‘constraining dissensus’, to complete Liesbeth Hooghe and Gary Marks’s conceptual pair.¹⁶ The relative sobriety of European integration was suddenly permeated by the political logic of antagonism and conflict. At least in some countries, the functional spillover rooted in interdependence and mutual vulnerability was hit by ‘political spillbacks’.¹⁷ European issues became a pivotal point of reference in the construction of political identities. They deepened the antagonistic rift between cosmopolitanism and ethnocommunitarism that has evolved as the primary fault-line of political spaces and party systems all over Europe.¹⁸ It is yet to be seen how the increasing politicisation of European integration will play out in the upcoming economic crisis following the COVID-19 pandemic. In any event, insights into how the European public and political systems dealt with strongly technocratic, austerity-based crisis management during the eurozone crisis provide valuable information for the next crisis. This volume seeks to take stock of the new modes and the intensity of the judicial and political contestation of austerity during the eurozone crisis and ventures a preliminary forecast of what this can mean for the upcoming challenges of European integration in the post-pandemic era.

RESISTANCE TO AUSTERITY: THE VARIETIES OF CONTESTATION

During the eurozone crisis, party politics became an important forum for challenging dominant crisis management, as we have just seen. However, it was certainly not the only such forum. Austerity provoked multiple forms of contestation. The struggle against austerity included traditional activism strategies, such as human rights, but also new forms of collective action and collaborative resistance. It involved diverse actors using institutional as well as extra-institutional channels for contestation. Austerity policies were challenged by oppositional parties, trade unions, grass-roots activists, newly emerging protest movements, academics, intellectuals, experts, artists, the mass media and lawyers.

Some of these actors reject austerity altogether. For these critics, austerity is an inefficient or even counterproductive means of overcoming the economic crisis.¹⁹ It sets in motion a downward spiral of economic decay, international tax competition, emigration, falling tax revenues and weakening social systems, and brings the social dimension of Europe to a ‘dead end’.²⁰ Others have criticised the political means by which austerity has been pushed through and have highlighted that crisis management has set a course for further technocratisation,²¹ bypassing deliberation in parliaments and public spheres. They claim that the politics of austerity aggravates ‘authoritarian’²² tendencies toward ‘collective bonapartism’,²³ that it disproportionately prioritises market demand and undermines the bases of democratic politics.²⁴ Another group of actors contests particular austerity measures, such as payment and pension cuts, labour law reforms and privatisation. Rather than the overall logic of austerity politics, their interventions target the harmful consequences of concrete measures for vulnerable groups, such as children,²⁵ unemployed people²⁶ or disabled and chronically sick persons.²⁷

Contesting austerity does not only vary according to the engaged actors and the scope of critique (general or concrete) but also regarding the sites and channels of contestation. Austerity has met resistance in courtrooms, in parliaments, in the streets, in mass media, at ‘green tables’, in collective bargaining systems as well as in intellectual discourse and academic conferences. Some of the channels that proved successful in the past, such as collective bargaining systems and parliamentary politics, have faced new constraints. Nevertheless, other, sometimes less explored, channels have taken centre stage. These channels of contestation are even more crucial since they allow for the articulation and handling of collective discontent. They absorb the individual experience of need. They proceduralise, symbolise and even temporarily transcend the conflictual nature of modern societies, countervailing their detrimental and anomic tendencies.

Each of these channels implies a certain mode of contestation. Whereas contestation before a court, for example, is necessarily bound by the language of law and based on the reinterpretative application of legal norms and the creation of doctrinal concepts and theories, parliamentary contestation is less constrained, though still following certain formal rules, as well as informal conventions and traditions. The same holds true for general strikes, demonstrations or acts of civil disobedience, which can be regarded as forms of political contestation that also follow certain normative structures. Even violent riots not only express political discontent, but at times follow normative structures. All of these channels vary as to their impact on political outcomes; while parliaments, courts and bargaining systems have a direct effect, mass strikes and intellectual discursive interventions only influence politics indirectly through mobilisation.

These differentiations are merely analytical. Austerity politics and the struggle against it consist of the interplay of different institutional, social and political actors, representing and...

Table of contents

• Cover
• Title Page
• Acknowledgements
• Contents
• List of Contributors
• 1. Contestation and Integration in Times of Crisis: The Law and the Challenge of Austerity
• PART I: CONTESTATION, POLITICISATION AND DEMOCRACY: A SENSITIVE VIRTUOUS CIRCLE?
• PART II: AUSTERITY MEASURES UNDER EUROPEAN AND NATIONAL JUDICIAL REVIEW
• PART III: CONTESTING LABOUR LAW REFORMS
• PART IV: ASYMMETRIES AND COMPETING RATIONALES IN THE CONTESTATION OF AUSTERITY
• Index
• Copyright Page