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Counterrevolution: Extravagance and Austerity in Public Finance
A thorough investigation of the current combination of austerity and extravagance that characterizes government spending and central bank monetary policy
At the close of the 1970s, government treasuries and central banks took a vow of perpetual self-restraint. To this day, fiscal authorities fret over soaring public debt burdens, while central bankers wring their hands at the slightest sign of rising wages. As the brief reprieve of coronavirus spending made clear, no departure from government austerity will be tolerated without a corresponding act of penance.
Yet we misunderstand the scope of neoliberal public finance if we assume austerity to be its sole setting. Beyond the zero-sum game of direct claims on state budgets lies a realm of indirect government spending that escapes the naked eye. Capital gains are multiply subsidized by a tax system that reserves its greatest rewards for financial asset holders. And for all its airs of haughty asceticism, the Federal Reserve has become adept at facilitating the inflation of asset values while ruthlessly suppressing wages. Neoliberalism is as extravagant as it is austere, and this paradox needs to be grasped if we are to challenge its core modus operandi.
Melinda Cooper examines the major schools of thought that have shaped neoliberal common sense around public finance. Focusing, in particular, on Virginia school public choice theory and supply-side economics, she shows how these currents produced distinct but ultimately complementary responses to the capitalist crisis of the 1970s. With its intellectual roots in the conservative Southern Democratic tradition, Virginia school public choice theory espoused an austere doctrine of budget balance. The supply-side movement, by contrast, advocated tax cuts without spending restraint and debt issuance without guilt, in an apparent repudiation of austerity. Yet, for all their differences, the two schools converged around the need to rein in the redistributive uses of public spending. Together, they drove a counterrevolution in public finance that deepened the divide between rich and poor and revived the fortunes of dynastic wealth.
Far-reaching as the neoliberal counterrevolution has been, Cooper still identifies a counterfactual history of unrealized possibilities in the capitalist crisis of the 1970s. She concludes by inviting us to rethink the concept of revolution and raises the is another politics of extravagance possible?
At the close of the 1970s, government treasuries and central banks took a vow of perpetual self-restraint. To this day, fiscal authorities fret over soaring public debt burdens, while central bankers wring their hands at the slightest sign of rising wages. As the brief reprieve of coronavirus spending made clear, no departure from government austerity will be tolerated without a corresponding act of penance.
Yet we misunderstand the scope of neoliberal public finance if we assume austerity to be its sole setting. Beyond the zero-sum game of direct claims on state budgets lies a realm of indirect government spending that escapes the naked eye. Capital gains are multiply subsidized by a tax system that reserves its greatest rewards for financial asset holders. And for all its airs of haughty asceticism, the Federal Reserve has become adept at facilitating the inflation of asset values while ruthlessly suppressing wages. Neoliberalism is as extravagant as it is austere, and this paradox needs to be grasped if we are to challenge its core modus operandi.
Melinda Cooper examines the major schools of thought that have shaped neoliberal common sense around public finance. Focusing, in particular, on Virginia school public choice theory and supply-side economics, she shows how these currents produced distinct but ultimately complementary responses to the capitalist crisis of the 1970s. With its intellectual roots in the conservative Southern Democratic tradition, Virginia school public choice theory espoused an austere doctrine of budget balance. The supply-side movement, by contrast, advocated tax cuts without spending restraint and debt issuance without guilt, in an apparent repudiation of austerity. Yet, for all their differences, the two schools converged around the need to rein in the redistributive uses of public spending. Together, they drove a counterrevolution in public finance that deepened the divide between rich and poor and revived the fortunes of dynastic wealth.
Far-reaching as the neoliberal counterrevolution has been, Cooper still identifies a counterfactual history of unrealized possibilities in the capitalist crisis of the 1970s. She concludes by inviting us to rethink the concept of revolution and raises the is another politics of extravagance possible?
568 pages, Hardcover
Published March 26, 2024
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About the author
Melinda Cooper
22Ìýbooks18ÌýfollowersMelinda Cooper is a Senior Research Fellow in the Department of Sociology and Social Policy at the University of Sydney. She is the author of Life as Surplus: Biotechnology and Capitalism in the Neoliberal Era.
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Displaying 1 - 9 of 9 reviews
March 26, 2024
Like Family Values, a book that I think I described as “stunning� on this website when I read it a few years ago, Counterrevolution is a history of the present conjuncture. Here Cooper is concerned with the confluence of the supply-side and “Virginia school� economics of late 20th century austerity in producing the contemporary moment. The scale and scope of analysis here is at times exhilarating. The “extravagance� here, which refers to forms of social life which exist in opposition to and are the targets of racialized and gendered forms of austerity through which class discipline is imposed on the poor and working class, is only explored in the brief conclusion, and I think I would have liked to see that argument get more space, but it doesn’t make this text any less useful as a genealogy of the trajectory from Barry Goldwater and James Buchanan to Trump and Dobbs. The aspect of the analysis which was the least familiar to me, the long history of asset price appreciation in chapter 1, is also I think the most useful part of the text, or was for me, at any rate.
October 5, 2024
Ett oerhört viktigt och grundligt undersökt bidrag till historieskrivningen om nyliberalismen och inte minst till bakgrundsförståelsen av trumpismen; det långsiktiga arbetet med att sammansmälta radikal marknadsfundsfundamentalism med reaktionära religiösa och socialkonservativa strömningar.
July 22, 2024
This book sizes up the ‘politics of money� in today’s USA. It analyses how, since the late 1970s, the movement of the price of assets (rents, interest, intellectual property royalties, capital gains, etc) overtook profits as main determinants of income and wealth shares � a counter-revolution sometimes called ‘financialization�. The author names the names, dissects the public-private alliances and chronicles in extensive and copiously footnoted detail specific counter-revolutionary monetary and fiscal offensives, both strategic and tactical. These range from vigorous ‘tax revolts�, public debt ceiling campaigns and welfare rollbacks led from the Right, but routinely supported by erstwhile social democrats like the Clintons.
As someone who’s followed, and been partially persuaded by claims that ‘civil society� would save our bacon, I can't just shrug off this book's findings about the setbacks civil society's emancipatory camps have suffered. This passage from the concluding chapter notes some of them.
This was always “a counterrevolution without revolution,� � a preemptive strike against an incipient social revolution that was not to be. For years, that counteroffensive has undermined the power of unions, eviscerated public services, and reinstated the private family as the welfare provider of last resort while for the most part leaving formal rights intact. In the last decade or so, the counterrevolution has gone into overdrive. Feeding off its own paranoia more than any real threat from the left, it is now seeking to extinguish even the legacy of civil, labor, and sexual rights won in a previous era.
Even more unsettling is the author's conclusion that "By far the most insidious legacy of the neoliberal counterrevolution was its foreclosure of the political imagination". She indicts parties and persons formerly on the Left who bought into ‘third way� deals or ‘anarchist mutual aid� and who helped usher in austerity measures. But for all that she identifies some promising citizen and union initiatives that have nudged back damaging fiscal and monetary policies. Yet countering the counterrevolution will require a great deal more. The author ends her book as follows:
Labor strikes, rent strikes, strategic defaults, urban riots, occupations of public space, and squatting can all have an acute effect on the value of private wealth and the calculation of public spending priorities. The real challenge is coordinating and consolidating such actions at scale such that they enduringly shift the levers of fiscal and monetary action in an egalitarian direction. The left will never be able to afford the revolutionary change it longs for unless some effort is made to collectivize the process of money creation and public spending. How to make such change affordable is the process of revolution itself.
As someone who’s followed, and been partially persuaded by claims that ‘civil society� would save our bacon, I can't just shrug off this book's findings about the setbacks civil society's emancipatory camps have suffered. This passage from the concluding chapter notes some of them.
This was always “a counterrevolution without revolution,� � a preemptive strike against an incipient social revolution that was not to be. For years, that counteroffensive has undermined the power of unions, eviscerated public services, and reinstated the private family as the welfare provider of last resort while for the most part leaving formal rights intact. In the last decade or so, the counterrevolution has gone into overdrive. Feeding off its own paranoia more than any real threat from the left, it is now seeking to extinguish even the legacy of civil, labor, and sexual rights won in a previous era.
Even more unsettling is the author's conclusion that "By far the most insidious legacy of the neoliberal counterrevolution was its foreclosure of the political imagination". She indicts parties and persons formerly on the Left who bought into ‘third way� deals or ‘anarchist mutual aid� and who helped usher in austerity measures. But for all that she identifies some promising citizen and union initiatives that have nudged back damaging fiscal and monetary policies. Yet countering the counterrevolution will require a great deal more. The author ends her book as follows:
Labor strikes, rent strikes, strategic defaults, urban riots, occupations of public space, and squatting can all have an acute effect on the value of private wealth and the calculation of public spending priorities. The real challenge is coordinating and consolidating such actions at scale such that they enduringly shift the levers of fiscal and monetary action in an egalitarian direction. The left will never be able to afford the revolutionary change it longs for unless some effort is made to collectivize the process of money creation and public spending. How to make such change affordable is the process of revolution itself.
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January 4, 2025Cooper positions “the family� as the principal political mediation uniting the new right-wing politics that emerged from the collapse of the New Deal order in the 1970s. Asset inflation transmitted dynastically through family ties replaced wage gains; new political coalitions were created by emphasizing the role of the male breadwinner under siege by welfare provisions; brinkmanship over deficits could impede the legislative process and impose constitutional protections against any future rectification. Heightening the procedural and political defenses of these new gains allowed the extremist religious faction of the Republican party - fanatically devoted to the Christian sanctity of the family as moral and economic bulwark - to play an outsized role in contemporary American politics.
Primarily a fine-grained history of the individuals that structured this new order, most of the more exciting conceptual arguments are implicit and not elaborated independently. The structure of the book tells these narratives separately as well, leaving the reader to weave them together if they want to convert the various threads into a story of “how we got here�.
Primarily a fine-grained history of the individuals that structured this new order, most of the more exciting conceptual arguments are implicit and not elaborated independently. The structure of the book tells these narratives separately as well, leaving the reader to weave them together if they want to convert the various threads into a story of “how we got here�.
October 4, 2024
Wonky but gripping (really) tale of how public finance is used time and again to make the rich richer and to convince the middle class to enthusiastically support the rich as essential services that the middle classes use (public schools, parks, roads) erode. Example, make raising property taxes anathema (which benefits those with the most valuable property) while financing cities etc with user fees, sales taxes, etc. schools crumble when frozen property taxes cannot keep up with increased costs to repair and run schools. Solution? Defund public schools using vouchers for people to attend private schools, which then raise tuition to match the vouchers, keeping riffraff out of the right schools.
March 1, 2025
I gotta leave it at 3. The history portion (~185pgs of the epub dwnld) is very good, filled with interesting details and tracing of the history of neoliberalism. The last 2 chapters are better covered in her other recent study. I would have gave Cooper's book here 4 or maybe even 5 stars but the last end of it is a solid demonstration that she doesn't get it. Books like this confirm my deep pessimism.
January 13, 2025
This is one of the best books—if not the best—I’ve read in 2024. It provides an in-depth dive into the evolution of fiscal policy and monetary policy and their socioeconomic impacts, with a particular focus on fiscal policy.
The book serves as a great antidote to ‘vulgar� analyses that overtly rely on abstract categories like labour and capital, without delving deeper into their complexities, and whose chain of causality always falls back into simplistic notions of 'material interests'. Melinda Cooper offers a concrete level of analysis, demonstrating how different categories like labour or capital are heterogeneous and malleable, shaped not just by class or economic material interests but also by factors like race and gender. One compelling example is her examination of how alliances between different constituencies change through time, as when in the 1970s-80s the petty bourgeoisie allied with private sector employees against feminised and racialised public sector employees.
I particularly enjoyed the last chapter, which explores the relationships between abortion, religion, and fiscal policy. Cooper details how the topic of abortion was able to unite previously disparate right-wing constituencies—Catholics, Protestants, and libertarians—under the same banner, following very astute coalition building efforts. Libertarians, who may not have been particularly invested in the abortion debate itself, strategically leveraged this contentious issue to advance their economic agenda. This agenda, which may not have gained much traction on its own, was brought forward through the emotions and social tensions triggered by abortion.
As a minor critique—or perhaps more of a wish—I would have loved to see more on the centre-left Keynesian side, its coalition building, and its political failures. I guess that would have made the book prohibitively long. In any case, the book is fantastic and serves as a reminder that reductionist, purely economic analysis is insufficient to understand the complexities of our societies.
The book serves as a great antidote to ‘vulgar� analyses that overtly rely on abstract categories like labour and capital, without delving deeper into their complexities, and whose chain of causality always falls back into simplistic notions of 'material interests'. Melinda Cooper offers a concrete level of analysis, demonstrating how different categories like labour or capital are heterogeneous and malleable, shaped not just by class or economic material interests but also by factors like race and gender. One compelling example is her examination of how alliances between different constituencies change through time, as when in the 1970s-80s the petty bourgeoisie allied with private sector employees against feminised and racialised public sector employees.
I particularly enjoyed the last chapter, which explores the relationships between abortion, religion, and fiscal policy. Cooper details how the topic of abortion was able to unite previously disparate right-wing constituencies—Catholics, Protestants, and libertarians—under the same banner, following very astute coalition building efforts. Libertarians, who may not have been particularly invested in the abortion debate itself, strategically leveraged this contentious issue to advance their economic agenda. This agenda, which may not have gained much traction on its own, was brought forward through the emotions and social tensions triggered by abortion.
As a minor critique—or perhaps more of a wish—I would have loved to see more on the centre-left Keynesian side, its coalition building, and its political failures. I guess that would have made the book prohibitively long. In any case, the book is fantastic and serves as a reminder that reductionist, purely economic analysis is insufficient to understand the complexities of our societies.
February 19, 2025
I didn't love this as much as Family Values, but the Intro and Conclusion here should be required reading for anyone on the left.
This entire review has been hidden because of spoilers.
February 20, 2025
Without a shred of a doubt the best piece of critical theory/sociology I've read in a long while. Indispensable for any serious engagement with the current political conjecture in the US.
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