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Austerity as a global prescription and lessons from the neoliberal Baltic experiment

Published online by Cambridge University Press:  01 January 2023

Jeffrey Sommers ,
Charles Woolfson  and
Arunas Juska
Jeffrey Sommers
Affiliation:
University of Wisconsin–Milwaukee, USA
Charles Woolfson*
Affiliation:
Linköping University, Sweden
Arunas Juska
Affiliation:
East Carolina University, USA
*
Charles Woolfson, Institute for Research on Migration, Ethnicity, and Society (REMESO), Linköping University, Norrköping, Östergötland SE-601 74, Sweden. Email: [email protected]
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Abstract

This article analyses the 2008 economic crisis and its outcomes for the Baltic states. It then gives a genealogy of European economic policy responses to the crisis, tracing them from the emerging ‘freshwater’ school of economics (e.g. University of Chicago) that arose in opposition to Keynesian theory. The more immediate cause of the 2008 crisis, long in the making, was its reliance on private debt to sustain economic demand in light of profit-enhancing wage suppression. Following the 2008 financial shock, European Union policymakers crafted policy that placed the burden of adjustment on labour. A programme of austerity was chosen in much of the European Union, at odds with the post-war European ‘social model’. This represented a retreat from the notion of a European project that encouraged liberalisation of economic policy but at the same time could be harmonised with a social dimension to create a distinctive ‘Social Europe’. Nowhere was this austerity more vigorously applied than in the Baltic states. Its effects are examined here, along with lessons to be derived from that experience.

Keywords

P16P46Z18Global financial crisisausteritymigrationneoliberalismBaltic states
Type
Keynote Articles
Information
The Economic and Labour Relations Review , Volume 25 , Issue 3: Special issue - Crisis, Austerity, Neoliberalism and alternatives , September 2014 , pp. 397 - 416
Copyright
© The Author(s) 2014

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