Introduction

Mark Blyth has provided a very useful, concise and succinct analyses of the history of austerity. Focusing on philosophers John Locke and David Hume and economist Adam Smith, he begins with its classical origins in the 17th century. Blyth sums up his discussion of the three by noting that none of them make an argument for austerity: Locke sets up liberalism to limit the power of the state at all costs; Hume sees no point in the state because the merchant class is the productive class to whom the money should flow; and Smith sees a role for the state but struggles to find it. In so doing, with their pathological fear of government debt, and the pre-condition of ‘parsimony, frugality, morality’, they produced austerity by default.

Liberal economists built on the work of Locke, Hume and Smith in the 19th century. David Ricardo was on the side of ‘can't live with the state’ and instead favoured a highly competitive economy of small firms producing a very low average rate of profit. The state should police private property but not attempt to redistribute it. In Ricardo's words, even if ‘the condition of the laborers is most wretched’, the state should take no action to compensate them. John Stuart Mill, on the other hand, tried, in his On Liberty, to find a middle road between the claims of the masses and the protection of individual rights, and his Principles of Political Economy spelt out what he thought was legitimate state activity.