Crises and Austerity: The Political Economy of Post-Crisis Alternatives in Canada

Abstract

The neoliberal era is increasingly crisis prone but the prospects for crisis-induced paradigm change remain remote. Two crises in particular, the global finance crisis (GFC) and the Covid-19 pandemic, challenged neoliberal fiscal orthodoxy and especially austerity. In 2008, as in 2020, the initial crisis response was one of fiscal stimulus to prevent economic meltdown. In 2010, this was followed by austerity policies attempting to restore neoliberal normality which had been in place since the mid-1990s. Will the same be true in the post-pandemic period? This article contrasts views of resiliency of neoliberal austerity with those who consider current crises might trigger significant policy and even paradigmatic change. We argue that demands for change have encountered an entrenched form of state austerity and concerted effort on the part of political and economic elites to return as soon as possible to neoliberal normality. Though recent crises have presented opportunities for a collapse of austerity policy systems, transformation has been limited by ideational promotion of austerity and institutionalised democratic isolation. Recent crises have been used to re-embed austerity responses as normal, once the immediate crisis is over.