Capitalism, Austerity, and Fascism

Abstract There is a strong resonance between events of the inter-war years and today. These include a questioning of laissez-faire capitalism and austerity, and the rise of so-called ‘populist’ parties on both the left and right. Clara Mattei’s (2022) The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism thus makes an interesting contribution, by locating the key argument of her book in the febrile period of European history between the wars. According to Mattei, the First World War disrupted the pre-war capitalist system to such an extent that it created a crisis of capitalism, itself. As a result, following the end of hostilities, there was a conscious effort to restore the pre-war ‘capital order’ by means of a technocratic ‘austerity strategy’, and this was strongly linked to the rise of fascism. We argue that the inter-relationship between capitalism, austerity, and fascism during the 1920s and 1930s was rather more complex, and that to make sense of this, it is necessary to broaden the focus beyond Italy and Great Britain and the international financial conferences at Brussels (1920) and Genoa (1922). Otherwise, we risk misunderstanding and mis-diagnosing our own times, as those inter-war politicians, financiers, and economists discovered to their cost. We therefore also include Germany and the USA and base our analysis on the events of the entire inter-war period.