Disciplinary effects of capital accumulation: Exploring the steering and fiscal capacity of the state in Italy and Spain

Abstract

Calls against austerity have entered the political agenda of very different actors in the political spectrum – from social democratic to right-wing populist parties. In this article, we argue that the main failures in realizing these claims and thus overcoming austerity can hardly be explained only in terms of (lacking) political will. We rather approach this problem complex in the two emblematic cases of Italy and Spain by foregrounding the disciplinary effects of capital accumulation in both the countries through a long-term historical reconstruction of the fiscal and steering capacity of their respective state institutions. Despite key specificities in the respective fragile accumulation regimes, the main findings point to the fact that the structure of accumulation has imposed strong constraints in both Italy and Spain. An unstable and crisis-prone capital accumulation characterized by low productivity, a lack of sectoral diversity, regional fragmentation, as well as high levels of exposure and dependency within variegated capitalism have restricted state capacity – a tendency only ruptured in temporary boom-cycles. This, we argue, entails some major implications, first, to address the present failures of social democratic forces and second, to gauge the concrete transformative potential at the politico-economic level of populist calls for ‘breaking the chains’ of austerity.

The rise of anti-establishment and far-right forces in Italy: Neoliberalisation in a new guise?

“…This reform process and the membership of the Economic and Monetary Union (EMU) ultimately failed to bring about the promised modernisation and economic growth, and were followed instead by a long phase of economic decline characterised by stagnation in real wages, labour productivity, and private and public investments (Storm, 2019). Absent significant productive investments and the ability to devalue the currency, the strategy based on ‘rigorous control of labour costs and equally rigorous control of public finances’ (Caterina and Huke, 2021: 273) seemed to have driven Italian capitalism into an impasse even before the Eurozone crisis. The main features of this structural crisis can be summarised as follows: (1) presence of a ‘chronic shortage’ of internal demand (Storm, 2019); (2) increasing exposure of Italian industry to competition from lower-wage Eastern Asian and Eastern European countries (Celi et al, 2017: 174–179; Storm, 2019); (3) diminished ability of the Italian state to induce changes in the capital accumulation strategy, following long-term austerity, loss of monetary policy autonomy, and privatisations (Caterina and Huke, 2021), a problem compounded by the deflationary bias of the EU/EMU regulatory regime 2 ; (4) perpetuation of the North-South divide and growing difficulty, under the EU fiscal rules, to maintain societal consensus (e.g.…”

“…This prompted the EC to threaten the opening of an excessive deficit procedure, before the government eventually backtracked, lowering the targets to 2.04% for 2019, 1.8% for 2020, and 1.5% for 2021 3 . While the failure to reverse course in fiscal policy reflected contingent financial market pressures (Di Quirico, 2021) and more structural impediments to the ‘steering and fiscal capacity’ of the Italian state (Caterina and Huke, 2021) rather than a simple lack of political will, the chosen path to reduce the initially-planned deficit reveals elements consistent with a neoliberal logic. Indeed, on the one hand, some of the largest savings came from the scaling down of the originally-foreseen public investments and of the RdC, and, on the other hand, the revenue increases were to accrue almost entirely from ‘safeguard clauses’ in the form of future hikes in the rate of VAT (a notoriously socially-regressive tax) (Ufficio Parlamentare Bilancio, 2018: 12).…”