Governing through Risk: How Neoliberal Discipline Was Reinvented in a Time of Crisis

Istvan Adorjan, University of Chicago

Some of the most interesting recent work on the nexus between states and political economy has focused on how crises should never be "wasted" (Mirowski) or be "capitalized upon" (Krippner). On the basis of my extensive research, I argue that the twin crises of private and public finance in the Euro area (2007-2014) have created an opportunity structure for EU actors to rearticulate an agenda premised on the primacy of market forces, which, however, were in fact performatively co-constituted by the action – and more significantly, apparent inaction – of political actors who presented themselves as incapable of controlling these markets. As soon as the ripples of the global credit crunch and the ensuing recession began to threaten the expected values discounted upon future capital realization, the ‘success stories’ of the Eurozone periphery (Greece, Portugal, Ireland, and then Italy and Spain) were suddenly perceived by markets as sources of systemic risk and uncertainty, bringing the pre-2008 capital inflows to a standstill (or even reversing them). Given the strictly monetarist architecture of the European Monetary Union and the impossibility of exchange rate adjustments, the sole option left for these states was recessionary fiscal austerity (internal deflation). Framing the financial crisis as a crisis of public finances created an opportunity structure for EU leaders to pursue a seemingly counterproductive strategy of intensifying market panic through a series of destabilizing statements and measures, which rendered the public finances of many Euro area states even more vulnerable. These seemingly contradictory signals given by Euro area politicians, I argue, had the performative effect of complementing and enhancing the hypostatized market forces that they ostensibly misunderstood. I will show that these apparently destabilizing policy mistakes create a new, more stable balance of political economic hegemony through the ‘natural’ disciplinary workings of the market.

No extended abstract or paper available

 Presented in Session 162. Fiscal & Monetary Politics