News - 24.09.2024

Austerity Policy as Political Ideology

VR Symposium on the Development and Impact of Austerity, September 2024

Many attended the VR symposium on austerity in September, where the keynote speaker was Clara Mattei, a professor of economics who has extensively written about the origins and development of austerity from the end of World War I. The symposium was held to mark the centenary since austerity was systematically introduced in Iceland for the first time.. The theme was "Economic Necessity or Political Ideology," and the discussions focused on the effects of this controversial policy both abroad and in Iceland.

The symposium was initiated by the VR Board. Halla Gunnarsdóttir, Vice Chair of VR, who moderated the event, emphasized that one of the major tasks of the labor movement is to hold the government accountable regarding the impact of economic management on workers' conditions. "The economic situation has not improved much since the signing of the last collective agreements," Halla said. "Capital owners are calling for cuts, and the burden is being placed on workers, renters, and debtors as if it were a natural law."

Austerity delivers exactly what it is designed to do, which is to protect capital and preserve the economic environment we live in, at the expense of workers and the general public, said Clara Mattei. She explained that today's situation can be understood by looking at what happened a hundred years ago. Capitalist governments have a tendency toward austerity, and the general population suffers as a result. The way to fight austerity is to understand that it is built into the system. The only thing that can prevent austerity from taking hold is political opposition from society, from labor unions, and from political leaders who can speak out against capitalist austerity. Austerity is a political ideology. See here a video of Clara Mattei’s lecture.

Ásgeir Brynjar Torfason, economist and editor of Vísbending, discussed austerity in Iceland, which was also addressed in a panel discussion. Alongside Ásgeir, panel participants included Sigríður Ingibjörg Ingadóttir, economist at BSRB, Stefán Ólafsson, professor emeritus and expert at Efling, Steinunn Bragadóttir, economist at ASÍ, and Sveinn Máni Jóhannesson, historian. During the panel discussions, it was highlighted that when austerity was first applied in Iceland a hundred years ago, it was, among other things, aimed at curbing the labor movement and the cooperative movement, which had advocated on behalf of the public for healthcare, education, social rights, and infrastructure development.

The manifestation of austerity in Iceland was discussed during the panel, noting how it appears in neglected infrastructure, privatization, high interest rates, and the demand that workers bear the brunt of the economic situation. The rights of property owners to hold capital are prioritized over workers' rights to basic needs. The new system of financing nursing homes was also mentioned as one facet of austerity, where private entities are allowed to rent facilities to the government for nursing homes at "market rates." Attention was also drawn to proposals for increasing the powers of the state mediator, which could erode workers' rights. It was further pointed out that austerity is class-based, benefiting the owning class while workers lose out, and that it also has a gendered impact, with women being required to perform both paid and unpaid work under worse conditions and for lower pay.