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Jung & Naiv
Jung & Naiv

#822 - Economist Clara Mattei on the history of austerity politics

April 21, 2026 • 2h 53m

Summary

⏱️ 13 min read

Overview

Professor Clara Mattei, author of 'The Capital Order,' discusses how austerity is not a policy mistake but a necessary tool for capitalism to maintain itself. She traces the historical alliance between liberals and fascists after WWI, explaining how both implemented similar austerity policies to suppress workers' movements and preserve the capitalist order. Mattei argues that mainstream economics deliberately obscures exploitation, and that true democracy is incompatible with capitalism. She advocates for grassroots organizing through assembly-based movements like her Free Free Forum project in Tulsa, Oklahoma.

The Capital Order and Austerity's Role in Capitalism

Mattei introduces her concept of the "capital order" - the political and economic system requiring wage labor and private property. She argues that capitalism systematically produces losers by design, not accident, and that austerity policies are essential tools for maintaining this system. The mainstream economic focus on aggregate growth obscures the fundamental class conflict where workers are structurally exploited while capitalists accumulate wealth. She challenges the notion that capitalism is a natural or optimal system, demonstrating how 12 people own more wealth than 4 billion people while 2 billion face food insecurity.

  • Mainstream economics convinces us the market satisfies our needs, but actually we are instrumental to the market, not the other way around
  • The system requires very coercive economic measures like austerity to maintain wage labor and private property
  • 12 people own more than 4 billion people; 2 billion people go hungry every night
  • Capitalism is doing great for profit margins, but people are struggling to pay bills
  • Economic growth increasingly goes to capital owners rather than workers - a measurable increase in exploitation
" The system is meant to propel the logic of profit, not fulfill the logic of need. So it's not a corruption of capitalism what we're seeing. We're seeing the acceleration of the very logic capitalism is supposed to follow. "
" If you go to work, you will have to work for the bottom line of your corporation that is financing genocide, destruction around the world. So that's the whole point, is that if we have money in our bank accounts and we also make good money, maybe as professionals, we're still losers in the sense that we are giving up our agency for the majority of the day. "

How Mainstream Economics Obscures Exploitation

Mattei traces how neoclassical economics emerged specifically to counter the labor theory of value and disempower workers. After WWI, when capitalism seemed on the verge of collapse, economists deliberately shifted from explaining that workers create value to claiming that virtuous savers and entrepreneurs are the source of wealth. This transformation eliminated the concept of class conflict from economic models, replacing it with harmonious optimization where everyone supposedly receives returns based on their contribution. This ideological shift served to make workers internalize their poverty as personal failure rather than systemic exploitation.

  • Economists at the 1920 Brussels conference developed austerity policies and new theories to save capitalism from revolutionary movements
  • Neoclassical economics replaced labor theory of value with the idea that the entrepreneur/saver creates value through virtuous behavior
  • Mainstream economics abolishes class conflict, presenting instead a harmonious world where everyone is paid their marginal productivity
  • If you have little money under these theories, you think it's your fault rather than systemic exploitation
" The labor theory of value was actually empowering those workers, because it was saying, listen, the value is coming out of you. It's coming out of your unpaid labor. That value is being accumulated at the top and it's being taken away from you. "
" In this world, there is no economic injustice. Economic injustice is stuff for radical crazies that just exaggerate. If you really look seriously, the world is just and fair. And in this way, you have created a subaltern, passive, consenting population. "

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