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Counterrevolution: Extravagance and Austerity in Public Finance
A thorough investigation of the current combination of austerity and extravagance that characterizes government spending and central bank monetary policy
At the close of the 1970s, government treasuries and central banks took a vow of perpetual self-restraint. To this day, fiscal authorities fret over soaring public debt burdens, while central bankers wring their hands at the slightest sign of rising wages. As the brief reprieve of coronavirus spending made clear, no departure from government austerity will be tolerated without a corresponding act of penance.
Yet we misunderstand the scope of neoliberal public finance if we assume austerity to be its sole setting. Beyond the zero-sum game of direct claims on state budgets lies a realm of indirect government spending that escapes the naked eye. Capital gains are multiply subsidized by a tax system that reserves its greatest rewards for financial asset holders. And for all its airs of haughty asceticism, the Federal Reserve has become adept at facilitating the inflation of asset values while ruthlessly suppressing wages. Neoliberalism is as extravagant as it is austere, and this paradox needs to be grasped if we are to challenge its core modus operandi.
Melinda Cooper examines the major schools of thought that have shaped neoliberal common sense around public finance. Focusing, in particular, on Virginia school public choice theory and supply-side economics, she shows how these currents produced distinct but ultimately complementary responses to the capitalist crisis of the 1970s. With its intellectual roots in the conservative Southern Democratic tradition, Virginia school public choice theory espoused an austere doctrine of budget balance. The supply-side movement, by contrast, advocated tax cuts without spending restraint and debt issuance without guilt, in an apparent repudiation of austerity. Yet, for all their differences, the two schools converged around the need to rein in the redistributive uses of public spending. Together, they drove a counterrevolution in public finance that deepened the divide between rich and poor and revived the fortunes of dynastic wealth.
Far-reaching as the neoliberal counterrevolution has been, Cooper still identifies a counterfactual history of unrealized possibilities in the capitalist crisis of the 1970s. She concludes by inviting us to rethink the concept of revolution and raises the is another politics of extravagance possible?
At the close of the 1970s, government treasuries and central banks took a vow of perpetual self-restraint. To this day, fiscal authorities fret over soaring public debt burdens, while central bankers wring their hands at the slightest sign of rising wages. As the brief reprieve of coronavirus spending made clear, no departure from government austerity will be tolerated without a corresponding act of penance.
Yet we misunderstand the scope of neoliberal public finance if we assume austerity to be its sole setting. Beyond the zero-sum game of direct claims on state budgets lies a realm of indirect government spending that escapes the naked eye. Capital gains are multiply subsidized by a tax system that reserves its greatest rewards for financial asset holders. And for all its airs of haughty asceticism, the Federal Reserve has become adept at facilitating the inflation of asset values while ruthlessly suppressing wages. Neoliberalism is as extravagant as it is austere, and this paradox needs to be grasped if we are to challenge its core modus operandi.
Melinda Cooper examines the major schools of thought that have shaped neoliberal common sense around public finance. Focusing, in particular, on Virginia school public choice theory and supply-side economics, she shows how these currents produced distinct but ultimately complementary responses to the capitalist crisis of the 1970s. With its intellectual roots in the conservative Southern Democratic tradition, Virginia school public choice theory espoused an austere doctrine of budget balance. The supply-side movement, by contrast, advocated tax cuts without spending restraint and debt issuance without guilt, in an apparent repudiation of austerity. Yet, for all their differences, the two schools converged around the need to rein in the redistributive uses of public spending. Together, they drove a counterrevolution in public finance that deepened the divide between rich and poor and revived the fortunes of dynastic wealth.
Far-reaching as the neoliberal counterrevolution has been, Cooper still identifies a counterfactual history of unrealized possibilities in the capitalist crisis of the 1970s. She concludes by inviting us to rethink the concept of revolution and raises the is another politics of extravagance possible?
568 pages, Hardcover
Published March 26, 2024
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677 people want to read
About the author
Melinda Cooper
23 books28 followersMelinda Cooper is a Senior Research Fellow in the Department of Sociology and Social Policy at the University of Sydney. She is the author of Life as Surplus: Biotechnology and Capitalism in the Neoliberal Era.
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Displaying 1 - 10 of 10 reviews
March 26, 2024
Like Family Values, a book that I think I described as “stunning” on this website when I read it a few years ago, Counterrevolution is a history of the present conjuncture. Here Cooper is concerned with the confluence of the supply-side and “Virginia school” economics of late 20th century austerity in producing the contemporary moment. The scale and scope of analysis here is at times exhilarating. The “extravagance” here, which refers to forms of social life which exist in opposition to and are the targets of racialized and gendered forms of austerity through which class discipline is imposed on the poor and working class, is only explored in the brief conclusion, and I think I would have liked to see that argument get more space, but it doesn’t make this text any less useful as a genealogy of the trajectory from Barry Goldwater and James Buchanan to Trump and Dobbs. The aspect of the analysis which was the least familiar to me, the long history of asset price appreciation in chapter 1, is also I think the most useful part of the text, or was for me, at any rate.
October 5, 2024
Ett oerhört viktigt och grundligt undersökt bidrag till historieskrivningen om nyliberalismen och inte minst till bakgrundsförståelsen av trumpismen; det långsiktiga arbetet med att sammansmälta radikal marknadsfundsfundamentalism med reaktionära religiösa och socialkonservativa strömningar.
October 22, 2025
TLDR: This was a fascinating, long, dense, and interesting book that I have some fundamental issues with. Still, a worthwhile intervention on the history of neoliberalism and the political forces that brought about our modern day!
I got this book on ILL after listening to the two-part 4 hour long interview with the author on The Dig. This book is a very thorough political economic history of the development of various strands of neoliberal political thought, and how they cemented themselves in the 1970s in the U.S. amidst the broader collapse of the Keynesian post-WWII economic order. Cooper focuses on central contradiction the 60s and 70s presented to the post-war consensus - declining rates of profit and wage-push inflation generated by workers from below as Black people and women were pushing themselves increasingly into a rapidly multipolar manufacturing order. The New Deal coalition was under threat, and with it, a series of intellectuals, economists, and politicians saw an opening to undercut the social wage - the various financial supports created by the state like unemployment insurance and food assistance - and instead build an economy that only protected asset value appreciation.
Cooper identifies two core facets of this drive that have previously gone un/underappreciated. The first is what she calls "supply-side populism" - a new political vision that sought to dismantle the political coalition of the New Deal by appealing to private sector blue-collar white men. This required convincing this demographic that their true interests lie not with their fellow unionized workers in the public sector (disproportionately female and people of color), but instead with the interests of the corporate elite. How? By convincing them they did not need a generous social welfare state that provided a stable social wage, but instead, just needed their biggest assets (their homes and their retirement funds) to appreciate over time. This would be the basis of their generational wealth and stability in old age, and it would not require taxation. If anything, taxation is a bad thing - it takes away from their hard earned wealth and gives it to the undeserving poor who do not wish to work for a living and instead want to subsist off of their hard work. Thus, cuts to capital gains tax, various business tax loopholes, and general corporate deregulation are good things - they make assets like homes and stocks appreciate. Additionally, government expenditure funded via taxation is now the enemy, and their workers are now lazy moochers living in largesse off of the "hard earned" capital gains and property taxes these white workers and small business owners pay. This also creates a direct class interest for middle-class white suburbanites to oppose progressive taxation (both as wealth redistribution (when its their wealth being distributed away) and as a vehicle for funding govt).
The second component she discusses is the Virginia public choice school of thought, which anchored a particularly Southern/neo-Confederate elite opposition to government services and resources as an unjust and immoral intervention into the family domain. In this view, the social welfare state is understood as a particular project of racial and gender justice, one that socializes specific components of the economy that were meant to be for the most marginalized. Thus, it is critical to keep public spending down, and to rely on tax cuts as the vehicle to push for spending cuts to the social wage. Budget deficits can be messaged to be the result of "runaway social spending", that must be balanced by brutal austerity that weakens public sector organized labor and increases unemployment, and keeps workers precarious so they do not challenge capital. You then cut taxes, which drive further deficits, and on and on you go. By cutting taxes on the wealthy, you can preserve generational wealth of the ruling elite, as their generational wealth is the most at risk from progressive taxation. This uniquely Southern segregationist elite perspective made its national breakthrough as the civil rights movement shifted the national political coalitions.
Together, these two perspectives were critical to informing the logics of the Federal Reserve under Volcker, the Reagan Administration, the Bush Administration, and the Trump I Administration, and set the terms of debate for the Clinton and Obama Administrations. It's a fascinating perspective that I believe has enormous value for recontextualizing our modern conversations about neoliberalism. The specific dynamics about budgets, taxation, and public sector vs private sector jobs are in particular UNBELIEVABLY essential to understanding the debate in EVERY major city in America. The narrative of the "greedy public sector municipal employee/teacher (Black women) living off the hard working taxpayer (white men who own homes)" is essentially the subtext to every single Chicago Tribune Editorial about city political debates.
So what's my issue with this book? That it fundamentally fails to address a critical issue that it dances around - the politics of public spending, taxation, and the New Deal order are interwoven with the New Jim Crow/prison industrial complex that exploded in this era. As Ruth Wilson Gilmore and other abolitionist geographers have noted, this era of "fiscal austerity" was only an austerity when it came to the social wage. Overall municipal spending increased, and continues to increase - because for every dollar take from the social wage, several dollars were added to carceral/police spending. This also is essential to the political calculus of the supply-side populists and to the Virginia school of thought on government spending. The South trial ran the idea of reconstituting an economy and political hierarchy around incarceration. Police, prison guards, and security services make up a massive political base that reliably vote for conservative politicians. It's not just the tax cuts on the wealthy that create record deficits - it's also the enormous amount of spending on policing and prisons. One of my favorite things I've heard folks on the municipal left say is "either we defund the police, or we let the police defund everything else." Because that's basically what we're up against. And although Cooper touches on the intrinsic racism embedded in the attacks on the social wage, she does not address the carceral/police Keynesianism at all. That is a major oversight of the book, because it would completely strengthen her argument! So basically, read this, and then also go read "Abolition Geography" by Ruth Wilson Gilmore and you'll understand everything you need to know about how municipal politics in America works.
Nevertheless, this is a very well researched and timely work, and I'm grateful to The Dig interview for uplifting this book!
I got this book on ILL after listening to the two-part 4 hour long interview with the author on The Dig. This book is a very thorough political economic history of the development of various strands of neoliberal political thought, and how they cemented themselves in the 1970s in the U.S. amidst the broader collapse of the Keynesian post-WWII economic order. Cooper focuses on central contradiction the 60s and 70s presented to the post-war consensus - declining rates of profit and wage-push inflation generated by workers from below as Black people and women were pushing themselves increasingly into a rapidly multipolar manufacturing order. The New Deal coalition was under threat, and with it, a series of intellectuals, economists, and politicians saw an opening to undercut the social wage - the various financial supports created by the state like unemployment insurance and food assistance - and instead build an economy that only protected asset value appreciation.
Cooper identifies two core facets of this drive that have previously gone un/underappreciated. The first is what she calls "supply-side populism" - a new political vision that sought to dismantle the political coalition of the New Deal by appealing to private sector blue-collar white men. This required convincing this demographic that their true interests lie not with their fellow unionized workers in the public sector (disproportionately female and people of color), but instead with the interests of the corporate elite. How? By convincing them they did not need a generous social welfare state that provided a stable social wage, but instead, just needed their biggest assets (their homes and their retirement funds) to appreciate over time. This would be the basis of their generational wealth and stability in old age, and it would not require taxation. If anything, taxation is a bad thing - it takes away from their hard earned wealth and gives it to the undeserving poor who do not wish to work for a living and instead want to subsist off of their hard work. Thus, cuts to capital gains tax, various business tax loopholes, and general corporate deregulation are good things - they make assets like homes and stocks appreciate. Additionally, government expenditure funded via taxation is now the enemy, and their workers are now lazy moochers living in largesse off of the "hard earned" capital gains and property taxes these white workers and small business owners pay. This also creates a direct class interest for middle-class white suburbanites to oppose progressive taxation (both as wealth redistribution (when its their wealth being distributed away) and as a vehicle for funding govt).
The second component she discusses is the Virginia public choice school of thought, which anchored a particularly Southern/neo-Confederate elite opposition to government services and resources as an unjust and immoral intervention into the family domain. In this view, the social welfare state is understood as a particular project of racial and gender justice, one that socializes specific components of the economy that were meant to be for the most marginalized. Thus, it is critical to keep public spending down, and to rely on tax cuts as the vehicle to push for spending cuts to the social wage. Budget deficits can be messaged to be the result of "runaway social spending", that must be balanced by brutal austerity that weakens public sector organized labor and increases unemployment, and keeps workers precarious so they do not challenge capital. You then cut taxes, which drive further deficits, and on and on you go. By cutting taxes on the wealthy, you can preserve generational wealth of the ruling elite, as their generational wealth is the most at risk from progressive taxation. This uniquely Southern segregationist elite perspective made its national breakthrough as the civil rights movement shifted the national political coalitions.
Together, these two perspectives were critical to informing the logics of the Federal Reserve under Volcker, the Reagan Administration, the Bush Administration, and the Trump I Administration, and set the terms of debate for the Clinton and Obama Administrations. It's a fascinating perspective that I believe has enormous value for recontextualizing our modern conversations about neoliberalism. The specific dynamics about budgets, taxation, and public sector vs private sector jobs are in particular UNBELIEVABLY essential to understanding the debate in EVERY major city in America. The narrative of the "greedy public sector municipal employee/teacher (Black women) living off the hard working taxpayer (white men who own homes)" is essentially the subtext to every single Chicago Tribune Editorial about city political debates.
So what's my issue with this book? That it fundamentally fails to address a critical issue that it dances around - the politics of public spending, taxation, and the New Deal order are interwoven with the New Jim Crow/prison industrial complex that exploded in this era. As Ruth Wilson Gilmore and other abolitionist geographers have noted, this era of "fiscal austerity" was only an austerity when it came to the social wage. Overall municipal spending increased, and continues to increase - because for every dollar take from the social wage, several dollars were added to carceral/police spending. This also is essential to the political calculus of the supply-side populists and to the Virginia school of thought on government spending. The South trial ran the idea of reconstituting an economy and political hierarchy around incarceration. Police, prison guards, and security services make up a massive political base that reliably vote for conservative politicians. It's not just the tax cuts on the wealthy that create record deficits - it's also the enormous amount of spending on policing and prisons. One of my favorite things I've heard folks on the municipal left say is "either we defund the police, or we let the police defund everything else." Because that's basically what we're up against. And although Cooper touches on the intrinsic racism embedded in the attacks on the social wage, she does not address the carceral/police Keynesianism at all. That is a major oversight of the book, because it would completely strengthen her argument! So basically, read this, and then also go read "Abolition Geography" by Ruth Wilson Gilmore and you'll understand everything you need to know about how municipal politics in America works.
Nevertheless, this is a very well researched and timely work, and I'm grateful to The Dig interview for uplifting this book!
July 22, 2024
This book sizes up the ‘politics of money’ in today’s USA. It analyses how, since the late 1970s, the movement of the price of assets (rents, interest, intellectual property royalties, capital gains, etc) overtook profits as main determinants of income and wealth shares – a counter-revolution sometimes called ‘financialization’. The author names the names, dissects the public-private alliances and chronicles in extensive and copiously footnoted detail specific counter-revolutionary monetary and fiscal offensives, both strategic and tactical. These range from vigorous ‘tax revolts’, public debt ceiling campaigns and welfare rollbacks led from the Right, but routinely supported by erstwhile social democrats like the Clintons.
As someone who’s followed, and been partially persuaded by claims that ‘civil society’ would save our bacon, I can't just shrug off this book's findings about the setbacks civil society's emancipatory camps have suffered. This passage from the concluding chapter notes some of them.
This was always “a counterrevolution without revolution,” … a preemptive strike against an incipient social revolution that was not to be. For years, that counteroffensive has undermined the power of unions, eviscerated public services, and reinstated the private family as the welfare provider of last resort while for the most part leaving formal rights intact. In the last decade or so, the counterrevolution has gone into overdrive. Feeding off its own paranoia more than any real threat from the left, it is now seeking to extinguish even the legacy of civil, labor, and sexual rights won in a previous era.
Even more unsettling is the author's conclusion that "By far the most insidious legacy of the neoliberal counterrevolution was its foreclosure of the political imagination". She indicts parties and persons formerly on the Left who bought into ‘third way’ deals or ‘anarchist mutual aid’ and who helped usher in austerity measures. But for all that she identifies some promising citizen and union initiatives that have nudged back damaging fiscal and monetary policies. Yet countering the counterrevolution will require a great deal more. The author ends her book as follows:
Labor strikes, rent strikes, strategic defaults, urban riots, occupations of public space, and squatting can all have an acute effect on the value of private wealth and the calculation of public spending priorities. The real challenge is coordinating and consolidating such actions at scale such that they enduringly shift the levers of fiscal and monetary action in an egalitarian direction. The left will never be able to afford the revolutionary change it longs for unless some effort is made to collectivize the process of money creation and public spending. How to make such change affordable is the process of revolution itself.
As someone who’s followed, and been partially persuaded by claims that ‘civil society’ would save our bacon, I can't just shrug off this book's findings about the setbacks civil society's emancipatory camps have suffered. This passage from the concluding chapter notes some of them.
This was always “a counterrevolution without revolution,” … a preemptive strike against an incipient social revolution that was not to be. For years, that counteroffensive has undermined the power of unions, eviscerated public services, and reinstated the private family as the welfare provider of last resort while for the most part leaving formal rights intact. In the last decade or so, the counterrevolution has gone into overdrive. Feeding off its own paranoia more than any real threat from the left, it is now seeking to extinguish even the legacy of civil, labor, and sexual rights won in a previous era.
Even more unsettling is the author's conclusion that "By far the most insidious legacy of the neoliberal counterrevolution was its foreclosure of the political imagination". She indicts parties and persons formerly on the Left who bought into ‘third way’ deals or ‘anarchist mutual aid’ and who helped usher in austerity measures. But for all that she identifies some promising citizen and union initiatives that have nudged back damaging fiscal and monetary policies. Yet countering the counterrevolution will require a great deal more. The author ends her book as follows:
Labor strikes, rent strikes, strategic defaults, urban riots, occupations of public space, and squatting can all have an acute effect on the value of private wealth and the calculation of public spending priorities. The real challenge is coordinating and consolidating such actions at scale such that they enduringly shift the levers of fiscal and monetary action in an egalitarian direction. The left will never be able to afford the revolutionary change it longs for unless some effort is made to collectivize the process of money creation and public spending. How to make such change affordable is the process of revolution itself.
Read
January 4, 2025Cooper positions “the family” as the principal political mediation uniting the new right-wing politics that emerged from the collapse of the New Deal order in the 1970s. Asset inflation transmitted dynastically through family ties replaced wage gains; new political coalitions were created by emphasizing the role of the male breadwinner under siege by welfare provisions; brinkmanship over deficits could impede the legislative process and impose constitutional protections against any future rectification. Heightening the procedural and political defenses of these new gains allowed the extremist religious faction of the Republican party - fanatically devoted to the Christian sanctity of the family as moral and economic bulwark - to play an outsized role in contemporary American politics.
Primarily a fine-grained history of the individuals that structured this new order, most of the more exciting conceptual arguments are implicit and not elaborated independently. The structure of the book tells these narratives separately as well, leaving the reader to weave them together if they want to convert the various threads into a story of “how we got here”.
Primarily a fine-grained history of the individuals that structured this new order, most of the more exciting conceptual arguments are implicit and not elaborated independently. The structure of the book tells these narratives separately as well, leaving the reader to weave them together if they want to convert the various threads into a story of “how we got here”.
October 4, 2024
Wonky but gripping (really) tale of how public finance is used time and again to make the rich richer and to convince the middle class to enthusiastically support the rich as essential services that the middle classes use (public schools, parks, roads) erode. Example, make raising property taxes anathema (which benefits those with the most valuable property) while financing cities etc with user fees, sales taxes, etc. schools crumble when frozen property taxes cannot keep up with increased costs to repair and run schools. Solution? Defund public schools using vouchers for people to attend private schools, which then raise tuition to match the vouchers, keeping riffraff out of the right schools.
March 1, 2025
I gotta leave it at 3. The history portion (~185pgs of the epub dwnld) is very good, filled with interesting details and tracing of the history of neoliberalism. The last 2 chapters are better covered in her other recent study. I would have gave Cooper's book here 4 or maybe even 5 stars but the last end of it is a solid demonstration that she doesn't get it. Books like this confirm my deep pessimism.
January 13, 2025
This is one of the best books—if not the best—I’ve read in 2024. It provides an in-depth dive into the evolution of fiscal policy and monetary policy and their socioeconomic impacts, with a particular focus on fiscal policy.
The book serves as a great antidote to ‘vulgar’ analyses that overtly rely on abstract categories like labour and capital, without delving deeper into their complexities, and whose chain of causality always falls back into simplistic notions of 'material interests'. Melinda Cooper offers a concrete level of analysis, demonstrating how different categories like labour or capital are heterogeneous and malleable, shaped not just by class or economic material interests but also by factors like race and gender. One compelling example is her examination of how alliances between different constituencies change through time, as when in the 1970s-80s the petty bourgeoisie allied with private sector employees against feminised and racialised public sector employees.
I particularly enjoyed the last chapter, which explores the relationships between abortion, religion, and fiscal policy. Cooper details how the topic of abortion was able to unite previously disparate right-wing constituencies—Catholics, Protestants, and libertarians—under the same banner, following very astute coalition building efforts. Libertarians, who may not have been particularly invested in the abortion debate itself, strategically leveraged this contentious issue to advance their economic agenda. This agenda, which may not have gained much traction on its own, was brought forward through the emotions and social tensions triggered by abortion.
As a minor critique—or perhaps more of a wish—I would have loved to see more on the centre-left Keynesian side, its coalition building, and its political failures. I guess that would have made the book prohibitively long. In any case, the book is fantastic and serves as a reminder that reductionist, purely economic analysis is insufficient to understand the complexities of our societies.
The book serves as a great antidote to ‘vulgar’ analyses that overtly rely on abstract categories like labour and capital, without delving deeper into their complexities, and whose chain of causality always falls back into simplistic notions of 'material interests'. Melinda Cooper offers a concrete level of analysis, demonstrating how different categories like labour or capital are heterogeneous and malleable, shaped not just by class or economic material interests but also by factors like race and gender. One compelling example is her examination of how alliances between different constituencies change through time, as when in the 1970s-80s the petty bourgeoisie allied with private sector employees against feminised and racialised public sector employees.
I particularly enjoyed the last chapter, which explores the relationships between abortion, religion, and fiscal policy. Cooper details how the topic of abortion was able to unite previously disparate right-wing constituencies—Catholics, Protestants, and libertarians—under the same banner, following very astute coalition building efforts. Libertarians, who may not have been particularly invested in the abortion debate itself, strategically leveraged this contentious issue to advance their economic agenda. This agenda, which may not have gained much traction on its own, was brought forward through the emotions and social tensions triggered by abortion.
As a minor critique—or perhaps more of a wish—I would have loved to see more on the centre-left Keynesian side, its coalition building, and its political failures. I guess that would have made the book prohibitively long. In any case, the book is fantastic and serves as a reminder that reductionist, purely economic analysis is insufficient to understand the complexities of our societies.
February 19, 2025
I didn't love this as much as Family Values, but the Intro and Conclusion here should be required reading for anyone on the left.
This entire review has been hidden because of spoilers.
February 20, 2025
Without a shred of a doubt the best piece of critical theory/sociology I've read in a long while. Indispensable for any serious engagement with the current political conjecture in the US.
Displaying 1 - 10 of 10 reviews