The Conceptual Roots of Contemporary Austerity Doctrine

A New Perspective on the British Treasury view.

Abstract

This essay looks at the "Treasury View" as a historically-situated and multifaceted body of knowledge that should be recognized as an important forerunner of contemporary austerity. In order to recognize the affinity with presentday
discourse, it is necessary to overcome the idea of the Treasury view as comprising only the crowding out argument. I interpret the Treasury view as an holistic doctrine, a wholesale ideological vision of how the economy
worked, where economic beliefs intermingled with ethical and political elements. In particular, Treasury officials regarded themselves as incorruptible guardians of technical truth, preferred free markets to state intervention, and
used a return to balanced budgets and the gold standard to impose austerity at a time when the First World War had aroused expectations of social reform. Hence the reconstruction of the conceptual basis of the Treasury view
goes hand in hand with the historical background of the role of the Treasury as a governmental department and ideological tradition. The paper expands upon the underlying assumptions that ground the Treasury's doctrine.
They are identified as: 1) Idealization of the free market 2) Skepticism of the role of the state in economics (retrenchment of the State), in particular the refusal of its social and welfare function, 3) Policy of fiscal and
monetary rigor 4) The virtue of savings. The analysis is conducted by considering the Treasury's archival records of the most important senior officials of the 1920s.