Debt, Austerity and the Rise of Conservative Nationalism

In the decade since the outbreak of the global financial crisis, European societies have struggled to find answers to two major conflicts: first, how to distribute the costs of the financial crisis, and second, how to reconcile national political and economic preferences with requirements stemming from the international markets, institutions and actors. Two major responses have prevailed. The first attests to the resilience of the pre-crisis neoliberal and pro-integrationist policy consensus. The second answer, promoted by nationalist-conservative forces has emerged as a powerful challenger. This answer pushes for selectively restoring national sovereignty without however breaking with the distributional priorities of neoliberalism. In contrast, left-wing answers to the crisis that seek to foster social cohesion and push back against markets have been surprisingly weak and unsuccessful. The paper seeks to explain the different capacity of left-wing vs national conservative answers to challenge the pre-crisis neoliberal and integrationist consensus. It argues that for an answer to be successful, it must be both politically and economically viable. Politically, any answer must resonate with public sentiments, and economically, it must garner the support of powerful economic actors, and be reasonably successful in its economic outcomes. Further, political and economic viability is also determined by the constraints stemming from international actors and the international economy. A paired comparison between the crisis response of Hungary’s second Orbán government (2010-2014) and Greece’s Syriza government (2015-2018) will show that these conditions systematically discriminate against left-wing, while rewarding national conservative answers to the crisis.