Austerity without deficits: The global political economy of Norway’s fiscal paradox

This article advances a new theoretical understanding of the global political economy of austerity through an examination of austerity policies in Norway, a country with soaring fiscal surpluses. Critical scholarship has analyzed austerity as an incoherent economic idea – a product of unreasonable public accounting, or simply ideological nonsense. No national context seems to confirm such a view more than Norway, where wage growth has been curbed and welfare spending restrained in a context of unprecedented public prosperity. Yet, this article argues that there is a rational core to Norwegian ‘austerity without deficits’, if seen from the vantage point of capital in globally integrated neoliberal capitalism. Examining the development of Norwegian economic policies since the 1970s, we demonstrate how the Norwegian state has imposed austerity measures in order to bolster national capital’s global competitiveness. Disciplining labor and public budgets is, we argue, the cost of doing business in today’s world economy. We call this uneven and combined austerity: combining national economies in a global structure of interlocking dependence, neoliberal austerity imposes limits to popular demands for welfare and better material conditions of living, even in countries where public money abounds.