We have created an economy with an extremely high cost-basis, and as a result it is brittle, fragile and vulnerable to cuts as modest as 4%.
In economies dependent on ever-rising consumption, austerity had a negative connotation even before its politically charged meaning commandeered the public debate. When the entire Status Quo depends on discretionary consumption not just for “growth” but for its survival, austerity is welcomed with approximately the same enthusiasm Superman reserves for Kryptonite.
This is of course a contradiction: an economy based not just on consumption of all net income but debt-based consumption is an economy devoid of savings, i.e. capital to invest in productive assets.
An economy without capital is lacking a key component of classic capitalism.
“Austerity” also suggests a preference for simplicity and productive work, another contradiction sociologist Daniel Bell explored in his 1988 book, The Cultural Contradictions of Capitalism: the narcissistic consumption promoted by Neoliberal Capitalism erodes not just the work ethic that powers productive capitalism but also the ethic to save and invest that is the foundation (along with credit and transparent markets) of capitalism.