ABSTRACT
The rise of the consolidation state follows the displacement of the classical tax state, or Steuerstaat (Schumpeter 1991 [1918]), by what I have called the debt state (Streeck 2014a), a process that began in the 1980s in all rich capitalist democracies. Consolidation is the contemporary response to the ‘fiscal crisis of the state’ envisaged as early as the late 1960s (O’Connor 1970a, 1970b, 1973) when postwar growth had come to an end. Both the long-term increase in public debt and the current global attempts to bring it under control were intertwined with the ‘financialization’ of advanced capitalism and its complex functions and dysfunctions (Krippner 2005; Magdoff and Sweezy 1987; Strange 1998; van der Zwaan 2014), which occurred alongside and as part of the neoliberal transformation of the capitalist political economy. As I will show, the ongoing shift towards a consolidation state involves a deep rebuilding of the political institutions of postwar democratic capitalism and its international order, in particular in Europe where consolidation coincides with an unprecedented increase in the scale of political rule under European Monetary Union (EMU) and the transformation of the latter into an asymmetric fiscal stabilization regime.
