🌊 Far-right populism and the neoliberal exclusionary state

Across the globe, far-right populism is on the rise. Its exclusionary nationalist nature poses a threat for liberal democracies. Taking Austria as a case study, Valentina Ausserladscheider explains the less obvious ways far-right populist nationalism can become deeply entangled with neoliberal economic policymaking

Far-right populism and neoliberalism

There are several reasons why far-right populism is often understood as a threat for liberal democracies. Some far-right populist actors pursue illiberal policies such as racist segregation, gender-based discrimination, or criminalisation of poverty. We can call these inherently anti-democratic, as Jasper T. Kauth has noted. Such policies can, however, also be presented as a means to reach liberal ends. As Marlene Laruelle writes, they are often adjacent to neoliberal ideologies.

Indeed, commentators have described recent political and economic developments in cases such as Hungary, the USA, and Turkey as a mixture of authoritarianism and neoliberalism. This combination of neoliberal and authoritarian policy positions has been identified as the ‘winning formula’ of far-right populist parties. Opposition to immigration went hand in hand with free-market economics and socio-cultural conservativism.

Austria's far-right populist Freedom Party, founded by ‘former’ Nazis, has been one of the country's dominant political forces for decades. Over the years, it has had an immense impact on economic policymaking

The party's authoritarian nature, however, has been argued to be the major threat to democracy. Observers therefore tend to neglect the effect of far-right populism on economic policymaking. In Austria, the far-right populist Austrian Freedom Party introduced and implemented economic neoliberalism. This exceptional circumstance provides an excellent example for study.

Many countries have experienced the rise of far-right populism only recently. But Austria's Freedom Party has been a dominant political force for decades. The party was founded by ‘former’ Nazis, and its longstanding influence stands as a constant reminder of Austria's intricate relationship with its national-socialist past, and its role in the Third Reich.

Over the years, the party has had an immense impact on Austria's economic policymaking. This impact goes beyond a programmatic mixture of authoritarianism and neoliberalism. It constitutes a specific interrelation between exclusionary nationalism and economic neoliberalism in policymaking.

Making neoliberal ideas a viable policy option

Economic policy changes are much less sudden and all-encompassing than they might appear. Scholars suggest that such changes are gradual and discourse intensive, as political actors convey inevitable, necessary and non-negotiable political and economic imperatives. Long before the full implementation of neoliberal policies, the Austrian Freedom Party introduced neoliberal ideas into Austria's party competition.

As the economic turmoil of the 1970s took its toll, Austria experienced high levels of debt. Deterioration of the economy fuelled scepticism towards the welfare state. The Freedom Party understood how to exploit this window of opportunity. It presented a political programme critical of Austria's branch of Keynesianism, which dominated through the 1970s and early 1980s. The programme advocated for ‘as much freedom as possible with as little state as necessary’.

The adoption of neoliberal ideas allowed the party to divert attention away from its nationalist ideological core. Entering into government made neoliberal ideas a viable policy option

This self-proclaimed ‘liberal direction’ precipitated a pause in the party's historical convictions around nationalism and nativism. The Freedom Party now comprised a ‘liberal’ faction and a ‘nationalist’ one, standing in permanent conflict. In 1983 the Socialists lost their absolute majority. Despite the Freedomites mobilising only 5% of votes, the resigning Socialist leader negotiated a small coalition with the Freedom Party, praising their ‘liberal orientation.’

Adopting neoliberal ideas allowed the party to divert attention from its nationalist ideological core and national-socialist founders in the context of postwar Austria. Neoliberal ideas were thus key to the Freedom Party becoming societally acceptable to the public. Entering office in 1983 for the first time, the Freedom Party brought neoliberal economic ideas into government. In so doing, it made such ideas a viable policy option for Austria's political economy.

Constructing the neoliberal exclusionary state

The party, however, remained deeply committed to its nationalist and nativist ideology. This became clear under the leadership of Jörg Haider. Haider combined neoliberal discourse with a strong nationalist conviction and nativist notion of Austria as part of Germanic culture. He mobilised this strategy at a time of continued economic deterioration. In the 1999 Austrian general election, the party gained 26.9%.

In 2000, the Freedomites entered into office for the second time. This time, they were the coalition partner of the Conservatives, controlling six out of ten ministries. In response, EU member states issued diplomatic sanctions against Austria, calling for a break with any government that included far-right parties. At the time, European leaders condemned the party's xenophobic and racist views.

Despite initial outrage from EU members, the Freedom Party was able to bring about an Austrian neoliberal exclusionary state –⁠ and normalise far-right populism in governments across Europe

The government cut the budget deficit to zero, privatised nationalised companies and pension schemes, and significantly decreased welfare state payments. These neoliberal policies went hand in hand with restrictive immigration rules, strong law and order enforcement, and anti-judiciary procedures. The Austrian neoliberal exclusionary state was born.

We can see the neoliberal exclusionary state as Austria's response to globalisation and Europeanisation. It allowed for Austria's integration into the neoliberal mainstream, but also ensured nationalist exclusivity for what was left of the welfare state. Welfare chauvinism, subsidiarity principles in relation to European integration, and liberalisation of trade and capital flows were a way of organising Austria's international integration.

The Freedom Party's governmental participation and role in constructing Austro-neoliberalism had two effects. Firstly, it mainstreamed far-right policy positions on immigration. Secondly, despite the international outrage, it normalised far-right populism in governments across Europe. Not only were sanctions dropped soon after, but the coalition was internationally praised for making Austria one of Europe's most competitive economies.

Neoliberal exclusion beyond Austria

The case of the Austrian Freedom Party's long-term agency in heralding neoliberal policy change offers new insights into how far-right populism affects economic policymaking. We now see the rise of the far right not just in Austria, but across the globe. In this light, these insights raise important questions about the type of policy change actors such as Donald Trump, Viktor Orbán, or Jair Bolsonaro bring about in the long run.

Valentina Ausserladscheider is author of Constructing a neoliberal exclusionary state: the role of far-right populism in economic policy change in post-war Austria

No.18 in a thread on the 'illiberal wave' 🌊 sweeping world politics

This article presents the views of the author(s) and not necessarily those of the ECPR or the Editors of The Loop.


photograph of Valentina Ausserladscheider
Valentina Ausserladscheider
Postdoctoral Researcher, Department of Economic Sociology, University of Vienna

Valentina is also a research affiliate at the Department of Sociology, University of Cambridge, where she recently completed her PhD investigating the rise of economic nationalist ideas in far-right parties.

Her research focuses on the cultural and political nature of economic ideas.

In particular, Valentina is interested in how cultural values shape economic policy discourse when elite actors legitimise institutional change.

Her research has been published in the Review of International Political Economy and Sociology Compass.

She tweets @V_Apunkt

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