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To contain the fallout, government support for households, businesses, and markets took on dimensions not seen outside wartime. It was not just by far the sharpest economic recession experienced since World War II, it was qualitatively unique.
All those crises had been overcome, but by government spending and central bank interventions that drove a coach and horses through firmly held precepts about “small government” and “independent” central banks. And who benefited? Whereas profits were private, losses were socialized. The crises had been brought on by speculation.
The virus that would by January 2020 be labeled SARS-CoV-2 was not a black swan, a radically unexpected, unlikely event. It was a gray rhino, a risk that has become so taken for granted that it is underestimated.16 As it emerged from the shadows, the gray rhino SARS-CoV-2 had the look about it of a catastrophe foretold.
In the historic record of modern capitalism, there has never been a moment in which close to 95 percent of the world’s economies suffered a simultaneous contraction in per capita GDP, as they did in the first half of 2020.
In the EU, “polycrisis” is a term that has come into use in the last decade. European Commission president Jean-Claude Juncker borrowed the idea from the French theorist of complexity Edgar Morin.25 Juncker used it to capture the convergence between 2010 and 2016 of the eurozone crisis, the conflict in Ukraine, the refugee crisis, Brexit, and the Europe-wide upsurge in nationalist populism.
There have been far more lethal pandemics. What was dramatically new about coronavirus in 2020 was the scale of the response. And that begs a question. As the Financial Times’s chief economic commentator Martin Wolf put it, Why . . . has the economic damage of such a comparatively mild pandemic been so huge? The answer is: because it could be. Prosperous people can easily dispense with a large proportion of their normal daily expenditures, while their governments can support affected people and businesses on a huge scale. . . . The response to the pandemic is a reflection of economic
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The aim of this book is to trace the interaction in the economic sphere between constrained choices being made under conditions of huge uncertainty at different levels all across the world, from main streets to central banks, from families to factories, from favelas to traders hunched frantically over improvised workstations in suburban basements.
The entire experience was an example on the grandest scale of what the German sociologist Ulrich Beck in the 1980s dubbed “risk society.”38 As a result of the development of modern society, we found ourselves collectively haunted by an unseen threat, visible only to science, a risk that remained abstract and immaterial until you fell sick and the unlucky ones found themselves slowly drowning in the fluid accumulating in their lungs.
One way to react to such a situation of risk is to retreat into denial. That may work. It would be naive to imagine otherwise. Many pervasive diseases and social ills, including many that cause loss of life on a large scale, are ignored and naturalized, treated as “facts of life.”
With regard to the largest environmental risks, notably climate change, one might say that our normal mode of operation is denial an...
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Facing up to the pandemic was what the vast majority of people all over the world tried to do. But the problem, as Beck pointed out, is that getting to grips with modern macro risks is easier said than done.40 It requires agreement on what the risk is, which entangles the science in our arguments and taxes the rest of us with the uncertainty of the science.41 It also requires self-reflexive critical engagement with our own behavior and with the social order to which it belongs.
It requires a willingness to contend with political choices, choices about resource distribution and priorities at every level. That runs up against the prevalent desire of the last forty years to avoid precisely that, to depoliticize, to use markets or the law to avoid such decisions.42 This is the basic thrust behind what is known as neoliberalism, or the market revolution—to depoliticize distributional issues, including the very unequal consequences of societal risks, whether those be due to structural change in the global division of labor, environmental damage, or disease.
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Coronavirus glaringly exposed our institutional lack of preparation, what Beck called our “organized irresponsibility.” It revealed the weakness of basic apparatuses of state administration, like up-to-date registers of citizens and government databases. To face the crisis, we needed a society that gave far greater priority to care.
To meet the crisis, very middle-of-the-road politicians ended up doing very radical things. Most of it was improvisation and compromise, but insofar as they managed to put a programmatic gloss on their responses—whether in the form of the EU’s Next Generation program or Biden’s Build Back Better program in 2020—it came from the repertoire of green modernization, sustainable development, and the Green New Deal.
The immediate economic policy response to the coronavirus shock drew directly on the lessons of 2008.
Fiscal policy was even larger and more prompt. Central bank interventions were even more spectacular. If one married the two in one’s mind—fiscal and monetary policy together—it confirmed the essential insights of economic doctrines once advocated by radical Keynesians and made newly fashionable by doctrines like Modern Monetary Theory (MMT).47 State finances are not limited like those of a household. If a monetary sovereign treats the question of how to organize financing as anything more than a technical matter, that is itself a political choice.
As John Maynard Keynes once reminded his readers in the midst of World War II: “Anything we can...
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The real challenge, the truly political question, was to agree what we wanted to do and to figure out how to do it.
It was hard to avoid the sense that a turning point had been reached. Was this, finally, the death of the orthodoxy that had prevailed in economic policy since the 1980s? Was this the death knell of neoliberalism?51 As a coherent ideology of government, perhaps. The idea that the natural envelope of economic activity could be ignored or left to markets to regulate was clearly out of touch with reality. So too was the idea that markets could self-regulate in relation to all conceivable social and economic shocks. Even more urgently than in 2008, survival dictated interventions on a scale last
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The orthodox understanding of economic policy was always unrealistic. As a practice of power, neoliberalism had always been radically pragmatic. Its real history was that of a series of state interventions in the interests of capital accumulation, including the forceful deployment of state violence to bulldoze opposition.52 Whatever the doctrinal twists and turns, the social realities with which the market revolution had been entwined since the 1970s—the entrenched influence of wealth over politics, the law and the media, the disempowerment of workers—all perdured. And what historic force was
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This time, not just individual banks but entire markets were declared too big to fail.56 To break that cycle of crisis and stabilizing and to make economic policy into a true exercise in democratic sovereignty would require root and branch reform. That would require a real power shift, and the odds were stacked against that.
The market revolution of the 1970s was no doubt a revolution in economic ideas, but it was far more than that. The war on inflation waged by Thatcher and Reagan was a comprehensive campaign against a threat of social upheaval, which they saw as coming from without and from within. It had the ferocity that it did because in the 1970s and early 1980s, class conflict in Europe, Asia, and the United States was still framed by the global struggles of decolonization and the Cold War.
What threatened was not the decorous Keynesianism of the postwar era, but something far more radical. Containing that risk required redrawing the boundaries of state and society. In that battle, the most decisive institutional move was to insulate control of money from democratic politics, placing it under the authority of independent central banks.
the battles of the 1970s and 1980s had been won. The threat that haunted Dornbusch’s generation had evaporated. Democracy was no longer the menace that it had been in neoliberalism’s years of struggle. Within the sphere of economic policy, that expressed itself in the startling realization that there was no risk of inflation. For all the centrist hand-wringing about “populism,” class antagonism was enfeebled, wage pressure was minimal, strikes nonexistent.
Over the course of 2020, household net worth in the United States increased by more than $15 trillion. Overwhelmingly that benefited the top 1 percent, who owned almost 40 percent of all stocks.59 The top 10 percent, between them, owned 84 percent.
The year 2020 exposed how dependent economic activity was on the stability of its natural environment. A tiny virus mutation in a microbe could threaten the entire world’s economy. It also exposed how in extremis, the entire monetary and financial system could be directed toward supporting markets and livelihoods, thus forcing the question of who was supported and how. Both shocks tore down partitions that were fundamental to the political economy of the last half century, lines that divided the economy from nature, economics from social policy and from politics per se.
there was a third shift, which in 2020 completed the dissolution of the framing assumptions of the era of neoliberalism: the rise of China.
Resurgent Russia, replenished by global exports of oil and gas, was the first to expose globalization’s geopolitical innocence. Russia’s challenge was limited. China’s was not. The Obama administration made its “pivot to Asia” in 2011.
In 2021 the CCP did something its Soviet counterpart never got to do: it celebrated its centenary. Beijing made no secret of its adherence to an ideological heritage that ran by way of Marx and Engels to Lenin, Stalin, and Mao. Xi Jinping could hardly have been more emphatic about the need to cleave to this tradition and no clearer in his condemnation of Mikhail Gorbachev for losing hold of the Soviet Union’s ideological compass.
There were, however, two spectacular differences dividing old from new. The first was the economy. China was the threat that it was as the result of the greatest economic boom in world history.
The second fundamental novelty was the global environmental problem and the role of economic growth in accelerating it. When global climate politics first emerged in its modern form in the 1990s, it was under the sign of the unipolar moment.
By 2020, China emitted more carbon dioxide than the United States and Europe put together, and the gap was set to widen at least for another decade. One could no more envision a solution to the climate problem without China than one could imagine a response to the risk of emerging infectious diseases. China was the most powerful incubator of both.
the intelligence, security, and judicial branches of the American government declared economic war on China. They deliberately set out to sabotage the development of China’s high-tech sector, the heart of any modern economy.
One of the promises of the 1980s market revolution was that Ronald Reagan’s “morning in America” would heave the country out of its slump, just as Thatcher promised to do for Britain. Donald Trump, the party boy of 1980s Manhattan, was the living embodiment of that new era of swagger. But Trump also personified the ugly truth about that moment, which is that the market revolution left a large part of American society behind.
there are elements on the far right of American politics that can fairly be described as fascistoid.
But two basic elements were missing from the original fascist equation in America in 2020. One is total war. Americans remember the Civil War and imagine future civil wars to come. They have recently engaged in expeditionary wars that have blown back on American society in militarized policing and paramilitary fantasies.75 But total war reconfigures society in quite a different way. It constitutes a mass body, not the individualized commandos of 2020.
The other missing ingredient in the classic fascist equation, which is more central to this book, is social antagonism, a threat, whether imagined or real, to the social and economic status quo.
This alignment of money with democracy in the United States in 2020 should be reassuring, up to a point. But consider for a second an alternative scenario.
Seeing 2020 as a comprehensive crisis of the neoliberal era—with regard to its environmental envelope, its domestic social, economic, and political underpinnings, and the international order—helps us find our historical bearings. Seen in those terms, the coronavirus crisis marks the end of an arc whose origin is to be found in the 1970s. It might also be seen as the first comprehensive crisis of the age of the Anthropocene to come—an era defined by the blowback from our unbalanced relationship to nature.
rather than trying prematurely to sketch the continuities of that half century of history, or attempting to project speculatively into the future, this book stays, as far as possible, in the moment itself. We will work backward and forward as the need for context arises, but the focus will be squarely on the chain of events between the outbreak of the virus in January 2020 and the inauguration of Joe Biden. These tight chronological limits are a deliberate choice. It is a way of making tractable the tension between past and present that defines what it means to write history. It is also a
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I began the year working on a book about the history of energy policy, tracing the political economy of carbon back to the era of the oil crises, mapping a prehistory of the Green New Deal. Like so many others, I had become preoccupied with the Anthropocene, a transformation driven by capitalist economic growth that puts in question the very separation between natural and human history.
A narrative of this kind may be premature, but in projecting an interpretation, making an intellectual wager, right or wrong, you gain something precious: a deeper understanding of what is really entailed by the proposition that every true history is contemporary history.80 Indeed, in light of 2020, Benedetto Croce’s insight takes on a new meaning.
A discussion of the climate crisis—the historical transformation of nature and its implications for our history—written from the safety of an Upper West Side apartment could seem remote. The Anthropocene remained an abstract intellectual proposition. The coronavirus crisis has stripped even the most sheltered of us of that illusion.
One need not sympathize with the politics of the objectors to acknowledge the historical force of their point. In a new and remarkable fashion, a medical challenge became a much wider crisis. Explaining how this might have happened not as the result of effete and overly protective political culture or as the result of a deliberate policy of repression, but as a result of structural tensions within early twenty-first-century societies, will help set the stage for understanding the crisis of 2020.
Seen globally, the story of the last decades is one of considerable advance in reducing death from diseases of poverty—communicable, maternal, neonatal, and nutritional diseases.
In a low-income country like Nigeria, where life expectancy at birth is fifty-five, 68 percent of deaths are due to diseases of poverty. In Germany, where life expectancy is eighty-one, that share is 3.5 percent; in the UK, 6.8. The United States is in-between.
It would be too much to say that these probabilities enjoy general acceptance. They are, on their face, a scandal. They give the lie to any idea that our collective priority is keeping people alive, but as stark as these differences are, the ratios are at least familiar. The probabilities change, but only gradually and generally only in a favorable direction.
Modern science, technology, medicine, and economic development might be giving us greater ability to fight disease, but those same forces were also contributing to the generation of new disease threats.
The emerging infectious diseases paradigm, proposed by scientists from the 1970s onward, was, like the models of climate change and earth systems ecology that emerged at the same moment, a profound critique of our modern way of life, our economy, and the social system built on it.
We were, whether we recognized it or not, involved in an arms race.
