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by
Adam Tooze
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September 19 - October 1, 2021
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.
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.
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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“This is the real first world war. . . . The other world wars were localised in [some] continents with very little participation from other continents . . . but this affects everyone. It is not localised. It is not a war from which you can escape.”34
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.
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.
They were desperate to demonstrate that they were better than the “populists.”
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.
As John Maynard Keynes once reminded his readers in the midst of World War II: “Anything we can actually do we can afford.”48 The real challenge, the truly political question, was to agree what we wanted to do and to figure out how to do it.
The year would witness the head-turning spectacle of the IMF scolding a notionally left-wing Mexican government for failing to run a large enough budget deficit.50
What did the damage was a plague unleashed by heedless global growth and the massive flywheel of financial accumulation.53
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.
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