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"In 1755, most of Lisbon was destroyed by an earthquake and tsunami, killing as many as 75,000 people. Its economy was devastated, but it was rebuilt along different lines that nurtured its own producers. Thanks to reduced reliance on British exports, Lisbon’s economy was ultimately revitalised.
But the earthquake also exerted a profound philosophical influence, especially on Voltaire and Immanuel Kant. The latter devoured information on the topic that was circulating around the nascent international news media, producing early seismological theories about what had occurred. Foreshadowing the French revolution, this was an event that was perceived to have implications for all humanity; destruction on such a scale shook theological assumptions, heightening the authority of scientific thinking. If God had any plan for the human species, Kant concluded in his later work, it was for us to acquire individual and collective autonomy, via a “universal civic society” based around the exercise of secular reason.
It will take years or decades for the significance of 2020 to be fully understood. But we can be sure that, as an authentically global crisis, it is also a global turning point. There is a great deal of emotional, physical and financial pain in the immediate future. But a crisis of this scale will never be truly resolved until many of the fundamentals of our social and economic life have been remade."
William Davies
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The last
global crisis didn't change the world. But this one could
William
Davies
The
financial meltdown of 2008 failed to provoke a fundamental shift in capitalism.
Will this moment be different?
@davies_will
Tue 24 Mar
2020 06.00 GMTLast modified on Tue 24 Mar 2020 10.27 GMT
‘The spread
of smartphones and the internet has generated a global public.’ People outside
a metro station in New Delhi, 19 March 2020. Photograph: Jewel Samad/AFP via Getty
Images
The term
“crisis” derives from the Greek “krisis”, meaning decision or judgment. From
this, we also get terms such as critic (someone who judges) and critical
condition (a medical state that could go either way). A crisis can conclude
well or badly, but the point is that its outcome is fundamentally uncertain. To
experience a crisis is to inhabit a world that is temporarily up for grabs.
The
severity of our current crisis is indicated by the extreme uncertainty as to
how or when it will end. The modellers at Imperial College – whose calculations
have belatedly shifted the government’s comparatively relaxed approach to
coronavirus – suggest that our only guaranteed exit route from enforced “social
distancing” is a vaccine, which may not be widely available until the summer of
next year. It is hard to imagine a set of policies that could successfully
navigate such a lengthy hiatus, and it would be harder still to implement them.
It is now inevitable that we will experience deep
global recession, a breakdown of labour markets and the evaporation of consumer
spending. The terror that drove government action in the autumn of 2008 was
that money would stop coming out of the cash machines, unless the banking
system was propped up. It turns out that if people stop coming out of their
homes, then the circulation of money grinds to a halt as well. Small businesses
are shedding employees at a frightening speed, while Amazon has advertised for
an additional 100,000 workers in the US. (One of the few, and far from welcome,
continuities from the world we’re leaving behind is the relentless growth of
the platform giants.)
The decade
that shapes our contemporary imagination of crises is the 1970s, which
exemplified the way a historic rupture can set an economy and a society on a
new path. This period marked the collapse of the postwar system of fixed
exchange rates, capital controls and wage policies, which were perceived to
have led to uncontrollable inflation. It also created the conditions in which
the new right of Margaret Thatcher and Ronald Reagan could ride to the rescue,
offering a novel medicine of tax cuts, interest rate hikes and attacks on
organised labour.
The 1970s
inspired a vision of crisis as a wide-ranging shift in ideology, which has
retained its hold over much of the left ever since. The crisis involved a
contradiction that was largely internal to the Keynesian model of capitalism
(wages were being pushed up faster than productivity growth, and destroying
profits), and an overhaul in the dominant style of business: out with rigid
heavy manufacturing, in with flexible production that could respond more nimbly
to consumer tastes.
There was
also an important spatial dimension to the 1970s crisis. Capital abandoned its
iconic industrial strongholds in northern England and the American midwest, and
(with help from the state) headed towards the financial and business districts
of slick global cities, such as London and New York.
For over 40
years after Thatcher first took office, many people on the left have waited
impatiently for a successor to the 1970s, in the hope that a similar
ideological transition might occur in reverse. But despite considerable
upheaval and social pain, the global financial crisis of 2008 failed to provoke
a fundamental shift in policy orthodoxy. In fact, after the initial burst of
public spending that rescued the banks, the free-market Thatcherite worldview became
even more dominant in Britain and the eurozone. The political upheavals of 2016
took aim at the status quo, but with little sense of a coherent alternative to
it. But both these crises now appear as mere forerunners to the big one that
emerged in Wuhan at the close of last year.
There is a grim truth at the centre of the
present crisis that makes it feel closer to a war than a recession
We can
already identify a few ways that 2020 and its aftermath will differ from the
crisis of the 1970s. First, while its transmission has followed the flightpaths
of global capitalism – business travel, tourism, trade – its root cause is
external to the economy. The degree of devastation it will spread is due to
very basic features of global capitalism that almost no economist questions –
high levels of international connectivity and the reliance of most people on
the labour market. These are not features of a particular economic policy
paradigm, in the way that fixed exchange rates and collective bargaining were
fundamental to Keynesianism. They are features of capitalism as such.
Second, the
spatial aspect of this crisis is unlike a typical crisis of capitalism. Save
for whichever bunkers and islands the super-rich are hiding in, this pandemic
does not discriminate on the basis of economic geography. It may end up
devaluing urban centres, as it becomes clear how much “knowledge-based work”
can be done online after all. But while the virus has arrived at different
times in different places, a striking feature of the last few weeks has been
the universality of human behaviours, concerns and fears.
In fact,
the spread of smartphones and the internet has generated a new global public of
a sort we have never witnessed before. Events such as September 11 provided a
glimpse of this, with Nokias around the world vibrating with instructions to
get to a television immediately. But coronavirus is not a spectacle happening
somewhere else: it’s going on outside your window, right now, and in that sense
it meshes perfectly with the age of ubiquitous social media, where every
experience is captured and shared.
The
intensity of this common experience is one grim reason that the present crisis
feels closer to a war than a recession. In the end, government policymakers
will ultimately be judged in terms of how many thousands of people die. Before
that reckoning is reached, there will be horrifying glimpses beneath the
surface of modern civilisation, as health services are overwhelmed and saveable
lives go unsaved. The immediacy of this visceral, mortal threat makes this
moment feel less like 2008 or the 1970s and more like the other iconic crisis
in our collective imagination – 1945. Matters of life and death occasion more
drastic shifts in policy than economic indicators ever can, as witnessed in
Rishi Sunak’s astonishing announcement that the government would cover up to
80% of the salaries of workers if companies kept them on their payroll. Such
unthinkable measures are suddenly possible – and that sense of possibility may
not be easily foreclosed again.
Rather than
view this as a crisis of capitalism, it might better be understood as the sort
of world-making event that allows for new economic and intellectual beginnings.
In 1755,
most of Lisbon was destroyed by an earthquake and tsunami, killing as many as
75,000 people. Its economy was devastated, but it was rebuilt along different
lines that nurtured its own producers. Thanks to reduced reliance on British
exports, Lisbon’s economy was ultimately revitalised.
But the
earthquake also exerted a profound philosophical influence, especially on
Voltaire and Immanuel Kant. The latter devoured information on the topic that
was circulating around the nascent international news media, producing early
seismological theories about what had occurred. Foreshadowing the French
revolution, this was an event that was perceived to have implications for all
humanity; destruction on such a scale shook theological assumptions,
heightening the authority of scientific thinking. If God had any plan for the
human species, Kant concluded in his later work, it was for us to acquire
individual and collective autonomy, via a “universal civic society” based
around the exercise of secular reason.
It will
take years or decades for the significance of 2020 to be fully understood. But
we can be sure that, as an authentically global crisis, it is also a global
turning point. There is a great deal of emotional, physical and financial pain
in the immediate future. But a crisis of this scale will never be truly
resolved until many of the fundamentals of our social and economic life have
been remade.
• William
Davies is a sociologist and political economist. His latest book is Nervous
States: How Feeling Took Over the World
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