Shutdown by Adam Tooze

 

“This book’s great service is that it challenges us to consider the ways in which our institutions and systems, and the assumptions, positions and divisions that undergird them, leave us ill prepared for the next crisis.”—Robert Rubin, The New York Times Book Review

 

Deftly weaving finance, politics, business, and the global human experience into one tight narrative, a tour-de-force account of 2020, the year that changed everything–from the acclaimed author of Crashed.

 

The shocks of 2020 have been great and small, disrupting the world economy, international relations and the daily lives of virtually everyone on the planet. Never before has the entire world economy contracted by 20 percent in a matter of weeks nor in the historic record of modern capitalism has there been a moment in which 95 percent of the world’s economies were suffering all at the same time. Across the world hundreds of millions have lost their jobs. And over it all looms the specter of pandemic, and death.

 

Adam Tooze, whose last book was universally lauded for guiding us coherently through the chaos of the 2008 crash, now brings his bravura analytical and narrative skills to a panoramic and synthetic overview of our current crisis. By focusing on finance and business, he sets the pandemic story in a frame that casts a sobering new light on how unprepared the world was to fight the crisis, and how deep the ruptures in our way of living and doing business are. The virus has attacked the economy with as much ferocity as it has our health, and there is no vaccine arriving to address that.

 

Tooze’s special gift is to show how social organization, political interests, and economic policy interact with devastating human consequences, from your local hospital to the World Bank. He moves fluidly from the impact of currency fluctuations to the decimation of institutions–such as health-care systems, schools, and social services–in the name of efficiency. He starkly analyzes what happened when the pandemic collided with domestic politics (China’s party conferences; the American elections), what the unintended consequences of the vaccine race might be, and the role climate change played in the pandemic. Finally, he proves how no unilateral declaration of ‘independence” or isolation can extricate any modern country from the global web of travel, goods, services, and finance.

 

 

Shutdown by Adam Tooze review – how Covid shook the world economy

 

A cosmopolitan analysis of what went wrong and how we can avoid it next time – because there will be a next time

 

Oliver Bullough

@oliverbullough

Fri 10 Sep 2021 06.00 EDT

https://www.theguardian.com/books/2021/sep/10/shutdown-by-adam-tooze-review-how-covid-shook-the-world-economy

 

Everyone has someone who made them feel inadequate in lockdown, whether it was a neighbour who grew tomatoes in their window box, one of those Twitter people who learned three languages between March and May, or just a friend who didn’t feel the need to get drunk every night. For me, that person was Adam Tooze.

 

While I was struggling to teach long division to my kids and begging editors for deadline extensions, he was – seemingly effortlessly – being a voice of sanity on social media; writing an improbable number of lengthy articles about how Covid-19 was rewiring the world economy; coherently explaining the long-term consequences on multiple podcasts; and sending a regular email newsletter, which discussed China, the EU or Vasily Grossman with equal felicity. As if that wasn’t enough, he was also – it turns out – writing a book.

 

Tooze is a professor at Columbia University, and Shutdown: How Covid Shook the World’s Economy is his fourth book. He specialises in analysing how the high-level, seemingly technocratic decisions of central bankers and finance ministries drive history in a way few people understand.

 

His last book, Crashed, analysed the financial crisis and showed how largely overlooked aspects of the response – particularly the “swap lines” between the US Federal Reserve and other central banks – proved crucial to its long-term consequences. That book was published within a decade of the crisis, and at the time seemed daringly contemporary, since few historians will tussle with events so close to the present day. Compared with Shutdown, however, it was ancient history. This book analyses events that were occurring as he wrote about them.

 

Tooze approaches economics from a liberal Keynesian perspective and, as a US-based Briton who grew up in Germany, is proudly cosmopolitan. He does not hide his opinions – not least, about the foolhardiness of Brexit – so he will presumably be accused of the usual things by the usual people, but Shutdown is a seriously impressive book, both endlessly quotable and rigorously analytical. Tooze synthesises a huge volume of information to argue that we must prepare for a new wave of crises or risk being sunk by them. Hopefully, governments everywhere will heed his warning.

 

The core of his analysis is that this is the first crisis of the Anthropocene – the epoch of significant human impact on the planet or, as he calls it, “an era defined by the blowback from our unbalanced relationship to nature”. We have been consuming too recklessly, and eventually the planet was always going to bite back. With Covid-19, the result of humans getting too close to viruses previously safely contained in wild animals, that finally happened. The wonder is only that it took so long. “For the last century we have been riding our luck,” Tooze writes.

 

He tells the story of the crisis chronologically, and roams the world freely as he follows the virus from China to Italy to the United States, picking out examples to reveal how unprecedented its impact has been. Traffic at Heathrow Airport dropped to levels last seen in the 1950s, the US stimulus was the largest ever, economic output dropped more quickly than had ever been recorded.

 

Conservative administrations everywhere were taking radical measures long demanded by politicians of the left

 

The scale of government intervention was so huge that he calls it a revolution, but he also points out that it was a strange one. Conservative administrations everywhere were taking radical measures long demanded by politicians of the left, and were egged on in doing so by the usual guardians of orthodoxy in the World Bank and IMF. But they were doing so not to build a new society, but to preserve the old one. The result is paradoxical: they wanted to support the market, and used the full power of the state to do so; central bankers justified their interventions by the need to maintain the integrity of financial markets, as if that were a more legitimate aim than improving people’s lives.

 

For progressives, this is depressing. The state can still use its powers to do huge things but it can apparently only use them in the service of the powerful and the wealthy. As soon as their crisis is over, those powers will be put back in their box.

 

Tooze insists that this would be a mistake. By virus standards, Covid-19 isn’t that bad, but just look at the damage it’s done. We need to be prepared for the next crisis, because it will be worse. Failing to act will condemn us to more deaths, more shutdowns and more expense, so we need to start preparing now. It is a message encapsulated in a line from John Maynard Keynes, spoken in 1942 in the depths of the last crisis as complete as this one, and which Tooze quotes more than once: “anything we can actually do, we can afford”. There’s something hopeful in that.

 

NONFICTION

Can American Democracy Survive Another Pandemic?

 By Robert E. Rubin

Sept. 2, 2021

https://www.nytimes.com/2021/09/02/books/review/adam-tooze-shutdown.html

 

SHUTDOWN

How Covid Shook the World’s Economy

By Adam Tooze

 

Where there’s a will, there’s a way. But what if our collective will is so divided that we can’t decide which way to go? Or, more to the point, what if we can’t agree on how much to spend, what to spend it on, who should benefit and when to pay for it (on a continuum from now to … never).

 

These are the questions raised — directly and by implication — in Adam Tooze’s engaging account of the twin health and economic crises that enveloped the world in 2020. Tooze leaves the reader with a clear sense of foreboding: about our preparedness for the next crisis, and about its imminence. It’s a warning we should take seriously.

 

Tooze is a historian, and “Shutdown” reads like a history, though, as Tooze notes, we are in the middle of the story. Like any historical narrative, it is abridged. (And there are no unabridged histories, only the historian’s choice as to what events to focus on, in the hope that they reveal the wider landscape and the forces shaping it.) Tooze juxtaposes the patchwork pandemic response of most of the world with China’s coherent but coercive response. Though China’s official reporting deserves skepticism, it seems clear that the United States and China had the two largest responses to Covid, especially in aggregate — the combined public and private response in the United States and the state-sponsored operation in China. The similarities begin and end with scale. China’s response was swift, centralized and severe, in ways a democracy would never — and should never — tolerate. Early mistakes in Hubei Province were met forcefully by Beijing. By Feb. 3, 2020, China was locked down and on its way to effectively containing the virus. In the United States, the previous administration’s response veered from denial to warning to blame-mongering, and back again. The result was a hodgepodge of local lockdowns, conflicting mask guidance, the politicization of scientific advice and an astounding death toll.

 

Tooze’s implication is clear: The West has no systematic ability to prevent or effectively fight large-scale crises. Our political systems are broken by cultural division and, in Tooze’s view, hamstrung by outmoded economic principles. The best we can hope for, he argues, is what we in the United States got: disjointed “subnational” action, crisis management by “ad-hockery.” (Europe, Tooze writes, is even less capable.)

 

On some of these issues, Tooze suggests a point of view, especially his belief that constraints on spending are artificial. He writes that the scale of government spending and central bank intervention in 2020 “confirmed the essential insights of economic doctrines … like Modern Monetary Theory.” He quotes John Maynard Keynes — “Anything we can actually do we can afford” — and concludes, “There is no fundamental macroeconomic limit that anyone can discern.” On this, we disagree. Not with the scale of coronavirus response (or the potential scale of future crisis responses), but with the notion that it forever obviates the need for responsible fiscal policy. You don’t have to know where the limit is to believe it’s highly likely there is one.

 

But resolving policy debates is not Tooze’s aim. Rather, he largely allows the facts to put the questions he raises into sharp relief. To whose benefit do we mobilize the machinery of the state? Who is left behind? Do those choices contribute to the fracturing of our politics? Was 2020 “the death of the orthodoxy that had prevailed in economic policy since the 1980s?” Can the democratic, decentralized vision of the West ultimately triumph against China’s “ruthlessly effective regime?” Can American democracy survive, and American government function, in our “disarticulated state”?

 

And, most urgently, what happens next time? Whether another pandemic, or another deadly wave of this one; nuclear proliferation from rogue states or nonstate actors; extreme weather or simply the irreversible, existential threat of climate change, the next crisis gets closer every day. As Tooze writes, “It was those who have for decades warned of systemic megarisks who have been crushingly vindicated.” The first of these questions — why do we intervene and for whom? — is perhaps the most important. When the pandemic threatened economic damage so broad that the global financial system itself was imperiled, it was (comparatively) easy to mobilize Western governments to respond with economic policy that was equally broad. The bipartisan CARES Act and its progeny were breathtaking in scope and a dearth of conditions. In Europe, the usual rules on state-funded support were likewise suspended.

 

At the same time, the exception proves the rule. It took an overwhelming threat to the institutions at the core of our financial system to produce the first meaningful relief in decades for those living in poverty. The coronavirus was “wartime,” and it remains impossible to imagine similar peacetime spending to combat the entrenched inequality that so threatens our country’s future — and, as Tooze underscores, enormously compounded the pandemic’s risks to the least fortunate. The question of who benefits, and whom we want to benefit, is a critical question that I believe should underlie all policy issues. Tooze suggests that it is often ignored because America’s policy debates are constrained by inherited orthodoxy. This is core to his implied criticism of traditional concerns about fiscal largess and it connects directly to our political paralysis.

 

Such a concern is surely correct — even if some readers may disagree on the specifics — but this book’s great service is that it challenges us to consider the ways in which our institutions and systems, and the assumptions, positions and divisions that undergird them, leave us ill prepared for the next crisis. You don’t need to believe that a never-ending cycle of deficit-funded spending, offset by monetary intervention, is sustainable in order to believe that the scale of spending generally contemplated to deal with an existential threat like climate change, or a societal threat like poverty, is woefully inadequate. You can just believe we need to pay for it.

 

On the book’s final page, Tooze offers this understated observation about the cohesion of thinking at the heart of China’s institutions: “The intellectuals of the Chinese regime are loyal to their party’s political project.” (This reads a bit like praise, and “Shutdown” does gloss over the dangerous underside of Beijing’s authoritarian regime.)

 

Of course, there is no such cohesion of thinking in the United States, or anywhere in the West. Pluralism, for all its messiness, is one of democracy’s great strengths. But we have entered a state of dangerous incoherence: The separate understandings of our world and its risks have become so divergent and so entrenched that they pose their own existential threat by impeding our ability to plan for, prevent and react to the crises to come.

 

Whether we can overcome that incoherence and meet the challenges ahead while protecting the values at the heart of the American idea — freedom, pluralism, democracy — is the essential question posed by “Shutdown.” How we answer it is the dispositive issue of our time.

 

Robert E. Rubin, co-chairman emeritus of the Council on Foreign Relations, was Treasury secretary from 1995 to 1999.