To grasp the pandemic, just follow the money
Possible analogies for the world economy during the pandemic: a stewpot turned food desiccator; a practice run for climate change; and my favourite, a rescue dog the pound won’t take back. It bites. It’s yours.
Why and how did the pandemic do this? Because the built world was more fragile than anyone realized. The pandemic has ravaged life not just internationally but separately, and simultaneously. And now it’s all taking place on a shifting sea. It used to be on dry land.
The historian Adam Tooze has always tried to make readers understand the larger forces that shape human lives. As much as people don’t want to admit this, it’s mostly money. The flow of finance that keeps people, systems, nations, and unities of nations afloat has rarely sloshed about so randomly.
Tooze’s new book, “Shutdown: How Covid Shook the World’s Economy,” is a short but essential read. He normally writes cinderblock-sized books on the 2008 crash, the Nazi economy and the post-1931 world order. Summary is not his style.
But “Shutdown” is still huge in its grasp and depth and his tone is the same as ours: wonderment at how money has shocked us once again.
The world is going through a polycrisis, he writes. “Blitzkrieg Anthropocene,” he called it recently. Climate collapse. Populism. The pandemic. The new downsides of globalization. The domino effect of supply chain collapse.
Misogyny and racism as a way of life.
This was followed, unusually, by conservative governments and global financial institutions handing out vast sums and the use of public money to fight populism (which may not have worked). Science, which triumphed by producing vaccines fast, was failed by rich nations hoarding those vaccines.
Did COVID damage neo-liberalism, that ubiquitous word that Tooze defines as the drive to “depoliticize, to use markets or the law to avoid” decisions on resource distribution, on who will be poor and who will not? Coronavirus revealed the weakness of institutions and governments and demanded a new social contract. Will it happen? Will it last?
Tooze says governments are spending public money as part of a tacit agreement to fend off the Bernie Sanders of this world, as an argument against socialism. Either way, people out of work in Canada and in other countries are being paid money, handed out with a necessary carelessness, to keep the economy oiled and functioning. It works.
Tooze explains to civilians like you and me how the world economy, the massive wet structure that keeps us at least partly stable, adjusted to the polycrisis. Better than expected, he seems to say.
He describes the world of 2019 as “organized irresponsibility,” given that globalization had made a crisis inevitable. “For the past century, we have been riding our luck,” he writes. The crisis was not Chernobyl-sized, meaning mostly manageable, but Wuhan, which means planetary given China’s mastery of global mercantilism.
Then came the time-wasting and the initial lockdown, followed by free fall, with India’s lockdown, Tooze says, rivalling China’s as the “biggest shock ever suffered by any labour market in history.” Equally, the chaotic capitalism of the U.S. had no real safety net, and little ability to administer change.
The central banks stepped in, buying debt, saving the sliding repo (repurchase) market, shoring up the reputation of U.S. Treasury bonds once considered sacred, pouring out emollient dollars, lowering interest rates (you and your mortgage may have noticed that one) and once again, “doing whatever it takes,” as central banker Mario Draghi said in 2012.
And this is how you kept your house, often your job. This is how people planetwide survived drought, flash flooding, typhoons, hurricanes, locusts, blackouts and massive fires during the pandemic. Britain Brexited at the worst possible time with Boris Johnson in charge, as was its wish. Bye now.
But survival? Tooze leaves the question hanging. Yes, carbon pricing is coming, as is perhaps more corporate taxation, social media regulation and other good things. But the poorer nations were stomped on, meaning more climate migration, meaning a terrible day when the developed world decides who it will sacrifice.
It won’t be us, we all say. We don’t know that. Tooze is explaining the shutdown. The showdown is yet to come.