The new wartime economy in the era of coronavirus

irksome regulations that were all to no avail if others did not comply. He dismissed the threat to liberty, describing their prescription as the “perfect” vehicle for “social action, where everyone can be protected by making a certain rule of behaviour universal”.

Most comparisons with the present crisis focus on the second world war. But as Mr Weldon points out, this was a conflict for which Britain was relatively well prepared.

“For several years before 1939, everyone could see that a conflict was likely so there was time to prepare,” he says. “Civil servants had spent years working out the lessons of the first war, so when the second came along they had sheaves of plans prepared they could consult.”

The coronavirus crisis is of a different stripe. It is not just that Britain had no detailed contingencies to hand, having largely brushed off warnings about the risks posed by pandemics — unlike some Asian countries that were affected by epidemics such as Sars and swine flu.

What is also striking is the sheer scale of the sudden dislocation, which has provoked antagonism between countries, impeded movement across borders and disrupted trade around the world. In that sense, it bears more resemblance to the first world war, which fell upon the public out of a seemingly clear sky.

Just as in 1914, the biggest immediate casualties have been the financial markets. In his first world war memoirs David Lloyd George, later prime minister but chancellor at the start of the conflict, describes how London’s role as the financier of global trade was shattered in days. Cross-border business cratered, leaving creditors unable to pay their debts and banks loaded with potentially defaulted assets.

The recent shock bears some resemblance to that period. Markets have slumped because of uncertainty about the duration and nature of the disturbance. Will it end quickly? Is it a question of liquidity or is the solvency of participants in doubt?

The aim now for central bankers should be to keep core markets open rather than trying to keep them up by simply buying everything

Paul Tucker

The ultimate response remains uncertain. The world is transfixed by memories of 2008, and the powerful stimuli that were administered to markets in the form of massive asset purchases by central banks. A number of central banks, including the Bank of England, are repeating those measures. But some think the authorities should look more to 1914, where Britain focused simply on keeping markets functioning and not preordaining at what level they should trade.

“In markets, the aim now for central bankers should be to keep core markets open rather than trying to keep them up by simply buying everything,” says Paul Tucker, chair of the Systemic Risk Council and a former deputy governor of the Bank of England.

He argues that the aim should not be to stimulate an economy, which the government is anyway trying to tamp down with its measures to suppress the virus. It should, instead, be to avoid the economy falling into a vortex and for government to ensure that citizens can live decently and businesses are not unnecessarily destroyed.

“If markets cannot function, well then the central bank’s job is to ensure the government is funded. But you shouldn’t start from there. You should try to be a catalyst and not automatically buy something that Larry Fink [chief executive of investment group Blackrock] and others might still buy.”

No one can know how long the coronavirus crisis will last. But one lesson of wartime politics is that governments cannot simply demand endless sacrifice. At some point, politicians must turn their minds towards the pay-off for all that blood, sweat and tears.

If the virus endures, Mr Todman suggests that this might involve some sort of generational compact to benefit the young on whose shoulders much of this inflated national indebtedness will fall. “The obvious thing would be some combination of improved lifestyle, more sustainable employment and the avoidance of climate catastrophe,” he says.

This could even be a political opportunity. It was after all not Churchill but the Labour party under Clement Attlee who seized the possibilities of the 1942 Beveridge Report on social welfare, paving the way for the National Health Service.

“It would be nice to see some ambitious post-pandemic settle