A Historian of Economic Crisis on the Fire This Time

Adam Tooze

Economic crises have reshaped the modern world. Economic historian Adam Tooze tells Jacobin how the coronavirus pandemic will upend global politics and commerce for decades to come.

Illustration by Rose Wong

Interview by
Daniel Finn

Adam Tooze is the leading expert on how economic crises have remade the modern world. Here, he tells Jacobin that the COVID-19 pandemic will transform global politics even more than the 2008 financial crash, inaugurating an age of instability.

Daniel Finn

In the run-up to the pandemic, many people were anticipating a rerun of the 2008 financial meltdown based on the same underlying factors. Instead, there was a very different type of crash. You point out in your book Shutdown: How Covid Shook the World’s Economy that the threat of infectious diseases generating a global pandemic had long since been identified by various experts and responsible bodies. What does it tell us about the world system that no effective preemptive action was taken?

Adam Tooze

It has something to do with the nature of the threat. Epidemic disease belongs in the same class as climate change, as a threat that is unconventional. That isn’t to say that it hadn’t saturated the scientific discourse for decades before things got real. But it remains outside the imagination of people who spend their time thinking about financial risks. Right now, we’re going through the process of trying to get financial regulators and central bankers to internalize issues like climate risk within their own system.

Somebody like the sociologist Niklas Luhmann would theorize this by saying that the efficiency of modern systems depends to a considerable extent on their closedness. That’s what enables them to function efficiently. Things must appear within the code of the system to be registered. Once they are, they’re then processed in a hyperefficient way. There’s a sense in which both climate and pandemic risk are just difficult to grasp.

You could be more concrete and say that all the studies about pandemic risk before 2020 tended to assume that it was a risk for poor countries. As Andreas Malm points out in his pamphlet Corona, Climate, Chronic Emergency, the scale of the crisis response has a lot to do with the fact that rich countries needed to save their own. That was part of the shock of 2020: it hit China, then Europe, then the United States, which, between them, account for 60 percent of global GDP, in a matter of a few months.

You can add a third, more banal explanation, which is that a market-based system finds it difficult to internalize an externality like this. It’s an externality not only with regard to the private actors that systematically generate these kinds of risks — property development, urban sprawl, or the agro-industrial food complex — but also from the point of view of nation-states. It’s easy for them to pass this off as somebody else’s problem.

You end up with an agency like the World Health Organization, which is grotesquely underfunded in relation to the needs of the global system. I was staggered to discover that its annual budget is smaller than some hospitals in New York. Of course, they’re doing somewhat different things, but it gives you a sense of the disproportion between highly capitalized private medicine and global public health.

Just think of the examples we’ve had recently. The defining one of the last thirty years has, of course, been the utter passivity and negligence with which the rich countries responded to the HIV/AIDS epidemic in Sub-Saharan Africa, which was just allowed to burn and burn. This ultimately provoked a change of heart and policy over HIV medication, but only after millions of people had died, and in the teeth of legal resistance from the drug companies.

Daniel Finn

There was a prediction in the early stages of the pandemic that it might prove to be China’s equivalent of Chernobyl. Two years later, that has proved to be well wide of the mark: instead of losing popular legitimacy because of its early missteps, the Chinese Communist leadership has actually gained legitimacy through contrast with the record of Western governments. Why do you think China was comparatively successful in dealing with COVID-19?

Adam Tooze

Public health is one of the things that the Chinese Communist regime is committed to. This is one of the great promises it has made to its population ever since the Maoist era. The first World Bank studies of China in the 1980s, as it began to open to Western expertise, dramatically confirmed this: China and India were both extremely poor, but China had achieved health and educational standards that were similar to those of a middle-income country.

Part of that Communist commitment to public health is that they treat epidemic risks very seriously. Although they initially failed to spot the significance of this particular outbreak because of issues with the reporting chain, there was never a moment when it was confused with flu in Beijing.

Identification of the risk, once it was apparent, is the relevant benchmark of comparison. Yes, there is the separate question of why the Chinese reporting system failed. But then, come January 20, 2020, when this issue was finally publicly recognized, what happened next? The response in China was dramatically different from everywhere else. In February, we slept. We should have recognized that if they were shutting Beijing off from Wuhan, then we really needed to consider the position of Tokyo, London, New York, Los Angeles, and all the other big airports that had to be immediately put under a system of intense monitoring.

When Beijing got going, what we saw in action was the consistent pattern of investment over the last ten to fifteen years by the Communist Party of China in the maintenance, expansion, and modernization of its party apparatus across this huge and rapidly transforming society. It was easy to imagine the Communist Party becoming almost obsolete as a result of the huge urbanization and social uplift that has happened in China. But they’ve managed to continuously update the structures of the party and their grip on Chinese society. The fancy new housing estates have Communist Party cells with active members.

This was what really sprang into action at that moment. It’s analogous to various projects and visions for the revivification, energization, and behavioral orientation of local government and public sector management that we’ve seen in the West since the 1990s and 2000s — the effort to develop joined-up approaches to “problem families” as defined by behavioral traits, for instance. That’s the sort of thing the Communist Party in China has been doing on an even larger scale, along with the assiduous development of party structures that enabled them to move.

China is easily portrayed as a vast, homogenous monolith, whereas in fact it’s a huge mass of localisms and particularities, with strong regional dialects and quite a pronounced sense of regional identity. One of the things that helped drive the lockdown was the fact that people from Wuhan and Hubei have rather strong regional accents, so it’s easy to target them for quarantine measures.

Within a couple of weeks in February, Beijing was having to issue antidiscrimination orders against local committees and party organizations across China, which had essentially adopted aggressive purging, monitoring, and surveillance of people that they thought had come from the site of the infection. By the middle of February, the regime was having to counterbalance this flywheel of lockdown it had set in motion.

All that adds up to a very effective mechanism for containing a virus that, in its first variant, was not that infectious. We now realize that you have to be inside breathing on each other. If people are out on the street, they’re not really going to get sick. That first wave of dramatic social distancing was enough to stop this in its tracks by mid-February.

Daniel Finn

In broad terms, how does the immediate global economic impact of 2020 compare with that of 2008?

Adam Tooze

Its initial impact was much more savage, much more dramatic, and much more widespread. The situation in 2008 is best described not as a global financial crisis but as a North Atlantic financial crisis. It wreaked havoc in parts of the North Atlantic economy. What happened in 2020 was something altogether more comprehensive.

Most of the global workforce was disrupted. Unemployment surged in India to over 20 percent, certainly; in China, the numbers are less certain, but given the precarious situation of the huge migrant workforce there, 20 percent is a reasonable estimate for China as well by late February or early March. We never saw anything remotely like that in 2008.

By the second week of April, global GDP is estimated to have fallen by 20 percent. That’s the severest contraction in the history of capitalism. There was nothing like that in 1929 or 1907 or 1893. There really isn’t anything in the history of capitalism to compare to that shock.

But then, what is equally impressive is how rapidly it was unwound — in part because of the nature of the shock, which was a deliberate retreat from work and social contact, one that was voluntary to a considerable extent. Almost all the data, especially for the advanced economies, suggest that it happened before government instructions were issued. It wasn’t voluntary in the sense that everyone had a free choice to retreat to the comfort of their well-appointed homes and take up new hobbies. But people made a constrained choice that this was the safest thing for them to do given their circumstances.

That did bounce back relatively fast. Then, of course, we had the mobilization of the largest single combined fiscal and monetary stimulus we had ever seen, particularly in the United States. On average, it fully replaced household income, especially for those on relatively low incomes. Disposable income went up at a time of a historic labor market shock, because of the huge scale of congressional appropriations.

Both of those things made this incredibly unusual. The United States came out above trend, although the recovery is now proving a little more disappointing than we thought, whereas after 2008, there was an agonizingly protracted recovery process. In a sense, we never got back to the pre-2008 growth trend. But that doesn’t seem to be what we’re experiencing this time.

The experience of low-income and emerging market economies was also somewhat different. After 2008, they were nowhere near as badly impacted as they would be in 2020. Then, they were swept up in China’s continuing boom, which ran all the way through to 2014, sucking the likes of Brazil along with it.

This time around, the low-income and emerging market economies took every bit as severe a hit as the high-income countries, and their recovery so far has been much slower. Although, within the rich countries, income inequality probably decreased last year — it certainly did so in the United States, despite the exorbitant benefits provided to the best-off through monetary stimulus — globally speaking, inequalities have been compounded by this shock.

Daniel Finn

There were a couple of points that I found especially striking from your discussion of the early economic crisis. The first was that by late March, at a time when most people were still reeling from the news of the pandemic, the financial markets had already come to terms with it and were now looking for the most profitable opportunities. You give the example of investors gravitating toward the biggest cruise ship company because they anticipated it was going to be the only one left standing. The second point was that central banks found it easier to justify what they were doing as a way of underpinning even the most speculative forms of private sector activity, rather than to acknowledge that they were supporting governments and states on which the entire social fabric ultimately depends.

Adam Tooze

This huge intervention that the central banks undertook began in earnest in the second full week of March. The financial crisis really began on Monday, March 9. By the middle of that week, the markets were in such turmoil that the central banks, led by the Federal Reserve, began to intervene on a scale we had never seen before. By the end of the month, there were $75 to $80 billion a day in asset purchases by the Fed — that’s a million dollars per second, day in and day out, for weeks on end.

What they were buying in the first instance was US Treasury bills — government debt. The Bank of England was doing the same in the gilt market, and the European Central Bank increasingly was, too. On the face of it, you would say, “This makes sense,” right? If we were in the 1940s, this would be the synthesis we saw between expansive government policy to fight the war and manage its aftermath, and the cooperative central bank that was doing its job in backing government action. Surely nothing further needs to be said.

But central bankers, to this day, will deny that they were doing any such thing. They would say yes, they were buying government debt, and yes, the government was about to embark on a large and generous fiscal policy, which was exactly what was needed at that moment, but no, the two things had noth-ing to do with each other. If you then ask them, “So why were you buying the Treasuries and the gilts?” the answer would be, “Financial stability.” Financial stability is a euphemism for making sure that no private investors, however speculative, suffer such large losses that they could bring the house down.

Who might suffer those losses? In this case, it is hedge funds that engage in quite complicated technical gambles on the movement of government debts. Somebody once said that it’s like a person who makes a living by picking up half-smoked cigarettes in front of a steam roller. The margins are tiny, but if you borrow enough money, you can generate substantial winnings. The problem is, if you bet the wrong way, the entire pyramid of credit threatens to implode. That’s what the central banks were preventing.

The central idea here is something that Daniela Gabor, the great critical macrofinance economist, stresses more clearly than anyone else. Central government debt has three faces. First, it’s a way in which we choose to fund government spending. There are several ways of doing that, and debt is one of them. Second, government debt is something pension funds invest in — long-term investors that need safe assets. But nowadays, and third, government debt is also rocket fuel for short-term financial speculation. One of the themes of Shutdown is to try to disentangle these three functions, two of which you might think of as potentially forming part of progressive politics or fiscal policy, while the third really is not.

What has this got to do with private borrowing and cruise lines? Investors hold government debt as a kind of liquidity piggy bank. It’s how you get cash quickly while earning a little bit of interest as you go along. In the crisis from March 9, 2020, private equities and private debt were selling off hard. Fund managers who handle rich people’s investments faced cash calls, so people were pulling their money out of investment funds.

When that happens, it’s like a bank run, and the investment fund managers need to get to liquidity quickly. If you sold off your investments in shares, it would be a disaster, because you would have taken a huge loss. What people did instead was to sell US Treasuries, and that was what destabilized the Treasury market. When the Fed looked at this, it said to itself, “Okay, there are two ways in which we could stabilize the Treasury market.” One would be to buy the Treasuries, and the other would be to try to stabilize the private asset markets, because that’s where the panic was. They stepped in and stabilized private debt markets as well with unprecedented promises.

At that point, even firms at the sharp end of this crisis, like cruise ship companies, suddenly sensed the possibility of borrowing. Then, of course, the question was what terms they could get and which one of these companies appeared to be the best bet to private investors. Investors gambled on the companies they thought would survive. There was obviously going to be a shock to the system, so it makes sense to pick the companies that would survive the Darwinian weed out. That was what began to happen in March, quite systematically.

I call this a Frankenstein politics. Rather than being a second coming of some sort of 1940s-style or 1950s-style social democratic, big government fiscal machine, this was a weird, hybridized Frankenstein’s monster. You had bits that resembled classic mid-century Keynesian interventionism bolted onto elements that were straight out of the twenty-first-century financialized world we inhabit.

Another example of this is the dudes on Reddit — the investors who took their stimulus checks and stuck them in the stock market, because that was where you could really make big money.

A lot of radical reformers have been calling for ordinary citizens to have central bank accounts. They were basically saying, “Why wait? We can do this for ourselves. You give me a stimulus check, and I know where to put it. I’m not going to be an idiot and go out and spend it on cheap Chinese plastic stuff. I’m going to stick it in the stock market, which you are promising to stimulate on the flip side of this deal, and get rich that way.” They closed the loop.

Daniel Finn

You talk in the book, also with reference to Daniela Gabor, about the “Wall Street Consensus” that she and others have argued is now in place, which ensured there was enough credit available for emerging markets in spite of the crisis. How does that model differ from the old Washington Consensus, and what are its political implications?

Adam Tooze

It’s a subtle modification, and it’s constantly shifting. We see new iterations of it all the time. There’s something called the “Cornwall Consensus,” believe it or not, named after the G7 summit last summer, which has replaced the Washington Consensus. All these concepts are trying to grasp something, which has to do with the global sphere preeminently.

We were just talking about Federal Reserve interventions in American financial markets. The Washington Consensus was a set of prescriptions for the entire globe, for how to regulate the balance of payments and the financial accounts of emerging market economies. I think what Daniela’s concept is supposed to encapsulate is the shift away from a regime that was oriented around disciplining sovereigns to fit within a framework dictated by norms of approved financial conduct and modes of integration with the global economy that were set in Washington. “Washington,” of course, stands for the US Treasury, the US State Department, the International Monetary Fund (IMF), and the World Bank, which are all located in Washington, DC. There has been a shift from that framework to a set of models defined by the interests of the people who are located four hours up the not-very-fast American railway line in Wall Street.

What Wall Street wants is not classic austerity fiscal policy, although that is always assumed. It is mainly interested in the IMF and the World Bank functioning in almost a management-consultant, enabling role to backstop and de-risk borrowing by emerging markets and low-income countries. The shift is away from a world in which the primary aim is to discipline sovereign borrowers — as in the case of Argentina, which is the fossil of the Washington Consensus, still sometimes taking the headlines — and toward a model in which the aim of the game is to organize public support for the de-risking of private lending, on the one hand. And on the other hand, you make sovereigns more resilient, precisely so that they can take on more debt.

That means they need to have large, high-functioning, domestic currency bond markets. You no longer take the foolish risk of borrowing in dollars. You borrow in the local currency instead, and foreign investors then absorb some of the risks of lending in local currency as well. Foreign investors have been willing to do that on quite a large scale, because we’re in a world where interest rates are scarce.

Then the question is, how do you equip the Indonesian central bank and finance ministry with the aptitudes and skill set that will make them into credible managers of a system like that? On the one hand, you might build up substantial foreign exchange reserves to enable you to cushion devaluations. On the other hand, Indonesia adopted a financial regime quite closely aligned with the Maastricht criteria that the Europeans used in 1992 to stabilize progress toward the Eurozone: debt limits, deficit limits, the whole works. That’s a typical example of this Wall Street Consensus model.

The point is to achieve a facilitative working between the big lenders in Wall Street and local governments, with the intermediaries of the IMF and the World Bank bringing them up to speed and enabling them to function as recipients of global capital. Of course, it requires the collaboration of local elites, many of whom are trained in the United States or at European universities. Yet this is no longer the “Chicago Boys” model, it’s a much more broad-gauge merger of emerging market financial elites with their counterparts in the West.

In 2020, where we expected a crisis, it didn’t arise. There has been a public health crisis and a macroeconomic disaster in the emerging market economies, but there hasn’t been a financial market disaster, partly because this system proved resilient. If you read the publications of the IMF or the Bank for International Settlements, they recognize that something like this model has come into being, no longer constrained by the nostrums of the Washington Consensus. It requires countries to carry out quite serious interventions at times to maintain their viability as debtors within this system. They were successful in preventing the eruption of an open financial crisis or a comprehensive debt crisis in 2020.

Daniel Finn

Do you think the choices that were eventually made by European leaders, after a lot of to-ing and fro-ing and brinkmanship, represent a clear and lasting break with the approach that was taken during the Eurozone crisis?

Adam Tooze

It’s too early to say. It’s still up for grabs. There are two views on this in Europe right now. On the one hand, there’s a constituency that thinks a door opened in 2020 for a new model, and they intend to hold that door open.

Then there is a constituency that was sustained by a coalition of so-called frugal states; now that the Free Democrats have claimed the German finance ministry, they will no doubt assert this position. This second constituency argues that the policies adopted during the pandemic were temporary and justified only by the extraordinary situation. The German Supreme Court has anchored that position by saying that the pandemic was the only possible justification for the European Central Bank’s purchase program.

This is something that will be fought out in the politics of Europe starting in 2022, when it’s certainly going to become a hot political issue. It’s difficult to see what the conservative position has to offer as a realistic vision of Europe’s future. If they regard this as merely an extraordinary expedient, what is their vision of how Europe’s strained and lopsided finances are going to be managed? They have avoided facing that question and answering it in a coherent way.

There clearly is a path that would lead from 2020 toward the establishment of a genuine European fiscal capacity, as well as putting the European Central Bank in a position to be a normal central bank. It would be afflicted by all the problems that central banks have in dynamic, unstable capitalist economies, but at least it wouldn’t have to deal with the additional difficulty of the EU’s treaty constraints. These are the stakes in European politics for the next couple of years.

Daniel Finn

There were two extraordinary things about the US political crisis of 2020 as you described it in the book: first, the fact that it was happening at all, with Donald Trump denying the legitimacy of Joe Biden’s election, and second, the thought that the outcome might have been very different if Bernie Sanders had been the one who was running against Trump instead of Biden.

Adam Tooze

I think the first point was baked in; it didn’t take us by surprise. Donald Trump gave ample notice that this was going to happen. It does point to a profound, ongoing crisis of the American constitution, and we’re not out of the woods yet.

The optimistic line is to say that all the powers in the United States, when summoned onto the stage of politics, secured the outcome. One of the astonishing things about 2020 is that they were summoned onto the stage: the law courts, big business, and, as we know now, the military behind the scenes — and not that far behind the scenes, either. We were, after all, in a situation where senior American military commanders were having to say publicly that they did not expect to be involved in the American democratic process. That was a highly significant denial.

The optimistic view is that all this happened but, in the end, there were guardrails, and the establishment enforced them. But this seems to me an entirely inadequate test of the robustness of America’s institutions, because Joe Biden is who he is. He was the most mainline candidate you could possibly have imagined running for the Democratic Party at that moment. It’s very unclear how any of those decisions would have gone if it had been the other way around — if it had been Bernie Sanders.

It’s worth remembering that there’s a structural constraint here. If Sanders had come to the fore in the Democratic primaries, there’s every reason to believe that a billionaire third-party candidate would have run, taking a significant fraction of votes away and making the election almost completely unpredictable. It’s not a matter of contingency that Biden was the candidate. The anchoring veto exercised by great American wealth is that no one like Sanders can really be allowed to run and win, even against Trump.

It exposes the boundaries of democratic politics in the United States. It’s surely likely that big money would have preferred Trump to Sanders, given the choice. That’s not something we can test directly, because it didn’t come to that, but the fact that it didn’t come to that is not accidental.

Daniel Finn

How much has the pandemic sped up the rebalancing of power relations between China and the United States?

Adam Tooze

It did so in some obvious ways: China’s economy grew very fast, and the crisis demonstrated the profound fragilities of America’s domestic polity. But I think the most significant thing by far is that the internal crisis of the late Trump administration spilled over to an external escalation, an escalation of US relations with China. The initiative came from the American side, and it seems to be a ratchet effect. The Democrats have thrown their weight behind the same basic logic of escalation.

This was certainly in the works. It can be traced back to the early stages of the Obama administration, when Barack Obama’s first visit to China in 2009 went badly wrong and tensions escalated from there. The pivot to Asia was announced under Hillary Clinton as secretary of state in 2011, and the American military has clearly been moving toward this, as the wind-down of the global war on terror became evident in 2013 or 2014.

Trump inherited all of that, but there was definitely a torque imparted by the events of 2020. The crisis of domestic political order in the United States spilled over into an escalation of anti-Chinese rhetoric at many different levels. It also, crucially, led to a synthesis of anti-Chinese rhetoric with reactionary and repressive rhetoric directed toward the United States itself. It was directed against Hollywood liberals through a cultural association of anti-racism in the United States with appeasement of the Chinese Communist Party. The attack on liberals and the Left is perhaps not surprising. But the pressure exercised by the Trump administration on American business was more so. Attorney General William Barr made some jaw-dropping threats toward the China business lobby.

We are seeing a profound fissure within the power structure of the United States, between the national security branch and the financial and economic governance apparatus, on the one hand, and very powerful, well-entrenched business and economic interests, on the other, which remain profoundly attached to deepen-ing their relationship with China. The events of 2020 pushed that tension to a new level.

It’s been difficult for the Biden administration to retreat from that, and Beijing has begun to react. While the early initiative lay, broadly speaking, with the United States, it’s clear now that Beijing has taken up the gauntlet. The United States has declared a kind of economic warfare on China through technology sanctions, trying to define redline areas of tech development that China is not to cross. Obviously, this is completely unacceptable to Beijing.

What we’re increasingly seeing now is a move toward the domain of hard power at its most extreme. I wrote a piece at the time of the Afghanistan withdrawal insisting that it in no way indicated a move toward a post-American world, in view of the Pentagon’s budget and its commitment to big-ticket, high-tech, large-scale military options. Joint Chiefs of Staff chairman Mark Milley’s escalation of the rhetoric on nuclear competition has only confirmed that. That is clearly the direction of travel, and it’s very difficult to see how you can square the deep integration of finance and supply chains with a genuine nuclear arms race between China and the United States.

Daniel Finn

You draw some bleak conclusions when you talk about the global vaccination efforts and what they tell us about the wider capacities of the world system. People might be broadly familiar with the inequities of the global vaccine rollout, but it was still quite extraordinary to read that any of the G20 states, with the possible exceptions of South Africa and Argentina, would have been able to borrow enough to cover a global vaccine program at negative interest rates. They could justify that even on the most narrowly cynical and self-interested calculus, yet they chose not to.

Adam Tooze

It’s absolutely staggering, in the face of desperate appeals not only from the United Nations but also from the IMF. It has been the central item on the agenda for the IMF in meeting after meeting over the past year, spelling out what’s at stake: tens of trillions of dollars of global GDP, in exchange for a vaccine program that even the highest estimates suggest will cost a hundred billion dollars. We have the scientific blueprint — we know the vaccine types that will work — and yet it’s not happening.

I have investigative journalist friends who’ve been working on the European side of this who say that it’s the inside power of the pharmaceutical lobby driving this. That doesn’t make it any less staggering to me, because if that’s the case, it’s not so much the tail wagging the dog as the hair on the tail wagging the dog — it’s such a tiny interest. If you break it down to that level, how much could Pfizer or Moderna conceivably have at stake in the intellectual property to do with these vaccines? Maybe $10 billion each, at the very most. You’re talking about a thousandfold disproportion between the $10 billion that could be at stake on the balance sheets of Pfizer and Moderna and the $10 trillion at stake in the global economy.

There’s a great group at Yale Law School that’s been working on health justice. They were originally organized around HIV/AIDS, and now they’ve focused on this issue. They’ve been doing frank interrogation-style meetings with Biden administration officials. The upshot is that apparently no one in the Biden administration is really pushing for it.

If you take the position that, ultimately, there must be some sort of materially motivated lobby or interest group blocking this, the question is: Why isn’t there the political pressure to overcome it? Why have they not simply asked these companies what their price is? Why are we not buying them off, given the general interest in progressing here? I don’t mean by that the general interest of everyone on the planet — I mean the general interest in accumulation of BlackRock, for example, or one of these asset managers that are now dubbed “universal owners.” The question is apparently not being put forth with real force.

It’s a failure with a logic that could be described as systemic in some general sense, but in a way, it takes us back to where we started. It’s not so much a clear clash of interests as a disconnect. It’s not as if there are massive social interests contending here.

Insofar as social interests are concerned, they appear to be relatively trivial in the broader scheme of things — the balance sheets of a few big companies, which happen to have expertise in this specific area. But what’s at stake on the other side is quite literally capital accumulation at the global scale — and, of course, the survival chances of 7.8 billion people — because all it takes is for this thing to mutate two or three times in the wrong direction, and we’re dealing with a completely different kind of threat.

It’s a fundamental puzzle for crisis theory. I’m not convinced that we have very good models for understanding this, any more than we have very good models for understanding a situation in which the entire survival of the world as we know it comes to hinge on the phase III trials being conducted in California by two drug companies, which is how the markets perceived the world in the fall of 2020. It’s an unhinged imbalance between means and ends.

On a broader scale, of course, this confirms any critical theories or assumptions about the profound irrationality, incoherence, and incapacity of the system we inhabit to pursue general interests in the face of a massive crisis. Every crisis theory worth its salt since Karl Marx in the nineteenth century has been saying this. But to actually demonstrate that in practice, in relation to this specific threat, to figure out what the logic is and not simply end up in a sense of bafflement — that’s the challenge we face.

It’s much harder to explain than the climate problem. The difficulty in wrangling capitalist interests to react to climate change is not that difficult to understand, but this is so much more urgent. After all, 20 percent of GDP went missing last spring. You have to go very far out in the climate models to generate scenarios like that. This happened to us last year, and the failure to act determinedly on vaccines exposes us to a repeat of it, not twenty years from now but this winter.

Daniel Finn

That point about the seeming lack of well-defined social interests leads to the final question I wanted to ask. In the conclusion to Shutdown, you make the argument that, putting together all the overlapping crises you’ve anatomized, people in a previous age would be realistically expecting this to give rise to revolution — perhaps not in every country but certainly somewhere. Yet that doesn’t seem to be on the agenda, and in your view, radical reform by forces of the Left is also a long shot for various reasons, so the dominant figures, for the time being, appear to be Bismarckian conservative reformers — politicians or central bankers — who want things to change so they can stay the same. Do you think that project of reform from above, which had its heyday in the mid-twentieth century, can succeed in the absence of organized pressure for reform from below, or even the threat of revolution?

Adam Tooze

This is an absolutely key question. It goes to the heart of ambitious reform programs like the Green New Deal, which has obviously lived, to a considerable extent, off the rich and empowering memory of that moment in the 1930s, ’40s, and ’50s. It’s important to remember how different the balance of class forces was then.

That’s one of the messages of the book: not to mistake the gyrations and extraordinary machinations of the central banking elite in 2020 for a politics like that of the mid-twentieth century. It may have the form, and it may even perform the function of that kind of politics, but it doesn’t have the substance, because the balance of class forces is so different. In fact, the condition of possibility for such dramatic central bank action is precisely their lack of fear. After all, the reason why central banks were made independent and programmed conservatively in the 1980s was because of class contestation and the possibility that inflation could become a runaway process of distributional struggle. That isn’t a risk today, and it sets them free.

Thinking about your question, it’s important to distinguish the claim that change and reform can only happen if they are driven by social forces from the bottom up from the claim that change can only happen if it’s driven by social forces. We need to reckon with the possibility that change can be driven by other kinds of coalitions of social forces. I’m saying this in part under the impression of having read Melinda Cooper’s brilliant essays about the conservative fiscal backlash in the United States during the 1970s. She makes the point that it’s a mistake to think of neoliberalism in the United States at that moment simply as an antidemocratic force, because one of its key mechanisms was mass mobilization of the property-owning middle class, notably in California, where they put through a balanced budget amendment.

That kind of Bismarckian politics is not devoid of the mobilization of social forces. On the contrary, Otto von Bismarck himself felt that he had assembled a class coalition that was quite powerful, which consisted of the peasantry on the one hand and nationalist bourgeois groups on the other, with which he could outflank the left liberals and at the same time contain the Social Democratic Party in the emerging German working class.

The question really — and I take this to be the place where any constructive reformist politics of a centrist variety catches on — is: What is that social coalition? The Biden coalition is college-educated and suburban. What can you do with that? It might not be, by any means, a radical politics. It’s unlikely to be a powerfully redistributive politics.

The question is, in a more open-ended way, given the challenges we face and the technocratic means at our disposal, what combinations can be arranged of various class coalitions and instruments to address the range of problems we face? That’s the space within which we maneuver, rather than a simple choice between above and below, technocracy versus mass movement.

Preeminently in the climate space, that’s the game that’s being played live now in the US Congress. How do you assemble a coalition that works politically, works economically, and delivers the necessary CO2 reductions for something other than an absolutely disastrous scenario?

It doesn’t reduce to that simple question of reform from above versus pressure from below, or reform versus revolutionary threat. The pressure can come from the middle or “sideways” in the social system. And there are political challenges far more realistic than the remote prospect of revolution that can affect real change. Perhaps we can agree that the most urgent question is how to build a social coalition capable of transforming crisis-fighting into a forward-looking reformist politics.