Economist Adam Tooze.Supplied
By the time the pandemic hit in the spring of 2020, Adam Tooze writes in his latest book, Shutdown: How Covid Shook the World’s Economy, “it was no longer clear that the great gods of growth were on the side of the West.”
He calls the ensuing turmoil – in the markets and throughout the economy, within households and offices and all over the globe – ”the polycrisis,” an event that has recalibrated the status ladder of global influence. In Prof. Tooze’s mind, the question isn’t when it will end but how we plan to pull out of it, and at what cost and risk. Any exit from COVID-19 will require humility and a rebalancing of power – never the West’s strong suit.
Prof. Tooze was born in London and attended Cambridge University, where he earned a degree in economics in 1989 before moving on to a PhD in history at the London School of Economics. His teaching career – Cambridge, Yale and now New York’s Columbia University, where he directs its European Institute – is as high-flying as his books are varied. That list includes Crashed: How a Decade of Financial Crises Changed the World; The Deluge: The Great War, and the Remaking of the Global Order 1916-1933; and The Wages of Destruction, The Making and the Breaking of Nazi Germany.
Prof. Tooze spoke to Globe and Mail feature writer Ian Brown in January by telephone from northeastern Kentucky.
How has your analysis of the pandemic in your book, Shutdown, held up since you finished writing it last spring?
I think the big surprise for me is that there hasn’t been a sustained push for a global vaccination campaign and a truly dramatic ramping up of vaccine production. At this point, the adjustment of fiscal and monetary policy, the right settings for 2022, depend critically on assumptions we make about the ongoing course of the pandemic. And we’re simply not doing everything we can to reduce that risk. It’s like a trillion-dollar bill lying on the pavement. No one’s picking it up. It’s difficult to see why.
You mean that we’re still scrambling for tests and vaccines.
Precisely. We still don’t seem to be taking this risk seriously, despite the truly epic economic shock that it delivered. If all this was a matter simply of life and death and humanitarian issues, you know, a cynic would shrug and say, “Well, what do you expect? People die.” But that isn’t the situation. This hurts people where it really hurts. It hurts rich people, businesses, powerful people you would expect normally to have a voice. And nevertheless, we have sustained inaction.
Does that make you wonder about our evolutionary opinion of ourselves? Somebody once told me the difference between me and my dog is that my dog doesn’t have much of a prefrontal cortex and can’t plan for the future. But our species, evidenced by the pandemic, doesn’t seem particularly good at that either.
I have a very high opinion of dogs. So I credit them with considerable intelligence. Maybe not for thought in the long run – I mean, time doesn’t seem to be their strong suit. But I’m not generally one for social evolutionary explanations. I don’t think a lack of intelligence is our problem here. It is, however, clearly an absolutely huge problem with social organization and political incentives. It’s something to do with the fact that the nation-state formats our politics in such a way that global issues are difficult to translate back into domestic relevance. Even if we all know perfectly well that until we’re all safe [from the virus], none of us is safe. That, I think, is the fundamental issue: our failure to grasp what globalization implies. And that’s not something we can sensibly attribute to evolution.
Do you think we’re approaching the end of the pandemic?
That’s the optimistic outlook. But of course there’s every reason to fear something else – which is that with huge numbers of people infected, the chances of variants pile up, and at some point one will arrive which is not just infectious, but more lethal. What I find staggering is that we don’t seem to be maximizing our chances of a positive outcome.
You do say we’re better at handling the economic fallout of the pandemic.
That’s true of the economy generally. Europe and the U.S. went through the second wave and didn’t see the same economic consequences they did the first time around.
And you believe the pandemic has exposed a rupture in our faith in government?
Why did a relatively benign attack, by the standards of epidemics, cause such huge damage? It has to do with the destabilization of our assumptions about death – who’s going to die, what level of mortality is acceptable, how we expect that mortality is going to be managed. We trust in governments to shield us from certain sorts of academic risk in modern society. And that trust was quite profoundly shaken at the beginning of 2020. And full confidence is very far from having been restored. This was a relatively mild test of those assumptions and it caused a very dramatic reaction, and not just on the part of government. It was a choice that people made the world over to shield themselves against the disease in various ways. That relationship between us as individuals and families and the government, I think, continues to be profoundly destabilized.
The pandemic has also established the pre-eminence of China.
At least in certain respects, yes. That’s definitely true. On the one hand, after all, it is a failure of Chinese public-health policy that unleashes this on the world. That’s undeniable. I’m by no means a lab-leak theorist. But however you regard the virus as having originated, it’s a China shock. So in that respect, China hangs over us. The pandemic marks the moment, I think, where events in a province of China that we might previously not have thought about dominated world affairs. Their regime also displays the capacity to deal with the crisis on its own terms, which we find very difficult to match. So at that level, yes. In the meantime, of course, a whole bunch of other things have begun to unfold in China, notably within the realm of the economy, which many analysts say indicates that the China bubble may be bursting. But I’m predisposed to think that, yes, the big story of the moment is the ascension of China – or, some would say, the return of China to its rightful place as the largest and most potent civilization and economy and polity in the world. That, after all, was the state of affairs for most of history as we know it.
I was shocked to read in your book that less than a quarter of the trillions spent in the U.S. on pandemic relief went to households.
It’s what sucked me into the entire debate. The plan was part of an ongoing process of figuring out what to do after 2008; this is the third iteration of a systemic crisis the fiscal and monetary authorities have had to respond to. The scale is absolutely awesome. And it confirms, again, the fact that if you are going to do large-scale monetary policy, you end up doing so through financial structures, through the financial markets, from which only a very small minority really significantly benefit. If you’re going to get permission to do large-scale fiscal policy, you are going to have to buy off very powerful interests, because that’s how something like the U.S. CARES Act gets through. And that means that it’s also going to benefit the privileged groups who perhaps don’t need the money as much.
It should be said, though, that the American Rescue Plan – the big stimulus the Democrats in Congress passed in early 2021 – is probably the most populist piece of legislation of that scale that has been passed in the U.S. in decades. That was surprising to the extent to which they really didn’t actually deliver much pork to privileged groups: $1.9-trillion focused overwhelmingly on middle- and low-income Americans.
Incidentally, Europe and the Canada demonstrated a remarkably different model – which is that you effectively used public administration of the labour market to cushion people. That strikes me as an underrated innovation in the history of the welfare state.
You say you’re surprised by the disproportion between the scale of the crisis and the puniness of what we’ve done to resolve it – specifically referring the global vaccine shortage.
It’s a situation where there is such a grotesque disproportion. It’s not even the tail wagging the dog. It’s the hair at the end of the tail wagging the dog. It’s genuinely puzzling. Skeptical left-wing muckraking journalist friends say to me, “Why are you so naive? This is Big Pharma. Big Pharma dictates what it’s willing to do in terms of the vaccine effort, and governments are happy to take what they get. And in any case, the key officials in the government are all suborned and captured by Big Pharma. And that’s why we’re in this situation.” And I accept that up to a certain point.
But then I just want to pose another question: Why isn’t there some other bit of government, some other powerful and imaginative group, who simply say, right, fine, that’s still not acceptable – what is the price that Big Pharma wants to radically expand the vaccine program? How is it not possible for powerful governments in Europe and the United States to haul Pharma in and say, name us a price. If it was $50-billion, it would be a price worth paying. Big Pharma is a big, powerful, vested business interest, but it’s not big in relation to the global economy. So how can such a small, vested interest be capable of derailing such a massive step? That’s a vacuum of power, a failure of authority. It’s a failure to exert the interests of the collectivity.
Of course, cynics will then say, “Well, they’ve taken care of the rich countries, so it’s going to be fine.” But if we get a deadly Omicron variant, it won’t be right. It just seems like implausibly shortsighted logic.
I always think in terms of analogies to the climate zone. [Former Bank of Canada and Bank of England governor] Mark Carney seems like the sort of ultimate enlightened capitalist functionary – not by accident from Canada – who somehow could act as the drummer boy for global capital to get $33-trillion together to deal with climate change. Carney obviously sees his best interest in doing this – because what is his next job? What does he do next? Clearly to him, it makes sense to be the czar of climate finance.
But we don’t have a figure like that with regard to vaccines. There’s a huge opportunity here to literally be the person saving the world from this crisis. And no one is stepping forward. Not in the political realm and not in the business world. Lots of academics have, but we don’t really have heft.
You say the pandemic proves we need a more sustainable and realistic economy that can better respond to crisis. You also ask for a fairer world. But you’re a hard-headed historian, well-known for your lack of sentimentality. Is fairness a realistic ask, given the system we inhabit?
Faced with the obscenity of massive global inequality and huge poverty affecting millions of people, how can one not articulate the desire and aspiration to greater fairness? It’s another one of those [puzzling] questions: Why do we not want to unlock the extraordinary human potential that is lost in all of those people who are struggling with the absolute basics of life? Imagine what we could have if all of those human talents were mobilized in the way the talents of people in the rich world or the emerging market world are. So I think there’s an imperative there.
And also, at some level, a likelihood. The lesson of the last half century is the grotesque imbalance between the First and the Third World. The call for global empowerment, justice, is a realistic demand because the idea that the balance of economic advantage is going to remain as grotesquely unbalanced as it is currently just seems implausible. I have too much respect for the talents and ambitions of people in Nigeria to imagine that the gap between me and the average Nigerian of my age is going to remain as large as it currently is forever. That just seems implausible. Convergence has been the global story, and I would expect it to a degree to go on being so.
It’ll be agonizingly slow. It will come with a huge cost. And one of the questions we now face, of course, is whether the environmental envelope can handle it. We in the North consumed so much of the environmental envelope that all it took was China to add its own weight to the balance for the whole thing to be exploded in the next generation or two. And so the challenge now, simply as an act of realism, is to ask what kind of a world we want for our own old age and for the lives of our children and grandchildren.
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