SHUTDOWN: How Covid Shook the World’s Economy by Adam Tooze (2021)
Adam Tooze is possibly the world’s foremost economic historian. He wrote thick, comprehensive books on the Nazi economy (Wages of Destruction), the war debts crisis of the 1920s (The Deluge) and the 2008 financial crisis (Crashed!).
His strengths are his international perspective (he is a British subject, educated in Germany who now teaches at Columbia University) and his deep understanding of high finance and how it affects society, politics and the overall economy.
Shutdown is not like his other books. It’s slim, and it is being published while the pandemic is still going on, not from the perspective of history. This is because he thinks his message is too urgent to wait.
It is that we the public are on the brink of a new era, an era when our worst crises will not be the result of tyranny, corruption and human folly, but blowbacks from our natural environment.
And we are woefully unprepared for this. The coronavirus pandemic had taken 3.2 million lives, including half a million American dead, as of April, when Tooze completed his book. The number is up to 4.5 million now.
The pandemic resulted in tens of trillions of dollars in economic loss. Yet only tens of billions has been spent on vaccine development, and much less than that on getting the vaccine to the public.
COVID-19 was not a black swan, a completely unpredictable event. It was a grey rhino, an event that many predicted, but were ignored. The climate crisis has bred other grey rhinos—devastating fires, floods, droughts and superstorms.
Tooze wrote that the reason we are unprepared is that the neoliberal policies of the past 50 years have stripped the governments of the USA, UK and much of the Western world of the capacity to respond to emergencies.
The neoliberal philosophy is that, in order to maximize efficiency, institutions should spend no more than they absolutely need in order to function. This means that there is no reserve capacity in case of emergencies, and hospital emergency rooms in the USA are overflowing with Covid patients.
What’s needed, he wrote, is something like the Green New Deal supported by Bernie Sanders, Alexandria Ocasio-Cortez and others. Governments must spend whatever is necessary to be prepared for the predictable crises that lie ahead, and do it in a way that creates full employment and puts money in the pockets of working people.
The International Monetary Fund has estimated that a successful global vaccination program would add $7 trillion annually to the world economy by 2014. Tooze said others estimate that such a vaccination program would cost $50 billion to $100 billion. Yet governments of rich countries, which have spent trillions of dollars on economic stimulus programs, say this is unaffordable.
Tooze quoted the great economist John Maynard Keynes: “Anything we can actually do, we can afford.”
That is, if the human and physical resources to accomplish a goal exist, and the political will to accomplish the goal exists, the problem of finance can be solved. People generally understand this in wartime. Why not in peacetime?