Adam Tooze: Shutdown: How Covid Shook the World's Economy 

City Journal, October 19, 2021

Shutdown, historian Adam Tooze’s new book—which carries the somewhat premature subtitle How Covid Shook the World’s Economy—is billed by its publishers as “a deft synthesis of global finance, politics and business . . . a tour-de-force account of the year that changed everything.” Whether the coronavirus will, when all’s done, have “changed everything” remains to be seen, but Shutdown is well worth reading as an intriguing, thought-provoking study of a period made unique not by a disease—our species has weathered many—but by how we dealt with it.

“Never before,” writes Tooze, “had there been a collective decision, however haphazard and uneven, to shut large parts of the world’s economy down.” He could have taken a more rigorously questioning look at the rights and wrongs of that decision, one of several missteps in the book that range from his cursory examination of the different course adopted by Sweden to his failure to consider whether prolonged shutdowns would have been justifiable had vaccines not been developed so quickly. The vaccine breakthrough casts the draconian measures taken by authorities in a more favorable light than they may deserve. For how much longer would we have had to shelter at home? Years?

But then Shutdown’s author makes no secret of his preference for strong state action. Consider the introductory section, in which Tooze depicts the pandemic as the arguably inevitable, and possibly even terminal, crisis for a neoliberal order for which he has little regard. By “neoliberalism,” Tooze means in part the modest—though that’s not the adjective he would use—turn toward a freer-market approach that, beginning at the end of the 1970s, emerged in reaction to the economic malaise that characterized that decade in which statism had finally run out of steam.

The neoliberal era, such as it was, did not last long enough. Plenty of evidence backs up Tooze’s contention that “a series of deep crises,” beginning with the Asian financial crisis of the late 1990s, “had shaken confidence in market economics,” even if that nervousness reflected the persuasive powers of a left-leaning media more than any serious effort to understand what had happened. In fact, three of those events, the Asian, global, and European financial crises, can trace their origins to attempts to constrain free markets—whether with an ill-judged currency peg, overreaching regulation, or the misguided exercise in central planning represented by the euro.

Tooze appears set on finding a connection between growth, modernity, and the global health emergency. “Economic growth full stop,” and by implication the market-driven nature of that growth, had led to the creation of a dangerous “imbalance between nature and humanity.” The pandemic, he writes, “was the natural ‘blowback’ that environmental campaigners had long warned us about.” Indeed it’s true that Covid was either the result of a laboratory leak (Tooze describes this as “one of the more plausible alternative theories”) or of an animal-borne virus jumping to a human. And zoonotic diseases are on the rise, mostly because of population growth. They can, as Tooze highlights, undeniably spread rapidly thanks to today’s international transportation networks. But to label the pandemic as “a plague unleashed by heedless global growth and the massive flywheel of financial accumulation” is to be too comfortable with the intellectual and economic status quo prevailing, say, half a century ago, not to mention jargon that dates back even further. Given the other options, I’ll take “heedless” growth.

Distrust of markets normally goes hand in hand with trust in government. Tooze’s complaint that Covid “revealed the weakness of basic apparatuses of basic administration, like up-to-date registers of citizens” is thus no surprise. It’s perhaps telling that Tooze devotes relatively little space to the initial bureaucratic failures that, in the U.S., anyway, made the situation worse. This owed nothing to a lack of funding but much to the nature of government: the assertion of control—and the importance of being seen to assert control—can count for more than the resolution of a problem.

The early FDA tests were botched in the critical weeks after Covid-19 arrived in the U.S., which was bad enough, but the agency took the trouble to block rival tests. As Tooze recounts it, “the regulators were concerned that the crisis might be exploited for profiteering.” Put another way, their fear of the price mechanism overwhelmed their duty to protect human life. A lesson can be learned from that, however poorly it fits in with this book’s broader message. Needless to say, the FDA’s record on approving home tests remains appalling, even now. Fortunately, Operation Warp Speed took a much more productive approach to developing vaccines. But unlike its competitors, Pfizer kept a certain distance from the feds. As Tooze notes, the pharma giant rejected any state funding for its research and development, preferring to sign a contract for the sale of vaccines to the government in the event that it could deliver them—though BioNTech, Pfizer’s partner, did receive financial support from the German government and the European Investment Bank.

Tooze doesn’t like seeing a crisis go to waste, and as he describes it, the Covid crisis has not been. It has led “very middle-of-the-road politicians” to do “very radical things” and ushered in “reformist experimentation” that would have been unthinkable beforehand. “New modes of welfare provision” have been tried across the globe. Some of this was improvisation, but some came with a “programmatic gloss,” above all the EU’s “Next Generation” program and President Biden’s plans to “Build Back Better.”

Neither of these projects is worth celebrating. The EU initiative used the pandemic as a device to advance a longstanding technocratic agenda, while Biden’s effort seems destined, should it pass, to be a vehicle for heavy-handed government, irresponsible spending, and waste. But Tooze, a cheerleader for the switch to an allegedly more sustainable economy, views them favorably, seeing them as drawing on the “repertoire of green modernization, sustainable development and the Green New Deal.” We’ll never know for sure if such policies were coming regardless, but the pandemic unquestionably accelerated their arrival and, by torpedoing Trump’s reelection, opened the door for a major leftward shift on this side of the Atlantic that would not otherwise have been possible. A precedent has been set.

The state, it turns out, has much more capacity to intervene in ordinary life and the economy than previously so complacently believed. We have also learned that such interventions are a surprisingly easy sell—to the public, at least—with the addition of a scary scientific rationale. The wisdom of lockdowns will be debated for a long time, but they, too, are a precedent that won’t be forgotten.

Meantime, Tooze observes that the economic-policy response to the pandemic drew heavily “on the lessons of 2008,” and then some. Given escalating economic damage (“a more sudden and precipitous contraction even than during the Great Depression”) and the prospect of disaster in the Treasuries market—if that had melted down, it would, writes Tooze, “have taken the rest of the world with it”—that was just as well. “American government debts,” he explains, “are the safe assets on which the entire structure of private finance rests. They are the foundation of America’s financial might and thus of the world order as we know it.” And there can be no doubt about how close to that disaster the Treasuries market came. “In the one market where you could always be sure to find a buyer,” relates Tooze, “there were suddenly none. On March 13 [of last year] J.P. Morgan reported that rather than a normal market depth of hundreds of millions of dollars in U.S. Treasuries, it was possible to trade no more than $12 million without noticeably moving the price.”

But it’s a leap too far to suggest that the measures taken to head off the economic, social, and financial collapse—a combination of massive spending and dramatic central-bank interventions—could confirm “the essential insights of economic doctrines once advocated by radical Keynesians and made newly fashionable by doctrines like Modern Monetary Theory (MMT).” Those essential insights? “State finances are not limited like those of a household. If a monetary sovereign treats the question of how to organize financing as anything more than a technical matter, that is itself a political choice. As John Maynard Keynes once reminded [BBC listeners] in the midst of World War II: ‘Anything we can actually do we can afford.’ The real challenge, the truly political question, was to agree what we wanted to do and to figure out how to do it.” Yes and no. Britain could “afford” to fight the war (though $31 billion in military aid from the U.S. came in handy), but political will cannot, in the end, transcend economics. Britain avoided bankruptcy in the aftermath of the conflict thanks only to a series of giant bailouts (the largest of which, suitably, was negotiated by Keynes).

Something similar may turn out to be the case today. The fiscal and monetary policies of 2020 were affordable when they were needed, but what will be their long-term cost? Tooze believes that last year saw “a comprehensive crisis of the neoliberal era.” That judgment may be overstated, but if the pandemic’s bills cannot ultimately be paid, the ensuing crisis will be concrete enough, even fatal: economic chaos is rarely a friend of small government.

I suspect that Shutdown will be one of the books that will have to be read about the pandemic for some time. But it should not be the only one, and not just because Tooze’s narrative doesn’t extend deep into 2021. The first U.S. case, for example, of the Delta variant was not identified until this past March. We still don’t know how the Covid scourge will pan out, and how it will change our attitudes toward disease, urban living, and remote working. The long-term political and economic consequences remain unknown.

The book’s other problem is the sheer volume of its ideological content, scattered across the page like the fragments of a catechism: “Anthropocene”; “the obsolescence of the nation-state”; the “belligerent Brexiteer”; “an eighteenth-century constitution”; “embattled Cuba”; and so forth, much of it—let’s be polite—unconvincing. Alongside all this, however, is a first-rate first draft of history, at its strongest when Tooze chronicles the economic free fall of March 2020 and the financial maneuvers that kept us out of the abyss—until the next crisis. Like epidemics, there will always be another.