As global supply chains break, airlines slash flights, borders rise within nation-states, stock exchanges convulse with fear, and recession looms over economies, from China to Germany, Australia to the United States, we can no longer doubt that we are living through extraordinary times.
What remains in question, however, is our ability to comprehend them while using a vocabulary derived from decades when globalization seemed a fact of nature, like air and wind. For the coronavirus signals a radical transformation, of the kind that occurs once in a century, shattering previous assumptions.
In fact, the last such churning occurred almost exactly a century ago, and it altered the world so dramatically that a revolution in the arts, sciences and philosophy, not to mention the discipline of economics, was needed even to make sense of it.
The opening years of the 20th century, too, were defined by a free global market for goods, capital and labor. This was when, as John Maynard Keynes famously reminisced, “the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth.”
This maker as well as consumer of global capitalism could invest “his wealth in the natural resources and new enterprises of any quarter of the world.” He could also “secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality.”
Such an economically enmeshed world seemed to many the perfect insurance against war — a contemporary version of such optimism was Thomas Friedman’s “Golden Arches” Theory, according to which no two countries with McDonald’s restaurants would go to war.
The First World War not only brought the period of friction-free globalization to a gruesome end. It also cruelly exposed an intelligentsia which had believed in irreversible progress and now was forced to acknowledge that, as an embittered Henry James wrote to a friend in August 1914, “the tide that bore us along was then all the while moving to this grand Niagara.”
As with our own crisis, the seminal crashes of the 20th century — the First World War followed by the Great Depression — were harder to grasp because their principal causes were set in motion decades before, and largely neglected by mainstream politicians and commentators.
Democracy, whether as an emotive ideal of equality or as representative institutions based on a widening adult male suffrage, had steadily become the central principle of the modern world, especially as industrial growth generated new inequalities.
Repeatedly frustrated, the aspiration for democracy helped fuel the rise of both left and far-right political movements, pitting them against established ruling elites.
The firebrands found their most committed supporters in the exploited populations of then-rapidly growing cities. Filled mostly with people freshly uprooted from the countryside, sundered from traditional livelihoods, and forced to live in urban squalor, the world’s great cities had started to become hotbeds of discontent in the late 19th century.
The problems of how to accommodate rising aspirations for equality through inequality-generating economies were particularly acute for nation-states such as Germany, Italy and Japan, that were trying to catch up with economically advanced Western countries.
Once the series of economic shocks that began in the late 19th century climaxed in the Great Depression, the elevation of the far-right to power, and intensified conflicts between states, was all but guaranteed.
In our own conjuncture, all ingredients of the previous calamity are present, if ominously on an unparalleled scale.
For decades now, de-industrialization, the outsourcing of jobs, and then automation, have deprived many working people of their security and dignity, making the aggrieved in even advanced Western countries vulnerable to demagoguery. At the same time, stalled economic modernization or a botched process of urbanization in “catch-up” powers like India and Russia, has created, in almost textbook fashion, the political base for far-right figures and movements.
The financial crisis of 2008, which has caused deeper and longer damage than the Great Depression, may have discredited the globalizing elite that promised prosperity to all, creating broad scope for opportunistic demagogues like Donald Trump. Yet few lessons were learnt from the collapse of global markets as the tide moved faster to Niagara. This is why the crisis of our time is as much intellectual as it is political, economic and environmental.
One sign of analytic deficiency is that the prescriptions for multiple malaises have remained the same in much mainstream politics and journalism: more economic “reforms,” largely in the direction of global free markets, reheated Cold War slogans about the superiority of “liberal democracy” over “authoritarianism,” and aspirations for a return to “decency” and “global leadership.”
These hopes for a return to the pre-2008 political and ideological status quo are often leavened with a heightened, if ineffectual, concern about climate change. Their inadequacy will become clearer in the months to come when afflicted nations as much as individuals are tempted to self-isolate, sacrificing many holy cows to the existential urgency of survival. The coronavirus, devastating in itself, may prove to be only the first of many shocks that lie ahead. –Bloomberg