2020-04-01 Bloomberg Markets Magazine

(Jacob Rumans) #1
economic era. Its main tendencies will
become visible over the months and
years to come. But the most
revolutionary shift is already in sight.
The state, much maligned in recent
decades, is back, and in its fundamental
role: as Leviathan, the preventer of
anarchy, and the ultimate insurance against
an intolerable human condition in which,
as Thomas Hobbes described it, life is
“solitary, poor, nasty, brutish, and short.”
In all countries where the
coronavirus first spread—China, Hong
Kong, Iran, Italy, Singapore, South Korea,
Taiwan, and Thailand—the state leads
the war against it, imposing draconian
lockdowns on entire populations,
ruthlessly sacrificing personal liberty
to security. Whether such heavy-handed
interventions will eventually succeed—
they seem to be working in Singapore
and China, countries with great state
capacity—is still unclear. Nevertheless,
in many other countries, ruling politicians
seem to realize they’ll be judged by their
administrative capacity to check the
spread of the virus.
Hence Trump’s fumbling
responses, which attest as much to the
American state’s incapacity for mass
testing as to his much-noted personal
inadequacies. Britain’s Conservative
government in mid-March announced a
massive upgrade of public services,
radically breaking with Anglo-America’s
libertarian orthodoxy of recent decades.
Italy has asked the European Union
for more leeway as it prepares to
disregard the latter’s fiscal rules to shield
its aging population from the virus. Even
Germany, the EU’s inflexible enforcer of
austerity, seems ready to trash its
dogma of keeping the budget balanced,
as more than two-thirds of its population
confronts the possibility of infection.
It’s taken a disaster for the state to
assume its original responsibility to
protect citizens. It’s time to remember
that another calamity, easily the biggest
of the last two centuries, was what first
established the modern state as an
able-bodied protector of the population.
After the First World War,
governments, trying to restore economic
and living conditions and fight off mass
unemployment, boosted their
intervention in the economy and
accelerated their building of social

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 is Thomas
Friedman’s Golden Arches Theory of
Conflict Prevention, according to which
no two countries with McDonald’s
restaurants would go to war.
World War I not only brought the
period of friction-free globalization to
a gruesome end. It also cruelly exposed an
intelligentsia who’d 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 were all but guaranteed.
In our own conjuncture, all
ingredients of the previous calamity
are present, if ominously on an
unparalleled scale.
For decades, deindustrialization,
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 such as President Trump.
Yet few lessons were learned 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. The inadequacy of such hopes
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.

recession, the virus looks set to
inaugurate a turbulent political and


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