2020-04-01 Bloomberg Markets Magazine

(Jacob Rumans) #1
Mishra is a Bloomberg Opinion columnist.
His books include Age of Anger: A History of
the Present, From the Ruins of Empire: The
Intellectuals Who Remade Asia, and
Temptations of the West: How to Be Modern
in India, Pakistan, Tibet and Beyond. This
column doesn’t necessarily reflect the
opinion of Bloomberg LP and its owners.

insurance systems and public services
in health, education, and housing. The
state’s planning capacity had been
enhanced during the extensive conflict.
Afterward, such newly developed powers
were reoriented from war-making to the
realm of social security, to the building
of large-scale relief and compensation
systems. As free markets suffered
broader discredit after the Great
Depression, the warfare state mutated
faster into a welfare state in European
countries on both sides of the war.
There was a corresponding
intellectual and ideological shift, best
signaled by Keynes. As this former
partisan of free markets put it in 1933,
“The decadent international but
individualistic capitalism” inherited from
the past is “not a success. It is not
intelligent, it is not beautiful, it is not just,
it is not virtuous—and it doesn’t deliver
the goods. In short, we dislike it, and we
are beginning to despise it.”
Even in the U.S., where hostility to
Keynes-style state intervention was
deeply ingrained, social policies during the
war created the basis of the New Deal’s

path-breaking protections for labor.
In our own era, we’ve been stumbling
from crisis to crisis toward an enhanced
savior role for the state. In the 1990s, the
debate about the state’s correct role and
size appeared to have been settled.
Centrist leaders such as President
Bill Clinton and British Prime Minister Tony
Blair didn’t fundamentally depart from
President Ronald Reagan’s conviction that
government is a “problem” rather than a
solution as they hectically privatized
and deregulated.
It was also easier then to trust in the
wisdom of the markets. Innovatively
locating different parts of the process of
production and the gains from it among
citizens of many different countries and
making quick decisions on the basis of
financial calculation, the market seemed
smarter, more agile, and more resourceful
than the old deliberative state.
As before, some unexpected
calamities undermined its hegemony.
President George W. Bush presided over
a massive expansion of government
bureaucracy in response to the Sept. 
attacks. In 2008, as global markets

collapsed, the U.S. as well as communist-
ruled China injected liquidity into national
economies on an unprecedented scale.
The American government controlled,
albeit briefly, General Motors Co. as well
as Chrysler.
After the financial crisis, quasi-
Keynesian doubts about economic
internationalism began to surface even
among such architects of globalization as
Lawrence Summers, who exhorted
politicians to recognize that “the basic
responsibility of government is to
maximize the welfare of citizens, not to
pursue some abstract concept of the
global good.”
Today the coronavirus has elevated
that responsibility into a life-or-death
imperative. And, as happened in the
interwar era, the state’s deep penetration
into economic and social life to
counteract a disaster is likely to endure.
For the popular tendency to regard
at times of extreme vulnerability the state
as a savior won’t disappear in less
perilous times. Nor will politicians forget
to base their appeal on a promise of
collective security.
But there should be no illusions
about the dangers in the profound
transformations ahead. In the interwar
era, an expanding state assumed
unprecedented powers over its citizens,
metamorphosing in some countries
into outright fascism. The history of war
and genocide in the first half of
the 20th century tells us that the
accumulation of biopower—the
technology of control and manipulation
over large groups of human beings—
can enable horrific crimes.
Certainly, the techniques of
surveillance available to the
contemporary state, starkly evident in
China today, can only further restrict
human rights and liberties. Leviathan is
back in a stunning revolution hardly
anyone foresaw, and though undoubtedly
welcome in the short term, it should be
feared in the long run.

Government Before the Virus
Expenses* as a share of GDP

European Union South Korea U.S. World








VOLUME 29 / ISSUE 2 17
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