Shutdown

Adam Tooze has a new book out, Shutdown.  Tooze is the liberal left’s current favourite historian.  His previous book, The Wages of Destruction,  won the Wolfson Prize for History and the Longman-History Today Book of the Year Prize. He has taught at Cambridge and Yale and is now Kathryn and Shelby Cullom Davis Professor of History at Columbia University.  He is a prolific writer of articles in the elite press; a mine of information and data on his Twitter account and his Chartbook site.  And of course, he is on SubStack.

I reviewed his last best-selling book, Crashed.  After singing the praises of Tooze’s account of the global financial crash and the ensuing Great Recession, I made the point that “Crashed provides us with the most granular and fascinating account of the crash and its aftermath.  It powerfully shows what happened and how, but in my view does not adequately show why it happened.  But maybe that is not the job of economic history, but that of political economy.” 

There are two critiques there.  The first is Tooze’s historical method: he decries ‘historicism’ as such and aims to provide a history of ‘the moment’, as it happens.  That can offer an excellent survey of who does what and when, but it does not serve well to understand why.  And second, although Tooze is an historian of events ‘as they happen’ (or immediately after), this approach has a false ‘neutrality’ in its analysis.  For Tooze is not ‘neutral’ or ‘objective’ at all – and after all, nobody can be where social interests and viewpoints are often contradictory. 

So beneath the ‘history of the moment’ lies an analysis of events that is really based on what Tooze calls ‘liberal democratic’ ideals, politically and on Keynesian theory and policy, economically.  Tooze sees himself as offering a viewpoint “of a left-liberal historian whose personal loyalties are divided among England, Germany, the “island of Manhattan” and the EU.” (Tooze, ‘Tempestuous Seasons’, London Review of Books, 13 September 2018, p. 20.)  Also: “the political intellectual tradition, which I personally feel attached to, which is left liberalism of the British variety.”  And more:“I’m a confirmed liberal Keynesian in my broad politics, and my understanding of politics and the way expertise ought to relate to it, and the operations of modern democracy.”

On the whole, Tooze sees, for all her faults, that the US is on the side of the angels along with Western Europe, in defending the ideals of ‘democracy’ against the forces of authoritarian rule from the likes of Russia, China, Turkey etc. Perry Anderson points out that Tooze’s book, Wages of Destruction argues that Hitler saw America as the main enemy of Nazi Germany ie the US was the force for democracy against fascism.  And yet all the evidence suggests that Hitler’s main ambition was to crush the Jewish Bolshevik conspiracy and, from the start, looked to invade and defeat Stalin’s Russia.

When it comes to the economics, in Crashed, we are asked to accept that, even though the actions of the US administration and the EU were full of holes, in the end they delivered in shoring up the system and avoiding a meltdown into a deep depression.  Yes, the draconian measures imposed by the Troika on Greece were terrible, but Tooze says nothing about Syriza’s capitulation to the Troika.  For him, there was no alternative but to ensure the survival of the EU as part of the liberal democratic order.  As he wrote: “Left-wing hostility to the pro-market character of the EU and nationalist hostility to Brussels’ united to deliver a profound shock to Europe’s elite. ‘Whatever the rights and wrongs of the constitution, popular democracy had asserted itself’.  Really?  Have the ECB and the EU Council mended their ways?

In Shutdown, Tooze examines the unprecedented decision of governments around the world to shutter their economies in the face of pandemic. “The virus was the trigger,” writes the author. But other elements were at play, including a serious slowing of global economic growth, a rise in nationalist and authoritarian regimes around the world, and what, in effect, was a new cold war with China. In other words, the agents for destabilization were myriad well before Covid-19 arrived. Tooze calls this ‘polycrisis’, to describe this multipronged series of failures of imagination and governance.

Tooze moves fluidly from the impact of currency fluctuations to the decimation of institutions–such as health-care systems, schools, and social services–in the name of efficiency. And he shows how no unilateral declaration of ‘independence” or isolation can extricate any modern country from the global web of travel, goods, services, and finance.  No country is an island when it comes to a virus, trade and supply chains – as we currently see.

The crux of Tooze’s message is that at the onset of the Covid-19 crisis, governments found themselves ‘flying blind’: none of the economic and political theories that purported to be guides for public policy proved to be of any use and were rapidly abandoned. Instead, driven by the need to “do something”, and be seen to “do something”, governments innovated.  

Tooze recounts what public figures said in the very early stages of the pandemic. On February 3rd 2020, Boris Johnson, Britain’s prime minister, warned of the danger that “new diseases such as coronavirus will trigger a panic”, leading to measures that “go beyond what is medically rational, to the point of doing real and unnecessary economic damage”. Within two months, he had locked down the British economy. On February 25th 2020, Larry Kudlow, an adviser to President Donald Trump, said that “we have contained this”, cheerfully adding: “I don’t think it’s going to be an economic tragedy at all.”

Tooze confirms what this blog and other analyses both from health and economics have shown: that decisive government action, such as lockdowns and prudent and socially responsible behaviour by citizens, reduced mortality and economic damage, the behavioural balance between these being roughly one-third governmental and two-thirds at the level of citizens.

The politicians may have been disastrous, but the institutions of the liberal democratic order compensated.  Whereas the financial crisis of 2008 showed the weakness of the world banking system, Tooze writes, the shock of the pandemic spoke to the weakness of asset markets as a whole, requiring entities such as the US Treasury to assemble “a patchwork of interventions that effectively backstopped a large part of the private credit system.”  Apparently it helped that Steven Mnuchin, “the least ‘Trumpy’ of the Trump loyalists,” led those Treasury efforts. It is strange that Tooze has a good word for this hedge fund multi-millionaire, who said in April 2020: “This is a short-term issue. It may be a couple of months, but we’re going to get through this, and the economy will be stronger than ever,”

Tooze also has kind words for the central bankers.  They were quick to grasp the implications of the disease. “In 2008 there had still been a note of hesitancy about central-bank interventions. In 2020 that was gone,” he writes. “Governments ended up backing this monetary stimulus with fiscal policy. The $14trn-worth of support they had provided by the end of 2020 was much larger than the stimulus they had offered in the wake of the global financial crisis.”

The business community also responded to the central bankers by apparently rejecting the policies of austerity. So when Joe Biden assumed the presidency, he pushed for big-dollar measures, which corporations supported, to jump-start the economy —with the proviso, Tooze notes, that Biden dropped his push for a $15 minimum wage.  

It is an odd conclusion to reach about the policy response to the pandemic.  Did central banks act to save people’s jobs or to shore up financial markets just as in 2008?; will the supposed fiscal largesse introduced in the 2020 slump be sustained in the rest of this decade?: are austerity policies really over?  In the UK, the current Chancellor has already cut back subsidies to workers and businesses and is preparing regressive new taxes to fund government spending.  In the US, Biden’s supposedly large infrastructure programme has been cut back by Congress and anyway will be financed by significant tax rises over the next five years.  Keynesianism is not really making a comeback.

Yet Tooze’s instant history goes through the prism of Keynesian theory.  Tooze is explicit about this.  In a review of Geoff Mann’s excellent demolition of Keynesianism, In the Long Run We Are All Dead: Keynesianism, Political Economy and Revolution (2017), Tooze defines the distinctive virtue of Keynes’s outlook as a “situational and tactical awareness’ of the problems for liberal democracy inherent in the operations of the business cycle in a capitalist economy, requiring pragmatic crisis management in the form of punctual adjustments without illusion of permanency.”

He even argues that China’s huge state-led investment during the Great Recession, amounting to over 19% of China’s GDP, was an example of Keynesian policies in action and commands Tooze’s unstinting admiration. “This was the largest Keynesian operation in history, a mobilization of resources on a scale that Western economies had only ever achieved under the pressure of war. Its global impact was decisive. ‘In 2009, for the first time in the modern era, it was the movement of the Chinese economy that carried the entire world economy”. 

I have argued elsewhere that this claim for Keynes is not supported by the evidence:  China’s state investment, run and operated by state banks and state enterprises, bears no relation to Keynesian macro policies.  Moreover, China’s avoidance of a slump did not ‘save capitalism’ in 2008-9; the Great Recession remained the widest and deepest slump in capitalism since the 1930s – until the pandemic slump of 2020.

In Crashed, the global financial crash was the result of the deregulation of the banking system, financial greed and incompetent authorities.  For me, all these were just symptoms or immediate catalysts of the underlying causes in the capitalist economy.  In Shutdown, we are again offered same Keynesian solutions to the pandemic slump: fiscal and monetary largesse. 

As Tooze says in an interview with Tyler Cowan, the neoclasscial mainstream economist, “Keynesianism, classically, of course, is a liberal economic politics. It believes in a multiplier, and the multiplier’s the be-all and end-all really of Keynesian economics because what it suggests is that small, intermittent, discretionary interventions by the state — relatively small — will generate outside reactions from the economy, which will enable the state to serve a very positive role in stabilizing the economy but doesn’t require the state to permanently intrude and take over the economy”.

Thus, there is nothing in Shutdown about needing to end the failure of markets in the pandemic. The banks and the tech and social media giants that have made trillions out of the pandemic slump are to remain as they are, while hundreds of millions globally have been driven into poverty.  It is not part of Tooze’s instant history agenda to “take over the economy”.

21 thoughts on “Shutdown

  1. “Thus, there is nothing in Shutdown about needing to end the failure of markets in the pandemic.”

    I haven’t read the book, but according to your account, Tooze has missed some issues. But it sounds like the book got some things right.

    However, it would seem your conclusion is largely sound.

    The response of the liberal democracies was massive fiscal intervention, by and large. It was not about a fundamental shift in the way business is done. Again, it was designed to preserve the system as it is and to shore up the system’s (inherent) inability to deal with the crisis, much to the relief of the capitalists.

    And the system will revert to type once the crisis is over.

    And the fact that the system survived again gives much discouragement to the revolutionaries. 🙂

    What gives people like me gleeful succour is that totalitarian states like the Chinese fail to deal with that other crisis, the climate crisis, not just the capitalist states of the West.

    It seems to me that none of the “isms” provide a universal formula for human contentment.

    1. ‘’ And the fact that the system survived again gives much discouragement to the revolutionaries ’’
      ‘’ We saw how well that went with the 20th century socialist revolutions. Not one of them exists in original form and all have turned to capitalism in some form ’’
      The arrogance (unsubstantiated sufficiency) of his comments is directly proportional to his ignorance. The more ignorance, the more cockiness. Especially the ignorance in the matter of revolutions. And especially in the matter of socialist revolutions. I will not give him a theoretical explanation of the subject, not even in synthesis, because I believe that his arrogance does not deserve it. I will only tell you this: if you are of the appropriate age, in no more than 20 years (maximum 30 years) you will attend the next world socialist revolution in person. It will probably be the revolution that ends up establishing the socialist mode of production on the entire planet. Some ideas about it. Do you know that the socialist mode of production is already installed at 40/50% in Western economies, in addition to China? You don’t know, do you? Hint: your dear Keynes and all the Western Welfare States WOULD NOT EXIST without the Russian socialist revolution of 1917. Yes, it is true, Keynes saves Capitalism temporarily. But he does not save it with more Capitalism (private property) but he saves it with the seed and the product of Socialism: The State as the main economic agent. States that have halved the capitalism of the nineteenth century. Does this seem surprising and shocking to you? Another idea: you don’t have to wait 20 years either to see the main signs of the upcoming revolution. These signs will be seen in the growing annual increase and starting today in protests and demonstrations by the population throughout the world. This slow increase in political conflicts has already been happening for years according to the most reliable and truthful reports, except in the Covid19 period. You don’t know either, do you? Last idea. The socialist revolutions of the 20th century have done as well as Capitalism did with its revolutions in the 19th century. Final clue: modes of production are not created overnight, nor are they built in all countries at the same time. The above is top-notch economics (cycles) and for you it should be as far removed as the Theory of Relativity.
      All the best

    2. Antonio,

      We obviously define socialism very differently.

      For me socialism is the more or less complete ownership of the means of production by the state.

      Would you agree?

      If this definition meets your approval can you name states where this is true.

      Cuba? Venezuela? Do these meet my definition?

      China is socialist/communist in name only. It’s a farce and faintly conceals a fascist State.

      The states in the west that have accepted state intervention in the economic process are not socialist. They are the products of Keynesianism.

      “These signs will be seen in the growing annual increase and starting today in protests and demonstrations by the population throughout the world. ”

      The Cuban people in recent moths have protested en mass against the Cuban regime. They want fundamental change. (Of course, the state authorities have responded in the anodyne totalitarian manner and chosen to shoot them. Apparently, there is a list of almost two hundred people who have gone missing, many of them are leaders of the protest movement.) Somehow it appears the Cubans are willing to give your revolutionary movement a miss.

      And what of the throngs of south and central americans fleeing poverty and violence in their countries. Are they building rafts to carry them across the Gulf of Mexico to mother Cuba? Are they inundating Venezuela? I don’t think so. They are instead flocking to the US Mexican border hoping to submit themselves to the ravages of the US capitalist system in a mass hysterical suicide pact. Very odd.

      And what of the hundreds of thousands of Africans manning overcrowded flimsy vessels to cross the Mediterranean and head towards the open coastal regions of southern Europe, again offering themselves as fodder for the capitalist system. Why are they not beating a path to Moscow or Beijing (not that these are representative of socialist societies at all)?

      Clearly, these poor misguided people are not hearing the call of your impending socialist revolution.

      You have work to do.

      1. Why Africans would try to cross the Mediterranean rather than the Indian Ocean *and* the Pacific Ocean to get to China? Geography has something to do with it.

        Why do Cubans go to the US? For the same reasons Puerto Ricans do. Or why Irish go to England. Or to flip it around, why Africans *don’t* go to India. Immigrants go where the money is.

        No one who seriously uses “totalitarian” shows good judgment in my opinion.

        The intense desire to see a capitalist counterrevolution in Cuba, is an intense desire to see the majority of the Cuban people punished for their laying hands on capitalists’ property, and to see it returned. Those who imagine they will benefit from the looting of public property are mostly deluding themselves.

        The “poor misguided people” are misguided in sharing your love of property-owners and your intense conviction that “revolution” in property relations is impermissible unless done without anything but majority vote (supermajority vote, practically speaking, in most societies) with no compulsion, done perfectly legally, always rejected if there’s any violence. I also think some of them are afraid of the violence of your idols, the propertied and deem revolution todays inexpedient. But that’s me.

      2. stephenjohnson,

        “No one who seriously uses “totalitarian” shows good judgment in my opinion.”

        The truth is now subject to judgement, is it?

        I can imagine this truth is not all that palatable to a revolutionary.

        It is always the first casualty, is it not?

        “But that’s me.”

        The chilling fact is that violence seems to be no obstacle, even a prerequisite.

      3. Henry You may be trying to learn marxism as you say, but it seems that you are trolling round lots of sites not just this one and not making any useful points but just attacking all and sundry. Give it a rest on this site, please

    3. Antonio,

      Despite having said what I said above, in some respects I agree with you.

      How long can humanity bear the iniquity of not just bare chested capitalism but also fascism dressed up as socialism and the kind of totalitarian socialism evident in the early to mid 20th century?

      I can’t see humanity wanting to be either subjugated by totalitarian regimes or in societies where private property is denied.

      But some things do have to radically shift.

  2. “In a review of Geoff Mann’s excellent demolition of Keynesianism…”

    Your post that dealt with that matter is absolute twaddle.

    In that post you ask; “So why do Keynesian ideas continue to dominate? ”

    The answer is that Keynesianism has periodically and routinely saved capitalism from itself.

    This of course galls socialists no end.

    And you write in that post:

    “But the real method of political economy………….is of a revolutionary social scientist (Marx), changing it for the long term.”

    We saw how well that went with the 20th century socialist revolutions. Not one of them exists in original form and all have turned to capitalism in some form.

  3. What is called here “a new cold war with China” looks more like a classic rivalry between monopoly capitalist powers, one industrializing rapidly and the other looking to keep its imperial domination (Germany-England -> two world wars; Japan-U.S. -> one world war). The economic situation of the Soviet Union then and China today are completely different.

    Another image without reality: “China’s state investment, run and operated by state banks and state enterprises, bears no relation to Keynesian macro policies.” China does not do overall allocation of investment per a plan. That went out long ago. China actually relies quite a bit on monetary and fiscal tools, plus industrial policy akin to postwar Japan and France.

    1. England/German rivalry before WWI included competitive colonization (esp. the “Scramble for Africa); competitive armaments (esp. in naval forces); repeated diplomatic crises (notably Morocco); adjacent wars (notably the two Balkan wars); systematic military treaties; rival currencies; all in addition to mundane trade competition. The claim that US/China “looks more like a classic rivalry between monopoly capitalist powers” like England/Germany before WWI is absurd. It is a triumph of ideological prejudice over eyesight, refuting the claim “Hindsight is 20/20.”

      The economic situation of the USSR “then” was that the Soviets were recovering from the titanic devastation of the Nazi invasion while being threatened by the US and its henchmen. At the same time, the “failure” of socialist economy to instantly erase this and match, even exceed, the performance of the richest part of the imperialist sphere was hailed as proof socialism doesn’t work. China is hailed as proof capitalism works, which strikes me as deranged. Saying that all this looks like England/Germany or US/Japan is saying black looks white.

      China first eschewed central planning a la the First Five Year Plan during the Great Leap Forward. I’ve never been quite sure why so many people think the alleged death toll refutes central planning, aka socialism. At any rate, investment by state banks and state owned enterprises may not be Gosplan at work, but it most assuredly is not the same as capitalist investment. Most of all perhaps, state banks and SOEs invest, rather than hoard cash. But also: When the state banks raise interest rates because wage levels are rising; when the state banks redline whole segments of the economy; when SOEs move their plants to other countries; when the SOEs turn themselves into finance firms; when the SOEs have their assets looted by management then go into bankruptcy court…then we’re talking about the state banks and SOEs, then we are talking about an “image without reality,” an illusion of socialism when we merely have “industrial policy.” Not seeing reality I think. But there are none so blind as those who will not see.

      By the way, the easy assumption that an industrial policy was just a fad that just went away as inexplicably as it came, is altogether too easy.

  4. If the author admits his ideological allegiance, I don’t see a problem with publishing biased stories. The only difference is that the work will not be treated as a serious History by contemporary and future historians, but instead as a simple statement of opinion and/or a primary source.

    Unbiased History is not only possible, but necessary. History is a science, with its due methodology and criteria for objective judgement – and there are serious historians out there. Being biased is by no means an excuse not to do History scientifically – if a historian uses this excuse for tampering, censorship, distortion and revision of documental and archaeological evidence, then he/she is a charlatan (and History has its charlatans, as any other field of science and academia).

  5. Not for the first time I remind Marxists that there is no such institution as ‘liberal’ or bourgeois’ democracy. The so-called democracies are in fact plutocratic oligarchies. In his ‘Politics’ Aristotle long ago pointed out that it is quite misleading to designate democracy as the rule of the majority and oligarchy as the rule of the few: rather democracy is the rule of hoi aporoi i.e. those without resources, while oligarchy is the rule of the rich, being few. The mark of a democracy is selection of magistrates by lot, that of an oligarchy election by ballot, which the rich will usually win thanks to their superior wealth. This was well-known to the early bourgeois ideologues: fro example Madison in The Federalist Papers No X is quite open in rejecting democracy as conducive to stasis(class struggle) and infringement on the rights of private property. Thus the US instituted a Republic with ‘representatives.’ Marx himself pointed out that elections merely allow citizens to elect which oligarchs will rule them. To call permission by the state to exercise the casting of a vote every few years as the exercise of power is fatuous. Note how bourgeois ideologues in discussing the ‘introduction’ or ‘abolition’ of democracy invariably employ the passive voice, thus allowing them to elide the agents of such, obfuscating that it is in such agents that power actually resides. As for the leading capitalist powers of Western Europe, North America and Japan, we should refer to them as ‘imperialist despotisms.’ Their long and blood -soaked histories confirm it. Who was it that said of Britain ‘The empire on which the sun never set and the blood never dried’?

    1. Slaves are “without resources” too, but lots never included them.

      If the ancient state provides resources, then by this it would have been democratic. The Spartan state provided resources to its citizens, far more than the Athenian state did. That did not make it more democratic than Athens.

      there were lots used in the Roman Republic in several ways. That did not make it more democratic than modern democracies.

      The distinction between “jurors” and “magistrates” is evaded, but it matters. Nor is it at all clear that leaving prosecution to private parties is more democratic.

      Madison was not an early bourgeois ideologue. If you have to have a name starting with “M” try Macchiavelli, in Discourses on Livy.

      Since many Marxists (all of the sincere and competent ones in my opinion) do *not* accept that elections are the hallmark of true democracy, there is no point in any of this, save to attack “Marxists.”

  6. ”And yet all the evidence suggests that Hitler’s main ambition was to crush the Jewish Bolshevik conspiracy and, from the start, looked to invade and defeat Stalin’s Russia.” But history is being rewritten, and some ‘marxists’ like the late Louis Proyect, have lent their support to the thesis that the Molotov/Ribbentrop Pact of August 1939 started WW2. The facts are that Japan launched its all-out invasion of China in 1937 cheered on by Germany and Poland, (who in turn invaded Czechoslovakia in 1938). By September 1939 millions of Koreans and Chinese are already dead! Chamberlain’s guarantee to Poland of 31/3/39 was nothing of the sort. It was a Machiavellian gambit that ensnared the Poles into believing that they could then oppose Hitler over Danzig, thus ensuring that Germany would invade and from Chamberlain’s point of few set off a German-Soviet war on the Eastern front. The Molotov/ Ribbentrop Pact checkmated this gambit. The evidence is laid out in Finkel and Leibovitz ”The Chamberlain-Hitler Collusion”(1997).

  7. Michael

    The link to the Perry Anderson pdf does not work https://thenextrecession.wordpress.com/Users/User/Documents/SHUTDOWN/Anderson-NLR-119-1.pdf

    I found the article on the New Left Review website but you need a log in there https://newleftreview.org/issues/ii119/articles/perry-anderson-situationism-a-l-envers.pdf

    I also found a pdf of the article that Adam Tooze had uploaded onto his own wordpress blog https://adamtooze.com/wp-content/uploads/2019/10/Anderson-NLR-119-1.pdf

    How would you fix that? I’ll use the New Left Review link for now.

    I hope you don’t mind a slight change I made from

    On the whole, Tooze sees, for all her faults, that the US is on the side of the angels

    to

    On the whole, Tooze sees that the US, for all her faults, is on the side of the angels

    It sounded as though the “her” was referring to Tooze which was very confusing.

    Dave

    On Tue, 19 Oct 2021 at 15:03, Michael Roberts Blog wrote:

    > michael roberts posted: ” Adam Tooze has a new book out, Shutdown. Tooze > is the liberal left’s current favourite historian. His previous book, The > Wages of Destruction, won the Wolfson Prize for History and the > Longman-History Today Book of the Year Prize. He has taught at Cam” >

  8. ‘Instant History’ ; I think that just about sums it up, Michael.

    I’m going to steal that term, it’s brilliant.

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