[D66] The last global crisis didn't change the world. But this one could

[Antid Oto]

  The last global crisis didn't change the world. But this one could

By
William Davies
theguardian.com
6 min
View Original 
<https://getpocket.com/redirect?url=https%3A%2F%2Fwww.theguardian.com%2Fcommentisfree%2F2020%2Fmar%2F24%2Fcoronavirus-crisis-change-world-financial-global-capitalism>


The term “crisis” derives from the Greek “krisis”, meaning decision or 
judgment. From this, we also get terms such as critic (someone who 
judges) and critical condition (a medical state that could go either 
way). A crisis can conclude well or badly, but the point is that its 
outcome is fundamentally uncertain. To experience a crisis is to inhabit 
a world that is temporarily up for grabs.

The severity of our current crisis is indicated by the extreme 
uncertainty as to how or when it will end. The modellers at Imperial 
College – whose calculations have belatedly shifted the government’s 
comparatively relaxed approach 
<https://www.theguardian.com/world/2020/mar/16/new-data-new-policy-why-uks-coronavirus-strategy-has-changed> 
to coronavirus – suggest that our only guaranteed exit route from 
enforced “social distancing” is a vaccine, which may not be widely 
available until the summer of next year 
<https://www.theguardian.com/world/2020/mar/20/when-will-a-coronavirus-vaccine-be-ready>. 
It is hard to imagine a set of policies that could successfully navigate 
such a lengthy hiatus, and it would be harder still to implement them.

It is now inevitable that we will experience deep global recession 
<https://www.theguardian.com/business/2020/mar/15/prepare-for-the-coronavirus-global-recession>, 
a breakdown of labour markets and the evaporation of consumer spending. 
The terror that drove government action in the autumn of 2008 was that 
money would stop coming out of the cash machines, unless the banking 
system was propped up. It turns out that if people stop coming out of 
their homes, then the circulation of money grinds to a halt as well. 
Small businesses are shedding employees at a frightening speed, while 
Amazon has advertised for an additional 100,000 workers 
<https://www.theguardian.com/technology/2020/mar/18/amazon-whole-foods-workers-stores-warehouses-coronavirus> 
in the US. (One of the few, and far from welcome, continuities from the 
world we’re leaving behind is the relentless growth of the platform giants.)

The decade that shapes our contemporary imagination of crises is the 
1970s, which exemplified the way a historic rupture can set an economy 
and a society on a new path. This period marked the collapse of the 
postwar system of fixed exchange rates, capital controls and wage 
policies, which were perceived to have led to uncontrollable inflation. 
It also created the conditions in which the new right of Margaret 
Thatcher and Ronald Reagan could ride to the rescue, offering a novel 
medicine of tax cuts, interest rate hikes and attacks on organised labour.

The 1970s inspired a vision of crisis as a wide-ranging shift in 
ideology, which has retained its hold over much of the left ever since. 
The crisis involved a contradiction that was largely internal to the 
Keynesian model of capitalism (wages were being pushed up faster than 
productivity growth, and destroying profits), and an overhaul in the 
dominant style of business: out with rigid heavy manufacturing, in with 
flexible production that could respond more nimbly to consumer tastes.

There was also an important spatial dimension to the 1970s crisis. 
Capital abandoned its iconic industrial strongholds in northern England 
and the American midwest, and (with help from the state) headed towards 
the financial and business districts of slick global cities, such as 
London and New York.

For over 40 years after Thatcher first took office, many people on the 
left have waited impatiently for a successor to the 1970s, in the hope 
that a similar ideological transition might occur in reverse. But 
despite considerable upheaval and social pain, the global financial 
crisis of 2008**failed to provoke a fundamental shift in policy 
orthodoxy. In fact, after the initial burst of public spending that 
rescued the banks, the free-market Thatcherite worldview became even 
more dominant in Britain and the eurozone. The political upheavals of 
2016 took aim at the status quo, but with little sense of a coherent 
alternative to it. But both these crises now appear as mere forerunners 
to the big one that emerged in Wuhan at the close of last year.

We can already identify a few ways that 2020 and its aftermath will 
differ from the crisis of the 1970s. First, while its transmission has 
followed the flightpaths of global capitalism – business travel, 
tourism, trade – its root cause is external to the economy. The degree 
of devastation it will spread is due to very basic features of global 
capitalism that almost no economist questions – high levels of 
international connectivity and the reliance of most people on the labour 
market. These are not features of a particular economic policy paradigm, 
in the way that fixed exchange rates and collective bargaining were 
fundamental to Keynesianism. They are features of capitalism as such.

Second, the spatial aspect of this crisis is unlike a typical crisis of 
capitalism. Save for whichever bunkers and islands the super-rich are 
hiding in, this pandemic does not discriminate on the basis of economic 
geography. It may end up devaluing urban centres, as it becomes clear 
how much “knowledge-based work” can be done online after all. But while 
the virus has arrived at different times in different places, a striking 
feature of the last few weeks has been the universality of human 
behaviours, concerns and fears.

In fact, the spread of smartphones and the internet has generated a new 
global public of a sort we have never witnessed before. Events such as 
September 11 provided a glimpse of this, with Nokias around the world 
vibrating with instructions to get to a television immediately. But 
coronavirus is not a spectacle happening somewhere else: it’s going on 
outside your window, right now, and in that sense it meshes perfectly 
with the age of ubiquitous social media, where every experience is 
captured and shared.

The intensity of this common experience is one grim reason that the 
present crisis feels closer to a war than a recession. In the end, 
government policymakers will ultimately be judged in terms of how many 
thousands of people die. Before that reckoning is reached, there will be 
horrifying glimpses beneath the surface of modern civilisation, as 
health services are overwhelmed and saveable lives go unsaved. The 
immediacy of this visceral, mortal threat makes this moment feel less 
like 2008 or the 1970s and more like the other iconic crisis in our 
collective imagination – 1945. Matters of life and death occasion more 
drastic shifts in policy than economic indicators ever can, as witnessed 
in Rishi Sunak’s astonishing announcement that the government would 
cover up to 80% 
<https://www.theguardian.com/uk-news/2020/mar/20/government-pay-wages-jobs-coronavirus-rishi-sunak> 
of the salaries of workers if companies kept them on their payroll. Such 
unthinkable measures are suddenly possible – and that sense of 
possibility may not be easily foreclosed again.

Rather than view this as a crisis of capitalism, it might better be 
understood as the sort of world-making event that allows for new 
economic and intellectual beginnings.

In 1755, most of Lisbon was destroyed by an earthquake and tsunami, 
killing as many as 75,000 people. Its economy was devastated, but it was 
rebuilt along different lines that nurtured its own producers. Thanks to 
reduced reliance on British exports, Lisbon’s economy was ultimately 
revitalised.

But the earthquake also exerted a profound philosophical influence, 
especially on Voltaire and Immanuel Kant. The latter devoured 
information on the topic that was circulating around the nascent 
international news media, producing early seismological theories about 
what had occurred. Foreshadowing the French revolution, this was an 
event that was perceived to have implications for all humanity; 
destruction on such a scale shook theological assumptions, heightening 
the authority of scientific thinking. If God had any plan for the human 
species, Kant concluded in his later work, it was for us to acquire 
individual and collective autonomy, via a “universal civic society” 
based around the exercise of secular reason.

It will take years or decades for the significance of 2020 to be fully 
understood. But we can be sure that, as an authentically global crisis, 
it is also a global turning point. There is a great deal of emotional, 
physical and financial pain in the immediate future. But a crisis of 
this scale will never be truly resolved until many of the fundamentals 
of our social and economic life have been remade.

• William Davies is a sociologist and political economist. His latest 
book is Nervous States: How Feeling Took Over 
the<https://www.penguin.co.uk/books/1114367/nervous-states/>World


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