Will COVID End Neoliberalism? — Adam Tooze

i wanted to start off by um you know hearing the distinctions between the economic collapse of 2008 and what our economy has experienced as a result of coronavirus and the uh shutdowns uh or lockdowns that happened um in in various countries um are there differences and and how do you um you know suss out those uh how do you suss them out it is a huge problem i mean i think it's a problem because what we've just experienced is i would argue unique in our experience today just modern capitalist economies we've never lived in a through anything quite like it 2008 in some ways was a classic crisis it was you might argue the last great crisis of the north atlantic financial system that had its origins in the triangular trade and the development of colonial capitalism in the 17th and 18th century and extended all the way through the 20th century world war one world war ii and down to 2008 it was about europe in the united states overleveraged banks a cycle based on real estate and that imploding whereas 2008 has some of the same elements people suffer unemployment on a gigantic scale not just in the north but in the global south we see an implosion of trade more rapid if you just look at the macroeconomic numbers than something we saw after 1929 in march 2020 the book focuses on this because it's so much a neglected element of the story we saw financial markets in turmoil reminiscent of 2008 and in fact if you benchmark the collapse in share values equity values it's as bad as in 1929 but the difference of course is that the causation is fundamentally different so what i try and do in this book is describe if you like the way in which the old familiars the tensions within global geopolitics within capitalist democracy within the financial system on the one hand intersect with this new shock the the shock of the shock of the pandemic and the temptation of course is to place the pandemic somehow outside of history as though it was some sort of exogenous surprise but of course that's also very unhelpful and frankly misleading because scientists have been in fact telling us for half a century for as long as they've been warning about climate change and more generally about the environmental crisis they've been warning about this particular risk of emerging infectious diseases stripping across the the world economy traveled through traveling through the channels of globalization and yet now finally as mike davis puts it in one of his brilliant analyses that monster has arrived that monster is at our door and that is in a sense what this book tries to describe and anatomize is this global intersection of familiar crisis dynamics and this new long prophesied long foretold but now pressing and still with us of course if you look around the globe the pandemic is no means over it's a the past tense which i use in the title is in a sense an artistic license you need to somehow confine this this book is about a 12-month period between january 2020 and january 2021 but obviously that we all know that the pandemic especially in the middle low-income middle uh middle-income world is still rife now you you talk a lot about the um the decisions that elites make uh in in the wake of a crisis and it's the it kind of gives you clues as to the structures of global power um how have elites responded to the pandemic uh how are they doing and who's really in charge here no i was i wish we knew i think i mean my own diagnosis always tends towards the disaggregation i rather than seeing as it were a spider in a web pulling the strings my own view is that we suffer on the whole from a sort of disaggregation of power diffusion of power so what's remarkably striking and this is obviously one of the huge dynamics of work in america today is that certain channels of crisis fighting are well-oiled well-greased they operate at extraordinary speed and with gigantic force and they mobilize the entire balance sheet of the american state the single most significant as it were means of financial stabilization in the world economy so i'm talking about central banks and the actions that stabilize financial markets from march 2020 onwards whereas other mechanisms just don't function at all for instance america doesn't have a national unemployment insurance system uh you were talking earlier on about the political economy of competition um we have an utterly ram shackle process for the development of life-saving and essential vaccines and even now that we've developed them we have no mechanism for securing their distribution effective distribution around the world even though the imf of all authorities has estimated that the net payout in terms of gdp growth would be eight trillion dollars for a 50 billion dollar investment and yet those processes of as it were resource mobilization to counter the actual health crisis globally and stop the virus from constantly mutating in body after body those simply don't function it's as though huge opportunities for collective gain are just lying on the street it's as though you're basically being offered a winning lottery ticket you know it's a winning lottery ticket for a million dollars and you say i don't actually have the dollar to buy it with it's an absurd kind of failure of coordination you know you you talk about the central banks and um i love the topic and i wish that there was um honestly more investigation into it because i i remember early on in the pandemic when the economy had collapsed you know you would hear people like donald trump for instance he was president at the time saying that we're going to experience a so-called v-shape recovery right this this notion that the economy is going to recover and everyone who's been hurt as a result of uh coronavirus financially will see uh their situation improve very soon but instead what i think this economic collapse does share with the 2008 economic collapse was that it widened uh the gap between the rich and the poor uh it continued it actually accelerated inequality and i i feel that the uh central bank certainly the uh federal reserve in the united states has helped to exacerbate that and accelerate that can you talk about that a little bit and this um idea of providing liquidity to banks and corporations and how damaging that's been so yes i mean we've gone through the alphabet looking for other letters to label this recovery with and i think k-shaped is the one that most people have come down on as the best description because the k has you know the two the two parts of the letter go in opposite directions and what's really amazing is that this polarization has happened despite the fact that the federal government in the united states has engaged in an unprecedented level of spending on on on welfare they've printed checks and sent them to american families as never before of course that doesn't address the structural problems of inequality of bargaining power of disadvantage of racialized hierarchy of criminalization and so on but it certainly did in fact if you take the just the poverty measure which isn't a terribly good measure of social power that you take that simple measure poverty actually fell in 2020 in the first half despite the rise in unemployment so we discovered that if you just hand out money it does in fact alleviate poverty in that trivial sense the rise in inequality comes from the surging benefits provided to those at the top so the top 10 and really the top 1 of affluence in the united states people with large portfolios um holdings of the s p 500 basically of the share index and and why this happens is that the extremely blunt instrument of monetary policy is used and the way it works is that the federal reserve intervenes to buy the safest assets out of the market so the particular market they intervened in this time in 2020 with gigantic effect was the treasury market the the market for government debt which is the anchor as people like daniela garbo the great critical macro finance theorists have shown us is the anchor of private financial speculation is a portfolio of government public debt and that market was in turmoil so the fed steps in it's buying as much to speak to this liquidity point it's turning treasuries into dollars cash dollars at the rate of a million dollars a second in the last week of march it's buying over 70 billion dollars of treasuries a day for several weeks it buys five percent of the 20 trillion dollar market in a matter of weeks so we've never seen anything like this this is on a scale much larger than in 2008 and the effect of that the intended effect is to shuffle money out of the market the fed is in where things are getting more expensive because the fed is buying them and into higher risk types of investment in other words shares so the means through which economic policy operates is basically indirectly boosts the equity market which helps corporations to refinance themselves by issuing capital but also helps of course all of the invested class that top 10 really top one percent of americans who actually own a share of this market and so after cratering in in late march the wall street has boomed in an extraordinary way all the way down to the present day so the affluent upper middle class and the elite who have big 401ks and other types of investment come out of this recession unimaginably better off than they were before it yeah yeah such a great point um you know just a quick follow-up to that it's more a point than a question but you know when there were debates in congress regarding uh the covid relief that would be provided to ordinary people um there was a lot of nickel and diming taking place a lot of discussion about means testing but in terms of monetary policy in terms of the actions of the federal reserve uh there was no debate about that uh yeah they don't unilaterally make the decision to um you know do what they've been doing yeah and even in between so what's really novel about 2020 in particular and not just in the united states but around the world is that there is it's explicitly conservative social welfare intervention so it is unambiguously undoubtedly the case that low-income and precarious families in the united states have never received more federal cash ever as quickly as they did in that period so that's true on the one hand but it's also true that the coffers of the federal government were opened especially in the spring 2020 just indiscriminately to any kind of business so if you like the entire petty bourgeoisie small business owners also through the payroll protection program sucked into this scheme and i think it helped that a this was a crisis which you know finger-pointing didn't really work that well though of course by the summer the republicans were finger-pointing at supposedly idol unemployed people who didn't want to go back to work but in the spring that that that didn't work very well and they had their man in court there a man in the white house so the usual sort of sniping that you would have received from the gop is silenced and instead it's really just this you know free-for-all and you see this even in europe where there are in fact much tighter rules on the kind of subsidies that can be provided to business not because europe isn't a capitalist state structure but because they police that capitalist state structure differently but in the in both cases it was really just a free-for-all because the aim of the game despite as it were the revolutionary means that are being used to stabilize the system the aim of the game is explicitly conservative it's literally can we put everyone back where we were before this shock happened and if not you know can we maybe even put them in a slightly better position than they were in before this shock happened because of course the gamesmanship the kind of competitive action that you were talking about in the segment before plays out even in these crises strikes me hearing all this that um we're just in an era of such a demacification of of politics and just uh democratic accountability like these decisions get made and we have no say in them at all we're yapping all day on jacobin and we have no no say in the matter it just like i mean this is like a kind of a feature of uh the neoliberal era uh the end of history whatever you want to call it um do you foresee that continuing for the foreseeable future or um or is is the pandemic opening up space for mass politics or democratic accountability whatever we want to call it to return and actually have some say in the matter and this is a key point i mean i think the short answer to your question is that remains to be seen and what has to be played out and it is a matter of politics but the your starting point i think is absolutely spot on one of the reasons why this essentially conservative policy could take on the gigantic dimensions that it did and could as it were leads some people to suggest that this was really a kind of war world war ii starcationism or something like that is precisely that there was no risk there is no political risk the reason why neoliberalism in the 70s and 80s in its campaigning phase insisted on say the independence of central banks was that they had something to fear from democracy they had something to fear from the organized forces of trade unions and and the working class that is evidently no longer the world that we're in and the the ironic effect of that is that it opens up the managers of crises in the centers of power like central banks to do whatever they think is necessary famously the phrase that hangs over all of this is the phrase used by the famous italian or european central bank of mario draghi in 2012 but he said we'll do whatever it takes and the people he's looking at at the time are a bunch of london hedge funders who are skeptical about the euro and he's trying to intimidate them so he says we'll do whatever it takes dramatic pause believe me it will be enough so don't bet against the fed don't bet against the european central bank that's very much the mood but the audience there are hedge funders not trade unionists if there were if there was a mass organization i think one of the uh that one of the questions would be what would be the limits then of capitalist crisis management so there's actually kind of a quite complicated balance of advantage here to be worked through and this isn't a surprise i mean this has been a classic feature of capitalist crisis management ever since the 20th century when it began in earnest is as it were what is the interplay between the technocrats who try and keep the wheels on the bus and social forces parliamentary or extra parliamentary social forces that configure the force field in which they operate and the moment we're in anyone anyway is one of almost complete disinhibition because you know the risks to their action are so slight you know you caution against uh anyone who might be giddy at the thought of you know the neoliberal era collapsing uh because of you know the what could happen uh to substitute uh neoliberalism can you discuss that and elaborate on on what the potential uh negative impact of neoliberal neoliberalism collapsing could be especially with the left in the united states at least being as powerless as it is at the moment well what goes with the collapse of neoliberalism is neoliberalism sort of prim slightly polite edge and this is frankly not very pronounced in the united states even at the best of times it's rather more so in europe um but i think that is the worry right is that whilst neoliberalism was in a mode of as it were trying to define clearly organic bounds for itself and limits there was a a shape to it and we have a vested interest i think as as relatively powerless people in that shape because those shapes are the laws of the lands commonly recognized rights and you only have to look at situations where that breaks down say russia in the period after the collapse of the soviet union in the 1990s where you see power and violence naked uh and bleeding in tooth and claw deployed for the possession of resources to see how dangerous it can be as a historian who worked previously on the history of nazi germany i'm forever haunted by the analysis of nazi germany offered by the frankfurt school legal theorists who describe fascism not in its movement phase but as a regime as an expression of the collapse of the coherence of the liberal rule of law and instead what we end up with is a sort of direct unmediated relationship between power and money and capital now some people have been tempted to say okay so we're headed back towards feudalism i don't think that's to my mind a very convincing way of thinking about this but we are certainly in a space in which everything is to be playful there and it could be tilted if you think about the force of the antitrust agenda now it could be tilted in quite a progressive direction and you know you only have to look to china to see how a regime that isn't afraid of knocking heads together how it can change the balance of force between a powerful regime willing to use the violence the coercive power of the state against money how dramatic the consequences can be at least in the short run and i think those are the questions which are up for grabs at this particular moment but broadly speaking what we are definitely seeing is a sort of increasing incoherence in the ability of law general forms of regulation to grasp what's going on either cross-sectionally at any given moment or in time across time which is why we see this more and more ad hoc more and more aggressive oversized sort of headless chicken style interventions by the central banks you mentioned china's um state power against money i find it very funny that the financial times uh reacted to it by uh saying that they were returning to maoism um and i was like i just i just found that pretty funny like this doesn't i lived in china it could have been less maoist um but uh i i my question is is about china and about you know you you mentioned briefly the this this this kind of move that they're doing lately to um to confront some of the power of of of money business whatever you want to call it um uh the reactions here in the west to that but also broadly speaking just the the the inevitab the seeming inevitability of of the overtaking of china of the united states in terms of uh economic power uh and and what they'll mean what that'll mean for the world yeah i think it's really helpful here to separate out different ways of thinking about the economy i mean in general we are indeed in a phase of transition and we are struggling to map it and it's not just analysts or just interested folks it's people in the pentagon are trying to map it so people with with power and i think it's useful to distinguish different metrics there's the gdp story the gnp story how big is the choice in the chinese economy and when will it thoroughly overtake the united states but in the next 10 years or so somewhat sooner than before then does the question of as it were how does the chinese regime relate to power concentrations in the hands of individual let's call them for shorthand purposes oligarchs their equivalents of the mark zuckerbergs the jeff bezos's of this world so aggregations of capital in the hands of individuals driven more often than not through platform economies so that question and then they're also simultaneously playing a very subtle game with western capital so in a sense i think this is a i think broadly persuasive analysis that as tension between the united states and beijing rises not really any longer on the trade front but above all on the geopolitical on the hard power defense industry type front what you simultaneously see on the chinese part is a very active pursuit of money so finance wall street connecticut the hedge funds the asset managers are being sucked into china at the same time and what china is dangling in front of them is wealth management which isn't the same thing as gdp gdp is the whole economy wealth management is the aggregated wealth of the top 10 of the chinese society which at this point is a huge pot of money that blackrock and the big fund managers in the west would love to have a slice of so there are these different dynamics working all at the same time whilst of course also the chinese working class is struggling increasingly competitive relations with new emerging market low-income countries that compete with them in industries like the set textiles and the garment sector so it's an incredibly complex multi-dimensional picture which in some ways is actually opening up what we mean by the economy at all right because on the one hand it's something that's easily measured in the form of gdp on the other hand it's a generator of tech which is essentially what concerns the soldiers on the other hand it's really class wealth which is what the asset managers are after and these are all different forces at work in the same conjuncture can you talk about the united states and its perception of china following the pandemic um you know you talk a little bit about how we really gave china a bit of a win uh the west did in terms of how much the west failed in its response to covid uh relative to how china responded to it can you discuss uh what china did right what the west did wrong and whether there are any lessons to learn from it well yeah i mean it's it's staggering i mean if you like soccer it's as though the chinese shipped two goals in the first half and then the whistle blew the other side came out ran down to their own goal and proceeded to spend the next 45 minutes firing the ball into their own net and at some point the referee said you know i think the chinese won i mean it's insane i mean if we'd stop the clock at the end of february this would have been the most severe shock that the chinese regime had suffered since the end of the cultural revolution it was a disaster of their public health management system the only way they could see to contain it was to shut their economy down which they did with incredible force i'll say in a second about how they did it um and it's caused a huge disruption in china itself and china was a profoundly unequal society there was a very fascinating discussion that bubbled up that had to be immediately repressed at the very highest level nikki chang the prime minister raised the issue that there were 600 million low-income chinese justice in the united states the whole issue of precariousness inequality bubbled up in china too and at that point as it were if you'd stop the clock there you would have said disaster for xi jinping's regime how on earth could they have failed to get it right look at the price they paid for for how they screwed up they have now got it under control but you know no bygones here this goes in the books as a huge loss and then europe happened and then the united states happened and the game completely changed latin america and are now spreading to the rest of asia as well china's problem now is that they have virtually no herd immunity because they never really had an epidemic in our sense um how they did it is really interesting because there's so many cliches abounding in the west about their regime in china which glenn we should make no bones about it is extremely authoritarian doesn't respect individual rights in the sense that we understand them but on the other hand cannot be reduced to a sort of xi jinping centered autocratic top-down dictatorship it's too big a place to work like that it's like south america north america and europe all added together it's far too fast right so the way it actually operates is mid-level and low-level self-mobilization in a kind of almost ecological system a signal comes from beijing and then everyone has to react and what's astonishing is how dramatically china reacted so the police shut itself down one of the reasons i don't use the phrase lockdown to title the book is that that doesn't really describe what happened it shut down hermetically sealed itself you know flush new private sector housing development suddenly discover they have a communist party sell and the housing unit shuts down villages shut themselves down factories do so it's an extraordinary process to which we simply have no counterpart because we don't in our western societies have that kind of cellular organization and the ccp talks about it as precisely that a kind of decentralized cellular power and they've quite deliberately engineered it i mean it has its own dynamics which are quite difficult for them because it can become a runaway process it's not entirely clear it can be steered but in a moment like this it triggered and it really shut the economy quickly which turned out to be the efficient way of dealing with this the single thing i mean that isn't a transposable lesson we can't apply that in the west it's unrealistic you know this idea that chinese authoritarianism can spread justifies history the single thing we have to learn in the west is about china not as it were from china it's just if something happens in a huge chinese city 10 million people very affluent international airport connections and beijing decides they need to shut beijing down then we need to react immediately because if it matters to beijing which is hundreds of miles away from from wuhan then it definitely matters to new york and london too and the thing that we were in a kind of fog about was you know there's all this talk about chernobyl chernobyl was a tiny town behind the iron curtain in the ukraine right that is not wuhan wuhan is a mega 10 million people very affluent half of them rich enough to go home or to go on long distance trips for the holidays right so there's just a fundamental i say in the book and it was quoted in the new york times that you know this is a sign of the failure of the global elite to understand the world they have created it's as though they just they talk all the time about globalization and travel around the jedi and don't get what this implies and it implies that if something like that happens in wuhan we have immediately to start talking about you know uh testing and tracing in every single major airport in the entire world immediately not up three months from now but now and and that sort of alertness this hair trigger thing is was just completely absent in that moment i have to say like i said i lived in china and i i the the image that people have in the west certainly in the united states of the average chinese citizen is kind of like a um client um uh figure who just like whatever the party says like we i'm like i i found just anecdotally in my experience there that they're far less pliant than the average american the average american party chinese people it's like have you actually any chinese people do they strike you it's like it's such a crazy like no i've i've only ever been there for a week but in that time i literally saw people get out of their cars and berate policemen that they thought were doing the right thing oh yeah you get arrested in america thrown to the ground have a gun pointed at your head and you'd be incredibly fortunate you didn't end up dead like and it's just like he was unreal now this isn't to say that that isn't a massive authoritarian regime of course it is but but it doesn't function through a series of robots it is a 1.4 billion robots right this is an absurd kind of misunderstanding of how that power functions no it's it totally i mean i just i think it's completely opposite of what the people here think about the chinese people i just it's completely backwards but um i guess the last question i think we could wrap on is um speaking about our institutions the institutions that uh govern the world the institutions that led to a series of crises that we've seen in the last few decades can they be reformed the eu the the imf the central banks all that stuff can they be reformed or or or or to burn it all down i know you guys like the burn it all down answer no no no no we actually don't know but the alternative is completely implausible right the idea that there's going to be some sort of grand rewrite the sort of bretton woods fantasy i i much as i love and sympathize with the people who articulate this kind of view i just find it very unpersuasive so the sort of politics i'm fascinated by and interested in is the sort that works from within this structure to try and make effectual change that pushes us in a better direction and that definitely needs to call on the full force of extra parliamentary mobilization there's no question i think for instance that the mass mobilization around climate in the europe in particular changed the debate in europe even in you know people as deeply conservative and unimaginative as ozone of underlaying at the head of the present you know the european commission gets it so i think it's some combination of those things but i don't think we should imagine that there is the prospect of the move to greater stability i mean we are in a situation of i mean you know folks on the left love gramsci they love the interregnum phrase they love this idea that we know we're between two different paths and this is a time for morbid symptoms or monsters depending on your translation and i you know monsters is absolutely right the only quibble i have with that is that it presupposes that there's some new order on the other side of this right that after the demise of the old order a new one will come and and ramsey was a bona fide you know revolutionary intellectual lingering ways these days in mussolini's jail so he is entitled to you know that vision in a way that it doesn't seem to me we are in any way entitled um we may live in a world of monsters right now but i don't think that that means that we should anticipate as it were some more orderly evolution to come if you enjoyed this video from jacobin weekends please hit like and subscribe that way you'll enjoy all of our backlog as well as all of our future content including interviews live streams and clips thank you

Channel: Jacobin

Views: 4,557

Rating: 4.9242902 out of 5

Keywords: adam tooze, shutdown, economic crisis, covid-19, covid recession, pandemic, china, capitalism, neoliberalism, economics, jacobin weekends, ana kasparian, nando vila

Id: I50LW7BtqRs

Length: 30min 35sec (1835 seconds)

Published: Sun Sep 12 2021