Introduction:Economic Consequences of the Pandemic

by John Quiggin on March 3, 2021

Here’s the draft introduction for The Economic Consequences of the Pandemic. Comments, criticism and congratulations all appreciated.

{ 6 comments }

1

Matt 03.03.21 at 10:31 am

A few more or less random thoughts on the (overall very nice) introduction

1) I’m struck at how naive, or outlandish, or…dishonest?… the claim by Keynes is that an “inhabitant of London” (even a “middle class one” as is added, but not in the original) could get “the various products of the whole earth, in such quantity as he might see fit” delivered to him after a phone call in 1914. Perhaps Keynes had a much more limited idea of the sorts of things available all over the earth than we do now, but this is just obviously nonsense. (How easy would it have been to get some good ceviche, or even a good taco, or some good pork barbecue in London in 1914? I expect it would take more than a phone call.)

2) It seems funny to say that the model of capitalism for John Stuart Mill was the “small firm”, given that he spent much of his life working for the East India Company – a not so small firm! Perhaps, despite that, he based his analysis on the idea of small firms. That in itself would be interesting, if true, but I am a bit skeptical.

3) I wonder if there are important differences between the British Empire, on the one hand, and the German Empire, the Austro-Hungarian Empire, and the Russian Empire on the other. Maybe not. I’m honestly not sure here. But in some ways contiguous “Empires” seem importantly different from explicitly colonial ones.

4) It seems somewhat funny to say that the various clashes described between empires were “resolved peacefully” before WWI. I assume that what you mean is that there were not (always) open war between the various states. But, at least, there was fighting in the relevant countries, so not exactly peace, and there were out and out wars, too. The Crimean war is one example, but not the only one. (There were other wars between the Russian and Ottoman empire, for example, most obviously the war of 1877-78, but others a bit less explicitly, too.)

5) a trivial point: on p. 4, you’re missing a period at the end of the sentence just before the one that starts, “The event that eventually sparked the war…”

6) You say, about WWI, ” It lasted until 1918, and cost at least 10 million lives. At no time did any of the contending empires put forward a serious proposal for peace.” This just ignores the eastern front. Not only was there a “serious proposal for peace” put forward by one of the “contending empires”, but the Brest-Litovsk treaty (of March 1918) ended Russian participation on terms very favorable to the Germans.

7) You say, “the return to normalcy was a disastrous failure. Barely a decade after the end of the war, the world was plunged into the Great Depression.” This seems to suggest a causal connection between the end of WWI, the peace negotiations, and the depression. That seems at least not obviously right to me. If you don’t mean to suggest a causal connection, I’d re-word it.

8) A trivial point: you say, “The 1939-35 War” – I assume you mean 1939-45. Another trivial point in the same paragraph. You say, “and social justiceWhat went wrong…” There’s a missing space and a missing period here.

9) You say, “As with Europe in the years before 1914, the pre-crisis trajectory of the US and global economy was one of stagnant incomes for many, combined with unsustainable growth in inequality and in the damage imposed on the global environment through climate change.” The last bit is oddly worded on its own, but also seems to suggest that climate change is closely connected in some way with the lessons of WWI. That seems, at least, not obvious to me. I’d re-word it. As it is, it seems too much like trying to cram everything you’re interested in into a particular historical framework that is unlikely to be able to bear the weight.

I hope this is some help!

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David D. Woods 03.05.21 at 4:44 pm

focusing on your line: “We face a world that has changed radically, but we do not know how to understand or navigate it.” From adaptive systems, with its root partially in biology: “The process of adapting to disruptions, challenges and surprises over time changes the system in question in multiple ways. In adapting to new challenges, systems draw on their past but become something new. Even when adapting to preserve,
the process of adapting transforms both the system and its environment.” This is from a section of my 2015 paper criticizing the widespread use of the label resilience as ‘rebound’.

Research on responses to shock events in the form of major accidents also points to the tendency to retreat and retrench into old models rather than reframe, revise and renew. A variety of factors contribute to the difference (with continuing arguments among systems safety people). To oversimplfy: the difference in part revolves around resisting role retreat and building/sustaining reciprocity across roles and levels. The former fragments responses, while the latter contributes to synchronization of efforts across roles and levels. The former exacerbates goal conflicts and undermines balancing trade-offs; the latter depends on goal alignment over roles (eg toward common higher order goals) which direct sacrifice judgments when roles are under pressure and goals conflict.

Many organizations are asking (and some are asking me) how to “bounce forward?” They acknowledge, to a degree, your line I quoted to start: they know they do not understand the changes and key factors as societies emerge from the pandemic, though they know it can be different in important ways. They know what emerges is likely to require new ways of ‘navigation’ in uncertain waters. They would like to prepare and enable capabilities for what comes despite the uncertainty. As my colleagues and I have emphasized, resilience as capability to act in the future depends on ability to anticipate. However, despite these intentions, these organizations face crunches and squeezes. 1. their attention flows to immediate compensatory activities leaving no room to see possible trajectories, or opportunities for reconfiguration and renewal. 2. because resources are limited, consideration of any strategic paths gets cut off early as – ‘we do not have the resources or time for those moves to pay off.’

Retreat and retrenchment is not possible, though many will desire and attempt it with unsatisfying results. Yet the alternative direction of reconfiguration, reframing, and renewal seems an empty box in need of specification. I am asked to fill in that box with what reconfiguration, reframing, and renewal means for an organization, industry, or key function (eg safety in industrial risk). It appears you are in a similar position examining post-pandemic developments.

To wrap up this comment stream:
a. if you want to know more about any of the bits I referred to I can explain or direct you to stuff (a recent talk addresses these for systems safety – link at end).
b. your line I started with has helped me unexpectedly, so thanks. I am supposed to have finished a new chapter addressing resilience focusing on inequity and reciprocity (not just pandemic), but have been a little stuck on how to tie the pieces together tightly with a pointed ending. Its a good feeling to get momentum back when writing has been bogged down.
c. your line is in many ways a general thought that can be expressed in different words. Or I could just quote you. You work is in draft stages so this may be problematic. Anyway let me know if this is possible. Sorry if all of this is a bother.
the link is https://www.youtube.com/watch?v=ZuLUp94wki4&t=95s

3

Joe B. 03.06.21 at 6:35 am

I’m interested to see how your argument is going to be developed. Please accept these comments for what they are: merely late-night musings. I don’t see the connections you are trying to make between the pandemic and either the War or the Armistice. I agree about the larger trends towards destabilization of global systems. My greatest fear during the Trump years was that his disruptive (used in the Silicon Valley sense) approach to foreign policy would set in motion unstoppable and calamitous feedback loops that no one could reverse — something like a geo-political analog to the 2008 global financial crisis, but with all the horsemen of the apocalypse on the loose. In that sense it seems like WW1 and the global disruption that followed is a good analogy, at least for the fairly simplistic view of WW1 that I have. It’s just that I fear we have not YET seen the consequences of this disruption — much of which cannot be repaired by Biden. Strange as it may sound, the pandemic almost seems like a distraction from the larger issues.

On a final note, if we should have learned anything so far in the US about the economic consequences of the pandemic is that massive stimulus works, even if it is not that well implemented. Perhaps that will be your point. I was shocked that the stimulus was as big as it was, but I shouldn’t have been. Trump loves to give people money — with his name printed on it, or course — before an election, so the usual intransigence of the Republicans was blunted a bit. That, coupled with the fact that economic activity bounced back in many sectors, so that filling a fair portion of the economic hole was possible. The global economic system has proved remarkably resilient to the “shock” of the pandemic so far, but I fear that the tectonic plates have been nudged a bit faster on their inexorable course to massive collision.

I suppose you may argue that economists, politicians, and the global elite are yearning for a return to “normalcy” after the pandemic without addressing the underlying instabilities. People will put the pandemic behind them and out of memory as fast as possible in a way that was not possible with the Great War, even though we are nearing 3 million dead. I’m less interested in the immediate economic “shock” from the pandemic, and more interested in your take on larger “tectonic shifts” in the global political and economic system.

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John Quiggin 03.06.21 at 6:51 am

Thanks for these useful comments.

Matt, on your first point, Keynes’ view of the world was very much conditioned on an upper-middle class male upbringing. This is evident, for example, in his Economic Possibilities for our Grandchildren, where he pays no attention at all to the labour involved in raising those grandchildren. I talk about this here

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Michael Connolly 03.08.21 at 2:16 am

Typo (transposition) early on – The German Empire was created in 1871, not 1817.

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John Quiggin 03.08.21 at 7:03 am

A further slightly belated response. The link between the War and the influenza pandemic was clear and direct, as I found out fairly recently and posted here. It also plausibly at least involves human-caused climate change on a regional scale

https://crookedtimber.org/2021/01/13/the-four-horsemen-of-the-pandemic/

All this will be in Chapter 1, coming soon.

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