The end of the age of globalisation

The economic consequences of Russia’s bloody and despicable assault on Ukraine are very much a secondary consideration to the immediate human and geopolitical implications. And since the various national responses to the conflict are still so fluid, it is far too early to be able to identify the war’s precise longer-term economic effects. Nevertheless, it is possible to suggest tentatively what could unfold on the international economic front. While today’s military confrontation appears to revive US leadership of the old West, because of its dominant military capabilities, in the longer term it is likely to speed up the shift to a post-American world. The invasion could hasten the demise of the US-led economic order.

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The fatalism of the inflation debate

When it comes to the misery of falling living standards, we don’t need a fevered and fatalist debate around rising prices and some short-term counter-inflationary devices, but a proper plan for economic growth. The wealth from rising productivity is the only reliable source of durable prosperity. Moreover, it would allow society to deal better with material disruptions of the sort we have had to endure over the past two years of restrictions and lockdowns.

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Why China haunts America

The events of 2021 confirmed that the US political class sees containing China as its No1 foreign-policy goal. Indeed, China is now one of the few issues that publicly unites Republicans and Democrats. Treating China as the biggest external threat to America can no longer be regarded as a Trumpian aberration. The Joe Biden administration has been similarly focused on China, building on a theme that goes back at least to Barack Obama’s ‘pivot to Asia’ 10 years earlier.

America’s growing antagonism towards China owes less to the rise of a new power and to a rapidly changing world than to the domestically driven insecurities and drift afflicting the US elite – a situation with parallels in Britain and the other ageing Western powers.

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How to bring about a high-wage economy

According to some pundits, the empty petrol stations and gaps on supermarket shelves are a forewarning of another ‘winter of discontent’ – a reference to 1978-9, when widespread strike action brought the UK to a standstill.

In the energy crisis, some see a return to the oil crisis of 1973-4, when OPEC imposed an oil embargo on the likes of the UK and the US because of their support for Israel during the Yom Kippur War.

And, as prices rise across the board, there is a great deal of speculation about a return of 1970s-style ‘stagflation’, when economic stagnation co-existed with sharply rising prices, precipitating a cost-of-living crisis.

As evocative as these trips down economic memory lane are, they do not help us understand what is going on today. The general fashion for reaching for old labels, such as new New Deals or new Cold Wars, to describe the present often obscures what is distinctive about the contemporary moment – and this certainly applies to our current economic situation.

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Shutdown: the end of an economic era?

Particular crises rarely change everything by themselves, but they can amplify what was already underway. This is how economic historian Adam Tooze approaches the Covid crisis in Shutdown: How Covid Shook the World’s Economy. He presents it as an event that brought pre-existing trends to the surface.

Shutdown is one of the first extended economic histories of the pandemic. It covers a single year, from Chinese president Xi Jinping’s public acknowledgment of the outbreak of a novel coronavirus in January 2020 to US president Joe Biden’s inauguration exactly 12 months later. The bulk of Shutdown is a comprehensive month-by-month commentary on the progression of the pandemic, the varied government responses to it and the economic, financial and political fallout.

Read the full review here of Adam Tooze’s new book Shutdown: How Covid Shook the World’s Economy.