In the 1982 preface to Capitalism and Freedom, Milton Friedman observed: “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”
In recent history, the UK and the world have been periodically transformed by crises. The Second World War, and the collective sacrifice it entailed, opened the way for post-traumatic societal growth and the establishment of universal welfare states and mixed-market economies. The collapse of the Keynesian consensus in the 1970s, precipitated by the scourge of stagflation, led to the Thatcherite and Reaganite free-market counter-revolutions. More recently, the aftermath of the 2008 financial crisis and the austerity that followed provoked political shocks across the Western world.
Is the coronavirus pandemic another such moment? In the first essay of our new series (NS, 3 April) “The World to Come”, now one of the most-read pieces in the history of our website, the philosopher John Gray wrote: “This is not a temporary rupture in an otherwise stable equilibrium: the crisis through which we are living is a turning point in history.”
The implications of this crisis are more profound than those of the 2008 crash. In an attempt to prevent mass death from the virus, governments have been forced to suspend their economies – a state from which countries will only falteringly emerge. In the UK, the government’s Job Retention Scheme means that more than half of the country’s 52 million adults now receive significant income from the state.
The global pandemic, which has infected more than 3.6 million people and killed at least 252,000, will accelerate pre-existing trends. The forward march of free-market globalisation – with people and goods relentlessly traversing porous national borders – has been decisively halted. The state, once derided as an outmoded actor, has reaffirmed its role as the ultimate guarantor of the economy. And the return of great power politics – typified by the increasing antagonism between China and the US – has been confirmed.
Yet the crisis is not only a moment to ask how the world will change, but how it should. The pandemic has demonstrated some of our best qualities: kindness, altruism, community and resourcefulness. But it has also enhanced a sense among people of all political persuasions that our society has drifted too far from such values.
Simon Henderson, the headmaster of Eton, caught the national mood when he told the Times: “Many of those who work in the lowest-paid roles are in fact the key to our survival, and these people who have been undervalued for so long have shown astonishing dedication when we have needed them the most. That can’t just be forgotten.”
After the 2008 crash, as government debt surged, punitive austerity was imposed in the UK and elsewhere. This cannot – and should not – be repeated. As leading economists, including Robert Skidelsky and Mariana Mazzucato, have written on newstatesman.com, it would be reckless to impose new spending cuts. Rather, as it contends with a national debt set to exceed 100 per cent of GDP, the UK should pursue bold alternatives, such as higher taxation of land, property and other static assets (as we have long argued), and growth through public investment: the best long-term means of debt reduction.
But the return of the protective state should not mean an embrace of centralisation. As Paul Collier, the author of The Future of Capitalism, argues in our cover story, a more resilient and responsive state depends on the decentralisation of power. The imperative in Britain and elsewhere remains to save lives and protect living standards. But the crisis creates a rare opportunity for national renewal: the age of private affluence and public squalor must be brought to an end.
In recent weeks, as Jason Cowley writes in his column this week, Britain has exhibited a sense of social solidarity that some thought had been lost. After years of ideological polarisation, the crisis has reiterated the need for humility and provided a poignant reminder of our shared humanity.
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This article appears in the 06 May 2020 issue of the New Statesman, Remaking Britain