Shutdown: How Covid Shook the World's Economy

Shutdown: How Covid Shook the World's Economy

by Adam Tooze
Shutdown: How Covid Shook the World's Economy

Shutdown: How Covid Shook the World's Economy

by Adam Tooze


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"This book’s great service is that it challenges us to consider the ways in which our institutions and systems, and the assumptions, positions and divisions that undergird them, leave us ill prepared for the next crisis."Robert Rubin, The New York Times Book Review

"Full of valuable insight and telling details, this  may well be the best thing to read if you want to know what happened in 2020." —Paul Krugman, New York Review of Books

Deftly weaving finance, politics, business, and the global human experience into one tight narrative, a tour-de-force account of 2020, the year that changed everything—from the acclaimed author of Crashed.

The shocks of 2020 have been great and small, disrupting the world economy, international relations and the daily lives of virtually everyone on the planet. Never before has the entire world economy contracted by 20 percent in a matter of weeks nor in the historic record of modern capitalism has there been a moment in which 95 percent of the world's economies were suffering all at the same time. Across the world hundreds of millions have lost their jobs. And over it all looms the specter of pandemic, and death.

Adam Tooze, whose last book was universally lauded for guiding us coherently through the chaos of the 2008 crash, now brings his bravura analytical and narrative skills to a panoramic and synthetic overview of our current crisis. By focusing on finance and business, he sets the pandemic story in a frame that casts a sobering new light on how unprepared the world was to fight the crisis, and how deep the ruptures in our way of living and doing business are. The virus has attacked the economy with as much ferocity as it has our health, and there is no vaccine arriving to address that.

Tooze's special gift is to show how social organization, political interests, and economic policy interact with devastating human consequences, from your local hospital to the World Bank. He moves fluidly from the impact of currency fluctuations to the decimation of institutions—such as health-care systems, schools, and social services—in the name of efficiency. He starkly analyzes what happened when the pandemic collided with domestic politics (China's party conferences; the American elections), what the unintended consequences of the vaccine race might be, and the role climate change played in the pandemic. Finally, he proves how no unilateral declaration of 'independence" or isolation can extricate any modern country from the global web of travel, goods, services, and finance.

Product Details

ISBN-13: 9780593297551
Publisher: Penguin Publishing Group
Publication date: 09/07/2021
Pages: 368
Sales rank: 505,872
Product dimensions: 5.90(w) x 8.90(h) x 1.30(d)

About the Author

Adam Tooze is a professor of history at Columbia University and the author of Crashed, winner of the Lionel Gelber Prize, a New York Times Notable Book of 2018, one of The Economist's Books of the Year, and a New York Times Critics' Top Book. He lives in New York City.

Read an Excerpt

Chapter 1





Skeptics-and there have been skeptics from the start-like to point out that the remarkable thing about the Covid crisis is that we turned something ordinary into a global crisis. No matter what we do, people die, and the same people die of Covid as die normally-old people with preexisting conditions. In a normal year, those people die of flu and pneumonia. Outside the privileged core of the rich world, millions of people die of infectious diseases like malaria, tuberculosis, and HIV. And yet "life goes on." Severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) was, by the standards of historic plagues, not very lethal. What was unprecedented was the reaction. All over the world, public life shut down, and so too did large parts of commerce and the regular flow of business. All over the world this massive interruption of normality stirred, in various degrees, incomprehension, indignation, resistance, noncompliance, and protest. One need not sympathize with the politics of the objectors to acknowledge the historical force of their point. In a new and remarkable fashion, a medical challenge became a much wider crisis. Explaining how this might have happened not as the result of effete and overly protective political culture or as the result of a deliberate policy of repression, but as a result of structural tensions within early twenty-first-century societies, will help set the stage for understanding the crisis of 2020.


It is true that old people die, but what matters is how many and at what rate and from which causes. At any given moment, this rank order of mortality can be described in terms of a matrix of probabilities that has evolved over time and is held in place by medical possibilities, health economics, and the pattern of social advantage and disadvantage.


Table 1: Causes of Death                                                                                             


            Total deaths                 Communicable, maternal, neonatal, and nutritional diseases (%)             Noncommunicable diseases (%)            Injury (%)       


            m         m         %         %         %         %         %         %


            1990    2017    1990    2017    1990    2017    1990    2017


Western Europe 3.86     4.16     4          5          90        91        6          4


United States    2.14     2.86     6          5          87        89        7          7


Latin America

and Caribbean  2.36     3.39     28        12        57        76        15        13


China   8.14     10.45   17        3          72        89        11        7


India    8.38     9.91     51        27        40        63        9          10



Africa  6.77     7.48     69        58        24        34        7          7


World  4.65     5.59     33        19        58        73        9          8




Seen globally, the story of the last decades is one of considerable advance in reducing death from diseases of poverty-communicable, maternal, neonatal, and nutritional diseases. Nevertheless, it remains true that poor people and people in low-income countries die soonest and of the most preventable conditions. In a low-income country like Nigeria, where life expectancy at birth is fifty-five, 68 percent of deaths are due to diseases of poverty. In Germany, where life expectancy is eighty-one, that share is 3.5 percent; in the UK, 6.8. The United States is in-between. In 2017, health spending per capita in high-income countries was 49 times greater in purchasing power parity terms than in low-income countries.


Within rich countries, there are appalling disparities in infant and maternal mortality and overall life expectancy along lines of race and class. Epidemics of drug use in disadvantaged and marginalized populations, asthma, and lead poisoning go unaddressed. In Germany, 27 percent of men in the lowest income class die before the age of sixty-five, compared to 14 percent for the highest income group. For women, the disparities are only slightly less stark. In the country's two-class health insurance system, the life expectancy of the 11 percent in private insurance is four years longer than those in the public system. In the United States, commonly described as the richest country in the world, according to a study of 2009, 45,000 people died for lack of health insurance. People in low-income census tracts in the United States are twice as likely as those in high-income areas to be hospitalized with flu, to require intensive care, and to die of it. The difference is starkest for poor people over the age of sixty-five.


It would be too much to say that these probabilities enjoy general acceptance. They are, on their face, a scandal. They give the lie to any idea that our collective priority is keeping people alive, but as stark as these differences are, the ratios are at least familiar. The probabilities change, but only gradually and generally only in a favorable direction. The crucial point, as far as the coronavirus crisis is concerned, is that as 2020 began, the only infectious diseases that still plagued the average citizen in a country above the high middle-income threshold were lower respiratory tract infections and the flu, and they were generally dangerous only to those of advanced age. In the United States, only 2.5 percent of all deaths in a normal year were attributed specifically to influenza and pneumonia. Adding all lower respiratory tract infections brought the share to 10 percent of all deaths. Together they accounted for 80 percent of deaths from infectious disease. HIV/AIDS and diarrheal disease, notably C. difficile, made up the rest. SARS-CoV-2 shook the confidence in those probabilities.


The conquest of major infectious diseases was one of the great triumphs of the era after 1945. It was a historic achievement on a par with the end of famine, universal literacy, running water, or birth control. Increased life expectancy is the secret sauce behind economic growth. It is marvelous to consume more. It's even better if you live decades longer to enjoy it. By one estimate, if we properly factored in the greater longevity achieved over the course of the twentieth century, it would double our estimate of the growth in the American standard of living. By the 1970s, as the final victory over smallpox and polio came within grasp, these triumphs spawned the idea of the epidemiologic transition. Infectious diseases would be consigned to the past.


The advances were greatest in the rich Western countries. But achieving the epidemiologic transition was a common aspiration of modernity. It was as relevant to the Soviet Union and Communist China as it was to the West. Indeed, as a collectivist project led by public agencies, it suited their political vision better than that of the West. Embattled Cuba, with its hardy public health system and outsize program of global medical assistance, is a dramatic demonstration of this point. For the Communist regimes, there was no contradiction between sacrificing tens of millions of lives for the advance of socialism, coercive birth control campaigns like China's one-child policy, and a massive collective effort to save lives and conquer infectious disease.


But as momentous as it was, almost at the moment of its triumph in the 1970s, the conquest of infectious disease began to be hedged by doubt. Influenza remained unconquered. It is both ubiquitous and easily underestimated as a cause of death. It accounts for a surge in mortality from all causes that occurs on a regular annual basis. This is normalized because many of these deaths are attributed to other, more immediate causes such as pneumonia and heart attacks. Influenza is highly contagious and there is no interval between infection and infectivity, which means that testing and quarantine are hopeless. It mutates rapidly, so vaccination will be at best partially effective. The one saving grace is its low lethality.


The same could not be said for some of the new infectious diseases that specialists began to tangle with in the 1970s. The nightmarish Ebola virus was identified in 1976, AIDS in 1981. In the West, HIV/AIDS remained confined to stigmatized minority populations. In sub-Saharan Africa, it became a generational crisis of young heterosexual people, and above all, women. By 2020, HIV/AIDS had claimed 33 million lives. Somewhere around 690,000 would die of the disease in 2020. As far as infectious diseases were concerned, it turned out, we were far from having reached the end of history.


Indeed, as scientists explored disease mutation and circulation, the picture that emerged was one of a precarious balance. Modern science, technology, medicine, and economic development might be giving us greater ability to fight disease, but those same forces were also contributing to the generation of new disease threats. The emerging infectious diseases paradigm, proposed by scientists from the 1970s onward, was, like the models of climate change and earth systems ecology that emerged at the same moment, a profound critique of our modern way of life, our economy, and the social system built on it. Our use of land across the globe, relentless incursions into the remaining wilderness, the industrial farming of pigs and chickens, our giant conurbations, the extraordinary global mobility of the jet age, the profligate, commercially motivated use of antibiotics, the irresponsible circulation of fake news about vaccines-all these forces combined to create a disease environment that was not safer, but increasingly dangerous. It was no doubt true that all these factors had been present to a greater or lesser extent for at least two millennia. The sophisticated urban communities of the Roman empire had already been prey to pandemics sweeping across Eurasia. But the late twentieth century, for all its medical prowess and newfound affluence, was seeing a dramatic escalation of threat potential. We were, whether we recognized it or not, involved in an arms race.


This was a profound diagnosis of the threats generated by our modern way of life. There are groups led by the anti-vaxxers who dispute its logic. But they are fringe elements. It is not the warning of emerging infectious diseases as such that has proven controversial. It is our willingness to follow through on its implications. If the experts tell us that our modern economic and social system is systematically generating disease risk, what do we do about it?


To address the problem at its source would require a comprehensive effort to map potential viral threats combined with systematic control of land use and a dramatic change to industrial farming. Such a transformation would mean confronting interests that range from giant global agro-industrial firms to Asian poultry magnates, corrupt city officials in Southern China, and hardscrabble farmers in some of the poorer places in the world. The drift of higher-income diets toward more meat and dairy products would have to be reversed. Unsurprisingly, the actual policy response falls far short. Health officials undertake efforts to impose hygiene regulations on factory farming and to tidy up wild meat markets. There are local and sporadic bans on the hunting of "bushmeat." But the more fundamental drivers of emerging infectious diseases remain unaddressed.


At the global level we have organizations like the World Health Organization (WHO), in which thousands of highly professional, motivated, and well-intentioned individuals from all over the world fight the good fight. But as a global health agency for a rapidly developing globe inhabited by 7.8 billion people, the WHO is a Potemkin village. For the two years 2018-2019, the WHO's approved program budget was no more than $4.4 billion, less than that of a single big city hospital. The WHO's funding is cobbled together from a hodgepodge of sources, including national governments, private charities, the World Bank, and big pharma. In 2019, among its largest donors, the Gates Foundation ranks alongside the national governments of the United States and the UK and ahead of Germany. The venerable Rotary International contributed as much, if not more, than the governments of either China or France. Altogether, the WHO can muster no more than 30 cents per year in spending for every person on the planet.


The WHO's dependence on its donors shapes what it does. Campaigns for disease eradication such as polio are high on its agenda. The WHO plays a key role in monitoring the flux of diseases around the world. It is a technical business. It is also highly political. The two essential preoccupations of international health regulation back to its earliest days in the first half of the nineteenth century were the Western fear of disease spreading from east to west and the interest of advocates of free trade to limit the use of onerous public health regulation such as lengthy quarantines. The idea was to ensure that plagues did not become an excuse for shutting off commerce. Those twin tensions still haunt the WHO. In its efforts to coordinate a global public health response, it is caught between the fear of antagonizing states by labeling them as sources of infection, its professional desire to take early and decisive action, and the backlash that it will face if it triggers what turn out to be costly and unnecessary limitations on movement and trade. After the global panic triggered by the appearance of plague in Surat, India, in 1994 and the blanket shutdown of travel during the SARS crisis in 2003, there was a push at the WHO to adopt a more cautious approach to travel restrictions. Likewise after the anticlimax of the 2009 swine flu epidemic, the WHO faced a vociferous campaign accusing some of its officials of artificially inflating the market for expensive vaccines. To manage these hugely difficult choices on a precarious shoestring budget was a recipe for disaster.


The British economist Lord Nicholas Stern once remarked that climate change results from history's greatest market failure-the failure to attach a price to the costs of CO2 emissions. If this is true, then as the coronavirus crisis of 2020 demonstrates, the failure to build adequate defenses against global pandemics must be a close second. Even the best-funded global public health infrastructure cannot offer guarantees, but as 2020 began, the disproportion between pandemic risk and the investment in global public health was nothing short of grotesque.



To talk in terms of 'market failure' understates the force of the point. What is at stake in the response to pandemic threats is not just a vast amount of economic value. What is at stake are basic questions of social order and political legitimacy.


If it were the case that governments could simply ignore epidemic threats they had done too little to forestall, if life could simply continue in the face of a sudden surge in deaths, then the underinvestment in public health would have a cynical rationale. But in fact one of the foundations of the modern state is the promise to protect life. Not by accident, the frontispiece to Thomas Hobbes's Leviathan features plague doctors. Given this basic understanding, for a modern state to allow a dangerous pandemic to run through a country unchecked would require a bold strategy of depoliticization, or at the very least, a gradual process of "hardening" of public attitudes. In 2020, the idea that Covid was "just the flu" turned out to be a harder sell than its advocates imagined.


Rather than ignoring the pandemic threat, in recent decades governments around the world have equipped themselves with specialist departments that prepare for biomedical catastrophe. They think like the military. Their assumption is not that the threat can actually be overcome-the faith that infectious diseases can be tamed is the conceit of sunny-minded public health campaigners. The job of the pandemic specialists is to prepare for a threat that will never go away and is, if anything, increasing in seriousness. Ominously, since the 1990s, "preparedness" has become the mission of more and more branches of government all over the world.


It is an intensely serious but also grimly futile business. The potential risks are vast. We can all too easily imagine a global outbreak of an Ebola-like disease, or a highly infectious influenza with the lethality of the Spanish flu. But at the same time, there is no willingness to make structural changes to our food chain or transport system to reduce risk or even to invest in an adequate public health system. Little wonder, therefore, that a global inventory of pandemic preparedness in 2019 found literally every government in the world wanting. It is a classic instance of what Ulrich Beck called "organized irresponsibility." And it harbors within it the potential for not just economic and social damage but political crisis.

Table of Contents

Acknowledgments xi

Introduction 1

Part I Disease X 25

1 Organized Irresponsibility 27

2 Wuhan, Not Chernobyl 49

3 February: Wasting Time 65

4 March: Global Lockdown 79

Part II A Global Crisis Like No Other 93

5 Free Fall 95

6 "Whatever It Takes," Again 111

7 Economy on Life Support 131

8 The Toolkit 155

Part III A Hot Summer 175

9 NextGen EU 177

10 China: Momentum 193

11 America's National Crisis 215

Part IV Interregnum 231

12 Vaccine Race 233

13 Debt Reflief 251

14 Advanced Economics: Taps On 269

Conclusion 287

Notes 307

Index 345

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