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He considers the president a hyper-nationalist, a hypocrite and a covert imperialist intoxicated by his own rhetoric. Wilson, he claims, aspired to global hegemony not militarily, as did Wilhelmine Germany, but through the imposition of a capitalist new order.

His formulary included industrial pre-eminence, preferential finance, an Open Door policy for trade everywhere, and a backward-looking presumption of white supremacy. That felicitous combination would at once maintain the peace and perpetuate American advantage.

Other nations, he believed, would necessarily shuffle along in an international “chain gang,” possessing the trappings but not the substance of sovereignty.

he seeks to elaborate an integrated planetary history. Trained in economics as well as history, he illuminates the interconnections between politics and finance. His geographical purview seems limitless.

Mr. Tooze sustains his argument through a close and often imaginative reading of the Wilson papers.

Wilson’s assertion of moral supremacy, he contends, finds roots in a “distinctive vision of America’s historic destiny” to which statesmen of both parties subscribed. Mr. Tooze expresses as much impatience with “strong-arm nationalists of the Teddy Roosevelt variety” as with Wilson. In short, both Democrats and Republicans sought to transform America into a “de facto super-state.”

The country’s failure to join the League of Nations after the war and its refusal to participate in European political affairs, even while it pulled the strings of international finance, made the “absent presence of US power” the defining characteristic of the 1920s

Mr. Tooze discerns an institutional problem here that goes deeper than the idiosyncrasies of politicians or voters’ naïveté. Americans clung to an obsolete Constitution, he maintains, a “vestigial thing” ill-suited to the modern world. Not until 1945 did the federal government acquire both the domestic tax resources and the power over international institutions necessary to properly exercise global hegemony.

Wilson never changed his objective. At the 1919 peace conference he aimed at “the collective humbling of all the European powers.”

When the European nations stopped payment on their debts in 1933, Congress passed a law forbidding loans to defaulting governments.

Once the U.S. joined the war, it lent to Great Britain, France and Italy some $10 billion (equivalent to $170 billion today) raised from U.S. citizens through the issue of “Liberty Bonds.” Britain had advanced a comparable sum but largely to czarist Russia and other polities unlikely to repay.

Since it could never collect on its own credit extensions, the U.K. pushed successive schemes to write down debts all around. The U.S. Treasury offered a brief moratorium in 1919 but thereafter summoned the borrowers to settle. The U.S. Debt Commission proved relatively generous, given adverse sentiment in the heartland

the sum required from London amounted to only 0.8% annually of British foreign investment.

Mr. Tooze nonetheless considers the British debt settlement outrageous, comparing its size to that of the U.K.’s national education budget or the sum needed to clear the country’s slums.

Mr. Tooze provides readers with additional graphic evidence of the subterranean animosity that characterized Anglo-American relations. He cites Wilson’s 1918 boast that if the British declined to limit their navy the U.S. would build a bigger one. In another bloody war, “England would be wiped off the face of the map.”

He sympathizes with the difficulties that Berlin governments encountered in the early 1920s and considers the notion of stabilizing the depreciating paper mark a chimera. As a result of the 1918 revolution, organized labor held effective veto power over tax and social policy. Nor could Weimar’s fractured society tolerate the level of unemployment that deflation would have imposed.

Under the circumstances, Mr. Tooze contends, the German government simply took the path of least resistance; it did not intentionally bring about the 1923 hyperinflation to undermine reparations.

the economic security of most Americans dwindled, and the legitimacy of the system was called into question. One consequence has been the rise of the far right; another is Donald Trump.

Germany insisted that the struggling countries had to practice austerity in order to restore the confidence of private financial markets. In a deep recession, even orthodox economists at the International Monetary Fund soon recognized that austerity was a perverse recipe for economic recovery.

Europe, because of Germany’s worries that these policies would lead to inflation, had no way to extend credit to struggling nations or to raise money through the sale of bonds, which would have allowed the ECB to provide debt relief or to invest in public services.

The political result was the same on both sides of the Atlantic—declining prospects for ordinary people, animus toward elites, and the rise of ultra-nationalism

Not so in Europe. Parties such as the German Social Democratic Party, the British Labour Party, and the French Socialists disgraced themselves as co-sponsors of the neoliberal formula that brought down the economy.

In nation after nation, the main opposition to the party of Davos is neofascism.

In his masterful narrative, the economic historian Adam Tooze achieves several things that no other single author has quite accomplished. Tooze has managed to explain a hugely complex global crisis in its multiple dimensions, and his book combines cogent analysis with a fascinating history of the political and economic particulars

when the collapse came, it was “a financial crisis triggered by the humdrum market for American real estate.”

the collapse reinforced the financial supremacy of Washington and New York. “Far from withering away,” he writes, “the Fed’s response gave an entirely new dimension to the global dollar.”

When the entire structure of borrowed money collapsed, the losses more than wiped out all the capital of the banking system—not just in the US but in Europe, because of the intimate interconnection (and contagion) of American and European banks. Had the authorities just stood by, Tooze writes, the collapse would have been far more severe than the Great Depression:

While insisting to Congress that the emergency response was mainly to shore up US finance, Bernanke turned the Fed into the world’s central bank. “Through so-called liquidity swap lines, the Fed licensed a hand-picked group of core central banks to issue dollar credits on demand,” Tooze writes. In other words, the Fed simply created enough dollars, running well into the trillions, to prevent the global economy from collapsing for lack of credit.

Bernanke instigated government action on an unimagined scale to prop up a private system that supposedly did not need the state

Using deposit guarantees, loans to banks, outright capital transfers, and purchases of nearly worthless securities, the Fed and the Treasury recapitalized the banking system. To camouflage what was at work, officials invented unlimited credit pipelines with disarmingly technical names.

The blandly named policy of quantitative easing, which drove interest rates down to almost zero, was a euphemism for Fed purchases of immense quantities of private and government securities.

The crisis, Tooze writes, “was a devastating blow to the complacent belief in the great moderation, a shocking overturning of the prevailing laissez-faire ideology.” And yet the ideology prevailed

In a reversal of New Deal priorities, most of the relief went to the biggest banks, while smaller banks and homeowners were allowed to go under

Banks were permitted to invent complex provisional loan “modifications” with opaque terms that favored lenders, rather than using their government subsidies to provide refinancing to reduce homeowner debts

How did a nominally center-left administration, elected during a financial crisis caused by right-wing economic ideology and policy, end up in this situation?

Turning to Europe, Tooze explores the fatal combination of Germany’s demands for austerity with the structural weakness of the ECB and the vulnerability of the euro.

Portugal or Greece now enjoyed interest rates that were only slightly higher than Germany’s, and markets failed to take account of the risk of default, which was more serious than that of devaluation.

instead of treating the Greek situation as a crisis to be contained and helping a genuinely reformist new government find its footing, Brussels and Berlin treated Greece as an object lesson in profligacy and an opportunity to insist on punitive terms for financial aid

A central player in this tragedy was the European Central Bank. Tooze does a fine job of explaining the delicate dance between the bank’s leaders and its real masters in Germany. Since Germany opposed continent-wide recovery spending, the bank could only pursue monetary policy. The model was the Fed. Yet while the Fed has a congressional “dual mandate” to target both price stability and high employment, the ECB’s charter allowed for price stability only

The ECB, with the consent of the Germans, came up with one of those bland-sounding names, Outright Monetary Transactions, for its direct purchases of government bonds. But the program, at the insistence of the Germans, was restricted to nations in compliance with Merkel’s rigid fiscal terms, which limited national deficits and debts. In other words, the money could not go to the very nations where it was needed most, since the hardest-hit countries had to borrow heavily to get themselves out of the recession

Reading Tooze, you realize that it’s a miracle that the EU and the euro survived at all—but they did so at terrible human cost.

the ideal of liberalized trade, and the use of trade treaties to promote deregulation or privatized regulation of finance, is a major element of the story of how neoliberal hegemony promoted the eventual collapse. But except for a passing reference, trade and globalized deregulation get little mention here.

he has almost nothing to say about Janet Yellen. Her nomination as Fed chair in 2013 to succeed Bernanke was an epochal event and an improbable defeat for the proponents of austerity, deregulation, and bank bailouts who influenced Obama’s policymaking. Yellen, a left-liberal economist specializing in labor markets, was the only left-of-center Fed chair other then FDR’s chairman Marriner Eccles. She also believed in tough regulation of banks. The extension of quantitative easing well beyond its intended end was substantially due to Yellen’s concern about wages and employment, and not just price stability, since low interest rates can also help promote recovery.

Tooze ends the book with a short chapter called “The Shape of Things to Come,” mainly on the ascent of China, the one nation that avoided all the shibboleths of economic and political liberalism, though it also, of course, does not have a political democracy.

he’s among the world’s most influential financial commentators, with loyal readerships in Washington, London, Paris, and Brussels, as well as on Wall Street

Tooze’s readers turn to him for his uncanny ability to know which numbers on a spreadsheet matter, or when a trend has hit the point at which it has started to shape history.

“Economic events have had such a huge influence on politics this century,” Robert Skidelsky, the John Maynard Keynes biographer, told me. Tooze “illustrates the interpenetration of economic policy and political events. It’s as simple as that.”

a long list of challenges: War, raising the specter of nuclear conflict. Climate change, threatening famine, flood, and fire. Inflation, forcing central banks to crush consumer demand. The pandemic,

The combination of COVID-19, buckling supply chains, and central banks’ scramble to respond constituted “the first crisis where I found my professional existence, my personal existence, and my understanding of my relationship to history were all just completely seamless, continuous,” he says. He found his niche—and thousands of new readers.

As he tells it, he’s not just circulating data or building arguments; he’s also bathing in an anarchic, unstoppable flow of information. “What does it mean to be in the present, in this constant experience of obsolescence, this constant experience of having your ideas and preconceptions consumed by the flow toward the future, which, at any given moment, is fundamentally unpredictable and then once you have consumed it, becomes obsolete?” he says effusively. “That’s my now—this literal floating on the surface tension of the current moment.”

Hitler was compelled not just by murderous anti-Semitism but by shortages of land, steel, and fuel, Tooze argued in 2006’s Wages of Destruction,

“We always wonder what drives this propulsive quality of the Nazi state, why it is so intent on blitzkrieg and fast conquest,” says Susan Pedersen, a renowned historian of Europe. “Adam lays out how they are operating in a world of economic constraint: For them, victory is possible, if it happens fast.”

As Tooze sees it, the forces of central-bank tightening, war, inflation, and climate change are reinforcing one another. He is offering no reassurance about where that might head—only the hope that perhaps this polycrisis might be knowable to us.

Tooze calls it a problem in “Western capitalism” intentionally. It was not just an American problem.

One of the great strengths of Tooze’s book is to demonstrate the deeply intertwined nature of the European and American financial systems.

In 2006, European banks generated a third of America’s riskiest privately issued mortgage-backed securities. By 2007, two-thirds of commercial paper issued was sponsored by a European financial entity.

“Between 2001 and 2006,” Tooze writes, “Greece, Finland, Sweden, Belgium, Denmark, the U.K., France, Ireland and Spain all experienced real estate booms more severe than those that energized the United States.”

while the crisis may have been caused in both America and Europe, it was solved largely by Washington. Partly, this reflected the post-Cold War financial system, in which the dollar had become the hyperdominant global currency and, as a result, the Federal Reserve had truly become the world’s central bank.

therein lies the unique feature of the crash of 2008. Unlike that of 1929, it was not followed by a Great Depression. It was not so much the crisis as the rescue and its economic, political and social consequences that mattered most

The Fed acted aggressively and also in highly ingenious ways, becoming a guarantor of last resort to the battered balance sheets of American but also European banks. About half the liquidity support the Fed provided during the crisis went to European banks

Before the rescue and even in its early stages, the global economy was falling into a bottomless abyss. In the first months after the panic on Wall Street, world trade and industrial production fell at least as fast as they did during the first months of the Great Depression. Global capital flows declined by a staggering 90 percent

The Federal Reserve, with some assistance from other central banks, arrested this decline. The Obama fiscal stimulus also helped to break the fall.

China, with its own gigantic stimulus, created an oasis of growth in an otherwise stagnant global economy.

The rescue worked better than almost anyone imagined

The governing elite did not anticipate the crisis — as few elites have over hundreds of years of capitalism. But once it happened, many of them — particularly in America — acted quickly and intelligently, and as a result another Great Depression was averted. The system worked

But Tooze also convincingly shows that the European Central Bank mismanaged things from the start

On the left, the entire episode discredited the market-friendly policies of Tony Blair, Bill Clinton and Gerhard Schroeder, disheartening the center-left and emboldening those who want more government intervention in the economy

On the right, it became a rallying cry against bailouts and the Fed, buoying an imaginary free-market alternative to government intervention. Unlike in the 1930s, when the libertarian strategy was tried and only deepened the Depression, in the last 10 years it has been possible for the right to argue against the bailouts, secure in the knowledge that their proposed policies will never actually be implemented.

The crash brought together many forces that were around anyway — stagnant wages, widening inequality, anger about immigration and, above all, a deep distrust of elites and government — and supercharged them. The result has been a wave of nationalism, protectionism and populism in the West today.

confirmation of this can be found in the one major Western country that did not have a financial crisis and has little populism in its wake — Canada.

No government handled the crisis better than that of the United States, which acted in a surprisingly bipartisan fashion in late 2008 and almost seamlessly coordinated policy between the outgoing Bush and incoming Obama administrations. And yet, the backlash to the bailouts has produced the most consequential result in the United States.

experts are considering the new vulnerabilities of a global economy

we are confronting a quite different problem — an erratic, unpredictable United States led by a president who seems inclined to redo or even scrap the basic architecture of the system that America has painstakingly built since 1945. How will the world handle this unexpected development? What will be its outcome? This is the current crisis that we will live through and that historians will soon analyze.

what about the United States? Before the 1914 war, the great economic potential of the U.S. was suppressed by its ineffective political system, dysfunctional financial system, and uniquely violent racial and labor conflicts. “America was a byword for urban graft, mismanagement and greed-fuelled politics, as much as for growth, production, and profit,”

as World War I entered its third year—and the first year of Tooze’s story—the balance of power was visibly tilting from Europe to America. The belligerents could no longer sustain the costs of offensive war. Cut off from world trade, Germany hunkered into a defensive siege, concentrating its attacks on weak enemies like Romania. The Western allies, and especially Britain, outfitted their forces by placing larger and larger war orders with the United States

His Republican opponents—men like Theodore Roosevelt, Henry Cabot Lodge, and Elihu Root—wished to see America take its place among the powers of the earth. They wanted a navy, an army, a central bank, and all the other instrumentalities of power possessed by Britain, France, and Germany. These political rivals are commonly derided as “isolationists” because they mistrusted the Wilson’s League of Nations project. That’s a big mistake. They doubted the League because they feared it would encroach on American sovereignty.

That staggering quantity of Allied purchases called forth something like a war mobilization in the United States. American factories switched from civilian to military production; American farmers planted food and fiber to feed and clothe the combatants of Europe

But unlike in 1940-41, the decision to commit so much to one side’s victory in a European war was not a political decision by the U.S. government. Quite the contrary: President Wilson wished to stay out of the war entirely. He famously preferred a “peace without victory.” The trouble was that by 1916, the U.S. commitment to Britain and France had grown—to borrow a phrase from the future—too big to fail.

His Wilson is no dreamy idealist. The president’s animating idea was an American exceptionalism of a now-familiar but then-startling kind.

Grant presents this story as a laissez-faire triumph. Wartime inflation was halted. Borrowing and spending gave way to saving and investing. Recovery then occurred naturally, without any need for government stimulus. “The hero of my narrative is the price mechanism, Adam Smith’s invisible hand,

It was Wilson who wished to remain aloof from the Entente, who feared that too close an association with Britain and France would limit American options.

“By the end of 1916, American investors had wagered two billion dollars on an Entente victory,” computes Tooze (relative to America’s estimated GDP of $50 billion in 1916, the equivalent of $560 billion in today’s money).

Wilson hoped to deploy this emerging super-power to enforce an enduring peace. His own mistakes and those of his successors doomed the project,

What went wrong? “When all is said and done,” Tooze writes, “the answer must be sought in the failure of the United States to cooperate with the efforts of the French, British, Germans and the Japanese [leaders of the early 1920s] to stabilize a viable world economy and to establish new institutions of collective security. … Given the violence they had already experienced and the risk of even greater future devastation, France, Germany, Japan, and Britain could all see this. But what was no less obvious was that only the US could anchor such a new order.”

And that was what Americans of the 1920s and 1930s declined to do—because doing so implied too much change at home for them: “At the hub of the rapidly evolving, American-centered world system there was a polity wedded to a conservative vision of its own future.”

The Forgotten Depression is a polemic embedded within a narrative, an argument against the Obama stimulus joined to an account of the depression of 1920-21. As Grant correctly observes, that depression was one of the sharpest and most painful in American history.

Then, after 18 months of extremely hard times, the economy lurched into recovery. By 1923, the U.S. had returned to full employment.

Wilson was guided by a different vision: Rather than join the struggle of imperial rivalries, the United States could use its emerging power to suppress those rivalries altogether. Wilson was the first American statesman to perceive that the United States had grown, in Tooze’s words, into “a power unlike any other. It had emerged, quite suddenly, as a novel kind of ‘super-state,’ exercising a veto over the financial and security concerns of the other major states of the world.”

the central assumption of his version of events is the same one captured in Rothbard’s title half a century ago: that America’s economic history constitutes a story unto itself.

Monetary authorities, worried that inflation would revive and accelerate, made the fateful decision to slam the credit brakes, hard. Unlike the 1918 recession, that of 1920 was deliberately engineered. There was nothing invisible about it. Nor did the depression “cure itself.” U.S. officials cut interest rates and relaxed credit, and the economy predictably recovered

Germany, for its part, could only pay if it could export, and especially to the world’s biggest and richest consumer market, the United States. The depression of 1920 killed those export hopes. Most immediately, the economic crisis sliced American consumer demand precisely when Europe needed it most.

But the gravest harm done by the depression to postwar recovery lasted long past 1921. To appreciate that, you have to understand the reasons why U.S. monetary authorities plunged the country into depression in 1920.

Americans, meanwhile, were preoccupied with the problem of German recovery. How could Germany achieve political stability if it had to pay so much to France and Belgium? The Americans pressed the French to relent when it came to Germany, but insisted that their own claims be paid in full by both France and Britain.

But 1920-21 was an inflation-stopper with a difference. In post-World War II America, anti-inflationists have been content to stop prices from rising. In 1920-21, monetary authorities actually sought to drive prices back to their pre-war levels

James Grant hails this accomplishment. Adam Tooze forces us to reckon with its consequences for the rest of the planet.

When the U.S. opted for massive deflation, it thrust upon every country that wished to return to the gold standard (and what respectable country would not?) an agonizing dilemma. Return to gold at 1913 values, and you would have to match U.S. deflation with an even steeper deflation of your own, accepting increased unemployment along the way. Alternatively, you could re-peg your currency to gold at a diminished rate. But that amounted to an admission that your money had permanently lost value—and that your own people, who had trusted their government with loans in local money, would receive a weaker return on their bonds than American creditors who had lent in dollars.

Britain chose the former course; pretty much everybody else chose the latter.

The consequences of these choices fill much of the second half of The Deluge. For Europeans, they were uniformly grim, and worse.

But one important effect ultimately rebounded on Americans. America’s determination to restore a dollar “as good as gold” not only imposed terrible hardship on war-ravaged Europe, it also threatened to flood American markets with low-cost European imports. The flip side of the Lost Generation enjoying cheap European travel with their strong dollars was German steelmakers and shipyards underpricing their American competitors with weak marks.

American leaders of the 1920s weren’t willing to accept this outcome. In 1921 and 1923, they raised tariffs, terminating a brief experiment with freer trade undertaken after the election of 1912. The world owed the United States billions of dollars, but the world was going to have to find another way of earning that money than selling goods to the United States.

Between 1924 and 1930, world financial flows could be simplified into a daisy chain of debt. Germans borrowed from Americans, and used the proceeds to pay reparations to the Belgians and French. The French and Belgians, in turn, repaid war debts to the British and Americans. The British then used their French and Italian debt payments to repay the United States, who set the whole crazy contraption in motion again. Everybody could see the system was crazy. Only the United States could fix it. It never did.

That way was found: more debt, especially more German debt. The 1923 hyper-inflation that wiped out Germany’s savers also tidied up the country’s balance sheet. Post-inflation Germany looked like a very creditworthy borrower.

“If man accumulates enough combustible material, God will provide the spark.” So it happened in 1929. The Deluge that had inundated the rest of the developed world roared back upon the United States.

From the start, the United States was Hitler’s ultimate target. “In seeking to explain the urgency of Hitler’s aggression, historians have underestimated his acute awareness of the threat posed to Germany, along with the rest of the European powers, by the emergence of the United States as the dominant global superpower,” Tooze writes. “The originality of National Socialism was that, rather than meekly accepting a place for Germany within a global economic order dominated by the affluent English-speaking countries, Hitler sought to mobilize the pent-up frustrations of his population to mount an epic challenge to this order.”

Germany was a weaker and poorer country in 1939 than it had been in 1914. Compared with Britain, let alone the United States, it lacked the basic elements of modernity: There were just 486,000 automobiles in Germany in 1932, and one-quarter of all Germans still worked as farmers as of 1925. Yet this backward land, with an income per capita comparable to contemporary “South Africa, Iran and Tunisia,” wagered on a second world war even more audacious than the first.

The reckless desperation of Hitler’s war provides context for the horrific crimes of his regime. Hitler’s empire could not feed itself, so his invasion plan for the Soviet Union contemplated the death by starvation of 20 to 30 million Soviet urban dwellers after the invaders stole all foodstuffs for their own use. Germany lacked workers, so it plundered the labor of its conquered peoples. By 1944, foreigners constituted 20 percent of the German workforce and 33 percent of armaments workers

On paper, the Nazi empire of 1942 represented a substantial economic bloc. But pillage and slavery are not workable bases for an industrial economy. Under German rule, the output of conquered Europe collapsed. The Hitlerian vision of a united German-led Eurasia equaling the Anglo-American bloc proved a crazed and genocidal fantasy.

The foundation of this order was America’s rise to unique economic predominance a century ago. That predominance is now coming to an end as China does what the Soviet Union and Imperial Germany never could: rise toward economic parity with the United States.

t is coming, and when it does, the fundamental basis of world-power politics over the past 100 years will have been removed. Just how big and dangerous a change that will be is the deepest theme of Adam Tooze's profound and brilliant grand narrative

“If the world is to cope with climate change, policymakers will need to pull every lever at their disposal,” he writes. “Faced with this threat, to indulge in the idea that central banks, as key agencies of the state, can limit themselves to worrying about financial stability … is its own form of denial.”

In England, by contrast, Carney has convened 33 central banks to investigate how to “green the financial system.” According to Axios, every powerful central bank is working with him—except for Banco do Brasil and the Fed.

Mark Carney, the governor of the Bank of England, in 2015, in a speech which has subsequently received massive coverage—and he is a man, after all, absolutely of the global financial establishment—coined the idea of a climate Minsky moment. [Editor’s note: A Minsky moment is when an asset’s price suddenly collapses after a long period of growth.]

We would need [fossil-fuel assets] to be on the balance sheet of actors who were under huge pressure in a fire-sale situation and who couldn’t deal with a sudden revaluation. We would need an entire network of causation to be there, which is what produced the unique crisis of 2007 to 2008.

So imagine that we stay on our current path, and we’re headed toward 3 or 4 degrees’ [Celsius] temperature change. And then imagine some of the nonlinearities kick in, which the climate scientists tell us about, and we face a Fukushima-style event.

What happens next? You then get nervous democratic politicians—and not necessarily those who are known for their populism, but just nervous democratic politicians—suddenly deciding that we have to stop doing one or another part of our carbon-based economy. It has to stop, and it has to stop immediately. And then you get big shocks. Then you get sudden revaluations.

In other words, the success of the delaying tactics of the carbon lobby create a situation in which we’re then faced with the possibility of a sudden regulatory shock

“One-third of equity and fixed income assets issued in global financial markets can be classified as belonging to the natural resource and extraction sectors, as well as carbon-intensive power utilities, chemicals, construction, and industrial goods firms.”

Whether that will, in fact, ease the formation of majorities in Congress is another question. Because, after all, it does somehow have to get through the Senate, you know.

Germany is far, far more exposed. A huge slice of their economy is basically all about internal combustion engines, and so that number includes all of those stocks, for sure.

If we saw a huge shock to, say, European equity [exchange-traded funds], which were heavily in German automotive, that’s the sort of trigger that we might be looking at.

This is not simply a zero-sum game; this is a structural transformation that has many very attractive properties. There’s loads of excellent jobs that could be created in this kind of transition.There’s no reason why, even by conventional GDP-type metrics, it need even be associated with the kind of feel-bad factor of slow GDP growth. Then [you could] also link it to a revival of social democracy for the United States. From a progressive political point of view, that’s obviously extremely attractive.

there’s also a deeper view: that climate change is the situation within which all other politics will happen for the next several generations, at least.

ever since the 1990s that’s been the logjam on any serious American commitment.

When you look at a third of securities tied up in the carbon economy and the evidence for decoupling GDP growth from carbon emissions maybe not being as strong as we’d like, do you think the change that needs to happen is realistic?

Tooze: Realistic? No. I mean, depends what you mean by realism. The scale of the challenge requires a boldness of action for which there is no precedent. That’s the only good purpose that the war analogies serve

Meyer: In your piece, you write: “Those in the United States who call for a Green New Deal or a Green Marshall Plan are, if anything, understating the scale of what is needed.”

Do you think climate action needs to be larger than, say, the U.S. mobilization for World War II?

Tooze: Well, less large in absolute terms. Because even the U.S. was spending almost 40 percent of GDP on World War II. And if you’re the Soviet Union, you’re spending 55 to 60 percent in 1940. We don’t need to do anything like that. It needs to be much bigger than the New Deal, which in fiscal-policy terms was really quite trivial.

Crucially, what makes it totally unlike the war is that there’s no happy end. There’s no moment where you win and then everything goes back to the way it was before, but just better. That’s a misunderstanding

This isn’t crash dieting; this is a permanent change in lifestyle, and we need to love that and we need to live it and we need to own it and we need to reconcile ourselves to the fact that this is for us and for all subsequent generations of humans.

It isn’t just the oil and gas majors, because they wouldn’t get you to 30 percent. Exxon isn’t big enough to get you to that kind of percentage. It’s Exxon, and [the major automakers] Daimler and BMW, and the entire carbon-exposed complex.

all the really hard choices need to be made by people like China and India and Pakistan and Bangladesh and Indonesia

You don’t have that very much in Germany. There isn’t anyone in Germany saying, “Which bit of mid-20th-century history is this most like?,” mercifully. The one analogy that has popped up in Germany is reunification, which I actually think is quite a good one, because that’s still an ongoing problem

in the American case, it would be civil rights and Reconstruction, which isn’t a particularly optimistic comparison to draw. It’s an ongoing problem, it’s a deep historic problem, it only happened once, we still haven’t fixed it, and we’re not at peace.

Meyer: There’s a kind of shallow view of climate change: that it is something we need to avert or stop. And that’s somewhat true

furthermore—and much more fundamentally than any of those things—this isn’t really about America. I mean, America can be an obstacle and get in the way, but none of the really hard choices needs to be made by Americ

like Reconstruction or the civil-rights movement, it needs to be something that people take on like a moral commitment, in the same way they take on genocide prevention as a moral commitment

problems that we thought we’d fixed, like the Green Revolution and the feeding of the world population, for instance—totally not obvious that those fixes cope with the next 20 years of what’s ahead of us. The food problem that was such an oppressive issue globally in the 1970s may resurge in an absolutely dramatic way.

Meyer: Given all that, if Jerome Powell decided that he wanted to intervene on the side of climate action, what could he do? What could the Fed do?

Tooze: What I think the Fed should announce is that it enthusiastically supports the idea of a bipartisan infrastructure push focused on the American electrical network, first and foremost, so that we can actually hook up the renewable-generating capacity—which is now eminently, you know, realistic in economic terms. Setting a backstop to a a fiscal-side-led investment push is the obvious thing.

It is indeed a highly appropriate response to an environment of extremely low interest rates, and [former Treasury Secretary] Larry Summers & Co. would argue that it might help, as it were, to suck us out of the state of secular stagnation that we’re in.

another avenue to go down—for the Fed to take a role in helping develop a classification of green bonds, of green financing, with a view also to rolling out comprehensive demands for disclosure on the part of American firms, for climate risks to be fully declared on balance sheets, and for due recognition to be given to firms that are in the business of proactively preparing themselves for decarbonization.

You could, for instance, declare that the Fed views with disfavor the role of several large American banks in continuing to fund coal investment. Some of the carbon-tracking NGOs have done very good work showing and exposing the way in which some of the largest, the most reputable American banks are still in the business of lending to Big Coal. Banking regulation could be tweaked in a way that would produce a tilt against that.

the classic role of the Fed is to support government-issued debt. Insofar as the Green New Deal is a government-issued business, the Fed has just an absolutely historical warrant for supporting fiscal action.

with regards to the broader economy, the entire federal-government apparatus essentially stood behind the spread of home ownership in the United States and the promotion of suburbanization through the credit system. And kind of what we need is a Fannie Mae and Freddie Mac for the energy transition.

if the question is, Is there historical warrant for the financial agencies of government in the United States biasing the property structure in the economy in a certain way?, the answer is emphatically yes—all the way down to the grotesque role of the New Deal financial apparatus in enshrining the racial segregation of the American urban space, with massive effects from the 1930s onward.

The idea of neutrality should not even be allowed in the room in this argument. It’s a question of where we want to be biased. If you look at QE, especially in the U.K. and the EU, it was effectively fossil-biased.

monetary policy is not neutral with regards to the environment. There’s no safe space here. The only question is whether you’re going to lead in the right way

Meyer: Last question. With any of this, is there a role for interested Americans to play if they are not particularly tied to the financial- or monetary-policy elite?

Tooze: Support your congressperson in doing exactly what AOC did in the hearings with Powell a couple of weeks ago

[Editor’s Note: Representative Alexandria Ocasio-Cortez asked Powell whether inflation and unemployment are still closely connected, as the Fed has long argued.]

Applaud, follow with interest, raise questions. That’s exactly what needs to be happening. The politicization of monetary policy is a fact.

If we don’t raise these questions, the de facto politics is, more often than not, conservative and status quo–oriented. So this, like any other area, is one where citizens—whether they’re educated and informed or not—need to wise up, get involved, and follow the arguments and develop positions.

So applaud your congresspeople when they do exactly what AOC was doing in that situation. In many ways, I thought it was one of the most hopeful scenes I’ve seen in that kind of hearing in a long time.

So extreme is inequality that the lowest-earning 50% of the world population – 4 billion people – account for as little as 12% of total emissions.

And those at the very bottom of the pile barely register at all. Mali’s per capita C02 emissions are about one-seventy-fifth of those in the US. Even if the lowest-earning third of the global population – more than 2.6 billion people – were to raise themselves above the $3.2-a-day poverty line, it would increase total emissions by a mere 5% – that is, one-third of the emissions of the richest 1%.

Half the world’s population, led by the top 10% of the income distribution – and, above all, by the global elite – drive a globe-spanning productive system that destabilises the environment for everyone

The worst effects are suffered by the poorest, and in the coming decades the impact will become progressively more extreme. And yet their poverty means they are virtually powerless to protect themselves.

This is the triple inequality that defines the climate global equation: the disparity in responsibility for producing the problem; the disparity in experiencing the impacts of the climate crisis; and the disparity in the available resources for mitigation and adaptation.

global heating will pose huge distributional problems. How will climate refugees be resettled? How will the economy adapt?

For fragile states such as Iraq, it may prove too much. The risk is that they will tip from just about coping into outright collapse, failing to provide water and the electricity for cooling – the bare essentials for survival in extreme heat

You might say, plus ça change. The poor suffer and the rich prosper. But the consequences of the climate triple inequality are radical and new

Rich countries have long traded on unequal terms with the poor. During the era of colonialism, they plundered raw materials and enslaved tens of millions. For two generations after decolonisation, economic growth largely bypassed what was then known as the third world.

Since the 1980s, with the acceleration of China’s economic growth, the scope of development has dramatically widened.

The middle 40% of the world’s income distribution now account for 41% of global emissions, meaning they have achieved a considerable level of energy consumption. But this “global middle class”, concentrated above all in east Asia, crowds out the carbon budget remaining for those on the lowest incomes, and their growth inflicts irreversible damage on some of the poorest and most disempowered people in the world.

As we run ever closer to the edge of the environmental envelope – the conditions within which our species can thrive – the development of the rich world systematically undercuts the conditions for survival of billions of people in the climate danger zone

They are not so much exploited or bypassed as victimised by the climactic effects of economic growth taking place elsewhere. This violent and indirect entanglement is new in its quality and scale

Violent and unequal relationships between groups usually involve some degree of interaction and can, as a result, be resisted. Workers can strike.

But arms-length ecological victimisation entails no such relationship and offers correspondingly fewer channels for resistance from within the system.

can we not hope for more constructive responses to the triple inequality?

This question is still what gives such huge importance to the global climate conferences such as Cop28, which starts on 30 November. They may seem like staid and ritualistic affairs, but it is in such venues that the lethal connection between oil, gas and coal production, rich-world consumption and the lethal risks facing those in the climate danger zone can be articulated in political form.

since then the resistance of US and European negotiators has hardened. As we approach Cop28, the organisation and the financing of the fund are yet

Such a fund is no solution to the problem of the triple inequality. For that we need a comprehensive energy transition and new models of truly inclusive and sustainable development

But a loss and damage fund does one essential thing. It recognises that the global climate crisis is no longer a problem of future development. We have entered the stage where the failure to urgently address the mounting crisis becomes an active process of victimisation. A victimisation that cries out, at least, for an admission of responsibility and adequate compensation.

Adam Tooze is a professor of history at Columbia University

A systemic risk is a threat emerging within one natural, technological, or social system with impacts extending beyond that system to endanger the functionality of one or more other systems

“Polycrisis is a way of capturing the tangled mix of challenges and changes closely interact with one another, bending, blurring and amplifying each other.”

The FT essay was a short piece - originally drafted to run to only 750 words. In that short compass I focused on three aspects

(1) Defining the concept of polycrisis in simple and intuitive terms;

(2) Stressing the diversity of causal factors implied by the term “poly”;

(3) and emphasizing the novelty of our current situation.

There are two aspects to the novelty that I stress in the FT piece, one is our inability to understand our current situation as the result of a single, specific causal factor and secondly the extraordinary scale and breadth of global development, especially in the last 50 years, that makes it seem probable, according to the cognitive schemata and models that we do have at our disposal, that we are about to crash through critical tipping points.

Do we actually know what development or growth are?

As Bruno Latour forced us to recognize, it is not at all obvious that we do understand our own situation. In fact, as he convincingly argued in We Have Never Been Modern, modernity’s account of itself is built around blindspots specifically with regard to the hybrid mobilization of material resources and actors and the working of science itself, which define the grand developmental narrative.

t we have every reason to think that we are at a dramatic threshold point, but also that our need to reach for a term as unspecific as polycrisis indicates our flailing inability to grasp our situation with the confidence and conceptual clarity that we might once have hoped for.

What Beck taught us was that risk is no longer in any simple sense “natural” but a phenomenon of second nature.

A Beckian reading of polycrisis might look a bit like the version produced by Christopher Hobson and Matthew Davies summarized

A polycrisis can be thought of as having the following properties:(1) Multiple, separate crises happening simultaneously. This is the most immediate and comprehensible feature.

(2) Feedback loops, in which individual crises interact in both foreseeable and unexpected ways. This points to the ways that these separate crises relate to each other.

(3) Amplification, whereby these interactions cause crises to magnify or accelerate, generating a sense of lack of control. The way these separate problems relate and connect works to exacerbate and deepen the different crises.

(4) Unboundedness, in which each crisis ceases to be clearly demarcated, both in time and space, as different problems bleed over and merge. It becomes increasingly difficult to distinguish where one issue ends, and another commences.

(5) Layering, a dynamic Tooze attributes to Yixin’s analysis, whereby the concerns of interest groups related to each distinct crisis overlap ‘to create layered social problems: current problems with historical problems, tangible interest problems with ideological problems, political problems with non-political problems; all intersecting and interfering with one another’ (quoted in Tooze 2021, 18).

(6) The breakdown of shared meaning, stemming from crises being understood differently and from the complex ways in which they interact, and how these interactions are subsequently perceived differently. As each crisis blurs and connects to the other, it becomes more difficult to identify a clear scope and narrative for each distinct crisis, as well as coming to terms with all the interactions between different issues.

(8) Emergent properties, the collection of these dynamics, which all exhibit a high degree of reflexivity, exceeds the sum total of its parts. The polycrisis is ultimately much more than a collection of smaller, separate crises. Instead, it is something like a socio-political version of the ‘Fujiwhara effect,’ a term used to describe when two or more cyclones come together, morph and merge.

(7) Cross purposes, whereby each individual crisis might impede the resolution of another crisis, in terms of demanding attention and resources, and the extent to which they have become tangled together makes it difficult to distinguish and prioritise.

We need to think “big”. Or rather we need to learn how to span the void between the very big and the very particular, the micro and the macro

What all this talk of grand social processes and movements of the mind should not obscure is the extent to which the current crisis is also a matter of identity, choice and action. As much as it is a matter of sociology, social theory and grand historical sweep, it is also a matter of psychology, both at the group and very intimate level, and of politics.

The issue of politics must however be flagged.

The polycrisis affects us at every level. And if you want to take seriously the problem of thinking in medias res you cannot bracket the matter of psychology.

The tension of the current moment is not, after all, simply the result of long-term processes of development, or environmental change. It is massively exacerbated by geopolitical tension resulting from strategic decisions taken by state elites. Some of those are elected. Some not.

What is characteristic of the current moment, and symptomatic of the polycrisis, is that the decisive actors in Russia, China and the United States, the three greatest military powers, are all defining their positions as though their very identities were on the line.

Can one really say that the Biden administration, the Chinese, Putin’s regime are crisis-fighting? Are they not escalating?

It is surely a matter of both, and in interdependence. Each of the major powers will insist that they are acting defensively (crisis-fighting in the extended sense). But what this entails, if you feel fundamental interests are at stake, is escalation, even to the point of engaging in open warfare or risking atomic confrontation.

It is like the classic Cold War but only worse, because everyone feels under truly existential pressure and has a sense of the clock ticking. If no one confidently believes that they have time on their side - and who has that luxury in the age of polycrisis? - it makes for a very dangerous situation indeed.

I found the idea of polycrisis interesting and timely because the prefix “poly” directed attention to the diversity of challenges without specifying a single dominant contradiction or source of tension or dysfunction.

In the United States, the great wartime mobilization of resources and manpower seemed to reflect what this unique nation was capable of achieving when set against a global, existential threat.

Of course, there’s a limit to these metaphors’ potency. In geopolitical terms, the Trump administration and nationalist governments elsewhere in the West are almost explicitly interested in breaking up the post-World War II political and economic order, not rallying it

“We might forgive our leaders’ frequent and self-serving language of war and their invocation of Churchill in 1940 if only it is accompanied by some of that wartime spirit that reset and expanded the boundaries of the possible,” wrote Oxford University historian Margaret MacMillan. “What had seemed fantastical or too expensive in peace — mass producing penicillin, splitting the atom, making jet engines — swiftly became reality.

But figures like Trump and Johnson, whose political parties presided over years of austerity or maintain an aversion to social spending, aren’t the sort of statesmen who would champion a New Deal or forge the National Health Service.

“Many of the actions undertaken to put the United States on a war footing in the 1940s were natural outgrowths of Franklin Roosevelt’s decade-long attempt to equip the federal government with new capabilities and grant it the necessary authorities to overcome the Great Depression,”

“The creation of new agencies and organizations was second nature to that generation, as was a willingness to experiment boldly, persistently, and swiftly on what might provide immediate relief for millions of affected Americans. Those habits have long since been forgotten.”

And maybe, as a virus paralyzes the globe, the lesson that matters is not one of leadership or courage or sacrifice, but something more tectonic and imperceptible.

“From the vantage point of the 21st century, if there is a historical grand narrative that does justice to the significance of the 1945 moment, it is not that of international organizations like the Bretton Woods institutions or national welfare states,” wrote Adam Tooze

It is, rather, “what 21st-century environmental historians call the ‘Great Acceleration,’ the vast and dramatic acceleration of humanity’s appropriation of nature that reached a turning point in the middle of the 20th century,”

“In its globe-spanning dimensions, in its multifaceted integration of the land, the sea, and the air, and in its violent intensity, World War II was an anticipation and driver of that process, which continues down to the present day.”

Stoics are making a comeback—and they have been for several years. From discussions among Silicon Valley elites to podcasts and newsletters, the school of thought that once flourished in ancient Greece and Rome has been seeing a revival in recent years. The pandemic supercharged this.

men react poorly to loss of status. A 2005 study by the University of Newcastle upon Tyne found that men who experience downward mobility are four times more likely to suffer from depression—and although women are twice as likely to be downwardly mobile, they don’t experience the same drop in well-being.

Today’s backlash against diversity and inclusion efforts can also be seen through this lens: a third leg of men’s status being chopped off.

The Roman Empire did not invent the patriarchy—but it did codify it into law. Pater familias was a legal status that gave the patriarch authority over the family and its estate, two status-granting privileges that contemporary men took for granted but may never achieve

The Roman legal concept of bonus pater familias, or diligens pater familias, became the benchmark for reasonable and diligent behavior when courts seek to establish negligence, from Spain to Canada.

Status (and gender) no longer mattered. What matters is the behavior: Is it that of a proverbial good family father? This has become a stand-in for the standard of care required, underpinning how we may not all think of the Roman Empire all that often, but it’s all around us.

In an age of crises, competence commands a premium—but what we’re getting instead is misogyny, anger, and poor mental health

no wonder that men are vocally demanding to spend more time with their families—perhaps the most potent cure to these struggles.

Today, men are craving answers, purpose, and family. If that’s unachievable, we can expect much worse than fantasies about bygone empires.

if we are agreed that Beijing looks set to stop the largest property boom in history without unleashing a systemic financial crisis, it is doing something truly remarkable. It is setting a new standard in economic policy.

Is this perhaps what policy looks like if it actually takes financial stability seriously? And if we look in the mirror, why aren’t we applauding more loudly?

Add to real estate the other domestic factor roiling the Chinese financial markets: Beijing’s remarkable humbling of China’s platform businesses, the second-largest cluster of big tech in the world. That too is without equivalent anywhere else.

Beijing’s aim is to ensure that gambling on big tech no longer produces monopolistic rents. Again, as a long-term policy aim, can one really disagree with that?

we have two dramatic and deliberate policy-induced shocks of the type for which there is no precedent in the West. Both inflict short-term pain with a view to longer-term social, economic and financial stability.

Ultimately political economy determines the conditions for long-run growth. So if you had to bet on a regime, which might actually have what it takes to break a political economy impasse, to humble vested interests and make a “big play” on structural change, which would it be? The United States, the EU or Xi’s China?

Beijing’s challenge right now is to manage the fall out from the two most dramatic development policies the world has ever seen, the one-child policy and China’s urbanisation, plus the historic challenge of big tech — less a problem specific to China than the local manifestation of what Shoshana Zuboff calls “surveillance capitalism”.

no, Xi’s regime has not yet presented a fully convincing substitute plan. But, as Michael Pettis has forcefully argued, China has options. There is an entire range of policies that Beijing could put in place to substitute for the debt-fuelled infrastructure and housing boom.

demography is normally treated as a natural parameter for economic activity. But in China’s case the astonishing fact is that the sudden ageing of its workforce is also a policy-induced challenge. It is a legacy of the one-child policy — the most gigantic and coercive intervention in human reproduction ever undertaken.

China needs to spend heavily on renewable energy and power distribution to break its dependence on coal. If it needs more housing, it should be affordable. All of this would generate more balanced growth. 5 per cent? Perhaps not, but certainly healthier and more sustainable.

If it has not so far pursued an alternative growth model in a more determined fashion, some of the blame no doubt falls on the prejudices of the Beijing policy elite. But even more significant are surely the entrenched interests of the infrastructure-construction-local government-credit machine, in other words the kind of political economy factors that generally inhibit the implementation of good policy.

The problem is only too familiar in the West. In Europe and the US too, such interest group combinations hobble the search for new growth models. In the United States they put in doubt the possibility of the energy transition, the possibility of providing a healthcare system that is fit for purpose and any initiative on trade policy that involves widening market access.

First and foremost China needs a welfare state befitting of its economic development.

On balance, if you want to be part of history-making economic transformation, China is still the place to be. But it is undeniably shifting gear. And thanks to developments both inside and outside the country, investors will have to reckon with a much more complex picture of opportunity and risk. You are going to need to pick smart and follow the politics and geopolitics closely.

If on the other hand you want to invest in the green energy transition — the one big vision of economic development that the world has come up with right now — you simply have to have exposure to China, whether directly or indirectly by way of suppliers to China’s green energy sector. China is where the grand battle over the future of the climate is going to be fought. It will be a huge driver of innovation, capital accumulation and profit, the influence of which will be felt around the world.

it is one key area that both the Biden administration and the EU would like to “silo off” from other areas of conflict with China.

I worry that we may be too focused on the medium-term. Given the news out of Hong Kong and mainland China, Covid may yet come back to bite us.

Here too China is boxed in by its own success. It has successfully pursued a no-Covid policy, but due to the failing of the rest of the world, it has been left to do so in “one country”.

Until China finds some way to contain the risks, this is a story to watch. A dramatic Omicron surge across China would upend the entire narrative of the last two years, which is framed by Beijing success in containing the first wave.