The first impeachment of Donald Trump. The departure of Great Britain from the European Union after four years of wrangling. The largest year of stimulus in global history by far. Strident democracy protests in Hong Kong. The murder of George Floyd and the subsequent associated turmoil. And, of course, the COVID-19 pandemic and a massive wave of business closings, unemployment and government lockdowns that followed in its wake.
Perhaps the most astonishing fact about 2020 is just how much happened — it might take a century or more for the public to digest it all. The permutations of so many disparate yet related events could make 2020 the most debated episode in history that produces the least consensus. Adam Tooze — a historian who writes in the style of a jazz pianist, flitting and floating up and down the ideas and events he chronicles — provides our first second draft of a history of this 2020 in “Shutdown: How Covid Shook the World’s Economy.”
In Tooze’s telling, 2020 was a “polycrisis” that could perhaps portend the end of the neoliberal order, or could merely be a “moment in a process of escalation” toward its demise. The book is a tour of global events as the human species confronted — very much together and very much apart — the calamities of COVID and the swirl of misery and reflection that accompanied them.
At the center of the government’s response to the COVID pandemic — and near the center of Tooze’s account — is the U.S. Federal Reserve, the American central bank that served as the liquidity provider of last (and in some cases, first) resort.
For those who just lived through the Fed’s eventful 2020 and paid close attention to it, there is very little that is revelatory about Tooze’s account. “Shutdown”is not the work of reporting on the details of how 2020 happened. It is instead a synthesis of what happened and an analysis about how the changing central bank changes the economy and society. To the uninitiated, a quick recap: In March 2020, the Fed took its 2008 playbook, ran every play from that last crisis, added several more that it had never tried before, and launched a thousand debates about the lines between fiscal and monetary policy, technocracy and democracy, debt and credit, Main Street and Wall Street. The Fed’s resolution to prevent anything like economic cataclysm was complete, even in the face of significant (and shifting) criticism from the tweeter-in-chief during 2020, among many other critics.
It is hard to say with certainty, but it appears that Tooze is not a fan of what the Fed’s dramatic interventions in 2020 tell us about the state of the economy and the state of society. He sees central bankers as closet revolutionaries responsible for ensuring that “everything must change so that everything remains the same.” Tooze gives high marks for managerial competence at the Federal Reserve, but the Fed’s performance, he writes, “was less an exercise in all-powerful technocratic manipulation than a scrambling effort to preserve a dangerous status quo.”
Tooze respects that his early take may neither stand the test of time nor be unanimously accepted by contemporaneous readers. The central invitation from "Shutdown," then, is not to accept one normative view on central banking, but to appreciate just how much the 2020 crisis has changed the role of central banks in society.
I would offer a few alternatives to the view that the central bankers are reactionaries in defense of the status quo. There is simply no question that the Fed and other central banks played a central role in managing the economic fallout of COVID; central banks, like other public institutions, are shaped by each generation’s crises and policy fixations. What is remarkable, then, is not that the Fed did as much as it did in 2020, something Tooze calls “surprising” given the Fed’s context and history. What is surprising is that central bankers were undertaking these experiments at the behest of politicians and citizens who required central banking experimentation in the moment of crisis.
Perhaps the biggest gap in Tooze’s account is a more detailed political analysis of why the U.S. Congress — on a bipartisan basis — sought to bless the Fed’s approach to crisis fighting by expanding its toolkit on almost exactly the basis that the Fed itself proposed. That rare moment of not just consensus, but near-unanimity, in March 2020 when Republicans and Democrats united to pass the massive CARES Act was a moment of invention and reinvention, not just for the Fed but in so many other areas of economic policy.
In “Shutdown,” these moves are seen through the lens of entrenching existing hierarchies: “For all the talk of a new social contract and the scale of the spending, coronavirus fiscal policy was as much a reflection of preexisting interests and inequalities as any other area of government action.”
But another interpretation is available. In the United States at least, the whirlwind of 2020 shows us that democracy is not dead, that technocrats make value judgments consistent with their expertise and, when they reach beyond that expert consensus, under the oversight of politicians. That it is not just pending elections that force politicians to act in a crisis, but crisis itself can inspire bold action.
In other words, 2020, with the economic policy reactions to COVID-19, could well have been a year when the power of the people and the people’s government — through the halls of Congress and in the conference rooms of central banks — worked better than most of us would have predicted.
Now here we are in 2021, wearing masks and wondering about booster shots, the crisis far from over. The Fed is in the news as always, the question of its remit and mandate again up for redefinition. This leaves us the post-COVID generation with yet another opportunity for institution-building and for the essential work of defining what central banks must be. “Shutdown” presents the global view on the sets of questions we must ask, even as we are nowhere near a consensus on those answers.
This dissensus is, perhaps, inevitable. The most profound lesson to take from Adam Tooze’s powerful marshaling of chronology and history is that the pandemic exposed deep rifts in our global order that had long preceded it. Those rifts are about what we do with risks and uncertainty. Our ideological priors push us in different directions — as individuals, as citizens, as nations — telling us which voices we want to amplify and which we want to silence. That’s not because there is no “science” at play — either epidemiological or economic — but because scientific facts lose their objectivity when we interpret them through the lens of public policy. Public policy is, and has always been, an intensely value-laden affair.
This is why, as we gather for the prolonged quadrennial ceremony of the Fed Chair sweepstakes, we must ask ourselves: What is a central bank for? And we should not be surprised when the answer to that question changes again and again.
