Making sense of the debate on the pandemic and its long-term impact on politics and policy
“France in 1789. Russia in 1917. The Europe of the 1930s. The pandemic of 2020. They are all junctures where the river of history changes direction.” Margaret MacMillan, celebrated historian of the 20th Century, doesn’t hold back with the totemic comparisons. The implication is that the pandemic represents not just a historical punctuation mark between the ‘pre’ and ‘post’ era, but a political turning point too. One in which established economic and social settlements get scrambled and remade, as societies try to make good the failings that have been exposed.
Others see big ideological shifts in the wake of the crisis. Francis Fukuyama believes the pandemic is likely to rekindle liberal democracy in some nations even while it nurtures the forces of nationalism in others. Meanwhile, popular left-wing historian Rutger Bregman says “it’s a wonderful time to be a social democrat”.
The elision of prediction and advocacy, the blurring of ‘will’ and ‘should’, has become a feature of Covid era commentary. But the ranks of those sensing transformative political change in the air extend beyond those on the lookout for signs that society might be moving their way. Even historian Walter Scheidel, whose book The Great Leveler is peerless in its pessimism about the prospects for greater social equality absent war, pandemic or violent revolution, now sees the possibility of a Rooseveltian moment.
In the British context the notion that a totalising moment of national trauma naturally precipitates far reaching economic and political reform is an enduring part of our post-World War II narrative. William Beveridge, whose towering report triumphed in converting a ‘should’ into a ‘will’, argued back then it was a ‘time for revolutions, not for patching’. The epic turmoil created by Covid-19, the arguments runs, must surely give rise to more than a bit of make-do and mend.
Yet patching would also be a characteristically British response. The deep continuities in our system of democratic capitalism which — for good or ill — have survived and evolved through all manner of societal change. They receive less attention than moments of rupture but they are very much part of who we are.
If there are to be structural shifts in economic and political power in the post-pandemic world, as many predict, we need to ask what might bring them about. If transformative change hinges on the result of an election which, in the British context, is still four years away then, perhaps, people are getting ahead of themselves. If the agent of change is the emergence of economic ideas whose influence will be so pervasive it will, as per Keynes, dictate the actions of the mad men in authority then what, exactly, are they? Alternatively, if the fallout from the crisis is to give rise to new class or group demands powerful enough to reorder our politics then what might they be and which institutions will they be channelled through?
The only answer to these questions is, of course, it’s far too soon to say — which is why strident predictions of political transformation often jar. But a degree of scepticism doesn’t, however, mean that some very real shifts are not on the cards.
Foremost among these is that the size and role of the state will grow. This expansion will arise for all manner of reasons. Whether it is the playing out of the automatic stabilisers, future waves of stimulus, the need to offer meaningful reward to frontline workers, ensuring public services — not least social care — are better prepared in the future, protecting some of the losers of the coming Brexit-shock or showing a commitment to so-called ‘levelling up’, the aftermath of this crisis will be expensive. The new focus on national resilience will spur government intervention to re-shore supply-chains in some critical industries and resist foreign ownership in others. All this comes on top of the slow-burn counter-reaction to a decade of austerity, the steadily rising costs of an ageing society and the escalating demands of adjusting to a net-zero economy. Nothing about our current national predicament that says ‘smaller state’ — even if so much about the UK’s handling of the current crisis makes the case for a very different one.
Bigger government will also mean a reset for our fiscal politics. After its big crisis-driven surge, spending will settle at a higher ‘new normal’, tax resistance will limit the ensuing revenue-raising efforts and a debt to GDP ratio of over 100% will become an enduring fact of post-pandemic life. Differences between the main political parties will, of course, persist. The Chancellor will pencil in spending restraint and some tax rises in the hope that the economy is sufficiently strong that he can act on them. The deep cuts of the last decade for many households and services won’t be reversed meaning the politics of austerity will rumble on. But neither main political party will conform to the caricature favoured by their opponents. National soul-searching about debt will be a thing of the past and the deficit-politics of the early 2010s will feel like a foreign country.
The state may also find itself with new tools at its disposal to shape the private sector. The first act of the crisis saw the state propping up wages and supporting business via loans; the second will, inevitably, involve more direct propping up — or recapitalisation — of struggling businesses weighed down by debt to protect them and, potentially, the financial system. One way or another government is likely to become an equity holder in a much larger swath of UK business than we have been accustomed to in this country. Doubtless this will be done reluctantly and be billed as a temporary step — much as the Bank of England’s now decade-old ‘asset purchase scheme’ was when first conceived — but exiting these programmes is hard. In the mid-2020s those favouring, say, more state direction over business in pursuit of the low carbon transition, or the creation of a UK sovereign wealth fund, may find the foundations of their project have already been laid.
Not only may the state have more potential to shape the private sector, it may also feel greater pressure to do so — including from some surprising quarters. A deep recession would cast a shadow over capitalist dynamism — more concentration among big business, less job-mobility among workers and greater risk aversion among financiers. True-believers in the benign power of markets, as well as sceptics, may find themselves calling for government initiative to help rekindle capitalism’s zeal.
Lasting change in the role of the state will ultimately need to be anchored in popular sentiment. Before the pandemic struck there had been years of rising support for higher public spending and taxes following the fall in the early 2010s — and we might expect that to continue. What happens to levels of public trust in government matters not just in relation to citizens’ willingness to comply with test and trace along with other control measures needed to avert a second wave. It also sends ripples across the larger pool of politics. The conspicuous failure of the British state in relation to fundamental issues such as shielding the old, educating the young and protecting frontline workers might work to diminish expectations of what public institutions can achieve in other domains. There is, for instance, longstanding evidence about the role of public trust in shaping government’s capacity to command support for acting on redistribution. It matters, then, if pandemics not only cause long-term economic damage but ‘political scarring’ too. Cross-national studies show trust in government tends to fall in the wake of epidemics, a decline that persists for many years and is far more pronounced among young adults. Not only does Generation Z face a bleak economic outlook, it may have been infected with political cynicism too.
Other more successful aspects of the crisis-response may, however, tug the other way. A very large sub-set of the British workforce — 11 million workers, 40% of all those in the private sector — have directly benefited from that most un-British of things: generous income insurance. The new schemes protecting employees and the self-employed were designed and delivered in the space of a few weeks and brought stability to much of the country at a time of extreme uncertainty. The public won’t expect emergency measures like these to persist when more normal times finally resume but, given the UK’s exceptionally high levels of income volatility, it may hope that something can be learned from them and that social security doesn’t simply return to the miserable status quo ante. Having witnessed a display of the state’s potent capacity to insure people against economic risk, disillusionment may follow if that public power is itself furloughed while insecurity lives on. (Though arguably this blurs a ‘should’ and a ‘will’).
Given these reasons to anticipate a more expansive role for the state in the post-pandemic era why, then, does the assumption of transformative change feel so premature?
Part of the answer comes down to timing. Much of this debate has so far been conducted in the interval between the initial bang of the health crisis and the resulting thud of the full economic impact. Seasoned observers of past recessions anticipate the one we are now in may be disproportionately job-destroying, as was the case with those in the early 1980s and 1990s, in contrast to the employment-rich and wage-poor pattern that followed 2008. The economic character of a recession shapes the politics, as well as policies, that follow. The return of mass unemployment would fuel social discontent, polarisation and concentrated poverty particularly among the young. It will, of course, force government to act to create jobs. But it is also likely to have a chilling impact on proposals that, say, rely on raising the cost of labour or persuading a large swath of the public of the merits of a higher tax burden. Other needed but difficult reforms will be kicked further into the future. Those who think crises always act as a spur to social change are only seeing one side of the equation.
Timing matters in a political sense too. The gods of serendipity sometimes ordain that those at the helm when a great shock occurs are instinctively at ease with the grain of the necessary response. Or fate can determine that an election is on the horizon when lightning strikes, allowing competing visions of how to rebuild to be put to the democratic test. Neither applies in Britain 2020.
Another constraining factor is the fragile nature of the main parties’ electoral coalitions. The Conservative’s not only face the task of protecting their ‘red wall’ seats but will also need to accommodate pressure for a growing state without alienating their more traditional, southern, pro-business base who will instinctively wish to hear about tax cuts and are more likely to chafe against the social controls that will regulate our shared life in the pre-vaccine years to come. This dilemma has echoes of that faced in the early 1920s and 1950s when the party had to weather an anti-statist ‘middle-class revolt’ against the leadership’s tack towards the collectivism that prevailed after each of the Wars (a tension brilliantly explored in EH Green’s Ideologies of Conservatism). The crisis will intensify Labour’s challenge, too, escalating expectations about the scale of policy radicalism at the same time as the new leadership also wants to project steady, professional, competence and reach out to older, more sub-urban voters.
All this means that for now the governing process is likely to resemble someone stumbling blindfolded down a hill: uncomfortable to observe but still with a discernible direction of travel. Policy shifts for the foreseeable future are likely to come about via a process of forced improvisation in the face of economic events — and the clear gravitational pull of those events will be towards more government, not less.
Whether this governing style is up to the scale of the challenges that lie ahead is another matter. Even if the worst is averted it’s still the case that as we move through the emotional stages of this crisis — fear, stoicism, frustration, anger — the political and economic problems facing the government will mount as reserves of good-will dwindle. But if there is a serious second wave, and deep recession starts to morphs into depression, then the outlook for the government would be dire and the implications for our wider politics radically more uncertain.
In sharp contrast to the Spanish flu at the end of World War I, which is largely missing from the history books of the 20th Century, we can already be sure that today’s pandemic — with its shocking death toll and dramatic curtailment of basic liberties — will be etched in our collective memory.
Whether it is also remembered as a moment of policy revolution is a different matter. Don’t underestimate the power of continuity. Those seeking ‘less government’ are in for a decade of disappointment. Those content with the pre-crisis system are now going to have to make their peace with a major expansion of the state. And those favouring more sweeping change need to win that case rather than assume that the shockwaves of the crisis will do it for them.