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Crises Only Sometimes Lead to Change. Why? (F Policy Magazine)

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The coronavirus pandemic has upended Western economies, many of which are now facing their gravest crises since the Great Depression. In response, governments are taking unprecedented measures.

In the United States, the crisis has produced an expansion of big government programs unparalleled in peacetime: massive stimulus measures, a historic expansion of unemployment benefits, a temporary basic income for many citizens, billions of dollars in funding for public health measures, low or zero-interest loans to businesses, and more. In addition, the U.S. Federal Reserve is engaged in an experiment with modern monetary theory—previously considered “voodoo economics” by mainstream economists—promising to pump unlimited amounts of money into the economy.

In Europe, governments have implemented even more dramatic measures, as economists such as Martin Sandbu urge them to “throw caution to the wind and spend massively.” Germany has given up its obsession with balanced budgets. In France, President Emmanuel Macron suspended many taxes, rent, and household bills and promised no company would be allowed to collapseScandinavian countries and the United Kingdom have essentially nationalized payrolls, promising to cover the wages of workers who would otherwise be laid off.

The assumption that the crisis and the radical measures undertaken in response to it will shape the world for years to come and forever alter the world order, as Yuval Noah Harari and Henry Kissinger respectively put it, has become commonplace. As the other essays in this issue make clear, many hope—or believe—that the crisis and the responses to it will enable governments to deal with many long-standing problems, from climate change to inequality.

Many progressives in particular seem to believe that the world is at the dawn of a new era, perhaps even more now that protests against racial injustice have been added to the upheaval caused by the pandemic. The “era of small government is over,” declared the New York Times columnist Jamelle Bouie. After the coronavirus, “ambitious progressive ideas that once seemed implausible … start to become more imaginable,” argued his Times colleague Michelle Goldberg. We must rethink “the basic assumptions underlying the American value system,” asserted former Democratic presidential candidate Bernie Sanders. A belief in the inevitability, or at least necessity, of transformative change has characterized the European left as well. The crisis is neoliberalism’s Götterdämmerung, proclaimed a headline in Germany’s leading left-wing newspaper, referring to the final destruction and subsequent renewal of the world famously portrayed in Richard Wagner’s opera about an apocalyptic battle. But transformation is never preordained.

Will the current crisis and the responses to it fundamentally transform economies, governments, societies, and the relationship among them? Is the world, as many believe or hope, at a turning point in history?

Answering these questions requires distinguishing between crises and transformation. It is easy to assume that crises trigger the collapse of an existing order and its replacement by a new one. But this view is fundamentally flawed, most obviously because it does not fit the historical record. Crises are fairly common; fundamental transformations are rare.

As Leon Trotsky, one of history’s great revolutionaries, wrote in 1932: The “mere existence of privations is not enough to cause an insurrection; if it were, the masses would be always in revolt.” Instead, he argued, “it is necessary that the bankruptcy of the social regime, being conclusively revealed, should make these privations intolerable.” And only at that point, he maintained, could “new conditions and new ideas … open the prospect of a revolutionary way out.”

Crises are fairly common; fundamental transformations are rare.

Trotsky, like all revolutionaries, understood that some crises lead to lasting transformation while others do not. And history provides lessons for those who believe or hope that this crisis will be one of those that does.

The first is that during periods of rapid change and uncertainty it is easier to be directed by events than to direct them—and it is easier to generate discontent against an old order than consensus for a new one. Concretely, this means that the key determinants of whether crises and discontent trigger transformation are political: In particular, planning and power are necessary. Without agreed-on plans for what sort of new order should replace the old one, opposition movements easily collapse into infighting, and discontent often peters out. And if such plans are not championed by a political force with the power to implement them, good ideas can remain footnotes to history, and the status quo can stumble on.

Take 1848, when uprisings fueled by massive discontent against existing monarchical dictatorships exploded across Europe and other parts of the globe. As the historian Eric Hobsbawm observed, few revolutions in history “spread more rapidly and widely, running like a brushfire across frontiers, countries and even oceans.” Indeed, within months, dictatorships that seemed completely secure crumbled under the onslaught of massive popular mobilizations.

Without agreed-on plans for what sort of new order should replace the old one, opposition movements easily collapse into infighting, and discontent often peters out.

But almost as soon as dictatorships began collapsing, divisions among the discontented came to the fore. Middle-class liberals wanted political and economic liberalization but opposed mass enfranchisement and anything smacking of socialism, while workers and others on the left demanded full democratization and structural economic reforms. Meanwhile, freed from the shackles of dictatorship, various ethnic groups demanded control over their fates and territories but were often unwilling to recognize the rights of other groups to do the same.

In short, once the old order began collapsing, the lack of agreed-on plans for what should replace it led revolutionary groups to begin fighting among themselves, enabling supporters of the old order to buy some off and crush the rest. Quickly, dictatorships returned to virtually every place from which they had disappeared. Historians, accordingly, often refer to 1848 as “the turning point at which history failed to turn.”

Between 1918 and 1939, another such pattern unfolded in Europe. However, the expectation that crisis would inevitably bring transformation everywhere was naive—and leftists’ hopes for revolutionary change on their terms were quashed once again. In some countries, interwar crises did not lead history to turn. In others, they did—but in dramatically different directions depending on which politicians and parties had the plans and power to make this happen.

World War I killed millions of people, ended an era of growth and globalization, and brought a flu pandemic, massive unemployment, and hyperinflation in its wake. Before countries could recuperate, the Great Depression hit, causing an explosion of dissatisfaction with capitalism and the status quo more generally.

In most countries, however, the left was unable to unify around a plan in response to the Depression. Communists wanted to use the crisis to bury capitalism and democracy. Traditional socialists, influenced by Marxism, viewed capitalism as impossible to fundamentally reform and so did nothing. Only social democrats believed the crisis provided the perfect opportunity to transform the relationship between governments, economies, and societies.

In France, not only the left but also the right was unable to unite around transformative plans in response to the Great Depression and the more general dissatisfaction pervading French society. The result was continued political drift and polarization and a country left weak and vulnerable to Nazi assault.

In a few places, such as the United States and Sweden, leftist parties did champion a social democratic Depression-fighting strategy, and progressive economic and political transformations occurred. In other countries, the left’s infighting and inaction facilitated the ability of fascists to exploit the Depression, and reactionary economic and political transformations occurred instead.

The clearest and most consequential example of this was Germany. During the Depression, Communists increased their attacks on the Social Democratic Party (SPD), the largest left party and the bulwark of German democracy, and joined with the Nazis in strikes, uprisings, and political maneuvers designed to hasten the Weimar Republic’s demise.

The SPD, meanwhile, despite the clamoring of its supporters and the rest of German society for an activist response to the catastrophe befalling them, remained largely on the sidelines. Its leaders rejected plans put forward by social democratic reformers for a Keynesian-type response to the Depression, which called for government spending and other programs to actively fight the economic downturn in general and unemployment in particular.

Stymied by Marxists, who insisted any reform of capitalism was pointless, the party’s leadership believed, as its main economic theorist Rudolf Hilferding put it, that an “offensive economic policy” would be ineffective because the ultimate arbiter of developments was the “logic of capitalism.” The frustrated union leader Fritz Tarnow summed up the dilemmas of the SPD’s stance in the following manner:

Are we standing at the sickbed of capitalism not only as doctors who want to heal the patient but also as prospective heirs who can’t wait for the end and would gladly help the process along with a little poison? … We are damned, I think, to be doctors who seriously want to cure, and yet we have to maintain the feeling that we are heirs who wish to receive the entire legacy of the capitalist system today rather than tomorrow. This double role, doctor and heir, is a damned difficult task.

Although there are many reasons for fascism’s success in Germany and other parts of Europe, the Nazis’ ability to take advantage of a crisis, and the left’s inability to do so, was critical.

The Nazis, on the other hand, had no time for healing the dying old order. They recognized the opportunity the crisis presented: a chance to inherit power. Adolf Hitler responded vigorously to the Depression, attacking the SPD and advocates of liberal democracy more generally for their passivity and inability to respond to widespread suffering.

In the 1928 elections, before the Depression hit, the National Socialist German Workers’ Party received only 2.6 percent of the vote. Four years later, in the campaign leading up to crucial elections in July 1932, the Nazi Party ran on an economic platform that promised to “solve the problem of unemployment,” conquer the Depression, and restructure the economy to serve “the people.” The elections made the Nazis the largest party in Germany. Within six months, they were burying the Weimar Republic. Although there are many reasons for fascism’s success in Germany and other parts of Europe, the Nazis’ ability to take advantage of a crisis, and the left’s inability to do so, was critical.

In contrast to 1918after 1945 a progressive transformation occurred across Western Europe. The tragedy of the interwar years and the Great Depression led to a unified belief on both sides of the Atlantic that a new order capable of ensuring economic prosperity and social stability was necessary for democracy to succeed in Europe. This consensus led to extraordinary efforts to change political and economic dynamics at the international, regional, and domestic levels.

Friedman understood what the left didn’t grasp: Neoliberal ideas were implemented because they became embedded within the economics profession, think tanks, and international organizations.

The United States helped construct new international security and economic orders to promote the peace and prosperity necessary for postwar democratic success. At the regional level, a process of European integration began, spurred by a recognition that democratic success required overcoming challenges too great to be achieved by the uncoordinated efforts of national governments acting alone. And at the domestic level, European center-left and center-right parties agreed on the need for a new order and social contract between governments and citizens, with the former committed to promoting growth and protecting the latter from capitalism’s downsides. Both the mainstream left and right recognized that such a transformation would be necessary to avoid the economic crises and political extremism that doomed democracy during the interwar period.

This order worked remarkably well until the 1970s, when a combination of rising inflation, increasing unemployment, and slow growth created an opportunity for another transformation. During the proceeding decades, neoliberals in groups like the Mont Pelerin Society and the Chicago and Virginia schools of economics and political economy had been thinking about what they saw as the downsides of the postwar order and what should replace it. When problems and discontent emerged in the 1970s, they were therefore prepared with a narrative of the old order’s failures as well as plans for a new one.

As Milton Friedman, an intellectual godfather of this movement, put it, “Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” Friedman understood what the left didn’t grasp: Neoliberal ideas were implemented because they became embedded within the economics profession, think tanks, and international organizations as well as championed by powerful political leaders like Ronald Reagan and Margaret Thatcher.

When the crisis hit in 2008, the left lacked a coherent narrative of the existing order’s problems as well as convincing plans for transforming it.

Interestingly, when this neoliberal order experienced its own crisis in 2008, no significant economic shift occurred, despite an initial widespread assumption, even by conservatives like France’s then-president, Nicolas Sarkozy, that the era of neoliberalism was over. That problems and discontent did not lead to the end of an old order and the rise of a new one was at least partially a consequence, as the Economist put it, of the left’s inability “to capitalise on an economic crisis tailor-made for critics of the free market.”

A key reason why the left was unable to do this, and therefore play the same transformative role its neoliberal predecessors had played a few decades earlier, was that it was divided and unprepared. During the previous decades, some parts of the left—epitomized by Tony Blair’s British Labour Party, Gerhard Schröder’s SPD, and Bill Clinton’s Democrats—had become content with a technocratic management of capitalism, forgetting that it was constantly evolving and inherently dangerous. Others on the left stopped focusing on capitalism entirely during the late 20th and early 21st centuries, turning their attention instead to intellectual currents such as postmodernism, multiculturalism, feminism, and postcolonialism, which were cultural rather than economic in nature. Thus, when the crisis hit in 2008, the left lacked a coherent narrative of the existing order’s problems as well as convincing plans for transforming it.

The same problem—an inability to capitalize on a crisis—could arise once again today unless those committed to creating a more just and egalitarian society heed the lessons of the past.

Figuring out whether the United States and wealthy European countries are on the cusp of a fundamental transformation of their economies, governments, societies, and the relationship among them requires looking beyond the severity of the current crisis and the unprecedented measures already taken in response to it. As history makes clear, crises create opportunities for change—but not all opportunities are seized.

Whether today’s left seizes the current opportunity and this period becomes a historical turning point in a progressive direction—rather than another instance of a decaying old order being patched up and hobbling on—will depend on whether those favoring transformation are able to avoid the mistakes made by their predecessors in 1848, the 1930s, and 2008 and are able to unite around convincing critiques of the old order and plans for a new one as well as turn widespread discontent into a powerful coalition in favor of transformative change.

Whether today’s left seizes the current opportunity and this period becomes a historical turning point in a progressive direction will depend on whether those favoring transformation are able to  unite around convincing critiques of the old order and plans for a new one.

For progressives, there are potentially positive signs. There are more useful transformative ideas lying around than there were a decade ago. In the realm of economic thinking, for example, scholars like Thomas PikettyEmmanuel SaezGabriel ZucmanMariana MazzucatoAdam ToozeAnne Case, and Angus Deaton have risen to the forefront of debate over the past years, highlighting problems with the existing economic order as well as developing potential responses to them.

At the same time, progressive think tanks like the Roosevelt Institute and the Washington Center for Equitable Growth have been developing and disseminating plans for long-term structural change. Even before the remarkable outpouring of protests spurred by the killing of George Floyd, there had been a surge in mass mobilization over the past decade. As the political scientist Erica Chenoweth and her colleagues have documented, the period from 2010 to 2019 “saw more mass movements demanding radical change around the world” than in any period since World War II.

History teaches us that new ideas and the mobilization of discontent are necessary but not sufficient to trigger transformation. Ideas need to be forged into coherent critiques of the old order as well as attractive, viable plans for a new one. And advocates of change need to unite around such plans to help protect against infighting, the dissipation of discontent, and pushback from defenders of the status quo. Only then can they gain and maintain the power necessary to implement plans for long-term change.

The right has understood this better than the left over the past decades. Neoliberals like Friedman were successful in shifting understandings of the practical relationship between markets, governments, and societies during the late 20th century because they had a clear sense of the new order they wanted to create and were able to get their ideas adopted by scholars, policymakers, and politicians who could implement them.

New ideas and the mobilization of discontent are necessary but not sufficient to trigger transformation.

Even after the financial crisis, which was widely attributed to neoliberalism’s failings, supporters of the status quo were able to thwart fundamental change. In the United States, for example, many of then-President Barack Obama’s key advisors were not interested in transformative change and remained preoccupied with patching up the old order. To return to the German analogy used by the SPD’s Tarnow during the Great Depression, they were primarily interested in being “doctors” rather than “heirs.”

And any potentially progressive aspects of the administration’s crisis package were limited in scope and duration by conservatives, who disseminated a narrative that transformed Obama’s rescue of the economy into a tale of government waste and elite bailouts. Meanwhile, the Tea Party movement further transformed the Republican Party into a unified force devoted to fighting progressive change and convincing citizens that the government was the enemy.

Despite the extraordinary nature of the current crisis and the widespread initial acceptance of extraordinary policies in response to it, a similar pushback by supporters of the status quo has already begun. In the United States, Republicans are falling back on their old talking points—voicing concern about the dangers of budget deficits, federal bailouts of state and local governments, and the so-called moral hazard associated with unconditional government handouts that might incentivize people to stay home rather than go to work. Grassroots activists, meanwhile, in many cases supported by the same donors and groups that helped get the Tea Party off the ground, have begun protesting against lockdowns, denouncing “big government” and “threats” to individual freedom—and they have been encouraged by Trump and other Republican leaders. As Jenny Beth Martin, the co-founder of the Tea Party Patriots, put it, she and her colleagues are ready to mobilize to ensure that when the pandemic is over, the United States remains a “capitalist country,” as opposed to a socialist one.

To counter this, progressives must remember that the crisis and the extraordinary measures already taken in response to it are not enough to guarantee transformative change. Whether this will be an “FDR moment”—as Massachusetts Sen. Edward Markey, a co-author of the Green New Deal, and other progressives believe—depends on ensuring that the right political conditions are in place: It was Franklin D. Roosevelt’s ability to rally voters and his party behind plans to dramatically reshape the relationship between the economy, government, and citizens as much as the widespread suffering and discontent with capitalism generated by the Great Depression that made the New Deal possible.

Democrats would need to mount a successful assault on the anti-government philosophy long championed by Republicans.

Translated to today, that means Democrats would need to mount a successful assault on the anti-government philosophy long championed by Republicans and temporarily called into question by the crisis, unify behind plans for transformative change, and convince citizens that these plans offer a better vision for the future than a patched-up version of the status quo. Demands for major structural reforms to combat racial injustice in the United States and elsewhere are subject to a similar dynamic. Institutionalizing major structural reforms in this area, like any other, requires winning elections and holding on to political power. Anything that enables opponents of change to shift attention away from problems that need addressing, erodes the broad but fragile support for reform that currently exists, or divides the Democratic coalition must be avoided.

Joe Biden, perhaps surprisingly, has pivoted significantly in this regard, from a message of continuity and competent management to one that champions deep structural reform in health care, the environment, infrastructure, education, racial justice-related issues, and more. Of course, in order to enact such changes, the presumptive Democratic nominee has to win the election in November and probably with coattails long enough to bring the House and Senate with him.

To do this, in turn, he must have more than a negative message that focuses on the mistakes, corruption, and ineptitude of the current administration. Biden will have to convince the electorate that transformative change is feasible and desirable. And in power he and the Democrats have to remember that long-term change requires political shifts. During the late 20th century, Republicans put together a coalition of the wealthy, business leaders, religious conservatives, and discontented low-education whites united—although for different reasons—around a promise to shrink the role of government. This coalition enabled Republicans to enact significant changes at the local, state, and national levels. Democrats will have to pull off a similar feat, uniting their own disparate coalition around a message of dramatic change, downplaying the areas where their constituencies’ interests diverge rather than converge.

As the Great Depression and the events of the early 1930s in Germany make clear, suffering and discontent can bolster the standing of nationalists, racists, and reactionaries as easily as they can propel progressives.

If Democrats and progressives elsewhere cannot do this, history may still turn but in a different direction. As the Great Depression and the events of the early 1930s in Germany make clear, suffering and discontent can bolster the standing of nationalists, racists, and reactionaries as easily as they can propel progressives. FDR understood this—and the New Deal was designed as much to undercut the appeal of democracy’s enemies as it was to reform capitalism. After all, during the 1930s, a surprising number of U.S. citizens and politicians, including Henry Ford, Charles Lindbergh, and the Rev. Charles Coughlin, openly praised Hitler and expressed admiration for the dictatorships arising in many European countries.

Populists and right-wing extremists are already peddling a narrative that blames the crisis on foreigners—particularly China and immigrants—and are offering a vision of a post-pandemic world where globalization, multilateralism, free trade, and immigration are limited; borders are hardened; governments are empowered to protect the people from danger; and social justice and inequality are once again pushed to the back burner.

In the past, historical turning points have not been the result of crises alone but rather of revolutionaries taking advantage of them. And taking advantage of a crisis requires knowing what you want to achieve and how to do it.

This article appears in the Summer 2020 print issue. Foreign Policy Magazine

Sheri Berman is a professor of political science at Barnard College, Columbia University, the author of Democracy and Dictatorship in Europe: From the Ancién Regime to the Present Day, and a columnist at Foreign Policy.

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