Disorder: Hard Times in the 21st Century

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Very interesting perspectives. Even before finishing it I noticed that my take on some of the daily news has changed by incorporating some of her insights. ''The book is as disturbing as it is thought-provoking'', says Martin Wolf in choosing it as one of this books for summer 2022. Most of us struggle to keep up [with the news], but not Helen Thompson - she doesn't merely grip each strand, but ties them together. So the first history she explores is a geopolitical one, revolving around energy and beginning with the rise of the US as a great power at the time of the emergence of oil as the chief energy source, replacing coal. The second history is economic and starts with the breakdown of the post WWII Bretton Woods monetary system in the early 70s and the emergence of fiat currencies. The third and final history is about democracies and how the geopolitical and economic changes of the 70s pressured democratic politics. HT: I have never been that comfortable with the term “neoliberalism.” Initially, it was most frequently deployed by those who saw the 1970s and early 1980s as a time of ideological turbulence in which the right’s ideas about the relative merits of markets and the state won, most consequentially in Britain and the United States. Later it risked becoming a catch-all term to describe whatever policies, ideologically driven or not, were pursued by the British and American governments.

Disorder by Helen Thompson | Waterstones

Although she does not predict the Russian invasion of Ukraine, she certainly sees the risks of it. I imagine she will have been somewhat surprised at the level of unity amongst Western countries that has so far been evident against Russia, and not at all surprised at the fault lines that are showing. She writes that “overall energy costs will rise and, once again, act as an inflationary pressure. Gas prices in Europe are particularly vulnerable to issues with Russian supply and transit, whether technical or generated by Putin’s willingness to use gas as a blunt strategic instrument.” Extending the analysis of economic effects of the energy transition, she goes on to state that “Without major breakthroughs on battery storage, there is no guarantee that electricity powered by renewables can escape an inflationary dynamic. Whatever the low unit costs of producing solar- or wind-powered electricity, at the system level – especially in those places, like Germany, where renewables are a significant proportion of the sector but the weather is unpropitious – the inefficiencies of intermittent renewables capacity have thus far often yielded higher electricity prices for consumers. It is likely that this energy-driven inflation will eventually unsettle the bond markets and make borrowing more expensive for governments.” Affordable energy storage is indeed crucial, but I think there is somewhat more room for optimism than Professor Thompson appears to show. Battery storage prices have been falling rapidly, for example, and hydrogen and synthetic fuels will also fall in price as government-supported deployment increases.There is a November 2022 interview on the Demand Side podcast where the author explains how the book gestated since 2018 especially its delay due to Covid-19. Thompson describes how she divided the book into geopolitics driven by energy supply particularly oil and gas and finance particularly the dismantlement of Bretton woods and democratic politics which cannot be separated from nation states.

Disorder by Helen Thompson | Waterstones Disorder by Helen Thompson | Waterstones

By 2005, Germany had reached several turning points. Economically, the re-emergence of a long-term preference for export-led growth and a large trade surplus left the Eurozone structurally divided, with the deficit states stripped of the safeguard of devaluation the ERM had once provided. Democratically, the 2005 German election began the era of grand coalition politics: between 1949 and 2004, a grand coalition had governed in Germany for less than three years; after the 2005 general election, a grand coalition had, by the start of 2021, governed Germany for all but four years. Geopolitically, a reunified Germany was beginning to reshape Europe’s energy geography. In 2005, Gerhard Schroeder’s government signed the agreement with Russia to construct the first Nord Stream pipeline, threatening Ukraine’s future as an energy transit state for Europe and diminishing Turkey’s utility as one. In the same year, Viktor Yushchenko became president of Ukraine and set about trying to achieve EU and NATO membership while Turkey began EU accession talks. This is a vastly abbreviated summary of the highly complicated history of oil and geopolitics presented in the book. Missing here are the Syrian civil war, NATO actions in Libya in the 2010s, China’s rising demand for energy and the effects on international finance, the US shale revolution, Turkey’s increasingly militaristic claiming of oil and gas resources in the Eastern Mediterranean, amongst other things, but being more recent these might be more familiar to the reader. Generally, I think the problem with the neoliberalism thesis is that its proponents largely downplay the material causes of the 1970s crises. The United States was the world’s largest oil consumer, and it could no longer produce enough oil to meet domestic demand. To import oil from abroad and run an oil-driven trade deficit, it needed foreign creditors, and that necessitated a move to opening international financial markets. In adjusting to this economic reality and the new power of OPEC to set prices and control international supply, Richard Nixon introduced substantial controls on the price, production, and distribution of domestically produced energy. It was primarily in reaction to these controls that the deregulation agenda took shape. Meg Jacobs’s book Panic at the Pump is eye-opening on this subject. This is not to suggest that there was no intellectual genealogy to certain economic policy ideas that are called “neoliberal” and were influential from the 1970s, especially in a number of international institutions and the EU. Of course there was, and Quinn Slobodian’s Globalists: The End of Empire and the Birth of Neoliberalism has done an excellent job of tracing that history. But we cannot understand either why the 1970s were such a historical juncture or the choices Western governments made in the 1980s about economic policy without seriously engaging with the trajectory of the world’s most significant energy source through that time period. A reall Future global geopolitics may not be as grimly repetitive or dystopianly restrictive as Thompson seems to suggest, if a core dynamic of global progress is the conflict between democratic and authoritarian impulses for governing, of which energy politics is a subset rather than the determinative factor.Getting to grips with the overlapping geopolitical, economic, and political crises faced by Western democratic societies in the 2020s. The question matters. If specific politicians and technocrats—and the intellectuals who influence them—make mistakes, then there is hope. The world has the potential to learn from their choices and do better in the future—or at least make new, different mistakes. If not, then the most it can aim for is the peace of mind that comes from understanding that there are no alternatives.