The commons are our collective heritage, our common-wealth, our public social and cultural amenities and institutions, our collective knowledge, our civil commons (epitomized by common law) and our traditions of sharing in society, epitomized by the old term “commoning”.

The rights of the common people to access the commons and to share in its bounty were first set out in the Charter of the Forest of 1217, companion to Magna Carta. The Charter established that everybody has a right to subsistence and that the commons should make that a reality, providing, in the words of the old saying, “the poor man's overcoat”.

Whereas in medieval times the commons related to the natural world – land, water, wildlife, minerals – the Charter's precepts of free and equal access and sharing also underpinned the public institutions and services built up over generations with public money and support. Like traditional commons, they have stood outside the market, as a free or affordable service for all citizens, not for private profit.

Throughout British history, rebellions and transformative moments have been about struggles to recover commons and systems of participative sharing. Now may be another of those moments. Many commons are of most value to those with low incomes, including the precariat, which has been disproportionately hurt by their plunder over the past four decades. The tragedy of de-commoning is that, as well as eroding social solidarity and respect for the ecosystems that sustain us, it has worsened inequalities in ways that orthodox economists ignore. The Covid pandemic has thrown into sharp relief the value of the commons and how society has been weakened by their erosion during the neoliberal era.

A progressive agenda worthy of the name must revive all forms of commons: natural, social, civil, cultural and knowledge. The discussion below illustrates how the five types of commons have been lost – and suggests what a progressive government should do about it.

The natural commons

Historically, waves of enclosure have depleted what was once common land on which commoners had rights, from roughly half of all the land in Britain in medieval times to 5 per cent today. This has resulted in one of the most concentrated landownership structures in the world, much inherited by a tiny elite.

The announcement from the Office for National Statistics at the beginning of August – that economic activity in the United Kingdom contracted in the second quarter of 2020 by slightly over a fifth – can have come as no surprise to anyone who has observed the shutdown of high streets up and down the country and the furloughing of something like a quarter of the private sector labour force. Although much attention has been given to the loss of trade for large corporations in the travel business in Britain, such as British Airways, incalculable damage has been wreaked upon small and medium-sized enterprises, which actually employ the majority of workers in the private sector.

In this situation it is useful to take a long-term view, to see how previous disasters and policy errors have affected the economy. The benchmark for economic activity over the last half-century has been 1979. At the time the economy was recovering from the “oil price shock” of 1974, during which the price of oil (on whose imports Britain was then wholly dependent) had quadrupled, and the Labour government was submitting to the monetarist demands of the International Monetary Fund to restrict spending. It was also the eve of the government of Margaret Thatcher. Her brutal industrial policies resulted in the worst depression since the 1930s, mass unemployment and street riots.

Despite the efforts to attract international business – as showcased in the much-bragged-about Nissan car factory in Washington, County Durham – the economy took well over a decade to recover from that forced contraction in industrial production. The collapse of the coal industry, heroically resisted by the National Union of Mineworkers, was merely the most spectacular shutdown of productive activity. Even with the boost from Nissan car production, the motor car industry reached its postwar peak as long ago as 1972, when 1.92 million cars were manufactured; by 2016 production was 1.7 million, and was already declining (Brexit and all that) before the shutdown of car showrooms in March 2020. By then, too, the industry's structure had changed: car production had become “internationalized”, with most car plants being foreign-owned.

At the start of 2020 China looked set to deliver the first of the centennial goals its leader Xi Jinping had promised. By 2021, the centenary of the founding of the CPC, China would be a “moderately well off” society and poverty would have been all but vanquished based on the current definition of the poverty line. It had become the second-largest economy in 2010 and an upper-middle-income country. Sure, there were worrying matters, not least the friction between China and the United States over trade, investment and technology. Economic growth had slowed in the 2010s compared with the first three decades after reform began in 1978, but that was to be expected, even though at around 6 per cent a year growth was impressive for such a large economy. Moreover, China had gained an international voice that was stronger than before, some would even say bellicose, as it projected its vision of the future global order through such grandiose schemes as the Belt and Road Initiative.

Less than two months into the year a lot had begun to unravel. A novel coronavirus had taken hold in the central megacity of Wuhan, which led the government to lockdown the country in the third week of January. Rapid spread beyond China soon led to a world pandemic, infecting at least 90 million people with more than two million deaths by early 2021. China's economy massively slid in the early months of the year. China reported its first quarterly GDP contraction of the reform period and the government abandoned in May 2020 predicting the GDP growth rate, which has been the metric by which it and its officials have measured their performance for many years. While the country's success in heading off the virus domestically allowed the economy to begin to recover from late March, the deepening pandemic disrupted the global markets with many economies falling into recession. Of the world's major economies, the IMF (2020) mid-year outlook predicted that only China would record positive growth in 2020 – a paltry 1 per cent – while the United States would grow −8.0 per cent, the EU −10.2 per cent and Japan −5.8 per cent.

Eighty years ago, on the outbreak of the Second World War, Keynes wrote a set of articles for The Times newspaper outlining how the British government could pay for the war effort without unduly restricting consumption. The articles were subsequently published as a pamphlet entitled How to Pay for the War: A Radical Plan for the Chancellor of the Exchequer. In it, he proposed “a plan conceived in the spirit of social justice, a plan which uses a time of general sacrifice, not as an excuse for postponing desirable reforms, but as an opportunity for moving further than we have moved hitherto towards reducing inequalities”.

No apology is needed for recalling Keynes's pamphlet, in view of the scale of the Covid-19 crisis and consequences for the country. The essays collected in this volume cover many aspects of the crisis, and lay out a number of approaches for dealing with them. At the start of the crisis, during the first period of lockdown, the key requirements were the provision of medical support and, as in wartime, ensuring that the population could maintain their consumption of essentials. As the world moves forward, macroeconomic policies to deal with the longerterm economic consequences become more pressing.

In this chapter we discuss the financing of these macroeconomic policies. Specifically, we discuss their impact on the national debt, whether or not this poses a problem and what can be done about it. Much remains unknown, but what is certain is that the nature of the crisis requires a level of borrowing that has no precedent in peacetime. The limits this poses to policy, and how these limits might be overcome, will determine the course of the recovery.

Fiscal commitments

At the start of the Second World War Keynes argued that the central dilemma was how to conserve resources for military purposes while maintaining decent standards of consumption for the least well off. The outbreak of the Covid-19 crisis posed a rather different problem: consumption was compressed as a by-product of lockdown, and by the loss of income of many workers and large numbers of small and medium-sized enterprises. In 1939 government expenditure was boosted by spending for military purposes.

As epidemiologists researching the social determinants of health and well-being, we study the impact of inequalities in income on physical and mental health, human development and social relationships. A very small silver lining to the coronavirus pandemic is that more people – and, crucially, more politicians and policy-makers – now understand the importance of epidemiology – i.e. the study of the distribution and determinants of health, and of public health research and practice. And, although it is the infectious disease epidemiologists and modellers who guided the government's immediate response to the onset of the pandemic, social epidemiology is critical to understanding the stark inequalities in health and well-being revealed by Covid-19 and the longer-term impacts of the responses, including lockdowns, recessions and depressions. Socio-economic and ethnic inequalities have shaped the demographics of Covid-19 and the severity of illness and mortality in different groups, a perspective also sharpened amid the pandemic by the Black Lives Matter movement. Rapidly rising rates of mental illness and of insecurities of income, employment, food and housing urgently highlight the need for routes to an inclusive recovery that could lead us to a much better new “normal”. More equal societies have weathered the storm better, benefiting from levels of trust and solidarity that have heightened resilience, whereas more unequal and authoritarian societies have suffered more illness and death. Equality really is at the heart of the matter.

Economic inequality, and its intersection with inequalities related to ethnicity, gender, disability, language, religion and more, is not just a health issue, of course. All the problems that are more common at the bottom of society, revealing a social gradient, get worse with greater inequality. In addition to shorter life expectancy, higher death rates and levels of chronic disease, increased obesity, mental illness and poor child well-being, more unequal societies suffer from more violence, including homicides, domestic violence, child maltreatment and bullying. Children and young people do less well in school and have lower chances of social mobility and higher rates of dropping out and teenage births. Drug and alcohol abuse, gambling, status consumption and consumerism also rise with inequality, while civic and cultural participation decline.

Keynes's letters to President Franklin D. Roosevelt clearly illustrate Keynes's firm belief that the main policy to help the US economy recover in a sustained way from the Great Depression was through increased public investment. In 1938 Keynes wrote to Roosevelt:

In an earlier letter to the president, in 1933, Keynes had written,

This is still, or even more, the case now. It was, to an important extent, true after the so-called Global Financial Crisis of 2007–09 and the subsequent eurozone debt crisis; it is also true in what seems to be, unfortunately the far worse current Covid-19 crisis.

One of the modern ways of increasing public, as well as private, investment is through funding by public development banks. By working with private banks and private capital markets, as well as other public institutions, public development banks can add leverage to public resources. Such leverage, facilitating a counter-cyclical response, is particularly valuable in times of economic crisis. Second, and crucially, public development banks provide valuable policy steering to help channel significant financial resources to key priority areas, such as the urgent green transformation and more inclusive growth.

There are multiple faults with the existing system of social security, many of them exposed by the Covid-19 crisis. Millions fall through what is an imperfect, mean and patchy safety net. Benefit levels are below those in other comparable rich nations, and, for most of those of working age, less generous than in the past. The system has become heavily dependent on a complex system of means-testing, a long-term shift that is a fundamental turn from the original Beveridge/Attlee principles of universalism and collectivism. The system is not equipped to deal with today's higher levels of uncertainty and turbulence. It also fails the key test of constituting a robust defence against poverty: poverty rates are now close to record postwar levels, and heading higher.

Although Britain's benefit system for working-age adults has always come with some degree of work conditionality, these requirements are now applied with unprecedented severity. Since 2012 over 5 million sanctions have been issued, often for minor breaches such as missing or being late for a job centre interview. At one stage the Department for Work and Pensions was levying more fines than the mainstream justice system. These conditions and sanctions were suspended for a few months during the first pandemic lockdown, but they were then reinstated from July, albeit applied in what the DWP described as a “light touch” manner to take account of the impact of Covid-19.

Although a system of reciprocity – in which entitlements come with responsibilities – has been an important source of public support for collective social security, the combination of inadequate support and coercion undermines the vital principle of entitlement. What is the case for a return to sanctions in what is set to be the weakest jobs market for decades? The evidence shows that new claimants are actively seeking work, and that sanctions have largely failed to help the jobless back to work, instead pushing them deeper into poverty and ill-health.

Equally important, the principle of reciprocity is applied in a heavily one-sided way. Wealthy and poor citizens have long been treated by different standards, a built-in source of inequity that exacerbates existing divisions across society.

The latter half of the nineteenth century to the second decade of the twenty-first century for China were turbulent decades of crises and wars, economic growth and contraction, and finally an extraordinary few decades of transformation of the economy and society. The calamities of the mid-nineteenth century brought a new reckoning about China's future that set the country on the long road to modern economic development. External defeat and internal insurrection had bloodied the Qing dynasty. Britain's victory in the Second Opium War had disposed of the belief that the foreigners had got lucky in the First Opium War less than two decades earlier. British military technology was superior to anything China had, while the domestic rebellions had laid waste large parts of the China heartland, robbed the administration of vital revenue, and exposed the inadequacies of the state to maintain internal security. Confronted with these near-death experiences, prominent court and provincial leaders initiated a modernization programme, despite opposition from conservative officials and outright hostility from most of the Confucian elite.

China's “long” twentieth century, the focus of this chapter, began with these “self-strengthening” (ziqiang) modernization initiatives in the 1860s and 1870s. New state institutions were created and the state sponsored arsenals and firms in shipping, textiles and mining. These fared little better than Japan's state-sponsored firms around the same time. In hindsight, the steps were too small, too few and too limited in scope. Their failings were exposed in the crushing defeat a modernizing Japan dealt China in 1894. The treaty that concluded the brief war with Japan allowed foreigners to establish manufacturing enterprises in China. Between 1895 and 1937, foreign capital and the private sector drove Chinese economic development. Shanghai and a few other places became vibrant centres of modern industry, commerce and urban culture. That economic growth was snuffed out in 1937 when Japan launched a full-scale invasion.

China during 1937–45 was characterized by multiple economies: the Japanese controlled the cities of east and central China, the Nationalists controlled southwest and west China, and in the interstices of the rural spaces between and the remote northwest provinces, the Communists held sway.

China's great transformation has created a huge middle-income, urbanized and sophisticated economy unrecognizable from 40 years ago. The especially rapid structural change after the 2001 accession to the World Trade Organization was pushed further by the massive stimulus investment to ward off the feared negative effects of the Global Financial Crisis, 2008–09. This chapter will take stock of the state of the Chinese economy, looking at not only the national aggregates for production, population and labour, finance and public spending, and international trade and investment, but also the diversity of economic change and growth across China's provinces. Achievements are impressive, but mask challenges for sustaining future growth in the context of an older population and shrinking workforce.

The world's number two economy after the United States and foremost manufacturing exporter is a challenge to describe. No country has sustained such high levels of economic growth for as long as China; no country has seen as many people lifted out of poverty in a generation; and no country has developed a vibrant market-based economy that seeks to become an innovative leader without throwing off the shackles of authoritarianism, least of all a former planned economy. Scale is a major challenge in measuring the current state of the economy. Many provinces are the equivalent in size of large national economies.

Diversity is the other challenge. The modernity of the eastern cities is a world away from the relative underdevelopment of the interior. Within China we find economies that are advanced, middle income and low income. As Jane Jacobs (1984) once observed, national economies are a convenient fiction. What matters are the cities and the urban conurbations that drive regional growth within different parts of a country. This chapter will therefore where feasible go beneath the national aggregates to look at the sub-national variations, the differences between and within provinces that make the Chinese economy so complex.

During 2018–19 celebrations of the fortieth anniversary of policies to reform and open up to the world (gaige kaifang) and the seventieth anniversary of the PRC's founding there was a lot of drum beating of the success achieved over the previous four decades.

The UK housing market is broken. The accepted affordability ratio for house price to incomes is around 4:1. In most major cities in the United Kingdom the ratio is double this, and in London, where the most jobs continue to be created, it is currently 14:1. A recent survey by Santander found that 70 per cent of 18 to 34-year-olds now believe that homeownership is over for their generation.

The first Covid-19 lockdown brought into stark view the plight of those unable to buy a home in a country with some of the weakest regulations protecting renters in the Western world. In cities such as London, renters pay over half their income to landlords. As incomes collapsed due to the lockdown, many have fallen behind with their rent (an estimate by Shelter put the number at 230,000 in England alone). The fear of eviction and homelessness has been ever present over the course of the pandemic, with the government having to repeatedly extend its ban on evictions at the last minute every few months.

Prospective home-buyers may have hoped that the virus-induced recession would finally lead to a sustained fall in house prices. There were a few months of gradually falling prices. But then, in July 2020, the government intervened, offering a stamp duty holiday on all properties under L500,000. Coupled with increasing demand for larger properties as people choose to work more from home because of the virus, the result has been the fastest rise in house prices in 16 years. The average price of a home – L240,000 – is now at its highest level ever.

The current government – like so many governments before it – is convinced that the housing affordability crisis is fundamentally a market failure on the supply side. The recent White Paper “Planning for the future” (see MHCLG [Ministry of Housing, Communities & Local Government] 2020) is a case in point. It proposes to overhaul an “outdated” planning system and “cut red tape” by largely removing the role of local authorities in approving planning applications and replacing it with a zoning system. The hope is that, with less regulatory oversight, the market will be set free to build more homes.

The UK economy is in crisis. As a result of the economic policies of recent decades, the lives of millions are insecure. Inequality and poverty in the United Kingdom have risen to levels not experienced since the 1930s. Growth has stuttered and productivity stagnated. Despite numerous promises and eye-catching headlines to “level up” and help those “just about managing”, there has been no concerted economic policy to address the increasing gap in income and wealth in the country. Since 2016 the economy and politics have been paralysed as all other issues have been sidelined by Brexit negotiations, arguments and disagreements. When matters could not have got worse for the United Kingdom, the Covid-19 pandemic brought many sectors of the economy to a standstill.

Between February and August 2020 the lockdown of society to prevent the spread of the virus caused the economy to shrink by an unprecedented 17 per cent. At the same time, the government's furlough scheme, under which it assumed responsibility for 75 per cent of furloughed workers’ wages, was implemented at a cost of L14 billion per month. The government has also lent substantial amounts to companies postponing their VAT and income tax payments. For the first time, people are being paid not to work, unlike unemployment benefit, when people are paid a far lower amount under the condition that they look for work.

The effect on government finances has been predictable. By November 2020 public debt had risen to L2,099 billion, or the equivalent of 99.5 per cent of GDP – a level not seen since 1961.

As the Covid-19 pandemic intensified towards the end of 2020 lockdowns were reintroduced and the furlough scheme extended, but this was too late to save many jobs. There were record redundancies, 370,000, from August to October 2020 and unemployment is expected to rise steadily as companies give up trading or reduce their workforce as a result of Covid-19.

Recovery to pre-pandemic levels is unlikely before the end of 2022, but the economy will also be affected by Brexit arrangements, which commenced on 1 January 2021. The Office for Budget Responsibility (OBR) expects that the effect of this relatively hard Brexit will be to reduce GDP by 4 per cent in the long run.

The battle for post-Covid-19 economic policy has to be won at the intellectual level before it can be won at the political level. Ideas always come first: intelligence can tame power. If there are no persuasive new ideas, politics will simply recycle the ideas of those who last had ideas. This recycling is in full swing.

The last set of ideas in economic policy were those associated with those of the rational expectations and monetarist schools, slightly modified by “new Keynesianism”. From this mix of value and monetary theory came the proposition – rooted in Léon Walras and David Hume – that market economies are spontaneously self-adjusting to a full employment equilibrium provided money is kept in order. No fiscal policy is required to balance the economy's books. All government needed to do in the way of macropolicy was to set independent central banks inflation targets, leaving them free to choose appropriate bank rates.

It may be objected that, since 2008, policy has been nothing like this. Emergency measures have been applied twice: in the immediate aftermath of the banking collapse of 2008/9 and to offset the partial lockdown of the economy in 2020. But one can think of these events as exceptions to the rules, too rare to justify dynamiting the theory of the self-regulating market. As US economist Robert Lucas remarked in 2009, “I guess everyone is a Keynesian in the foxhole.” In the foxhole – but not out of it: Keynes was for emergencies only.

We have the same reaction today. Impelled to close down 30 per cent of their economies to stop the spread of the coronavirus, governments have spent money freely, to support businesses and pay wages. They hope that, as the economy, reopens a V-shaped recovery will relieve them of their fiscal burden. This will not happen. To understand why, we need to start in a different place; that is, with Keynes.

Keynes's theory

For Keynes, “[t] he outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes”. His theory dealt with the first failure, in the 1930s.

Britain needs an ownership revolution. It needs its privately owned companies to be driven by a constitutionally entrenched purpose beyond profit making, to which all its stakeholders, including anchored investors, are committed. It needs many more firms to be diversely owned either as employee-owned companies, mutuals, co-operatives, trusts or partnerships, with sound constitutions that ensure their good governance and management. It needs more and better social ownership of assets it believes should be used to deliver the public good, which would otherwise be unobtainable. To secure all this, it needs vastly enlarged pools of dedicated capital to support the revolution – in particular, sovereign and citizen wealth funds alongside a reorganized and repurposed asset management industry. This ownership revolution is the precondition for achieving every worthwhile economic and social aim. There is no prospect of more justice, rising living standards and greater fairness without it. Ownership reform should be front and centre of our economic and political debate.

Ownership is fundamental. It is owners who shape the constitution of enterprise, and, in consequence, firms’ agility, innovative capacity and productivity. It is the character of ownership that confers trust and commitment between all the firms’ stakeholders. It is owners who give the green light to investment, employee participation and voice, customer engagement and the full acceptance of responsibilities to the environment. It is not enough in the twenty-first century to follow Milton Friedman's famous and much-quoted statement that the social responsibility of business is to increase its profits, so long as it stays within the rules of the game – a qualification that Friedman's critics often put aside as they seek to damn him.

But even accepting the qualification, Friedman's argument in wrong. Of course, no business is sustainable without profit; but owners are part of society, too. It is therefore not enough simply to follow the letter of the law around an overriding goal to maximize profits, arguing that the legal rules of the game completely and totally capture all society's preferences. That is to absolve business of all responsibility for the society of which it is part, claiming that achieving social and public good is only the government's provenance and government is all-seeing. Both claims are self-evident poppycock, and excuse owners from using their prerogatives well.