Crashed: How a Decade of Financial Crises Changed the World

"Adam Tooze’s book was written after I wrote mine. It’s the work of a real historian who has a very, very wide view and an exceptional knack for bringing everything together. He writes beautifully. Obviously, I would like to say my book is the book on the financial crisis. But he has stuff which I didn’t know when I wrote mine. What his book brings out is how many different facets of our economy interacted to produce this monstrous financial crisis of 15 years ago, from 2007 onwards and, as you say, its longer-term ramifications—because we’re still very clearly living with the consequences of that financial crisis. The book tells you about the policies and the institutions, particularly the financial institutions and how global the crisis was. He brings up the interaction of Central and Eastern Europe, which is something I wasn’t so aware of when I was writing my book. If you’re just curious about how we got into this state, as far as the financial crisis is concerned, why it happened and what policymakers did, he’s a great storyteller. If what you want is a really good story of what was going on by someone who is economically literate but also a really good historian, Crashed is my recommended book. Adam is very much the outsider and a critic, which is good. Lots of mistakes were made and somebody has to make those arguments. But I was in policymaking institutions a long time ago, am closer to policymakers, and think more as an economist, and what you have to recognize is that you’re making decisions to deal with events in real time. You will never have all the information you need or even most of it, and a lot of what you do will be wrong. That’s just how it is. It will be guided by political pressures, myopia and vested interests, which matter. So, for example, a lot of the policy decisions made in Europe during and after the crash of the financial crisis of 2007-9 were made in the eurozone under German pressure. Germany was the dominant creditor and had certain interests and views about what had to be done and how it should be done. They were partly moral, partly political, partly in response to interest groups. Now, it’s perfectly reasonable to say—and I did write at the time—that these were mistakes. But you have to accept countries will respond to domestic political pressures, which were very profound. They will respond to how they see the world order and what a moral world order should look like, which was very significant in this case. They will make mistakes. They learn—and they did learn a lot—on the job. One of the things that happens in life—Adam is a bit of an exception—is as a young person you are consumed by the stupidity of your elders. That was me, half a century ago. How could they make so many mistakes? Well, by now I must say I feel much more forgiving of my then elders because, by God, we made mistakes and they’re never easy to avoid. They happen for all sorts of reasons: misunderstandings of the situation, misleading ideology, oversimplifications of various kinds, perfectly understandable interests and interest groups. So I’m much more forgiving, but I think Adam’s criticism is important. If we’re going to learn, we have to learn from mistakes."