An Economic View on the World’s Most Pressing Issue at This Moment – Carnegie Endowment for International Peace

Zachary D. Carter recently joined the Carnegie Endowment as a nonresident scholar.

You study geopolitics through an economic lens. What do you see as the most pressing issue at this moment?

Russia’s war in Ukraine—which is to say the global energy crisis, which is to say the climate transition, economic inequality, and new economic thinking. Russian President Vladimir Putin’s invasion was a needless humanitarian crisis that has also transformed the international economic order, and I think we’ll be sorting out the implications of that upheaval for a long time, whenever and however the conflict ultimately concludes.

What’s one trend or story in your area of study that has flown under the radar?

The U.S. economy is very strong right now.

Predicting the future is extremely dangerous in economics, but as of today, the United States is experiencing what is almost certainly the best economy of my lifetime. Unemployment is down to 3.5 percent, and post-COVID inflation has cooled off. Wages are up since the onset of the pandemic, even accounting for inflation, and wages are rising as inflation moderates, which is doubly good news. All of this is happening while we’re witnessing a domestic explosion of green energy and green tech investment that ought to be good for workers and the environment for years to come. Meanwhile, other countries are trying to one-up the United States by subsidizing their own green industries, which is excellent news for the planet.

Pessimism has been the smart call for most of my life, but there are some very important things going the right way right now, and some very good reasons to believe in a better future.

You’re currently writing a book on John Stuart Mill. How do you think your research on this topic will influence your work at Carnegie?

I’m always hesitant to talk about books while I’m working on them, because the answer to a question like this always depends on the research, and you never know where the research will go. Sometimes a draft memo or a diary entry will change your whole understanding of a period in someone’s life—especially for a thinker like Mill, who was perpetually revising his ideas in response to new events. But I think the fact that he was always updating his thought will be important.

Mill has earned a lot of admirers over the centuries for being right about things that his contemporaries were wrong about—particularly slavery and women’s equality. But Mill was also frequently wrong about some of the most important questions of the day, including some he worked on directly, such as British Imperial policy in India. I’m not convinced that these are really separate spheres of intellectual activity for Mill—his greatest insights and his gravest failures seem to have been forged in the same fires. There is something profound there, although I can’t yet say just what.

You’ve also written an award-winning book on John Maynard Keynes. What’s your favorite Keynes fact?

Keynes was a pillar of the Bloomsbury Group, a collection of ambitious artists and writers who lived in London in the years surrounding World War I. Keynes was a very unusual person in any setting, but he was particularly grandiose within Bloomsbury—he was the only member of the gang who knew anything about economics, the only one who had any pull in politics, and the only one who ever became fabulously wealthy. He ended up financially supporting much of the group for many years.

As a result, he could be a very intimidating person, particularly when pitted against someone like David Garnett, who ran a bookshop and once wrote a novel about a woman who suddenly turned into a fox. According to Garnett, he was enjoying a walk with Keynes one day when they heard the low rumble of thunder. Garnett became very agitated and wanted to hurry back inside, telling Keynes that storms are always closer than you realize because it takes so long for the sound to travel through the air. Keynes looked at Garnett and said something like, “Why you silly man, sound waves travel through the ether!” Garnett became very exercised about this, because of course Keynes was completely wrong. When they got back to the house, Garnett tried to find someone who would talk sense into Keynes about the speed of sound. But it was the great Keynes against the little bookstore clerk and so everybody believed Keynes.

The story might not be true! I didn’t put it in my book because I couldn’t figure out a way to gracefully fit it into the narrative with all the necessary caveats. Everybody in Bloomsbury had an axe to grind with everyone else at some point in time, and they all wanted to be understood as the true secret genius of the collective—especially the people who never ascended to the kind of stature that Keynes and Virginia Woolf acquired. But even if Garnett fabricated the whole thing, I think there’s something to his belief that he could at least get away with telling this story in his memoir. I read a zillion of Keynes’s letters, memoirs, and diaries, and it sounds to me like the kind of thing he would do and the kind of thing that would happen in Bloomsbury.

I like this anecdote because, true or false, it’s a reminder that these extraordinary figures from history are always just as human as you and I. They make mistakes. They believe incredibly silly things sometimes for reasons that are baffling even to their friends. And the more respect we have for these figures, the more careful we have to be with them, because it’s very easy to get carried away by their intellectual charisma and tell ourselves, “Ah yes, indeed, sound waves travel through the ether.”

What will be your area of focus at Carnegie?

Everything! I’m only half-joking. My work will be sheltered under the Global Order and Institutions Program, and the plan is to examine all the big questions in geopolitics and diplomacy through an economic lens.

I think most people conceive of economics and politics as separate spheres of activity, but I’ve come to believe that any deep knowledge of economics requires a thorough understanding of political realities and possibilities, while any firm knowledge about politics requires an understanding of economic pressures and potential.

I’m particularly interested in the rise of authoritarian political movements in the aftermath of the 2008 financial crisis and whether new modes of economic cooperation and coordination can be devised to strengthen democracy for the fight against climate change. Not everybody likes democracy, prosperity, peace, and stability, but I think if you can find a way to put them all on the table in one package, you’ll get a lot of takers.