“Deaths of Despair” Preceded Pandemic; What Will Follow?

Case and Deaton ask how capitalism can survive the despair of its working class.

Posted Sep 04, 2020

The book Deaths of Despair and the Future of Capitalism was published at a somewhat awkward time: the middle of March 2020, just when much of the United States was going into lockdown mode due to COVID-19. Serious books require a great deal of preparation, and this 300-page book by two careful scholars is surely no exception. As they were completing their manuscript, no one was predicting the current pandemic. What the authors were focusing on was the previous two decades’ surprising rise in death rates and first fall in life expectancy in the United States in a century, trends not due to the virus but due to an apparent epidemic of hopelessness and pain contributing to tens of thousands of people becoming addicted to opioids, drinking their way to eventually fatal liver disease, and committing increased numbers of suicides by more direct methods.

Why were two economists—Anne Case and Angus Deaton—writing about health crises, their interpretation of which seems to be psychological? And why were they making a connection between what they called “deaths of despair” and the future of capitalism? Why, in particular, was this happening so soon after one of them had been awarded the Nobel Memorial Prize in Economic Science and had achieved public acclaim for a book with almost the opposite theme: how the combination of market-based institutions and the technologies of the industrial revolution had lifted a considerable fraction of mankind above subsistence living standards for the first time in world history (Deaton, The Great Escape: Health, Wealth and the Origins of Inequality, 2015)? Finally, did anyone care anymore in March 2020, now that an unexpected viral pandemic was turning life inside-out for so many Americans?

The answer to the last question is clear enough. The book’s awkward timing didn’t put Deaths of Despair’s sales on hold while people waited to see how the current crises would play out. The book became a New York Times bestseller, a Wall Street Journal bestseller, and a New York Times Book Review editor’s choice, according to Google Books.

What’s it about? Case and Deaton coined the term “deaths of despair” to convey their sense that the downturn in U.S. life expectancy in recent years has its main cause, not in any bacterial or viral infection transmitted across the population by personal contact (on the contrary, lack of social support systems and human connection is one of the culprits—see another book inspired by the opioid epidemic, Murthy, 2020). Nor is the rise in death rates due to environmental toxins causing cancers, or CO2 discharges causing global warming. Instead, they attribute the epidemics summed up by Deaths of Despair to an interplay between economic trends, frayed social networks, and psychological effects, causing considerable numbers of people to lose the sense of purpose and optimism needed to keep moving forward with their lives.

Case and Deaton argue that the rising gap in fortunes between college-educated and non-college-educated Americans—especially non-Hispanic white Americans—and the inadequacy of social or governmental supports for those affected, has been the main cause of the turn towards opioids, alcohol addiction, and increased suicides, with abetting factors such as lack of government protection from pharmaceutical industry promoters of OxyContin and other addictive painkillers.

Why does “future of capitalism” appear in the title? For one thing, Case and Deaton address anticipated reader questions about why the economic system that raised hundreds of millions from poverty in Deaton’s previous book seemed now to have become a villain. But for another, they were clearly deeply troubled by our latest version of capitalism, the one failing to protect a considerable fraction of our population from sinking back into economic marginality as it transitions towards a new reality in which only possessors of advanced skills can build promising futures, and a handful of extraordinarily successful entrepreneurs capture an unprecedentedly large share of the goods, services, and wealth that the system generates, leaving tens of millions to choose between welfare checks, flipping hamburgers, and mopping floors at incomes that—if they can hold themselves together emotionally—will at best make ends meet.

Case and Deaton, in fact, give another full-throated defense of competition, private property, and markets, at key moments in their book. But they make clear their view that capitalism of the style pursued in the United States since the Reagan revolution, and especially in the past decade, is a failing and unsustainable version. Speaking of the financial and economic crisis which began in 2007 and 2008, they write:

“Until the crash, it was possible to believe that the elites knew what they were doing, that the salaries of the CEOs and the bankers were being earned in the public interest and that economic growth and prosperity would make up for the ugliness of the system. After the crash, when so many ordinary people lost so much, including their jobs and their homes, the bankers continued to be rewarded and went unpunished, and politicians continued to protect them. Capitalism began to look more like a racket for redistributing upward than an engine of general prosperity.”

I’ve written in some of these posts about closely related issues—e.g., the “hit” that mainstream politicians permitted blue-collar workers to endure from globalization, an error that contributed immensely to the threat to the liberal order that is today’s U.S. political scene. And Case and Deaton’s position on the necessity for appropriate societal actions, much of it through the state, including in spheres of education and health care, is very much in line with elements of the Acemoglu and Robinson book (The Narrow Corridor, 2019) of which I wrote here.

Louis Putterman
Source: Louis Putterman

For any budding economists out there, the book also holds lessons I would wish to see absorbed by the rising new generation who are aligned with the goal of making economics broader and more relevant, but who also show the great danger of veering away from the kinds of depths of insight that Case and Deaton exhibit because they are not afraid of being interdisciplinary and of connecting dots even without slam-dunk econometric proofs of causality. Let me approvingly quote a passage that resonates:

“Some economists now endorse the idea that a controlled experiment is required to demonstrate causality… Such techniques have their uses, but they are of little use to us here in describing a slowly evolving and large-scale disintegration that involves a historically contingent set of forces, many of which interact. Some hard-nosed social scientists argue that anything learned in such circumstances is illusory. We fundamentally disagree.”

I encourage you to engage with this important book. Our society can do better if we are willing to learn from the millions of lives and deaths of despair we have been churning out alongside sustained growth in the value of GDP and of the stock market. If too large a fraction of our population continues to fall through the cracks, our days of progress on those fronts on which we have seen successes may also fail to be sustained.

References

Anne Case and Angus Deaton, Deaths of Despair and the Future of Capitalism. Princeton University Press, 2020.

Vivek Murthy, Together: The Healing Power of Human Connections in a Sometimes Lonely World. Harper Wave, 2020.