Navigating Global Crises. Unorthodox Monetary Policy, Debt Management and International Institutions in Britain and Italy from WWI to Covid-19

The paper offers a theoretical and comparative reflection on the importance of historical narratives in interpreting economic crises and informing effective policy responses. It takes as its foundation four emblematic episodes of extraordinary public spending ‒World War I, World War II, the Great Depression of 1929, and the Global Financial Crisis of 2008 ‒ collectively referred to as Big Fiscal Government Spending (BFGS) episodes. These are used as a lens through which to consider the COVID-19 crisis and explore what lessons past experiences may offer for the present and future. The essay adopts a heterodox, interdisciplinary approach, grounded in critical realism and historical inquiry, and deliberately distances itself from a rigidly orthodox economic framework. Drawing on perspectives from scholars like Harold James and Barry Eichengreen, the text argues that public responses to crises are the outcome of political and institutional choices, rather than deterministic economic laws. Accordingly, historical analysis is not aimed at prescribing a single optimal policy solution, but rather at illuminating a range of potential strategies and outcomes—always sensitive to national specificities, institutional architectures, and the influence of individual leadership. A central section of the paper contrasts orthodox and heterodox responses to crisis. A key insight is that in all four BFGS episodes, breaking with orthodoxy was a common feature: from the creation of new monetary instruments and direct central bank financing of war deficits, to expansive fiscal policies, bailouts, and off-balance-sheet solutions. International institutions are considered both as guardians of orthodoxy and, at times, as enablers of unconventional approaches during critical junctures. In the case of COVID-19, the author argues that the decision by governments to shut down economies in order to protect public health marked a dramatic departure from market-driven logic, underlining the centrality of public action. War metaphors are used not merely rhetorically, but analytically, to underscore how debt and public spending take on a different meaning in exceptional circumstances. The analogy with wartime economies supports the idea that public debt incurred to meet existential threats should not be treated as ordinary fiscal burdens. The essay concludes with the view that economics cannot be reduced to technical management of abstract systems ‒ it must also be understood as a historically grounded social science. Crises do not demand uniform solutions, but rather call for learning, and courageous unorthodox political decision-making. Historical examples offer up a range of possible policy actions faced with global crises that are wider than economists in thrall to today’s orthodoxies may care to acknowledge.