06/03/2012 § 7 Comments
In graduate school, many of my classes had a focus on ‘sustainability’. We struggled to determine what the word meant in practice, so it became a banner to march behind. A new word has become au courant: resilience. Now, the goal is to promote resilience in our social and economic systems.
While regional countries are driving the global “green growth” agenda, policymakers are facing a new economic reality and heightened uncertainty. The challenge of eco-efficient economic growth and inclusive resource use is critical and growing in several countries. Fundamental, rather than incremental changes are needed – Governments must therefore take the lead in re-orienting both the “visible” and the “invisible” economic infrastructure. At the same time the implications of heightened uncertainty and risk for policymaking requires more attention.
This blurb manages to mention ‘heightened uncertainty’ twice in four sentences, but never uses the word ‘resilience’. If anything, the report is focused on change: ‘fundamental…changes are needed’ and ‘re-orienting…economic infrastructure’. But resilience is an ability to resist change or to spring back from change. This is the fundamental contradiction with the new jargon. This blurb implicitly acknowledges the contradiction by its inability to speak of both fundamental changes needed and resilience in the same paragraph.
The Econ4 website explains resilience:
A healthy economy is a resilient economy able to withstand unanticipated shocks. To borrow a metaphor from the physical sciences, resilience is the ability to bounce without breaking. We can build resilience into our economy and its infrastructure by following the design principles of diversity and dispersion. The aim is not to maximize “efficiency” at a single point in time, but rather to minimize economic vulnerability over time.
A common analogy for resilience is a bowl. The economy starts off in equilibrium at the bottom of the bowl. Then, a shock displaces the economy, sending it up the side. A resilient economy can return ‘naturally’ to its starting position at the bottom.
This situation is contrasted with an unstable economy. The notion is that an economy at its maximum is on a pinnacle. It can get knocked off its perch and sent rolling down a slope. It won’t ‘naturally’ return to the maximum, but needs to be pushed back (if it ever can).
The central idea is that we should have an economic and social system that is robust to shocks and returns to its initial position. The central problem is that there is no way to determine whether this position is good or not. For example, the failure of Reconstruction and the rise of Jim Crow in the US South after the Civil War shows that the Southern system of apartheid (avant la lettre) was resilient. Here are other examples of resilient socio-economic systems (dates from Wikipedia):
- Middle Kingdom of Egypt (2055 BC – 1650 BC)
- Han Dynasty (206 BC – 220 AD)
- Roman Empire (27 BC – AD 476 (Western Empire))
- Capetian Dynasty (987 AD – 1328/1792 AD).
Extremely unequal and repressive systems can be stable. In fact, there is a line of argument in poly-sci that democracy is inherently unstable. Dictatorships can be more stable. By the same token, market economies with entrepreneurship can be less stable than command economies with repressed technological change.
To make the resilience concept work, we are back to usual economic questions. Whose welfare? Whose preferences? Who bears the cost of the movement from equilibrium? Who benefits from equilibrium? Who starts with the resources? How are resources redeployed to new uses?
I don’t see how adding this new concept helps us answer any of these questions.