What the world needs now is… efficiency plus resilience

Economist Bernard Lietaer has an interesting paper on handling the current financial crisis. It’s based on the interplay between efficiency and resilience.

http://www.lietaer.com/images/White_Paper_on_Systemic_Bank_Crises_December.pdf

Lietaer’s main point is that in going all out for efficiency, economic managers have failed to pay attention to the importance of resilience, which requires such seemingly ‘inefficient’ features such as redundancy.

He is also concerned with the very idea of a general equilibrium theory in economics, when financial systems are, for him, better seen as being in dynamic disequilibrium.

As Lietaer notes,

“The misclassification of economics as a system in equilibrium is brilliantly explained in chapters 2 and 3 of Beinhocker, Eric The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics (Cambridge, Mass: Harvard Business School Press, 2006)” (Lietaer 2008:15)

Competely independently of this, but on a related topic, the Association of American Geographers has a session at its Annual conference in March entitled:

From Growth to Resilience – Changing Perspectives on Regional Development.


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2 thoughts on “What the world needs now is… efficiency plus resilience

  1. interesting. reminds me of experience in breeding of plants & animals. Directed selection is “more efficient” than natural selection, but inefficiency of the latter results in a natural genetic reserve that can facilitate adaption to change in environment. Example is cavendish banana: cultivated mercilessly for taste, dominance of cavendish left world banana supply vulnerable to outbreak of new fungus.

  2. Exactly. The idea of economic systems having features of ‘natural’ systems sounds suspicious to some and is generally under-researched. Conversely ecologists have tended to avoid consideration of human intervention in ecosystems, trying to study the non-human interactions alone. The Resilience Alliance people (Holling Gunderson and others) are trying to resolve this by refering to ‘social-ecological systems’, in which the two interact. The history of the Irish potato famine is another example similar to the cavendish banana. Supposedly there were only three varieties of potato grown in Ireland in the mid Nineteenth Century, making the food supply more vulnerable than it otherwise would have been to potato blight.

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