Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Perspective
  • Published:

Systemic resilience in economics

Abstract

We describe a framework for understanding the factors that underpin economic resilience, and identify the basic tools for implementing it. This principally involves examining resilience by design, which promotes endogenous reorganization in the economy, and by intervention, which includes exogenous measures such as bailouts, stockpiles and building buffers. We link these ideas to comparable notions from physics, such as the rich and non-trivial phenomenology that arises in circumstances when a system is dynamic and out of equilibrium. We contend that a more nuanced understanding of the underlying structure of our economic system could lead to more enlightened policy decisions that promote resilience and result in better outcomes in the long run.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Prices may be subject to local taxes which are calculated during checkout

Similar content being viewed by others

References

  1. Anderson, P. W. More is different. Science 177, 393–396 (1972).

    Article  ADS  Google Scholar 

  2. Föllmer, H. Random economies with many interacting agents. J. Math. Econ. 1, 51–62 (1974).

    Article  MathSciNet  Google Scholar 

  3. Kirman, A. in OECD Complexity and Policymaking (OECD, 2016).

  4. Linkov, I., Keenan, J. & Trump, B. D. COVID-19: Systemic Risk and Resilience (Springer, 2021).

  5. Trump, B. T., Hynes, W. & Linkov, I. Combine efficiency and resilience in post-COVID societies. Nature 588, 220 (2020).

    Article  ADS  Google Scholar 

  6. Linkov, I., Trump, B. D., Golan, M. & Keisler, J. Enhancing resilience in post-COVID societies: by design or by intervention? Environ. Sci. Technol. 55, 4202–4204 (2021).

    Article  ADS  Google Scholar 

  7. Kott, A. S., Golan, M. S., Trump, B. D. & Linkov, I. Cyber resilience: by design or by intervention? Computer 54, 112–117 (2021).

    Article  Google Scholar 

  8. Simmie, J. & Martin, R. The economic resilience of regions: towards an evolutionary approach. Camb. J. Reg. Econ. Soc. 3, 27–43 (2010).

    Article  Google Scholar 

  9. Sonnenschein, H. Market excess demand functions. Econometrica 40, 549–563 (1972).

    Article  MathSciNet  Google Scholar 

  10. Mantel, R. On the characterisation of aggregate excess demand. J. Econ. Theory 7, 348–353 (1974).

    Article  Google Scholar 

  11. Debreu, G. Excess demand functions. J. Math. Econ. 1, 15–23 (1974).

    Article  Google Scholar 

  12. Beaudry, P., Galizia, D. & Portier, F. Reviving the Limit Cycle View of Macroeconomic Fluctuations (NBER, 2015).

  13. Portier, F. The instability of market economies. Rev. OFCE 157, 225–233 (2018).

  14. Gabaix, X. The granular origins of aggregate fluctuations. Econometrica 79, 733–772 (2011).

    Article  MathSciNet  Google Scholar 

  15. Bak, P., Chen, K., Scheinkman, J. & Woodford, M. Aggregate fluctuations from independent sectoral shocks: self-organized criticality in a model of production and inventory dynamics. Ric. Econ. 47, 3–30 (1993).

    Article  Google Scholar 

  16. Scheinkman, J. & Woodford, M. Self-organised criticality and economic fluctuations. Am. Econ. Rev. 84, 417–421 (1994).

    Google Scholar 

  17. Guzman, M. & Stiglitz, J. E. Towards a Dynamic Disequilibrium Theory with Randomness Working Paper No. w27453 (NBER, 2020).

  18. Juncker, J.-C., Tusk, D., Dijsselbloem, J., Draghi, M. & Schulz, M. The Five Presidents’ Report: Completing Europe’s Economic and Monetary Union (European Commission, 2015); https://ec.europa.eu/info/publications/five-presidents-report-completing-europes-economic-and-monetary-union_en

  19. Sondermann, D. Towards more resilient economies: the role of well-functioning economic structures. J. Policy Model. 40, 97–117 (2018).

    Article  Google Scholar 

  20. Weil, D. The Fissured Workplace (Harvard Univ. Press, 2017).

  21. Shiller, R. Irrational Exuberance (Princeton Univ. Press, 2000).

  22. Pfeffer, J. & Williams, L. Mental health in the workplace: the coming revolution. McKinsey Quarterly (8 December 2020); https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/mental-health-in-the-workplace-the-coming-revolution

  23. Smith, E. et al. A brain capital grand strategy: toward economic re-imagination. Mol. Psychiatr. 26, 3–22 (2021).

    Article  Google Scholar 

  24. Haldane, A. Rethinking the Financial Network (2009).

  25. Hynes, W., Trump, B., Love, P. & Linkov, I. Bouncing forward: a resilience approach to dealing with COVID-19 and future systemic shocks. Environ. Syst. Decis. 25, 1–11 (2020).

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to William Hynes.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Hynes, W., Trump, B.D., Kirman, A. et al. Systemic resilience in economics. Nat. Phys. 18, 381–384 (2022). https://doi.org/10.1038/s41567-022-01581-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue date:

  • DOI: https://doi.org/10.1038/s41567-022-01581-4

This article is cited by

Search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing