The global economy has had a shock unheard of before – the scale and the rate of adaptation has surely surprised everyone. The world will never be the same because:
- the division into the real and virtual economy no longer holds true to a large extent. It has appeared that the division criterion is about neither industries nor processes, but about the creativity of manufacturers and consumers,
- the division between private and public property is just as vague – the economic categories like exclusion from access, competition for access, or external effects need to be reviewed in the light of the current economic, political, and social realities,
- variability is the new normal – quick and major changes in the range of available goods, products, processes, markets, economic parameters,
- the position of individual economic entities is highly impermanent – significant modern assets, highly-qualified staff don’t guarantee stability, as proven by the dramatic situation of airlines,
- the state’s substantial interference with the economy takes place virtually without any ideological-political discourse. The business world’s dependence on political decisions has grown and will remain at a high level for a longer time,
- it seems there are no limits to macroeconomic expansion – the national debt or money supply are growing without any consideration for risks such as the state’s potential bankruptcy or the rapid acceleration of inflation,
- macroeconomists have a serious problem – their dogmas such as the claim that inflation is always a monetary phenomenon or the Phillips curve have not found their confirmation? in reality,
- it’s hard to accept that traditional economic indicators explain what really happens in the economy. When we sit on the couch and watch series and films on Netflix, do we actually generate GDP? And when we watch videos on YouTube, available free of charge, does the GDP grow as well?
To conclude: the current situation shows how much we don’t understand. At both the micro and macro levels, there are phenomena happening that economics and management textbooks simply can’t explain.
The text is part of the publication "The New Normal. Reality in the times of the global Covid-19 pandemic. A commentary by the faculty of Kozminski University".
