Autarky is the characteristic of self-sufficiency; the term usually applies to political states, societies or to their economic systems. Autarky exists whenever an entity survives or continues its activities without external assistance or international trade. Wikipedia
The world is in a panic. We have been told to shelter in place, to maintain social distancing and stay six feet apart, to practice hyper personal hygiene. We have also been told not to hoard, to take care of ourselves, to help others, to pray and to think positive. Society as we knew it not so long ago will come “roaring back” because of ”pent up demand (World War II terminology)” to the “greatest economy in history.” All will be well after God gives us a miracle drug.
I’m on board with most of that except the society will come roaring back part. I don’t pray but that’s between me and God (and I don’t believe in God but that’s my business).
So, why don’t I think society will come roaring back? I will answer in two parts.
The first part is fairly easy to understand. Asset prices, interest rates, income inequality, debt and expectations were so completely out of whack before the dreaded virus struck that a blow up was bound to happen. And, they’re still out of whack to the eye of any rational observer. We were just waiting for a pin to prick the bubble and the virus was that pin. Not that the virus isn’t real. It is THE problem now and we must get in control of it before things can get much better. But, we also have to wait until asset prices, interest rates, income inequality, debt and expectations return to “reasonable” levels (and they could stray further from “reasonable” levels on the downside because of the panic). Then, things might have a chance to “come back” roaring or not. So, it’s going to take awhile. Most “bear” markets and “recessions” take a year or two (some much more) to run their course while the economic “fundamentals” return to “reasonable” levels.
The second part is more complicated. The other night while I was sheltering in place, I told my grandkids (from a safe distance) that I’d come to believe that our (the American) democracy seems throughout its history to have oscillated between two polar extremes.
The first extreme has been variously called patriarchal, conservative, libertarian, self-sufficient, tough love, sow what you reap, emergent, “free” enterprise (hard to accomplish when the initial conditions hugely unequal), and capitalism (usually practiced in name only). None of these characteristics are bad in themselves although I would question the wisdom of patriarchy after reading Melvin Konner’s The Tangled Web: “… if, as now seems clear, women, like other primate females, are less aggressive than males for biological reasons, then an overall increase in the number of women in power would tend to buffer political systems against violence.” Maybe.
The other, the opposite of the first, is called matriarchal, liberal, nurturing (nanny state), mutually dependent (i.e. cooperative), sharing, planned and (what most scares the first bunch) socialism. None of these characteristics in themselves are bad either. Everything in moderation.
I am an economist so I have great respect for free enterprise and capitalism under normal conditions, but conditions are never quite normal. I am also a liberal in the sense that Jesus (or Tolstoy) was a liberal but I’m not a Christian and if I were I would certainly not compare myself to the Christian savior nor do I pretend to have the writing skill or penchant for human observation of the great Tolstoy.
What I wanted to impress on my grandchildren is that we all have inside us our particular strains of the two extremes through which democracy oscillates. And, we oscillate too.
During a panic we tend to freeze up, to harden our views and run to extremes. I’ve had family and friends and listened to leaders today who are convinced that the lesson from our current problems is that we should be self-sufficient, depend on no one, turn away from others, particularly foreigners, and shrink up inside our dark shells. That’s impossible for me. How could I get a cup of coffee, sip a mezcal, or reward myself with a chocolate bar? On the other side I hear pleas for us all (the world as a whole) to come together, to support each other, to share ideas and develop a plan to move forward. As noble as it sounds, none of us (especially not me as I’ve said) have the morality of (pick your hero—Jesus, Gandhi, Schweitzer, Donald Trump) or the wisdom (or lack thereof) of Tolstoy. Yet, we each freeze up, harden our views and run to extremes. That’s what a panic does. And, that’s the second reason I’m not optimistic of a quick return to normalcy.
It’s going to take awhile. And, during the wait, many of us will likely hunker down in the darkness like the mass of humanity in E. M. Forster’s The Machine Stops. Eventually, as in Forster’s brilliant and still quite useful story, a few brave souls will venture out into the light. Maybe you will too. May the Force be with them and with you.