Ardevora's Lang: The global economy has evolved into a fragile system

Complex modern supply chains

I do not think many people saw this coming. An illicit, wild animal food market in a region in China unleashes a global economic recession in the space of three months – or possibly longer, depending on whether you trust the information coming out of China

The specifics are almost certainly unforecastable, but the pattern may be predictable. I have been revisiting the deeper realms of my memory, raiding my university experiences. I dimly remember having an interest in the processes of disequilibria in economics, at a time when conventional theory suggested markets were always in equilibrium. Back in the day, we thought economic systems were rigid and only temporarily disturbed from equilibrium. Temporary disequilibria were thought to be created by 'exogenous shocks' - rare and isolated to world wars and the oil crisis. Oil slump will...