Could the COVID-19 crisis cause social collapse?

Our systems were already too complex to manage. Could coronavirus be the tipping point?


Could Coronavirus Cause Social Collapse? (A systems perspective)

Russian soldiers march in Petrograd, February, 1917

     It is beginning to dawn on us that the coronavirus crisis will most likely cause profound, long-lasting economic and social effects. A couple of weeks ago, there was widespread talk among economists and market analysts of a quick, “V-shaped” recovery in which output would drop dramatically but recover quickly to near pre-crisis levels once people started going back to work. With every day that passes under lockdown, every extension of school and business closings and recommendations to social distance, that possibility seems more and more remote. Steve LeVine eloquently makes this case in his recent piece, “This Looks Like A Depression, Not A Recession.”

     At this point, it is becoming hard to imagine how this crisis won’t turn into another Great Depression-style event. Even with trillions of dollars of relief from the world’s governments and central banks, it is inevitable that we will see lasting economic damage. Even with unemployment compensation, business loans/grants, QE programs at the national level, etc. etc., there are some harms that it is impossible to totally mitigate. Many businesses will not make it through the weeks and months ahead, and in two or six months, when it is safer to go back to work, millions of people will not be able to return to their old jobs. The exact shape of the recovery is impossible to predict, but it at this point a very deep recession or depression seems likely.

     The preceding discussion is an important one, but I wonder whether it goes far enough. As a student of history’s extreme events, and of complex dynamic systems and non-linear behavior, I think it is important to pose the question: could this crisis cause widespread social collapse?

     None of us need anything more to worry about than we already have. And while we are obviously facing a huge crisis, it is important not to be alarmist, or to draw conclusions outside what the facts support. But we are in a completely unprecedented realm, and possibilities that seemed remote or fantastic a matter of weeks ago have suddenly become very real and imaginable. And if the novel coronavirus has taught us anything, it is the costs of failures of imagination. Many experts and organizations had predicted a pandemic, but for most of us, and even for many in high positions of leadership, such a crisis was simply impossible to imagine in our modern, technologically advanced world. We are finding, though, that there are limits — natural and otherwise — to our life on this planet. Even with all of the technology at our disposal, it will still take eighteen months or longer to bring a vaccine into use against the virus that causes COVID-19.

     So, given the costs of failures to imagine extreme events, it is important to think thoroughly through the possible ramifications of the unprecedented circumstances that we are currently facing. It is not out of the question that this crisis could lead, at least in more vulnerable societies, to social and governmental collapse. Branko Milanovic argues, in a lucid piece for Foreign Affairs (“The Real Pandemic Danger is Social Collapse”) that this crisis could precipitate an unraveling of the global order. We would do well to think through that possibility.

     When the Soviet Union collapsed in 1989, Francis Fukuyama wrote a widely-cited article (“The End of History?”) which argued that, with the victory of capitalism and liberal democracy over communism and totalitarianism, the West had won, and we had reached “the end point of mankind’s ideological evolution and the universalization of Western liberal democracy.” In this teleological view of things, American power was permanently ascendant, and the world would never go back to the way it had been for most of history. But now we are finding that America, and the world, are not immune from the sorts of dramatically disruptive and destructive events (like wars and pandemics) that have characterized human history up to this point. Lulled into submission by decades of relative peacefulness and prosperity, many of us forgot that such extreme events could happen, at least to us (whoever ‘us’ is). But now we are being forced to realize that history never stopped.

A number of destabilizing factors have become apparent in recent years:

  • loss of trust in institutions and other people
  • the weakening of democracies and the ascendancy of authoritarian, populist, and other political forces
  • lack of global leadership
  • massive structural imbalances (debt, inequality, asset bubbles, crises of affordability, negative interest rates, etc.)
  • the effects of ecological destruction

     And this list is by no means comprehensive — these are simply the first things that come to mind. All of these factors have converged in recent years, and will be intensified by the current crisis. The question of whether decline in the global order necessarily brings chaos has become a part of the foreign policy and global affairs discussion.

     My most recent academic discipline is Systems Science, a little-known, interdisciplinary academic field, centered in social science, which uses tools from the areas of complexity/chaos theory, control theory, cybernetics, simulation and modeling, ecology, psychology, and other areas to study complex problems. What we are now witnessing with the coronavirus crisis is the ultimate systems problem, with the whole of human society as a massive, dynamic, intricately interconnected system, with economic, financial, informational, political, and many other subsystems which interact in complicated, difficult-to-understand ways.

     In systems science, we often talk of managing complexity, and of the costs of complexity. Our modern way of life depends heavily on extraordinarily complex systems (information technology, supply chains, corporate and political structures, etc.). A prime example of the costs of complexity is the last financial crisis of 2008–2009. Many economists and financial professionals scoffed at the idea that trouble in the housing and mortgage securities markets could lead to a larger crisis. After all, the financial system was loaded with derivatives and other instruments whose purpose, their raison d’etre, was to manage risk. How could a financial system with so many levels of hedging and risk management be subject to widespread systemic risk? This was another failure of imagination. In retrospect, it turned out that the structure of global finance was a house of cards with significant structural weaknesses, and the complexity of the system made it difficult to understand the ways in which it could fail, and fail catastrophically, until it was too late. Thus, even before the coronavirus crisis, it was becoming clear that many of our social and economic systems had become too complex to manage effectively.

     Joseph Tainter, archaeologist and historian, in his remarkable book, The Collapse of Complex Societies, argues that the root cause of the collapse of civilizations is diminishing returns to complexity. Institutions grow in size and cost, but progress slows or stops altogether. That never-ending growth has become enshrined in our political and economic decision-making, as ‘political economy’, suggests that our civilization has been dealing with these diminishing returns for decades or centuries. Tainter’s remarkable intellectual framework for understanding the trajectory of social growth and collapse has never been more relevant than at this moment.

     The more complex a system becomes, the more difficult it is to understand or predict its full range of behavior, particularly when new conditions are rapidly introduced. We are already seeing signs that the effort to stop the crisis is having unintended consequences. Take the example of the mortgage markets, in which the Federal Reserve has recently announced intervention, in the form of purchases of MBS (mortgage-backed securities). When the Fed’s purchases caused rates to climb, this initiated a wave of margin calls across the industry which threatens to bankrupt many players in the mortgage markets, causing many mortgage bankers to call for the Fed to reduce its purchases of such securities. 

     This is simply one example of the difficulties of intervening in financial and other systems which are so complex that no one can possibly understand every aspect of how they work. Very likely we will see more examples of this phenomenon, where efforts to stem the tide of crisis actually have the opposite effect. The possibility of feedback loops leading to destructive or chaotic behavior, either from the effects of the crisis itself, or the unanticipated results of policies designed to address them, is all too real. A characteristic feature of complex systems is cascading failures, where a failure in one part of the system leads to multiple, potentially catastrophic, failures in other parts. This is all-too-possible, even likely, in the economy, where the principle that one person’s spending is another person’s income means that, in the language of systems, many parts of the economic system are tightly coupled, increasing the likelihood of cascading failures.

     The larger point is that, even in times of relative stability, our large-scale social and economic systems already exhibit unpredictable, damaging behavior (as in the last financial crisis). We simply do not know how those systems will respond to this kind of shock to the entire global system all at once. Conventional forecasting models are built on linear relationships between inputs and outputs, and do not take into account the possibility of cascading failures, feedback loops, network effects, and other highly dynamic effects. Most economic models assume that the economy tends toward a state of equilibrium, and will return to this state after a shock causes a temporary dislocation. But what if the shock is large enough, and drives the state of the system far enough from equilibrium, that it becomes impossible to return to the previous system state?

     The shortcomings of linear thinking become much more apparent in times of radical change. Social scientists and analysts use linear models because they are simple and easy to work with, and often yield fairly good approximations of the real system under study. When changes to the variables in a system are small and isolated, linear models usually give reasonably good results. But when many factors or variables undergo drastic change all at once, models built on linear relationships are no longer adequate for understanding the system’s behavior. While there is research into the nonlinear and chaotic dynamics of social systems, this kind of thinking has not been assimilated into most of our economic and political decision-making apparatuses, making us unprepared for a global crisis of such scale and complexity.


     What if, as a civilization, we are already well on the downslope of this curve of diminishing returns to complexity? If that is in fact the case, and the signs seem to be all around us, then we could not imagine a more effective catalyst to that process than a global crisis which requires the shutdown of most economic activity, places heavy stresses on economic, financial, health, and other systems, and dramatically exposes the weaknesses of our existing institutions. Tremendous supply and demand shocks are happening at once, across the world. In the midst of all of this, an oil price war has caused oil prices to collapse, adding to uncertainty and the pressure on global markets.

     The combination of this crisis with climate change and the collapse of ecosystems is downright terrifying. Human civilization was already on a trajectory of existential crisis, and the idea that we may have already entered an era of collapse had begun to enter the popular consciousness even before the coronavirus crisis. The question of what such a collapse might look like has been studied, for example, by NASA. While the causes of the collapse should come as no surprise (overconsumption, depletion of resources), the exact trajectory of the collapse is difficult to predict. Some nations and institutions are more vulnerable than others, so it is unlikely that we would witness global collapse in a single event, though we are only at the beginning of this global crisis, and in coming weeks and months, as the shocks continue to propagate through the system, we are likely see more and more destabilizing effects.

     In the short term, the virus-related shutdowns are having positive effects in terms of reduced pollution and emissions. But there are reasons to believe that in the medium and long term, this crisis might make it harder, not easier, to address the climate crisis. Now that the world’s governments are spending trillions of dollars to respond to the outbreak, massively increasing public debt, which was already at historically very high levels before the crisis, it becomes very difficult to imagine how we will make the massive investments required to address climate change and other system-wide challenges. And if we think of climate change and the virus crisis as two facets of the larger war on our natural environment, then a pandemic seems less a mitigating factor than an additional red flag of impending disaster.

     Every day it becomes less difficult to imagine how we might end up in a situation of collapsing institutions and governments. The possibility that coronavirus could cripple our national government is being discussed, and in some ways this has already begun to happen. The IRS, for example, announced on Monday the closure of its field offices in order to slow the spread of the virus, but such closures will make it more difficult for an already overburdened system to respond to the crisis. Coronavirus cases in Congress raised the possibility of our government being disabled at the time we need it the most.

     And there is a long list of similar possible ways in which things could get much worse from here. As markets price in the true scale of the crisis, and the effects of rapid economic shutdown propagate through the system, the economic damage will only increase. The crisis threatens to create a massive credit crunch, as payments dry up, confidence evaporates, and margin calls and demands for collateral accelerate. Even before the novel coronavirus appeared, there was widespread worry about the health of the global financial system, and worry that history’s largest debt bubble could burst at any time. If localized trouble in mortgage markets caused so much damage in the last financial crisis, how many times worse will the economic damage be from a global economic shutdown?

     In the United States, hospitals are already becoming overwhelmed in some areas, and we are still not at the peak of the crisis. Coronavirus is revealing that, at least in the United States, our health care system is simply unable to cope with a crisis of this scale. In the midst of all this, the Trump administration is refusing to reopen ACA enrollment, ensuring that millions of Americans will be without health insurance in the middle of a pandemic, a decision seemingly designed to bring about a worst-case scenario. And as health care workers get sick, the ability of the system to respond to the crisis is diminished.

Coronavirus is also revealing the vulnerabilities in our food supply. We depend very heavily on just-in-time supply chains which are being heavily disrupted. Many farms will fail. While we take our modern civilization for granted, it is in fact much more fragile than we previously realized, and we are in the process of discovering many of those vulnerabilities, all at once.

     Our democracies were already vulnerable before the crisis. In the United States and other countries, election interference was already a major concern. The virus is almost certain to raise question marks over the 2020 election, and it is apparent that our system is ill-prepared to cope with the kind of adaptations that are needed to address the compound issues that are arising. In Hungary, Israel, the Philippines, and elsewhere, political leaders have exploited the crisis to consolidate power and weaken the institutions which might stand in their way.

     America’s trade wars with China and Europe were the most visible examples of a rising tide of protectionism across the world. Already, before coronavirus, there was talk of the decoupling of global economies, and the current crisis is likely to dramatically accelerate that trend. The realization that we might be witnessing the rapid reversal of globalization is beginning to dawn. Worryingly, there is no accepted alternative economic order, and the virus crisis is exacerbating international tensions, and raising the risk of global conflict.

     Scenarios for how the pandemic might lead to further destabilization are not difficult to imagine. Some countries are more vulnerable than others — Iran, for example, was already experiencing severe economic hardship before being hit very hard by the epidemic. The failure of a state like Iran, which sits at the geographic and geopolitical center of increasing tensions, could reverberate across the region and spark larger conflict. Russia and China have been working overtime to disrupt and reshape the (previously American-led) global order, and that order is being further weakened by the pandemic. The Crisis Group publishes a list of conflicts to watch, including Iran, North Korea, Yemen, and Venezuela- any of these places could be the match that lights a larger regional or global conflagration.

     Probably a collapse, if it comes, will not be a single, well-defined event. More likely, we will see a series of crises that further destabilize our social and economic systems. The rapid, widespread shock of the coronavirus outbreak might compress years of changes into months, or decades into years, but the process of social collapse might still play out relatively gradually. Fifty or a hundred years from now, it might be clear that this crisis was the death blow to our current way of life and global order, but that might not be obvious as we endure a global economic depression and collectively attempt to get back to normal, even though it is becoming increasingly unlikely that that will ever happen. Events which in the long (retrospective) historical view might be considered ‘collapse’ might appear to those who live through them as turbulence or decline. The question might not be so much, “will coronavirus cause social collapse” as much as, “to what degree will coronavirus hasten a process of collapse that is already underway?”

     This article has raised more questions than answers. Though social collapse is, by definition, a process that cannot be effectively managed, it is still crucially important that we understand the reality of our situation in order to formulate meaningful responses, as individuals, organizations, and governments. At the least, the coronavirus crisis has made us all more aware that extreme events can and do still happen — and not in spite of our level of advancement, but in many ways because our civilization is so advanced (which, in the current paradigm, is another way to say ‘complex’). If we are to avoid the worst imaginable outcomes, which increasingly seem possible or even likely, we must be clear-eyed about where we find ourselves, and understand that we will never return to ‘normal’, to the way of life that we had before.

     And this might not be such a bad thing. If we can embrace self-reliance, simplicity, the value of art and literature, time spent with friends and family, and the precious gift of our natural environment, and realize that human well-being goes far beyond money and material things, then perhaps we will be able to transition to a world in which technology, economy, and politics are in the service of real human needs not the other way around. And if we can do that, then complete disaster (if not hardship and sacrifice) can be avoided. If not, then the next chapter of human history will be a dark one indeed.

 


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