The metamorphosis of resilience

Abstract

This paper attempts to answer the question of whether the concept of resilience in economics, which is considered to be systemic, is systemic enough. First, it briefly reviews the dominant economic interpretations of resilience and points out the tacit assumptions of the prevailing understanding that are incompatible with the nature of the real socio-economic system. It then highlights that the inclusion of the dynamic constellation of the large (sub)systems (e.g., the financial sector and the real economy) is essential to understand that, in addition to the restorationist interpretation of resilience known from the mainstream concept, system structuring efforts (i.e., to create a more harmonious relationship between systems) may be needed and, moreover, that their synergistic combination may help to promote the resilience of the system as a whole. The resulting extended theoretical framework is then illustrated on two levels: (i) following the SPIDER approach used in qualitative systemic reviews, it is shown that the resilience-oriented investigations of the mainstream economics literature also suggest that it is worthwhile to address the interaction between the financial sector and the real economy; (ii) this is reinforced by demonstrating the breakdown of the constellation between the financial sector and the real economy. Finally, implications are drawn both for economic theory and economic policy.