The ‘blurb’ on the back of this book suggests that it ‘describes how individuals, institutions and nations can successfully navigate a dynamic, globalized economy filled with unknown risks’.  I am unconvinced that the contents live up to this claim.

The early chapters are interesting – contrasting resilience (the ability to bounce back) with robustness (the ability to resist shocks).   A society needs to ability to bounce back.  How is that developed?  It could be by having a strong social contract, or by working through a series of small shocks – modest business cycles may build up resilience.    

Long-term factors can improve or undermine resilience.  Weak financial markets, high public debt, inflation volatility or inequality are all potential challenges.  Global problems include supply chains, weak economic and/or governance in some emerging economies and failures of global coordination, for example on Covid vaccines.  The cost of building in resilience should not be seen as coming at the expense of long-term growth, because it enables society to take more risk.

Looking at the importance of the social contract, and at how externalities affect outcomes, Covid produces many examples of good and less good behaviour.  Trap externalities (children losing school or suffering ill-health due to parental unemployment) are identified as those from which it is hard to recover.  

Brunnermeier also argues that diverse societies are more resilient – because there are a range of responses to shocks.  A resilient society supports the unemployed to bounce back – not stay unemployed.  Strong social norms, governments adept at resilience, enforcement and markets are all suggested as possible ways of implementing the social contract.  However, too strong social norms might reduce diversity, and markets can tip over and reduce resilience. The Covid pandemic showed the importance of rapid adaptation – most obviously in the way governments worked with the private sector to speed up vaccine development.

A significant argument is made about ex-ante and ex-post social contracts.  The contract needs to be responsive, which means governments have to be able to escape from some promises – but still be trusted.  This can only be achieved if there are strong notions of fairness applied in exercising this flexibility.  

Brunnermeier then discusses the case of Covid in more detail, looking at the range of government responses and longer-term effects and changes.  These chapters seem less successful – not least as when written in 2021 we were only half-way through the story (and even that may prove optimistic).  

That means that the following chapters (on scarring, central bank behaviour and fiscal policy) which are seen to a large extent through the lens of Covid, also seem provisional.  Perhaps this is inevitable.  The potential risks which are flagged from central banks acting as market maker and asset purchaser during the crisis have yet to play out.  Similarly, we are far from knowing the end to the story of high public debt – at the moment looking sustainable because interest rates are low.  We are however now seeing one of the risks mentioned coming to pass – that the Covid recovery would spark inflation.  And the long-term scarring effect on the young, and thus on inequality in the future, could prove a weakening of resilience.   

The later chapters consider a range of global economic aspects. These include the difficulties and risks surrounding emerging market debt and the issues raised by China’s rapidly increasing importance in the world economic system and the associated tensions.  

Finally there are some observations on the difficulty of developing credible and successful policies for address climate change.  In particular this reprises the earlier point about tension between a clear ex-ante policy path and the inevitable ex-post need for flexibility as we learn about behavioural change and as technologies develop.  

This book seemed over-long and rather inconclusive.  There are some tantalising questions raised: how much economic risk is valuable, and how much too much?  Should SDRs be used to support emerging and developing markets in time of crisis?   But it is hard to draw out policy answers or suggestions.  

In a concluding chapter, Brunnermeier discusses the new challenges to resilience that are emerging, such as from cybersecurity, genetically-designed weapons or future pandemics. He stresses the importance of individual resilience, as well as societal and institutional. The key message is that societies need to be more proactive in ensuring their resilience, at all levels including global.  Sadly, in the spring of 2022, global resilience feels frighteningly fragile.