21-12-2023
8 minutes

Antifragility as a Priority

In the upcoming weeks, the new government will undoubtedly receive numerous pieces of advice on how to address challenges in public finance, where to invest, how to reform education, etc. These are crucial issues. Simultaneously, it’s important to remember that there are periods in the history of continents or the world when correctly identifying the ‘soft underbelly’ – those elements of the socio-economic system particularly vulnerable to events considered relatively improbable but carrying strong negative consequences – comes to the forefront. Mitigating these risks is also essential. These skills will be key in the coming years and will lead to the emergence of new winners and losers globally. Where will Poland find itself in this grouping?

May You Live in Interesting Times

We certainly cannot complain about the quantity and diversity of events we have faced in recent years, and we can expect more. This assumption is driven by the fact that, on a global level, we are abandoning the continuity of many processes that have been beneficial to us over the past decades. One area of change is global demography. The aging process of the global population is accelerating, soon becoming a widespread phenomenon, with one significant exception: Africa. While in Europe, over half the population is over 44 years old, in Africa, more than half are not yet 20! According to UN forecasts, Africa will soon become the global leader in the increase of working-age population – by nearly 700 million by 2050. Where these people will find their place in life and work, especially considering climate change, remains an unanswered question.

A second significant issue is the gradual departure from a unipolar world. After the fall of the USSR, the United States became a hegemon, playing a vital role as the global policeman, ensuring the security of international trade. Without this, the turbo-globalization and development of many world regions would have been impossible. More and more signs indicate that the USA might not be able or willing to fulfil this role to the same extent as in past decades. Although this is less evident under President Biden, the isolationist current remains strong in the USA. Furthermore, the USA’s dominant position will be increasingly contested by rivals. In this context, it is essential to remember the enormous changes that have occurred over the past years in potential economic (and military) power: while in 1990, the USA had 21.5% of global GDP (according to PPP, IMF data) and China 4%, it is now approximately 15% and close to 19%.

Another significant discontinuity concerns the process of world democratization. After 1990, we witnessed the strengthening of democracy, but various analyses (e.g., the Democracy Report) indicate that recent years have seen a complete reversal of favorable trends and a rapid rebuilding of autocrats’ positions. This is accompanied by the return of extreme nationalist and revisionist narratives and an arms race.

We are finally witnessing a rapid acceleration in technological and social changes. The industrial era, particularly the model of mass production combined with the use of energy from burning fossil fuels, is becoming a thing of the past. Increasingly, a paradigm of an economy based on knowledge and an information society, utilizing renewable energy sources, is taking shape. There is also hope for a greater positioning of humans as an element of the biosphere, rather than its conqueror. This last point is particularly important in the context of the pressure our civilization exerts on the environment. According to data in the article ‘Global human-made mass exceeds all living biomass’ (Nature, December 17, 2020), the mass of what humans produce (concrete, plastic, etc.) doubles every 20 years and has just surpassed in size the mass of all living things (flora and fauna).

Reconstruction of the Global System and the ‘Soft Underbelly’

All this implies significant systemic changes. We do not know what lies at the end of this road, but it is clear that the so-called transitional period is and will be tumultuous. In such times, the key concepts become fragility and antifragility. These terms were popularized by the economist and philosopher N. Taleb, who advocates treating fragility as a fundamental measure for assessing the stability of a given system, such as a community and its economic sphere. The primary characteristic of fragility is that it focuses on the scale of impact of a specific event on a system (e.g., the economy), without delving into its origin. This stems from the assumption that in times of rapid transformations, historical cause-and-effect relationships fail. In such a situation, instead of trying to predict the future, a better strategy is to protect those elements of the system that constitute its ‘soft underbelly’.

What can be considered as the ‘soft underbelly’ for Poland? One of the foremost vulnerabilities is the high degree of the economy’s dependence on the import of energy resources. Nearly 100% of the oil and about 80% of the gas used in our country are imported. Although the reliance on locally available sources (coal, renewable energy sources) for electricity production means that imports account for about 40% of total energy consumption, it is still quite substantial. The fact that gas and oil currently flow smoothly – mainly by sea – to Poland does not guarantee that this will continue in the coming years.

Another critical element is our eastern neighborhood. Russia does not hide its imperial ambitions, so we must anticipate the continuation of various forms of hybrid incursions.

A less intuitive ‘soft underbelly’ is the economy’s dependence on the German market. Exports to Germany account for nearly 30% of the total. Meanwhile, there is a significant risk that the German economy may experience prolonged sluggishness. Key elements of its economic model are becoming outdated: the technological revolution is eroding the position of some German companies (e.g., in the automotive industry), Germany has lost privileged access to energy sources, and the important Chinese market for exports may not be as accessible.

Access to global technologies is another issue of concern. Its importance from a developmental process perspective is immense. For the last 30 years, we have taken access to these technologies for granted. However, this too may change, as well as access to various raw materials used in modern production. In this respect, we are also heavily dependent on imports.

Cybersecurity is also of great importance. In an era of widespread use of technology, this is an area that, if insufficiently ‘cared for,’ can have enormous consequences.

Among the less intuitive issues is also the availability of competencies. The accelerating technological revolution means that the rate of their erosion will be much higher than in the past. If we do not have the proper mechanisms in place to support the process of rapid adaptation, the lack of properly educated individuals can significantly hinder advancement on the ladder of complexity and productivity.

And finally, the most crucial issue: strong social polarization. We have repeatedly seen in our history how internal wars fought in the face of external changes have led us to disaster.

Identify and Act

This is certainly not an exhaustive list, and supplementing it should be one of the government’s first tasks. In parallel, we need decisions and actions that will safeguard our ‘soft underbellies’.

Regarding energy, on the one hand, we need rapid – but not reckless – development of renewable energy sources (RES) to reduce dependency on imports, but also maintaining strategic extraction capabilities and electricity production based on coal. Even if they are not to be utilized in practice, the cost of maintaining these capacities as a strategic reserve must be borne. This does not negate the need for improved efficiency. Investing in all forms of storage – oil, gas, electricity – is also worthwhile.

In the context of our eastern neighborhood, it is necessary to quickly catch up on years of neglect in the field of defense. Also, to develop strategies to deal with possible next waves of immigrants and other variants of hybrid warfare.

We need to verify the sources of supply of raw materials crucial to our economy and develop possible alternatives. Also, to reduce export dependence on Germany. A good direction is, for example, supporting the development of the professional services sector. They are subject to international exchange, and their provision is geographically unlimited. However, this requires appropriate, flexibly adapting competencies. This, in turn, necessitates highly innovative labor market policies, supporting not only workers (study leaves, subsidies, etc.) but also companies (e.g., in the form of a competency audit offer).

To ensure access to modern technologies, Poland needs to be part of a strong economic grouping. The natural choice remains the EU, where we should become much more actively involved in shaping future solutions and policies, including those concerning Africa.

Redirect Focus

In turbulent times, a country exhibiting antifragility climbs upwards, as it were, on the backs of those whose socio-economic structures collapse because they are weak. It is characterized by greater resilience, flexibility, and adaptability. The last two traits are part of our national DNA, but now we need the next step: based on the lessons learned from COVID-19 and the influx of Ukrainian immigrants, we should strengthen mechanisms for cooperation between various entities: government, local governments, businesses, and NGOs. Caring for antifragility is a common task.

And most importantly, we must broaden the sphere of social consensus, lower the temperature of internal disputes. Only then will we be able to focus on what is important and what is happening around us. History teaches that the greatest unused opportunities in our history were related to not recognizing this broader perspective. It is high time, therefore, to redirect our gaze.

 

Published: Rzeczpospolita, 13.12.2023

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