In hindsight, our new economic era probably began in 2008, when a handful of bankers—and the policymakers who write the rules—broke the system. Not only did they set off a terrifying financial meltdown, but the resulting deep recession also exposed a crisis in economic policymaking. The emergency measures that kept the developed economies going, such as near-zero interest rates and massive asset buying by the central banks, are still with us today and have produced, at best, mediocre results. Governments, it seems, are fumbling in the dark.
Since the outbreak of COVID-19, these policies have only ballooned. Rich countries have spent previously unimaginable sums to order vaccines, support workers, and shower corporations with cash as the lockdowns froze the economy. Even as the pandemic (hopefully) winds down, there are few signs that the urge to spend and stimulate is going away. Many cheer this as the return of the robust state. Others fret about fiscal irresponsibility.
Decades of economic orthodoxy are being thrown out as the world sorts itself out anew. Governments used to care about debt and central banks about their balance sheets—no longer. The consensus was that endless money printing would unleash galloping inflation—whether that happens remains to be seen. During the depths of last year’s economic deepfreeze, stocks were soaring to new all-time highs. By some measures, U.S. asset valuations are now more extreme than they were before the crash in 1929. So are we in the Roaring ’20s—or on the cusp of another meltdown?
Out goes the rulebook for an international liberal order based on free markets and trade, replaced by a new dogma of intervention as the administration of U.S. President Joe Biden and other governments seek to secure jobs, green their economies, and reorganize supply chains whose fragility the pandemic exposed. Nations are putting the brakes on globalization as they realign their economies in the emerging strategic competition between Washington and Beijing. Poor countries—the ones that can’t afford all this spending—risk falling further behind.
The new age is rife with ironies and unintended consequences. Trillions of dollars spent by central banks were supposed to trickle down to companies and their workers. Instead, they fed perhaps the biggest asset boom in history, making the rich even richer and helping to raise inequality in the United States to levels not seen since the Great Depression. The old global order lifted billions of people out of poverty in the developing world; now the walls may be going back up as seamless globalization turns into an economic cold war. Green policies designed to save the planet are one of the reasons why demand for steel, coal, and many other environmentally dubious commodities is soaring as investors anticipate a golden age for industrial manufacturing to produce all those wind turbines, new transmission infrastructure, and electric car batteries. Instead of celebrating the transition to a digital service economy, we’re talking about supply chains again.
To help us think about what comes next, Foreign Policy asked 13 prominent economists and thinkers to both describe the new, post-pandemic economic era and propose the name by which it should be known. You can read their entries on the following pages—from Mohamed A. El-Erian’s Government Unbound to Jayati Ghosh’s Age of Deadly Disparities.
To us, the epithet for this moment that stuck was Fuzzynomics. Coined for this issue of our magazine by the investor, author, and FP advisor Antoine van Agtmael (who in the 1980s invented the term “emerging markets”), Fuzzynomics encapsulates a world where the old rules no longer apply and the new ones aren’t yet clear. Where governments and central banks—at least in rich countries—can throw around money by the trillions and make up the rules as they go along. Where things feel artificial, inflated, uncertain—and where the experiment could go either wonderfully right or terribly wrong.
Perhaps Fuzzynomics will stick. Even if it doesn’t, we’re convinced that these 13 thought leaders have, in aggregate, sketched the contours of our age. But read on, and decide for yourself.—Stefan Theil, deputy editor
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