MARKETS and RESILIENCE : A contradiction or a potential?

1. MARKETS and RESILIENCE :A contradiction or a potential? • Introduction: Reasons for addressing resilience • Resilience: A few conceptual issues • Instances: Madagascar, Senegal, Côte d’Ivoire • Markets: Resilient system or source of vulnerability • Conclusion : Regulation for what and how ? Jean-Luc Dubois, IRD, IRU Resilience Alliances to fight poverty seminar Marseille, 2nd October 2014, 10h15-10h45

2. 1. Reasons for addressing resilience • A globalized and well-informed world where financial markets impose their ways of functioning, • Volatility (markets), flexibility (agents), precariat … • This generates uncertainties due to regular changes • vulnerability (the risk of falling) et fragility (risk of breaking-up) implies reasoning in terms of trajectories et randomness • Confronted to serious shock (generating trauma): • Is it possible to adjust or to overcome the trauma (resilience)? With what conditions (requires observation and assessment)? • What can be done after a shock (ex-post) or even in a preventive way (ex-ante) in order to allow resilience?

3. 2. Resilience : Conceptual issues Origin and multi-topics history Definition and formalization What to observe and measure ? Ex-post public action vs. ex-ante policies

4. Origin and multi-topics history • Elements for a common definition of resilience are emerging from various scientific domains • Initially metal physics (torsion, shock) • Then psychology being centred on the individuals: Werner (Hawai), Masten (‘magic’), Cyrulnik … • Socio-ecosystems: a systemic approach (Holling, Adger, Gunderson, Berkès, …), ‘panarchy’ schemes • For social resilience: groups, institutions, towns… • Searching for a joint definition related to previous research • Resilience as a ‘capacity’ (individual and collective) and a ‘process’ managed through various steps (linked to agency) • Input of social sciences: role of inter-action and collective

5. Definition and formalisation • Resilience can be seen as a capability i.e. effective and observable, potential leading to freedom (Sen) • « The ability of a person, a social group, a system to bounce / restart / reborn after a traumatic shock that destroyed all or part of its integrity"  » • Introduces the distinction between shock and breakdown and therefore between ex-ante and ex-post situations: • What kind of shock? Duration and intensity (vulnerability) • A breakdown of the system? Introduces ‘fragility’ • Raises the issue of resilience as a processex-post including various steps calling for agency : • Distinguishing between quantitative adaptation and qualitative resilience as the consequence of a shock • With various steps to go through for bouncing (with a leap): adaptation, resistance, rebellion, breakdown, renaissance, ...

6. A conceptual scheme

7. What to observe and measure? • What will we observe and measure? (distinctions) • The capability to bounce of whom? for what? • The steps of a resilience process through agency? • An application of the capability approach • Effective capacity of resilience observed (descriptive indicator) and potential freedom (inductive variable) • Can we find a unique and universal indicator? • A resilience threshold? • A set of indicators (multidimensional) • Objective measurement or subjective based on perceptions • Indicators of gap (quantitative) and leap (qualitative): • Quantitative indicator for adaptive capacity (vulnerability) • Qualitative indicator to express a break (fragility)

8. Ex-post public action vs ex-ante policies • Two distinctions : ex-ante and ex-post situations; public actions vs public policies • Ex-post public actions (curative) • After a shock and a breakdown, important role of NGOs • Role of agency (empowerment) and effective capabilities • Follow-up of the resilience process (various steps) • Ex-ante public policies (preventive) • Aim of policies is to anticipate a shock, a crisis (breakdown) • Risk management, human development, infrastructure … • To reinforce the potential dimension of resilience capability • A remaining question: resilience of whom? for what? • Famines and food security, naturel disasters (hurricane, typhoon, earthquake), armed conflicts and civil wars

9. 3. Some instances • Madagascar • Socio-political blockages lead to regular government change • GDP decreasing trend, alternative phases of renewed growth • Markets adaptation but lack of social redistribution • Senegal • Fragility of marine and coastal ecosystems • A human decision: a breach in Senegal estuary • Change in markets : from food and vegetable to salt • Côte d’Ivoire • Strong structural inequalities between North and South • A socio-political crisis due to the presidential election • Beginning of a civil war that generates population trauma • Market ‘resilience’ and use for economic ‘emergence’

10. Madagascar GDP per capita and political regimes since 1971

11. A breach in Senegal coastal estuary

13. 4. Markets: Resilient system or source of vulnerability A particular resilient system able to adjust to the socio-economic environment and to rebound in the case of crisis through its internal mechanism (supply demand, exchange, price)… being a resilience factor However, due to its volatility, a permanent source of vulnerability for all actors : can this be corrected by insurance processes (derived products)? Markets to remain source of sustainable growth (danger of precariat, periphery classes) requires regulation : insurance, taxes, subsidies

14. 5. Conclusion : Regulation for what, for whom and how ? The objective is to prevent crises (i.e. subprime) by controlling excess in terms of social and economic justice while promoting freedom initiatives A history of taxation on exchanges : mercantilist, physiocrat, industrial product, service, finance… Markets could be a relevant instrument for redistribution based on a precise analysis of supply and demand (products and actors) Can be adjusted through negotiation, planning, incentive taxation (value added tax) and subsidies

15. Recent references Ballet J., D. Bazin, J.-L. Dubois, F.-R. Mahieu, 2013, Freedom, Responsibility and Economics of the Person, London, Routledge Châtaignier J.-M., 2014, Fragilités et résilience : nouvelles frontières de la mondialisation, Paris, Karthala Fontaine L., 2014, Le marché. Histoire et usages d’une conquête sociale, NRF Essais, Paris, Gallimard Ibrahim S. and Tiwari M. (eds.), 2014, The Capability Approach: From Theory to Practice, London, Palgrave Koffi J.-M., Ballet J., 2014, « Resilience et sociétés », numéro special, Ethics and Economics Vol.11 No. 1 UNDP, 2014, Sustaining Human Progress: Reducing vulnerabilities and Building Resilience, HDR 2014, New York