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Theories are plenty, but chaos remains the name of the game in Lebanon. It was about time someone looked the word up in the dictionary. To be precise, chaos is defined as “general confusion, a serious lack of order, things turned upside down”. A free-for-all, but in more civilized terms.
Chaos spans all fields. If one thinks economically, the signs are clear already, and the phenomenon is exacerbated day after day. The affected fields are myriad: administration, taxes, electricity, landfills, banking matters, water, internet, inflation, dollarization, state finances, the implementation of laws, public education, social security… and many other condiments of this spoiled dish we are made to eat every day.
To make it even worse, ministers are bent on adding an extra layer to the all-pervasive chaos, to turn it into a complete mess, while international donors are doing what they can to salvage some remains, with a great deal of frustration.
Chaos or not, the economy does not stop. It never stops as long as there are people who consume and/or produce. This brings us to our main topic featured in the title: the economy of chaos.
This is no new discovery. In fact, the concept of chaos exists; it has been studied and debated by many great thinkers in many fields, including economics.
As these thinkers have posited, chaos generally prevails when random, non-periodic, and unpredictable fluctuations occur, when parameters fluctuate erratically in one direction or another, with no one to monitor or even anticipate the next fluctuation.
Let us compare by using the weather forecast as a benchmark. Even the most advanced computers can only predict the weather for the upcoming week – and not without major discrepancies – as many elements are simply beyond any control.
Therefore, chaos makes it particularly challenging to predict the future, at a time when every single person in the country is asking themselves the same question: what will happen? To the USD/LBP rate? To our money in the bank? To the country?… The future is their biggest concern, and it is precisely where the biggest challenge lies.
Two main phenomena – tackled in detail by a number of theorists – are making the forecasters’ task more difficult than ever. The first, is the fact that the initial data remains unclear: there is no proper population census, no information on the people who left the country, the ones who wish to leave, or the ones who will eventually return, no data pertaining to the average income (in USD and LBP), no information on the amounts of money kept at home locally or abroad, and no figures related to revenues generated by legal – and illegal – businesses… we don’t even have enough information to imagine a scenario or two.
Even international organizations are perplexed, and the latest reports are further proof. Having sensed the urgency of predicting the future, these organizations often propose two or three scenarios, as in the movie “The Good, The Bad, And the Ugly”, depending on whether reforms are undertaken entirely, partially, or not at all.
If one was to believe such predictions, the dollar in 2026 would be worth somewhere between 50,000 LBP and 1,500,000 LBP! As for the time needed to go back to the pre-2019 days – also depending on the scenario – one would have to wait 5 to 19 years! Why such inaccuracy? Because, in this chaotic situation we are in – where future fluctuations are random in and of themselves – even the starting point from which a prediction formula can be considered remains unknown.
If these two ingredients are so unclear, it’s because no roadmap is being followed, no statistics are being updated, and no initiatives have been taken or pondered. It is, in brief, because the country has no governance whatsoever.
The second phenomenon is better known as “the butterfly effect”, wherein, as usually understood, the flapping of a butterfly’s wings in Brazil is likely to generate – gradually – an entire tornado in the United States. “It’s nonsense”, according to mathematician and chaos theorist, Edward Norton Lorenz. Because, in this case, one should study the movements of every single butterfly on the planet, as well as the impact of humans and other animals.
The way Lorenz sees it, the butterfly metaphor is meant to convey the idea that, sometimes, a simple act can generate a gigantic phenomenon. It is like this last drop in a cup already full, or this tiny snowflake that brings about an avalanche… or a small fee that enrages an entire population (2019).
Going back to the initial idea, predicting the future, not only do we not have sufficient basic data, we also don’t know when the flapping of a pair of wings will generate some – unknown – phenomenon. The phenomenon in question can be anything from a “great crash” – as some newspapers write, with little accuracy – or “a faster than expected recovery” that some economists from the private sector are predicting.
In other words, the predictions of those who try to guess or anticipate parts of the future – practically everyone in this anguish-ridden country – will be as accurate as the weather forecast.
This does not mean, however, that determinism is the way to go, nor that one ought to wait idly for the catastrophe to take place. Wings must continue to flap. Individual and collective acts can make a difference, until the last butterfly comes and shows us the way out.
Given all the uncertainty, one can either be idiotically optimistic or idiotically pessimistic. All things considered, it is always better to be optimistic and wrong, than to be pessimistic and right.
