Economic Recovery after the Zombie Apocalypse

(Cross-posted at the Volokh Conspiracy)

Most zombie preparation guides focus on helping you survive the first few weeks with the idea that sooner or later the authorities will defeat the zombie menace and order will be restored. However, what we know from the literature (e.g. Dawn of the Dead and The Walking Dead) is that it’s quite possible that the zombies will do enough damage to knock society back to a more primitive social structure. Several chapters of the book, including one of my own, address the question of how people might begin to rebuild the economy after the apocalypse. (Spoiler alert: I’ll be referencing parts of World War Z and The Walking Dead, so stop here if you don’t want to know. Although, if you care that much, why haven’t you seen them already?)

Before we can face the zombies, we need to step back a bit and consider a basic principle of economic organization. Economies are built around connections between people, either through “hierarchical” organizations such as firms (or armies or families) or alternatively through market systems which are decentralized and built around organized systems of exchange. Each method has its own advantages and disadvantages. Hierarchies can be efficient since there is less time spent in negotiation; however, as the size of the organization gets larger, it’s harder for the person in command to have the specialized expertise needed to make the right decisions at each level. Markets, while seeming inefficient, allow economies to scale up in size which implies more specialization and so greater productivity.

We see both sides of this in the zombie war described in the book World War Z. The anti-zombie forces are finally organized under a centralized command, which allows quick decisions to be made on how to fight the zombies. On the other hand, it is often the people who are directly engaged in battle rather than the people at the top who are most effective in discovering new forms of weaponry and fighting techniques. Fortunately for the humans, the army command recognizes their efficacy, but if they did not, there would have been no alternate channel for the developers to offer their innovations.

The weapon that is the turning point in the war is a new exploding anti-zombie ammunition built in a factory in Hawaii, which is safe from zombies. Unfortunately, the development of this ammunition seems problematic in the environment of World War Z. To make something so sophisticated would require expertise in chemistry, machinery, mining, logistics and a variety of skills that would be spread across the globe in a modern economy. But in a world overrun by zombies, the specialization and trade that these markets would require would become impossible. As the zombies advance and global markets collapse, the things an economy could produce would become less and less sophisticated. I expect World War Z is offering us far too optimistic an outcome.

A more likely vision of the new world is given by The Walking Dead, where society has broken down and survivors clump together in small communities such as Woodbury, which is ruled by the authoritarian “Governor”. This world would be built around production in small, local hierarchical organizations such as communities and extended families rather than around long distance trade which would suffer from insufficient support for modern transportation technology and the risk of being eaten (Brian Hollar has a nice chapter in our book that discusses precisely the issues of specialization and trade in a world full of zombies).

However, one might think it would be easy to revert back to normal once the zombies are gone; after all, we know how modern technology works and what a functional economy looks like, so it should just be a matter of reproducing what we know. On the other hand, the countries of the developing world know the same things too, and yet many of them still fail to move forward.

The typical Econ 101 model of development makes things too simple. It states that poor countries just need to save and as they build up their capital they’ll become rich countries (and yes, sometimes it even happens that way). However, a more sophisticated version of this model says that this only works if there is an effective legal system that identifies and protects property rights.

But this just pushes the question back one step: how does political and legal order come about? It often seems that a certain level of economic development is needed before you can have reliable and unbiased systems of property rights. But it also seems that you need those systems in place before true economic development can occur. This could either result in a positive feedback loop where small advances along one dimension promote development along the other or in stagnation where neither gets started because of the lack of the other. The older name for economics, political economy, reminds us that the long-run nature of the economy is not only based on competing firms but also on competing centers of power. How do you move from a dictatorial leader who keeps a community together in the face of the zombie hordes to a system of distributed property rights and neutral arbiters of disputes? Would the leader realize he would need to give up control, or would society have to relive 200 years of revolutionary history to move forward? Personally, I’m not an optimist about either zombies or humans, so I’m not planning for a quick recovery.