Today we are going to find out what the black swan theory means, how it affects the economy and the society overall and several examples of how the black swan events have changed the words.
The black swan theory or theory of black swan events is a metaphor that describes an events like the economic downturn and pandemic that comes as a surprise, has a major effect, and often change the direction of politics, the economy and business, and influence the course of history. Even though,the black swan events are often inappropriately rationalised after the fact with the benefit of hindsight.
- The Black Pestilence in the 1300s destroyed the feudal system in Europe, replacing it with more modern hiring relationships. Only three centuries later, the deep economic crisis caused by the Hundred Years War between England and France led to a new leap of innovation that radically modernized agriculture.
- SARS pandemic in 2002-2004 sped up the growth of the small company Alibaba, which traded over the Internet. Now it is a retail leader in Asia. This growth was fueled by anxiety and panic of people who tried to avoid contact with each other as much as possible – almost the same as what we see now.
- The 2008 financial crisis also contributed to new technologies. In Western countries, companies like Airbnb and Uber instantly became popular, because in times of crisis, people tried to save on everything: arrange joint living and group for trips.
- The video game industry has taken the trend and has also dramatically changed course. In 2011, thanks to Nexon in Asia and King in the West, free games with in-game purchases began to develop rapidly.
- With the advent of Covid-19, we already see the first signs of how consumer and company behavior is changing. Airline profits are falling due to travel denials, stocks of drugs, cereals and toilet paper are running out in retail chains, and work at home is becoming the norm.
Some of these changes are a direct but short-term reaction to the crisis. All this will return to normal after defeating the coronavirus. However, some changes will remain, creating the basis for long-term innovation, and will dictate the business environment for many years to come.
Interesting fact: in the opposite to my personal opinion, Nassim Nicholas Taleb, the inventor of the “black swan” definition considers black swans to be an unforeseen events that have significant consequences for the economy. At his point of view,the COVID pandemic could have been prevented, so it may be called a white swan, rather a black one.