The global economy is navigating a period marked by volatility and upheaval, from energy price swings to rising inflation and the lingering effects of Covid-19. Yet, the emphasis going forward centers on two crucial issues: growing income inequality within societies and, most urgently, the consequences of climate change on economic systems and livelihoods.
That was the core takeaway announced during the opening session of the XXXIII International Congress of the International Center for Research and Information on Public, Social and Cooperative Economics (CIRIEC), held at the Valencia Art Palace. The discussion, framed by the Nobel Prize in Economics recipient Paul Krugman, pointed to 2022 as an inflection year for the United States and Europe. The economist suggested that the current crises would extend for a year or two, but that the trajectory of the global economy could resemble the situation seen in 2019, aided by a set of positive factors such as easing inflation and steadier demand. Krugman underlined that the immediate shocks should not be overstated as the dominant drivers of long-run outcomes.
Looking at the present landscape, Krugman argued that the most disruptive forces are not only energy shortages or the aftereffects of the pandemic but the structural changes required in the labor market. He noted that in southern Europe and parts of North America, firms must adapt to higher labor costs while maintaining productivity and competitiveness. Over time, those adjustments will shape investment decisions, wage dynamics, and the distribution of economic gains across regions.
On the supply chain front, the Nobel laureate observed gradual improvement. He cited evidence such as major retailers in the United States moving through inventories, signaling a normalization of some disrupted channels. Nevertheless, persistent energy-related issues remain a constraint and a reminder that structural bottlenecks coexist with cyclical recoveries. The message was clear: recovery is uneven and influenced by both macroeconomic policy and sector-specific frictions.
Krugman did not shy away from broader questions of equity and the climate transition. He described a social vacuum as a condition that dampens collective action, stressing that those who feel marginalized or left out of social participation bear the greatest burden in times of hardship. Addressing inequality, he argued, is essential not only for social cohesion but for the resilience of the economy itself.
In relation to climate policy, Krugman warned that if people are not frightened by the risks, attention will wane. He emphasized that while individuals can contribute, the most significant strides require coordinated, international action. Governments must shoulder a substantial portion of the effort, and social economy initiatives along with cooperatives should be integrated into the broader response to climate change. The overarching thesis is that a successful transition hinges on a blend of public commitment, private adaptation, and collective social enterprise working in concert to reduce emissions, foster sustainable growth, and protect vulnerable communities from economic shocks. These themes, he suggested, should guide policy and research agendas in economics, business, and public administration for years to come. [CITATION: Krugman, 2024 conference remarks]