POST COVID-19 FRACTAL ECONOMICS AND

ECONOMIES
Dr.Kartik H

Author's email-dr.kartik.h@gmail.com

ABSTRACT
Due to the Covid-19 pandemic and its accompanying
'lockdowns', Global economic growth will be nil or negative for
some time to come. Due to largescale quarantine measures,
economic activity that entails social gatherings or presence of
crowds is also no longer possible or encouraged. This paper
deals with providing a solution by envisaging a wholly
different Post Covid-19 economy. Such Economies will be
Fractal economies.
First, we discuss the Impact of Covid-19 on the Global
economy. Then I introduce the concept of a Fractal economy
dependent on Social and Economic Lines of Interaction
(SELOI). Finally, we discuss the various aspects of Fractal
economies that make it radically different from the Pre Covid-
19 economies that earlier existed.
1. IMPACT OF COVID-19 ON THE GLOBAL ECONOMY
Due to the Covid-19 pandemic and its accompanying
'lockdowns', Global economic growth will be nil or negative for
the year 2020-21.[1] Due to largescale quarantine measures,
economic activity that entails social gatherings or presence of
crowds is now no longer possible or encouraged. Etiquettes

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 that accompanied business meets (like shaking hands, hugging
between business partners) is also no longer advisable.
Tourism, food consumption businesses (restaurants, hotels
etc), Long distance travel, travelling in closed spaces for long
time periods (International air travel. Long railway journeys) is
no longer desirable. Consequently, all these sectors cannot
conduct their economic activities in normal fashion.
Owing to the large fiscal stimuli unleashed by governments
across the world (to the tune of more than $ 3 Trillion)[2],
there is a real danger of inflationary or hyper-inflationary
trends in the economy once 'lockdowns' are lifted before any
changes are made to the existing scheme of things [3].
It is therefore pertinent that we understand that economies
the world over cannot go on as before. Any Post Covid-19
economy will have to be a radically reorganized economy,
either by necessity or policy action. If left to necessity, there is
a danger of economic problems transforming into social ones.
If a Post Covid-19 economy receives policy support, then it can
be moulded to give high rates of growth as before, albeit with
certain caveats. This is where the concept of 'Fractal
Economies' need to be looked at.
2. WHAT IS A FRACTAL ECONOMY
A fractal as per mathematics, is a complicated pattern built
from simple repeated shapes that are reduced in size every
time they are repeated.[4] For example, the way a tree trunk
divides into smaller and smaller branches and twigs is an
approximate fractal pattern. Fractals exhibit similar patterns

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 at increasingly small scales, as concept known as self-
similarity, or expanding symmetry or unfolding symmetry.[5]
Now imagine a self-sufficient local economy. Within the same
revenue district, there are production facilities (Small or
medium sized). The produce of this revenue district is majorly
consumed in the district as well. Except for raw material that
are not available elsewhere, all economic activities take place
within the revenue district itself. Such a self-sufficient revenue
district can be called a fractal economy. The provincial
economy will be made of a large number of such fractal
economies. And the national economy will comprise of a set of
provincial fractals. This is akin to quasi-decentralization of all
economic activities. Nassim Nicholas Taleb terms such
functional units as Fractal Localism.[6] Again, the idea of
planning for a Fractal Economy is to make it anti-fragile, [7]
where an entity not only tolerates stress and pressure, but
thrives because of them.
Coming back to the revenue district which is our fractal
economy. Since it is almost self-sufficient, it can function as an
independent unit in crises like a global lockdown (due to any
reason) or major disasters. Since each fractal economy is
almost independent of the other, loss or destruction of one
fractal unit will not affect the overall economy much.
3. SOCIAL AND ECONOMIC LINES OF INTERACTION (SELOI)
It is important to visualize the Social and Economic Lines of
Interactions (SELOI) that are vital in any economy. SELOI are
modes of interaction along which social and economic

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 intercourse occur. Imagine is a city X which produces cars, and
a city Y which is a vibrant economic hub. Now a large number
of customers from city Y will buy cars from city X. The trading
of cars for money/cash forms an economic line of interaction.
There may be a good number of tourists from city X that visit
city Y often. This route becomes another line of interaction.
The basis on which inter-personal relations take place in the
context of Social and Economic interactions is termed as a
Social and Economic Line of Interaction (SELOI). The activity of
a shop owner selling goods to a customer and taking money in
return is a SELOI. SELOIs can be contact oriented or
Contactless. Electronic payments for online services are an
example of a purely contactless SELOI.
The Social and Economic interactions happening between
large market areas is what can be termed as Social and
Economic Lines of Interaction (SELOI).

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 Arrow A- Indicates a Market Area or Hinterland in a Pre-Covid-
19 Economy
Arrow B- Indicates a Market Area or Hinterland in a Post
Covid-19 Economy. Each Large Dark circle encompassing the
smaller black circle is a Fractal Economy
Arrow C- Indicates typical Social and Economic Lines of
Interaction (SELOI).
Arrow D- Indicates an expanded market area with inward
curving SELOIs post Covid-19. It is a Fractal Economy.
Arrow E- Inward curving SELOI. More Social and Economic
interactions happen within the Fractal Economy due to the
Covid-19 conditions. This is consistent with the localized
nature of the Fractal Economy.
Arrow F- Interactions still occur between large market areas.
But they are only for essentials that other hinterlands cannot
produce. Interactions between markets are few and far in
between, though bulky, unlike in the Pre-Covid-19 era.
4. ASPECTS OF A FRACTAL ECONOMY
The fractal economy has several aspects with many
advantages and disadvantages.
1. Due to social distancing norms secondary to the prevalent
Covid-19 pandemic, intense and multiple social and economic
interactions are not advisable. As such, fractal economies
provide the opportunity to reduce such interactions and keep
the economic activity localized.

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 2. Since many materials cannot be sourced from long
distances and other faraway markets, the local economy
needs to become self-sufficient. Because of this, the economic
activity of a market will expand into the rural or sub-urban
areas in and around the market area.
3. Due to geographic expansion of a market into the local
surroundings, newer avenues of local employment will open
up for the people in that area. Cross-country and International
migration (due to economic reasons) will drastically reduce.
4. The focus can be more on value addition to individual life
rather than value transfer through migrant remittances.
5. Traditional business practices can be implemented in the
Fractal economies leading to optimization of economic activity
in that area.
6. Developing nations may find it easier to transition to a
fractal economic system due to the 'Multi-pillared' nature of
their economies.[8]
7. Since the resulting fractal economies will be pre-dominantly
decentralized in nature, it will be easier to use
cryptocurrencies as modes of exchange. [9] It might even be
favorable to introduce Regulated and Sovereign Backed
Cryptocurrencies.[10]
8. For the same reason as above, it may be the right
opportunity to introduce blockchain processes in all those
industries and sectors that allow for it. This can be done in a
planned manner with scientific approach.[11] Scaling up from

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 community to district to provincial level can be done on the
lines as envisaged for Kibbutz economies.[12]
9. Since supply chains are shorter (due to shorter SELOIs) the
business turnover in terms of inventory cycles, Logistics etc.,
i.e. Business cycles are also shortened with probable smaller
troughs (and crests). Over a long period of time this can have a
salubrious effect on standard of living of the people of the
area.[13]
10. Due to shorter SELOIs and the increased cost of
transportation and handling in a Post Covid-19 Economic
system, Savings rate of the people will be lower. Inflation
might be higher and many countries may face 'Jobless
growth'.
11. Central Banks might have to recalibrate their approach to
Monetary policy [14] as money supply and demand will no
longer be contiguous or seamless, but rather 'fractured' in the
sense that most of the money circulation will be 'local' rather
than 'global.
12. Similarly, Governments will have to repurpose their fiscal
policies [15] in order to focus on relatively smaller, local,
decentralized, Fractal economies rather than large provincial
or national economy.
13. 'Global' industries like tourism (recreational or medical),
large scale mega manufacturing (except few sectors like
automobiles) etc might find it difficult to thrive in a post
Covid-19 economic scenario.

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 5. CONCLUSION
We have seen the impact of Covid-19 on the Global economy.
Then we discussed a new concept i.e Social and Economic
Lines of Interaction (SELOI) and defined the parameters for the
same. We also saw differences between a centralized or
'Quasi-Centralized' Pre-Covid-19 economy and a decentralized
or Fractal Post Covid-19 economy.
Discussion on the various aspects of a fractal economy show
us that even though Post Covid-19 Fractal economics may not
give us a high and spectacular growth rate, it may qualitatively
improve our economic standards by promoting self-sufficiency
and business optimization tailored to local conditions.
6.REFERENCES
[1] https://bit.ly/2LoKzzG
[2] https://reut.rs/3cqEzlT
[3] https://econ.st/3cmCJSV
[4] https://bit.ly/2LpbECS
[5] Gouyet, Jean-François (1996). Physics and fractal
structures. Paris/New York: Masson Springer. ISBN 978-0-387-
94153-0.
[6] https://bit.ly/360CN8E
[7] Taleb, Nassim Nicholas. 2012. Antifragile: things that gain
from disorder. New York: Random House.

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 [8] Hegadekatti, Vasantmadhav, The 'Pillar Model' of Large
Economies: Analyses of Multi-Pillar and Oligo-Pillar Economies
(May 1, 2020). Available at SSRN:
https://ssrn.com/abstract=3590055
[9] https://bit.ly/2Z38VXP
[10] Hegadekatti, Kartik and S G, Yatish, The K-Y Protocol: The
First Protocol for the Regulation of Crypto Currencies (E.g.-
Bitcoin) (February 13, 2016). Available at SSRN:
https://ssrn.com/abstract=2735267
[11] Hegadekatti, Kartik and S G, Yatish, Roadmap for a
Controlled Block Chain Architecture (August 13, 2016).
Available at SSRN: https://ssrn.com/abstract=2822667
[12] Hegadekatti, Kartik and S G, Yatish, Kibbutz Economy
Interactions with Blockchains and Cryptocurrency Networks
(February 13, 2017). Available at SSRN:
https://ssrn.com/abstract=2916278 or
http://dx.doi.org/10.2139/ssrn.2916278
[13] https://bit.ly/35Vv6QM
[14] https://bit.ly/2YULG1M
[15] https://bit.ly/2WTybNe

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