“False” stability leads to greater instability.
Discussion
Does "real" stability actually exist, in nature, though?
Yes, in context of the greater ecosystem, but the inter connectivity is hard to see and it comes at a cost. If the cost is removed - ie - apex predator of wolf in Yellowstone, ecosystem fails.
Small (seemingly unconnected inputs) can lead to dramatic outputs.
The cost in the case of an economy is by removing the ability to fail, incentives become broken, sending a signal to ensure that you get big enough to warrant a socialization of losses at the taxpayers expense….leading to a far bigger collapse later.
I think we actually disagree, here. Fundamentally. I think all complex systems are, at best, metastable. Only adaptive systems are able to persist for long periods of time. I can think of nothing in nature — literally nothing — that is absolutely stable. Except maybe the proton. Which still may be unstable, and the only reason we haven’t seen a decay event, could be because the proton’s half-life is some major multiple of the age of the universe or something.
But for social and economic systems, my base rate assumption, is they exist within metastability windows, and no set of rules or axioms can maintain their stability indefinitely. Eventually the second law of thermodynamics will rear its ugly head in every system.
Any real world macro-level equilibrium is a built up out of smaller systems in equilibrium which are made up of smaller systems, etc. It’s impossible to know, except ex post, how vulnerable the entire system is to some little exogenous addition causing some sub-sub-sub-system to careen out of its seemingly unshakable orbit.
It’s easy to underestimate how stable and persistent nimbly improvisational sticking-fingers-in-dams systems can be.