In recent years, the virtual economy has increasingly become a core feature of the modern economy, exerting a far-reaching influence on all walks of life. After the outbreak of the 2008 sub-prime mortgage crisis, it became a buzzword among economists, who identified it as one of the prime causes of the crisis. However, the virtual economy is not a derogatory term. It is a product of the commodity economy at a certain development stage.

Judging from historical data, especially 100 years of long-cycle data regarding the US economy, the development trend of the virtual economy basically coincides with the tendency of the real economy. Nonetheless, the alienation of the virtual economy was aggravated in America after the 1970s and in China after the 1990s. Moreover, almost each round of alienation intensification was coupled with an economic crisis.

According to the International Monetary Fund, the world has seen a total of more than 200 economic crises, large and small. The most notable include the 1637 Tulip Bubble, the 1720 South Sea Bubble, the 1907 banking crisis, the 1929 Great Depression and the 2008 sub-prime mortgage crisis.

Among other factors, the cause of the 2008 sub-prime mortgage crisis was bubbles in the virtual economy. The origin of economic crises began to change from the real to the virtual economy in the 1970s. Thereafter, Keynesian policy failed again and again because it is only capable of coping with crises of overproduction but not the bubble crises engendered by the virtual economy.

If the real economy of a country exhibits a steady upward trend in the age of peace, the virtual economy should regress, benchmarking against the trend line, with temporary fluctuation allowed. A large range of fluctuation and long deviation would suggest alienation in the virtual economy and problems in the economy as a whole.

Under such circumstances, the government should adopt proper measures to control the situation. Otherwise, the commodity economy will inherently bridge the deviation between the virtual and real economy through economic crises.

It can thus be seen that the alienation of the virtual economy is inseparable from the occurrence of economic crises. It is even the root cause of contemporary economic crises.

Currently, the world economy is still mired in the lingering effects of the 2008 economic crisis. As the alienation of the virtual economy persists, the international community should constantly improve the economic system to bring the virtual and real economy back onto the track of benign, coordinated development. Only in this way can contemporary economic crises caused by the alienation of the virtual economy be fundamentally eradicated.

Chen Yongjun and Deng Zhongqi are from the School of Business at Renmin University of China.