The Changing World Order narrates the rise and fall of countries from an economic and social perspective. It posits that two cycles, the long-term debt cycle and the cycle of internal order, govern the rise and fall of nations. At any moment in time, one country is more powerful than the others and directs the world order. That country changes every 200 years.
I was looking forward to reading the book because it promised a glimpse into the political and economic changes of the future.
It didn’t disappoint in this regard. In fact, it over-delivered.
After reading Nassim Taleb’s Incerto, I adopted Taleb’s conclusion that predicting the future was futile because it was too random and too different from the past.
This book pretends the opposite. Because history is a cycle, we can anticipate what’s to come provided we know where we are in the cycle.
History as a cycle (instead of history as a straight line) is not a farfetched idea.
Humans have a hard time learning the lessons of their elders. Pushed by envy, jealousy, and laziness, they make the same mistakes – and so the whole thing starts again, in a never-ending…well, cycle.
Because Ray Dalio shows how history repeats over lifetimes, this book is one of the most important books ever written.
It’s a blueprint for the development of an empire, and a manual against its decadence.
It’s a book every politician in the world should read.
Yet, it’s not without default. The book is too long, too specific at times, and too repetitive. The author introduces too much of what he is about to say.
For example, Dalio wrote an entire chapter to present parts I and II, only to give a detailed explanation of these two parts in the subsequent chapters.
Some parts, like the part about Chinese culture and history, were completely irrelevant and painful to go through (especially for a book that promised to take you through economic cycles, not Confucianism.)
Like most books, the most important part is the first 20% of the book. The rest is interesting, but not as much as the beginning.
Throughout the book, the author dispenses his principles. I highlighted them in red in the summary.
Also, Ray Dalio made a video illustrating the thesis of his book.
I watched it, and would recommend you do too, before or after reading the summary (it is below).
I also wrote a short summary if the long-form summary is too long for you.
So, should you buy the book?
If you’re a history and economics freak like I am, definitely yes.
But if you’re merely interested, the video and both summaries will be more than enough.
The author studied the Dutch Empire, the US Empire, and the British Empire at large. Then he looked at the French, German, Chinese, Japanese, Indian, and Russian empires.
He noticed that they all rose and fell in the same way, which will be outlined in the book.
We will therefore remain imprecise.
The biggest thing that impacts people is the struggle to make, take, and distribute power.
Wealthy people are those who own the means of production. They work in symbiosis with politicians to set rules. This happened equally in all empires.
In the long term, fewer people own more and more wealth and power. Then they overextend and fail. This hurts the poor and leads to revolutions and civil wars.
The empire disappears and a new empire takes over, which leads to a new world order, and the cycle starts again.
The Big Cycle governs the rising and decline of empires and influences everything about them.
The next three important cycles are:
These cycles don’t change, because human nature doesn’t change: we still deal with fear, greed, and jealousy as we did since the dawn of time.
What changes is technology. Countries still rise and fall, but in the long term, people are getting richer.
Why? Because of evolution.
Evolution is the single force that persists across time – and across all of these empires.
To quote the author: evolution is the upward movement toward improvement that occurs because of adaptation and learning. It evolves in cycles: people get richer, then poorer, then richer, then poorer, etc.
Wealth rises over time due to human productivity. The more we produce, the richer we get.
Productivity in a system depends on the capacity of said system to turn ideas into economic outputs.
Evolution drives the trend up. As time goes by, we produce more, so our wealth increases.
Learning and productivity don’t cause major big shifts in society. They are not the cause that lead to important events.
Booms, busts, revolutions, and wars. These are driven by the cycles we have talked about.
Capitalism, while responsible for creating enormous wealth, also created gaps in wealth and overindebtedness that have led to economic downturns, depressions, etc.
All fights that ever happened, happened due to fighting over wealth and power. These events, and natural events, have been the ones that influenced the course of history the most.
Countries that fail in these moments are weak countries.
Past Big Cycle Shifts in Wealth and Power
Throughout history, various groups of people (tribes, countries, etc) have gathered power. When they got more power than anyone else, they became world leaders and established a world order.
When they lost their wealth and power, the world order changed.
Empires’ power and wealth can be measured with the help of eight determinants.
These determinants usually rise and decline at the same time.
The Big Cycle starts with a new order, then follows with the rise, the top, and the decline, until a new world order is established.
The rise is the period of building. It happens because of:
-> the country becomes more productive and competitive -> shares of world trade rise -> military strength increases.
The result is that people in the country earn more, hence become less competitive. The technology is copied by other countries, so innovation declines. Since people are richer, they get lazier. People borrow more, thinking that it will help them do better.
This is when we’ve reached the top. The top is characterized by:
The decline comes with economic weakness and social conflicts.
It happens when, internally:
These internal changes don’t necessarily lead to a new world order. They need to be aligned with external characteristics such as:
A Preview of Where We Are Now
In 1950, the US was at its peak. 75 years later, we are in the decline period.
It’s likely that the upcoming events (in a few years) will be traumatic for many people.
December 14, 2022
April 13, 2021
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