Systems that Build, Preserve and Collapse
Organizational Transformation
The good news according to Peter Zeihan in The End of the World is just the Beginning, is that we have been fortunate to live through a unique period in history that saw unparalleled flourishing for most of the population. The bad news is that period is over. From the end of World War II until about 2015, Zeihan argues globalization made it possible for nations to leverage their resources and participate in a global market. That broad-based participation was made possible because the United States invested heavily to ensure safe transportation and adherence to international rules and norms.
The book is deeply researched and provides extensive insights into the different sectors that have driven global flourishing and how in a world lacking global connectivity they will look and operate. Energy, finance, industrial materials, manufacturing, and most importantly, agriculture all function quite differently in a disconnected world where the fundamentals that enabled specialization and growth have or will disappear.
According to Zeihan, one of the biggest drivers of this change is slowing or negative population growth, which results in contracting economies and fewer workers to support retirees living much longer. On this point, Zeihan declares it is already too late for many countries that will never recover from experiencing low birth rates in recent decades.
Another significant driver is nationalization, which naturally accelerates the decline among weaker nations. Stronger nations can leverage their advantages to overcome supply shortages and build favorable alliances. Zeihan wrote his book prior to all the talk about the impact of tariffs which adds to the interest in his forecasts. The lack of globalization doesn’t necessarily lead to a race to the bottom but there is less output to share. So winning is relative as no one achieves their full potential.
The world he describes for most countries will be dramatically worse. He suggests that some countries will return, at best, to a pre-industrial economy and others a struggle to feed their populations. Most experts don’t see quite the catastrophic path ahead, but the book reminds us when we neglect to consider how systems operate, we set up the potential for dramatic and undesirable consequences.
There are also limits to what systems can do even if they are well designed. For example, systems can be designed to benefit almost everyone but rarely to benefit everyone equally. Systems may produce relative winners and losers but that doesn’t mean the system doesn’t produce the intended benefits.
Systems also must be maintained. Declining birth rates are often a sign of economic development and increased opportunity. However, rates below the replacement level directly impact the supply and demand of labor and goods. In most systems, there are a few critical inputs that must be monitored carefully. Some countries are engaging more directly in social engineering (incentives to marry and have children) to address shifts in cultural norms that directly influence economic realities.
More than just maintaining, systems typically must adapt and innovate to reflect changes in their operating environment. While there may be some elements of natural evolution as parts of the system seek to survive and grow, Ziehan’s research shows how geopolitical systems adapt largely through the decisions made by the stronger nations. The weaker countries often are forced to react and simply make the best out of what they are given.
The dysfunctional future Ziehan predicts reflects the difference between good and bad systems. A healthy system creates upward momentum so positive streams are being constantly developed which leads to an abundance mentality. An unhealthy system narrows opportunities which tends to reduce trust and cooperation, leading to a scarcity mentality. Sadly, the decline in systems often begins, not when things stop working, but when people stop trusting others to seek mutual benefit.