There’s a new genre of non-fiction that suddenly feels popular, or at the very least, it feels topical.
The genre is all about how the world is changing quickly — how it is falling apart.
I’m sure there are better descriptors for the topic, but I call it “End of the World-ism.” Ray Dalio’s Principles for Dealing with a Changing World Order is one popular example.
I just finished The End of the World is Just the Beginning: Mapping the Collapse of Globalization by Peter Zeihan, which could be the cover title for the End-of-the-World-ism catalog.
It’s the kind of book that will make you lose some sleep, stock up on can goods, and want to quit the internet and start reevaluating a lot of future plans. At least that’s how I felt.
But the book helps makes sense, or provide some context, for how some of the big geopolitical trends are shaping up and what that means for the future.
Some of the biggest challenges facing the near-term are shrinking demographics for major economies. The demographic issue is like a one-two punch creating a smaller workforce and diminished demand for goods and services, which leads to overall decline of, well, everything. Just like populations can grow in booms, dwindling demographics can compound.
Another big trend? Disruptions to global trade brought on by another synergistic effect of degrading international security (this will especially affect global shipping) and the availability of raw materials (because of demographics and changes in capital allocation). The result is that it gets harder to maintain the same level of global trade and commerce.
Add the destabilizing impacts of global climate change — a big risk is to the planet’s wheat harvest — and we are left with a world that becomes more isolated, fragmented, and disorderly.
While all of that feels like doom and gloom, the book seems to completely gloss over the global transition to digital systems. While the world’s pivot to digital certainly won’t help us grow more wheat or grow the population in vulnerable places, it will create new economies, find new ways to form and allocate capital, and offer new systems for organizing and coordinating.
Maybe digitalism replaces some of the fading aspects of capitalism and globalism.
Nevertheless, It wasn’t hard to read the book and see examples of the symptoms of post-globalization playing out in real time in the news. The book was published in 2022, but while I was reading it in late 2023, it felt like a weird companion piece to the headlines: new wars, regional instability, food prices, energy woes, and pirates were all things discussed in the book, but also happening on a regular basis right now.
Here’s a quick summary of some of the big ideas:
The abundance mentality becomes old fashion
One of the biggest takeaways from the End of the World is Just Beginning is the idea that we have reached the peak of globalization’s growth curve. We are at the top, looking down, and the downhill side looks dicey.
Among the biggest drivers of the post-peak world will be simple math. Fewer people, according to Zeihan’s figuring, means less demand, means fewer workers (especially skilled workers), means less overall productivity, and diminishing demand for the items the underpin most major economies like cars and houses and other big ticket items.
“There are a number of ways down for countries looking down the maw of demographic oblivion and globalization’s collapse, but they all share something in common: reduced interaction means reduced access means reduced income means fewer economies of scale means less labor specialization means reduced interaction. Shortage forces people—forces countries—to look after their own needs. The value-added advantages of continuity and labor specialization wither. Everyone becomes less efficient. Less productive. And that means less of everything: not just electronics but electricity, not just automobiles but gasoline, not just fertilizer but food. The parts are less than the sum. And it compounds. Electricity shortages gut manufacturing. Food shortages gut the population. Fewer people means less chance of keeping anything that requires specialized labor working. Say, things like road construction or the electrical grid or food production.”
Shrinking productivity means that the footprint and the openness of economies will also shrink. There will be more competition over fewer and fewer economic outputs. The result will be destabilizing and lead to conflicts over the basics like food and energy.
At the same time countries, like the US for example, will start to become more isolated. Moving away from the role of global referee and peacekeeper (or peace enforcer) only acts as a feedback loop which leads to more scarcity.
Markets made of manufactured money are not stable
The downturn in demographic growth and the follow-on economic drawback will also complicate the global money supply — especially given the balance sheets of many countries.
“At the time of this writing, in early 2022, every country in the world has experienced financial crises and market meltdowns multiple times in the post–Cold War era. If you think this is symptomatic of deep structural issues, you are right. If you think it’s all wildly unsustainable, right again!”
In some regards the recent global pandemic — and its economic repercussions — provides insights into what the future might look like in regards to the consequences of central bank interventions.
“Financial collapses triggered by countries doing things unwell and unproperly and unwisely are as common as the stars in the sky. In unsuccessful systems, governments often find themselves beset with spending needs greater than their means”
The rise of global populism
All you have to do is follow political headlines to understand that around the world a major pivot is underway. It’s likely that here in the US the ideas of populism will be on full display during the upcoming election cycle.
“Expect a lot more populism. The global demographic is aging rapidly, and most older folks are rather . . . set in their ways. But more than that, retirees are dependent upon their pensions.”
There is another factor at work here too. Social cohesion feels strained because of a lack of tangible economic growth. When families can’t afford to buy a house, or when young people can’t afford to go to college, or people have to make decisions between paying bills or buying groceries, it starts to strain social dynamics.
“Capitalism without growth generates massive inequality, as those who already have political connections and wealth manipulate the system to control ever-bigger pieces of an ever-shrinking pie. The result tends in the direction of social explosions”
I think it’s safe to say we are also seeing the inequity of poorly allocated capital. Put another way, the inefficiencies with peak capitalism are creating more billionaires, but also creating the conditions where most people feel like the have to work more or earn more just to get by.
Digital abundance in a time of physical scarcity
I’ve written before about the idea of how systems like Bitcoin create scarcity in a time of digital abundance.
The basic idea is that generative AI and then artificial general intelligence (AGI) will make the goods, products, and services of the information age like writing computer code, for example, so available that they become less valuable.
There are parallels to the the rise of digitalism and the early days of industrial era:
The biggest restriction of this new industrial era was no longer muscle, water, or wind—or even energy in general—but instead capital. Everything about this new era—whether it be railroads or highways or assembly lines or skyscrapers or battleships—was, well, new. It replaced the infrastructure of the previous millennia with something lighter, stronger, faster, better . . . and that had to be built up from scratch. That required money, and lots of it. The demands of industrialized infrastructure necessitated new methods of mobilizing capital: capitalism, communism, and fascism all emerged.
Likely there will be some echos of history here. The abundance of the digital age is constrained or at least contained by how capital is organized and controlled.
Systems like Bitcoin and other forms of legitimate cryptocurrency provide a new way of organizing and coordinating capital. The economics of Bitcoin are designed so that the currency becomes more scarce over time.
It kind of makes sense that scarce digital capital can help guide or inform the direction of digital abundance.
It’s the stuff that comes after the end of the world that will be really interesting
So what does the end of the world — or at least sputtering globalization have to do with open money?
Bitcoin, the first open money protocol, was born on the heels of the global financial crisis of 2008-2009. Bitcoin provided a map or a vision about how people could use the internet to coordinate and exchange value without the need for governments, banks, credit card companies, etc.
In a lot of ways, Bitcoin represents a step function evolution of the concept of money, which has been evolving along with human civilization since the beginning.
Other forms of decentralized systems started to take root and grow, again representing a new means and method of global communication and organization.
No country that has ever industrialized has ever managed the process without crippling social and political mayhem. Industrialization is necessary and unavoidable, but it is hard.
You could probably say the same about the pivot toward digital systems. Like the move that economies made to become industrialized, the same kind of massive changes in terms of organization, social structure, etc., will happen as we pivot toward digital systems of money, work, and collaboration.
The move towards digital is necessary and unavoidable, but it is hard.