The world around us and the economies of change

It is incredibly clear that the world around us is volatile beyond measure. The current military conflict in the Middle East is just the latest in a series of pressures that have been affecting the world. 

Enough will be said about the Middle East conflict over the next few weeks and plenty has already been said – some of it probably more alarmist than realistic. I will take a step back and look at the background of the world and where we are currently situated.

Across the last few years, it looked and felt as if the world was getting pulled in all sorts of directions at once. Global trade has been clearly shifting for a while, a trend that has only exacerbated since early 2025. 

Global conflict has been ramping up visibly and globally, with the 2022 invasion of Ukraine probably the most visible flashpoint that started this cycle. Climate events have inflicted untold pain across countries, especially in our part of the world. Massive technological upheavals are ongoing. Social and economic consequences of all of these seem likely, but seem equally hard to pin down.

When so many things change at once, it can seem like a moment of absolute chaos, as if the order of the world is just breaking apart. I think, however, that there is another explanation – that multiple cycles of the world are drawing to a close at the same time. 

Here, the economic dimension takes precedence in my biased mind. Economic pressures build up and translate through to both larger and smaller impacts, simply because of the pervasive tentacles of the creature at hand. Yet regardless of the specifics, it fundamentally becomes one where things are changing, as opposed to breaking apart alone. With change, like always, come disruptions.

What is this economic transition? I have previously spoken about how the post-World War II global economic order of US-led consumption activity is likely near its end. This comes on top of the post-’70s global monetary order shifting away from US led-deficits, along with the consequent financial flows that follow this also shifting. 

Then onto the post-2000s world of US deficits balanced against Chinese surpluses. And subsequently onto the post-2015 world of where the Chinese system tried (and so far, failed) to distance itself from this dipole.

Consider how wide ranging each of these were. We are talking of the entire architecture of global trade, global finance, and even the specific locations through which these move, changing. 

Enough of the world that has been built across generations by now will then have to also face the pain of any change – such as the firms that work in the places that make sense for them, along with the kinds of workers that they need to hire. As all of these change, there will be (and we are seeing the clearest evidence of this right now) massive shifts.

It is critical to spend some time on the magnitude of these shifts. Within each context, the shift might remain relatively within the bounds of what usually happens. 

The global trade order might shift slightly at the most fundamental level. The underlying architecture might shift separately at some moderate level. The countries within this might shift slightly. Their industries might also shift by a relatively moderate degree. But when each change takes place in the context of other changes as well, each movement, although relatively moderate, becomes massive in absolute terms.

There are two consequences of this that I want to examine. First, such conditions mean that things change in unexpected and often massive ways. Black swan events will probably become more likely – to the extent that while you wouldn’t know which individual swan will turn out to be black, you would almost certainly be able to claim that multiple swans will be black and prepare accordingly. 

Second, changes of this kind are complex and the impacts themselves are complex – and isolating individual aspects alone is not only likely to be inaccurate, but even directly harmful.

These consequences are what I will end this piece on. In the current moment of conflict as well, there will be (and I have already seen many) claims of one specific factor alone mattering in one specific way. 

The most obvious example is what happens if oil prices rise, which will clearly be unfavourable for oil importers. However, the type of change here is both large and happens alongside other changes. Oil price changes do not happen in isolation. In engaging with a question that is as complex, and a world that is changing as fast, these consequences and outcomes probably deserve far more attention. 

source: The Morning