The Doom Loop
Why the World Economic Order Is Spiraling into Disorder
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- € 19,99
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- € 19,99
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Globalisation and its institutions have failed to adapt to today’s political-economic realities. What went wrong, and how can we reverse our descent into chaos?
The United States, once the world’s undisputed superpower, is losing its dominant position. Rising economies like China and India increasingly exert their influence, the West’s share of global GDP consistently declines—and America’s rules-based system risks becoming irrelevant. In business, competition brings efficiency, balance and innovation. But in the marketplace for global power, things look rather different.
Acclaimed economist Eswar S. Prasad argues that the very forces expected to stabilise the world order are fuelling disarray. Instead of promoting shared prosperity, globalisation has deepened inequality in many countries, stoked political backlash and prompted escalating trade wars. Economic institutions like the International Monetary Fund and World Trade Organization, founded to foster cooperation, have failed to adapt to twenty-first–century realities. The ascent of ‘middle powers’ like South Africa, Brazil and Indonesia once suggested a stable multipolar future; but today, such economies are forced to pick sides in an intensifying US–China struggle for hegemony.
In clear-eyed, bracing prose, Prasad contends that we are caught in a destructive feedback loop between economics, domestic politics and geopolitics. As instability becomes the status quo, we need radical new solutions to reinvigorate the world economy, prioritise common aspirations—and reverse our downward spiral into disaster.
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This trenchant treatise from economist Prasad (The Future of Money) argues that China's rise and America's wane are leading to global instability. The issue isn't brinkmanship per se but a chaos-generating feedback loop that has emerged from the two very different economic behemoths' attempts to compete with one another. ("My tribe of economists believes that competition is a positive force in practically every realm," but "basic precepts of microeconomics do not always apply to the complex world of geopolitics," Prasad notes.) To wit, in order to match each other's strengths, China is adopting more free market measures, while the U.S.-led West is seeing more state control of corporations and markets. This would seem on its surface to be a harmonious development, but instead, Prasad argues, it has led to "dysfunction," since there is no longer a universally understood set of rules governing the international order. Prasad's goal is twofold, as he seeks both to puncture the myth of globalization as inherently generating stability (he points to globalization's failure to evenly distribute its benefits across the world) but also to convince both sides that maintaining a working international order is more beneficial than retreating into zones of influence. To that end, he urges both sides to come together to work out a new set of international economic rules. Erudite and expansive, this will appeal to geopolitics wonks.
