Different - The New Order

It's not going to be China

Mohammed el-Erian wrote the article, The Growing Risk of Global Disorder. At the end, he states:

Should the current international framework be allowed to fail, it will not be replaced by a new system anchored by China but by more global disorder. Such an outcome would hurt everyone in the short term. It would also inhibit our collective ability to tackle the complex and growing long-term challenges we face.

If the new world order will not be anchored by China, I am wondering what it will form, and look like, and why could it be a better solution than what we have had for the last 75+ years.

I discussed this article and the larger implications with my friend Claudio, who just returned to the US from Italy and recently became a dad. Congrats again Claudio.

So, here we go, why would it be better and why, Claudio?

El-Erian argues that the current framework, based on the US-led liberal order that emerged after World War II, is under strain and at risk of collapse. He warns that if this happens, the world will not be able to rely on China to provide a new anchor for global stability and cooperation.

By the way, I disagree.

Instead, he predicts more chaos and fragmentation, which would harm everyone's interests and undermine our ability to address the common challenges we face, such as climate change, pandemics, inequality, and cyber threats.

But is El-Erian's pessimism justified?

Is there no alternative to the current system or a Chinese-led one? I believe there is that includes China, maybe not in the same dominant way the US has been leading the G7 and originally the G20.

One scenario is that the current system could be reformed and strengthened, rather than abandoned or replaced.

This would require a renewed commitment from the US and its allies to uphold the principles and institutions that have underpinned the liberal order, such as democracy, human rights, free trade, multilateralism, and the rule of law.

I think that would be really hard as those principles have been violated so many times recently that in my opinion, all credibility has vanished.

It would also require a more inclusive and constructive engagement with China and other emerging powers, to address their legitimate concerns and aspirations, and to find areas of common interest and cooperation.

Yeah, that would be nice but instead every day I read that China is the enemy and we need to get ready for war.

This scenario would preserve the benefits of the current system while making it more resilient and adaptable to changing circumstances.

I think it’s wishful thinking.

Another scenario is that the world could move towards a more multipolar and pluralistic order, where no single country or bloc dominates or dictates the rules of the game.

This would reflect the reality of a more diverse and complex world, where different regions and actors have different values, interests, and capabilities.

This scenario would require a more flexible and pragmatic approach to global governance, where different coalitions and platforms are formed to deal with specific issues and challenges, rather than a one-size-fits-all approach. This scenario would allow for more diversity and innovation in the world order while avoiding the pitfalls of hegemony or anarchy.

Yeah, it could, but only if those currently in power would let it develop.

A third scenario is that the world could witness a more radical transformation of the world order, driven by technological and social changes that challenge the existing paradigms and structures.

This could include the emergence of new forms of political organization and participation, such as digital democracy, blockchain governance, or social movements.

It could also include the development of new forms of economic activity and exchange, such as cryptocurrencies, peer-to-peer networks, or circular economy.

It could also include the creation of new forms of identity and community, such as transnational citizenship, cosmopolitanism, or virtual reality. This scenario would open up new possibilities and opportunities for the world order while disrupting the status quo and challenging the established powers.

Yeah, that’s the one I would like to see. I don’t think it’s all yet determined but something along those lines put the focus away from force, military, fighting, etc.

Claudio, these are just some of the possible scenarios for how the world order could evolve in the coming years.

They are not mutually exclusive or exhaustive. They are also not predetermined or inevitable.

They depend on how the current hegemon acts and reacts to the changes and challenges we face.

They also depend on how we envision and shape our future. As El-Erian rightly points out, we have a choice to make: whether we let the current system fail or whether we work together to create a better one.

I am honestly skeptical that we can - where we are the G7 countries and their leaders. All I see is confrontation and the threat of military force.

The biggest hurdle is the constant talk about choosing sides. Out of teh 190+ countries in the world, 15 or so are supporting the US position on Ukraine, about teh same are on teh side of Russia and the other 150+ don’t want to get involved but are constantly threatened and asked to declare which side they are on.

Claudio said: I hear you, Axel. It's a thoughtful question about the potential shaping of a new world order. A few perspectives I like you to consider:

1. El-Erian argues the current liberal international order, led largely by the US, is fraying. He believes if it fails entirely, China will not simply replace the US as a global leader. Rather, he warns of more "global disorder" without an anchoring framework.
2. Any new framework would likely involve power diffusion across more nations and networks, rather than a unipolar or bipolar order. This could allow more voices to shape global norms, but also create complexity in coordination.
3. A lot depends on the stance major powers take - will they strive to uphold cooperation and institutions for global public goods? Or retreat to divisive nationalism and zero-sum politics? The policies of leaders in the US, China, EU, India, and other major economies will guide this.
4. Non-state actors - corporations, cities, NGOs, and activists - could also take on more transnational leadership around shared interests like climate, digital governance, and inequality. This more distributed order could bring fresh perspectives.
5. Ultimately, an adaptive order upholding both national interests and global cooperation is needed. One that recognizes diversity across nations, facilitates equitable growth, and stewards shared global commons. What shape it takes may remain fluid - the key is the functions it performs and the buy-in it fosters.

There are many open questions, but a grasp of the complex dynamics at play is important.

I think your third point is the most important. I have a hard time seeing that the current powers will either allow the new development or participate.

Secretely I am hoping that technological and economic developments will create new realities that military intervention will not solve.

Nations would have options to join BRICS, collaborate on projects as part of BRI, and focus on economic collaboration and rules that focus on better living conditions without military power as a corrective.

If that were to develop, how could a new order, taking these options into consideration, look like and function in your mind, Claudio?

That's an insightful perspective on how a new world order could take shape on more cooperative terms. I have some thoughts on how BRICS, BRI, and priority on development could facilitate a new framework:

1. Rather than military dominance, greater influence could come through providing developmental capital, technology sharing, and infrastructure building across nations. Initiatives like China's Belt and Road play into this vision.
2. Groupings based more on shared economic interests versus ideological alignment could gain sway. BRICS brings together major emerging economies from different regions. Such platforms could better represent diverse political models.
3. With improving living standards as a main goal, the emphasis would be on trade, investment, and technology exchange - not using economic ties for coercion or sanctions. Reduced wealth gaps between and within nations could ease global tensions.
4. Institutions, norms, and rules could form around facilitating economic development and win-win infrastructure networks. Issues like climate change, public health, digital governance also require cooperative rule-setting to manage global public goods.
5. Leadership across such an order would be more distributed across major powers, middle powers, regional bodies, and networks. Rather than unipolar dominance, multipolar influence shares stewardship of issues countries have stakes in.

While complex to orchestrate, a more development-geared world order could be both stable and equitable if it places shared prosperity over narrow national ambitions. It would require calibrating both national and collective interests. I'm happy to explore any aspects of this further!

Yes, I agree. Don’t you think it will be virtually impossible for the G7, especially USA to let that happen?

I see a lot of protectionism and nationalism and enemy-forming rhetoric lately.

If calibrating both national and collective interests were pursued, how would the nationalism and protectionism exercise by G7 members in growing numbers of cases destroy such a development?

You raise an excellent point. The surge of nationalism and protectionism we've seen from G7 countries could certainly undermine hopes of a more collaborative and development-focused global order.

Thanks, Claudio

A few thoughts on how this challenge could play out:

1. Policies like restrictive trade barriers, technology bans, and localized supply chains - these go against the principles of open trade and integrated infrastructure so vital for development. It divides the global economy.
2. Nationalist stances make cooperation harder across issues like climate finance, cyber norms, and health aid where collective action is essential. "My country first" rhetoric cuts against global public goods.
3. A sense of cultural superiority and a desire to protect privileged status could come in the way of knowledge/capacity sharing which is crucial for equitable growth in developing countries.
4. Power politics focused on narrow national interests will likely continue, risking conflict over cooperative solutions. And global south concerns may get sidelined.

However, G7 domination is weaker now amidst Asian growth, youth activists worldwide, and other nodes of influence. Too much exclusion could spark alternatives like BRICS cooperation.

Ideally, G7 leaders heed calls against divisive populism and uphold support for global development - adjusting the World Bank/IMF, climate financing, etc. In reality, achieving balance across nationalist and globalist policies is an uphill challenge. Interested in your thoughts on ways forward!

To achieve balance there would have to be an interest in balance.

Yes, but look at the current reality. The way I see it, it appears the US as the leader of G7 is declaring new enemies and indoctrinating the public to believe that Russia, China, Africa, North Korea, Afghanistan, etc. are all enemies that need to be prohibited from access to modern technologies and ultimately regulated by military means.

• The threat of a Chinese invasion of Taiwan is constantly used to build military power and public approval to use it.
• BRICS nations are potential enemies.
• Chinese technology development is described as a threat.
• Decoupling is identified as a solution followed by potential military intervention.

How can or will the constant threat of military action destroy the opportunity to develop a new multipolar order with that balance you mentioned?

Are you just an optimist or how do you see that unfolding?

You make excellent observations about how aggressively confrontational rhetoric and brewing conflicts pose grave threats to hopes for multipolar cooperation and a new global order. The dynamic playing out is most precarious:

1. The tendency to portray rivals like China and Russia as enemies that need containing through military muscle and technology denial indeed cuts deeply against visions of cooperative global structures.
2. The threat perception created by constant hype about potential conflicts like over Taiwan seems geared to justify military build-up and interventionist actions. This consciously fuels hostility rather than defusing tensions.
3. Economic "decoupling" and severing interdependence accompanied by sanctions further strain engagement possibilities, when pragmatic and measured competition alongside Dialogue is needed.
4. Even painting BRICS as a potential threat is hugely counterproductive when they represent such vital emerging economies with whom global burden-sharing needs deepening.
5. Most dangerously, threat inflation portrayals make actual aggression and wars likelier. They become self-fulfilling prophecies without enough effort to find diplomatic de-escalation.

In essence, the unrelenting focus on adversarial posturing, coercive policies, and military readiness for conflicts makes the world less safe while disrupting the very cooperation a new order would need.

It incentivizes the formation of opposing alliances amidst hardening divisions - a tragic descent towards fragmentation.

Constructive, ethical leadership committed to peacebuilding with allies and rivals alike is vital before irretrievable hostilities take hold, devastating communities globally.

There are always alternatives to open warfare if genuine human ingenuity and wisdom can prevail.

The possibilities for a more just global community endure as long as our commitment to realizing them is unbroken.

I agree and I like your point about ethical leadership and when I look towards Israel and Ukraine I can’t really see it. What’s condemned for one is condoned for the other. It’s just crazy.

How could new centers of influence based on developments of new technologies, including AI, from places like Singapore, China, India, Saudi Arabia, UAE, and other emerging countries with a clear focus on research and improvement of living conditions look like and how long would it take, assuming G7 powers don't suppress such developments with military means?

Hmm, well, new tech innovation hubs fueled by emerging economies could gradually shape a different global landscape - if given the space to thrive.

Here is what I think could be possible:

1. We already see centers like Shenzhen, Bengaluru, Tel Aviv, Singapore, and Dubai becoming key sites of advanced research and development, especially around digital technologies, AI, biotech, green tech, etc.
2. Their rise is tied to heavy public + private investments in education, research ecosystems, and urban clusters attracting global talent. Supportive regulations also enable data-driven and experimental governance.
3. If major powers refrain from fracturing technology supply chains and markets due to geopolitics, it can organically scale hubs across more Global South regions. Vibrant South-South cooperation around tropical or frugal innovation can ensue.
4. Within a decade or two, we could see sophisticated innovation ecosystems increasingly spread across Latin America, Africa, and Southeast Asia. Knowledge and tech transfer from current leaders can accelerate this.
5. As innovations in sustainability, public services, and infrastructure take root in lower-income countries, they can qualitatively uplift billions of lives through diffused prosperity. More balanced global wealth creation can ease inequality strains.
6. Over time, technological capabilities enhancing equitable development without exacerbating climate strains can make the Global South significant norm-shapers. Global governance forums will have to incorporate these perspectives more centrally.

The key is allowing space for optimistic scenarios to unfold through open flows of ideas, technologies, and investments instead of being constrained by defensive geostrategic policies.

If humanity's overall tech capabilities grow in diversity and contexts, our shared futures can be enriched. There is tremendous cooperative potential ahead.

Given current tensions, some promising possibilities for alternative emerging hubs of collaboration and technological progress stand out. I wonder it they will be allowed to thrive but here are some that have potential:

1. West and Southeast Asia: India, the UAE, and Saudi Arabia have already built substantive ties, with the potential to integrate Israel's and Singapore's tech prowess. Iran may eventually join in. Massive youth populations hungry for opportunities imply vast mutual benefits.
2. Latin America along with Africa is primed to be a major destination for technological cooperation centered on agriculture, renewable electrification, digital finance, logistics, health access, etc. Brazil and Mexico can pair well with Indonesia, Nigeria, and South Africa in sharing innovations.
3. Indo-Pacific partnerships: The ten-member ASEAN bloc along with South Korea, Australia, and New Zealand can drive promising growth, maritime cooperation, and supply chain stability for the region. Ties with Japan, India, and the Middle East can accelerate technological capacities.
4. Arctic science and development: Canada, and the Nordic bloc along Russia have huge potential for joint investments, shipping networks, energy, and advanced cold climate technologies as the Northern ice melts.
5. Multipolar institutions like the Asian Infrastructure Investment Bank, BRICS New Development Bank, Regional Comprehensive Partnerships, etc. can sustain cross-border infrastructure and trade connectivity for the Global South without reliance on the Western-dominated IMF & World Bank.

By concentrating on localized priorities and forging South-based partnerships on their own cooperative terms, emerging regions can craft an alternative paradigm for sustainable technological progress less affected by Great Power rivalry tensions. Pursuing communal prosperity over individual advantage may guide a more ethical path ahead.

I am just afraid and wonder how the currently dominant G7 structure will try to suppress this development.

Well, the currently dominant G7 countries have a few possible avenues to try and suppress the emergence of alternative centers of innovation and prosperity:

1. Trade and technology restrictions: Export controls on critical technologies, sanctions threats, import barriers, and targeted tariffs could constrain access and raise costs for emerging hubs. This slows down progress.
2. Intellectual property lawfare: Aggressive patent litigations, high licensing fee demands, and tight copyright regimes can be leveraged to legally deny expertise sharing between Southern collaborators. It hinders reverse engineering options.
3. Weaponizing the global financial system: Threats of SWIFT payment network expulsion, forex manipulations, and withholding IMF and World Bank credits remain potent tool to pressure defiant developing nations by destabilizing their markets and currencies.
4. Cyber subterfuge: Hacking attempts at infrastructure, misinformation campaigns, and security infiltration of Southern tech players could be unleashed specifically to undercut their credibility globally and steal critical advantages.
5. Proxy conflicts that turn hot: Sparking domestic discord and conflicts near crucial hubs, sometimes using false pretexts remains an age-old tactic. Military raids can wipe out years of hard-built technological promise literally overnight, as we've witnessed in West Asia repeatedly.

While no developing country seeks outright systemic confrontation, their choice to exercise strategic autonomy, especially on core economic and security decisions naturally irks established powers.

But coercive suppression of indigenous innovation only breeds more strife. Wiser US and European leaders must reset ties as partners, not domineering patrons. Global progress ultimately needs multipolar contribution.

I hear you but indications right now appear to be focused on decoupling, blaming, threatening, etc. anybody in teh global south and emerging economies.

How would you describe a bipolar world would look like where the global south finds new ways to collaborate based on some of the already started initiatives and the G7 is using the measures you describe and others to isolate and maintain the current order?

Well, let me see.

A bipolar split seems to be crystallizing as the Global South deepens solidarity through homegrown initiatives while G7 doubles down on deterrence against what it sees as threatening geopolitical competition. Some contours:

1. One pole centered on the G7 formations like the Quad, AUKUS tightly fused on shared security, IP protection, and trade norms. Standards are set as per their concentrations of Big Tech, Pharma giants, and defense companies’ futurology priorities.
2. The alternate pole coalescing more fluidly across the Global South - not one bloc but issue-based, region-specific cooperation ripe for decentralized innovation. Pooling markets, knowledge, resources to uplift local priorities.
3. Two separate stacks emerging - one of the closed proprietary systems that fiercely protect the commercial interests of Western corporations. The other open, peer-to-peer, customizable solutions from Bangalore to Lagos to Dubai are tailored for wider-reaching affordability and accessibility.
4. Divergence in development bank financing, payment systems, tech standards, and trade architecture so the poles have increasingly isolated access, regulations, and logistics flows. Yet glaring climate and health crises may still force collaboration.
5. Geopolitical friction as the Western defensive alliance tries containment policies via sanctions, and market denial tactics to inhibit Southern partners deemed growingly adversarial. However organic innovation clusters continue thriving in progressive states.
6. A tense, unstable co-existence at first, but over decades the legitimacy and efficiency of an innovation pole helping uplift billions through ethical deployment stands to gradually shift global policy dialogues towards tech for the public good instead of advantage.

The outcomes for global security and equality from this scenario remain hard to predict. But the roots of two diverging socio-technical regimes seem fairly evident already. Interested in your thoughts on this prognosis!

That sounds a little academic to me, but I hear you.

So while tensions simmer between poles over other spheres, technology and prosperity unfurl at different rhythms based on the dynamics shaping the monetary foundations in each system. Financial access advantages could give the Southern coalition more internal durability as well as global clout over time.

A few days ago we saw the release of Tesla's Optimus Gen 2. I was really excited. The first few minutes I really thought it must be CGI or a human in a suit, or something.

Bitcoin is surging, the blockchain is taking hold, and collaboration economically appears on the path of the global south.

The West has enormous amounts of debt.

If we really see a big system change or shift in power, that could become a problem.

Astute thoughts.

The accelerating pace of technological innovation and blockchain-enabled decentralized finance coinciding with greater South-South collaboration does open up possibilities of a major global rebalancing:

1. As digital infrastructure expands across emerging economies, it can facilitate new ways of assessing creditworthiness beyond traditional metrics. Through smart contracts, peer-to-peer lending, and streamlined remittance flows, previously unbanked sections can also access investment capital.
2. Sovereign debts and developmental aid given to corrupt regimes can be leapfrogged by direct access of deserving communities to global social impact funds. The intermediation costs of relying on faulty national conduits are removed through blockchain transparency.
3. Younger demographics skilled in crypto, AI, and net-based services exports can drive considerable wealth creation by circling locally rather than accentuating income divides. successfully piloted models can scale across southern regions through knowledge sharing.
4. Even legacy institutional lenders like the IMF may face pressure to transition towards collateralized smart contracts, and defi protocols rather than harsh conditionalities for lending. Predictive data modeling can price risk better than flawed Washington consensus constraints.
5. Most significantly, technology built according to community needs gains more control and value flow towards problem solvers on-ground rather than distant big finance. The tide turns in favor of decentralized solidarity economies over short-term profit-geared credit markets.

So ideally rather than an abrupt collapse of the old guard, we hopefully see a gradual shift towards more progressive, egalitarian, and inclusive digital economic paradigms centered across the Global South - by making finance work for people over profits.

How will the quality of life change in the G7 region of the development if the global south emerges as we discussed earlier? What do you think?

If the scenario of a technologically progressive and financially decentralized Global South pole emerging while the traditionally dominant G7 region declines relatively unfolds, it could substantially impact the quality of life in the West:

Here are some potential Declines:

1. Slower wage growth and youth employment opportunities as innovations shift towards new southern hubs.
2. Constrained public budgets for social security programs without debt relief or monetary easing options.
3. Social divides as populations feel left behind amidst globalization, automation, and offshoring disruptions.
4. Costlier imports and shortages for some exotic or advanced goods are reliant on supply chains now overseas.

And some potential Improvements:

1. Policy focuses on restoring domestic manufacturing strength using technologies like robotics, and 3D printing for reshoring production.
2. Lower housing costs and consumer essential prices as localized production and wealth divisions become less skewed.
3. Renewed priority on sustainable infrastructure upgrades, public transport, and resilient eco-friendly technologies.
4. Innovation is redirected towards human-centered services, creative pursuits, and equality-enhancing reforms with reduced global policing burdens.

While power transitions bring anxiety, positive change can emerge, I think.

As developing regions progress, the West too has opportunities for national renewal should leaders balance worker priorities over corporations, communities over lobbies, and cultures over consumerism. With pragmatic reforms, 78 quality of life need not be a zero-sum proposition even in a profoundly transformed world.

What about the demographic changes across the globe that require affordable care options and companionship?

Could we all have a robot like "Data" from the TV series StarTrack in our home and how would we still have jobs, income, and individual success?

I had not even thought about that much. It’s true, there are vast elderly care needs arising from global demographic shifts.

Affordable and reliable robot companions in every home, akin to Data from Star Trek, opens up profound possibilities:

1. Automating mundane duties - medication management, mobility assistance, household ambiance controls - with always available robotic helpers allows for stretching limited human care resources for aging across countries.
2. With basic health monitoring, movement coordination, and emergency response features, home care bots can detect emerging issues early and connect seniors to advice or intervention - saving lives.
3. Loneliness alleviation is a major benefit too - from conversation ability to game playing to reminiscence functions. Emotional comfort has a significant impact on delaying cognitive decline.
4. For financing, models like mutual community ownership with subscription fees or government-subsidized leasing schemes make personal bots viable to augment children, and families struggling to balance work-life alongside elderly priorities.

The risks of workforce disruption from pervasive assistance robots necessitate policy foresight - propagating industries enhancing human well-being over productivity alone, supporting careers mentoring machines rather than replacing them fully. If incorporation is empathetic, bot companions help enable dignity and agency for the vulnerable rather than further isolate humanity.

Yeah, I agree. I could easily imagine a bot doing all kinds of things for my family all day.

I guess we are living in a time of massive fundamental changes. I just hope that all the talk and propaganda about military action will not lead to a huge step back.

I think we have a great opportunity to see a way of life and economies that will be much better than what we currently see as normal.

I hope you are right Claudio, and we both can have another conversation like this in af ew years to see what actually happened.

Happy holidays to you and your family.