The Unravelling World Order

The introductory essay for this cluster takes as its launch point a single striking observation: that the evidence suggests that rising incomes are failing to produce happiness as promised, and that democracy is in recession.

Over the last few decades, hundreds of millions of people have been lifted out of abject poverty, and hundreds of millions more have achieved a middle income and middle-class life. That isn’t just something, it is an extraordinary achievement that only a couple of centuries ago was considered a preposterous fantasy. Yet there is a very real sense that progress has stalled. The engine of continuous progress toward ever greater human flourishing is spluttering. The directional policy consensus that emerged after the Cold War has fallen apart, replaced by a confused and confusing array of ideologies and theories animating the actions of governments across the globe, many of them recycled from the failures of the past.

This essay will walk though some of the most prominent problems that seem to be afflicting the world today to make the case, specifically, that the world order as it has been recognised is unravelling, and to argue that the common thread running through this unravelling is that governments do not govern in the best interests of their citizens.

Does Anyone Have a Fig Leaf?

To illustrate this point, a good place to start is perhaps the civil war in Sudan. This war seems to be widely forgotten — probably because it has few implications beyond Sudan’s borders, but what also makes it lacking in newsworthiness is that there is no ideological narrative to provide context and moral clarity. It is, essentially, a contest between two armed groups both seeking power and control, undoubtedly for the purposes of enriching themselves, and perhaps for the pursuit of power as its own end. Neither side even pretends to be advancing a moral justification for their actions, which is, if nothing else, at least honest.

What is poignant about the conflict is both the immense human suffering and the apparent indifference of the warring factions to that suffering. Its would-be rulers display naked self-interest in its purest form. If and when one or other side prevails, it would be absurd to believe that they will act with anything other than self-interest in their governance of the country. The only question will be the extent to which they expropriate wealth for their own benefit, which becomes a dilemma of balancing trade-offs: whether they are prepared to forego short-term gratification to allow the country to prosper, which would offer greater rewards over the longer term, or whether they simply extract as much as they can as fast as they can in the expectation that their hold on power is likely to be temporary.

The Sudanese civil war is emblematic of a wider trend: The Uppsala Conflict Data Programme recorded 65 active state-based conflicts (wars where at least one belligerent is a state and which result in at least 25 battle-related deaths in a year) in 2025, the highest level since its records began in 1946. The Peace Research Institute Oslo has observed that “the past four years have been the most violent period since the end of the cold war.”

The number of people forced to flee their homes to escape war or persecution has tripled since 2010, reaching 123 million by the end of 2024, according to the UN High Commissioner for Refugees. Rules that are supposed to protect civilians in conflict are more widely flouted than at any point in recent decades. Wars are lasting longer, and fugitives stay displaced longer as a result. These are not abstractions; they are the concrete output of a world order whose enforcement mechanisms have degraded faster than anyone who designed them anticipated.

As I said, the Sudanese civil war does at least have the merit that there is not even a pretence to an ideological, or principled justification. Russia’s 2022 invasion of Ukraine provides an interesting contrast. The defining characteristic of that invasion is, for me, that it is nakedly a war of conquest by one nation state against another. There has always been a background level of conflict around the globe. However, conflicts have generally been of the nature of civil wars, insurgencies, or military action to prompt regime change, or at least a change in regime behaviour. Some conflicts have been in a grey area where there was conflict between nations, but genuine ambiguity about where a particular population group should belong. Generally, these conflicts have been about self-determination of ethnic subgroups.

Russia’s invasion of Ukraine was qualitatively different. The narrative run by Russia was inconsistent and garbled: it variously argued that it was acting to protect Russian speakers in the eastern provinces, that Ukrainians were not truly a separate ethnicity, and that it was acting in self-defence against NATO expansionism. Many have speculated as to the true reasons. The explanation that Ukrainian aspirations toward genuine democracy, freedom, and the elimination of corruption had the potential to destabilise Putin’s grasp on Russia is entirely plausible, but so too is the argument that it was simply Putin’s vanity and delusions of Russian greatness, manifested as an obsession with empire-building in the manner of the great Tsars of the past.

The reasons Russia has evolved more generally into a deliberate and aggressive spoiler of the world order, both in Ukraine and beyond, are really not important in this context. The point that I think is important is that, objectively, the Russian Government has not acted in the best interests of its citizens. Whether it could have claimed to have done so if its initial invasion had been a success is moot - its determination to persist as the economic and social costs rapidly mounted shows a complete disregard for the wellbeing of its own citizens.

What was surprising about the political response to the Ukraine invasion was the lack of moral outrage from the global south. While motions in the UN mustered a near-universal vote against Russia’s aggression, in practice there was at best ambivalence, and at worst an almost palpable desire to view Russia as having been somehow provoked. A common attitude seemed to reflect the parable that when two elephants fight, the wisest approach is to stay clear for fear of being trampled. It is undeniable that in some cultures there is a mindset of respect — even mild admiration — for the willingness of Putin to grasp and project raw power. This betrays a strikingly cynical and transactional perspective that I will return to when examining concepts of national culture elsewhere in this project. The point for here though is that for much of humanity, principle and rules weren’t important, and there was little, if any, moral differentiation between Russia and Ukraine.

To a western observer with an acute sense of the importance of rules, this is jarring. The problem, though, is that the post-war international order was never as coherent or as principled as its champions liked to claim. Its rules were written primarily by the victors of the Second World War, selectively enforced, and routinely subordinated to the strategic interests of major powers when the two came into conflict. Foreign policy conducted without a clear normative foundation tends, reliably, toward opportunism: a succession of short-term calculations that accumulate into incoherence and, eventually, into a loss of legitimacy that no amount of diplomatic reassertion can restore. The world has spent decades watching powerful states assert the importance of rules they were simultaneously breaking, invoke humanitarian principles as cover for strategic interests, and sanction adversaries for behaviour they tolerated or enabled in allies.

There is perhaps no better contemporary illustration of this than the west’s approach to Israel. I am not seeking to take sides in the many overlapping conflicts revolving around Israel — only to highlight the inconsistencies of principle. Israel is manifestly in breach of numerous provisions of international law, and there appears to be prima facie grounds that it has committed repeated war crimes. Yet those who most loudly invoke the rules-based order tend to go silent, or react with outrage, when it is suggested that that order should apply to Israel equally. The attack by Israel and the United States on Iran in February 2026 has no grounding in international law — however odious the Iranian regime, the rules-based order explicitly does not authorise military action on those grounds. And while one of the mantras repeated endlessly is that Iran cannot be permitted to acquire nuclear weapons, Israel’s own nuclear arsenal is never mentioned, let alone questioned, despite Israel having been the primary protagonist in most of the region’s conflicts. The principle being applied is not one of rules but of political convenience, and the global south notices the difference. The erosion of moral authority this produces is real and consequential, and it goes a significant way toward explaining the muted response to Russia’s invasion of Ukraine from countries that have long experience of western double standards.

The Dark Side of Economic Interdependence

One thing arising from the crisis over the Strait of Hormuz caused by the attack on Iran by the US and Israel is that almost all countries can agree that keeping critical waterways open to trade is vitally important. What is at play isn’t even close to principle though — it is outright self-interest. What it does usefully highlight is the intense interdependence of the global trading system, geopolitics, and conflict, and this leads naturally to a deeper examination of what that interdependence means in practice.

For several decades, the dominant theory of economic statecraft was that trade was politically neutral: that the mutual benefits of exchange would soften political tensions, that interdependence would create shared interests, and that the expansion of global supply chains was simply the efficiency-maximising response to comparative advantage operating at planetary scale. The theory was not entirely wrong. It produced real gains, lifted hundreds of millions from poverty, and generated genuine economic relationships that were difficult to sever without cost to both sides.

What it failed to account for is the asymmetry of those relationships. Albert Hirschman identified this problem in 1945 in a book that was largely forgotten by the economics profession until recent events made it inescapably relevant. His insight was simple: trade is voluntary and mutually beneficial, but the benefits are not always symmetrical, and asymmetry creates leverage. A country that depends heavily on a single trading partner, requires monopolised raw materials, has limited sources of supply for essential inputs, or relies on access to a narrow waterway, is to precisely that degree economically and politically exposed. The country controlling the supply can make demands it could not otherwise make, because the cost of refusing is borne asymmetrically.

The recent history of supply chain weaponisation provides an ample catalogue of examples. China’s use of trade restrictions against South Korea following the deployment of a US missile defence system; its targeted campaign against Australian exports in response to Canberra’s call for an independent inquiry into the origins of COVID-19; its ongoing capacity to restrict rare earth exports on which high-technology manufacturing globally depends. Russia’s manipulation of European energy dependency to extract political accommodation before and after both its 2014 and 2022 invasions of Ukraine. The Trump administration’s deployment of tariffs as a coercive instrument — dressed up as a mechanism for the revival of American manufacturing, but the true underlying point was inescapable: the aim was not to maximise economic welfare, but to demonstrate power, to establish that access to the US market was a political favour capable of being withdrawn.

Again, the point I want to stress is that it is highly doubtful that any of these actions was taken out of genuine concern for the best interests of the coercing country’s own citizens. The Iranian and Russian regimes demonstrably have no concern for their populations. The Trump tariffs were economically incoherent as domestic policy — they imposed costs on American consumers and businesses while delivering little in the way of the manufacturing renaissance promised. Some US citizens may derive a self-satisfied patriotic satisfaction from the assertion of American power, but it has not improved the living standards of the median household.

China’s case is somewhat more nuanced. The Chinese system is unique among the world’s political arrangements: while autocratic and frequently repressive, it is also perhaps more attuned to the sentiment of its citizens than most autocracies, monitoring and responding to popular opinion as a mechanism of legitimacy in the absence of democratic mandate. But it is important to emphasise that this is not the same thing as acting in the best interests of its citizens. Rather, the intention is to keep them quiescent while the leadership pursues its own priorities — a vague but persistent conception of China ascending to its rightful place as an undisputed global power and reversing the humiliations it suffered in the 19th and 20th centuries.

To that end, China pursues a deliberate policy of suppressing household consumption. Chinese households retain a disproportionately low share of what they produce — in the form of wages, other income, and transfers. Household consumption accounts for less than 40 per cent of China’s GDP, compared with a global average of roughly 60 per cent, and the lowest consumption share of any major economy. The excess productive capacity this generates is directed toward government and export industry investment, allowing China to project economic power, flood the world with underpriced goods, and accumulate vast foreign exchange reserves. It is a policy that deliberately leaves Chinese consumers poorer than the country’s per capita GDP would imply, while giving the political elite scope to direct the economy toward activities — including military expansion — that serve its own ambitions rather than the welfare of its population.

Not all supply chain vulnerabilities originate from deliberate coercion. The COVID-19 pandemic demonstrated at scale how supply chains optimised for efficiency in normal times can seize under unexpected stress. Shortages of personal protective equipment, semiconductors, and pharmaceutical ingredients revealed that just-in-time manufacturing and geographically concentrated production had created fragility that no individual actor had intended but that the system had systematically incentivised. Food supply chains have proven similarly brittle: the combination of pandemic disruption, the effective withdrawal of Ukraine from global markets following Russia’s invasion, and recurring droughts affecting multiple producing regions simultaneously all showed how quickly agricultural commodity markets can tip from adequacy to shortage.

In each case, the political instinct of affected governments was identical: secure domestic supply first, regardless of the consequences for others. Export restrictions on food, fertiliser, and critical medical supplies proliferated across both wealthy and developing countries. The impulse is understandable — no government that answers to its own voters can easily export surpluses while its population faces shortages — but it is collectively self-defeating. When multiple countries simultaneously restrict exports of the same commodity, the shortage deepens and the costs fall hardest on the countries least capable of absorbing them. A first impulse that is morally fragile in isolation becomes, in combination, a mechanism for converting a manageable problem into a crisis.

The common thread in all of these instances of supply chain disruption is a principle that seems obvious in retrospect but was systematically ignored by the architects of global integration: trade relationships designed for a stable, rules-based environment become structural vulnerabilities in an unstable, power-based one. Efficiency and resilience are not the same thing, and the relentless optimisation for the former, without adequate regard for the latter, has left countries exposed in ways they are only now beginning to take seriously. The answer is emphatically not to retreat from trade. Trade is both a function of, and a driver of, the interdependence that is an unavoidable feature of human existence. Some challenges — as the COVID-19 pandemic brutally demonstrated — require collective responses that transcend borders. Climate change is the most prominent of these, and it is another arena in which the world order is tragically failing.

The Failure of Climate Action is a Fundamental Structural Deficit

The scientific community has now, reluctantly and with characteristic understatement, conceded that the Paris Agreement target of limiting warming to 1.5 degrees Celsius above pre-industrial levels is no longer attainable. This is not a minor revision. The target was set with full awareness of how difficult it would be to achieve; its abandonment reflects not the revision of a stretch goal but the failure of the global system of climate governance to produce action remotely commensurate with the problem it was established to address.

The reasons for this failure are structural, and they were visible from the outset. Climate change is, at its core, a problem of negative externalities at planetary scale. When economic activity generates greenhouse gas emissions, the costs are borne not by the parties to the transaction but by the world at large — predominantly by populations in low-income countries who contributed least to the emissions and lack the adaptive resources to manage the consequences. In a domestic economy, this is precisely the situation in which governments intervene: they regulate the externality, impose a price on the damage, or otherwise correct the market failure. But there is no world government. The parties most responsible for the emissions are sovereign states acting within their own borders, and the international institutions that nominally address the problem have no enforcement capacity and no mechanism for compelling compliance.

The result is a free-rider problem of the most intractable kind. Climate action imposes real costs on the countries and industries that undertake it, while the benefits are shared globally. Any individual country can calculate, not unreasonably, that its own emissions reductions will make little difference to global outcomes if major emitters do not follow suit, and that it will share in the benefits of others’ reductions regardless of whether it contributes to them. This logic, applied widely — and it is applied widely — produces collective inaction that no country intended as a matter of deliberate policy, but that every country’s individually rational behaviour reliably generates.

The problem compounds further. If a government acts to reduce emissions within its jurisdiction, it may simply cause the emitting activity to relocate to a country with less stringent controls, achieving no net environmental benefit while incurring the full economic cost. This risk of carbon leakage is not hypothetical; it is a genuine constraint on unilateral climate policy and one of the strongest arguments for coordinated international action. But the mechanism for that coordination, the annual Conference of the Parties, is a voluntary assembly of sovereign states in which the most consequential actors face no binding obligation and no meaningful sanction for non-compliance.

Beyond the direct challenge of coordinated emissions reduction, there is also a cross-national equity dimension that resists easy resolution. The countries historically most responsible for accumulated atmospheric emissions are not the same as those facing the most severe consequences. Conceptually, those countries facing the most serious impacts could compensate major emitters for reducing their emissions — but this would for the most part result in poor countries paying rich ones, a solution that is both economically elegant and morally repugnant.

There is also a temporal problem: the costs of adequate climate action are immediate, while the most severe consequences of inadequate action are distributed across future decades, with the steepest costs borne by people not yet born. Democratic systems with electoral cycles measured in years are structurally poorly suited to making those trade-offs. And autocracies, while having the capacity to impose meaningful solutions, are rarely interested in the long-term welfare of their citizens. The end result of all these forces is a system that is structurally unable to rise to the magnitude of the challenge. The Paris framework was the best available compromise given the circumstances. Its failure does not mean that climate diplomacy was worthless; it means that voluntary frameworks, however well designed, are insufficient to the scale of the problem.

Rampant Inequality is not OK

While the effects of climate change on inequality are real and consequential, it is important to recognise that the world is starting from a position of rampant inequality — across classes, generations, and countries.

The conventional account of inequality goes roughly as follows: global poverty has fallen dramatically over the past three decades, with hundreds of millions lifted above subsistence; wealth inequality has increased in many countries both developing and developed, but consumption inequality is less extreme; the appropriate response is more and better quality growth, effective redistribution, and better access to education and opportunity. This account is not false, but it is inadequate. I want to call out three specific characteristics that give cause for pause.

First is the structure of the decline in global poverty. This decline is very highly concentrated in Asia. China has been the overwhelming driver, with strong support from other south and south-east Asian countries. The challenge for many of these countries is that they benefited enormously from declining birth rates, which creates a demographic dividend: a bulge in the working-age population relative to the young and old. For many of these countries — and for some it is already an acute problem — this dividend becomes a dead weight as the bulge moves through time. The working-age population is beginning to decline in several of them, creating the conditions for getting old before getting rich, which places intense pressure on welfare systems and undercuts the prosperity of those in mid-life.

The second is the specific and intensifying sense among younger generations in wealthy countries that the system was structured to work for those who arrived before them, and has been progressively locked to prevent meaningful entry by those who followed. There is a systematic pattern visible across much of the rich world: happiness scores among younger cohorts diverge sharply from the national average, and the gap has been widening even as aggregate economic data has suggested continued progress. Three features of these rich economies are striking. First is the unprecedented debt accumulation by governments — a clear signpost that the future of younger generations is being mortgaged to fuel the lifestyle of the old and wealthy. Second is housing affordability: structural elements of the economy and tax system appear to provide an inbuilt ratchet that increases the wealth of home-owners while the young are increasingly locked out of the housing market. And third, and perhaps most poignant, is birth rates collapsing to well below replacement: these perhaps partly reflect greater self-actualisation among younger generations, but more likely they manifest a deep anxiety and lack of hope about the ability of their society to support parents and their children. Something real is happening to how the rising generation experiences prospects and possibility in wealthy countries.

The third point is the decline in development aid from western to developing countries, starkly highlighted by the cancellation of most US aid under the Trump administration. This most visible step is, however, the culmination of a long-term trend of declining generosity by the west. Arguably this change stems from two complementary developments: First is the rise of grievance politics – it is difficult for a democratic Government to justify significant foreign aid when it is itself invested in a narrative that its citizens are suffering cost of living pressures. Second is a growing scepticism that foreign aid is well invested, and even a sense that it does more to sustain inequality than to relieve it.

That scepticism is not without an evidence base. The end of formal colonialism carried with it a promise: that liberation from external extractive power would enable former colonies to chart their own development and, over time, to close the economic gap with the wealthy world. In too many cases, that promise was not kept — not because development is impossible, but because the extractive structures colonialism had embedded did not dissolve with the departure of the colonisers. As Daron Acemoglu and James Robinson documented with considerable empirical rigour in their work on institutional economics, the key variable in long-run development is whether a society’s institutions are inclusive — distributing opportunity broadly and creating incentives across the population — or extractive, concentrating the gains of economic activity in the hands of those who control the state. Where colonialism left behind extractive institutions and a local elite positioned to inherit them, what changed at independence was the nationality of the beneficiaries, not the character of the system. The colonial logic of resource extraction for the benefit of a dominant group was not replaced; it was relabelled, clothed in whatever ideological garment — socialism, economic nationalism, religious authority, anti-imperialism — offered the most effective rhetorical cover for continued elite enrichment. This is a sweeping characterisation, and the exceptions matter: there are countries that have used the institutions of independence to build genuinely inclusive societies, and the legacy of colonialism imposed real and lasting structural disadvantages that cannot simply be wished away. But as a description of why so much of the developing world continues to be governed principally in the interests of a ruling class rather than its population, it has substantial empirical support.

At this point it is worth circling back briefly to climate change, because the context of extractive elites matters for the debate on climate compensation. The historical case for compensation from wealthy to developing nations has genuine substance — the accumulated emissions of wealthy nations are a documented fact, and the asymmetry of who suffers the consequences is real. But it is difficult to take those demands fully seriously when they are made by governments that are demonstrably and corruptly enriching a small elite at the expense of the populations they claim to represent. The moral legitimacy of the claim belongs to the people living with those consequences; in too many cases, the governments making the claim on their behalf have forfeited any credible right to do so.

Always Bet on Self-Interest

I want to be clear about the sense in which I am using the term “world order” in this essay. It is often used foremost to describe the international rules-based system — the network of treaties, institutions, and practices that has provided the framework for international commercial and political relationships since the end of the Second World War. There is also an important domestic element to this order. In the economic sphere, there is what has been called the Washington Consensus about what constitutes sensible and coherent economic policy settings. In the political sphere there has been a western-driven orthodoxy toward liberal democracy, characterised by competitive multi-party democracy, protection of human rights, and key personal freedoms. All of these elements I am grouping together into a broadly defined concept of a world order.

What this world order essentially represents is a recognition that humanity is highly interdependent. Some of that interdependence is a practical matter — the natural environment exists independently of any individual, group, or nation. Some of it is a choice, trade being the prime example. A third, fuzzier category is moral: for a large proportion of humanity, though clearly not all, humans occupy a status that exists independently of where they live, and the individual welfare of all people is regarded as a collective responsibility.

Within a society, individuals are similarly interdependent. And, in the same way that individuals gain from cooperation within a society — a concept that ultimately finds its expression in the notion of the social contract — nations gain by constraining their actions to create a more accommodating world. The world order can be seen as the philosophical concept of enlightened self-interest operating at the level of the nation state.

My core argument, which runs through this project, is that the failures we are witnessing reflect a fundamental incoherence of governance around that world order, and that the framework as it has stood is insufficient to meet the challenges of a complex global system. Quite simply, the architecture is not fit for purpose to convert enlightened self-interest at the nation-state level into a coherent and sustainable system.

The underlying causes of this insufficiency are many, and they are discussed in detail in The Pursuit of Happiness and its Enemies cluster of this project. For the purposes of this essay, the key point I want to emphasise is that the common characteristic running through most of the failures is that political decision-making is captive to the ruling elite, and that this elite is acting in self-interest the vast majority of the time.

The constraints on political elites are obviously a function of the political system of the state. While the concept of a benign autocrat is valid, the reality is that they are rare, and those that do exist are often ineffectual. Autocracy and elite self-interest can essentially be assumed to go hand in hand. The case with democracies is more nuanced. One way of thinking about democracy is that it is an institutional solution to this problem of self-interest: it seeks to align the interests of the ruling elite with the interests of the voting population, since that alignment becomes the pathway to power. This framework is far from perfect though — it often rewards short-term solutions, ideology over evidence, and rhetoric over substance. The result is messy, compromised policies that frequently entrench outcomes favouring the wealthy and powerful. This is really the best-case scenario. Many claimed democracies are actually hybrid regimes, blending the semblance of competitive elections with a heavy bias toward incumbency, and producing political outcomes that are similarly biased.

What we need to be clear-eyed about, then, is that the ruling elite will for the most part act in its own self-interest — not the best interests of the country they rule, not the best interests of the citizens of their nation, and certainly not the best interests of the global community. This is the common thread that runs through all of the myriad ways in which the global order is failing.