The Doom Loop: Why the World Economic Order Is Spiraling into Disorder

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. (Feb.)