This post originally appeared on XYZ.
Does anyone still not think that the world got real weird about a year or two ago? It’s like the globe went from being a placid pond to a washing machine. Things that you never would have imagined ten years ago are now daily occurrences in the news. As usual, the mainstream media is explaining away events while XYZ has been covering this trend in detail. How can we make sense of the atmosphere of insanity which we can feel is spreading around the world?
It’s my view that we are living through a time when the paradigm upon which the present order is based is breaking down. Things that have been seen as natural or eternal are now being revealed as temporary and unstable. The ground upon which we built many of our expectations and our security is turning into sand, and things that we thought would stand forever will wash away. If that all sounds melodramatic and hysterical, then good. I’m now firmly convinced that our immediate future holds more drama and intensity than anyone around today has experienced in their lifetimes.
Throughout history, paradigm shifts such as this can be confusing at first because each manifests in slightly different ways and occur over varying time frames. They don’t all look alike. Just as generals are always preparing for the last war and traders are always looking out for the last crash, we can miss what’s happening until it’s passed because it didn’t look like how we expected it should. The most recent example in Western history most of us are familiar with is the First World War. An Australian sitting down to his tea with bread and jam on a Saturday morning in 1910 was comfortable in the knowledge that, as a subject of the British Empire, his position at the head of humanity was assured and that the prospects for the century ahead were bright. Progress would continue advancing and wonders would proliferate. The future was rosy. There had been a brutal depression twenty years earlier, but that was because of rampant land speculation and irresponsible banking at the time. The lessons had been learned and would not be repeated, surely…
The world that man of 1910 inhabited, whether he realised it or not, was shattered by a gunshot in Sarajevo in June 1914. It took time for events to unfold and the shift to be made manifest, but that world would never return. It’s not the only example in modern history, either. A man born in China in 1830 was born into a world in which China was the centre of the earth, heaven reflected its will down onto its most civilised portion and foreigners were ignorant barbarians. By the end of his life, if he survived, this man would have seen Chinese ports given over to those same foreigners and Chinese treated as servants, the Taiping Civil War in the 1850’s which killed twenty to thirty million people and the fragmentation of the country. Japan went through a similar paradigm shift shortly afterward, although it emerged stronger as a result. The French Revolution, the Black Death, the Mongol invasions of Asia, the Arab conquests of the Middle East – throughout history there have been times when seemingly from nowhere change has occurred at such a rate that it has left the people living through it bewildered. What was unthinkable prior becomes mundane after.
The argument I am making here relies upon the understanding that history does not move in a straight line. Neither is it random. Clear patterns emerge wherein there are periods of stable continuity suddenly punctuated by violent turmoil. As humans we are subject to what psychologists call ‘normalcy bias’; we tend to think that things have always been and will always be as they are. It’s necessary for us to function to believe so, but it’s not at all borne out by reality. It may be that stability breeds instability, just as Alan Greenspan’s ‘Great Moderation’ of the 1990’s through interest rates and debt-fueled economic growth provided the foundation for the dot-com bubble, US real estate bubble and the Great Financial Crisis of 2008. A small recession during that time would have allowed excess debt accumulation to be cleared, but was not politically acceptable so was not allowed to happen. Stability bred instability; enforced order bred entropy and disorder. Indeed what we are seeing in the headlines today traces its origins to decisions and policies made during the previous last few decades. If anything makes this paradigm shift unique, in my view, it is that it is happening globally to an extent never experienced before. This means the scale of events and the consequences will be far greater than what has happened in the past.
We are seeing the rules upon which current global order is based dissolving fast before us. Brexit seems like it will be considered by many the first sign that something big was happening. Since the Second World War, we are accustomed to ever-greater globalisation and centralisation of control throughout the world. This has seemed to many an inevitable trend, and indeed a hopeful one. To others, this has seemed an illiberal trend toward tyranny and totalitarianism on a global scale. Brexit punctured that trend, and it likely will lead to the breakup of the EU. The Trump phenomenon is another example of where business-as-usual is being punctured and a new set of rules is emerging. The revealing at the same time of how the Clintons operate behind the scenes is shaking the establishment to its foundations. We will never again return to the soap opera that has been US politics for the past few decades. Faith in the current system has been irrecoverably lost. Interestingly, this political eruption is also global. The rotating door we’ve seen in the PM’s office and the rise of minor parties reflect dissatisfaction with the establishment here in Australia as well. Around the world, the establishment is on notice; I’d wager many PM’s and Presidents have been furiously learning how to create a LinkedIn profile over the past year or two. Either that, or keeping their private jet fueled and ready to go on the tarmac.
Markets are also not following the rules. In a time of increasing political tensions, terrorist attacks and financial instability, stockmarkets should be crashing. Instead they are at all-time highs. This is the most hated bull market in history, and traders have been expecting a crash for more than a year. The real economy is being hollowed out around the world as the internet of things continues to destroy jobs across the board and people hoard cash and pay down debt. Flagship brands such as Dick Smith are dying out, being replaced by nimbler newcomers such as Kogan. Still the market indices creep higher, and traditional explanations for market behaviour are being proved flat-out wrong. The mainstream media is dying too – there are now alternative news channels on YouTube which have far more viewers and a far more engaged fan base than the media stalwarts who have occupied our living rooms since childhood. You reading this article is an example of this. Tiny cracks in the established order are rapidly expanding to reveal that the order itself is crumbling.
What will replace it?
I’m going to go out on that dangerous limb and make a few prognostications about what the next paradigm that is now emerging might look like. Of course this is all speculation, however it is speculation based on the patterns of history and current trends. If you think this is just nonsense and I’ve got a few roos loose in the top paddock, I’ll be delighted to bear your scorn and respond with my own in the comments below.
Firstly, I think the Middle East is going to look radically different in the years to come. Nature abhors a vacuum, and this is one of the few periods throughout history where the Middle East has not been ruled by a single empire. I think a regional, and perhaps global, empire based in the Middle East is coming. Muslims are expecting a leader to emerge to unite the Umma, and this may well occur. This will be accompanied by the era of foreign domination of the region’s resources coming to an end. A war of at least regional scope looks likely in the interim as Shia and Sunni finally duke it out for who is going to bring the delights of Islam to the rest of the world. Given the emigration into Europe and the hostility that many Muslims have toward Western countries, we can expect more terrorism as well.
Secondly, this increase in Islamic terrorism that we will likely see in the West will be accompanied by a complete deligitimation of our current ruling elites. I see the overthrow of our ruling classes coming. They are dishonest, irresponsible and completely inept. With new elites will come new political structures; given how divided Western countries are ideologically and culturally, this could be accompanied by fragmentation into separate political entities. Some will be more liberal than others. The most radical political changes I expect will occur in Europe as the EU collapses and the repressed nationalism of European peoples reasserts itself, perhaps violently. Pan-European nationalism as well as a return to traditional Christian faith could be a response to the rise of a fundamentalist Islamic hegemon out of the Middle East. Like the Crusades, but with nukes.
Finally, I see a global monetary reform on the horizon as the United States dollar loses its reserve currency status and the IMF tries to bring in some form of global currency system. Whether it will work is doubtful; trust between nations is pretty low right now. Perhaps it will be accomplished in a similar way to the Bretton Woods agreement – after a global war. That’s the traditional way of reconciling who’s going to pay their debts and who’s going to get repossessed. If there’s another world war, all bets are off. One thing that is certain, however, is that the current approach of governments of confiscating wealth from the productive and the unborn and using it to bribe their pet constituencies will come to an end. Socialism relies upon government debt to sustain itself, and once fiat currencies start to become worthless and the banking system collapses there will be no more money spigot for government to spray at the unproductive and the entitled. It will be the end of socialism. Pass the popcorn.
Whether I’m correct or wildly off-base, significant change is coming. Changes will only be appreciated in hindsight, and people’s experiences of the shift will vary greatly. How we fare will be determined by how much we allow those who benefited from the current, dying order to maintain their grip as it dies, thus bringing all of us down with it. If as individuals and as a society we wish to thrive through this challenging period, we need to first face reality and acknowledge it. If our thinking remains stuck in the dying paradigm, we will not do well through it. After the chaos ahead, a new paradigm and a new order will emerge. Whether this change is experienced as a triumph or a tragedy will depend upon your perspective. If, like me, you see the current order as unredeemably corrupt, this will be a time of hope and renewal. For those fully psychologically invested in the status quo, it might be time to prepare for some disappointments and some heartache. For economic rent-seekers who are used to benefiting from the status quo without earning it, you have hard times ahead. Periods such as ours have a way of cleansing out the system and clearing accounts. In time, the new order will emerge. Until then, buckle up. It’s only going to get weirder.