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

by Eswar S. Prasad

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.

Kindle Edition

Expected publication February 5, 2026

About the author

Eswar S. Prasad is the Tolani Senior Professor of Trade Policy and Professor of Economics at Cornell University. He is also a Senior Fellow at the Brookings Institution, where he holds the New Century Chair in International Economics, and a research associate at the National Bureau of Economic Research. He is the author of Gaining Currency: The Rise of the Renminbi and The Dollar Trap: How the U.S. Dollar Tightened Its Grip on Global Finance.

Reviews

[ROLLAND Florence · Rating 5 out of 5]

This book reads like a university course (this is actually a compliment). A truly good surprise, and not a doom read at all.

The author is a university professor in trade policy and economics. It shines through The Doom Loop. The reader is invited to walk through different areas and concepts in order to understand the economics of international trade (at the college introduction course level). You can read the chapters independently, depending on what you are curious about. A lot of connections are also made between international trade and political economics. Occasionally, there is some comic relief (like the EU rules about bananas) in order to illustrate this or that concept. Everything is there for good reason, though - anecdotes are never a waste of your time, and they always serve the global narrative.

Long story short: I liked The Doom Loop. A lot of it was actually a nice refresh of the political economics course that I took in university in 2010. The constant connection with recent events puts everything in a very useful light. You will understand better why China and India are trying to stay out of the war in Ukraine, for instance. Or why Trump thinks that tariffs will make America great again (spoiler alert, they won't). Or why we seem embarked collectively in a doom loop, with one financial crisis following the other.

Without completely spoiling the book, this is not a doom-and-gloom type of read.
Actually, it leaves you feeling quite hopeful.
First, because it will make you feel clever (unless you are already very knowledgeable about economics, and have nothing to learn from this book). It always feels good to understand things and see them in a new light.

I suggest that you actually start with the Introduction, skip directly to chapter 7 (in order to understand the global vision that Eswar S Prasad had for the book), and then read through chapters 1 to 6 (you will already know where the author is going, and it will help you put what you read into perspective). Then, satisfied with your newfound knowledge and understanding of international trade, read through chapter 7 again. Finish with chapter 8. Breathe, and thank yourself for dedicating a few hours of your life to reading economics.

My own reflections after reading The Doom Loop

Yes, we are going through difficult times. Yes, in most countries, institutions (such as central banks) are weakened by corruption and are not serving the interests of the people. Yes, Trump's second term is a disaster: for the US, but also for all the countries that are dragged in the chaos. But what led to this chaos in the first place? As the rules of the game are changing, and as former "third world countries" are becoming major international players (I am looking at you, India), the US and Europe are mourning their empire. Frustration gives way to misguided policies (like agressive tariffs to "punish" China).

The order that too many people are mourning was never fair to begin with. It relied on the exploitation of other countries, perceived as weaker, and treated as vassals. Many new technologies (fintech, AI, cryptocurrencies, cheap international communication...) are redefining the relationships between countries, but also the relationships between people of the same country. National and international interests are not necessarily in competition. This is not a zero-sum game. There is a future where we can globally benefit from the shift that is happening... But it requires strong democracies and clear rules.

If we want to get out of the doom loop, we need to defend the institutions that support democracy and international trade.

Thank you #NetGalley, Venture NY and Eswar S. Prasad for the ARC.