Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

by Ray Dalio

the war for control is typically followed by struggling to get most of the population in line and united (often through conflict to establish the leadership’s power). That is typically followed by a peace that is due to no entities wanting to challenge the dominant power (Stage 1). Then the new ruler turns to building up the empire. To be successful an empire needs a smart and determined population that works well with each other. It also needs to be strong financially. These things are obtained by systems that train and produce people who have strong education and self-discipline. Getting the most capable people into the most important roles requires the meritocratic selection of people. In Chinese dynasties, the imperial exams often played that role, and it was common for new dynasties to implement educational reforms. It also requires an effective resource-allocation system (Stage 2). During that period of peace and rising power, the empire typically works well economically and improves its financial condition. While the empire typically starts with limited financial resources and low debts because the previous empire’s debts have been wiped out, in