The End of the World is Just the Beginning: Mapping the Collapse of Globalization

by Peter Zeihan

Instead of having to fight for food or oil, everyone gained trade access global in scope. Instead of having to fight off empires, everyone gained local autonomy and safety. Compared to the thirteen millennia of history to this point, it was a pretty good deal. And it worked. Really well. In a “mere” forty-five years the Bretton Woods system succeeded in not just containing the Soviet Union, but in choking it to death. The Bretton Woods system generated the longest and deepest period of economic growth and stability in human history.

Labor hyperspecialization is now the norm, and trade has become so complex that entire economic subsectors (loan officers, aluminum extruders, warehouse planning consultancies, sand polishers) now exist to facilitate it. Nor is this specialization limited to individuals. With global peace, countries are able to specialize. Taiwan in semiconductors. Brazil in soy. Kuwait in oil. Germany in machinery. The civilizational process has been reaching for its ultimate, optimal peak.

But “optimal” is not the same thing as “natural.” Everything about this moment—from the American rewiring of the security architecture to the historically unprecedented demographic structure—is artificial.

Capitalism trades away equality to maximize growth, both economic and technological. Socialism sacrifices growth at the altar of inclusivity and social placidity. Command-driven communism writes off dynamism, instead aiming for stability and focused achievements. Fascist corporatism attempts to achieve state goals without sacrificing growth or dynamism, but at the cost of popular will, a massively violent state, epically awe-inspiring levels of corruption, and the gnawing terror of knowing that state-sponsored genocide is but a few pen strokes away. Capitalism and socialism are broadly compatible with democracy and all the political noise and chaos that comes with it. Command-driven communism and fascist corporatism are far more politically . . . quiet.

postgrowth systems. Even if such weakening countries survive, their workers

This combination of reach and specialization takes us to a very clear, and foreboding, conclusion: no longer do the goods consumed in a place by a people reflect the goods produced in a place by a people. The geographies of consumption and production are unmoored. We no longer only need safe transport at scale to link production and consumption together; we now need safe transport at scale to support production and consumption themselves.

The workforce is alternatively hyperspecialized, nearly unskilled, or, testament to the fact that the world is nearly always stranger than you think, a combination of the two. Even worse, modern city life requires ever-present access to so many peoples and places scattered around the world and over which a city has no influence. Put simply, regions can deindustrialize far more quickly than they industrialized, and the critical factor is what happens to transport.

That focus came at a cost. When the goals are market share and employment, cost management and profitability quietly fade into the background. In a debt-driven system that doesn’t care about profitability, any shortfall could simply be covered with more debt. Debt to hire staff and purchase raw materials.

Part and parcel of the Chinese financial model is that there is no top. Because the system throws a bottomless supply of money at issues, it is hongry. Nothing—and I mean nothing—is allowed to stand in the way of development. Price is no issue because the volume of credit is no issue. One result among many is insane bidding wars for any product that exists in limited quantity. If ravenous demand for cement or copper or oil drives product prices up, then the system simply deploys more capital to secure them.

China’s industrialization push has proven so huge and so fast and so overfinanced that China isn’t simply the world’s largest producer of steel; it regularly ranks among the world’s top four importers of steel, particularly the product sets on the higher end of the quality scale. But that over-finance also means China produces steel with zero regard for the reality of domestic needs, and so China is also the world’s largest steel exporter—particularly steel product sets on the lower end of the quality scale.

This is both great and awful. It’s great in that it simplifies understanding of the supply chains: China’s penchant for hyperfinancing and overbuilding makes it all China, all the time. It is awful in that the global supply chain for one of the world’s most utilized metals is wrapped up in a failing system. When China cracks, the world will face global shortages of aluminum, as there simply are not sufficient smelting facilities elsewhere to cover more than a few percentage points of the pending shortfall.

In the Order the only competition over materials access was over market access. Invading countries for raw materials was expressly forbidden. You simply had to pay for them. Capital-rich systems, therefore, enjoyed the best access. The Asians with their hyperfinance model kind of cheated, with the Chinese ultramegahugehyperfinanced system tending to gobble up anything it could.

In a globalized system, supply chains are not simply about achieving economies of scale; they are about matching each part and process to an economy and workforce that handle the work most efficiently, all in the shortest possible amount of time. One of the many things that makes modern computing and telephony and electronics possible is that the world is awash with workforces and economies at different stages of the development path while at the same time the macrostrategic environment enables all those various systems to interact peaceably and smoothly.

by nearly a quarter. The Asians perceived Western consumption as their path to stability and wealth, and all reforged their economic and social norms around export-based manufacturing. Japan vanguarded the process, but it didn’t take long for Taiwan, South Korea, Southeast Asia, and China to follow. Decades of exports, growth, and stability enabled most of these players to climb steadily up the value chain.

Italy is, well, Italy. Unlike the Northern Europeans, who integrated their peoples early on by extending government writ up and down river valleys into ever-larger polities and so take to things like supply chains naturally, the Italians were a series of disconnected city-states from the fall of Rome right up to formal unification in the late 1800s. Italian manufacturing is local, and viewed less as an industry and more as a point of artistic pride. Italians don’t do assembly lines, or even regional integration. They don’t manufacture. They craft. As such, any products that come out of the Apennine Peninsula are either absolutely, shockingly ridiculous in their quality and beauty (think Lamborghini) or absolutely, shockingly ridiculous in their lack of quality and beauty (think Fiat).

but what the Germans are exceptionally good at is building the machines that manufacture other things. The bulk of the expansion of China’s industrial base since 2005 has been possible only because the Germans built the core machinery that made it happen.

such rapid aging precludes the Asians in general—and the Chinese in particular—from ever breaking away from their export model. There simply isn’t enough local consumption to even hope to gobble up everything the Asians produce. And if the Americans no longer empower the Asians to export the world over, the entire Asian model fails overnight. Third and finally, rapidly aging workforces are perfectly capable of collapsing under their own weight via mass retirement.

Let’s begin with base structure: part of why American manufacturers feel cheated by globalization is because that was the plan. The core precept of the Order is that the United States would sacrifice economic dynamism in order to achieve security control. The American market was supposed to be sacrificed. The American worker was supposed to be sacrificed. American companies were supposed to be sacrificed. Thus anything that the United States still manufactures is a product set for which the American market, worker, and corporate structure are hypercompetitive. Furthermore, the deliberate sacrifice means that most American manufactured products are not for export, but instead for consumption within North America.

Most people think of the Bretton Woods system as a sort of Pax Americana. The American Century, if you will. But that’s simply not the case. The entire concept of the Order is that the United States disadvantages itself economically in order to purchase the loyalty of a global alliance. That is what globalization is. The past several decades haven’t been an American Century. They’ve been an American sacrifice.

Manufacturing and energy and finance are cool and all. They have collectively brought the entirety of humanity into the modern age. But agriculture? It is the first step along the path from the misty terrors of yesteryear to the world we know. Should contemporary agriculture unwind, it will mean a massive contraction in volumes and varieties and availabilities and reliabilities of foodstuffs. It will mean that entire countries that have used modern agricultural technologies and markets to pull themselves out of the preindustrial age will now fall backward into the preindustrial past. At preindustrial population levels.

Anyone who cannot source crude for domestic refining cannot produce nitrogen fertilizers. This will be a problem nearly everywhere in the Eastern Hemisphere, but as with the broader energy question, the complications will be particularly intense in Korea, Central Europe, and the bulk of sub-Saharan Africa. The country that will certainly face the biggest declines in agriculture output will be China. Not only do the Chinese grow pretty much everything at scale, but Chinese soil and water quality is so low that Chinese farmers generally use more fertilizer per calorie produced than any other country—five times the global average in the case of nitrogen fertilizers.