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

by Peter Zeihan

We then use the income from the sales of what we’re good at to pay for the items and services we aren’t good at. It isn’t perfect, but it has promoted the greatest technological advancement in human history, brought most of us into the Digital Age, and created ever-greater demand for ever-greater levels of education. But none of this is a natural outcome of the “normal” world; rather, it is instead an artificial outcome of the American-created security and trade Order. Without global peace, the world gets smaller. Or, put more accurately, the one big world breaks up into several smaller worlds (and oftentimes, mutually antagonistic worlds).

Three, of many, examples of how it can go to pot are the anarchist movements within the United States during the Great Depression, the rise of Donald Trump in the Rust Belt as a reaction to the region’s deindustrialization, and the general societal collapse of the Lebanese Civil War.

That just leaves command-driven communism. Sadly, it just might be the most viable of the four. But only if it crushes the population’s souls to the degree that having an opinion is suppressed by an overarching, 1984-style propagandaesque dictatorship.

At present, I see only two preexisting economic models that might work for the world we’re (d)evolving into. Both are very old-school:

The first is plain ol’ imperialism.

The second is something called mercantilism, an economic system in which you heavily restrict the ability of anyone to export anything to your consumer base, but in which you also ram whatever of your production you can down the throats of anyone else.

But even together, some version of imperialist mercantilism faces a singular, overarching, likely condemning problem: Too many guns, not enough boots.

The only countries in a post-2022 world that might be able to maintain an overseas empire are those that can have three things going for them: a serious cultural superiority complex, a military capable of reliably projecting power onto locations that cannot effectively resist, and lots and lots and lots and LOTS of disposable young people.

There are no countries who boast the mix of youth and reach necessary to project power out of their own neighborhood on a cost-effective, sustained basis.

economic growth and technological progress (both of which require capital as an input) will stall out. And that’s just one facet. Everything that capitalism and fascism and the rest were designed to balance or manage—supply, demand, production, capital, labor, debt, scarcity, logistics—isn’t so much contorting as evolving into forms we have literally never experienced as a species. We are entering a period of extreme transformation, with our strategic, political, economic, technological, demographic, and cultural norms all in flux at the same time. Of course we will shift to a different management system.

Second, the process will be the very definition of traumatic.

Between the demographic inversion and the end of globalization, we are not simply ending our long experience with more, or even beginning a terrifying new world of less; we face economic free fall as everything that has underpinned humanity’s economic existence since the Renaissance unwinds all at once.

We are not going to get this right on our first try. We will not follow the same paths forward. We will not arrive at the same destination. It took our world centuries to suss out our current quartet of economic models. It is a process, and not one that proceeds in a predictable, sedate, straight line. The last time humanity struggled with changing factors that necessitated new economic models, the causes were the Industrial Revolution paired with the first globalization wave. We argued—vigorously—over which system might be best. We had fights. We had wars. We had big wars. Most were not Cold.

Now that we all need a fleet of drinks, let’s look at a couple of examples of what success might . . . resemble. For while our world has never experienced anything like what we’re about to go through, some countries’ demographic and geopolitical realities have forced them to deal with this transformation’s leading edge sooner than the rest of us. There are a couple of places we can look to for inspiration. Or for goalposts. Or at least for land mines. I have two for you to consider.

The trauma of the Soviet collapse was economic, cultural, political, strategic—and demographic. Between 1986 and 1994, the birth rate halved while the death rate nearly doubled. Russia today is deindustrializing at the same time its population is collapsing. Dark? Yes, but Russia is probably one of the best-case scenarios for much of the industrialized world. Russia, after all, at least has ample capacity at home to feed and fuel itself in addition to sufficient nuclear weapons to make any would-be aggressor stop and think (a few dozen times) before launching an assault. In a world of constrained trade and capital, one could be in significantly more dire straits than still having strategic depth plus reasonably reliable food, fuel, and electricity. But the gold standard in terms of preparing for a postgrowth life is elsewhere.

Japan has been on the path to demographic oblivion for more than five decades. Extreme urbanization has been the norm since World War II and there simply isn’t enough space in Tokyo’s omnipresent condos to easily raise families, much less families of size.

Design and technical and very high-end manufacturing work—the sort of work done by high-skilled, older workers—is kept in Japan, but almost the entirety of the rest of the manufacturing supply chain is located on the other side of national borders.

This new industrial model has enabled Japan to age with a degree of grace. But there are a couple of glaring problems. First, Japan’s economy has stalled. In inflation-adjusted terms, the Japanese economy was smaller in 2019 than it was in 1995.

Second, it is exceedingly unlikely that Japan’s path is replicable. After all, the Japanese experience of 1980–2019 is in many ways unique.

Japan’s population is the world’s most homogeneous, with more than 98 percent of the population being purely ethnically Japanese. That unity enabled social and economic transformations that would have triggered mass upheaval in more diverse populations.

Japan is eminently defensible. Japan is an archipelago that has never been successfully invaded. Even the Americans were so daunted by the task of conquering the Home Islands that they opted to nuke Hiroshima and Nagasaki to force surrender, rather than sending the Marines into the grinder.

Finally, as with everything demographic, Japan had in spades the most critical asset: time. Economic transformation doesn’t happen overnight. From the point that the old Japanese economic model broke in the 1989 stock and property market crashes, Japan had three decades to transition to what has become its new normal.

The coronavirus pandemic didn’t simply rob us of lives. It robbed us of what we needed more than anything else to prepare for the coming demographic devastation. It robbed us of the one thing no one on Earth can make more of. It robbed us of time.

The outcomes of such an easily spread pathogen are legion, but for our purposes four stand out: First, decreased and inhibited contact among people translates directly into decreased and inhibited economic activity, or, as it is known by its technical name: a recession.

Second, the very nature of our economic “normal” cavitated. Every one of the top thirty economies experienced lockdown and disruption.

Third, if the goal was economic stability, the parts of the world that somehow escaped COVID were . . . the wrong parts. Sub-Saharan Africa did reasonably well, but to be blunt, in most of the region life expectancy is simply too low to have many people aged over seventy.

Fourth, unrelated issues intensified during the coronavirus crisis to further fracture global connections.

There are precious few countries who against all odds have kept the demographic torch burning. Life for them will change, too, but not nearly as quickly or drastically or negatively. The one that matters more than all others combined is the United States.

Kashagan’s half a million barrels of daily output is obviously not long for this world. But it is hardly the only production zone that faces complete collapse in the years to come. That will be crushing. Modern energy in general and oil in specific is what separates our contemporary world from the preindustrial. It separates what we define as “civilization” from what came before.

Q

Oil-derived liquid transport fuels increased our capacity to move objects at distance by a factor of one thousand. On-demand electricity, directly or indirectly made possible by oil, had a similar impact upon our productivity. For the first time in history, we could do anything and go anywhere at anytime. Even better, for the first time “we” didn’t mean the most powerful empire of the era, but instead every individual person. Once your home is wired, everyone can have electricity at low cost. Unlike wood or coal, oil-based liquid fuels such as gasoline and diesel are so energy-dense and so easily stored that we store them within our modes of transport.

Without oil, the American-led global Order would have never had a chance. Nor would have passenger cars. Or global food distribution. Or global manufacturing. Or modern health care. Or the shoes most of us are wearing. Oil’s power is such that in many ways, it has almost enabled us to ignore nothing less than geography itself. Almost. Oil is not quite that perfect. The restriction oil insists upon is not technological, but instead one of sourcing. Oil feels no obligation to exist in locations that are convenient. For the entirety of the Industrial Age, getting the oil from where it exists to where it is needed has been . . . gnarly. In that, Kashagan is no standout. It is best to start at the beginning. With Captain Ahab.

Empires fought over oil because they couldn’t fight a war without it. The Japanese successfully captured Java in 1942 to acquire Dutch oil resources, while America’s unrestricted submarine warfare by the end of 1944 starved the Japanese of fuel. The Germans’ desperate bid for those old Zoroastrian assets in Soviet Azerbaijan foundered at Stalingrad in the winter of 1942–43, while the Americans bombed Romanian oil fields in August 1943 to deny the Nazis their output.

The Arab Oil Embargos of 1973 and 1979 turned what had until then been a hypothetical discussion in America into brass tacks.

When events transpired that threatened oil access, the Americans responded as if the end was nigh because, well, it was. Without sufficient volumes of affordable oil, the entire Order would collapse. American (and British!) actions included sponsoring a coup in Iran in 1953 to overthrow a semidemocratic system in favor of a pro-American monarchy. American actions included supporting of a borderline-genocidal purge in Indonesia of communist elements in 1965–66. American actions included the quiet backing of an authoritarian Mexican government against prodemocracy forces in 1968. American actions included the largest American expeditionary military action since World War II as part of the forcible ejection of Iraqi troops from Kuwait in 1992.

The Order may not have been possible without these countries’ oil, but neither would these countries have been possible without the strategic overwatch of the Order. The second major zone of oil production is the former Soviet space.

As a planet, we are perfectly capable of suffering broad-scale economic collapse and vastly increasing our carbon emissions at the same time.

You think that electrifying everything and going green is the only way forward? As of 2022, cobalt is the only sufficiently energy-dense material that even hints that we might be able to use rechargeable batteries to tech our way out of our climate challenges. It simply cannot be done—even attempted—without cobalt, and a lot more cobalt than we currently have access to, at that. Assuming all else holds equal (which is, of course, a hilarious statement considering the topic of this book), annual cobalt metal demand between 2022 and 2025 alone needs to double to 220,000 tons simply to keep pace with Green aspirations. That won’t happen. That can’t happen.

We know that the “green” path we are on is unsustainable. We just don’t have a better one to consider until our materials science improves.

Without the rules and constraints of the Order in place, money on its own just isn’t going to cut it. Without the Order it all unwinds. This is far worse than it sounds.

Central to this devolution, once again, is American disinterest. The Americans can access what they need without massive military interventions. This will generate not the sort of heavy American involvement most countries would find distasteful, but instead large-scale American disengagement that most countries will find terrifying.

Each time we got hit with a new variant or a new vaccine or a new anti-vax backlash, our demand profile changed again. Each change in our demand profile took a year to work itself out. It was not enjoyable, and it is nothing compared to what’s coming. The supply chain agony of 2021 was primarily about whiplashing demand. Deglobalization will instead beat us about the head and shoulders with instability in supply.

Modern manufacturing is borderline insane. The more I learn about the sector, the less sure I am as to which side of the border it resides. Modern manufacturing is eminently vulnerable to every facet of every disruption the Disorder is capable of generating.

The technical term for what has made all this and so much more possible is “intermediate goods trade.” It is quite literally globalization given physical form. Historically speaking, intermediate goods trade was a big no-no. That requires some unpacking.

First, the Industrial Revolution not only gifted us with steel—less brittle, more workable and durable than iron—it gifted us with huge volumes of steel so that workers could access the raw metal without having to forge it themselves. With that messy, expensive, dangerous step taken care of, skilled workers could focus on adding value and specializing further. For the first time in human history, specialists in multiple fields could meaningfully collaborate. Interaction brought advancement. Second, the Industrial Revolution brought us precision manufacturing, both in tools and molds.

Third, the Industrial Revolution brought us fossil fuels. We’ve already covered their role in generating power and enabling us to move beyond muscle and water, but there is far more to oil and coal than that. Derivatives of the pair of “power fuels” often have nothing to do with energy at all: paints, pigments, antibiotics, solvents, painkillers, nylon, detergents, glass, inks, fertilizers, and plastics.

Taken together, these three improvements—in specialization, in scale, and in product reach—changed the math of the possible, and gave us our first real glimpse of what we today recognize as manufacturing.

That naturally benefited certain geographies. Economies of scale are impossible with a skilled labor force of one. Industrialization enabled the development of industrial plants that would (a) enable skilled labor to multiply their efforts by having each worker specialize on a specific task or part, and (b) enable unskilled labor to come in and work the assembly lines.

Any geography that could shuttle goods and people about in the preindustrial age could now shuttle about intermediate goods. In addition to all their other advantages, the imperial systems with good internal geographies could now generate manufacturing, enabling economies of scale that others could only dream of. The first really big winner was canaled Britain, followed by Germany’s Ruhr Valley and ultimately the American Steel

It took the end of World War II to merge the entire planet into a single system and transform the global ocean into one gigantic safe, navigable waterway. With the United States guaranteeing security for all international commerce and preventing the alliance members from either going to war with one another or having colonial empires and opening the American consumer market to all interested parties, countries that could have never even dreamed of industrializing suddenly could. All at once, the “safe” locations favored by geography had to compete with heretofore backward, unindustrialized locations.

the habitable bits of German lands on the Rhine, Danube, Weser, Elbe, and Oder Rivers are—at best—loosely connected. It’s easy for Germany’s more consolidated neighbors to split it apart. If Germany fails to press every economic development process to the limit, it is overwhelmed. So the German industrialization experience of the late 1800s and early 1900s was absolutely frenetic.