[Note: Over the two weeks through 12 September I’m publishing ten serialized “episodes” of one of my most read (but long) research notes at Thematic Markets. Although Global entropy: Enter the dragons is two years old, like much of my research, its insight linger long after. Indeed, the hosts of two different podcasts that I was privileged to join recently, Demetri Kofinas’ Hidden Forces, and Erik’s YWR: Your Weekend Reading, both chose to focus on it. Can’t wait to read the whole thing? It’s free at Thematic Markets. Want an update on what I’ve learned in the two years since? I’ll tackle that when I resume regular Tuesday publications on 16 September.]
Global entropy, the story thus far
The US-led PWLO is exceptional in history and was enabled by unique circumstances: a world war that left the US head and shoulders above all global challengers. In its aftermath, the US was by far the largest economy, the most powerful military, master of the seas, and its universities and research laboratories were the primary source of innovation in the world (see Solved: Drivers of the dollar cycle). No other nation or empire in human history was so globally dominant. For four decades, the Soviet Union’s nuclear capabilities created a bipolar international order, but economically and culturally the US was without equal. Within that context, the US was able to impose and sustain a world order of its own design. Access to US markets, for those that participated, was the key to rapid income growth as pioneered by Japan and Germany, and later copied by Asia’s “Tigers,” while the US Navy kept the seas free for commerce, and the US military and alliance network policed any would-be disruptors of Pax Americana.
Apex neoliberalism: the beginning of the end
Yet arrogance and time, the greatest enemy of order (and friend of entropy), would eventually bring about change. Time allows for supplicants to learn, grow and eventually challenge the master. Indeed, this was intrinsic to the design of the PWLO: the US Marshall Plan, US AID, and post-War international institutions like the World Bank and International Monetary Fund (IMF) were created to facilitate the growth and rebirth of destroyed and developing nations, while the United Nations (UN), World Trade Organization (WTO), and International Criminal Court were created to channel would-be challengers through an institutional bureaucracy and systems of rules to avoid more costly state-to-state conflicts. However, as a result, the entire system increasingly came to rely on its own creation myth: that the rules underlying the new international governance structures and bureaucracy were “universal values” accepted by all.
While US power and wealth remained pre-eminent, the PWLO myth could be supported. But the rise of Apex neoliberalism that was blind to the limits of myth in a multicultural world and arrogantly assumed Western power and wealth was unassailable sowed the seeds of the PWLO’s demise. The three pillars of Western power – the PWLO myth, economic dominance, and military superiority – peaked in relative terms over little more than a decade from 1991 to 2003.
Peak myth
Western international prestige peaked in 1991 with the coincident fall of its only geopolitical rival, the Soviet Union, and the Gulf War’s expulsion of Iraq from Kuwait by a US-led coalition of 42 nations sanctioned by the UN and even the Arab League. Seemingly democracy had triumphed, recidivist powers were in decline, the “rules-based order” dictated international relations, “universal human rights” were accepted by all, and “The End of History” was declared.1 The reality, as time would prove, was quite different: some countries superficially adopted Western liberalism to access the rich US and European markets, others, like the former East Bloc, as noted by Branko Milanvic, did so as “revolutions of national emancipation” from centuries of rule by the Austrians, Germans, Turks, and Russians,2 while still others did so out of fear of the West’s awesome display of power in the Gulf War.
Yet at least one country took a very different lesson from the triumph of the US-painted world order: an imperative of rapid modernization in order to resist the Western order or even overthrow it, and the usefulness of PWLO institutions for a poor country to do so. The Chinese Communist Party (CCP), having just two years earlier brutally crushed a liberal movement that threatened its rule, looked with horror at the ease with which the American military turned an army that looked very much like its own into smoldering rubble along the “Highway of Death” in just 10 hours. Chinese fears were fanned over the next two decades by increasingly values-driven Western international activism under the aegis of the PWLO, that also resulted in the humiliating accidental bombing of China’s Belgrade embassy in 1999 during the UN-endorsed NATO bombing campaign of Serbia.
While China was plotting a new course, Apex neoliberalism, giddy with its own success, sowed the seeds of its demise over the course of the quarter century following the Gulf War. The West deeply bought into its own myth, blind to the reality that others had not, and stretched towards imperial overreach. President Clinton’s Secretary of State, Madeleine Albright, epitomized the hubris of Apex neoliberalism when she justified US international activism by stating “If we have to use force, it is because we are America. We are the indispensable nation. We stand tall. We see further into the future.”3
Under Apex neoliberalism, Western statecraft shifted in focus from national security to moralistic, evangelical interventionism to uphold the Western vision of morality.4 The “War on Terror” further confused international relations and Western power projection. For nearly a quarter of a century, under three separate administrations, the US led narrowing coalitions backed by increasingly tenuous PWLO legality on expeditions of regime change in Serbia, Afghanistan, Iraq, Libya, and Syria, and conducted drone or Special Operations Force (SOF) assassinations and other extra-sovereign missions in a variety of other countries.5
Overuse and inconsistent application of a morality many other countries did not share, applied with frightening lethality by the West’s expensive, hi-tech militaries, scared, appalled and disillusioned non-aligned countries and even many allies.6 The myth holding together the PWLO was demolished by meaningless “red lines,” flip-flopping between allies and adversaries with each change in presidential administration (2000, 2008, 2016), and a long line of body bags and failed or weak states, culminating in the disastrous and humiliating US withdrawal under fire from Kabul after America’s longest war. That is, for everyone but the West.
Peak economy
Western economic power peaked with China’s accession to the WTO on 11 December 2001, the shot not heard around the world. Weaponizing the Asian development model pioneered by Japan, China industrialized and climbed the economic-value chain with unprecedented speed and scale through consumption repression and directed investment (Mercantilism (with Chinese characteristics)), and reorientation of global supply chains through uncoordinated group exchange rate repression(Chinese co-prosperity sphere) that leveraged the monstrous appetite of the US consumer. In the process, China became the literal factory floor for not only the US, but the world. China is now the second largest economy in the world, its largest official creditor, and the largest trading partner to more than 120 countries.7
This was no accident nor merely the most successful development strategy in history. With 20-20 hindsight, it appears part of a broader grand strategy to challenge the US and overturn the PWLO. By becoming the world’s factory, China’s industrial policies made both allies and adversaries alike critically dependent on it for nearly all manufactured goods, from essential medical supplies to advanced materials and technologies. The latter reflected not only extensive industrial policies but detailed, methodically designed outward-investment8 and espionage policies9 that catapulted China to the cutting edge of industrial and military technologies. China’s near monopoly production of the rare earths essential for many advanced technologies (and guided munitions) and Huawei’s leadership in 5G networking are well known, but the list of critical technologies in which China now leads or dominates – 53 of 64 in one study10 – is both staggering and reflective of at least two decades of carefully planned and executed long-term state strategy.
China’s economic and industrial policies, its Belt and Road Initiative (BRI) and widespread information warfare,11 appear to follow the arc of grand strategy sketched by two senior colonels in the People’s Liberation Army (PLA) in 1999. In their book “Unrestricted Warfare,” Major General (ret.) Qiao Liang and Colonel (ret.) Wang Xiangsui advocated, as the title suggests, an unrestricted definition of warfare that extends beyond military conflict to all domains. They specifically enumerate economics, politics, international law, and information as domains of warfare.12 Although the influence, feasibility and even originality of the book’s strategy are debated13 – some argue the book merely restates Mao Zedong14 – it is hard to deny that China’s policies of the last quarter century don’t well fit the book’s recommendations.
A 2015 speech on economic and financial policy by General Qiao, with specific examples, supports that idea that Chinese economic policies were at least partly designed with inter-state conflict in mind. A year before the Chinese renminbi achieved international recognition as a reserve currency with inclusion in the IMF’s special drawing rights (SDR) basket, General Qiao spoke before the CCP’s Central Committee, focusing his speech on economic warfare that (1) explicitly identified the BRI as an economic weapon, (2) described (his perceived) use by the US of the dollar as an economic weapon; and (3) made a case for China to pursue a reserve currency as both a countermeasure and offensive weapon.15
Peak military
With growing economic might focused on the broadest definition of warfare, challenging US military dominance was only a matter of time. That job was made easier by Apex neoliberalism’s arrogance and misdirected focus on international activism and the “War on Terror.” David Kilcullen dates the high-water mark of US military power precisely to 5:30am Bagdad time on 19 March 2003 when US Special Operations Forces failed to decapitate the Iraqi regime in the opening salvo of Iraq War.16 From that point onward, dispersed, non-state actors, “snakes” in Dr. Kilcullen’s parlance, evolved low-tech, asymmetric countermeasures to avoid direct confrontation with the unmatched lethality of America’s expensive, hi-tech, communication-enabled, precision-guided weapons that were designed to fight “dragons,” i.e. strategic rival nation states with professional militaries.
But the dragons were watching and learning, and as Dr. Kilcullen notes, Apex neoliberalism blinded the West to the growing danger: “Western powers have acted as if they were still in a…security environment [characterized by] threats originated from weak [or] failing states and nonstate actors…[when they instead faced] a return of state-based threats and great-power military competition.” While the US was preoccupied with its War on Terror, nation building and the global financial crisis, the dragons were testing their own asymmetric strategies and advanced weapons: “liminal” or hybrid warfare just below the threshold for counter attack or with plausible deniability (e.g. poisoning dissidents in foreign nations, “little green men,” unmanned vehicles and balloons);17 hypersonic missiles,18 fifth-generation stealth fighter jets,19 swarming autonomous vehicles (used to attack the world’s largest oil terminal),20 and loitering munitions (demonstrated with deadly effect first in Nagorno-Karabakh and lately in Ukraine).21
Fight Apex neoliberalism: ❤️ this article and share it!
For further reading:
More on Global entropy and shaping new world order:
Global entropy approaches a tipping point? – (Free at Thematic Markets) Video interview by Erik @YWR on Global entropy, its consequences and how to prepare.
Reflections on Trump’s revolution – (Thematic Markets) A video interview by Grant Williams on the emerging new world order under President Trump.
La Cosa Nostra Americana – (Thematic Markets) The developing new world order under President Trump: the requirements of fealty.
Leitmotif 3: Localization and Global bifurcation – (Thematic Markets) China and the US are creating a “hard fork” in the world economy.
Observations: Carlson vs Putin – (Free at Thematic Markets) Ten essential insights from the interview with Vladimir Putin.
Values aren’t universal, but power is – (Free at Seriously, Marvin?!) Why Donald Trump’s aggressive, confusing negotiating tactics may succeed with the “Global South.”
Can a tiger change its stripes in a typhoon? – (Free at Thematic Markets) How can Taiwan adapt to a changing world order and the themes driving it.
The risks from Apex neoliberalism:
Leitmotif 6: A “Western Spring”? – (Thematic Markets) Western elites’ suppression of populism risks a larger, more disruptive backlash.
May you live in interesting times, The Tower – (Thematic Markets) Amid rising popular discontent with Western elites, what if they lose faith in themselves?
Overquantification – (Free at Seriously, Marvin?!) How excessive quantification is leading to poor leadership and decision making in the West.
The rising importance of geoeconomics (economic statecraft):
Observations: Navigating the consensus – (Thematic Markets) Reflections on my presentation to central bankers and business economists on the rising primacy of geoeconomics.
Leitmotif 9: It’s not the economy, stupid! – (Thematic Markets) The focus of US economic policy is rapidly evolving to match China’s: national security.
Incompatible drag – (Free at Thematic Markets) The global welfare and productivity consequences of China’s economic warfare against the West.
Affordable geoeconomics – (Free at Seriously, Marvin?!) What are the most cost effective ways to respond to China’s economic warfare?
Risks of a China-US war and other Complexity cascades:
Leitmotif 10: Party like it’s 1938 – (Thematic Markets) The eery parallels with 1938 in the current path to war in the Western Pacific.
May you live in interesting times, The Wheel of Fortune – (Thematic Markets) The rising risks and implications of a war over Taiwan.
Wagner’s lessons – (Thematic Markets) What Yevgeny Prigozhin’s failed rebellion teaches us about Russia’s internal risks.
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“The End of History?” Francis Fukuyama, The National Interest, no. 16 (Summer 1989): pp. 3-18.
Democracy of convenience, not of choice: why is Eastern Europe different,” Branko Milanović, Global Inequality Blog, December 23, 2017.
Interview on NBC-TV “The Today Show” with Matt Lauer,, transcript, US Department of State,19 February 1998.
The Hell of Good Intentions, Stephen M. Walt, MacMillan, 2018.
See: “Drone Warfare,” The Bureau of Investigative Journalism, website; “The Assassination Complex,” Jeremy Scahill, The Intercept, 15 October 2015; and “The Operation that Took Out Bin Laden,” Kris Osborn & Ho Lin, Military.com.
“How do Global South politics of non-alignment and solidarity explain South Africa’s position on Ukraine?” Elizabeth Sidiropoulos, Brookings Institute, 2 August 2022.
“China Is the Top Trading Partner to More Than 120 Countries,” Amb. Mark A. Green, Stubborn Things, A blog of the Wilson Center, 17 January 2023.
“The influence mechanism of industrial policies on Chinese companies’ cross-border M&A decision-making,” Yalan Shen, Menggi Yang, Hongyu An, and Kailun Li, Scientific Reports, no.13, article 16162, 27 September 2023.
Survey of Chinese Espionage in the United States Since 2000, Center for Strategic & International Studies.
The Critical Technology Tracker, Australian Strategic Policy Institute, 22 September 2023.
See: “China’s Public Diplomacy Operations: Understanding Engagement and Inauthentic Amplification of PRC Diplomats on Facebook and Twitter,” Marcel Schliebs, Hannah Bailey, Jonathan Bright, & Philip N. Howard, Oxford Internet Institute, May 2021; “Chinese Bots Inundate Twitter With Pornographic Spam Amid COVID Protests,” Abid Rahman & Patrick Brzeski, The Hollywood Reporter, 28 November 2022; “How China Built a Twitter Propaganda Machine Then Let It Loose on Coronavirus,” Jeff Kao & Mia Shuang Li, ProPublica, 26 March 2020; and “Chinese bots targeted Trudeau and others - Canada,” BBC, 24 October 2023.
There are several translations of the book to English, but an abridged version made available by the US Foreign Broadcast Information Service is available free online.
See: “Unrestricted Warfare: A Chinese Doctrine for Future Warfare?” John A. Van Messel, Marine Corps University School of Advanced Warfighting, 1 January 2005; “Unrestricted Warfare is Not China’s Master Plan,” Josh Baughman, China Aerospace Studies Institute, Air University, 25 April 2022; and “Book Review: Unrestricted Warfare,” Major Marshall Lawrence, Australian Army Research Centre, 28 August 2020.
“China’s ‘Three Warfares’ in Perspective,” Peter Mattis, War on the Rocks, 30 January 2018.
Qiao Liang: The U.S.’s Strategy of Shifting Focus to the East and China’s Strategy of Going to the West – China’s Strategic Choice in the Game between China and the U.S.,” Major General Qiao Liang, speech (translation), 15 April 2015.
The Dragons and the Snakes, David Kilcullen, Chapter 6, Oxford Academic Press, 2020. Full disclosure: Dr. Kilcullen is a friend and business partner in another venture, but this book is essential reading for anyone interested great power competition and the challenges now facing the West.
See: “Russia and China Look at the Future of War,” Institute for the Study of War, 14 September 2023; “Hybrid Warriors: China’s Unmanned, Guerrilla-Style Warfare in Asia’s Littorals,” Tobias Burgers & Scott N. Romaniuk, The Diplomat, 16 February 2017; and “The long history of Russian deaths in the UK under mysterious circumstances,” Lucy Pasha-Robinson, The Independent, 6 March 2018.
See “The most shocking intel leak reveals new Chinese military advances,” Josh Rogin, The Washington Post, 13 April 2023; and “Top U.S. general confirms ‘very concerning’ Chinese hypersonic weapons,” Phil Steward, Reuters, 28 October 2021.
“Fifth generation fighter jets – A Chinese, Russian, Indian and US arms race,” MiGFlug, undated.
“Iran’s drones are a buzzing menace for Saudi Arabia,” Ilan Zalayat, Atlantic Council, 28 October 2021.
See: “The Air and Missile War in Nagorno-Karabakh: Lessons for the Future of Strike and Defense,” Shaan Shaikh & Wes Rumbaugh, Center for Strategic & International Studies, 8 December 2020; and “Loitering Munitions Will Change Warfare – Until Air Defense Catches Up,” Larry Dickerson, Defense and Security Monitor, 24 April 2023.