From: allin
Ray Dalio highlights that the United States is currently facing both a civil war internally and an international war simultaneously [00:00:21]. This period is characterized by significant tensions and a lack of cooperation, both domestically and globally [01:02:58].
Internal Conflict
The US faces an internal conflict driven by differing wealth and values within the population [01:07:06]. This tension is expected to lead to greater conflict, potentially testing the legal system and creating conflicts between states and the central government [01:03:38]. There is a concern about fragmentation of states from the central government and significant fragmentation globally due to a failure to agree on most things [00:58:34].
The rise of AI and new technologies, while potentially increasing productivity and profits, could lead to significant job losses, such as in call centers or automotive lines [00:56:31]. This could create a large number of unemployed people and fuel a demand for public support programs, potentially leading to the rise of socialism [00:57:08], [01:00:08]. This societal disruption will make it difficult to agree on plans and could lead to increased dissatisfaction and conflict centered around money and power [01:01:21].
International Conflict
The world is entering an environment of likely greater conflict over time [01:05:01]. This is part of a cycle where financial problems are widespread, coupled with global polarity due to differing wealth and values, and a lack of an international rule system [01:06:55]. Organizations like the World Health Organization and World Trade Organization are considered obsolete [01:02:20].
A “might is right” dynamic is emerging, leading to increased military spending and a technology war [01:02:35]. This includes a crucial “AI War” that no country can afford to lose, as it is considered more important than profits [03:55:06]. Losing this war could have severe consequences [03:55:23]. The US and China are actively engaged in this technology war, particularly concerning chips and applications [03:55:52], [01:13:05].
Historically, a cycle exists where internal difficulties can lead to external conflict [01:05:47]. War can be seen as stimulatory for economies [01:06:07].
Approaches to Warfare
There is a fundamental difference in how countries approach warfare:
- China: Based on Sun Tzu’s Art of War, China emphasizes winning without direct fighting through deception and manipulation to avoid self-damage [01:09:50]. Their international relations operate on a “tribute system” where power determines hierarchy, and lesser powers give tribute to greater powers to foster harmony and prosperity [01:10:22].
- Mediterranean/Western Approach: This approach, historically born out of 30 years of war leading to the Peace of Westphalia in the mid-17th century, is characterized by fighting expertise and defined borders [01:11:31]. Western powers were historically strong at fighting due to practice, as seen in the Opium Wars against China and Japan [01:12:39].
Despite the risk of military wars, Dalio suggests that due to the risk of mass destruction, similar to the Cold War era between the Soviet Union and the United States, military conflicts might be avoided, but the period will still be very difficult [01:08:40].
Five Big Forces
Ray Dalio identifies five major forces shaping the changing world order and contributing to current and future conflicts [01:01:48]:
- Debt and Money: The challenges of rising debt levels and the mechanics of monetization.
- Internal Conflict: The civil war internally within countries, especially the US, driven by wealth gaps and differing values.
- International Conflict: The shift away from a cooperative world order towards a “might is right” dynamic.
- Technology War: The crucial competition in areas like AI, which has military and economic implications.
- Climate: An economic and environmental issue contributing to expenses and challenges.
These factors converge to create a tense and incendiary global situation where cooperation is declining while problems are escalating [01:02:24], [01:07:36]. This confluence of issues will likely lead to a period of “hellacious” conflict over the next decade [01:05:16].