Book Review: The Changing World Order: Why Nations Succeed and Fail by Ray Dalio

History repeats itself, maybe not in the same place and exactly at the same time, yet there it is going around and around. Ray Dalio proposes that nations (more like empires) have six stages between their rise and fall:

“Stage one is when the new order begins, and the new leadership consolidates power…
Stage two, when the resource-allocation system and government bureaucracies are built and refined…
Stage three, when there is peace and prosperity…
Stage four, when there are great excesses in spending and debt and the widening of wealth and political gaps…
Stage five, when there are very bad financial conditions and intense conflicts…
Stage six, when there are civil wars/revolutions…” Page 152.
Ad infinitum.

What leads to the rise of the nations is education, innovations, and openness to the world, besides other factors mentioned in the book. What leads to the destruction is the wealthy possessing more and more of the shared assets for themselves. That leads to bad financial debt arrangements and, in the end, disorder.

Ray Dalio makes a compelling case here about how these cycles run and why. He goes into detail to reason his arguments through history. Of course, this idea of economic cycles is not a new thing. Actually, it has been proposed several times before. But what makes this a good book is how it simplifies the matter and connects the dots between stagnation, the fall of education and innovations, and the wealthy using their own nations as their personal piggy banks. He goes beyond that, reflecting on what the future might be like. Ray Dalio argues China will rise as the next leading empire while the USA is heading down to fall because of its reckless money borrowing and other political decisions. On the other hand, China is more sensible with its economics, and its education levels are rising. Ray Dalio’s views about the rise of China are colored a little by his favoritism for the nation and his personal ties there, but I don’t think he is wrong. If you remove his personal stories and look at his proposed markers when an empire is on the rise, he might be right. 

Yet, the book has its downfalls. It is repetitive, weak, shallow, and makes leaps with its arguments, and the graphics in the book are horrendous. For example, there was one occasion where you were supposed to compare nations, and the data provided on each nation’s graphics were presented differently. Other graphics are just messy or don’t accurately present the point trying to be made across. Not all were bad. There were some excellent charts there, but for me, the tables were one of the weakest things in the book, in general.

So what do I think after reading the book? The same thing I thought before reading it. That nations will repeat their cycles, especially the big empires, and the little countries might sail onwards if they are not swept into the global conflicts, which they often are. What did I learn? Fiat currency isn’t a new thing. It is a pretty old concept to get out of a jam where nations and the rich are running out of money/assets to be hoarded for themselves, so new debt arrangements are needed to continue the party, and at some point, there will be a great reset.

Should you read this book? Maybe. But be critical when you read it because the book really oversimplifies things and cuts corners to make these grand patterns appear.

Thank you for reading and have a great day ❤