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Landscape

Geopolitics & World Order

Created Jun 11, 2026·Updated Jun 11, 2026

TLDR

The post-1945 rules-based international order led by the US is fragmenting into a might-is-right multipolar system. Interconnected shooting wars, economic conflicts, and alliance realignment follow a recurring historical pattern — Dalio's "Big Cycle" — that has preceded every major power transition in the last 500 years.

Overview

The current geopolitical landscape is defined by the simultaneous unraveling of several pillars of the postwar order: US military and economic dominance, multilateral institutions, and the norm that disputes are resolved through negotiation rather than force. Multiple active conflicts — Russia-Ukraine, Middle East theaters, trade and technology wars — are not isolated crises but interconnected fronts in what amounts to a world war by historical standards. Past "world wars" likewise consisted of interrelated conflicts that were slipped into without clear start dates or declarations of war.

Two broad alliance blocs are consolidating: a US-aligned grouping (Europe, Israel, GCC states, Japan, Australia) and a China-Russia-Iran-North Korea axis, with allegiances measurable through UN voting, treaty commitments, economic ties, and leaders' statements. The cohesion and credibility of these alliances — especially whether the US can and will defend its partners — is the central variable shaping the next decade.

The Big Cycle Framework

Ray Dalio's "Big Cycle" model identifies a 13-step escalation sequence that has recurred across major power transitions. The sequence runs from the initial relative decline of a dominant power (Step 1) through economic wars, alliance formation, proxy conflicts, weaponized chokepoints, and multi-theater combat, culminating in a new order designed by the winning side (Step 13). Dalio's indicators place the current moment at roughly Step 9 — multi-theater conflicts happening simultaneously — analogous to 1913–14 or 1938–39.

Five forces drive the cycle:

  1. Money, debt, and economics — big cycles of monetary order and disorder
  2. Internal political fracture — wealth and values gaps eroding domestic cohesion
  3. External order breakdown — rising powers challenging the incumbent
  4. Technology advances — dual-use breakthroughs and related financial bubbles
  5. Acts of nature — droughts, pandemics, and climate disruptions

Rules-Based to Might-Based Transition

The world order has shifted from a multilateral, rules-based system led by the US and its allies (e.g., the G7) to a might-is-right order with no single dominant power enforcing rules. This resembles the international landscape that existed through most of history prior to 1945 rather than the anomalous stability of the postwar period. The practical implication is more frequent conflict, because there is no credible enforcer to deter it.

Overextension and Pain Tolerance

A recurring historical pattern is that overextended empires — those with commitments exceeding their capacity to defend them — suffer from that overextension. The US currently maintains 750–800 military bases in 70–80 countries (China has one), creating expensive vulnerabilities and making multi-front warfare implausible. source(https://raydalio.substack.com/p/the-big-thing-we-are-in-a-world-war)

Dalio argues the most reliable predictor of who wins a conflict is not raw power but which side can endure the most pain the longest. By this measure, the US — despite being the most powerful country — may be the weakest major power at sustaining prolonged conflict, given domestic political dynamics, election cycles, and public appetite for war. source(https://raydalio.substack.com/p/the-big-thing-we-are-in-a-world-war)

Alliance Blocs and Strategic Chokepoints

Key alliance structures:

  • US-aligned: NATO (Article 5), US-Japan, US-South Korea, US-Philippines, AUKUS, Abraham Accords / GCC partnerships
  • China-Russia-Iran-North Korea axis: China-Russia "No Limits" partnership, Comprehensive Iran-China 25-Year Agreement, Russia-Iran defense cooperation, Russia-North Korea mutual defense treaty

Chokepoints like the Strait of Hormuz and the Taiwan Strait are becoming weaponized bargaining chips. Control of these passages and the credibility of alliance commitments to defend them are central to how the order reshapes.

Flashpoints and Probability Estimates

Dalio assigns rough five-year escalation probabilities to major flashpoints:

  • Iran-US-Israel war — already active and intensifying; resource depletion on all sides
  • Ukraine-NATO-Russia — ~30–40% chance of expanding beyond Ukraine
  • Taiwan / US-China — ~30–40% military conflict probability, highest risk around 2028
  • North Korea — ~40–50% chance of some military engagement
  • South China Sea (Philippines-China) — ~30% chance of a clash testing US treaty obligations

The aggregate probability of at least one major escalation exceeds 50%.

Implications

The Big Cycle framework suggests that at this stage, conflicts intensify rather than subside. Countries are recalculating their security postures: those relying on US defense guarantees are watching how the US performs in current theaters to decide whether to seek nuclear weapons, build independent defense capacity, or realign toward the opposing bloc. These recalculations — not the wars themselves — may be the most consequential geopolitical dynamic of the next decade.

For investors and decision-makers, the key takeaway is that "back to normal" is unlikely. The transition from a rules-based to a might-based order implies structurally higher geopolitical risk, defense spending, and potential for capital controls, financial repression, and market disruptions — patterns that have accompanied every prior cycle transition. See Knowledge Work Future for how these macro shifts intersect with technology-driven economic transformation. See also Dario Amodei for a frontier AI lab CEO's policy proposal responding to these geopolitical dynamics (democratic AI coalition, coordinated safety regulation).

Sources