The Structural Transformation of the Global Environment

The global order is no longer organised around shared rules. It is increasingly shaped by power, bargaining, and unilateral action. Trade, finance, technology, and security are no longer coordinated through stable frameworks but are subordinated to political alignment.

Recent transatlantic developments make this shift visible. Equity markets fell sharply and government bond yields rose not because of changes in inflation or growth expectations, but because of diplomatic threats, tariff announcements, and territorial claims. The suspension of EU–US trade agreements, the threat of punitive tariffs on European goods, and the use of trade policy as a response to political disagreements signal a clear departure from rule-based coordination.

This is not ordinary volatility. What matters is the source. Market outcomes are increasingly driven by discretionary political decisions rather than institutional rules. The same shock produces different consequences depending on political positioning. This is not instability within an existing order. It is the replacement of rules with power.

What the United States has been doing under Donald Trump strongly recalls the mercantilist logic and colonial practices of the nineteenth century. Trade sanctions, territorial rhetoric, and security commitments are treated as bargaining tools rather than shared constraints. Barbarism has returned as policy.

Statements about Greenland, repeated references to Canada as a “51st state”, and claims over Venezuela are not diplomatic accidents. They reflect a worldview in which borders, alliances, and sovereignty are negotiable instruments. This fundamentally alters the operating environment for markets and institutions.

Political Short-Termism

Political time horizons have shortened dramatically. Electoral calculations now dominate economic and institutional decision-making. Long-term commitments are routinely questioned. Policy reversals are no longer exceptional.

When executive power openly raises doubts about holding elections or signals indifference to constitutional continuity, uncertainty becomes systemic. This is not about political polarisation. It is about the erosion of the most basic institutional anchor: the expectation of orderly political succession.

In the United States, repeated public references to postponing midterm elections, combined with executive pressure on independent institutions, represent a serious blow to democratic order. Institutions designed to function within stable constitutional limits are being pushed beyond those limits. This directly affects economic expectations, investment behaviour, and international credibility.

Radical Uncertainty as an Operating Condition

Classical distinctions between risk and uncertainty no longer capture the current environment. The problem today is not that probabilities are hard to calculate, but that the set of possible outcomes itself is unstable.

This explains why forecasts fail simultaneously across institutions. It explains why policy credibility erodes even when stated intentions appear reasonable. The issue is not analytical incompetence. It is structural transformation.

The stalling of progress in reducing extreme poverty in the world’s poorest countries is part of the same picture. The dramatic decline in extreme poverty over previous decades depended on institutional continuity, global coordination, and predictable access to trade and finance. As fragmentation deepens and development policy becomes hostage to geopolitical competition, those conditions disappear. The reversal is not accidental.

Institutional Responses and Their Limits

Faced with this structural mismatch, institutions respond defensively. Authority is centralised. Discretion replaces rules. Controls are tightened, often at the expense of legitimacy.

At the same time, technocratic actors attempt to preserve continuity through reassurance. Finance ministers and central bankers call for calm while political leaders escalate threats. These mixed signals do not stabilise expectations. They weaken them.

Such responses may temporarily contain disorder. They do not resolve the underlying problem. On the contrary, they increase fragility by concentrating power while eroding trust.

Rethinking Governance After Structural Change

The challenge is not to restore earlier operating conditions. That world no longer exists.

Governance in the current environment requires recognising that coordination, continuity, and automatic convergence can no longer be assumed. Markets, states, and institutions now interact in a structurally different environment.

The current global disorder should not be read as a temporary deviation or a failure of individual leadership. It reflects a deeper structural transformation that has rendered inherited frameworks increasingly ineffective.

The neoliberal order did not simply weaken states and societies. It reshaped the global environment by prioritising efficiency over resilience, markets over institutions, and short-term gains over long-term stability. History is non-linear and path-dependent. What we are witnessing today is not surprising. It is the delayed outcome of an institutional architecture that no longer fits the world it is meant to govern.