Book Review: The Changing World Order by Ray Dalio

Learning from decline

“When the cycles align, the tectonic plates of history shift, and the lives of all people change in big ways.”
— Ray Dalio, Principles for Dealing with the Changing World Order

The Central Thesis: Understanding the Big Cycle

Ray Dalio's Principles for Dealing with the Changing World Order is an ambitious exploration of why nations succeed and fail, rooted in a sweeping study of history. Dalio's central thesis is that the rise and fall of empires follow predictable patterns. These "Big Cycles" unfold over centuries, with clear markers that reveal where a nation is in its arc, whether ascending, peaking, or declining.

The book offers a framework to understand our current era by comparing it to previous cycles of dominance, crisis, and renewal. The primary forces at play include:

• The Long-Term Debt and Capital Markets Cycle
• The Internal Order and Disorder Cycle
• The External Order and Disorder Cycle

Dalio doesn’t just offer academic theory, he provides actionable perspective. He helps readers "step above the blizzard" of daily headlines to see the patterns through time, which is invaluable in today’s chaotic global climate.

The Six Stages of the Internal Cycle

At the heart of Dalio’s framework is a six-stage internal cycle that every empire goes through:

1. The Rise – Strong leadership and unified values lead to institutional strength and a sense of shared purpose.
2. Early Prosperity – Investments in education, infrastructure, and productivity result in rising living standards.
3. Mid Prosperity – Wealth accumulates; the nation becomes a global power.
4. Bubble Prosperity – Borrowing increases, speculation rises, and gaps in wealth begin to widen.
5. Internal Conflict and Disorder – Political polarization and social unrest take hold as trust in institutions erodes.
6. Revolution or Civil War – Intense disorder gives way to upheaval, often leading to a new order.

Dalio warns that both the United States and other Western nations, including Canada, appear to be firmly in Stage 5. In Canada, this stage is reflected not only in the alarming rise of federal debt, but also in intensifying social unrest and widening ideological divisions. The political and cultural gap between the left and the right has become more entrenched, and regional fragmentation is increasing as the interests of the West and East diverge sharply. Issues like energy policy, national unity, language rights, and economic fairness have become flashpoints, deepening mistrust in federal leadership and institutions. These are the kinds of internal fractures Dalio identifies as hallmarks of the disorder phase, when the unity and shared values that once supported prosperity begin to erode, leaving nations vulnerable to decline.

Canada’s Fiscal Trajectory: A Personal Reflection

One of the book's most striking impacts on me was how it helped clarify my resistance to unchecked government debt, especially in my home country of Canada.

Canada's federal debt has doubled over the past decade. In 2014, the debt-to-GDP ratio stood at 85.5%. By 2024, it had risen to 110.8%. This surge has occurred under consistent Liberal leadership and annual deficits—even during times of economic growth. We've embraced spending as the default policy lever, without corresponding gains in productivity or long-term competitiveness.

This kind of fiscal trajectory fits squarely into Dalio’s model. The upstream factors—excessive debt, political polarization, underinvestment in real productivity—lead to downstream impacts that are often destabilizing. Stage 5 isn’t just a theoretical phase. It looks a lot like our current political and economic reality.

The Rise and Fall of Empires: A Brief History of the Big Cycle

Dalio highlights how three previous world powers followed the same pattern:

Dutch Empire (1600s)

Led the world in trade, finance, and naval strength. Eventually weakened by overextension and war with England.

British Empire (1700s to early 1900s)

Industrialized, dominated global trade, and held reserve currency status. Declined through war, debt, and internal stagnation.

United States (1945 to Present)

Rose after WWII with unmatched military, economic, and cultural dominance. Now facing debt burdens, internal discord, and a declining global role.

China: The Emerging Power

China’s rapid rise is marked by technological growth, economic expansion, and strategic geopolitical moves (e.g., Belt and Road Initiative). Dalio places China in Stage 3 or 4 of the cycle—rising rapidly and building infrastructure, military capacity, and financial independence.

The Macro is the Micro

Dalio’s message doesn’t just apply to nations. It resonated with me personally.

I’ve learned that I share a similar vulnerability to overextension. Whether it's taking on too many personal goals or ignoring signs of imbalance, the micro mirrors the macro. Debt, in this context, is symbolic of all the responsibilities and commitments we accumulate without thinking through the consequences.

Understanding where I am in my own cycle—and how to return to order when I fall into disorder—has become a powerful lens for change.

What I’m Taking With Me

This book reinforced the value of systems thinking and proactive adaptation. We can’t stop cycles, but we can prepare for them. On both the national and personal level, the keys are:

• Addressing debt early
• Building productive capacity
• Strengthening internal unity
• Investing in resilience

“You can’t stop the cycles. But you can position yourself to ride them better.” — Ray Dalio

That’s what I’m working on now: building a system that helps me avoid collapse and stay grounded, even as the world shifts beneath my feet.