Summary of Key Points
This article explores the core issue of a reconstructing global order from three perspectives: asset price fluctuations, historical changes in Indonesia, and the current competition between China and the United States. It highlights that narratives (commonly accepted stories) and institutional frameworks are crucial factors influencing resource allocation and national influence. Old international organizations like the WTO are becoming ineffective due to a lack of enforcement capabilities. Emerging markets, such as Indonesia, are beginning to actively seek greater say in resource distribution. Both China and the US have shortcomings in their ability to adapt their narratives and institutions to the new order. However, this period of order reconstruction presents a significant opportunity for the next generation.
Detailed Analysis
1. Why do Narratives Have a Greater Impact on Prices and Power Dynamics than Data?
The article uses examples of gold and oil prices to illustrate that asset prices do not necessarily reflect their intrinsic value in the short term; instead, they are driven by narratives. For instance, the peak in gold prices in January this year was not due to a decrease in its value but rather a decline in the popularity of the narrative surrounding it as a safe-haven asset. Similarly, the peak in oil prices in March was not caused by a reduction in oil supply but rather a loss of credibility in the story regarding the escalating conflict between Iran and the US. These narratives do not merely consist of fabricated claims; they tap into common concerns and desires among people. For example, the Indonesian Deputy Minister of Foreign Affairs pointed out how WTO regulations conflict with the UN Charter and how emerging markets often lose legal disputes related to resources, which resonates with the grievances of many developing countries. This phenomenon illustrates the power of narratives in politics and diplomacy—convincing others that you understand their needs is more effective than simply presenting facts.
2. Why Can't the WTO Regulate Emerging Markets? The "Police" of Globalization Are Gone
The article compares the WTO to a court without enforcement officers; it can make rulings, but no one enforces them. Previously, the US played the role of enforcing these rules, using its influence to support the WTO's decisions. However, the US no longer wishes to do so, stating that it will no longer provide enforcement capabilities, leading to a weakening of globalization. This explains why countries like the Democratic Republic of the Congo can raise resource prices without consequence and why Indonesia dares to challenge developed nations over strategic resources—the WTO is powerless to stop them. Under the old order, upstream resource-rich countries benefited less from trade, but this argument no longer holds up in reality. When a country faces dire economic challenges, such as a shortage of fertilizers, rationality becomes irrelevant; resource distribution is often a matter of survival. With the old order collapsing, new rules must be established.
3. Why Has Indonesia Adopted Islam? Trade and Institutions Are More Effective than Force
Indonesia, which followed Buddhism and Hinduism 1000 years ago, now has 91% of its population practicing Islam. This shift is not due to the decline of China or India but rather the influence of Arab merchants who brought a set of practices more suitable for the island nation:
- Trade Networks: Arab merchants traded spices from Indonesia to Europe, earning substantial profits and providing benefits to local elites. Adopting Islam allowed Indonesia to integrate into these trade networks, leading to rapid economic growth (for example, North Maluku's growth rate is four times that of Indonesia).
- Institutional Advantages: Arab merchants introduced advanced business laws and management practices, which were more efficient than China's tribute system, which was a mix of politics and economics.
- Cultural Relevance: Islam adapted to local traditions by using local performing arts and songs, making it easier for the common people to understand. In contrast, Buddhist concepts like nirvana and the multiverse were too abstract and accessible only to elites.
4. The Weaknesses of China and the US in Indonesia: Hardware Is There, but What About Software?
China and the US are Indonesia's largest export markets, with apps like WhatsApp (US) and TikTok (China) being widely used. However, both countries lack the necessary "software" to effectively connect with local cultures. China has the hardware (trade and infrastructure) but lacks narratives that resonate with Indonesian customs. The US once relied on universal values (democracy and freedom) to influence Indonesia, but now it faces internal divisions and struggles to find a new narrative. Similarly, the US tries to persuade Indonesia to side with it, but Indonesians question its credibility.
5. Opportunities in the New Order: Is This Generation Really Out of Chance?
The article suggests that the current situation is similar to that before the end of the Middle Ages, when religions, ideologies, and trade alliances were in conflict. With technological revolutions (such as AI and new energy), opportunities abound:
- Old Rules Are Overturned: New rules have not yet been established, providing opportunities in areas such as business (e.g., resource pricing) and culture (e.g., creating localized narratives).
- Technological Advancements: Tools like TikTok enable rapid global reach for telling new stories.
In conclusion, globalization is not dead; it is just evolving. Those who can create compelling narratives and institutions that resonate with local cultures will gain more resources and influence in the new order. This generation happens to be living through this period of transformation, which presents a golden opportunity.
Final Summary
Globalization has not ceased; it is simply adapting to new realities. Those who can articulate stories that inspire widespread belief and establish institutions that fit local contexts will have a greater stake in the new global order. This generation is indeed at the forefront of this transformative era.