The Budding New World Order

Business leaders must now confront a mammoth trend that’s just as significant for them as the quickening march of technology. It’s the global turn away from socialism in its many forms, away even from classical liberalism, and toward populism. The trend gained momentum over the weekend and could now become one of those epochal turning points, analogous to what happened when John Paul II became pope in 1978, Margaret Thatcher became Britain’s prime minister in 1979, and Ronald Reagan was elected president in 1980, together setting the world in a new direction.

Fidel Castro’s death on Friday was heavily symbolic but not just that. While he lived, he cast a broad shadow over his brother Raul’s modest efforts to begin reforming the island’s pathetic communist economy. He didn’t publicly condemn the restoration of relations with the U.S., but he was known to oppose it. No one should expect rapid reforms now; dictatorships don’t give up power easily. But the way is finally clear for Cuba, part of the nearly extinct species of truly communist countries, to evolve.

Ecuadoran president Nicolas Maduro declared three days of mourning for Castro’s death – anything to distract attention from his own economic disaster. An eye-opening report in the New York Times details how over 150,000 Venezuelans have fled the country in just the past year. Their objective: food. Venezuela was one of Latin America’s richest countries until Maduro’s predecessor, Hugo Chavez, turned it sharply toward socialism. Now it’s on the brink of starvation, insurrection, and collapse.

In a starkly different environment, Francois Fillon yesterday astoundingly won his center-right party’s runoff election in advance of next year’s French presidential election. Here’s a country where government accounts for a higher proportion of GDP than in any other European nation but Finland and where the merest threat of rolling back worker protections sparks violent rioting. Yet Fillon won by promising he will slash government spending, end early pension rights for many in the vast state sector, and raise the retirement age to 65 for everyone. His victory sent France’s Socialist party into a panic. The great question now is whether the far-right populist Marine Le Pen will be even stronger in the general election next spring; polling suggests she may well be.

Combine the past weekend’s news with Brexit, the election of Donald Trump, and rising nationalism in Russia, China, Turkey, and elsewhere, and this looks increasingly like one of those world-historical moments that historians will be studying decades from now. The challenge for leaders will be to assess it coolly, to see the long-term implications, and to reallocate their resources shrewdly.

The big idea to keep in mind is the magnitude of this opportunity. History shows that times of tumult are when the competitive order gets recast, when winners become losers and new leaders emerge. How will your organization make the most of this moment?

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