Global Order Is Changing, Not Collapsing: Finance Chiefs Challenge Mark Carney’s Davos Warning on Rules-Based System

When former Bank of England governor Mark Carney declared at Davos this week that the rules-based international order is “effectively over,” he articulated a fashionable pessimism that has become almost reflexive among global elites. Yet within hours, a chorus of finance ministers and central bankers pushed back—not with denial, but with a more textured reading of transformation. The global order, they insisted, is fragmenting and rebalancing, not rupturing. The distinction matters enormously.

The debate playing out in the Swiss Alps is less about whether change is happening—that much is obvious—and more about whether we are witnessing institutional evolution or systemic collapse. The answer shapes everything from capital allocation to climate diplomacy, from trade policy to the very architecture of multilateral cooperation that has underpinned prosperity since 1945.

Carney’s Realism Meets Institutional Inertia

Mark Carney’s assessment was stark. Speaking at a World Economic Forum panel on January 23, he argued that the post-war consensus built on open markets, multilateral institutions, and predictable rules has given way to a world governed increasingly by power politics rather than legal frameworks. His diagnosis drew on a Thucydidean realism: nations pursue interest, not principle, and the veneer of rules merely reflects the balance of power beneath.

The evidence he marshaled is familiar but potent. The World Trade Organization has been functionally paralyzed for years, its appellate body dormant since 2019. Climate negotiations lurch from compromise to gridlock. The International Monetary Fund and World Bank remain dominated by voting structures that lag decades behind shifts in economic gravity. Even the language of “America First” or “strategic autonomy” signals a retreat from collective governance toward unilateral assertion.

Yet Carney’s framing—an ending, a collapse—struck several finance chiefs as both premature and misleading. German Finance Minister Christian Lindner, who has rarely shied from confrontation with Berlin’s partners, countered that “what we are experiencing is not the end of rules but their multiplication and contestation.” French Economy Minister Bruno Le Maire echoed the point: the global system is not breaking; it is becoming plural, regionalized, and more contested.

Fragmentation Is Not Failure

The distinction between rupture and fragmentation is not semantic. A collapsing order implies chaos, unpredictability, and the breakdown of cooperation. Fragmentation, by contrast, suggests a more complex reality: overlapping spheres of governance, competing rule-sets, and selective adherence depending on interests and power.

Consider the evidence. Global trade has not collapsed—it has regionalized. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership in Asia, and the European Union’s expanding network of bilateral deals show that rule-making continues, just not universally. The WTO’s failure has not stopped countries from negotiating enforceable agreements; it has merely shifted the locus.

Similarly, climate governance has not ended with the stalling of UN processes. The Paris Agreement remains legally operative, and coalitions of willing actors—from the EU’s carbon border mechanism to the U.S. Inflation Reduction Act—are embedding climate rules into trade and investment. These are not perfect substitutes for universal frameworks, but they are frameworks nonetheless.

Financial regulation offers another case study. The Basel Committee on Banking Supervision, the Financial Stability Board, and networks of central bank cooperation continue to set standards that shape trillions in cross-border capital flows. These institutions lack the drama of summits but possess the durability of technocratic consensus. As Agustín Carstens, general manager of the Bank for International Settlements, noted at Davos, “the plumbing still works, even if the architects are arguing.”

Thucydides in the Age of Capital Flows

Carney’s invocation of Thucydidean realism is intellectually compelling but risks overstating its modern applicability. The ancient historian’s world was one of zero-sum struggles for security and dominance. Today’s global economy, by contrast, is defined by deep interdependence that makes pure power politics costly and often self-defeating.

China and the United States may compete for technological supremacy and strategic influence, but their economies remain entangled through supply chains, debt holdings, and consumer markets. Europe may chafe at American extraterritoriality in sanctions, but it depends on the dollar system and NATO security guarantees. Even as geopolitical tensions rise, the incentives for selective cooperation in finance, health, and technology remain high.

This is not naiveté about cooperation—it is recognition that power in a globalized system is exercised differently than in antiquity. Economic statecraft, regulatory leverage, and technological dominance matter as much as military might. The rules-based order was never purely rules-based; it always reflected American hegemony. What is changing is not the presence of power but its distribution and the willingness of other actors to contest its terms.

The Myth of the Liberal Order

Part of the confusion at Davos stems from a lingering myth: that the post-1945 order was ever a pure expression of liberal values. In reality, it was a Cold War construct designed to contain Soviet influence, underwritten by American military and economic dominance, and sustained by institutions that favored Western interests.

The Bretton Woods institutions were never neutral technocracies—they were instruments of American and European power. The WTO’s trade liberalization benefited advanced economies disproportionately for decades. The very language of a “rules-based order” obscured the extent to which those rules were written by the victors of World War II and tailored to their interests.

What we are witnessing now is not the collapse of a liberal utopia but the end of Western monopoly over rule-making. Emerging economies—China, India, Brazil, Indonesia—are demanding seats at the table and, when denied, building parallel institutions. The Asian Infrastructure Investment Bank, the BRICS New Development Bank, and regional payment systems are not rejections of rules; they are alternative rule-sets that reflect different priorities and power balances.

This is profoundly uncomfortable for those invested in the old architecture, but it is not apocalyptic. It is competitive multilateralism, messy and contested, but still multilateral.

Markets Price in Managed Disorder, Not Chaos

Financial markets, often sensitive barometers of systemic risk, have not behaved as though the global order is collapsing. Sovereign bond yields in advanced economies remain historically low, cross-border capital flows continue at scale, and currency markets—while volatile—show no signs of breakdown.

This does not mean markets are sanguine. Geopolitical risk premiums are rising, and investors are diversifying supply chains and currency reserves. But the behavior suggests adaptation to fragmentation, not preparation for collapse. Capital is finding new routes, not hoarding in panic.

As Christine Lagarde, president of the European Central Bank, observed at Davos, “we are moving from a single highway to a network of roads—some smoother than others, but still navigable.” This is a world of higher transaction costs and more complex coordination, not one of disintegration.

Middle Powers and the New Geometry of Influence

One of the most significant shifts in the changing global order is the rise of middle powers as swing actors. Countries like South Korea, Indonesia, Saudi Arabia, and Turkey are no longer content to align reflexively with blocs. They are pursuing hedging strategies, maintaining economic ties with China while preserving security relationships with the United States.

This flexibility reflects a new geometry of influence. In a multipolar world, middle powers can extract concessions, broker deals, and shape regional outcomes in ways that were impossible in a bipolar or unipolar system. The Gulf Cooperation Council‘s pivot toward Asia, ASEAN’s centrality in Indo-Pacific trade, and the African Union’s assertiveness in global forums all signal this shift.

For the finance chiefs at Davos, this presents both challenge and opportunity. Fragmentation means more negotiating partners, more diverse coalitions, and more customized agreements. But it also means more durable, interest-based cooperation rather than ideological alignment. This is not the end of order—it is the beginning of a more pluralistic one.

Climate, Technology, and the Test Cases Ahead

If the global order is evolving rather than collapsing, the next few years will reveal whether fragmentation can sustain cooperation on the issues that matter most. Climate finance, pandemic preparedness, and the governance of artificial intelligence are test cases.

On climate, the proliferation of national and regional mechanisms may paradoxically accelerate action. The EU’s carbon border adjustment, China’s emissions trading system, and U.S. subsidies for green technology are competitive as much as cooperative, but competition can drive innovation and adoption faster than consensus.

On technology, the absence of universal rules is spurring regulatory experimentation. The EU’s AI Act, China’s data sovereignty laws, and U.S. antitrust enforcement represent divergent models, but they are all attempts to impose order. Over time, convergence or interoperability may emerge from this competition.

The risk, of course, is that fragmentation hardens into blocs that cannot cooperate even when existential threats demand it. But the history of international relations suggests that necessity eventually forces coordination, even among rivals. The question is whether we can afford to wait for necessity.

Conclusion: Mutation, Not Collapse

Mark Carney’s warning at Davos was valuable precisely because it forced a reckoning with uncomfortable realities. The old order is not coming back. American dominance is waning, European influence is constrained, and new powers are rising with different values and interests. The institutions built in the last century are outdated and under strain.

But the finance chiefs who pushed back were not in denial—they were offering a different diagnosis. The global order is not collapsing into chaos; it is mutating into managed disorder. Rules still matter, but they are contested, plural, and harder to enforce universally. Cooperation continues, but it is transactional, conditional, and coalition-based rather than institutional and automatic.

For investors, policymakers, and citizens, this means navigating a world of higher complexity and greater uncertainty—but not one of breakdown. The highways may be cracking, but the roads still connect. The challenge is not to mourn the old map but to learn the new terrain.

The question is not whether the rules-based order is over. It is whether we are wise enough to build something better from its fragments.