Eyes (and Elbows) Up! Avoiding the "Tragedy of the Horizon" through Resilience
In 1946, at the start of the last big transition in global order, Winston Churchill was on a speaking tour in the USA. In a small city in Missouri, he spoke about how an “iron curtain” had fallen across eastern Europe, from the Baltic Sea to the Mediterranean. In a time many people understood as dark but when they were also confused about what was happening, Churchill’s speech clarified how we saw the world after World War 2, describing in blunt language a new tension between east and west, between democracies and totalitarianism. His words directly led to containing an expansive Soviet Union and to aiding a recovering West. Churchill crystallized and refocused our understanding of what was happening.
Mark Carney recently seized the global imagination from Davos last month in a similar way. Carney is now PM for Canada and a populist in his own way. He’s also a former central banker. You can read his speech here or watch it in full at this site.
Carney was mostly addressing the “middle powers” — the countries that have some wealth and influence, that are largely free-market democracies with strong social safety nets, and that have been close allies of the US since 1945. He declares the long post-war period to be over:
For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection. We knew the story of the international rules-based order was partially false, that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigour depending on the identity of the accused or the victim. This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes…. This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition.
Mark Carney knows the difference between stability, a transition, and a rupture.
Adam Tooze is a historian at Columbia University and a specialist in economic crisis. In a recent podcast, Tooze reminded me of some of the details of Carney’s time as a central banker for the UK, with the formidable title of Governor of the Bank of England. Compare the excerpt above to Carney’s speech as a central banker and his active navigation of a complex and shifting geopolitical landscape here. In that 2019 pre-Covid speech, Carney is focused on stability and smooth transitions, buffering shocks and avoiding shoals. His voice in 2019 is remarkably similar to my ears to 2026, telling truths about how to live as a middle power, seeking succor and hoping to thrive in the shadows and interstices of larger brutes. He also made a transition from managing a transition to dealing with a rupture — an abrupt change, with no going back to the old system.
Why am I spending so much time on Carney? In Davos, he was most worried about new realities of the “great powers” of the US, China, and Russia, but it’s also worth noting that Carney has been one of the most ambitious and effective climate adaptation leaders in the world. He might also be one of the first true climate economists with his interest in the implications of climate science for how we evaluate and assign value. He coined the term “tragedy of the horizon” to capture the insight that financial systems and financial stability as we have known them are impossible in light of rapid climate change and that we need to be prepared for new and difficult t foresee changes. Traditional approaches to planning — for economies, companies, investments — actually make us more vulnerable to collapse and damage. Carney has been thinking about the big changes to come for a long time, but only recently has he added Washington to his list of concerns.
He’s long been worried about ruptures, if you will.
I can still hear the resonant overtones of a nimble central banker in Carney’s Davos speech. I also hear an implicit definition of resilience that is similar to my own: financial stability as an article of faith or an unquestioned ambition may become a self-inflicted wound. If we wish to build resilience (a word he did use in his Davos speech), then resilience must encompass the ability to prepare for and even engineer for new conditions. Accepting uncertainty for the future is a profound element of how we prepare.
Carney tells us about navigating this new landscape and its contours:
And we have something else. We have a recognition of what’s happening and a determination to act accordingly. We understand that this rupture calls for more than adaptation. It calls for honesty about the world as it is.
We know the old order is not coming back. We shouldn’t mourn it. Nostalgia is not a strategy, but we believe that from the fracture, we can build something bigger, better, stronger, more just. This is the task of the middle powers, the countries that have the most to lose from a world of fortresses and most to gain from genuine cooperation. The powerful have their power. But we have something too – the capacity to stop pretending, to name reality, to build our strength at home and to act together.
Carney is describing a practice of resilience that feels deeply familiar — that we avoid building protective, isolating, and castellated walls in favor building shared visions of how to work with interdependence and collective concern and learning.
Carney sees resilience as more than an economic concept. He sees resilience as an economic strategy, one that he has been articulating across a wide range of political threats, risks, and opportunities. And as with Churchill, some 80 years ago now, we must both see the new reality of a “curtain” of change, as well as ensure we are the right side of that curtain.
John Matthews | Corvallis, Oregon, USA
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