On December 26th 1991 the Soviet Union was dissolved with 12 states emerging out of the wreckage of this former superpower. What followed was over 2 decades of unparalleled economic, political and moral dominance by the United States – the lone surviving superpower. The United States had (and continues to have) the world’s largest economy, the world’s most powerful and sophisticated military and unparalleled dominance of world trade through the power of the US dollar. American-style capitalism – having spread slowly since the end of WWII – rode a wave of economic liberalization around the world. But those days are over.

The economic order of the world was battered by the financial crisis of 2008 and the economic malaise that emerged out of it. The US economy is weighed down by over 18 trillion dollars of debt and its foreign policy is facing ever greater challenges. In the South China Sea, China is laying claim to a swathe of ocean that it denominates by the nine-dash line. Russia has displaced US influence in the Middle East and is challenging the post-war economic order in Europe – through its Eurasian union – and the security infrastructure of the continent, most publically in Ukraine.

The economic landscape has shifted equally dramatically. China’s economy will continue to grow at double the rate of the world average well into 2017, and its currency the Yuan is now placed to challenge the dominance of the US dollar (see last week’s Yuan World Order). The European Union has come and almost gone in the 25 years since the collapse of the USSR. Africa has shed its reputation as the ‘dark continent’ and is charted to grow at about 5% annually after growing at 6.5% in the period 2003-2008. Its population is also set to double to 2 billion by 2030. Central banking has radically shifted since 2008 with new tools – such as the Temporary Auction Facility and interest on reserve deposits – being added to the arsenal every few months.

So what does this mean for the future of the world economy? Three major developments will shape the course of the world economy for the next 2 decades. Firstly, multiple centers of economic power will emerge. While this has been developing for some time in the form of major financial hubs in London, Singapore, Hong Kong and New York, the next 2 decades will see diminishing US economic power counteracted by rising Chinese economic power and African economic power (particularly the coming Eastern African monetary union). The European Union will reform and strengthen, that much is clear. Ordinary individuals will have their lives shaped not just from Washington but from Beijing, Addis Ababa or Brussels.

Secondly and as a result of the first development we will continue to see the erosion of the Bretton-Woods monetary order. The Bretton-Woods Monetary order established the International Monetary Fund (IMF) and World Bank (WB) and has been a key pillar of the global economic order since WWII. Its breakdown has already begun to happen with the establishment of the New Development Bank by Brazil, Russia, India, China and South Africa (BRICS) which opened its offices in Shanghai in July of this year. Seeded with $50 billion in capital designated for financing infrastructure and with a further $100 billion in the Contingency Reserve Arrangement (CRA) designed to help countries during balance of payments issues.

Finally and most significantly, we will witness the weakening of economic policy. The traditional models of fiscal (government spending and taxation) and monetary (interest rates and money supply) have begun evolving since the early 2000s. But in a world where the startup and scaling costs for private business are coming closer and closer to 0, the economic influence of large, inefficient government institutions is fading. In its place venture capital, hedge funds, incubators, universities and other private institutions wield growing power over how we trade, how we buy and how we sell. The example of Uber best illustrates this. Changes in government legislation did not lead to Uber. Rather, Uber led to changes in government legislation and how we buy, use and sell transport. In October 2010 Uber received a cease and desist order from the San Francisco Metro Authority for operating like a cab company without proper licensing. As regulatory resistance eased, Uber struck a deal with the California Public Utilities Commission and in September of that year California becomes the first state to regulate ride-sharing services. This process of disruption is enveloping industry after industry and economic activity after economic activity.

The economic and political order of the world will continue to be heavily shaped by the legacy of 2 decades of American dominance much in the way that it continues to be shaped by British dominance in the 19th century. We will continue to use the US dollar and the US economy will remain the largest economy in the world for the foreseeable future. US influence and power will not disappear outright nor will it fade overnight. Instead we will continue to see the emergence of a multipolar world where the Yuan, the Euro, the rupee and the dollar compete for influence. We will have our lives shaped from every corner of the world, not just one. But perhaps the boldest claim of them all, we will be better off because of it.

This post was originally published here.