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Reasons To Be GloomyFour things to worry about.

By Ian BremmerPosted Thursday, Sept. 18, 2008, at 12:31 PM ET

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With the end of the Cold War, the dynamism and market power of the United States, Western Europe, and Japan—fueled by private wealth, private investment, and private enterprise—seemed to have established the dominance of the liberal economic model. But public wealth, public investment, and public enterprise have returned with a vengeance. An era of state capitalism has dawned, one in which governments are again directing huge flows of capital—even across the borders of capitalist democracies. The trend has important implications for free markets and international politics. Best recent estimates are that sovereign wealth funds, state-controlled pools of capital fueled by large reserves of foreign currencies, already account for about 12 percent of international investment—double their share of five years ago. Some credible forecasts suggest their assets could grow 500 percent by 2015. Twelve new funds have been established since 2005. More than 20 countries now have sovereign wealth funds, and several more have indicated an interest in creating them.

Yet despite the fast-growing market power of these sovereign wealth funds, we still don't know much about them. "Very few of them publish information about their assets, liabilities, or investment strategies," warns the International Monetary Fund. Some fear the states that control them will use these funds to gain political leverage inside other states.

This shift in the international balance of market power is generating considerable anxiety among U.S. and European policymakers, who fear that emerging-market-based national oil companies, state-owned enterprises, and sovereign wealth funds threaten the economic stability and national security of other countries. Whatever the political motivations for creating them, state-run companies and investment funds are burdened with the same bureaucracy, waste, and political cronyism that plague the (often authoritarian) governments that control them.

The third important geopolitical shift flows from technological advances that arm ambitious and aggressive governments, organizations, and even individuals with powerful new weapons. The tools of the information age help citizens connect and collaborate with one another and with the world outside. In recent years, we've witnessed the birth of a truly global talent pool—and have seen what it can do to generate prosperity in several countries at once. At the same time, weapons technologies—missile-guidance systems, chemical and biological agents, and nuclear know-how—are also cheaper and more widely available than at any time in history. In the past 10 years, India, Pakistan, and North Korea have officially joined the nuclear club, and the trend toward proliferation will likely intensify over the next decade.

The fourth and broadest shift in the international order flows from the transition from a U.S.-dominated system toward a nonpolar world, one in which the leading political and economic institutions no longer reflect the true balance of global power.

As U.S. hegemony gradually fades, the international leadership vacuum will grow. Other states, profiting from America's troubles or at least not wanting to share in them, will resist taking on new international responsibilities that come with costs and risks. All this comes at a historical moment in which the usefulness and legitimacy of the United Nations, World Bank, and International Monetary Fund are already open to question. On a variety of transnational issues—nuclear nonproliferation, counterterrorism, and public health and environmental worries—this trend means that problems can easily become crises.

So much for the darkness; where's the dawn? As rising energy prices create political problems for the governments of countries that depend on oil-supply growth, we'll see a surge in investment in new energy technologies and infrastructure. That process, still in its infancy, is already moving forward.

State capitalism will threaten the performance of global markets until the demands of the marketplace push a range of authoritarian states toward the fundamental political reforms that bring greater transparency. Addressing the diffusion of dangerous technologies will require, among other things, a new and more effective nonproliferation regime. But as more countries develop an interest in preserving a profitable status quo, we're likely to see more movement in that direction.

None of these transformations is right around the corner. Lifting the darkness will take more than a new business cycle, a new oil find, or a new American president. Without fundamental changes in the global system, none of these challenges can be met. The good news is that necessity remains the mother of invention, and that almost everyone appreciates a beautiful sunrise. As a greater number of governments and citizens own a stake in global economic growth, more people than ever will be looking for ways to coax the sun from behind the horizon.