Over the past 20 years, the traditional agenda-setters of the global system—essentially the United States and other Western countries—have been under challenge not only from the rise of alternative economic powers, notably China, but also from within. You see that in the Brexit referendum, in the election of former President Donald Trump and in the so-called "populist," anti-system parties of the right, and sometimes left, that have challenged the status quo. This has pushed governments into retreat.

And so, businesses have been left with a clear choice: Either they lead, or no one leads. If Western business wants to defend the gains of globalization, then it's going to have to argue for it. Another factor is that employees, especially younger ones, expect their employer to articulate and defend their value system. We have seen this on issues of social, economic, racial and climate justice, which has pushed many businesses to take stands they would likely have steered around in years past.

Obviously, different sectors play different roles, and each has its own culture, but there are some common factors. Despite such commonalities, the debate about the future of AI, for example, shows how hard it is to square the circle when governments don't know what to do.

It is hard enough for governments to regulate, and harder indeed to incentivize, self-regulation. Considering the competing interests and views within the Western tech sector—never mind the challenges from China, Russia and the Gulf—the idea that the industry will have a single point of view that coheres into effective self-regulation seems far-fetched.

The fear of government regulation might induce some common purpose, but the European Union is already hard at work on its approach, and the US has President Biden's executive order on AI, so the space is filling up fast. I am not an expert, but the dramatic removal and reinstatement of Sam Altman at OpenAI shows that even within one company there can be irreconcilable views. This is why we have government and legislatures.

We have all failed to set the pace on decarbonization. It's been a 40-year failure to follow the writing on the wall. Arguably, the greatest advances so far—in price reduction—have come from China and its massive renewables drive. There has also been significant innovation in spaces like offshore wind, incentivized by government regulations like the UK's Contracts for Difference.

What we have seen in the past couple of years, however, is significant. Western governments have woken up to the need to sweeten the pill for private investors in decarbonization. This has been done most extensively through the US's Inflation Reduction Act, which has a US$350 billion price tag, though many suggest it will be north of US$1 trillion. There is also the EU's Fit for 55 program, China's continued subsidies for its own industry and India's decarbonization commitments. This is some kind of new "competitive leapfrogging" that is not being driven by global regulation, but instead by the search for competitive advantage and climate crisis fears.

It's a mixed picture. De-risking will be costly, which in the short term may have some businesses looking forward to the prospect of windfall gains from increased prices. But it carries risks, too, in the form of blowback from consumers, who have not really had to face the consequences of de-risking and will struggle to see its rewards.

We do not know how far it will go, but it seems prudent to understand that post-pandemic, post-Ukraine and in the wake of great power competition between the US and China, there will be a greater premium on domestic or "friendshored" production, which will likely drive up prices. This is obviously a threat to business. Globalization has been a phenomenon, and while there is scant evidence of it going into full-scale reverse, the global business model is built on a bias toward free trade and free movement of people and capital. Grit in those wheels creates a whole new level of risk.

I mean that public goods on which globalization depends—the management of risks like pandemics, economic or climate challenges, or the conflicts and consequent refugee flows—have not been well managed. There is too much insecurity, inequality and instability to sustain the system in a steady way, and this lays the groundwork for backlash.

If you ignore problems, they get bigger, and that is what is happening. We have 50-plus conflicts going on in the world, a rampant climate crisis and weakening global norms—all exacerbated by great power competition. Risk plus fragmentation is a bad and unstable combination. We need to address both: the risks (whether health or refugees) and the fragmentation (for instance, by ensuring that there is space for cooperation, as well as competition, with China). This is what we should be doing.