I have been observing a profound structural shift in global market physics. As the traditional global “Hegemons” (the US and China) become more problematic, many other countries are working to create an alliance of “Middle Powers” around issues like defense, trade, health, and climate.
When I look at the Hegemons, I see the effect of decades of centralization. The center of knowledge and capability has coalesced around very specific locations and institutions: Wall Street for finance, the US Department of Defense for security, Silicon Valley for IT tech, and Shenzhen for manufacturing.
As US leadership erodes and Chinese manufacturing dominance becomes more threatening, I expect to see a concerted effort by Middle Powers to build secondary centers of activity — or better yet, an altogether more decentralized network.
My perspective on this comes from an unexpected angle. Most of my professional history has been spent working on systems theory, and recently, I’ve been heavily focused on applying artificial intelligence to solve the problems of “thin markets.” Through an initiative called DeeperPoint, I’ve been studying how AI can engineer viable marketplaces even when participants are scattered, volume is low, and trust is fragile.
What this hands-on work with AI and market engineering has shown me is that we are approaching a structural tipping point. DeeperPoint is proving that it is entirely possible to build high-performance, decentralized market mechanisms that don’t require the massive, centralized hubs that the Hegemons have historically controlled. Whether Middle Powers build these networks with DeeperPoint or completely different initiatives doesn’t matter; the physics of market design have fundamentally changed, and because I now know it is possible, I am convinced it will happen sooner rather than later.
That shift creates a structural reason — the promise of decentralized, high-performance systems — why Hegemon power may begin to wane at an accelerating rate.
Here is why that shift is not only possible, but highly probable based on the physics of market design.
1. The Historical Necessity of the Hegemon’s Centers
To understand why Hegemons lose power, we must understand why they gained it. Historically, markets faced overwhelming friction: geographic distance, temporal distance, search opacity, and trust deficits.
Before AI, there was only one reliable way to overcome these “thin market” challenges: Standardization and Geographic Concentration.
- Geographic Concentration: If you bring everyone to the same physical or virtual location governed by the same rules, you collapse distance and search friction. Centralization has been the centerpiece of pre-IT market design for centuries: the “gold street” in Istanbul’s Kapali Carsi, the Centro de Abastos in Mexico City, or the ubiquitous districts in older cities totally devoted to one type of product (auto parts, home lighting, pumps and motors). The Hegemon’s dominant centers — Wall Street, Silicon Valley, Shenzhen — are the direct descendants of this phenomenon, scaled to a global level. They are massive, engineered solutions to coordination problems.
- Standardization: To make markets liquid, early engineers forced participants to standardise. You threw away nuance and complexity (turning unique companies into standard ticker symbols, or unique supply chains into standard shipping containers) to achieve transactional thickness.
Hegemons built these centers. Because the centers provided the only thick, liquid markets, the rest of the world had to participate on the Hegemon’s terms, paying their “gatekeeper taxes” and adopting their proprietary “Powerplay Standards.”
2. The American Blind Spot and the MAGA Miscalculation
Because they built these global centers, the centralization instinct remains stubbornly strong within the United States. Much of the concept of “American Exceptionalism” actually rests on this centralization blind spot — the assumption that the world must come to American financial, technological, and security hubs because there are no viable alternatives.
This assumption is especially pervasive with President Trump and the MAGA movement. This blind spot is beginning to cause real damage because it gives them a rationale for a highly confrontational approach to foreign policy. They believe the US is so big and its market gravity so absolute that they don’t need to care what their friends, neighbors, and allies think. They treat alliances transactionally because they assume the rest of the world has nowhere else to go.
China is a different story. China clearly has manufacturing dominance that it uses as a ruthless power play, but Beijing seems to understand the limitations of that gravity much better than Washington does. China is actively engineering massive infrastructure (like the Belt and Road Initiative) to physically and digitally wire the Global South to its centers. They understand that leverage requires constant engineering and connection, not just demands for loyalty.
But the structural reality remains the same for both Hegemons: they are psychologically and structurally committed to the gravity of their centralized hubs. They are missing the reality that Middle Powers are actively seeking alternatives, and through AI, they will soon no longer need to come to them.
3. The Middle Power Dilemma
For decades, Middle Powers (like Canada, the EU, Japan, South Korea, and Australia) have operated under the Hegemons’ shadow. They represent a massive economic bloc (roughly $37.7 trillion in combined GDP), but they are separated by vast geographic, cultural, and regulatory boundaries.
When Middle Powers try to trade directly with each other, they encounter thin markets. Historically, they have relied on the massive gravity of Hegemon hubs because they are easy and convenient — providing ready-made liquidity and infrastructure as long as they remain trustworthy. Without that centralized gravity, buyers and sellers across borders struggle to find each other, verify quality, and establish trust. As a result, a Canadian firm seeking scale wouldn’t sell directly to a Japanese partner; both would plug into a US-controlled platform or supply chain. The Hegemon acted as the mandatory, convenient intermediary.
But as the Hegemons become more confrontational, that reliance becomes an unmanageable strategic risk.
4. The AI Catalyst: Decoupling Thickness from Centralization
The core realization is that AI fundamentally changes the physics of market design. Large Language Models (LLMs) and AI-driven market engineering dissolve the historical tradeoff between thickness (which used to require centralization/standardization) and relevance (which fragmented markets).
AI tools achieve market thickness without requiring participants to gather in a Hegemon’s hub. Here are three examples of how might work (there are many more):
- Semantic Matching & Vector Embeddings: Buyers and sellers don’t need to speak the same language, use the same standardized codes, or exist on the same proprietary platform. AI maps complex, heterogeneous needs in high-dimensional space, reducing search friction from months to milliseconds across borders.
- Trusted Intermediation: AI can act as a confidential broker, learning the true constraints and capabilities of a Canadian seller and an Australian buyer without requiring either to expose strategic vulnerabilities. It engineers trust where no institutional relationship exists.
- Asynchronous Brokerage: AI agents negotiate and orchestrate deals across time zones, bridging the temporal distance that traditionally killed global deals before they started.
5. Innovation is No Longer Bound by Geography
One of the most powerful historical reasons to centralize in a hub like Silicon Valley was the need to bring innovators together to innovate. But technical expertise in AI is now spreading around the world with blistering speed. Since new innovations are almost instantly published to the web, there is no delay in brilliant minds adopting them, regardless of where they live.
I see this daily. For my work, I rely on a team of whip-smart developers in Addis Ababa, Ethiopia. They speak excellent English and are constantly integrating the latest AI developments into our platform. What works for my team in Addis applies to entrepreneurs and developers almost anywhere. Vibrant startup communities are growing in Toronto, where there are half a dozen AI meetups every week, London, Paris, Mexico City, and so many more.
Because the foundational knowledge of AI and market engineering can be adopted anywhere, new initiatives are going to pop up in places the Hegemons aren’t even looking.
When I visited Ethiopia a few months ago, I saw this firsthand. Their tech community was actively chasing fintech ideas that would never have occurred to Silicon Valley or Wall Street. In Ethiopia, families might have farmed their plots for generations, sometimes centuries, but no one has a formal deed. Because traditional banks can’t use the land as collateral, local fintech initiatives are using technology to collect alternative forms of evidence that prove a farmer is real, established, and can service a loan.
As tech power and AI expertise decentralize, these local communities will use the tools of market physics to build networks that solve their unique structural problems. They will find new ways to operate that genuinely surprise Silicon Valley — and eventually leave the Hegemon hubs on the sidelines.
6. The Structural Shift
If you no longer need physical concentration or rigid standardization to achieve a thick, liquid market, the primary value proposition of the Hegemon’s hubs evaporates.
Through “Benign Standards” (open interoperability) and AI-driven market engineering, Middle Powers can orchestrate highly efficient, distributed networks. A decentralized market facilitated by AI can perform just as well — if not better, due to preserving context and nuance — as a centralized market controlled by a Hegemon.
The promise of decentralized, high-performance systems is not merely a political preference for Middle Powers; it is a superior market architecture unlocked by artificial intelligence. By bypassing the traditional hubs, Middle Powers retain their margins, protect their sovereignty, and structurally accelerate the waning of Hegemon dominance.