Here's the uncomfortable truth: the world order that shaped most investment strategies for the past few decades is gone. No single country runs the show anymore, and that means the assumptions baked into your portfolio might be dangerously outdated.

That's the message Marko Papic, Chief Strategist at BCA Research, delivered at CommBank's 15th Global Markets Conference back in October. His thesis? We've been living in a multipolar world for at least a decade, whether investors want to admit it or not.

"Geopolitics is clear. We're not in a unipolar or hegemonic world. We haven't been in 10 years. Our geopolitical hardware has already been changed," Papic told the conference attendees.

To make sense of this new landscape, Papic uses a schoolyard analogy that's both simple and unsettling. Imagine a playground with no teacher supervising. Whether things stay orderly or descend into chaos depends entirely on how power is distributed among the kids.

Under unipolarity—which Papic describes as "the bully everyone quietly pays lunch money to"—life was predictable for investors. You knew who was in charge. Multipolarity is messier. There's no single authority keeping everyone in line, which means more volatility and less certainty.

When Chaos Breeds Innovation

The numbers back up Papic's argument. Armed conflicts have been surging since 2011, a pattern he interprets as evidence that no power can impose global order anymore. "It seems the world is falling apart," he said, channeling the sentiment he hears from institutional clients.

But here's where things get interesting. Competition between states doesn't just create instability—it accelerates technological development. When countries view each other as rivals, governments pour money into research and development programs covering energy, computing, transportation, and industrial capacity.

This isn't the venture capital era of funding apps that deliver cheeseburgers at 3 a.m., Papic notes. Today's innovation cycle is driven by productivity improvements and strategic necessity. Governments across the U.S., Canada, and Australia are launching multi-billion-dollar initiatives to secure production of energy and critical commodities.

Papic also rejects the idea that we're heading toward strict U.S.-China bipolarity. True bipolarity, he argues, would be far more inflationary and damaging to global trade. "In the schoolyard, there are two bullies... It's an orderly world, but it's not ideal," he explained.

Multipolarity allows for messier but continuous economic engagement. "Enemies go to war with one another, and they continue to trade with one another right up until the war. That is the distinct feature of a multipolar world."

Australia's Geopolitical Sweet Spot

According to Papic, Australia sits in an enviable position within this new framework. The country's resource base, institutional stability, and attractiveness to global capital make it a prime destination as nations scramble to diversify supply chains and reserves.

"If I'm a central banker, do I really just want to diversify into gold? It seems pretty 18th-century. Australia and Canada would be my top two picks," Papic said.

He views Australia's "geopolitical promiscuity"—its ability to work pragmatically with multiple powers—as a strength rather than a weakness. "Issue by issue, Australia has to defend its interests, and America will respect them," he noted.

While Australia faces legitimate security challenges, Papic emphasized that real geopolitical influence requires economic strength as a foundation. "You cannot have any geopolitical material power without generating enough economic well-being with which to pursue your interests."

The Inflation Problem at Home

But Australia's domestic economic situation complicates this rosy geopolitical picture. Rising costs and monetary expansion are reshaping the country's investment fundamentals in ways that could undermine its advantages.

Matt Barrie, CEO of Freelancer, has been vocal about the inflationary consequences of expanding the money supply through mortgage creation linked to migration. "Supply of Aussie dollars up 11% a year. Wonder why prices are up 11% a year?" he wrote in a recent post on X.

Barrie's argument is that Australia is becoming increasingly dependent on taxpayer-funded employment, while soaring home-loan issuance injects liquidity that pushes up prices throughout the economy.

Record migration is adding fuel to this fire. Net long-term arrivals topped 468,000 over the 12 months to September 2025, according to news.com.au. This historic level is straining infrastructure and driving up housing costs. As many new arrivals enter publicly funded jobs, the trend may be masking underlying weakness in the private sector.

Government spending hit 27.9% of GDP in the June quarter, well above pre-pandemic levels, and public-sector wages have climbed sharply. If this pattern continues, structural inflation could hurt the commodity sector by raising production costs and reducing competitiveness—precisely when the country might need its competitive edge most.

So Australia faces a paradox. Geopolitically, it's positioned to thrive in a multipolar world. Economically, domestic policy choices could squander that advantage. The playground may have no teacher, but that doesn't mean every kid handles the chaos equally well.