Ray Dalio (founder of the world’s biggest hedge fund firm Bridgewater, 46th richest person in the world, $18 billion net worth) knows a thing or two about financial systems. He isn’t afraid to shout about it, either. In 2007 he was one of few people to warn of an impending economic collapse. The next year the world entered the worst global recession since the 1930s.

12 years later, the coronavirus pandemic sees us all on the brink of financial uncertainty once again. As of 28 May, London’s FTSE 100 may have begun to recover but it has a long way to go after such a dramatic fall, with blue chip stocks and travel and leisure in decline. As a whole, the UK economy has shrunk by 2% since January 2020, leading chancellor of the exchequer 

 to warn that a ‘significant recession’ is now ‘very likely’.

Dalio, who is both an outspoken advocate for both progressive philanthropy and the epitome of an ultra-capitalist success, has some thoughts on the matter. In a virtual TED talk given this April, Dalio likened the coronavirus pandemic to a ‘tsunami’ and again warned of another Great Depression. In financial terms, Dalio believes that, however the global community chooses to weather the coming storm, one thing is for sure, “We’re not going to go back to the way it was.”

In order to recover from this impending – and inevitable – economic slump, Dalio believes the next few years needs to see global policy makers ‘restructure our economy and restructure our financial system’ in order that inequality and the wealth gap can be addressed, making a fairer world in which everyone stands to profit.

“There’s enough wealth to go around,” says Dalio, who has committed to donating more than half of his fortune to charitable causes within his lifetime. “But what do you do when you’re outside the ring of support?”

We are now entering into, he believes, a ‘defining moment’ in which we as a people can come together under one banner to support each other and accept that capitalism is in need of an overhaul. Or we can ignore the lessons of this newly developing economic crisis and those of the past, and continue to put number one first. The path we choose, Dalio argues, will define our future.

“I’m a capitalist. I believe in the system,” explains Dalio. “I believe you can increase the size of the pie and you could divide it well.”

Born in 1949 to a jazz musician and a homemaker, Dalio grew up in the Queens neighbourhood of Jackson Heights, an ethnically diverse area of New York with a high population of LGBTQ people, artists and musicians seeking to get away from Manhattan’s overcrowded theatre district. The area has had a reputation for high crime rates, but as of the early 2000s has become a more desirable destination for middle class families and young professionals. Whether struggling artist or middle class manager, every stratosphere of the area’s current and past population will be hit by the predicted economic fallout of coronavirus.

For his part, Dalio began hustling at the age of 12 when he bought shares in Northeast Airlines for $300 before tripling his investment when the airline merged with another company. Degrees from Long Island University and Harvard Business School followed in the next two decades. Following a stint on the New York Stock Exchange, Dalio founded Bridgewater Associates out of his apartment in 1975. By 2005 it had become the world’s largest hedge fund firm. By 2017 it had $160 billion worth of assets under management. In March of the same year, Dalio announced he would step down as co-CEO as part of a company-wide shake-up.

In the years since, Dalio once again sought to draw the world’s attention to an impending financial crisis, just as he had done in 2007. In 2019 he spoke with the US programme 

 making the case that income equality in the US was a national emergency requiring urgent reform. Later the same year, he called for a reform of capitalism and again described wealth inequality as a national emergency in the United States.

Summing this up in a blog entry in November of last year (just as the coronavirus was taking hold in China), Dalio argued that “excess capital, unfunded social liabilities, and government deficits have created a recipe for disaster”.

Dalio on stage with Gary D. Cohn at Davos


While the coronavirus pandemic is of course the spark that lit the fuel, these underlying problems were already waiting to serve as kindling. To move forward economists, policy-makers and business must use the current crisis to develop a stronger, and infinitely fairer economic system.

At present, we don’t know what the long-term effects of the current economic instability will be, but it isn’t looking good. Speaking on 10 May, Boris Johnson urged those who can – mostly the working class who can’t work from home – to go back to work in a clear attempt to keep the UK economy ticking over. These actions have drawn flack, with many arguing the prime minister is putting the economy before working class lives. Either way, as Rishi Sunak admits, a recession is still on the immediate horizon; over a million people have now applied for Universal Credit, while a quarter of UK companies are currently closed.

In the US, Dalio believes unemployment will hit a double-digit rate alongside a 10% decline in the economy which will last years, not months. Global losses, he estimates, could be anywhere from $12 trillion to $20 trillion (£9.8 trillion to £16.4 trillion) in what is sure to be a bigger and ‘more complex’ crisis than in 2008.

Speaking with TED, Dalio acknowledges traditional economic tools such as cutting spending, debt restructuring, redistribution of wealth through taxes, and printing of money, will all play a part in our recovery, as they did during the 1930s. But on the whole, a new problem requires a new response. “There comes a time that we need reforms,” he says.

“I believe that the times ahead will be radically different from the times we have experienced so far in our lifetimes,” Dalio wrote in a LinkedIn article published in March of this year. He continues, “Wealth, values, and political gaps are now larger than at any other time during my lifetime… How will people and policy makers be with each other when the next economic downturn arrives?”

In the same essay Dalio goes on to explain that the traditional relief methods, known as quantitate easing, “widen the wealth gap because buying financial assets pushes up their prices, which benefits the wealthy who hold more financial assets than the poor.”

Ideas on how to restructure an economic system are more complex than can be outlined simply in a TED talk or LinkedIn essay, and least of all this article. But Dalio’s key message is that now is an opportunity to reflect on how financial systems operate. And, if we want to, we can change them for the better, building a new, more robust future.

“The greatest force is human inventiveness and adaptability,” he says. “Adaptation is the greatest power.”

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