What if only three topics mattered in international politics? Wouldn’t that be great? If you try to follow the development of international politics in the early twenty-first century, and you are not a super gifted multitasker, you are lost. There is just too much going on, even on the surface of things, from Syria to China to Trump to Ukraine to Brexit—to name just a few of the more obvious items on the list.
Once you start digging a bit deeper than the news cycle, things become truly dizzying. So many megatrends, so many microevents, so much structural change, and the myriad of ways in which all of this is manifested. What if one could simplify all this and have a one-size-fits-all filter to separate the crucial from the clutter?
Just a few weeks ago, I met someone who claims to have done just that. He is an investment strategist at a big bank based in London. His job is to advise the bank’s clients on where to put their money and tell them how risky investments would be, given political situations around the world and the way that markets develop.
He told me that he is really only interested in three things. First, will the euro survive? Second, what will China do? Third, what’s the state of the U.S. economy? Everything else is of interest only in relation to these three items. So if you want to engage this strategist on, say, Russia or Brazil or the human rights situation in Turkey, he would be interested only if you could convince him that any of these issues has an impact on one (or more) of the other big three. You are lucky if you are a Russia analyst. But don’t even bother if you deal with Africa, Afghanistan, or climate change.
Let’s assume for a minute that this is how international politics really works. What does this analytical banker’s matrix tell us about today’s world?
It is a world in which power is defined solely in terms of market value. Soft power does not exist, but military power is also much less valuable than most believe. Europe’s combination of the single market, its 500 million consumers, a unified trade policy, and the common currency make it a superpower, but one that is under supervision because the EU does not handle its status with proper political maturity. This is an aspect of great importance: if you have market power, you had better act like you do. Being powerful in the markets and then behaving foolishly in politics is the ultimate sin. The message is that when you have money, grow up. Hear that, Europe? Get the message, Saudi Arabia?
In essence, it is a world of mercantile realpolitik. Only a few places across the globe, those with market impact, matter. Other places, and the people in them, matter less. You can call that a healthy sense of priority or you can call it brutal heartlessness, but so be it. Human affairs do not impact everyone the same way. The big rich three—America, China, and Europe—deserve your attention; the rest are just political derivatives.
As a consequence, it is also a world in which Russia is much less important than most of us would claim today. Which means it is a world in which having oil and nukes and little green men can make you somewhat important, but not really important. Mr. Putin might disagree, and Poland and the Baltic states probably would, too—but they don’t move markets very much, so what do they know?
It is a world ruled by short-term considerations. Investors want return on investment. Many of them want it on a quarterly basis, which puts their attention span at one-sixteenth of that of a politician who runs on a four-year election cycle. If you think Western democratic politics is short-termist, shallow, and out of breath, welcome to the world of mercantile realpolitik! Everything here happens so fast that all those undercurrents of human development, the slow-burning big issues, barely register.
Or rather, these undercurrents matter, but very differently from the way conventional analysts describe. Because the world of mercantile realpolitik is not the world of representative democracy. It’s the world of the permanent collective referendum of customers, investors, commodity traders, currency speculators, equity managers, and, perhaps, if they are lucky, central bankers. All of the big underlying developments, such as demographic trends, technological innovation, global warming, and so on, are permanently being factored in by their crowd smartness. In this world, the big bazaar of human need makes the real decisions, long-term and short-term. Politicians, elected or unelected, only have the job of administering such change. Policymakers are only interesting in as much as they are good or bad at their jobs. They are not interesting per se.
It is a world in which the daily worries of leaders matter only on the margins: how to evacuate those stranded tourists from a civil war country? How to make sure those refugees are not cycling across my border? How to stand firm with that prickly neighbor of mine without sounding too scary?
It is a world that has taken the politics out of the political. It is a world in which only the big stuff matters and the small stuff is sweated only by folks who don’t move markets. Ultimately, it is a world in which humans count only as collectives: customers, satisfied and thus calm or unsatisfied and thus unruly. It is a world in which economics and politics are the same thing.
Big banks might think that they can get away with this view of the world. But my guess is that they can’t. We all crave simplicity in an age of high complexity, but reducing international politics to three issues goes too far. If this is the way that investors look at the world, no wonder they get it wrong so often. Besides: how uninteresting a world it would be if they were right. Thank God there is more that matters than just three big things.