Henry Kissinger’s World Order 1 is a great read for anyone who wants to quickly brush up on some core tenets of geopolitics. The beginning of the book takes the reader from the end of the Roman Empire to the subsequent attempts by various powers to re-create a stable equilibrium over the next 1500 years of European history.
To understand geopolitics, investors have to understand European history. Today’s international order is essentially Europe writ-large because the “principles of national independence, sovereign statehood, national interest, and non-interference” were all transferred from Europe to its colonial charges. Fundamentally then, China and Russia are as much “European” states in the Westphalian sense as Belgium or Burundi.
Kissinger’s message is that “order” is not naturally a product of geopolitics, but rather a cultural and political construct that has to be designed with care and defended with a combination of both normative legitimacy and realist pragmatism. And most importantly, all members of the international system have to ‘buy-into’ its construct.
The rise of non-European powers, however, has undermined this global order. According to Kissinger, China, Russia, and various Islamic powers, all struggle to merry the contemporary global order born in the post-WWII era with their own, pre-Westphalian perceptions of how an international system should work.
China has historically ordered the world hierarchically, with itself at the center. The Islamic world has separated the global system into the “House of Islam” and the “House of War.” Russia has rejected any order based on elegant balance-of-power mechanisms through its history and has sought to secure its position through expansion.
While Kissinger’s discourse of non-Western perceptions of international affairs borders on caricature, he makes an important point:
“The result is not simply a multipolarity of power but a world of increasingly contradictory realities. It must not be assumed that, left unattended, these trends will at some point reconcile automatically to a world of balance and cooperation – or even any order at all.” 2
In other words, the world is not just multipolar because the U.S. is in relative decline and various regional powers have gained enough ‘hard power’ to pursue their own “place in the sun.” Multipolarity is philosophical and normative, eroding the legitimacy of Westphalian principles upon which the current global order rests.
How does Kissinger see the world evolve in the near future? Without action from the world powers – namely America – to counter present-day multipolarity, Kissinger is pessimistic. Without a concerted effort to reconstitute a new international system the penalty for failing “will be not so much a major war between states… as an evolution into spheres of influence identified with the Westphalian model as against the radical Islamist version. At its edges each sphere would be tempted to test its strength against other entities of orders deemed illegitimate.”
This is similar to what we wrote in our April 2014 Monthly Report titled Multipolarity And Investing.3 We posited that the main risk for the world “is that competing geopolitical blocs may become large enough to undermine economic and financial globalization. A ‘Eurasian bloc’ that includes China with a large pool of savings and a sizeable middle class, combined with Russia and its massive natural resources may not need as much interaction with the rest of the world as its constitutive members require today.”
In essence, the world begins to “slowly resemble the geopolitical backdrop of George Orwell’s 1984, bringing to life the famous phrase repeated throughout the novel that “Oceania was at war with Eurasia and in alliance with Eastasia.”
This is a world that lacks an international order but is split into regional ones. It is not necessarily a violent one, but it is also no longer globalized. Many crucial geopolitical assumptions that investors take for granted today – such as the slow but steady progress of emerging markets towards developed world status – may be impeded by the consequences of rival spheres of influence. China and Russia – maybe Brazil and Turkey – may decide that painful economic and political reform for the sake of competitiveness vis-à-vis developed economies is too onerous. Instead, the alternative route may be regional hegemony and the erosion of globalization.
A paradigm shift of this magnitude is impossible to forecast. Some data – particularly on global trade – suggest that we are already at the apex of globalization, but the data may simply be reflecting deficient aggregate demand, not geopolitical seismic shifts. Nonetheless, Kissinger does not really offer a coherent answer as to how such a future should be prevented. It concerns us that a statesman of Kissinger’s stature is at a loss for words before the dire forecast he leaves us with. And considering that he is 91, it is doubly concerning that this may have been his last book.
- 1 Kissinger, Henry. World Order (2014). New York: Penguin Press.
- 2 Emphasis added.
- 3 Please see BCA Geopolitical Strategy Monthly Report, “Multipolarity And Investing,” published April 9, 2014, available at gps.bcaresearch.com.