To Dare Even More Boldly: Back to the Pythia's Lair; Can the Future Be Foretold?
The great goal, the Everest of this book, has been to identify the historical elements that comprise the rules of the road for mastering political risk analysis and to holistically put our ten commandments to use in explaining the baffling world we presently live in. Having discovered these elements—and illuminated them through the use of historical story-telling, placing them in real-world policy situations throughout the ages—their order of analytical use completes the typology of political risk analysis, getting us to the Holy Grail of actual understanding. We can now conclude by answering our original Delphic question: Can the future indeed be foretold? And if so, in what circumstances and with what limitations? Our bold Drakean reply follows on naturally from this bold Drakean narrative.
Kenneth Waltz and the Systemic Realism Underlying Political Risk Analysis
As we have seen, a striking feature of modern political risk analysis is that most of its prominent practitioners tend to be realists of one sort or the other, analysts who are comfortable talking about power and its role—for good or ill—in the world. Most realists place a high value on the importance of political systems, believing that the sort of world we find ourselves in (and countries’ specific place in it) largely determines what will historically happen.
So unipolar worlds (such as Imperial Rome or China at the height of its regional pomp) work in one fashion, bipolar worlds such as the 1945-1991 US-Soviet era in another, and the multipolar world of post-Napoleonic Europe in still another. Such analytical insights flow from a structural realist philosophy—an intellectual sub-set of realism that is widely adhered to by most leading political risk practitioners out there today in both the political and commercial worlds.
Building on the earlier realist thinking of E.H. Carr, Hans Morgenthau, and Reinhold Niebuhr, Kenneth Waltz, in his ground-breaking work, Theory of International Relations, laid the cornerstone for modern political risk analysis with his illuminating focus on the central role of global political systems in determining action. If Morgenthau is the hero of the history-first wing of political risk analysis, Waltz is the standard-bearer for the political scientists. But this should not be seen as a binary choice. As this book has shown, the best kind of political risk analysis fuses the insights of the two disciplines.
Waltz agreed with earlier realist leading lights that, owing to the anarchic nature of the international system—the lack of a global referee to keep the peace—the perennial competition between states would continue on forever, with warfare being a permanent part of international life.
Conflict has been endemic since the days of the ancient Greeks, and realists wearily point out that there is no sign whatsoever—based on the anarchic nature of the world order—that the endless empirical historical record is likely to ever alter. This explains why, rather than wringing their hands and wasting their intellectual efforts in a fruitless search for perpetual peace, political risk analysts instead get on with analysing the world as they actually find it, warts and all.
However, unlike Hans Morgenthau’s almost Freudian psychological focus on human nature and the specific characters of major world leaders, Waltz took a far more Olympian view. He posited that both the nature of the global system that any country finds itself in as well as the country’s specific position within that system poses significant real-world constraints on its foreign policy actions. In other words, if you are Ringo in the Beatles, you don’t get to decide who sings lead.
Waltz argued that these systemic constraints largely determined countries’ general foreign policy behaviour at any given moment in history. Strikingly, of the various possible global systems, Waltz believed a bipolar world was the most stable: with fewer significant actors, there is far less chance than in a multipolar system of miscalculation leading to great power war.
For modern political risk analysts, this line of thought—that a multipolar system is less stable than a bipolar world—perfectly explains why political risk analysis is presently coming into its own commercially, as the world is now transitioning from the bipolar US-Soviet competition to the more complicated great power world our children will inherit.
A less stable system means more political risk, and more political risk points to a greater need for political risk analysis. The stunning commercial rise of modern political risk analysis is ironically confirmed by the very geopolitical theoretical backdrop such analysts hew to in the first place.
The Ten Commandments of Political Risk
Know Thyself
1. Know the nature of the world you live in.
2. Know your country’s place in that world.
3. Know when you are the political risk.
4. Know when game-changers occur.
Nothing in Excess
5. Balance is the key to foreign policy.
6. Game out lunatics.
7. Game out chess players.
Make a pledge and mischief is nigh
8. Avoid the losing gambler syndrome
9. Avoid the promised land fallacy.
10. Prepare for the butterfly effect
‘Know Thyself’ as the Base of the Political Risk Analysis Typology
Waltz’s systemic insight mirrors the thinking of the ancient Greeks, taking us back to the dank cave of the Pythia, where our adventure began. For a systemic power assessment of the world—knowing the nature of the world one actually lives in and one’s place in it—is undoubtedly where all political risk analysis begins, the trunk of our analytical tree being the ancient Socratic admonition to ‘know thyself.’ As such, the systemic commandments we have derived from history amount to the building blocks for mastering political risk as a whole.
Knowing whether the global power system is stable or in flux, and crucially assessing changes over time in that structure that can alter its very nature, must be the first basic commandment of political risk analysis. In our terms, we must start with the trials and tribulations of George Harrison and the Beatles, as well as the surprise longevity of their friendly rivals, the Rolling Stones. In the mid-1960s, the Beatles were rightly seen as the best of friends, the epitome of hippy togetherness. By contrast, the Stones were snarky about the world and surly about each other.
Yet the bipolar Beatles system, dominated by John Lennon and Paul McCartney, collapsed in the blink of an eye, as its power structure—with the rise of the creative talents of George Harrison (and the increasing disinterest of John)—no longer reflected the band’s creative realities. In other words, the overall power realities of the system changed over time, even as the decision-making structure within the group did not. This is the classic definition of a failed, unstable global system, a lesson today’s leading power, the United States, would do well to learn from.
Meanwhile, in ruthlessly jettisoning their founder, the tragic and flailing Brian Jones, the Stones—under the leadership of Mick Jagger and Keith Richards—moved from an unstable multipolar mess to a remarkably durable bipolar system that perfectly reflected the Jagger-Richards song-writing dominance.
This stable order survived numerous drug busts, massive addictions, and girlfriend swapping precisely because it was so rooted in the creative realities of the group. Getting the nature of the global. system precisely right—be it unipolar. bipolar, or multipolar—and then constantly assessing any changes over time that can alter that system is where it all begins for political risk analysis.
The second commandment of political risk analysis under the ‘know thyself’ imperative is that, once the overall nature of the global system has been determined, it is necessary to precisely assess a country’s place within that global system and, crucially, to act on this knowledge. Here the story of Lord Salisbury—the unlikely but true hero of this book—shows us the way forward.
In late Victorian England, Salisbury had both the bravery and the intellectual integrity to see that Britain’s place in the world was changing. This meant that while Britain remained the dominant global power by a long way—being the only great power that was omnipresent in every region of the globe—it was in the throes of a long relative decline, with Germany, Japan, and the United States slowly gaining on it, year on year.
Ignoring the usual complacent analysis that flows from most leading powers that their country’s dominant position will be unchallenged forever (look at American neo-conservative commentators recently), Salisbury instead brilliantly adapted British foreign policy to fit the world he actually found himself living in. Rather than taking on rising powers America and Japan, instead Salisbury skilfully co-opted them, most particularly by defusing the war drums beating in the 1890s between Washington and London over the issue of Venezuela.
A generation later, Salisbury’s unsung but far-sighted foreign policy reached its apogee as Japan and the US rode to Britain’s rescue in 1918, decisively tipping the Great War Britain’s way and ensuring that it remained a great power.
This was only accomplished because Salisbury then—as political risk analysts must do so now—had the courage to clearly look at his country’s evolving position in the world order and adapt British foreign policy to specifically match this change. Seeng what a country can and ought to do based on its overall strategic position in the existing global order is an indispensable step to take in any successful political risk analysis.
Likewise, at about the same time, the Genro in late-nineteenth-century Japan learned the bitter lesson from their humiliations at the hands of Western powers in forcibly opening up their country that they were relatively weak in comparison. The revitalisation of Japan on the global stage became the basis for the remarkable, breakneck reforms its elite set in motion, a conservative revolution that within a generation transformed the country’s global prospects. By correctly and honestly identifying its structural international weakness, Japan transformed itself through the Meiji Restoration, which set the country on course for a dramatic about-face, becoming the greatest regional power in Asia.
The third necessary commandment of political risk analysis also flows from the Ancient Greek admonition to ‘know thyself’: to look in the mirror and know when we ourselves are the political risk in the global system. As the great historian Edward Gibbon made clear in Decline and Fall of the Roman Empire, in the end the Romans were not victims of external events but rather were primarily undone by endemic domestic problems that occurred within their empire.
More specifically, the Romans’ decadent inability to wean themselves off their dependence on foreign mercenaries to defend their empire left them at the mercy of the very people they had hired to man the gates. As far back as the ascendancy of Sejanus during the pivotal reign of Tiberius, the power of the Praetorian Guard—the emperor’s personal bodyguard—had grown to unhealthy proportions, leading to perpetual political instability over time and domestic chaos that prevented Rome from dealing with its many and growing problems.
Political risk analysts are called upon to apply their analytical craft to domestic matters as they routinely do to foreign affairs, as a great power’s inability to solve its own problems—the current dismal state of the EU leaps to mind—over time can weaken its foreign policy initiatives and even its position as a great power itself.
It takes a real talent for introspection for analysts to realise that political risk is not just something that happens to other people and to instead turn the powerful analytical lens upon their own country, to which most people have more emotional ties than they realise. Recognising that we ourselves might be the problem is a hard but imperative element of modern political risk analysis—as is presently the case with the West, where much of the world’s political risk, in the age of Donald Trump and European economic sclerosis, is coming from.
The fourth major commandment of political risk analysis under the ‘know thyself’ banner is to discern when everything has changed—to separate the historically essential from all the noise the 24-hour news cycle throws at all of us every single day.
Despite the many towering intellectual geniuses that graced America’s founding, it was only John Adams who really saw the game-changing historical significance of what was going on in Philadelphia in the summer of 1776. While Jefferson was writing at the time about his desire to buy a barometer, and his rival Alexander Hamilton (at an improbably early age) was helping George Washington direct the war effort, Adams alone had the clarity of mind to see, in that blisteringly hot early July, that the American Revolution had profound historical ramifications that would change the world order.
Likewise, during the stirring month of December 1941, with the Nazis at the very gates of Moscow and the Japanese devastating the American Pacific Fleet at Pearl Harbour, it was Winston Churchill alone amongst the Big Three leaders (Churchill, Stalin, and Roosevelt) who saw through all the tumult that Japan’s ill-judged attack had been the key event that fundamentally altered the global strategic balance of power—by ensuring American entry into the war on the side of the Allies, thus decisively shifting the correlation of forces in their direction. Many important things were going on that fateful December, but only one crucially changed the trajectory of the war and all that was to follow. Churchill, like Adams, possessed the out-of-body analytical ability to see the world at a higher, structural level and to see what made it change.
The creative ability to sift the intellectual wheat from the chaff, discerning which events are game-changers, which are important, and which are interesting but basically irrelevant, is an absolutely vital skill for any first-rate political risk analyst to possess.