March 21, 2005

God Returns

Posted in International Economy · 2 comments ·
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Investors rarely factor God into their calculation. However, in the years ahead, He is likely to figure prominently in economics, politics andmoney – so we had better get used to Him again.

One of the starkest differences in global affairs between the 21st century and the previous one is the return of God to the centre of the political arena. As a result, even the most atheistic investor has to take into account the Almighty and especially His flock,when formulating strategy and tactics. This is a newball game for almost all investors, from the largest institutions to the humblest households because, for a long time, religionwas not a relevant factor in financial markets.The 20th century produced a broad selection of ideologies, but the big and successful ones were the secular ones: fascism and Nazism (in their brief but disastrous heyday), communism (which lasted longer, but ultimately collapsed) and liberal capitalism,which is currently running the show.

Whatever their respective strengths and weaknesses, these were all rational, in the sense that they recognised the existence of geopolitical and economic interests – their own and those of their enemies. Hitler, for example, invaded Poland in 1939 and Russia in 1941 on the basis of calculated risks, which turned out to be wrong but were, nonetheless, rational.

Faith and religious belief were not part of the calculations of these secular ideologies. The irrelevance of religion in the face of this onslaught of secularism was encapsulated in Stalin’s dismissal of possible opposition to his policies on the part of the Vatican: �We all know how many divisions the Pope has.� In this, Stalin – and the entire Soviet system – proved to be completely wrong. The Pope’s �divisions’�, including a Polish cardinal who himself went on to become Pope, outlasted and eventually expunged the Soviets from Poland; even theRussian Orthodox church survived the Communists, although in rather poor shape.

The Western media, themselves bastions of secular liberalism, have been equally guilty of failing to understand the forces at work beneath the surface of world affairs. Thus, whilst they sought to play up the role of Polish Catholics in hastening the demise of the USSR, they missed the critical contribution of a ragtag guerrilla army in Afghanistan in exposing the advanced decay of the Soviet behemoth. The Afghan resistance to the Soviet invasion, which attracted support fromall over theMuslim world, became the launch pad for a new phenomenon – soon to be labelled by that same media as �Islamic fundamentalism’�. But this continued to be regarded as something exotic and remote until some of the newmovements’ adherents hit New York and Washington on September 11, 2001.

This pivotal event effectively ushered in the 21st century by underlining that God and his various believers were back in full strength, after an enforced leave of absence from the global spotlight. The focal point of this return of religion is an updated version of that golden oldie of historical wars of religion, a Christian Muslim conflict called a crusade or a jihad, depending which side you’re on. If, however, you are determinedly secular, you can just label it a �clash of civilisations’� and if even that is too aggressive for you – as it is for many of us – then it is merely a campaign against terrorism or �militant groups’�.

Well meaning as most pacifists may be, we are objects of ridicule in the eyes of the true believers (�fanatics’�, to their enemies).This is especially so in the case of people like Osama bin Laden, who are imbued with a sense of divinely-prescribed mission – in his case, to recreate a single caliphate that unites the Muslim world, regains the Muslim lands taken by the infidels (including Spain, southern France and Italy, the Balkans, and of course Israel) and defeats, or at least neutralises, as many as possible of the enemies of Islam everywhere else.

The main debate among �Islamic fundamentalist” groups such as al-Qaeda – conducted quite openly, for instance via numerous internet sites – is whether the first target should be the corrupt Muslim regimes (especially Saudi Arabia and the other states on the Arabian peninsula), or the non-Muslim states (headed by the US and Israel).These are referred to, respectively, as �the near enemy’� and �the far enemy’�, and this debate is hardly academic as far as the outside world is concerned, least of all for investors. If terror strikes are planned for the UK and US, many people could die and serious political and economic consequences would follow. But if the main effort is concentrated on knocking over the ruling families in Saudi Arabia and Kuwait, the price of oil would soar towards $80 or even $100 a barrel and the Western economies would be sent reeling.

This is a crucial point because, unlike Stalin, or even Hitler, the bin Ladens of this world pay no heed to what secular people and governments regard as rational thought. This is especially the case if they don’t actually run any countries. However, the factor that makes today’s terrorist groups far more dangerous than their predecessors is the prospect of their obtaining weapons of mass destruction.

Yet for all its potential to wreak havoc, �Islamic fundamentalism” does not have a monopoly on representing God in this world. Indeed, from the European perspective, the attitude of the hardline elements of the Bush administration – and of its fundamentalist Christian supporters – is no less fanatical and, many would argue, no less potentially dangerous. Bush and his people seek to avoid the term, but there is little doubt that in their own minds they are engaged in a crusade, in the religious sense, to impose their (seemingly secular) values on the rest of the world, especially the Muslim parts of it. Many of the evangelical Christian sects in the US are active in aggressively promoting their beliefs among the �heathens’�, and their attitudes (but not their actions, fortunately) are no less fanatical than those of their Muslim counterparts.

Nor would it be fair to limit the discussion to Muslims and Christians. India’s recent governments have been aggressively Hindu and the simmering Hindu Muslim tensions that have always characterized the Indian sub-continent, even during the Raj, have, in recent years, been ratcheted up to nuclear levels. Ironically, this has had a calming influence on both sides, but the struggle between rational and irrational forces in both Pakistan and India, including in the governments and armed forces of both countries, is far from over.

This carry-on exists among Jews also. In Israel, there is a clear new brand of messianic fanaticism among some small groups. These may be marginal elements within Israeli society but, once again, intense commitment and total disregard for the consequences – in other words, the �mission fromGod’� syndrome, this time in Jewish garb – can help small numbers go a long way.

The bottom line: from NewYork to NewDelhi, anyone engaged in making decisions about money needs to recognise that times have changed radically. We know, thanks to recent economic research, that the old assumption that consumers and investors act rationally is not always true. But the really bad news is that even governments and countries cannot be relied upon to act in ways that the market considers rational. Leaders, and especially opposition figures may have their own agenda, which on further examination may turn out to be what they believe is God’s agenda.

In such cases, not only can you not argue with this kind of thinking, you can’t even understand it – unless you are prepared to factor God and his followers into your analysis.


  1. Dan Hayes

    David,

    From this side of the pond, an addendum to your usual
    perceptive commentary.

    Much as it grieves me to disabuse your readers of the
    threat posed by America’s fundamentalist Christians, the
    Bush administration’s hardline “fundamentalist Christian
    supporters” are in Lenin’s taxonomy no more than useful
    idiots. The hardline policy was and is being formulated by
    Jewish neoconservatives, who are neither new nor
    conservative (they being warmed-over Trotskyites). Of
    course most Americans have been brain-washed to not even
    dare think such thoughts. There are a few countervailing
    voices (The American Conservative Magazine, Chronicles
    Magazine, and even more minor Paleoconservatives organs),
    but they have been pretty well marginalized and relegated
    to crying out in the wilderness.

    Yes, religion is now (and always has been?)a powerful
    geopolitical factor. But whereas in Israel the zealots
    are “marginal elements”, in America the Jewish pro-Israel
    zealots run the show. Here the fundamentalist
    Christians’function is to serve as plentiful cannon
    fodder. So what else is new!

    Keep up your good work. I always look forward to your
    weekly commentaries.

  2. adrian

    Capitalism, liberal or otherwise is a bit like the Honey
    Monster, it just gobbles everything up and keeps on
    going….it gobbles resources, environment, religion and
    maybe eventually human wellbeing.
    In my opinion the current economic mode/ideology of
    capitalism is seen as unstoppable by fundamentalist
    defenders of islamic faith and they are lashing out western
    countries and their allies, or traitors in their eyes.

    In the west the capitalist ideolgy sits well with
    protestantism and the work ethic there is no backlash.Earn
    a pound, spend a pound, tithe a pound and we all go to
    heaven is the golden rule of thumb!Its all pretty short
    sighted and maybe those islamic fundamentalists have
    noticed.
    Capitalism is coming their way, the children will have
    their heads filled with Sponge Bob and Square Pants, they
    will have the latest xxx rated video games (you can shift a
    hooker on Grand Theft Auto).
    The kids will probably start skipping mass or whatever it
    is over there; they will ruin their teeth on coca cola and
    their health on marlboro lites and AIDS.

    Religion declines when a western called Consumerism is the
    new show in town and one hell of a show it is.
    Just tell ‘em about the honey mummy!

  3. Tom Farrell

    David,
    I think there is a risk that the ‘clash of civilisations’
    thinking is getting a disproportionate amount of coverage
    due to the Bush ‘war against terror’ PR machine. We may
    also want to consider other prevailing theories that abound
    regarding the nature of international affairs. The neo-
    realist view put forward by John Mearsheimer et al heralds
    the ‘end of stability’ era, i.e. the Cold War bipolar world
    (Western bloc v Soviet bloc) kept the peace due to the
    balance of power. Now that it has been replaced with a
    multi-polar world, there is an imbalance that will lead to
    increased instability. This pessimistic view is predicated
    purely on the anarchic power-maximising nature of states –
    there is no place for ‘God’ in this view. The liberal view
    put forward by Francis Fukuyama et al heralds the ‘end of
    history’ era, i.e. the 20th century is ending with
    the ‘unabashed victory of economic and political
    liberalism’. The end of the Cold War marks the ‘end point
    of mankind’s ideological evolution and universalization of
    Western liberal democracy as the final form of human
    government’. This optimistic view states that increased
    capitalism, liberal democracy, and globalisation will lead
    to increased peace and prosperity. It conquered rival
    ideologies like hereditary monarchy, fascism, and most
    recently communism – de facto, it believes religious
    fundamentalism (‘God’) is not a potent opponent. Finally,
    the culturalist view put forward by Samuel Huntingdon et al
    heralds the ‘return of history’ era, i.e. post-Cold War
    conflicts will occur mainly between civilizations
    (‘broadest level of cultural identity’). This pessimistic
    views states that Inter-civilization conflicts are
    intensifying because cultural differences are real & basic,
    they become more visible as distances shrink, non-Western
    cultures are ‘re-indigenizing’, economic regionalism is
    strengthening cultural identities, and religion is
    replacing the nation as identity source – this is
    definitely all about God.

    Reasons to question the realist view include the peaceful
    nature of Europe (except for former Yugosalvia and the
    Caucasus), NATO has survived/expanded, the EU has actually
    become more integrated, and Russia is coming closer to the
    West (albeit very slowly). Granted, war did not decline
    during the course of the 20th century, but there were some
    remarkable changes regarding the types of war that were
    fought. From 1900 to 1910, wars of all categories were
    represented rather evenly, whereas from 1990 to 2000 most
    were civil wars. Today there are few interstate wars with
    clearly defined parties, albeit civil wars have become
    increasingly internationalised. Reasons to support liberal
    view include the increasing pace of globalisation and the
    absence of any other ideology to challenge capitalism and
    liberal democracy. Indeed, reflect on recent events in the
    Middle East, e.g. Mahmoud Abbas elected as president of the
    Palestinian Authority, elections in Iraq, Saudi Arabia
    electing seats in municipal councils in provinces which is
    a significant break with the kingdom’s past policy of
    directly appointing council representatives, Egyptian
    President Hosni Mubarak announced election reforms that
    allow for the first contested presidential elections since
    he took office in 1981, Lebanese Prime Minister Omar Karami
    resigned and dissolved his government in the face of
    popular protests over Syria’s domination of Lebanese
    politics. Certainly, one can make valid accusations about
    the ‘free and fair’ nature of these events. Nonetheless,
    one could argue they are significant in light of the
    region’s authoritarian nature to date. Reasons to question
    the culturalist view include the fact that disputes not
    significantly more common among dyads split across
    civilizational boundaries than others, disputes between
    West & ‘the rest’ are no more common than between or within
    most other groups, and there is no evidence of clash
    between Islam & West except as it involves Israel. Reasons
    to support include the increasing occurrence of civil wars
    from 1990 onwards as noted above. However, to quote
    Huntingdon himself: ‘Muslim wars have replaced the cold war
    as the principal form of international conflict … These
    instances of Muslim violence could congeal into one major
    clash of civilizations … However, it is more likely that
    violence involving Muslims will remain dispersed, varied &
    frequent …The causes of contemporary Muslim wars lie in
    politics, not seventh-century religious doctrines’ ‘The Age
    of Muslim Wars’, in: Newsweek: Issues 2002 (Dec 2001-Feb
    2002), pp. 6-13

    In short, I go with the liberal democratic / capitalist
    view. The world needs more optimism!
    Tom

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