“Populism” and the Age of Disruption

The future of politics

This week I want to talk politics without getting (party) political. Like many others, as an analyst and investor, post-Brexit and Trump, and with Marine Le Pen likely to win the first round in the French presidential election on 23 April, I have been trying to figure out what it all means.

The word populism has become a shibboleth of the globalist liberal left to beat the patriotic conservative right. Yet historically, populist governments have taken many forms with very different economic policies. In my view, populism is not a coherent political philosophy but the political manifestation of a more general underlying disruption. In fact, we are living through the Age of Disruption. What does it all mean for investors?

“Disruption”

This is a popular term to describe how new internet-based technology is transforming traditional business models just as Uber has disrupted the transport business and Spotify has disrupted the music business.

But it goes much deeper than that. We are living, for good or ill, in The Age of Disruption – everything we think is certain is about to change. And all of the major themes of the modern world are inextricably interlinked.

The “refugee crisis”, climate change and the rise of Islamic extremism are intertwined. The civils wars raging in Syria and Yemen right now have religious roots and have forced hundreds of thousands of people to vote with their feet – and leave. Yet climate change is a related factor. The Prince of Wales, for one, has linked the start of the Syrian Civil War in 2011 to disputes between communities about water rights[i]. And the consequent shift away from oil to renewables in a bid to rein in carbon emissions will have a disproportionate effect on Arab Islamic countries which are dependent on the export of hydrocarbons. And that this will in turn affect the dynamics of Islamist ideology…


And then technology in the form of robots (not only androids but mainly expert systems and chat-bots) and artificial intelligence (AI), are already transforming the world of work. This – because people’s politics are largely determined by their economic status – in turn affects the nature of politics. And yet the existing political class that has remained largely unchanged for a century or more, aligned as it is around an adversarial right-left model – is proving inadequate to the task of responding to change.

Imagine a world where there are layers of disruption piled one on top of the other: people on the move (refugees), extreme weather (climate), terrorism (Islamic fundamentalism and potentially other agents), energy shortages (a power crisis), mass technology-induced unemployment (robotisation), and, last but not least, the break-down of government as we know it in the West as the political elites leach authority…

And yet the Age of Disruption could also be an age of opportunity during which the human race, despite huge downside risks, will scale new heights of achievement. The world in 50 years’ time, thanks to technology, could be one of abundant health and wealth.

In the meantime…

“Populism”

The term “populism” is being bandied about these days without any rigorous attempt to define precisely what it means. It is normally used by the Left disparagingly to describe the forces behind Brexit, Trump, Le Pen et al. In fact, historically, the term populism has been used by both left and right to describe political movements with very different economic policies.

…in The Age of Disruption – everything we think is certain is about to change.

Mr Trump and Madame Le Pen have very different attitudes towards welfare, and whereas Mr Trump wants to de-regulate Wall Street (by, amongst other things, repealing Dodd-Frank), Madame Le pen wants to nationalise French banks. What Mr Trump and Mme Le Pen do have in common is a detestation of globalisation.

Populism in America has form

In the late 19^th Century the American Populist movement, led by the charismatic William Jennings Bryan, was a mass movement of farmers and agricultural workers against the metropolitan elites – particularly the bankers – who were charging high interest on their land loans and paying rock-bottom prices for their products.

After the conclusion of the American Civil War (1861-64), rural-dwelling Americans were encouraged to buy land from the Federal Government to run farmsteads. They borrowed heavily, taking advantage of plentiful cheap credit. But in the 1880s – probably on the back of the transformative impact of the railroads – a wave of deflation meant that land prices fell rapidly. This left hundreds of thousands of rural Americans – who would have regarded themselves as hard-working, God-fearing, patriotic folk – in what we would today call negative equity.

The American People’ Party – which lasted from 1891 to 1919 – sought to champion a discontented rural, small-town America against the plutocrats of Washington, New York and Chicago. Its leader, WJ Bryan was a much more conventional figure (in American terms) than Donald Trump – he was a lay-preacher who invoked a Social Gospel and the Prince of Peace in all his speeches.


His solution to America’s economic woes was to junk gold and to adhere to the Silver Standard. (The Gold Standard was thought to favour Wall Street). Some eighty years after the decline in the Populist movement, in 1979, the Hunt brothers tried to corner the world market in silver to the same end (and for their own enrichment).

WJ Bryan was later seduced to become President Wilson’s Secretary of State in 1913, and subsequently most of the American Populists were absorbed into the Democratic fold. It was only with the anti-Obama Tea Party that the Republicans began to incite a new American Populism. But the themes are the same: anti-finance, anti-global, anti-elite. And after the financial crisis of 2008, which was undoubtedly precipitated by Wall Street, that position is not stupid.

Mr Trump is the heir to WJ Bryan (though Bryan would have found him a vulgarian). I wouldn’t be entirely surprised if President Trump comes out for the Silver Standard sometime soon (no doubt on Twitter).

European Populism

The Greek political theorist, Takis S Pappas, lists 22 European political parties that he describes as “challenges to liberal democracy” in a recent article in the Journal of Democracy. But he breaks them down into three distinct categories: anti-democrats, nativists and populists. Of these, seven parties have already held power in coalition and another four alone.

All but one of the anti-democrats are “extinct” – amongst them the UK’s unlamented British National Party (BNP) which polled 564,000 votes in the UK general election of 2010 but just 1,667 votes in 2015![ii] In contrast, votes for UKIP went up from 919,546 to 3.89 million[iii]. So actually – in contrast to what the left so often broadcasts, pro-fascist, overtly racist parties have declined as “Populist” parties have risen.

…in contrast to what the left so often broadcasts, pro-fascist, overtly racist parties have declined as “Populist” parties have risen.

Nativism is “the policy of protecting the interests of native-born or established inhabitants against those of immigrants” and Professor Pappas places the French Front National in this category. However, according to Pappas, the governing parties of Greece, Poland and Hungary are Populist, as is Italy’s 5-Star Movement. UKIP is Populist, too (even though I see it as a retro Tory Party of the 1950s).

Pappas believes that Populists are dangerous, not because they oppose democracy but because they support it. If they think they have sufficient popular support they feel inclined to overthrow constitutional restraints. This is exactly what President Trump is doing by attacking the Constitution (“so-called judges”) from the inside on the basis of his popular mandate.

Populist parties embrace democracy (“people power”) but oppose liberalism. They point to the fact that in Western countries like the UK, once a citadel of liberal democracy, elected politicians have been ceding the sovereign power of Parliament to external bodies for a generation.

They have empowered quangos (parastatals) with quasi-judicial authority; they have shifted law-making powers to the courts by passing fundamental legislation like the Human Rights Act 1998; and they have given law-making powers up to supranational bodies (the EU in particular, but also to the WTO, the ICC and so forth), and down to subsidiary assemblies such as the Scottish Parliament. Furthermore, they have given away control of monetary policy, and therefore most economic policy, to an unaccountable and secretive class of central bankers.


Liberal democracy is broken, say the Populists, because the globalist liberal political elite (I have called it Blameron) have given away most of their powers. This renders them incapable of delivering their election promises. A good example of this would be Mr Cameron’s promise to reduce immigration in 2010 and again in 2015 – empty promises that he was entirely unable to enforce thanks to freedom of movement.

But the future of “liberal democracy” is a question that most of the “developing world” has already answered.

Nationalism and conservatism – the new model in the developing world

President Putin of Russia (a Christian), President Erdoğan of Turkey (a Muslim), and Prime Minister Modi of India (a Hindu), despite superficial cultural differences, have remarkably similar political ideologies. They are all nationalist conservatives who enhance their authority by affiliating themselves with state-sanctioned religions.

One of the most remarkable political transformations of my lifetime concerns attitudes towards Russia. Years ago apologists for the Soviet Union worldwide were of the left. They admired the ultimate experiment in state socialism even though it clearly abused human rights and failed to deliver widespread prosperity. Latterly, the greatest admirers of Russia are now to be found on the right – especially the American religious right. Pat Buchanan, the American paleoconservative commentator, who ran for President in 2000, has described Russia as the last bastion of Christianity.

…the future of “liberal democracy” is a question that most of the “developing world” has already answered.

President Putin’s close alliance with the Russian Orthodox Church has coincided with conservative, or more correctly traditionalist, legislation with respect to social issues. In June 2013 Russia passed a law “to protect” children from “gay propaganda” in schools. (To put this in perspective one should recall that Mrs Thatcher’s government did something very similar with the infamous Section 28 of the Local Government Act 1988).

And last month the Russian Duma voted to decriminalise wife-beating (unless it is a repeat offence and inflicts serious injury). Proponents of the law advanced the classic paleoconservative argument that the State has no right to intrude in private domestic affairs. The same argument has been used by those who oppose the criminalisation of the smacking of children which occurred in most Western European countries during the first decade of this century. (Something most Asian parents would find bizarre).

Russia is not alone in experiencing an upsurge in nationalist conservatism. India, under Prime Minister Nahendra Modi of the Hindu nationalist BJP, has also sought to revert to “traditional” ways, reinforced by an emphasis on religious devotion. In December 2013 India’s Supreme Court reversed a landmark judgment by a lower court decriminalizing homosexuality in the country. This has been misreported because the Supreme Court did not “outlaw gay sex” but affirmed that the law regarding homosexuality could only be changed by central government.

Actually, India is not a homophobic society: British and American readers might be surprised by how many Indian celebrities are “out” there. What they don’t like – as in Russia and Turkey – is identity politics.

In November last year India’s Supreme Court ruled that the national anthem must be played in every cinema before a film is screened during which audiences must stand. Depending on your point of view, this is the restoration of a socially binding tradition or an authoritarian intrusion into public life.


Another country which has veered in the direction of nationalist conservatism is Turkey. President Erdoğan has consolidated power since he first became Prime Minister in 2004 and is now set to become a powerful President – head of state and government on the model of the French Fifth Republic.

Incidentally, Messrs Putin, Modi and Erdoğan are very similar personality types. They are not charismatic rabble-rousers; rather they are all introverts (unlike Mr Trump) – softly-spoken, mild-mannered, thoughtful, methodical, focused, guileful and ruthless.

The Putin-Modi-Erdoğan model is important in my view because there are reasons to suppose that this political model – and not liberal democracy – will become the political standard in the developing world in years to come. Professor Francis Fukuyama’s vision of The End of History (1992) brought about by the triumph of universal liberal democracy now seems like an academic joke.

Patriots and Globalists

Broadly, patriots are conservatives with reservations about immigration while globalists are liberals who welcome and even encourage “multiculturalism” and immigration. Conservatives are suspicious of feminism while liberals regard it as an essential corrective to patriarchy. These two sides appear to be moving away from one another as the ideological gap widens.

Professor Francis Fukuyama’s vision of The End of History (1992) brought about by the triumph of universal liberal democracy now seems like an academic joke.

But it is not always so simple. The patriotic right also has a strong libertarian steak just as the globalist left sometimes veers towards collectivism. There are gay conservatives, just as there are church-going liberals. (Most vicars seem to be pseudo-Corbynistas – disciples of the Rev. Giles Fraser!).

One fundamental difference between conservatives in Europe and America and conservatives in Asia is their attitude towards free speech. Conservatives in the West fear that freedom of expression has been curtailed by excessive political correctness and the tendency, particularly in Western universities, to “no-platform” any academic with whose views liberals disagree. Conservatives in Asia, like Mr Erdoğan, are not keen on a free press and have a record of closing newspapers. That said India still has a vibrant media.

Some predictions…

The political systems of the West will continue to face extreme disruption, whether Madame Le Pen wins or not. The British Labour Party (which has lost an important by-election as I write) now looks to be in terminal decline. The European Union is facing unprecedented political instability at a time of extreme economic fragility.

My best guess is that the fundamentals of the capitalist system will not change in the Age of Disruption, though economic nationalism will eclipse globalisation. I wrote in the autumn of 2015 that The Marxists are Back but, although Marxism still has deep roots, it is unlikely to be returned to government in any advanced country.

Economic growth will continue to be driven by dynamic enterprises in the private sector which will be financed through liquid international financial markets. The latter will be tempered by bouts of economic nationalism, however, which will increasingly impede hostile cross-border takeovers of the aborted Kraft-Unilever variety.


If the Populists sustain their advance then, at some point, the central bankers will be (metaphorically speaking) taken out and shot. Monetary policy will be restored to the ministries of finance. Overall, banks and bankers are in medium-term decline.

Majoritarian democracy has already mutated into what John Fonte of the Hudson Institute calls post-democracy – in which elites and the powerful institutions they control increasingly exercise more power than elected representatives in legislatures. That is why the Populists exist.

Suspend your political allegiances for one moment and ask yourself one question. What would you prefer – democracy without liberalism or liberalism without democracy? That’s the issue: for you can no longer have both.

[i] See: https://www.theguardian.com/commentisfree/2015/nov/29/climate-change-syria-civil-war-prince-charles

[ii] See: https://en.wikipedia.org/wiki/British_National_Party_election_results

[iii] See: https://en.wikipedia.org/wiki/UK_Independence_Party_representation_and_election_results