Whenever I’m asked to express a view upon the prevailing investment climate, I tend to show a series of three schematic demand graphs depicting, in turn:
- a rising straight line to represent the steady secular upswing occasioned by the contemporary industrialisation and urbanisation of a large part of the world’s population;
- a sine wave to show the cyclical fluctuations around this which we Austrians believe to arise from the instabilities inherent in our system of credit;
- and, finally, an ECG plot to mimic the manic-depressive overlay of financial market hyperactivity — a dance of dervishes which certainly draws some of its rhythm from the so-called "fundamentals," but which is often no more than the hallucinatory frenzy induced by the narcotic vapours of too much leverage.
Though much of the daily grind involves making assessments of the noisier, latter pairing, the first retains a key role in the decision process and, though the least volatile of the three, it is not a wholly trivial task to gauge its vitality and strength.
Naturally, once the conviction arises that what we are witnessing is the unfolding of a major socio-economic phenomenon, this is not a judgement which lends itself to short-term revision. Still, this is not to say that risks to this trend do not, in fact, exist.
That these are mainly political, rather than economic, in nature means that while often a matter of unforeseeable electoral caprice, they may yet remain true to the march of history — which, today, can be too readily seen as a creeping, but inexorable, anabasis away from the republic of individual liberty and on toward the Reich of intrusive collectivism.
Thus, the present, widespread resurgence of a petulant and suspicious nationalism is one development which may yet divert the locomotive of emancipation and enrichment off the main line and into the barbed-wire sidings of the gulag, helping beat ploughshares back into swords as it goes. This primitive xenophobia applies not just to the import of goods, but also to that of people and even of capital from abroad.
Indeed, it is all too characteristic of the prevailing tide of distrust that foreigners’ money is only grudgingly welcomed by the usual inveterate debtor nations if it takes the form of a passive (and preferably a sovereign) loan and, even then, only to the extent that the obligation is not prevented from slipping through the lender’s hands by way of a steady depreciation of the currency in which the loan was contracted.
Added to this has been a worrisome rise in the expropriation of private property, especially where it consists of one of the more immobile pools of capital — archetypally mine sites and oil fields.
Here, we should not confine ourselves to a consideration of the rough, political banditry being practiced in the likes of Venezuela and Bolivia. Rather, before we shy too many stones at the surrounding glazing, we should note that these are only extreme cases of a rapacity which has seen the imposition of retrospective taxes and ramped-up royalties, the forced "re-negotiation" of commercial leases, and the insidious extortion of "social responsibility" bribes (ostensible "good works" which are actually demanded either to buy votes for the local nomenklatura or to further the insidious cause of the Platonic One-World guardian class).
We should harbour no illusions about the supposedly high-minded egalitarianism in which these last are meant to be rooted. These are all policies enacted for the sole benefit of the venal ruling classes. They work to the detriment of the owner-shareholders of the businesses so gouged and are thus both an infringement of freedom and a destruction of capital, no matter how willingly the preening CEO in charge engages himself as an accomplice in this theft.
Accordingly, they are acts all the more reprehensible when the afflicted companies are based in those Anglo-Saxon nations which most pride themselves on their supposed commitment to the cause of the free market and the rule of law.
A combination of the above dangers is also to be recognised in the Listian promotion of "national champions" by the likes of Messrs. Sarkozy and Putin (though we can perhaps temper our criticism of the latter by noting that he is neither so narrowly mercantilist as his Euro-bashing French counterpart, nor is it always so clear that ownership of the corporations for whose control he is contending was honestly acquired or is responsibly being discharged).
Next, we can point to the ongoing disgrace of that impenetrable thicket of farm subsidy, tariff barrier, and naked trade restriction which is often dressed up today with the meretricious verbal garlands of "energy independence" or "consumer protection" (not to mention the even more Orwellian abuse of the term "free trade").
When we consider all the harm this does, especially to the poorer producers and consumers of the goods affected, we can only aver that if the Bono’s of this world really wanted to do some good, they could start by learning a little economics before spouting off between sets.
They might then realise that they would be far better employed in arguing the case for the aspiring third-world entrepreneur to have unhampered access to the world market instead of propounding another dreary round of statist charity-mongering (i.e. invidious tax redistribution mixed with market-stultifying surplus dumping) every time they step out of their gleaming limos and onto the awaiting red carpet.
A further danger is that posed to a senescent world order when its existing hegemon is growing tired and irascible and where the weight of his mailed fist is becoming resented far more than the soft stroke of his ensheathing velvet glove is appreciated.
By exaggerating and exploiting the perils emanating from new ideologies while reinvoking the faded demons of an expired one, the Hegelian ratchet of action and reaction, of belligerence and blowback, is surely aggravating all the antagonisms discussed above: a policy which may well end with the horrid doors of the temple of Janus Quirinus being thrown fully open once more.
Finally, we can hardly overlook the obstacles to genuine material advance which issue from the dismal oracles of that eschatological and profoundly anti-human cult of Gaia worship known as "environmentalism" — a leitmotiv which so informs our present political rhetoric that it has become little more than the liturgy of a state-sponsored religion which handily bathes all of the inquisitor’s cowl, the commissar’s cosh, and the tax gatherer’s claw in a falsely-reassuring, panda-friendly, green glow.
Sadly, little resistance to this is ever heard from among the grandees of the managerial class — the self-enriching CEOs who give true capitalism and genuine entrepreneurialism a bad name among the less discerning. These asymmetrically-rewarded plutocrats, champions of the corporatist state, are all too ready to play along with this humbug (as they are with most other governmental intrusions), happy that there are sufficient incentives to comply being offered in the form of taxpayer subventions, the suppression of competitors, or the personal approbation they can expect from the regime and from its pet intellectual apologists — carbohypocrites, every man jack of them!
Amid this gloom, the hope we must cling to is that, despite the uncomprehending prejudices regularly and cynically stirred up in the masses by the insufferable presumption of their leaders, the "spontaneous order" which characterises our economic organism will continue to provide it with a powerful and constantly-adapting system of repair and recovery. We must not forget that this is a self-organising principle which asserts itself exclusively through the courageous exercise of entrepreneurship in utilizing the previously-harvested fruits of thrift and stewardship — each of them institutions in whose defence we must therefore be untiring.
Among us six and a half billion human cellules there are, regrettably, any number of pathogens, parasites, and cancer precursors to plague us and yet the "invisible hand" of our shared immune system usually manages to overcome all but the worst of their onslaughts, so allowing the rest of us the chance to develop and grow to somewhere near our true potential.
For as long as that precarious advantage is maintained, the secular trend to a resource-intensive deepening of the global capital structure will also persist, allowing us to put aside for now our darker forebodings and to focus on the more concrete (though, presumably less existential) cyclical disturbances which we face in the here and now, retaining a certain faith that material progress can still be achieved — and some measure of liberty retained — in spite of whatever unnecessary disruptions they may meanwhile entail.