Convergence: A Tale of Two Tales

Charles Dickens’ 1859 classic A Tale of Two Cities is famous for its opening lines: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of madness, it was the age of belief, it was the age of unbelief, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was winter of despair, we had everything ahead of us, we had nothing before us, we were all going straight to Heaven, we were all going straight the other way…”

Set at the time of the French Revolution (1775-1793), the story compared and contrasted two cities, London and Paris, but was actually a commentary on how Britain was undergoing its own gradual change, as France was about to enter into revolution with the overthrow of the monarchy. On an individual level, the story was about personal redemption and resurrection, as the English hero dies as a substitute guillotine for his French friend.

Dickens’ opening lines apply easily to the current age of pandemic and war, where everything is polarized in democracy versus autocracy, the war of freedom versus evil, black versus white. Dickens skillfully weaved a story that penetrated not only into personal lives and minds, but also into the larger context of the tumultuous age of emerging capitalism and the harrowing shift from feudal monarchy to a republican and industrial era.

We don’t have such a Dickens today, only science fiction or fantasy stories, like The Matrix or JRR Tolkien’s Lord of the Rings, stories about good versus evil, white lords versus darkness. But former German Chancellor Angela Merkel expressed today’s quantum reality as follows: “Anything is possible; take nothing for granted,” in his Harvard commencement address. It is true that what was unthinkable has become reality – Europe is now back at war, armed with everything from media to finance.

Traveling through France and Holland in May, I saw that the vibe was reminiscent of the roaring 1920s, when people were partying, restaurants were full, everyone just happy to be out of lockdown and of confined loneliness. And yet, in Ukraine, a deadly war is unfolding, with more than 6.8 million refugees outside the country, the world’s largest refugee crisis since World War II.

The contrast between peace and prosperity and war and disaster at the same time could not be starker.

With truth having been sacrificed with war, we now have two main narratives between an “idealistic” Western rules-based order and a “realistic” view of the rest of the world (Rest). NATO claims to fight to defend the freedom of individual nations to choose their own sovereignty, which makes perfect sense. For them, it is a just war. But how fair is it when only Ukrainians are dying while Europe is still buying Russian oil and gas?

The Russian view, from President Vladimir Putin’s own historical perspective that Russia and Ukraine have the same roots, is that NATO’s eastward expansion has crossed the national security red line. of Russia, so Russia acted to defend its western border to stop NATO expansion. This line is articulated by the realistic vision of international relations of Professor John Mearsheimer of the University of Chicago in his books and his lectures on YouTube.

After 100 days of fighting, in which no one is sure who wins or loses, I gave up watching the BBC or CNN and instead went straight to YouTube to explore very different stories and perspectives. YouTube at least gives you a choice ranging from short blogs with emotional take on bordering on conspiracy theory to long, boring but insightful analyzes of how events unfold. As the futurist Samo Buja said, how you interpret unfolding events depends a lot on the pattern in your head that is loaded with your own values ​​and biases. Listening to the perspectives of India, Latin America and Africa gave me a different view of how they see the world changing.

As this Condivergence series has explained through complexity studies, there is no simple objective truth that everyone will agree on. All we can discern from the ever-changing complexity is that a pattern emerges from the mess. Those who can read this model and act before everyone else will benefit. A simple linear projection is just one of many different paths possible in different directions. These nonlinear paths can be curvilinear – in waves, cycles, circles, or loops – or they can be quantum leaps into an entirely different space. The conventional linear approach in which the future is an extension of the past (the tendential mega-projection of history) is overly simplistic and outdated.

Seen from a planetary systemic whole, the pattern that emerges in this fog of war is that the West, some one billion wealthy Americans, Europeans and Japanese, wants to maintain the status quo – their rules-based order that preserves their right to dominate the story. They claim it is rules-based and democratic, but in today’s world of eight billion people, seven billion have never voted to agree to such rules. Thus, the Western order is challenged by 1.4 billion Chinese, 1.3 billion Indians and around 1.6 billion Muslims from Indonesia to North Africa. To this must be added Russians (146 million), Latin Americans (665 million) and Africans (1.2 billion) who represent diverse opinions on how the world should be run, challenging the Western right to dominated by media, money, military and technology.

The West cannot whitewash its imperial past, when it brutally seized the resources of the Remnant as if it were natural and its right. For the rest, today’s injustices have a lot to do with this bloody colonial history, in which the West divided and ruled. The troubles in Africa, the Middle East, and Latin America are totally tied to how the West fought for its natural resources, such as oil, slaves, and gold. With their fluency in the English language and natural argumentative skills, Indian thinkers are now emerging as an important voice from the rest.

In their “choose your side” narrative, India’s External Affairs Minister, S Jaishankar, made it very clear: “We choose our own side”. Those who argue that India must align itself with the West to contain China forget that the British took up to US$45 trillion from the Indian subcontinent during the British occupation of India and left up to to three million Indians dying of starvation during WWII (just google this). Africa and the Middle East suffer because their borders are straight lines determined by colonization that bear no resemblance to geography or tribal history, so border disputes become inevitable over time.

PwC’s global projections estimated that by 2050, the world ranking in terms of purchasing power parity (PPP) of GDP would be China (1), India (2), Indonesia (4), Brazil (5), Russia (6) and Mexico (7). From the west, only the United States and Japan would remain in the #3 and #8 positions. Based on GDP per market exchange rate (MER), the top eight would exclude Russia, the United States being No. 2, Japan 5 and Germany 7. In other words, all other things being equal, China, India, Indonesia, Brazil and Mexico, which already had 43% of world population in 2022, would be a great power by 2050.

Using the MER basis, these remaining five economies would account for 67.4% of the total GDP (MER) of the top eight countries by 2050, and the rest would be 12 countries (including South Korea), accounting for 65% of the Top 20 countries in 2050. 2050. So the picture is that in terms of population and GDP projection, the West will be a significant minority compared to the rest, powerful but more dominant.

This is a seismic shift in world affairs. The stories by 2050 will change to reflect this change. At that time, no nation could dominate the Remnant, not even militarily or financially. A more democratic narrative should seriously consider the opinion of the Remnant, because no one can predict whether the multipolar world will split into blocs or become even more integrated and yet separate at the same time (convergence in reality).

How should investors view these global trends? The correlation between GDP and investment returns is never linear or simple. Investing in the Chinese stock market has not yielded returns as good as investing in US markets; it is certainly more volatile. My investment in Japanese stocks, betting on a reversion to the mean after the 1989 bubble and considering that the Japanese economy is very strong, was very disappointing. And yet, I can disclose that my investment in Indian exchange-traded funds (ETFs) has generated long-term growth, despite short-term volatility.

I won’t be here in 2050, but if you ask me where I would put money in the long term, I would invest in Indian, Indonesian and Vietnamese ETFs. These are economies that build their own future, without trying to get caught up in the game of the great powers. The way intellectuals in these countries define their own vision of their destiny could very well be a game-changer in the world.

Coming back to Dickens, the new A Tale of Two Cities could well be A Tale of New Delhi/Beijing, Bangalore/Shenzhen or even Nusantara/Rio de Janeiro. Three decades from now, it will still be the best of times and the worst of times. It’s not “either or” but “and”. We live in a world that is good and bad at the same time.

As the Bob Dylan song says, “times change”.


Tan Sri Andrew Sheng writes about global issues affecting investors

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