Entropy: The Defining Characteristic of Global Affairs

Expanding prosperity contributed to the popularity of the doctrine [of harmony of interests] in three different ways. It attenuated competition for markets among producers, since fresh markets were constantly available; it postponed the class issue, with its insistence on the primary importance of equitable distribution, by extending to members of the less prosperous classes some share in the general prosperity; and by creating a sense of confidence in present and future well-being, it encouraged men to believe that the world was ordered on so rational a plan as the natural harmony of interests.1

Politics are made up of two elements — utopia and reality — belonging to two different planes which can never meet. There is no greater barrier to clear political thinking than failure to distinguish between ideas, which are utopia, and institutions, which are reality.2

But in the real world, for a while now I’ve been nagged by this feeling of entropy in global affairs; that order and institutions are giving way to chaos and ungovernability.

Profound transformation in relationship b/w state & man globally over last 25 years. History moves slowly, but entropy is clear as day.

But the other part is acknowledging that we’re nearly 70 years into the post-World War II international system, and 25 years into the post-Cold War era. It all seems to be getting a bit long in the tooth.

Now it’s impossible to explore the concept of entropy in global affairs in a comprehensive manner for a recreational blog…especially during the World Cup. But I thought it might be helpful to try to approach the issue with an analytical framework I gleaned in a lecture hall one cold evening in Italy. What follows is not the answer, but one view. Nobody knows where we’re going—especially the political risk consultants.

Levels of Analysis

  1. Man / human nature (think Hobbes, Machiavelli and Thucydides);
  2. The structure of a state (think Liberalism or Marxism); and,
  3. The international system (think of the context in which states act, i.e., anarchy).

Let’s start micro and telescope out to the macro.


Human nature is unchanging. We know this. Greed and fear continue to motivate mankind, whether in casinos or international politics. But what do we know about the human experience? Is it getting better or worse?

We’ve had a heck of a run over the last 25 years. The unprecedented integration of the global economy, with its relatively free movement of goods and capital, led to an expansion of prosperity that is unparalleled in human history (see exhibit below). It is truly astonishing. A recent Financial Times analysis relays, “In 1990 an estimated 1.9bn people, or more than a third of the world’s population, survived on less than $1.25 a day, according to the World Bank. By 2010 that figure had fallen to 1.2bn, less than a fifth of the people on earth. In the 25 years since the fall of the Berlin Wall those earning between $2 and $10 a day have been the biggest beneficiaries of globalisation.”5 The analysis went on to question whether, given reduced growth expectations for the global economy, the 40% of the world’s population that constitutes a “fragile middle” now risks descending back into poverty.

Observe the unparalleled expansion of prosperity. Source: McKinsey Global Institute,
Observe the unparalleled expansion of prosperity. Source: McKinsey Global Institute, “Financial globalization: retreat or reset?”

To get another view on individuals’ conditions, I pulled some data on substance abuse and suicide in the United States; the figures add weight to the view that Americans’ living conditions are declining (see charts below; click to enlarge).


These data are just for the United States, a country that confronts a number of socioeconomic and political challenges, but one that is not experiencing an acute national crisis.

In Greece, a country suffering from a series of acute crises, suicides reportedly jumped 17% between 2007-2009, 25% in 2010 and 40% in the first half of 2011 compared to the same period in 2010.6 The World Health Organization reported a few cases where individuals deliberately infected themselves with HIV to obtain monthly benefit payments of €700.7

Or take Syria, where beyond the violence and atrocities reported in the news, 15,000 doctors are reported to have left the country after having been targeted for attack or imprisonment, with few medications and scant diagnostic equipment available for patients. In Aleppo, 36 physicians remain compared to 5,000 before the war began.8 And you thought you had trouble getting an appointment.

Relative Deprivation and the “Propaganda of the Deed”

These conditions matter because they shape individuals’ psychology. A growing global pool of disenfranchised people creates greater opportunities for radicalization to take root. Advances in technology make it easier to discover (and be influenced by) news and narratives, and to experience a growing feeling of relative deprivation.9

Writing of the emergence of the Anarchist idea at the turn of the 20th Century—six heads of state were assassinated by anarchists in the 20 years leading up to 1914—Barbara Tuchman describes a world where:

No single individual was the hero of the movement that swallowed up these lives. The Idea was its hero. It was, as a historian of revolt has called it, ‘a daydream of desperate romantics.’ It had its theorists and thinkers, men of intellect, sincere and earnest, who loved humanity. It also had its tools, the little men whom misfortune or despair or the anger, degradation and hopelessness of poverty made susceptible to the Idea until they became possessed by it and were driven to act. These became the assassins. Between the two groups there was no contact. The thinkers in press and pamphlet constructed marvelous paper models of the Anarchist millennium; poured out tirades of hate and invective upon the ruling class and its despised ally, the bourgeoisie; issued trumped calls for action, for a ‘propaganda of the deed’ to accomplish the enemy’s overthrow. Whom were they calling? What deed were they asking for? They did not say precisely. Unknown to them, down in the lower depths of society lonely men were listening. They heard echoes of the tirades and the trumpets and caught a glimpse of the shining millennium that promised a life without hunger and without a boss. Suddenly one of them, with a sense of injury or a sense of mission, would rise up, go out and kill—and sacrifice his own life on the altar of the Idea.10

The State

Monopoly on Violence

Policy Independence and Popular Sovereignty12

If you’re tired of reading / hearing / thinking about the Middle East, then look to Europe for additional examples. In September 2012, George Soros wrote an article calling for debt mutualization / fiscal union (i.e., Eurobonds) to solve the European debt crisis and strengthen the European Union. Here’s the opening line in his piece, which calls for states to relinquish even further sovereignty to Brussels / Frankfurt: “I have been a fervent supporter of the European Union as the embodiment of an open society—a voluntary association of equal states that surrendered part of their sovereignty for the common good.”13 While the Eurobond concept never took off, the idea was fundamentally flawed precisely because it offered a short-term, technical solution to a question whose answer is ultimately political in nature.

And it hasn’t gone away. For years, Europeans have been living in an environment of diminished sovereignty—both state sovereignty and popular sovereignty. Governments have been incapable of fixing the economic crises besetting their countries (such as youth unemployment), in part because they lack policy independence: they’ve surrendered monetary policy to the ECB. And in multiple instances, peoples’ votes have been ignored or overturned. As one observer recently wrote in the London Review of Books:

Europe is ill. How seriously, and why, are matters not always easy to judge. But among the symptoms three are conspicuous, and inter-related. The first, and most familiar, is the degenerative drift of democracy across the continent, of which the structure of the EU is at once cause and consequence. The oligarchic cast of its constitutional arrangements, once conceived as provisional scaffolding for a popular sovereignty of supranational scale to come, has over time steadily hardened. Referendums are regularly overturned, if they cross the will of rulers. Voters whose views are scorned by elites shun the assembly that nominally represents them, turnout falling with each successive election. Bureaucrats who have never been elected police the budgets of national parliaments dispossessed even of spending powers. But the Union is not an excrescence on member states that might otherwise be healthy enough. It reflects, as much as it deepens, long-term trends within them. At national level, virtually everywhere, executives domesticate or manipulate legislatures with greater ease; parties lose members; voters lose belief that they count, as political choices narrow and promises of difference on the hustings dwindle or vanish in office.14

The International System

It is the differential or uneven growth of power among states in a system that encourages efforts by certain states to change the system in order to enhance their own interests or to make more secure those interests threatened by their oligopolistic rivals. In both bipolar and multipolar structures, changes in relative power among the principal actors in the system are precursors of international political change…‘The great wars of history—we have had a world war every hundred years for the last four centuries—’  wrote Halford Mackinder in 1919, ‘are the outcome, direct or indirect, of the unequal growth of nations…’  The critical significance of the differential growth of power among states is that it alters the cost of changing the international system and therefore the incentives for changing the international system.16

Interdependence in the world political economy generates conflict. People who are hurt by unexpected changes emanating from abroad, such as increases in the prices that producers charge for oil or that banks charge for the use of money, turn to their governments for aid. So do workers, unemployed because of competition from more efficient or lower-wage foreign production. Governments, in turn, seek to shift the costs of these adjustments onto others, or at least to avoid having them shifted onto themselves. This strategy leads them to pursue incompatible policies and creates discord…If discord is to be limited, and severe conflict avoided, governments’ policies must be adjusted to one another. That is, cooperation is necessary.17

Taking a look back over the last 25 years, the global environment can broadly be viewed in four phases, corresponding to U.S. Presidential administrations, which isn’t surprising because the United States has been the guarantor of global stability and protector of lines of communication. In extremely broad brushes:18

  • George H.W. Bush: managed the collapse of the Soviet Union and sought a global approach toward security cooperation; was ultimately conservative / status quo in nature and tilted against revisionist policies and powers (i.e., Gulf War).
  • Bill Clinton: took security cooperation further with a policy of democratic enlargement, whereby U.S. military force could be used both to change conditions / governance within countries, and serve as a demonstration effect for international organizations / coalitions (UN, NATO / IFOR) to participate in security cooperation (i.e., Somalia, Bosnia).
  • George W. Bush: despite campaigning on his father’s approach to foreign policy, following 9/11 security cooperation gave way to “coalitions of the willing” and unilateral military action when deemed necessary; ardent belief in the ability of the U.S. military / government to change foreign societies; nevertheless, went through the UN for the Iraq War.
  • Barack Obama: a confusing approach; unilateralist action via drones and special operations raids; a believer in the responsibility to protect doctrine, but inconsistent in its application; preaches of a rules-based international system but doesn’t always adhere to established rules / policies nor his commitments (i.e., red line with Syria); ineffective so far at bringing stability to the international system in the face of revisionist challenges (i.e., Russia / Ukraine).

The point is that all these actions ultimately have led us to a period where the United States seeks a breather from its 25 years as the “world’s policeman” and seeks to husband its power after having changed the rules of the game. And that power may be in relative decline precisely when the global environment is becoming less benign, and rising / peer competitors (e.g., China and Russia) are becoming more aggressive toward their neighbors.

International Institutions

Beyond geopolitics, the international system can viewed through its institutions. This post has gone on long enough so I will just mention two: the Bretton Woods institutions of the IMF and the World Bank.20

Source: McKinsey Global Institute,
Source: McKinsey Global Institute, “Financial globalization: retreat or reset?”

We’ll see where all this ends up. Policymakers in emerging markets have expressed frustration at the United States’s unilateral approach toward monetary policy—Brazil’s Finance Minister, Guido Mantega, spoke of “currency wars” and the Reserve Bank of India’s Governor, Raghuram Rajan, has called for greater coordination and cooperation to avoid spillover effects—seemingly questioning the IMF’s ability to engage as an honest broker. The dominance of the World Bank in lending to developing economies is disappearing, along with the conditions for better governance, anti-corruption, etc. that came with its financing. New institutions are emerging. Maybe it’s all for the better.

Utopia and Reality

Nothing is more revealing of the nature of the nineteenth century than the misguided complacency and optimism of 1913 and early 1914 and the misconceptions with which the world’s leaders went to war in August of 1914. The events of the following thirty years, from 1914 to 1945, showed the real nature of the preceding generation, its ignorance, complacency, and false values. Two terrible wars sandwiching a world economic depression revealed man’s real inability to control his life by the nineteenth century’s techniques of laissez faire, materialism, competition, selfishness, nationalism, violence, and imperialism…The hope of the twentieth century rests on its recognition that war and depression are man-made, and needless. They can be avoided in the future by turning from the nineteenth-century characteristics just mentioned and going back to other characteristics that our Western society has always regarded as virtues: generosity, compassion, cooperation, rationality, and foresight, and finding an increased role in human life for love, spirituality, charity, and self-discipline.22

This post opened discussing capital markets, with asset prices across-the-board defying gravity. Maybe the market has it right. Maybe this is the best of times and things will continue to get better—at least for owners of capital and assets. Might as well have a dance party on a deck. It would not surprise me to see the capital markets carry on in The Matrix with assets continuing to push to new highs…especially when the marginal buyer is likely playing with other peoples’ money (maybe yours).

I don’t know the future, but I wonder if the markets are pricing for Utopia; market participants certainly are complacent. I also wonder if tectonic change is afoot. Whether discussing man, the state, or the international system, global conditions betray a sense of entropy—of hope giving way to anger and fear, of order giving way to chaos, and all while the relative costs for changing the system that you and your parents grew up in are diminishing. Instead of compassion and cooperation, apathy, indifference and discord seem to be gaining traction. It makes me wonder if—not tomorrow, probably not next year, maybe not even in this decade—a world where people talk about asset prices will be a quaint memory.

But this process will bring about calls for order, rules and a new international system, as it has for hundreds and hundreds of years. What form will the next system take? Which norms will it advance? Which polities will shape it? Nobody knows. And perhaps it doesn’t matter today. The World Cup is on, the United States advanced from the “Group of Death,” and the kind folks at AB InBev remind us that these matches are best enjoyed over ice-cold Budweiser.  Where would we be without our bread and circuses?

# # #


22 Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (1966), pgs. 1310-11.


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