Remirro de Orco was made the governor of Romagna by Cesare Borgia for one purpose: to silence rebellious voices and pacify an insurgency. Romero failed, and his body was found in pieces in the main piazza of Cesena in 1502. Machiavelli recalled that “the ferocity of the spectacle left the people at once satisfied and stupefied.” The goal was that the brutal loss of a life would have saved many lives if another revolt had taken place.
There is discriminant punishment and there is indiscriminate punishment. There is proportional response and there is disproportional response. There is malevolent harshness and there is benevolent harshness. And someone may say there is a discriminate, disproportional, benevolent harshness, and that this is the time to apply it against a tyrant like Putin, in the form of cutting off completely any Russian exports and imports, and especially those related to energy.
Some analysts have interpreted Putin’s Ukrainian war as a ploy to reestablish a Russian Empire of influence. The problem of course is that Putin probably never understood – among a myriad of other things – that in the City of God, Augustine discusses heaven and earth as interwoven with overlapping terrestrial jurisdiction. The behavior in one determines the outcomes in the other. To be a player in the geopolitical evolving ordination (where the balance of power is determined), the player needs total capabilities that match the geopolitical aspiration (like in Augustine’s writings human behavior needs to comply with the heavenly aspiration). The application of justice in the evolving balance of power presupposes order, and the achievement of the latter may require discriminate, disproportional, benevolent harshness, as discussed by Hobbes.
However, any effort to propitiate a delusional Caesar is self-defeating, as appeasement unhinges any current or targeted balance of power. Propitiation and conversion presuppose that you are dealing with a Constantine ready to move Rome to its new place in Constantinople. When the market gets into a new balance of correctional trajectory, the downfall is not proportional. Rather, disproportionality is what marks the ordination of the new balance. On average, the markets have dropped about 7.5% in the last six months. The question is, however, – as the following graph may indicate – if, when disproportionality is observed, we should be making preparations for a new market regime. As the following figure portrays, five very well-known securities (DraftKings, Teledoc, Alibaba, Facebook, and ARK’s flagship fund) have lost between 42 and 67 percent of their values in the last six months. There is no doubt that these losses of very well-known companies are disproportional to the average market losses.
The Ukrainian shock could turn out to be a tipping watershed moment with intensifying ramifications. The implications for energy prices and flows, inflationary pressures, grains, fertilizers, minerals, food shortages, supply chain disruptions have been well-documented. The medium-term consequences of the above could be a recession (especially in Europe) within 6-12 months while prices stay elevated.
In the midst of reorganizing the new world order, particular sectors may experience an upward boost. We should not be surprised if LNG, biofuels, renewable energy, along with the food supply chain and the accompanying fertilizer industry (especially one that uses hydrogen) demonstrate particular strength.
The ordination of the new balance does not mean that securities or sectors – as those discussed above – will be excluded from the new balance. After all, in the Augustinian strategy “you don’t destroy what you are trying to preserve.” Rather, you work towards a reformation, and hence Machiavelli’s embracing of Luther’s Reformation (1517), as well as the mental emancipation of his strategy: The lightness of being becomes bearable when reformation is at stake (let’s recall that Machiavelli had been tortured).
Isaiah Berlin saw something unique in Machiavelli: Realism. The ideal is unattainable. We live in a world of competing realisms. In such an environment where the greater evil is to be avoided, an economy of violence may be needed as a necessary mechanism that would preserve the virtues that we uphold as dear and close to our hearts and minds.
The market’s discriminate, disproportional discipline is not an end in itself. It is a means to an end that should ultimately lead to cleansing and catharsis (balance sheets, corporate strategies, excess spending, boards etc.). From that perspective, it represents benevolent harshness. Machiavellian tactics are not ends to themselves. Rather, they are means to a benevolent harshness that advance a superior state of affairs. This is where Machiavelli reads like Augustine while foreseeing the Leviathan by Hobbes.
A few days ago, I started re-reading particular sections of the original 1651 edition of Leviathan(published just three years after the Westphalian Treaty) courtesy of The Remnant Trust. Hobbes is the anti-Grotius. Everything is about the Sovereign Power. The citizens are surrendering their rights to the Prince who can protect them from the horrors and the chaos of “a war of all against all”. Westphalia legitimized the State as the ultimate entity of international order. Leviathan established the necessary political theory that the State needed to justify its legitimacy, authority, and governance within the state, but says nothing of the jungle of the international order and balance of power. Maybe words lose their meaning when the party of oligarchs brings terror in the affairs of a state like they did in ancient Corcyra (today’s Corfu island, in the Ionian Sea). The stasis in Corcyra cost Athens its statecraft focus during the fifth year of the Peloponnesian War.
Augustine’s checklist of a just war (426 AD) was evolved by Machiavelli’s Prince (1532) in the sense of restraining evil through particular means in order for the balance to be preserved. Adam Smith saw in the invisible hand of the markets (1776) the cathartic element of balance, only to have the Founding Fathers introduce in the Federalist (1787-1788) the concept of checks and balances, and Immanuel Kant in 1795 linked republics together in a balance of power endeavor by the honoring of mutually accepted Articles of peace. And as we wrote two years ago, the disintegration of the 1648 Westphalian world order was accelerated by another Russian (Czar Alexander). However, the fact of the matter is that perpetrators (such as Napoleon) are eventually isolated, and another balance of power emerges (Vienna, 1815). However, a flawed new balance of power in the absence of a leading superpower (Versailles, 1919), plants the seeds of the next destruction (WWII) until the superpower brings together geopolitics and geoeconomics on a global scale (Bretton Woods, 1944). When that balance is jeopardized (due to a mismatch between capabilities and aspirations as it was in the 1960s), then a fragile system emerges (Camp David, 1971) which is marked by a series of crises until that is replaced by the emerging Day After regime of a new order in the balance of power marked by bipolarity and led by a hyperpower.
From Augustine and Machiavelli to Hobbes and Putin’s Ukrainian War:Market Regime and the New Balance of Power
Author : John E. Charalambakis
Date : March 7, 2022
Remirro de Orco was made the governor of Romagna by Cesare Borgia for one purpose: to silence rebellious voices and pacify an insurgency. Romero failed, and his body was found in pieces in the main piazza of Cesena in 1502. Machiavelli recalled that “the ferocity of the spectacle left the people at once satisfied and stupefied.” The goal was that the brutal loss of a life would have saved many lives if another revolt had taken place.
There is discriminant punishment and there is indiscriminate punishment. There is proportional response and there is disproportional response. There is malevolent harshness and there is benevolent harshness. And someone may say there is a discriminate, disproportional, benevolent harshness, and that this is the time to apply it against a tyrant like Putin, in the form of cutting off completely any Russian exports and imports, and especially those related to energy.
Some analysts have interpreted Putin’s Ukrainian war as a ploy to reestablish a Russian Empire of influence. The problem of course is that Putin probably never understood – among a myriad of other things – that in the City of God, Augustine discusses heaven and earth as interwoven with overlapping terrestrial jurisdiction. The behavior in one determines the outcomes in the other. To be a player in the geopolitical evolving ordination (where the balance of power is determined), the player needs total capabilities that match the geopolitical aspiration (like in Augustine’s writings human behavior needs to comply with the heavenly aspiration). The application of justice in the evolving balance of power presupposes order, and the achievement of the latter may require discriminate, disproportional, benevolent harshness, as discussed by Hobbes.
However, any effort to propitiate a delusional Caesar is self-defeating, as appeasement unhinges any current or targeted balance of power. Propitiation and conversion presuppose that you are dealing with a Constantine ready to move Rome to its new place in Constantinople.
When the market gets into a new balance of correctional trajectory, the downfall is not proportional. Rather, disproportionality is what marks the ordination of the new balance. On average, the markets have dropped about 7.5% in the last six months. The question is, however, – as the following graph may indicate – if, when disproportionality is observed, we should be making preparations for a new market regime. As the following figure portrays, five very well-known securities (DraftKings, Teledoc, Alibaba, Facebook, and ARK’s flagship fund) have lost between 42 and 67 percent of their values in the last six months. There is no doubt that these losses of very well-known companies are disproportional to the average market losses.
The Ukrainian shock could turn out to be a tipping watershed moment with intensifying ramifications. The implications for energy prices and flows, inflationary pressures, grains, fertilizers, minerals, food shortages, supply chain disruptions have been well-documented. The medium-term consequences of the above could be a recession (especially in Europe) within 6-12 months while prices stay elevated.
In the midst of reorganizing the new world order, particular sectors may experience an upward boost. We should not be surprised if LNG, biofuels, renewable energy, along with the food supply chain and the accompanying fertilizer industry (especially one that uses hydrogen) demonstrate particular strength.
The ordination of the new balance does not mean that securities or sectors – as those discussed above – will be excluded from the new balance. After all, in the Augustinian strategy “you don’t destroy what you are trying to preserve.” Rather, you work towards a reformation, and hence Machiavelli’s embracing of Luther’s Reformation (1517), as well as the mental emancipation of his strategy: The lightness of being becomes bearable when reformation is at stake (let’s recall that Machiavelli had been tortured).
Isaiah Berlin saw something unique in Machiavelli: Realism. The ideal is unattainable. We live in a world of competing realisms. In such an environment where the greater evil is to be avoided, an economy of violence may be needed as a necessary mechanism that would preserve the virtues that we uphold as dear and close to our hearts and minds.
The market’s discriminate, disproportional discipline is not an end in itself. It is a means to an end that should ultimately lead to cleansing and catharsis (balance sheets, corporate strategies, excess spending, boards etc.). From that perspective, it represents benevolent harshness. Machiavellian tactics are not ends to themselves. Rather, they are means to a benevolent harshness that advance a superior state of affairs. This is where Machiavelli reads like Augustine while foreseeing the Leviathan by Hobbes.
A few days ago, I started re-reading particular sections of the original 1651 edition of Leviathan (published just three years after the Westphalian Treaty) courtesy of The Remnant Trust. Hobbes is the anti-Grotius. Everything is about the Sovereign Power. The citizens are surrendering their rights to the Prince who can protect them from the horrors and the chaos of “a war of all against all”. Westphalia legitimized the State as the ultimate entity of international order. Leviathan established the necessary political theory that the State needed to justify its legitimacy, authority, and governance within the state, but says nothing of the jungle of the international order and balance of power. Maybe words lose their meaning when the party of oligarchs brings terror in the affairs of a state like they did in ancient Corcyra (today’s Corfu island, in the Ionian Sea). The stasis in Corcyra cost Athens its statecraft focus during the fifth year of the Peloponnesian War.
Augustine’s checklist of a just war (426 AD) was evolved by Machiavelli’s Prince (1532) in the sense of restraining evil through particular means in order for the balance to be preserved. Adam Smith saw in the invisible hand of the markets (1776) the cathartic element of balance, only to have the Founding Fathers introduce in the Federalist (1787-1788) the concept of checks and balances, and Immanuel Kant in 1795 linked republics together in a balance of power endeavor by the honoring of mutually accepted Articles of peace. And as we wrote two years ago, the disintegration of the 1648 Westphalian world order was accelerated by another Russian (Czar Alexander). However, the fact of the matter is that perpetrators (such as Napoleon) are eventually isolated, and another balance of power emerges (Vienna, 1815). However, a flawed new balance of power in the absence of a leading superpower (Versailles, 1919), plants the seeds of the next destruction (WWII) until the superpower brings together geopolitics and geoeconomics on a global scale (Bretton Woods, 1944). When that balance is jeopardized (due to a mismatch between capabilities and aspirations as it was in the 1960s), then a fragile system emerges (Camp David, 1971) which is marked by a series of crises until that is replaced by the emerging Day After regime of a new order in the balance of power marked by bipolarity and led by a hyperpower.