We are experiencing a paradigm shift: A geopolitical and geoeconomic
shift accompanied by scientific, technological, financial, and energy
evolutions. The world is changing, and we are changing along with
it. Over the course of the last four decades, understanding the
evolution of the credit cycle could have been sufficient to manage
assets. The world was living under conditions of bipolarity or unipolarity
(mostly), and for the last three decades globalization, market
liberalization, and democratic movements created conditions of prosperity and growth. The tailwinds of prosperity and geopolitical stability (ensured by America’s defense of global public goods, such as trade routes), are facing risks from within (political as well as financial) and uncertainties in the external environment. Thus, the transformation/paradigm shift may be changing and with it the tailwind may be transforming into a headwind.

Daniel Defoe’s Robinson Crusoe is neither about the myth of modern individualism nor about a person’s return to a state of nature. It’s about the establishment of a new country whose people did not desire to return to the old monarchical regime where liberties were oppressed. Defoe published his book in 1719 and the book’s story is during the Restoration period for England (1659-1686) when Oliver Cromwell’s democratization was
dethroned in favor of old monarchical forces. Defoe opposed the Restoration and Crusoe is called to create a new alternative polity in the midst of a shipwreck. Crusoe needs to rebuild a modern state as part of an international system. Crusoe is a realist who looks into a new establishment whose top priority is survival and defense to be followed by sovereign integrity and development. Once Crusoe had secured a population (per
Aristotle’s instructions), he secured the defense and the territorial integrity, and then he committed his state to an international order by siding with the captain and the mate while opposing the mutineers who approached his island-state.

Crusoe will question Hobbes’s social contract because he believes that if the sovereign broke the contract s/he deserves to be deposed. Crusoe believes that some rights are inalienable and not transferable to the sovereign. America stood to take over and Jefferson was being tutored to draft the Declaration of Independence.

John Locke in his Second Treatise of Government (drafted in 1690, just four short years after Crusoe’s adventure) is for a new polity, and outlines for the forthcoming leader of the new international system the elements for that new polity in order to “begin the world anew”, and in order to replace the old system with the new one where people will have the right to own property and whose assets can increase through a free market system. The
new system will be governed by the consent of the governed and will be characterized by the inalienability of the rights to life, liberty, property, and freedom from absolute and arbitrary power. Locke would go even further by declaring the right to rebellion against arbitrary government. Locke was showing to Jefferson the way to declare liberation from oppression and to Lincoln the path for the Emancipation Proclamation.

So, while for Hobbes power makes the law and for Kant utility will advance peace (why would a state choose war over trade gains?), comes the birth of a nation that espouses the metaphysical realities of protecting the rights of the citizen, especially her/his right to life, liberty, property, and the pursuit of happiness. The Declaration of Independence is indispensable for both freedom causes as well as material causes. It’s a Declaration of a new state of being, of a new international order, where the United States’ role will be
unique from colonial times to the present day.

We may have neglected that the great books of classical thought guided the authors of The Federalist Papers where thoughts about statecraft, strategy, and power across history are outlined and debated. When Hamilton, Madison, and Jay debate the ideas in the writings of “Publius”, they write for us and the evolving international order and call our attention to the flaws seen in previous democracies such as the Athenian democracy and
the disaster that Pericles brought to the Athenians (see Hamilton’s no. 6) whose democracy was susceptible to mobs and internal discord.

The emerging reality of the new international system may resemble something like the following schematic:

There cannot be real portfolio alpha apart from understanding the new and evolving international paradigm of the balance of power and the emerging new order. Over the weekend, I walked out of Monticello and Mt. Vernon and understood the power of Washington’s Farewell Address which encompasses almost all the elements of the evolutionary forces involved in the literature and practice of statecraft: First, watch that the system doesn’t break down into tribalism and bitter factionalism. Second, when choosing
war make sure that it’s a worthy and just cause. Third, realism should be paired with moral idealism, “observe good faith and justice towards all nations…”, so that America “will be worthy of a free, enlightened, and at no distant period, a great nation, to give mankind the magnanimous and too novel example of a people always guided by an exalted justice and benevolence.” Finally, the new polity cannot just depend upon its brilliant institutions. The future would depend on the private virtues and dispositions of the people, of the formation of a character capable of preserving and advancing an order that honors the principles
upon which the system was established.