Prepare for the revenge of politics. For the past few decades, the quants – mathematicians, physicists and technologists – and their younger brothers, the economists, have been in the ascendant. With their mathematical models and their ability to crunch vast quantities of data, they have shaped the way businesses understand the world and operate within it.
But politics is making a comeback. That was one of the persistent themes at an invitation-only high-powered international conference about systemic risk in the financial services convened by the Global Risk Institute in Toronto this week (I was the rapporteur). As one of the bankers put it, if you want to understand the world economic outlook for 2013, and where your company should invest, you can’t just talk to economists anymore: “You need to talk to political scientists.”
I tested that idea with two thinkers – one an economist, the other a political scientist – who make their living helping businesses understand the world. Perhaps not surprisingly, Ian Bremmer, the political scientist and founder of the Eurasia Group, instantly agreed.
“When I started the firm in 1998, I had to convince people about the importance of political science, and I was not always successful,” Bremmer said. Making that pitch is getting easier – Bremmer now has some 150 employees and 400 clients around the world.
That trend is growing, he believes, and he thinks a major driver is the rise of the emerging markets. Bremmer defines emerging markets as “countries where politics matters at least as much as economic outcomes;” he also points out that over the past five years emerging markets have been responsible for two-thirds of global growth. Put those together and you have a world in which politics matters more.