A couple of weeks ago I found myself strolling through Soho in London, at a respectable hour, behaving in an entirely respectable way.

I popped into the Coach and Horses on Greek St to pay homage to Peter O’Toole and Jeffrey Barnard, and on my way out passed through Dean St. Unusually maybe, my thoughts turned to Karl Marx and Charles Dickens. Marx lived at 28 Dean St (at the time the area was populated by doctors, architects, publishers and lawyers) and Dickens had worked in a theatre nearby (73 Dean St).

I wondered if they had ever met – there is no record of them having ever done so, though both had the same pre-occupation, the social and economic side-effects of the industrial revolution in Britain, especially the plight of those cast aside by the locomotive of what was then the world’s most powerful economy.

For example, Dickens’ book ‘A Christmas Carol’ published in 1843 was followed a few years later by Marx/Engels’ Communist Manifesto. There is evidence that in his own writing, Marx referred to some of Dickens’s work (and characters like Mr Pecksniff in Dickens’ 1842 book Martin Chuzzlewit, with Dickens later coining the term ‘pecksniffian’ to denote someone of high moral principles). Yet, even though their attention was grabbed by the same problems, Marx was an advocate of revolutionary solutions, and Dickens a fan of a more measured, benevolent approach.

If they were to meet today, I wonder what their collective passions might be fired by?

At the beginning of the ‘Manifesto’ Marx wrote ‘a spectre is haunting Europe—the spectre of Communism. All the powers of old Europe have entered into a holy alliance to exorcise this spectre’. What for example might that spectre be?

They might discuss how the two large communist countries have become authoritarian states and the ways in which they are weigh on and actively impinging on European democracy. Dickens would surely hold Marx to task for ‘how it all went so wrong’.

Marx might try to correct the error of communist ways by writing ‘A Democratic Manifesto’, abolishing the concentration of power in small groups, tight ownership of media and social media and much greater use of collective decision making. Dickens might plot the trials of naïve leaders (there are still a few judging by the courting of Viktor Orban) as they struggle to negotiate the obstacles put in their way by the former communists.

If poverty was the greatest obstacle of the mid 19th century, perhaps the biggest challenge in developed countries is from the ways in which, for the first time ever, technology is permitting enormous changes and variability in the ways we socialise, we think, are educated and the ways we look. Two of the stock market trends of 2023  – AI and obesity drugs – betray this.

For his part Marx, who greatly valued the social aspect of human life, and who feared that capitalism might destroy society (not yet), might well take against the power of social media and soon AI firms. He might build up an impressive book of evidence – the ways in which social media leads to deteriorating sociability (apparently most couples now meet online, and there is a loneliness epidemic), societies appear more divided than ever, especially on questions of identity and values. It is also now possible to control and manipulate humans through technology than ever before.

For his part, Dickens might have difficulty writing about an atomised world, where people are so easy to take offense and where, despite material wealth, human development is regressing (Oliver Twist might choose an entirely different path – perhaps continuing life in a gang of scammers and David Copperfield would vault from poverty through the prism of TikTok).

If we needed proof of the prowess and relevance of either man, they are still part of public life. Marx remains prominent in the discourse in international political economy (David Skilling and I have coined the current business cycle as ‘Marx’s revenge’ because of the countervailing forces of capital and inflation) and this Christmas, various works of Dickens will appear on tv channels.

As a final recommendation, one of my favourite Dickens themed books ‘is ‘Drinking with Dickens’ , a set of yuletide drink recipes from the time of Dickens, authored by his great-grandson Cedric Dickens.

Mike 

I have mentioned previously that I spent a good deal of time this year writing a book on how to reinvigorate French democracy (co-authored with Pierre-Charles Pradier, L’Accord du Peuple’ will be published in mid-January by Calmann Levy).

As we started the book in 2022, France was calm and I wondered if I had the wrong subject but two bouts of violence in early 2023 have convinced me that French democracy needs mending. One way we proposed to doing this is to follow some of the innovations in Irish democracy (i.e. deliberative democracy). No sooner than we had sent the book to our editors, violent riots erupted in Dublin.

All of this suggest two things. First, I am not good at forecasting and in fact curse whatever subject I write about. Secondly and more seriously, the world is still in a democratic recession, and in particular Europe, as the epicentre of the democratic world is challenged and under attack from multiple angles.

Against this backdrop, next year will be a crucial one for democracy as it is a year of consequential elections (as David Skilling and I note in our recent 2024 ‘Scramble for Supremacy’ note), with voters in countries representing over 50% of the global population going to the polls.

Last year we expected to see a stabilisation in the ‘democratic recession’ and increased stresses on autocrats. This has largely played out.  In Europe, where we have EU level elections in June, the centre has largely held, but shifted to the right somewhat.  Indeed, in several countries the far right has surrendered power to the centre (Spain, Poland).  

Immigration and the shadow of Russia’s war on Ukraine are the two motivating forces on European politics and in general we have seen the centre adopt a tougher stance on immigration and values.  Robert Habeck’s speech in the aftermath of the attack on Israel and the collaboration amongst the Nordic countries on deportations are two signs of this.

The likely accession to power by Donald Tusk in Poland is a significant positive, though we do not expect the Sanchez government in Spain to endure.  German politics is in flux and in both Germany and the Netherlands new parties are emerging that mix left wing socio-economic policies with stringent policies on immigration.   

As Europe shifts to the right, we expect the UK to move to the left.  The next UK general election is now Labour’s to lose and despite the recent cabinet reshuffle, the credibility of the Tories is so badly damaged that we consider the outstanding issue to be the magnitude of a Labour victory.

If European democracy is more stable, a series of elections in Asia and the US have the potential to reset the democratic and geopolitical debate for the next decade.

Chronologically, we highlight Taiwan’s presidential election in January, Indonesia in February, Russia in March, and India in April. A general election in South Africa will then likely follow and on November 5^th the US votes for its next president.

The US Presidential election is obviously the key event.  The risk is that not just that Donald Trump is re-elected but that American voters demonstrate disregard for the constitution, the rule of law and the reputation and role of the US abroad.  This event would create a constitutional and political crisis (not least as Trump’s retribution committee becomes active) in the US, and would likely upset economic and investment activity, and alter the balance between the democratic and ‘non-democratic’ world.  

In other key elections, Vladimir Putin will almost certainly win the Russian vote – though turnout and the protest vote will be interesting to watch.  In India, Narendra Modi is likely to stay in power next year – India’s economy and notably its geopolitical position are in the ascendant, and with a fragmented opposition (we are watching five state elections in December) he stands a high chance of being re-elected.

Finally, Taiwan’s election in January bears watching for its global implications – from the risk of war to global semiconductor supply chains.  As we write, the two opposition parties have failed to cement a coalition, and it is likely that the DPP’s Lai Ching-te will be the victor, something that would displease China.  This election could influence the geopolitical tone for the year.

These elections in 2024 will have implications for markets and for economies.  Expect more government spending as governments seek to strengthen economic activity – and the prospects of re-election.  And there is the potential for ructions in markets if there are unexpected political results – and there are particular market risks around the US Presidential campaign and elections.

Specifically, and with a financial markets hat on, ‘Losing America’ would have enormous implications for bond markets.  In times of crisis, Treasuries and the USD rally, but a ‘rule of law’ crisis of confidence in the US could lead to prolonged weakness. Corporate investment (with less room for tax cuts this time) would be curbed, and ‘American division’ could spoil the economy.

In such a scenario, geopolitical risks – emanating from Russia and China – would rise, vulnerable and contested sectors from semiconductors to vehicles would be volatile, and we expect that a ‘supply chain’ wobble might well reoccur.  In response, we expect the EU to focus more on defense and security, and that ‘strategic autonomy’ would be deepened.

Let’s hope the voters do the right thing!