Bi-Weekly Geopolitical Report – Thinking About Deterrence (February 12, 2024)
by Patrick Fearon-Hernandez, CFA, and Daniel Ortwerth, CFA | PDF
In his book Leviathan, published in 1651, the English philosopher Thomas Hobbs argued that human society in the state of nature would be marked by conflict and mistrust, as each person would be free to attack his or her neighbor to acquire needed resources. According to Hobbs, government evolved to end this chaotic, violent state by providing security and order to society. Without a powerful central government, Hobbs posited, life would be “solitary, poor, nasty, brutish, and short.”
But what about the community of nations, where each country could be tempted to attack its neighbor for political, economic, or other reasons? No world government has evolved to provide order and security in international relations, even if the UN has been given some powers aimed at helping it keep the peace. As we’ve written before, the more typical source of international security and order has been when a powerful country gained hegemony over much of the globe, as the United States did in the decades after World War II. As US voters now question the costs and benefits of that hegemony, and as the US hesitates to enforce order, rival countries have begun to assert themselves. “The Jungle Grows Back” is the term we use to describe the situation. This report examines how, in this newly chaotic world with weakened hegemonic order, nations may increasingly rely on “deterrence” to protect themselves, with potentially big implications for investors.