Stratfor’s Geopolitical Weekly: Financial Markets, Politics, and the New Reality
In an insightful commentary entitled Financial Markets, Politics, and the New Reality, George Friedman, founder of geopolitical intelligence firm Stratfor, discusses the roots of the market economy in the context of political structures and — within this framework — evaluates the current state of the European sovereign debt crisis.
Friedman’s argument: Investors typically view the intrusion of politics into markets as a negative because political decisions are unpredictable. But in his view, political decisions are in fact foreseeable — and investors can forecast political behaviors, just as they forecast markets, if they understand the “impersonal forces” that drive politics. After all, Friedman writes, that’s why Adam Smith and David Ricardo — so admired by modern investors and economists — never used the term “economics” in isolation from “politics.” For these thinkers, “political economy” was more than a term of art.