After two years of intense pressure — the U.S. trade war with China, its brinkmanship with allies, and finally the government shutdown — the global system is showing signs of cleaving. The U.S. and the rest of the world appear to be tipping into recession, leading nations are taking each other's nationals hostage, and deadly and frequent violence is striking Europe.
The big picture: Last week we took account of our six 2018 geopolitical forecasts. Now we explain our outlook on this year. A core observation for 2019 is that the anti-establishment wave has unfolded amid a booming global economy. Now, a key question is how already-furious people will behave when economies almost everywhere begin to go south.
- This is the seventh year of these forecasts. I base them on 15 common-sense rules that reflect how people have tended to behave over time. (Here are the first 14, and the 15th.)
1. A mainstream challenge to capitalism as practiced ...
Something is clearly wrong with the global economy, which has left behind swaths of populations around the world, disregarded them in political decisions, and all in all forgotten them in the calculus of power. But, thus far, the only economic reaction has been a backlash against Big Tech.
- In 2019, look for that response to widen into a broadside against capitalism as practiced.
- The main working dynamic will be the Economic Injustice Rule. This comes into play when people despair of their future, or especially that of their children.
- Among what you will see: A push for a breakup of big companies whose market power may be behind a long period of essentially flat wages and productivity. This groundswell for much more aggressive anti-trust action could go far beyond tech, including the health, drug and media industries.
2. ... leading to political realignment ...
The economic backlash will wash over into a political reckoning. A sign of the action to come is this now much-circulated Jan. 3 monologue from Fox News firebrand Tucker Carlson: a call to arms against the system and those who would keep it the way it is.
- Trump's capture of economic discontents was pivotal to his 2016 election victory. But, with a slew of new scholarly books, academic papers and rants like Carlson's, Trump's political hunch has now gained intellectual force.
- Look this year for politicians of both political parties to seek to own this issue. (Oren Cass, Mitt Romney's domestic policy adviser in 2016, has already written a Republican manifesto with his book, "The Once and Future Worker.")
- The driving force here is the Staying in Power Rule. It explains that, around the world, regardless of where, the abiding desire of all politicians is to obtain or keep power. Democrats and Republicans alike will understand that serious economic reform has risen to be a bedrock issue.
3. ... and greater anger
We thought we had already witnessed an explosion of political anger.
- But 2019 will see greater fury than the last two years, especially in the U.S., where Trump will finally be confronted with the result of the Robert Mueller investigation just as he's preparing for his 2020 re-election campaign.
- Animating the action again: the Injustice Rule. People — whether they are in Poland, Hungary, Brazil, France or the U.S. — simply do not believe they are getting a fair shake.
4. Beijing will cling to Made in China 2025
The U.S. and China continue to negotiate against the backdrop of a trade war that is contributing to economic mayhem in both countries.
- In a deal, look for China to far more concretely open the doors to Western investment and products, with sharply lower tariffs and a more verifiable promise to no longer demand a U.S. company's intellectual property as a price of entry to its market.
- But, while Beijing may feign movement on the margins, look for no real concession on its central strategic policy, known as Made in China 2025. This is Beijing's plan to dominate the technologies that will drive economic and global power in the decades ahead.
- The primary dynamic is the Mountain Rule, which explains the behavior of big countries whose history and culture leads them to seek large aims and to play outside the norm.
Do not forget this: Back to the Injustice Rule, etched into Chinese policy is the unforgettable humiliation of the Opium Wars of the 19th century, when the U.S. and Britain forced China into far-reaching concessions.
5. Maduro will be forced out
Venezuelan President Nicolas Maduro has held onto power for almost six years, ever since the death of his mentor, Hugo Chavez. This is despite the oil-rich country's economic disintegration.
- Thus far, the Muddle Along Rule has saved Maduro: This guideline explains that countries and autocratic leaders only very rarely implode. Instead, they somehow just keep going.
- But look for Maduro to go this year: The driving force will be the Caesar Rule, which explains that, when such leaders do go, it is usually because they are ousted (or killed) by their own aides or military.
- Why now: The opposition has peace feelers out to the military, which is key in such situations.
6. Big personality will be key
Scholars and other political observers say Trump is only a symptom of a shift in global trends. While that may be right, it only goes so far. Trump is not a mere pawn of history, but very clearly a willful actor — a "big personality," in the parlance of our rules.
- Will the U.S. have a full-year recession? Will there be a war of miscalculation in the South China Sea? Will war flare in eastern Europe?
- The answer to all these questions relies on the whims of big, unpredictable personalities — Trump, China's Xi Jinping, Russia's Vladimir Putin — who dominate geopolitics in a way not seen in decades.
- A wild card: Trump has repeatedly threatened to withdraw from NATO, the NYT reported this week. The Stay in Power Rule suggests he will be seriously tested to do so in order to impress his base.