The concept of the black swan – an extreme, unexpected event that upsets the global economic and political system – was popularised in the wake of the 2008 crash by risk analyst Nassim Taleb.
Black swans have been around from time immemorial but they take on greater significance in an age of globalised capitalism in which interconnectedness is both a cliché and a reality.
The black swans that jump to mind in the last century include, in order, the 1917 October revolution bringing Lenin to power and sparking a decades-long battle between communism and capitalism, and the 1929 market crash that singlehandedly brought capitalism to its knees in the 1930s, including indirectly bringing Hitler to power in Germany.
Arguably the instability and strife characterising the two decades following the 1929 crash made the black swan concept analytically irrelevant, since extreme, unexpected events that upturned the existing world order became the norm from 1933-1949, bookended by Hitler and Mao. The 1941 Japanese attack on Pearl Harbour was not (officially) anticipated and its effects were immediate and profound, suddenly thrusting the US into the middle of the war in Asia and Europe, marking the definitive moment when it became a world power with global military reach and the will to decisively intervene in conflicts across the planet.
Revolution
In the second half of the 20th century we can perceive political earthquakes including the Cuban revolution (1959) and Iranian revolution (1979) as seismic events creating shockwaves that, at least in their region, would reverberate for decades. The impact of the Iranian revolution is still being felt. The upheavals of 1968 that spread from Paris to Prague and Cairo, and included the burning of inner cities in the US following the murder of Martin Luther King Jr, were to a lesser extent a socio-political black swan – unexpected, and viral, in the sense that protests could spread from country to country, and inspire others to follow. They did not in the end lead to the fall of governments, but they marked a new kind of youth and student revolt, and an end to post-war social consensus in many countries.
Eric Hobsbawm’s “short 20th century” ended with the anti-communist revolutions of 1989 and the fall of the Soviet Union. At the time these seemed to come out of nowhere in a region that had been under Soviet authoritarian rule for decades. Suddenly the iron curtain melted away and the cold war was declared buried. A new era of peace and democracy was hailed, even if it never came to pass.
If anything the 21st century has seen more black swans than the last. The attacks of 9/11 were a psychic shock to the billions who watched them live on TV. They sparked a new polarisation and the promise from America’s leaders of a war without end that is still ongoing. The turning of Muslims into an enemy within, a greater willingness to intervene in the Muslim world in the name of the fight against terrorism, the adoption of anti-terror language by all governments that wanted to easily identify and target their opponents. In this sense 2001 and its instrumentalisation were as significant as the 1979 Iran revolution or the Pearl Harbour attack in 1941.
The crash
For the global economy, the 2008 crash marked a watershed, and one whose effect on politics in the western world is still unfolding. New populist movements of right and left emerged out of a centrist consensus that has now been definitively shattered. Then in 2011, the Middle East and western capitals were convulsed by new protest movements. Across north Africa and the Arab world governments fell and bloody civil war spread, coups and conflict. The dream of freedom did not survive the initial burst of hope, and the post-colonial order of the Arab world was gone forever.
Trump and Brexit
This brings us to 2016. It could be argued that both Brexit and Trump are a kind of political black swan. Yet given the decades of anti-Europe propaganda pumped out by the British tabloid media, combined with a powerful residual strand of English nationalism, I don’t think Brexit was quite the outlying result of the referendum that many analysts have claimed: if the main Tory newspapers urge millions to vote for Brexit and then millions do, this cannot be seen as wholly unexpected, however much for many remainers the sky had fallen in and the world grown dark.
Trump, though, surely measures up in the swan stakes. His candidacy was seen as a joke by most experts until he somehow broke through the ranks on the back of disillusionment with corporate controlled American politics and post-crash fury at elites. His arrival at the White House is arguably an outlying and system-threatening event. It’s a close analytical call whether a mad nationalist billionaire ruling America marks a decisive and unexpected enough break with the existing order to be called a black swan event, but his actions since his election show him to be a genuine disruptor of political norms both at home and abroad. And in the managed democracy which is a America’s highly centrist bipartisan political system, Trump represents something of a break with the norm of controlled candidacies within the controlled oligarchic party system.
What comes next? If, as appears possible, the current era is one of perpetual instability of the kind last seen in the 1930s and 1940s, black swan events will become more frequent and may roll into one another: this rare plumage will be expected every few years rather than once a decade as it was between 1950 and 2000.
For no obvious reason, black swans tend to occur at the end of a decade or the beginning of one. We might next see a geopolitical or economic earthquake within three years. Given that minor earthquakes have become an apparent commonplace in these unsettled times, such an event would not only have to confound and disturb expert opinion, but it would have to mark a violent break, a viral system shaker.
Some financial analysts are already predicting another crash. But historically a 2008 type event does not normally come along so soon after the last one. The reason it might this time could be as a result of the unprecedented quantitative easing unleashed by central banks that anaesthetised the global financial system after 2008 and led to the biggest asset bubble expansion of wealth of the 1 percent in history. This in turn has restored a kind of complacency to the world economy that usually precedes a shock. Alternatively, an obscure protest somewhere in the world might snowball into the next revolutionary upheaval that no one, at least in the mainstream, expected. Maybe neither will happen. And that’s the point. More than ever, we don’t know what’s coming next, just that it’s coming.
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