Russian Revolution


Last year was the anniversary of the Russian revolution, an event that changed the world and whose impact is still much in evidence. The revolution was to sweep away the old order and hand power (in theory) to the people. Reality was of course quite different. Revolutions of a type still happen today, the coup in Zimbabwe last November and an attempted one earlier last year in Turkey.  The reasons and paths toward revolution can be complicated, often an attempt to rid a country of a corrupt political leadership, to over throw oppression, or to establish a different ideology.  Revolutions don’t have to be dramatic, bloody or involve corruption, indeed quiet revolutions are often talked about in many areas of life and I think we are witnessing one now in global politics. 

This revolution is the rise of popularist parties and popularist candidates for political office.  Only a few years ago the old political order went unchallenged – countries had their established political parties which seemed unassailable; it was a case of which one appealed most to voters at election time, the baton would be handed right to left, left to right as it had been for generations. But it looks like it has changed. There is Donald Trump and Emmanuel Macron, in Italy the Five Star party, in Germany the Germany First Party and in Greece Syriza; these are the better known ones but many others exist.

As an investment team we watch this development and wonder how it will impact economies and markets.  Some of these popularist movements are economic and market friendly, others less so; and we ask ourselves why has this happened? The short answer seems to be people want to take control back from a political elite who are seen as out of touch and not representative of the majority of voters.  As a result more and more people seem to have become actively engaged in politics, knowing they can make a difference and that they can potentially bring change.  The Brexit vote in the UK perhaps triggered an empowerment of people, and made voters feel they could make a difference, after all none of the politicians thought there would be a no vote – in revolutionary parlance you might say ‘the people beat the establishment’.  In particular younger voters have been engaged, and irrespective of whether they have a right or left political leaning, it has to be positive that young people are engaged, because they have the most to gain or lose.    

Where these changes will eventually take politics is hard to say, it is early days in this revolution and no doubt there will be a lot of twists and turns along the way.  Our best guess is that this shift is long term, but whether popularist parties will wrest control completely from older parties we don’t know.  Equity and bond markets have taken it all in their stride so far, but the investment team are conscious of potential risks and monitor events and political moods globally.