The Crisis in Ukraine: Authoritarianism’s Threat to the Next Economy


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Markets aside, the events of the past week have been devastating. Russia’s war on Ukraine is ending lives and placing millions more in harm’s way, while also putting democracy under attack. Over the past few days, as we’ve all watched this unjustifiable war of aggression unfolding, a few things have become clear. First, authoritarians, especially isolated authoritarians, are capable of making and implementing horrifically bad decisions. But of course that’s the case: social science, neuroscience, and market evidence have shown over and again that it takes multiple and diverse viewpoints to arrive at the best decisions. The more isolated an individual, the fewer the inputs that go into a decision, the less opportunity there is to be informed and formulate a first principles-based, working way forward. As an isolated paranoid with near absolute power, Vladimir Putin may be incapable of good decisions at all. Putin’s war of aggression is good for no one, not for him, the people of Russia, the people of the world, and least of all for the citizens of Ukraine. If we needed more evidence of the importance of diversity in decision making, here it is.

Second, it is even more clear now that Petrostate dictators, and those with an overdependence on fossil fuels for revenues, are dangerous for global stability. Their propensity to create economic shocks and their unwavering commitment to the burning of fossil fuels despite the existential risk of the climate crisis, combined with their low probability of making good long-term decisions, may make dictators in those economies the worst kind of authoritarians. The possible exception to this statement is a petrol authoritarian with a massive nuclear arsenal.

These Petrostate dictators (and their investors everywhere) are thwarting the world’s ability to make the existentially critical transition to the Next EconomyTM. They are attempting to stop rule by popular vote and to end collective decision making in general. On a human level, they stand against social justice, and they stand for rule by the rich alone. Petrol-fueled authoritarians are doing everything they can to keep the globe dependent on fossil fuels, literally an 18th century technology of burning things to make energy; technologically not that far removed from when Homo erectus first mastered fire. Seen in technological, historical context, it’s pathetic. Yet, they are largely succeeding: 2021 emissions were among the highest on record for the global economy.

Currently, there’s a Petrostate dictator in Moscow inflicting horrific damage on Ukraine because he can’t let go of his tired old idea of rebuilding the world as he thinks it was in the mid-20th century (not a rational basis for any decision, much less war). He has been given the power to do so; he’s doing it because he can. It is rule – and terror – in the name of ‘because I said so.’ It is the opposite of constructive consensus. It is the definition of zero-sum thinking and the antithesis of the positive-sum collaboration the world requires today.

Our small effort to combat all of this has been to invest exclusively in the solutions to the problems created by all this zero-sum, short term and irrational thinking, and never to invest in the causes of the problems themselves. Green Alpha has always stood, first and last, for enabling the transition to a world economy that can work for everyone without crashing past planetary boundaries and threatening us all, economically, and existentially. Yes, this has always meant standing against authoritarianism and its enablers, whoever and wherever they may be.

Our uncompromising stance has led to occasional criticism from the mainstream investment industry. It has been said that since we are declining to hold the causes of our crises, things like fossil fuels companies, fossil-powered utilities, the makers of internal combustion engines, the perpetuators of hate and discord, and so on, that we are insufficiently diversified; it has been said that our strategies’ tracking error is too high. Sometimes the criticism has been reduced to a single sentence, “Green Alpha is just angry.”

We don’t think the question should be “Why is Green Alpha angry?” We think it should be, “Why is the majority of the asset management industry so sanguine?” Or, more precisely, “Why does the asset management industry continue to hold and pour capital on the seeds of our destruction?” Is it in the name of outdated Modern Portfolio Theory? What use is that?

So yes, institutionally, philosophically, and foundationally, we stand with the people of Ukraine and with peace-loving builders of economically scalable, positively impactful solutions and of popular consensus everywhere.

‘Freedom forever’ is the cry we hear from Ukraine today and who can disagree with their wish? The only way to make that aspiration come true is to build an economy that can function, providing abundance, indefinitely, for all participants. The only way to bring about that future is to invest in it now.

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