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C hristmas is my favourite time of the year because it is a welcome break from the relentless grind of research and deal-making that defines the life of an Indian broker with clients spread across the world. It also gives me a week or so to reflect, and as I write this column over the break of 2014, my mind goes back to the Christmas of 2004.

During that vacation a decade ago, I had come to India to explore business opportunities for a stockbroker like me in the roaring Indian economy. The small equity research franchise that I had just co-founded in the United Kingdom was growing steadily in a British economy which, in turn, was growing at 3 percent in a world where the price of a barrel of Brent crude was $40. Alan Greenspan was still the revered chairman of the Federal Reserve and hence, by extension, the most powerful man in the world after the president of the United States, George Bush. America and Britain had supposedly found weapons of mass destruction in Iraq and, consequently, their guns were trained on that region.

In India, the United Progressive Alliance (UPA) had just won the general elections at the expense of the National Democratic Alliance (NDA) and Manmohan Singh was celebrated on the cover of Western business magazines as the intellectual, complex problem-solving leader that many Western countries wished they had as their head of state. The NDA, with its discredited India Shining campaign behind it, was seen as a political coalition out of touch with the harsh ground realities of rural India. More importantly, with former Prime Minister Atal Bihari Vajpayees health on the wane, the Bharatiya Janata Party (BJP)the leading party in the NDA was seen as rudderless compared to UPA leader Sonia Gandhis socialist inclusive view of Indias developmental process.

More generally, in the context of emerging markets, the acronym Brics had become fashionable 10 years ago. Friends of mine who had been running emerging markets money for a long time suddenly found that over the course of 2004 and 2005, the phone started ringing more often as investors dialled in the dollars into those regions and, more specifically, into China and India. One such friend in Hong Kong found his fund swelling from $100 million at the beginning of 2004 to $1 billion by the middle of 2005. On billboards near my office in London, Brics funds were advertised with over 3 percent management fees.

Presuming that my Indian surname automatically qualified me to manage money in India, headhunters used to call me to ask whether I would like to make a switch from stockbroking.

The Western press attributed this rising enthusiasm for emerging markets to the adoption by these economies of the Washington Consensus ie, the World Bank/IMF prescribed recipe of fiscal discipline, low inflation and an open economy (both from a trade and capital flows perspective). Gurus such as Tom Friedman, Barton Biggs, Stephen Roach, Jim ONeill and Jeffrey Sachs were held in high regard for being the high priests of this new dawn for emerging markets.

New Political Constructs

The instinctive tendency of most analysts is to study historical trends and extrapolate them into the future. However, as Thomas Kuhn explained in his book, The Structure of Scientific Revolutions (1962), while the real world might change in a gradual manner, the intellectual constructs that we use to understand the world alter in a non-linear fashion. That is, when a fresh way to think about the world comes along, and if this new construct gives a more accurate depiction of reality, we abandon the old construct at a rapid pace.

Image: Paulo Whitaker / Reuters

A new generation of strongmen politicians with no Western baggage has risen to power

One example of this is Copernicuss view that the solar system revolves around the Sun rather than, as Europeans believed until the 16th century, around our planet. In the space of less than half a century, Copernicuss radical thought overturned centuries of conventional wisdom and became the accepted way of thinking. In a similar vein, 10 years on from 2004, we are now seeing the advent of a new way of thinking about emerging markets in general and India in particular.

The Decline of the West and the rise of Asia: The Wests economic decline relative to Asias economic vibrancy is making it less assertive in this great game of global jostling by strongmen politicians. The economically enfeebled Europeans are almost invisible in international affairs. The Americans, while more visible, are no longer as assertive as they once were, even in the face of major transgressions by other great powers.

Witness the way President Obama is dealing with Ukraine. All of this matters because as Financial Times wrote on December 5, 2014: What these leaders do tell is that the multilateralist model of the second half of the 20th century is more likely to represent a historical interlude than a permanent shift in the nature of relations between states.

Globalisation is already in retreat. As the strongmen stride the stage, Kant is making way for Hobbes and multilateralism for great power politics. The West is about to relearn what it is like to live in a much rougher world.

Illustration: Sameer Pawar