You’ve surely noticed news stories that say the U.S. has slipped into a new Cold War with Russia.
Last year, daily headlines described Russia’s extensive “information warfare” and cyberattacks aimed at the U.S. and other countries to sway elections, provoke polarization and discord, intimidate journalists and disable energy grids in the U.S. and UK.
Russia threatened to attack U.S. Special Forces in Syria, and it cast its 10th veto of UN efforts to discover who was responsible for chemical weapons attacks in Syria. What’s going on?
These developments are just the latest symptoms of a decade-long shift in Russian social psychology. To understand Russia’s actions, you must understand its social mood.
Just 10 short years ago, international optimism attended Russia’s economic, financial and geopolitical future.
The Russian stock market was up more than 5,000% from its 1998 low and Russia was the darling of emerging market investors. Pundits expected Russia to continue to move toward democracy and play nice on the international stage. What analysts missed back then was that these manifestations were signs of a positive extreme in Russian social mood.
When mood trends reach extremes, they reverse. As our recent paper in the Journal of Behavioral Finance and Economics documents, we forecast in November and December 2007 that a strong trend toward negative social mood would tank Russia’s stock market, impel the country to further consolidate power under an increasingly authoritarian executive, incline it to oppose the West, and inspire it to reclaim its former USSR borders. We listed Georgia, Ukraine and Syria among the likely hotspots for conflict.
Six months later, in May 2008, Russia’s benchmark stock index peaked and began a steep 79.9% drop into January 2009. Two months into that decline, Russia invaded the Republic of Georgia. In 2013, Russia intervened in Ukraine, and in 2015 it began military conflict in Syria. Meanwhile, relations between Russia and the West have soured to their worst since the Cold War.
Today, many experts offer explanations for Russia’s behavior, but few of them — even Pentagon strategists — saw Russia’s truculent resurgence coming. In Senate Armed Services Committee testimony in July 2015, U.S. Joint Chiefs of Staff Chairman Joseph Dunford stated that official U.S. military intelligence and defense strategy “did not fully anticipate growing Russian aggression.”
Robert Prechter's social mood theory sees benchmark stock indexes as particularly good metrics of trends in social psychology. Trends toward positive social mood produce stock market advances and generally positive events; trends toward negative social mood produce stock market declines and generally negative events.
During past global bear markets, Russia and the Soviet Union tended to embrace authoritarian leaders, grab more territory, bolster their military and act aggressively toward neighbors and the West. Russia maintained this pattern of behavior in this bear market.
So, what’s next for Russia? Its negative mood trend continues. The RTSI is still down about 51% from its 2008 all-time high.
Until Russia’s mood becomes more positive, its relations with the West and the tenor of its social expression will likely remain negative.
The persistence of positive social mood in the U.S. and some Western European countries since 2009 has helped prevent tension between Russia and the West from escalating.
Another major trend toward negative social mood in Western countries in concert with an ongoing negative social mood trend in Russia would signal an elevated risk of hotter conflict.
Alan Hall, senior analyst at The Socionomics Institute, is a contributing author to the book “Socionomic Causality in Politics.”
© 2023 Newsmax Finance. All rights reserved.