Though the pen is mightier than the sword, and philosophy the mother of all lasting authority, civilization--when it begings--is built upon a foundation of force and violence. Our world today is not too different from the world eons ago, where man fought one another for reasons that might include one of these: (1) scarce resources or (2) ideological dominance. The former is purely economic, where those with lesser and poorer populations loot a more powerful neighbor for survival, in which the intellectually and materialistically impoverished peoples gather against a larger people who do not share in the misery. The latter is more or less philosophical, often fought between parties of equal strength, sometimes also serving as a guise to justify more economic reasons for warfare, that bring not only necessity and survival into the game, but also propaganda in the name of the good, the just, and the righteous, and whoever wins obviously had all three on their side. Power comes before civilization, and brute force opens the gate to knowledge and economic trade. Those who dabble in the benefits of civilization must never forget the legacy of blood and realpolitik behind every lasting peace.
Likewise, those who dabble in blood and realpolitik should never forget how to harness peace to bring the benefits of civilization.
Anyone who prospers under peace usually do so through the creation of value, and that usually means production, commerce, and finance in one form or the other. Of course, most countries in our world today can at least call themselves a "nation" if nothing else, even though some probably do no better than nomadic tribes under that title, and the benefits of national soverignty that come with it including a government, a standing army, and at least some infrastructure to support the rule and law of both. Such benefits, however, are too often perceived as "enough" or "as good as it gets", though it may be no where near the standards that must be in place in order for prosperity to take root, though the facade of peace and control may exist.
While the capital markets do not discriminate between "right" and "wrong", or between what's "warm-hearted" and what's "cold-blooded", it at least knows perfectly well the conditions under which wealth and prosperity of a people must operate commercial enterprises and participate in trade. After all, one of the greatest perks to civilization is specialization of skill which brings those who know best to provide to society with the fruits of their best-practices in exchange for others' best-practices, and a society which facilitates this sort of exchange is a society that ultimately prospers, and a society that seeks to dampen free-exchange and commerce for whatever reasons may be will find itself destroying value and alienating itself from the forces of economic progress.
Venezuela is a case in point. President Hugo Chavez, through an interesting twist of socialist ideology, have decided to nationalize many of the country's energy and mineral assets in order to finance the demogaugic promises widespread education, healthcare, and crime reduction. To the investment community, this is horrible news, and Venezuela will have successfully cut itself out of any promises of future benefits and welfare that result from foreign capital and investment. While education, healthcare, and the safe enforcement of law is important to any society--the tax at which Venezuela extracts against the world's capital is too great a burden, and like any investment that simply do not make sense from a cost-benefit perspective, the wonderful promises are sure to be empty as financing escapes the tentacles of these so-called social initiatives which have unlimited costs. Decades from now Venezuela will no doubt find itself to be a poor country with nationalized and yet undeveloped reserves of natural resources as the world shuns its lack of protection for the individual.
When the capital markets speak of political risk, they are speaking of simple initiatives in favor of individual rights--starting with the right to property--that a country lacks, which dampens any "rule of law" that might protect an investor's interests from being nationalized or expropriated, which often have unreasonable compensation schemes that completely disrespects and mocks the hard-earned value in which a corporation or an individual works to create and maintain. Though "a fight to take from greedy capitalists what naturally belongs to the people" might make a great demogaugic slogan, it completely throws one of the most important rights of man: the right to own. While equality and social justice is important to a certain extent, such should not come at the expense of the individual, and any society that deviates philosophically from the free-giving of freedom in building wealth and enterprise, then, should be best avoided by the investment community at large.