Branko Milanovic joins the show to discuss his latest book, The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order (2026). We discuss the emergence of a new elite; similarities between Trump, Putin, and Xi; and “national market liberalism” in a multipolar world. Branko Milanovic is a Research Professor at the CUNY Graduate Center and former lead economist at the World Bank. He is the author of Global Inequality: A New Approach for the Age of Globalization (2016), Capitalism, Alone: The Future of the System That Rules the World (2019), and Visions of Inequality: From the French Revolution to the End of the Cold War (2023), and The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order (2026). Listen and subscribe on Apple Podcasts or Spotify to stay updated with the latest episodes! *The Trialogue Podcast is hosted by the Stimson Center and produced by University FM.
Branko Milanovic joins the show to discuss his latest book, The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order (2026). We discuss the emergence of a new elite; similarities between Trump, Putin, and Xi; and “national market liberalism” in a multipolar world.
Branko Milanovic is a Research Professor at the CUNY Graduate Center and former lead economist at the World Bank. He is the author of Global Inequality: A New Approach for the Age of Globalization (2016), Capitalism, Alone: The Future of the System That Rules the World (2019), and Visions of Inequality: From the French Revolution to the End of the Cold War (2023), and The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order (2026).
Listen and subscribe on Apple Podcasts or Spotify to stay updated with the latest episodes!
*The Trialogue Podcast is hosted by the Stimson Center and produced by University FM.
(Transcripts may contain a few typographical errors due to audio quality during the podcast recording.)
[00:00:00] Peter Slezkine: Welcome to Worldviews, an interview series on international affairs with guests from around the globe. I'm your host, Peter Slezkine. In this show, guests from across the political spectrum and from all over the world share their views in their own voice.
While the Stimson Center seeks to provide access to a wide variety of perspectives, it does not endorse any particular position. We leave it to the listeners to judge the validity and value of the views expressed by the guests. I hope you enjoy the podcast.
My guest today is Branko Milanović, research professor at the CUNY Graduate Center and former lead economist at the World Bank. He is perhaps the world's greatest expert on the subject of global income inequality. In the conversation that follows, we discussed his latest book, The Great Global Transformation. I hope you enjoy the episode.
Branko, thanks so much for coming on the podcast.
[00:01:00] Branko Milanović: Well, Peter, thanks a lot. Actually, it's a pleasure.
[00:01:02] Peter Slezkine: So, you're an academic, a former lead economist at the World Bank, an erstwhile Washington think tanker, but more important for our purposes, you are a major public intellectual who has spent the past decade publishing a series of important books on global inequality and great transformations. In your latest book, The Great Global Transformation, examines the double impact of neoliberal globalization, a reduction of global inequality on one hand, due to the rise of Asia and China in particular, and a simultaneous increase in domestic inequality, particularly within wealthy nations.
And you argue that both developments have provoked a reaction, geopolitical rivalry in a newly competitive multipolar environment on one hand, and a political backlash against newly entrenched neoliberal elites on the other. So, how is that for a simple summary? And perhaps you can begin by building on it, and then we could dig into some of the argument's finer points and broader implications later.
[00:02:05] Branko Milanović: I mean, this is a great summary. So, basically, there are two things that I think are new. The first one is that it explains that the end of global neoliberalism, or neoliberal globalization, if you prefer it that way, is an endogenous process.
And that's why I also took the title from Polanyi, because in Polanyi, too, you have increased commercialization of many activities which have not been commercialized before. These are so-called "fictional commodities" in Polanyi. And then you have the double movement, and it's actually an endogenous reaction to that, which leads to a rejection of certain forms of commercialization, and societies attempt to embed this relationship in the social framework.
Similarly, I think that actually neoliberal globalization provokes...
[00:02:54] Peter Slezkine: Sorry, just so our listeners understand the parallel, some of them might be think tankers, as you once were, international relations experts who know little about Polanyi. So, Polanyi is describing the great transformation that your title alludes to, and he is focused on the 19th-century industrial revolution, the creation of a new economy, the disruptions, dislocations that that produces, and then the reaction creation of new social contracts, right? And so, you're drawing a parallel to that?
[00:03:20] Branko Milanović: Yeah, I'm drawing a parallel to that because what Polanyi was explaining was, in some sense, onslaught of commercialization and commercialization of new activities in England during the Industrial Revolution. And then the reaction was societal reaction against that, and then you establish some new equilibrium, if you can call it like that.
The idea was, in my case, that neoliberal globalization provoked endogenously two processes that you alluded to. The first process was the rise of China, which became, at one level, a geopolitical issue of competition with the United States. That was not originally planned within globalization or neoliberal globalization in the 1980s. Neither Thatcher nor Reagan, nor Deng Xiaoping, would have expected China to be, in 40 years, a remarkable geopolitical opponent to the United States.
To the extent, actually, this is just in passing, but now when we have all these issues with artificial intelligence, we are having a very similar situation, and I think you would recognize it, to what we had between the United States and USSR when it came to nuclear proliferation and control. Which means that China is now really, very clearly, even in some sense, militarily, like number two. But the same process of neoliberal globalization provoked dissatisfaction internally within rich countries, because the middle classes of those countries really have not benefited from globalization as much as they expected.
The top 1% or top 5% did much better, and that provoked, again, endogenously dissatisfaction domestically. So, these are the two levels at which the book works, at the level of geopolitics and at the level of discontent and internal political turmoil.
[00:05:12] Peter Slezkine: So, you have made the parallel with Polanyi. So, what he was describing in England and in Western industrial economies is now happening to some extent on a global scale. To what extent are you also drawing on James Burnham, your countryman Djilas? Are you describing the emergence of a new class and a new kind of convergence? I mean, convergence theory was very powerful once, went out the door entirely when it seemed like one system prevailed totally over the other. Now perhaps we should take it seriously once more.
So, did they get the kind of class right? You describe a different one, I think. But, sort of, the general principle of convergence, you think, needs to be taken seriously again.
[00:05:57] Branko Milanović: You know, I use empirical work that I've done myself and with colleagues on the American and the Chinese elite. Let me just say very briefly that actually we have fairly good data about the Chinese elite. People might not know that, but China publishes annually fairly detailed household surveys and data.
And actually, if you have connections, because you do need to have connections, then you actually get the data more easily. So, leaving China aside, I also did work on the American top 10% elite again. And what was interesting there, and this is this new phenomenon that now, actually, I think more people are beginning to work, but I originally discovered it, if I can call it like that, and named it homoploutia. I'll explain in a minute what it means.
Is that simply what you observe that an increasing percentage of the people who are in the top 10% of the U.S. income distribution are simultaneously? And that's really key. The same people are at the same time among the rich capitalists because they are among the people who get... I mean, they're among the top 10% in terms of income from property. And they are in the top 10% in terms of income from labor. Now, mind you, this is something that Marx would never have imagined.
Most people for the 19th century, even early 20th century and mid-20th century, would not have imagined because societies were generally class-based societies where people who were at the top were overwhelmingly people with income from capital, which now still is the case. If you look at Brazil, Peru, Chile, that's what you find at the very top. And actually, the work that is now going on, it's not in my book, but it's actually the sequel of other people who are now working, is how did it happen?
And actually, obviously, as you can see, there are two possibilities. One possibility is you, sort of, inherit quite a lot of money. You go to a very good school and get an excellent job, and you're in the top 10% by wage income as well.
Another possibility is that you are really doing very well, but you're not among the rich people, rich capitalists, but you actually get a very good job. You go through whatever, 30 years of work, you accumulate a lot. And then, of course, at a certain age, you know, there is a difference in age. In the first case, you may be homoploutic, which means you're rich both in capital and labor already by 35. In the other case, probably it's going to wait until you're 55 or 60. And that's an interesting part that people are actually studying now. So, you see, these are the two pathways to that.
[00:08:23] Peter Slezkine: And when you enter that class already at a more advanced age, it's because you've had a very high professional salary that you then invest in property, in the stock market that then makes you a capitalist with a share in that system.
[00:08:38] Branko Milanović: Yes, that's exactly like that. Exactly. And where Burnham comes in, I was independently interested in Burnham. So, when I read him, one thing about the managerial revolution that he had in mind, and, of course, people from the 1960s, like Raymond Aron and John Kenneth Galbraith had in mind, was there was a convergence, they believe. And then the people who are really in the top class are really technocrats, managers. And it's very clear in Burnham when he talks about managers are managing company.
Take another example of a famous manager who was actually also the head of the World Bank, and that's an important point, McNamara. He was managing Ford before, private company, then went to manage the Pentagon, and then managed the World Bank. So, the idea that Burnham had was it really, you are a managerial class. You don't care if it's private, public, whatever, you are managing because you are about efficiency, technology, and so on. The implication of Burnham, and actually he mentions it himself, is that private property is no longer sacrosanct. Managers don't very much care if it's private property or state property.
But in homoploutia, where you are a very top guy in terms of labor and a top guy in terms of capital income, you do actually have pro-capitalist ideology because your income depends on that. So, you're a manager, but you're at the same time a big-time capitalist. And I think what was the difference with Burnham and what now exists is that while he believed that the ideology of private property would generally, kind of, diminish in importance, we have had, on the contrary revival, of course, from the 1980s.
And I think that revival is explained by the fact that people who are managerial class are at the same time people who are big-time capitalists.
[00:10:32] Peter Slezkine: So, you describe a different new class than Burnham did and Djilas, in that they're not only managers and technocrats, they're managers and technocrats who also have a great stake in capital. But do you believe that the basic insight holds, that despite geopolitical ideological differences, the great global processes of capitalism and so forth create the same sorts of elites everywhere?
I mean, Burnham was making a parallel between the Nazi fascist corporate state, what was emerging under FDR in the U.S., and what was happening in the Soviet Union. Do you think that generally speaking, there is a convergence of elites from China to Russia to Europe to the U.S.?
[00:11:18] Branko Milanović: I cannot tell you exactly that, because the countries are at a different level of development. If you ask me, like, really, if I want to say yes or no, I would say yes, there would be convergence of the elite in the sense that they would be all homoploutic. And I forgot to mention, homoploutic comes from Greek, homo meaning same, and then ploutia is wealth. What I meant to say is that actually they are same or equally wealthy in terms of human capital. That's why they have high wages. And in terms of financial capital and physical capital, that's why they have high income for property.
So, but what you notice that more advanced economies like the U.S. and Western European economists have, among their top, about between two to 3% of the population. So, we're talking about the whole population, two to 3% of the population who are homoploutic, who are both among the top capitalists and top wager earners. When you go to the more traditional capitalist countries that are not as developed as the United States, when you go to Brazil, I mentioned that Chile, we have data from Peru, we have data from Argentina. The percentage of people who are homoploutic is much less simply because you have not still created, I think, sufficiently rich laborers, sufficient number of software engineers, workers, doctors, lawyers, and others who have accumulated enough financial assets to be among the richest capitals.
So, there is some kind of a maybe delay or lag there. When you come to China, there is also the emergence of homoploutia. But in China, I was more interested by really remarkable change in the sources of income of the top class. And I will stop there. In 1988, when we have the first data, two-thirds of the income of the top class is defined as the top 5% comes from state. It is state-owned enterprises, administration of the government, or of the Communist Party.
Today, two-thirds of the income of that top class comes from the private sector, including PMC, professional managerial class, small capitalists, and large capitalists. So, there was a remarkable change in the composition of the top class that used to depend on the state sector predominantly and now depends on the private sector.
[00:13:46] Peter Slezkine: How does the emergence of homoploutia in various societies and the redistribution of wealth globally affect domestic politics in the various big countries in the world?
[00:14:02] Branko Milanović: As I was saying before, when you asked me in the very beginning, when I said actually what we see now, and I was very reluctant to talk much about Trump, Putin, and Xi Jinping. I do that only at the end. And what I argued there is that all three represent a certain form of the rejection of some essential features of the previous period of neoliberal globalization.
Trump has been brought to power, and I'm not going to talk about that because millions of people have been writing about this, for the malcontents of people who were not happy with the way that globalization went. For many reasons, whether it was because of a lack of jobs or lower wages, or expectations, or because they were called various names by Hillary Clinton. But in any case, dissatisfaction, which was internalized here and, of course, in many other countries, including Germany, as we see now, France, United Kingdom with the Reform Party, and it's all well known.
But my argument is also that the same logic applies to the other two cases, Russia and China. In the case of Russia, I think Putin was clearly brought to power by the oligarchs, originally by Berezovsky, and he turned against the oligarchs who have been created by Yeltsin, and he actually used popular dissatisfaction also to impose his so-called vertical of power, which was quite popular when he imposed it. And it was, again, a sort of against the previous period that allowed him to establish his power.
And in the case of Xi, my argument is similar. Under Hu Jintao, who preceded Xi Jinping, the ideology of the Three Represents meant essentially that very rich people would be able to become party members and to actually go pretty high up in the party hierarchy. So, what Xi reacted, I mean, why he was supported, is because the Communist Party establishment and the state establishment essentially wanted to preserve the autonomy of the state.
In other words, yes, the rich people like Jack Ma and others can become rich, but they cannot control political decisions. And I think this is the constituency that essentially brought Xi Jinping to power, and that's the constituency to which he plays. And that constituency is basically, "We are running the show, we are running the country, you can become rich, but don't come close to telling us what the policy would be."
And I think we see that very clearly even when we talk about artificial intelligence today. And you notice that actually in the case of China, the decision there, I've read actually that some people who are working like top engineers and others are not very satisfied with the government policy, but the government is the decider. So, to conclude, all three of these leaders that are generally considered like autocrats and this or that, I think, are the product of the previous period of neoliberal globalization. And they're riding the wave of the societal rejection of certain features of that globalization.
[00:17:08] Peter Slezkine: Interesting. So, in the case of China, I mean, Xi came to power on the back of a promise of anti-corruption. He's been in power for a very long time, and the anti-corruption process continues and is perhaps eternally necessary.
Trump ran against the Epstein class and is now identified with it by much of his base. And Putin, I guess the irony is that he began the campaign of disciplining or imprisoning oligarchs himself, but the process only concluded through Western action. After the start of this war, after 2022, the sanctioning of Russian oligarchs is what truly subordinated them to the Russian state. In turn, Putin from a once-upon-a-time, fairly conventional neoliberal into a real statist, leaving aside the chief economist, Nabiullina, who's still in power in his more, kind of, conventional neoliberal.
[00:18:08] Branko Milanović: Yeah, it is, I think, actually in the case of Russian oligarchs, this is, of course, one of the big ironies of history. Essentially, they escaped Russia after taking lots of assets out. And nobody could expect, certainly they didn't expect because they would not have kept all that money abroad in a visible form, that eventually the money would be seized by the other side, not by the Russian side, by the Western side. It is really an irony of history what happened.
And moreover, the original rationale, which was also a bizarre rationale to start with, was that there would be a threat of seizure of assets because oligarchs are so powerful they're going to tell Putin, "Wait, don't go to war because we are going to lose our money." And Putin would say, "Yes, yes, you're such powerful guys, so I will not do the war." Of course, what happened, he went to war regardless of that. That shows essentially that oligarchs were non-powerful. So, the rationale to seize their assets, what was based on their political power, was proven wrong.
So, there was no actually argument to seize the assets. So it is such a bizarre situation. And when I was arguing that people say, "Oh, you have sympathy for them," but they don't. Actually, I think that most of them are really thieves. But the point is that you don't threaten on one ground that when the ground doesn't turn out to be right, then you say, "Well, nevertheless, we'll just take it."
[00:19:35] Peter Slezkine: Do you think that misapprehension is a product of projection or of a misunderstanding of state elite relationships generally? So, in a fantastical hypothetical, if Russia or China could inflict serious pain on American oligarchs, would that then influence the state? And so, the American government just believed that Russian elites had the same, sort of, influence that their own did. Or do their own elites not have this influence after all? And they just had, sort of, a neoliberal picture in their head that doesn't actually map onto the powers of states and the rules of geopolitics.
[00:20:13] Branko Milanović: I think the latter on, I think they had an image of the, sort of, neoliberalism and had an image where the money elite really had disproportionate influence on government policies. I think in the case of Russia, they believe still the oligarchs, clearly, they believe that the oligarchs are so powerful. In reality, the KGB was in power.
And I think in the case of China, likewise, it would be a mistake to believe that the oligarchs are powerful. And we have seen this. I'm not saying that they are without any importance, but I'm just saying they are not really the deciders when it comes to important government decisions.
And we have seen that in example. That's one that I like to quote, but there are several others. But Jack Ma was the most dramatic one, because as you remember, he was about to have the largest IPO in history of the world. And that was actually cancelled, I think he did 24 or 48 hours before it happened, on explicit orders by Xi Jinping. But what was interesting, that's what it's at least what people say. But what was interesting, it's not a dispute, was who gave him the phone call.
The phone call came from the middle-level Ministry of Finance official. And things don't happen exactly by accident in China. And that was a very clear message to Jack Ma. You are not at the level of minister, forget other levels. You may be a billionaire, but your level is a mid-level official in Ministry of Finance. So, he conveyed the message. And I think that has been the case since. And as you mentioned, the corruption campaign has been going on. And part of that campaign was essentially directed towards disciplining all the party members who are very rich.
And for that, actually, I have the papers that I did with Chinese authors. We used actually official Chinese data from the Central Committee Disciplinary Commission, which actually deals with only party members. And you have there, really, the amounts of money they've been accused of stealing and everything else, which is on average about 12 to 15 times their salaries.
[00:22:18] Peter Slezkine: Is there any logic you can see in the data as to who bears the brunt of the anti-corruption campaign? Does it correlate with how much they're, in fact, stealing, or is it just a matter of party loyalty that if they seem to lack loyalty or a part of too powerful a plan, then they get the axe, regardless of how much they're stealing, assuming that everybody is?
[00:22:38] Branko Milanović: We don't know what leads the Central Committee Disciplinary Commission to actually choose one person that maybe not choose another one. But they do publish the data, which we had actually 1,000 cases of people who have been found guilty. And by the way, whoever has been accused has been found guilty. So, it's 100% result. And they give very detailed data about the first amount of money, including the value of the jewelry or art collection, all of that, that was considered unjustifiably acquired. I cannot use stolen, but there was some other euphemism.
And then the age of the person, number of years that he was Communist Party member, what was the position at which he was then found guilty? How long did this process last? What is his age, and what was his skill level of education?
So, this is very interesting because that information we have and using household survey data, we can place these guys and say, "What would be these guys' legal income with level of skill and position?" For example, they give you a position, whether you were in the county level, or they have provincial level, or your national-level guy. And that's where we find that actually expected with expected wage, for example, for that guy with such skills, is 100.
The amount of money, embezzled money on a monthly basis is 1200 to 1500. So, we're really talking about massive amounts. And these are big guys. These are so-called tigers. They have the flies. These are the small guys, like policemen in the street. And then they have the tigers. And these were the tigers. But of course, from such data, we cannot tell if these tigers were accused and found guilty because they lacked loyalty to the party or just they were corrupt.
[00:24:32] Peter Slezkine: What about in the U.S. case? Obviously, Musk hasn't been disciplined the way Ma was, but in his power struggle briefly with Trump, it seems like he lost. That Silicon Valley has learned that it is not truly a global stateless entity, but that it is subject to the power of the American state specifically. And they've all become nationalist to one extent or another. So, how do you see the power dynamic here?
[00:25:02] Branko Milanović: This is very interesting that you mentioned. Originally, actually, I think many people believed, and I, including myself, actually, that Musk is going to stay for a while, but he came like a summer storm. You know, he was there, but it didn't last too long. And I think that that he lost actually the power of the state was greater than the power of the oligarchs of the plutocrats.
The interesting part would be to see how things develop now with artificial intelligence, because this is, I think, a very interesting case where the incentives are very bizarrely aligned. On the one hand, all these large AI companies have an incentive to continue and to speed up the development because they're fighting against each other. U.S. military-industrial complex has also an incentive to do that in order to tell the Chinese that the U.S. is more powerful.
But then, within themselves, they also realize that the ultimate result of all that would be a monopoly or one or two companies, that what the money that has been invested, we're talking about billions, as you know, billions and billions might actually produce a bubble. And there is on top of that, a real danger with, that's why I actually, I like the analogy with nuclear weapons is the real danger where you have to control it.
And I would really see, if you see AI as the equivalent of nuclear weapons, you have to ask yourself a question. Would it have been reasonable if the U.S. and USSR have outsourced production of nuclear weapons to private company and let them do whatever they wanted? So, if private company produces nuclear weapon in California and they're saying, "Okay, we'll just want to sell it tomorrow to somebody else, and we'll do with that whatever we want."
So, you had to find some solution. First, that it was in those cases, it's very clear in state hands. And secondly, that there was a mutual restraint, which was then, of course, implemented through four agreements about nuclear weapons. And I think we will have to do something similar with artificial intelligence.
[00:27:02] Peter Slezkine: I think the analogy between AI and nuclear weapons is instructive, but misses some fundamental differences that for one, it turned out that it didn't matter at all who won the nuclear race. I mean, obviously it mattered to the Japanese, but it didn't matter in the struggle between the U.S. and the USSR. The USSR got their second that had no effect on the balance of power.
Two, and we don't know if that's going to be true with AI. Maybe if you get there first, you determine the entire system. Nuclear weapons are not supposed to be used in their power is implicit. Whereas AI is already used pervasively and ubiquitously and will be ever more so. So, it's much more active than passive. And nuclear weapons are always directed outwards at the apparent adversary. Whereas the transformative effects of AI are going to probably be first felt on the domestic society, the national economy.
And, of course, it has international national security implications, but that's not its exclusive area of operation and probably not its primary one. So, I see the dynamic is very different, and therefore the discussions would have to follow a very different logic.
[00:28:10] Branko Milanović: Well, I'm not saying that there is 100%, sort of, parallel, and you're right in many of these points that you made, but what I think is similar is that AI, like nuclear weapons, can be used militarily or can be used to attack the other side to get information, stop, for example, water companies from functioning, airplanes from flying, electricity for being delivered. That can be done through artificial intelligence, let alone that artificial intelligence can also develop biological and chemical weapons.
So, it does have this impact. And when you said nuclear weapons did not have eventually have a role, but they didn't have role because of mutual acceptance of constraints on their deployment in reality, and I think something similar is needed here because if it's left just to its own, there are, of course, some beneficial effects that would exist. Like there are beneficial effects of the nuclear energy. I mean, after all, production of nuclear energy was very good, and it's good.
France depends two-thirds of energy on nuclear, but nuclear weapons were bad. Likewise, I would say artificial intelligence, there are, of course, very important elements, but there is also a dangerous part, and I don't think we should minimize it because we are now a little bit there, I believe, like where we were with nuclear weapons since, let's suppose, I don't know, '49, '50, or so on. And now, with hindsight, you say, "Well, it really didn't matter, but it didn't matter because we controlled it." But if you're now in '49, when the Soviet Union got its nuclear weapon, or let's suppose we are now in '51, then you don't know if it will matter or not.
[00:29:52] Peter Slezkine: Yeah, no, I certainly didn't mean to say that nuclear weapons played no role. I just mean that AI is already actively present everywhere, whereas nukes are buried in silos or on submarines under the ocean and are always poised to fire, but hopefully never do and never did after the first couple of uses.
[00:30:12] Branko Milanović: Ah, yeah.
[00:30:13] Peter Slezkine: And so, that's a big distinction. We're not preventing use, we're trying to direct use and preclude some kinds of uses. And that it is the effect with nukes obviously was domestic to the extent that nuclear energy became important, but the idea in the '50s that maybe nuclear technology was going to totally revolutionize medicine and everything else proved empty, whereas for AI it seems like the first effect is going to be domestic, although it will also have extraordinarily important international security implications. But let's turn to your concept of national market liberalism.
So, now that the great global transformation has taken place, this has transformed, sort of, the nature of national economies of states. So, what is national market liberalism and how will that impact international relations?
[00:31:06] Branko Milanović: Well, I would love to speak about AI in this context because the subtitle of the book is actually National Market Liberalism in a Multipolar World. What do I mean by national market liberalism? Let me explain that relatively easily and quickly.
We all do agree, from Mark Carney to Trump or to Ursula von der Leyen or whoever, that the period of neoliberal globalization that we can relate to the early 1980s, certainly the peak was around 2000, that period has come to an end. And that's, I think, quite obvious. And people have written, it's not only Trump's tariffs, it's use of coercion in international economic relations, inability to, in very many cases, control of capital transfers, inability of countries like China to raise money from U.S. stock exchange, and many other things have happened, including, of course, really an attempt to limit severely movement of labor, which, theoretically, within the neoliberal world, was actually always to be treated like just another factor of production. So, people move wherever they want to make more money, like capitalists in the West, wherever they can make more money.
So, that's been at an end. So, the question then becomes, what do we think this new regime that we are already beginning to live in, what are the features to that? And my argument is the following, that neoliberalism was consistent in the sense that the rules which applied externally and domestically were more or less the same. These are the rules of domestically, it was low taxation, profit principle, reducing the importance of the welfare state, and internationally, which was free trade, flexible exchange rates, and so forth, no tariffs, low tariffs.
The point is that with the new system, we remain domestically more or less neoliberal, and I will give you some argument as to why we are remaining there. But internationally, major countries, and then the whole world, because the whole world imitates what major countries do, becomes mercantilistic.
So, now we have domestically neoliberal policies of deregulation and low taxation. They continue, but externally, U.S. or China or Russia or India, or the European Union behave like mercantilistic powers. In other words, they treat trade, international relations, as a zero-sum game. Whatever is gained from you is their loss for me. So, we play a game where we threaten either tariffs, off-closing of immigration channels, or inability of your companies to sell in my place, like Huawei cannot sell in the United States, or electric cars cannot come here. You use internationally, you use political power, and you play a mercantilistic game.
It is liberalism, it is market liberalism, because it is limited to the market relations, and it is national. And I think it's very important to realize that the prefix national has to be there. And when you think that any cosmopolitan ideology, like liberalism, would not allow the nationalism, because it is somehow contradictory. Well, of course, I say, yes, socialism was also an internationalist ideology. But put prefix in front of that, national, you get a very different animal. So, we now, I think, have essentially national liberalism, which means liberalism applied only inside or within. Without, it's a different matter.
[00:34:38] Peter Slezkine: That's funny. I should have known that the punchline would have been national socialism. I somehow assumed you were going to say socialism in one state. So, it's been...
[00:34:45] Branko Milanović: Well, that's the same idea. It's the same idea. It's basically, we are socially scared, and then elsewhere will be different.
[00:34:51] Peter Slezkine: So, the question, I suppose, that follows is, do we need to employ the term "national"? Obviously, we need some alternative to the cosmopolitan global category. But is the new repository of market liberalism necessarily the nation?
Presumably, most nations are far too weak to practice this form of mercantilist politics in the big, scary world. And you mentioned the European Union as one of the players in this game, which is obviously a supranational construction or a particular kind that is facing all sorts of tensions at the moment.
[00:35:33] Branko Milanović: I would say it's still the nation. But of course, it's a more complicated thing. But I think it's still the nation in the sense of the, let's take four, the dimension, which are national states of China, Russia, India, and the United States.
[00:35:49] Peter Slezkine: Interestingly, all of them are claiming to be civilizations. The first three claim to be civilization states in the U.S. is now making a very bold claim to lead Western civilization, wherever its bounds may be.
[00:36:01] Branko Milanović: Yeah, but they do have governments that represent the nation, and these are single governments. The European Union is different because, of course, there is a German government, there is a French government, and there is something which is on top of them formally, but in reality, with much less power. So, I know the European Union is different.
Now, your question was, do we need the modifier or the prefix national? I think it's absolutely crucial, not in the sense of ethnicity or whatever, but in the sense of governments being oriented in the external relations, all predominantly by what is defined as the national interest. So when they take this national interest, rightly or wrongly, it's a separate matter, but they do actually explicitly now talk about it.
And if you look at the rhetoric that comes from the United States, from Russia, from China, from India, it's a very strongly sort of country-oriented, if you don't want to use "nationalist," because I don't want to use word nationalist in the sense of ethnicity, that's because India has 250 million Muslims. So, it's not only Hindu, but it is a national interest of India. Now, obviously, small countries cannot do the same.
So, what I think we might have, we might have the fragmentation of the global market, where you create, between the two words, zones of economic interest, like Japan created co-prosperity zone, UK had Commonwealth preferences, Germany had bargain agreements with all East European countries, and the fact of control of Eastern Europe. So, we might have more of that, but that fragmented world will be very different from the globalized world of the past.
[00:37:41] Peter Slezkine: Why don't you just call it imperial market liberalism then? Because if it is going to be fragmented into a commonwealth, a co-prosperity sphere and so forth, then there should be an imperial center that extends beyond the nation-states, right? Japan is the center of its own system in the past, wanted to be, the U.S. would be, and so on, China.
[00:38:00] Branko Milanović: Well, maybe, because of course, I think what is happening with the multipolar world is that you essentially would have about four to five centers of the five poles. And then, of course, within that region of interest, they would basically impose their own… Not their own will, but they will be seen as the regional hegemons.
[00:38:24] Peter Slezkine: The mercantilist dynamic that you describe would probably take place among these larger blocks. So, not every nation is treating trade.
[00:38:33] Branko Milanović: No, no, I understand that. You know, Tanzania is not going to be in the United States. Smaller countries would have to fall within there. But we can discuss whether the national always would hold, but I would actually see the national rather in an ideological sense, in the sense that countries now, even smaller countries, are now really being essentially guided entirely in foreign economic relations by what is perceived as national interest.
And I think this is different from what it was before, where the national interest was essentially interpreted to be subsumed, in other words, to be satisfied with globalization policies. Now, I think we have clear dissatisfaction with this kind of unfettered globalization of the past, and we really define national interest in the opposition to the others. When people tell me, for example, they say, "It's true that trade with shared world GDP is now stable. It did not really go down." The movement of capital has gone down.
But I think what is more dramatic is an ideological change in the way that we perceive, meaning the states, countries, perceive their relationship with the rest of the world. And I think that's a sea change, and that is actually reflected in what I call this national market liberalism. And in part, because I really didn't like people realizing that we have come at the end of neoliberal globalization, but then calling it "post-neoliberalism," because it is really an oxymoron. What does it mean, post-neoliberalism? I mean, even the two words post and neo put together really make no sense.
[00:40:09] Peter Slezkine: Cancel each other out. Yeah, that is very true.
[00:40:11] Branko Milanović: And then what happens then in the future? We have another system, which is post-neoliberalism. You know, it's meaningless.
[00:40:18] Peter Slezkine: I agree completely that nationalism seems to have become the discursive alternative or conceptual alternative to global cosmopolitanism. My instinct, though, is that this is a misperception, that people will realize that these national politics run up against structural limits, and that the only powers that can actually practice mercantilist policies are the ones that have imperial qualities. And so, it's a dead end for particular European nations to try to make their countries quote-unquote, "great again."
That even in the United States, if this is going to work out, you're going to have to plug Canada into the system, Mexico, and any number of other nations. And so I think we're going to probably land somewhere in between global cosmopolitanism and sort of national mercantilism.
[00:41:16] Branko Milanović: Well, Peter, now you're actually, we started with James Burnham, but you have now gone back to James Burnham because, of course, his idea written in 1941 seemed eminently sensible. Is it actually the world would be divided into Japanese, German, and American spheres of influence? And that seemed really, when you look at that from at that time, which means before the beginning of the war of Germany against the Soviet Union, it seemed really sensible.
[00:41:44] Peter Slezkine: And then Orwell popularized Burnham's idea in Nineteen Eighty-Four in the most memorable fashion.
[00:41:50] Branko Milanović: Right. So, it could be that, I see your point now because national, let's go back to the subtitle of the book, National Market Liberalism in a Multipolar World. What you're arguing is that essentially that "national" would be not subsumed, but would be...
[00:42:05] Peter Slezkine: Subordinated to the multipolar.
[00:42:07] Branko Milanović: It was a multipolar. And then it essentially would be several poles that the policies would be defined at the level of a pole. And a pole could be an imperial pole, actually, maybe by definition, it's an imperial pole.
But I think that ideologically, I think that actually this new system, we have to have a term. And I think that the fact that national thinking is done with respect to the rest of the world was dominated by what is perceived to be national interest. I think it's objective to put the "national" prefix before. But obviously, we can argue that.
[00:42:43] Peter Slezkine: No, I think it's interesting tension in the subtitle. And I think it can be resolved by, sort of, a sequential process that the dominant discourse is national, but perhaps what it will lead to is a multipolar reality. But quickly to finish, I guess, because I still, I'm, sort of, interested in these larger constructions, I wanted you to perhaps investigate the different ways one could define West and East.
So, the first stage of the great global transformation is a massive redistribution of wealth from West to East, reversing the Great Divergence of a few centuries earlier. But the West is obviously the U.S. on one hand that has its own continuing dynamic, and Europe, on the other hand, which is perhaps declining faster. And then there are Asian countries like Korea and Japan that are on one side, part of the Asian rise story.
On the other hand, they're part of the American system and are now, sort of, caught between China and the U.S., the Asian wave that they rode in the American wave that might be cresting and crashing.
[00:43:54] Branko Milanović: Let me just go back to the very beginning of what we said just to be very clear about the terminology. What has happened with the rise of China and rise of Asia? And when I speak of Asia, of course, it includes India, which is now the most populous country in the world, Vietnam, Thailand, Indonesia, 290 million people, and so forth. What has happened is redistribution in the sense that it's not that money was taken from the United States and gone to China. The U.S. has become richer. Europe has become richer over 40 years.
But China and Asia have become even more in percentage terms, richer. So, in other words, when we look now at the map of the world and the map of Eurasia plus North America, we actually see very different distribution of economic power. We see, actually, China and probably the Pacific provinces of China and also the Atlantic provinces of Europe being very rich and actually, to some extent, going back to the distributional economic activity that existed in the 15th, 16th century, where you had really maritime regions, the Mediterranean, the Atlantic in Europe, and the Pacific in China being much richer and the central regions where now it's Russia, Ukraine, Eastern Europe, having as they do now and they might do in the future, low population density, central Asia, and relatively lower level of income and less activity.
So, in that sense, this is undoing all the Great Divergence where actually China and India stayed at the same level of income, and Western or Northwestern Europe and North America really became much richer. So, just wanting to make sure that "redistribution" doesn't mean that you take money from somebody else. Redistribution means simply that you have grown faster than the other guy.
So, that has, I think, happened. And as we discussed in the very beginning, it had a geopolitical angle, and it had domestic angle through the dissatisfaction in the lots of people within the rich countries. Now, what would it mean for the rest of the world and for the other countries that are not China or the United States? Of course, it's very difficult to predict. It becomes more of an international relations game. For example, India, I think, is increasingly going to play a big role because of its size and because of education of its people and so forth. So, it's very difficult to tell it now because there are many geopolitical elements that are now becoming more dramatically highlighted and especially the situation in Asia.
[00:46:22] Peter Slezkine: But so what do you do with, like, Japan and Korea? They're part of both stories. They're part of the Asian rise, and they're also part of the Western relative decline.
[00:46:30] Branko Milanović: I don't know what they do. They're part of a Western alliance. And Japan has not, of course, grown very much in the last 30 years. But it is, you mean, relatively politically stable. Korea's situation, of course, is much more difficult. First of all, Korea has continued growing, but Korea has obviously a problem that the country is divided into two. They have North Korea on the border. I think it is a difficult situation because also, as you know, the nuclear weapons in North Korea mean that South Korea could also develop nuclear weapons, but then Japan would not like that idea at all. So, then Japan would develop nuclear weapons.
So there is, I think, potential for escalation or proliferation there.
[00:47:13] Peter Slezkine: One absolutely final question. You recently wrote an essay on your Substack about the hypocrisy and warmongering of European elites. Can you just give us a summary of the argument? We were just talking about East Asia as perhaps the most dangerous region in the world where a major war might break out, but a war is already underway in Eastern Europe. So, what are the dynamics at play?
[00:47:38] Branko Milanović: I think that the dynamics there, and that's what I criticize European elites, and particularly from small countries. I think very often it has happened that small countries, of course, look at their own interests and they, to some extent, use larger countries or other countries to internalize, or actually to not maybe always consciously take their interests and then go to war. And I actually mentioned, I mean, I think it's clearly that Israel is having an influence on U.S. policy in the Middle East.
I think also it is true that Serbia has actually, to some extent, used Russia in the run-up to World War I. And I think in this case, the Baltic countries and the Nordic countries, by keeping this very bellicose rhetoric about the war and all of that, are pushing, whether they want to do that cautiously or not, I don't know, but the fact of pushing Europe and the United States into a war which can really easily become a nuclear war. And I think it is an irresponsible position.
It is very clear that under the current situation and whatever we can foresee, this war between Russia and Ukraine can keep on going for years. That would really be not only totally destructive for the two countries, but for Europe as well. And that, of course, is first ethically unacceptable.
And secondly, it is, I think, irresponsible because that war can become larger and can, as I said before, go nuclear. So, small states then look at their own interests, and they say, "Well, whatever I do or whatever I say, the United States will go in and defend." But I think it's also naive because the United States is not going to go into a strategic nuclear war because of the 15 villages in Estonia. So, it is unrealistic as well.
So, I thought it was hypocritical, and it really replaced maybe the domestic constituency or replaced some kind of a fielding of anger. But it is hypocritical. And as I said before, irresponsible. So, that's why I actually, I thought if they were responsible players, they should call for a negotiation, and they should participate, and they should insist on that. I'm not saying negotiation would solve the problems, but negotiation could lead at least to a ceasefire.
[00:49:56] Peter Slezkine: So, your Serbian forebears 100 years ago pulled Russia into a great power war. Now the, I mean, Israel has been wagging the American dog for a while and setting terms in the Middle East. And now the Baltic Nordic countries are pulling the U.S. and NATO into a war with Russia. You're suggesting that this is not actually in the national interest of these smaller countries, that they might get a short-term boost in influence. But if they provoke the great war that they are flirting with, presumably they will be the first to suffer.
[00:50:30] Branko Milanović: They could be the first to suffer, but they also might actually believe that by creating bigger war, they might profit from it. I'm not exactly sure that they would lose. I'm not quite sure that Israel can be described as having lost. Actually, Israel probably gained by, sort of, basically pushing U.S. into war with Iran because U.S. now doesn't know how to extricate ourself from that war. And Israel is just sitting home and being quiet. But I still believe that such policies have to be considered from a more global perspective.
In that sense, they are irresponsible because they actually push towards a much greater conflict than what currently exists.
[00:51:13] Peter Slezkine: So, wagging the dog might actually work if you're the tail, but the dogs themselves should all turn around and face one another and then recognize what's going on.
[00:51:21] Branko Milanović: No, they should really. I've given actually three examples here, but probably there are more examples that can be given. Obviously they are controversial, but I think there is a certain logic of small countries not internalizing, not seeing a global picture, and being irresponsible in that sense.
[00:51:41] Peter Slezkine: Well, a wise conclusion from a representative of a small nation who has moved to a big metropolis. Thank you very much.
[00:51:49] Branko Milanović: Thank you very much, Peter. It was really fun talking about all the issues from corruption in China to the Nordic-Baltic alliance.
[00:51:56] Peter Slezkine: Well, we have many more issues for another time. All right, thanks again.
[00:52:00] Branko Milanović: Thanks a lot.
[00:52:04] Peter Slezkine: Thanks for listening to Worldviews. Make sure to subscribe to the show so you don't miss out on any episodes. Worldviews is hosted by the Stimson Center and produced by University FM.