The just published book by Christian Christiansen Designing Global Economic Equality: The Making and Unmaking of Global Egalitarian Policies at the United Nations provides a review of intellectual history of the idea of global inequality. It follows recent excellent books by Samuel Moyn Not Enough: Human Rights in an Unequal World and Quinn Slobodian Globalists: The End of the Empire and the Birth of Neoliberalism and Hayek’s Bastards: The Neoliberal Roots of the Populist Right (reviewed on my Substack here, here and here) in evaluating the transition in the intellectual discourse and in international politics of the ideas of global poverty, global inequality and global development. The scope of Christiansen book is narrower than that of the other two which often move into the arena of economic and political history.

Among the three “globals” I mentioned above Christiansen focuses only on one dealing with inequality. Global inequality, as Christiansen writes, and as it becomes clear to the reader, meant many things to many people. It entered the jargon of economics already in the 1950s. Colin Clarke’s Conditions of Economic Progress published in 1940, but then forgotten during the war, and resuscitated after 1945, played a very important role by putting numbers on the huge gap (“the chasm”) that existed between the developed Europe and the US, and impoverished Asia and Africa.

In the early 1960s, many African countries become independent and the rich would discover poverty in the Third World; not that that poverty was unknown before, but now, when the countries became independent, the Third World poverty acquired a political meaning: poor nations of Africa and Asia could be easily tempted by the “false promise” of communism and become allies of the Soviet Union. There is thus an element of self-interest from the very beginning of Western involvement in “solving” mass poverty in Africa and Asia. There were, nonetheless, other elements too: the success of the Marshall Plan in Europe that implied that aid can jumpstart economic development, and a turn toward the welfare state which could be interpreted, and was interpreted by some including Jan and Alva Myrdal, that it naturally must lead to a global welfare state. In other words, the world should ultimately become a greater Sweden. These hopes were, of course, soon disappointed.

The era of two overestimations. I would like to name the period from the early 1950s to the introduction of the New International Economic Order in 1974, “the period of two overestimations”. The first was the overestimation of the willingness of rich countries to provide aid. Innumerable individuals (beginning with quasi omnipresent in the book Barbara Ward) and likewise innumerable international commissions composed of equally innumerable wise men (mostly men), totally overestimated the likelihood that the rich countries would spend a sizeable share of their GDP on economic aid. The original target, in the 1960s, was 1% of the rich countries’ GDPs. It was then scaled down to 0.7% of GDP. Like many UN objectives and “pledges”, it was ignored. Today, rich countries’ foreign aid is estimated at less than 0.3% of GDP and lots of that includes military transfers, or aid that can be understood only in terms of political geostrategics, not at all in terms of alleviating poverty and reducing inequality between the (somewhat awkwardly) labeled Global North and Global South.

The second overestimation was that aid could propel poor countries’ growth. That practically never worked. The Marshall plan was a singular exception, but it was an exception (we understand it much better now), because Europe needed capital but had everything else: highly qualified labor force, variety of already built industrial factories that just needed raw materials (and thus foreign exchange) to begin producing again, well-known and much used markets. None of that existed in the newly decolonized countries in Africa and parts of Asia.

Those two over-estimations went together with a somewhat otiose language of moral responsibility of the North, the rhetoric couched in ethical terms, and not in terms of restitution for the harm of colonization (although there were, as Christiansen writes, such authors as well); and often in the wooden language of the many reports (the Pierson report, Columbia Conference on International Development, the Brandt report). Christiansen gives copious quotes from many of these reports and one becomes quickly incredulous that authors truly believed that vague--and invariably vain—appeals to moral conscience of the rich and to their ill-defined responsibility for poverty in the Third World would ever have any traction in real life. Perhaps our era is much more cynical, but making such abstract calls for action—that invariably are vague as to who and how should do things—seemed rather written to display moral virtues of the writers than to lead to some measurable change. Robert McNamara, the engineer of body-counts, is no less morally disposed in the appeals to the conscience of the West than the indefatigable Barbara Ward who became his close advisor (after, or perhaps simultaneously as, advising the Popes and many other influential personalities).

The most interesting person of the period is Raúl Prebisch. Prebisch was a structuralist (even if he was not sure he agreed with such a description) who made points that were understandable and sensible: the international system was systematically skewed in favor of rich countries (for example, by ruling out nationalization of multinationals working in poor countries), by protecting Western industries against the nascent industries of the South (and thus making export growth of the South more difficult), and finally by profiting from the long-term movement of terms of trade against agriculture. Prebisch thus saw poor countries, and especially his native Latin America (he was born in Argentina), locked in a situation where they were short of foreign exchange to start serious import substitution (which obviously requires, at first, technological imports from the North), impotent in their dealings with Northern multinationals, and stuck with production of raw materials whose relative price is on a long-term decline. Moreover, high inequality in the South leads to wasteful expenditure by the elite on luxury goods thus additionally reducing the funds for “primary accumulation” and growth. Even if Prebisch was wrong on the long-term evolution of the prices of primary commodities, his basic story made sense then, and continues to do to some extent even now. What better example than China which indeed faced all the issues listed by Prebisch but was able, by improving its position vis-à-vis foreign investors to conquer their technology, move to higher value-added production, not waste too much money on luxury consumption, and achieve extraordinarily high rates of growth.

As this short sketch of Prebisch shows, he was no great friend of neoliberal approach to global inequality according to which poor countries should just follow the path of the rich: find the right niche in the international division of labor and go along the stadial development à la Walt Rostow (another important development economist who is, unfortunately, not much mentioned by Christiansen). It is no surprise that Prebisch got into a couple of nasty quarrels (unusual for him) with Milton Friedman and neoclassical economists who, from the late 1970s, dominated the field of “global inequality” and development.

We thus enter into the second phase that may be dubbed that of “neoliberal globalization”. The rule here was: countries should simply follow market signals and grow. It was a naïve doctrine. While the moralizing doctrines of Barbara Ward and Jan Myrdal were naive in their assumption that there is such a political or moral entity as “global community”, the neoclassicals were naïve in believing that unmolested markets will make everybody rich, or at least no longer poor. While one group was naive politically, the otter was naive economically.

This transition, occurring at around the ninth decade of the 20^th century, is much discussed in both its national and global aspects. It is notable that Christiansen links the economic disputes of the period with those in the field of international relations. A precursor to the move to the right in economics was, Christiansen writes, Robert Tucker (Inequality of Nations, 1977) that hailed back to political realism: the real—the only--actors in the world of international economics are states. States have interests but not ethics. The global community does not exist. The neoliberal turn thus took as its underpinning a very realistic (in the sense of the so-called realistic theory) view of international relations.

As must have become clear to the reader up to now, the term “global inequality” in reality meant, most of the time, contrasting some average numbers for the North and the South: average GDP per capita, or average life expectancy, or average school attainment. For me, since the work on global income or wealth inequality has become possible (thanks to more plentiful data), ”global” means inclusion of all individuals in the world, not simplified by an average quantity but with their actual incomes or wealth. In Christiansen’s book, reflecting much less empirically rich times, it was simply a gap between the North and the South. This point is important to make because a similar confusion (do we compare the mean against the mean, or do we take all individuals and look at global distributions?) continues, not infrequently, today. Both pictures have validity and use, but the one that looks at all individuals in the world is of course hard to create but is richer in its empirical and even political meanings. Neither the North, nor the South can be usefully summarized by one number. In today’s world even less so than in the past.

Finally, we come to the almost-present where the book ends: to the period of “embedded globalization” or “inclusive capitalism” where neoliberal globalization was, in words, tamed by market consultants and the UN. It is a rather bizarre phase in the evolution that we, following Christiansen, chart here. Under the pressure of the Asian financial crisis, Seattle and Genova riots, market consultants had devised the idea of “responsible capitalism” or “embedded capitalism” such that companies will continue making money, but now, they argued, companies would do so by focusing on green technologies, treating workers nicely, and doing similar implausible things. UN, short of money and ideas, bought that phantasy and we are treated to no fewer than three speeches, delivered year after year by Kofi Annan, then General Secretary of the United Nations, at Davos (where one wonders why, in the first place, the head of an inter-state organization should go at all). The whole discussion, including in Christiansen’s book, becomes murky here. It is not clear what UN and international organizations believe any longer the policy to reduce the gap should be. We are lost in a fog of fantastic statements where all contradictions between business and state, the poor countries and the rich, the powerful and the weak seem to have been solved, at least by a rhetorical sleight of hand. It was probably intellectually the most barren period.

Christiansen’s book is, for the students of development economics and international relations, and people like me who study world inequalities, enjoyable and very well documented. There are many things to learn. It covers the political West-Third World relations since the end of the Second World War in detail. It uses mostly the UN as the forum where they were intellectually played out. Development economists, not linked to international organizations, play a secondary role; macro economics is not much mentioned, and the Soviet bloc and China are totally absent. I also think that more attention should have been paid to the New International Economic Order. It is a complex project: it stood for certain principles of the UN much more so than the political West, but it also rejected interference in domestic affairs and hence the protection of human rights. It wanted to reduce inequality on its own terms, but its “reign” was short-lived. It ended with the increase of US interest rates that plunged the Third World into insolvency, reimposed the role of the IMF and brought the original hierarchy back. Except…except for many in Asia who grew faster than ever and redefined the meaning of North-South relations.

As people who read my Substack and other short pieces might have noticed I have not commented on almost anything regarding football in the past several years. I have lost quite a lot of interest, in part because of the interruption brought by covid (and the sad spectacle of empty stands and piped-in supporters’ noise generated by TV producers), and was then increasingly alienated by the extreme commercialization of the game. It is not that professional football (soccer) was ever free of money and commercial interests. But, keeping in step, with neoliberal commodification, it has become so brazenly and openly commercialized that some of its original features that made football stand out among sports have been lost. A sport that has historically been grounded (and not only in England, the cradle of football, but in all countries where it has spread in the twentieth century) in the local and the class (bourgeoisie vs workers; mixed heritage vs. White; right-wingers vs. left-wingers) has now become a deracinated sport. It has grown unmoored from most of its local, national or class roots. It is even doubtful, I think, to what extent it can be called a “sport” any more and not an “entertainment” in the sense in which the term is used by Hollywood and Madison Avenue.

I do not think that these critiques of the current state of football, and implicitly of its associations (FIFA and its constellation of regional groupings), is new. People have been saying this for years. And it has steadily grown worse. Perhaps the sight of this year’s Champions’ League final brought it home more than ever. Without going into the details of the game, I think it would not be unfair to summarize it by saying that (a) it was a very boring game and devoid of individual sparks of genius, and (b) it was just physical and tactical. Players, whose physical prowess, conditioning, and endurance are extraordinary, looked more like creatures from an AI-generated computer game than footballers of the past. There was no Omar Sivori who refused to wear shin-guards, no disheveled, cocaine-driven Maradona, no Garrincha half-asleep at the right-wing, no pot-belly Ferenc Puskas who could not run 100 meters and yet would score hundreds of goals, no fifth Beatle, no crazy individual. There were accordingly no unexpected passes, no incredible dribblings, no solo actions, no bizarre moves. But there was lots of tactical prevarication, with players lined up as Roman legionnaires executing a difficult maneuver before entering the battle, and performing their narrowly-circumscribed duties at perfection.

To add to this lack of genius and plethora of tactics, the winning team is largely an artificial creation, implanted in one of the largest capitals of Europe—not known for its love of the game—by foreign money. It has indeed acquired a strong following now, but that following itself has not birthed the team; it has never been powerful or passionate enough to create a team. On the contrary, the following was created once the team has become famous. There was no internal, endogenous growth that, step by step, over the years would have created a team. It is the same as if instead of planting trees to provide a shade, one were to simply uproot the trees from the forest and plant them on the sidewalk. Indeed, both provide equal shade at the time of heat. But one set of trees would have been created by a community that would oversee, over the years, its execution; the other would be brought in by the developers. The developers, in this case as in several others, simply decided to invest money in football rather than in building new city blocs. That’s how the winning teams are created nowadays. Socially, ex nihilo.

The winning teams are, not surprisingly, more and more the same: in the Champions’ League, an average of 25 teams were quarter-finalists in every five-year cycle from 1958 up to the early 2000s; since then, the number has gone down to around 20, and in the latest cycle is likely to be only 15 (see the figure, and explanation below). The very end of boredom will be reached when each season the same eight teams are quarter-finalists.

The spectacle –for it is indeed now a spectacle—has acquired characteristics of a circus, very much in sight in this year’s final. Calling out the players’ names with an exaggerated accentuation, setting fireworks, bringing in enormous screens (like in the new Bernabeu in Madrid), announcing the entrance of players into the arena as if they were gladiators, reminded me of what American football has become. It is a sort of a sport, just a “sort”—but devoid of all the characteristics of localism and class that I mentioned before. The teams may move from one city to another, the franchise is there to make money. The football franchises of FIFA and UEFA are now giant companies: players are entertainers, the game is a circus, and the businessmen are there to pocket the money.

Explanation of the graph. Figure shows the number of teams that are the quarterfinalists in each five-year cycle of the Champions’ League (or the European Cup as it was called earlier) beginning with the 1958-62 cycle. With the competition most equalized, there would be every year, eight different teams in the quarter-finals and thus the most egalitarian Champions’ League would have 40 different teams in each five-year cycle (5 times 8=40). The highest number in the graph is 40. The most “monopolized” or “centralized” competition would have the same eight teams in quarter-finals each year. Thus the lowest number in the graph is 8; consequently, the higher the value, the more equal the League. The Champions’ League went from having about twenty-five different teams in each cycle up to the early 2000s, to only twenty, and now in the current cycle, running from 2023 to 2027, the number is likely to be around 15 (the current value, after three years, is 12).

PS. This critique of FIFA and UEFA should not make one forget that an even worse association is the one ruling tennis. I wrote about that several years ago (“The age of open financial imperialism”) when I had a discussion with Nate Silver. The tennis association is as outrageously commercialized as the football association, but is, in addition, not elected by anyone and is monopolized by a couple of rich individuals from rich countries, so much so that tennis’ “World Cups” are always played in the same venues, years after year. This kind of monopolization has, luckily, so far failed to take hold in football, but it not impossible to imagine that it might. Then the Champions’ League final will be always played in the same venue, with more or less the same teams, and the World Cup will forever be held in one or two countries.

What would be the likely effects of massive introduction of artificial intelligence in the economy, from the Marxist point of view? Interestingly, this question, as far as I know, has not been asked.

At first, the implications for Marx’s labor theory of value seem bad or in contradiction with the facts or our expectations. AI implies the introduction of extremely capital-intensive techniques of production, or to use Marxist terminology, of processes with a very high organic composition of capital. In other words, AI implies very high c/v ratio. That is the ratio of constant capital (c) to capital engaged to hire labor (v). If the presence of labor is small, and perhaps in cases of fully automated production, close to zero, the surplus value produced by labor must also be small or close to zero. Regardless of how high the rate of exploitation is, a very small v implies a very small s (surplus value). We thus establish that the rate of profit (s/(c+v)) must also be very small, consistent with one of Marx’s most famous “laws of capitalist development”, namely tendency of the profit rate to fall with the introduction of more capital-intensive processes of production. In the case of almost wholly automated production, the rate of profit must become zero or be near zero. As Marx, Schumpeter and common sense tell us, capitalism with zero profits is an absurdity. Capitalists will not invest if their expected return is zero. Thus, the tendency of the rate of profit to fall spells the doom of capitalism.

Much before the AI appeared on the scene this was the idea discussed by the early 20^th century Marxist economists like Rosa Luxemburg and Henryk Grossman. They expected precisely what we observe today: that by introducing more capital-intensive processes of production, which for each individual capitalist as he or she introduces them, are more profitable, capitalists as a class, when they all do so, displace living labor, reduce the amount of surplus value, and thus as a result drive their own profit rate (for all capitalists as a whole) down to zero.

So will the AI bring capitalism to an end? This does not seem to square well with the facts and expectations of not smaller, but higher, rates of profits that would come from the introduction of AI. Was Marx entirely wrong? Perhaps not.

To see that consider the economy composed of two sectors. First, the sector with very high organic composition of capital, exactly as we have described it. But now allow that total automatization of production in this sector creates a demand for production of goods and services such that only live human labor can do, or where live human labor is superior to AI: think of caring activities, sports, nursing, top cooking skills, coach training, bar tenders, creative writing and multitude of other tasks that, precisely because some of them may be done in a rough way by the AI, will become ever more valuable when done by skilled, real live human labor. Thousands of teachers may be replaced by the AI but the demand for really good teachers, who can beat the AI, will increase.

Then, a second sector, the very opposite of the fully automated sector, will develop. It would be characterized by low organic composition of capital: constant capital (c) would be small relative to variable capital (i.e., to the amount of engaged capital paid in form of wages). It would, unlike the automated sector, generate a huge amount of surplus value.

But as we know, in capitalism, commodities and services are not sold at labor values, but at the prices of production which equalize profit rates in capital- and labor-intensive sectors (i.e., in sectors with different organic compositions of capital). This, in turn means, that the amount of profit in the automated sector will, in equilibrium, be proportional to the (huge) amount of capital employed in the automated sector. Therefore, our automated sector’s profit will not be negligible as it seemed at first when we looked at it in isolation and assumed that the entire economy is composed of it only. On the contrary, the profit rate may go up because replacement of labor in one sector is accompanied by the creation of more labor intensive processes of production elsewhere.

To put it simply: while one part of the economy will work only with machines (where under the term of machine I include the AI), another part of the economy will be much more labor intensive, probably even more so than today. This in turn means that profits in the AI sector may be high—but only if the growth of the AI sector is accompanied by rising demand for goods and services produced by live labor and thus by the emergence of that, second, sector. If the AI sector takes the entire economy, then according to Marxist analyses, the profit rate must tend toward zero. And even under the neoclassical analysis that would be the case, because a fully automated production that does not employ labor at all implies total wages of zero or close to zero, and it becomes unclear to whom the bonanza of new production could be sold. Thus, the AI-generated abundance leads, in a neoclassical world too (absent a huge redistribution to people who do not work), to insufficient aggregate demand, and consequently to the profit rate close, or equal, to zero. In the neoclassical world, as in Marxist world, the rise of AI must be accompanied by an equivalent rise in labor intensive activities in order to keep the economy in equilibrium and not to drive the aggregate demand and the profit rate down to zero.

To summarize: in both Marxist and neoclassical worlds, an economy composed of highly automated sector only is incompatible with the maintenance of capitalism. In one case because the produced surplus value and thus profit is zero; in the other case, because insufficient aggregate demand leads to profits of zero. The situation can be “saved” only by an equivalent rise of a labor-intensive sector or by massive redistribution to people who do not work.

Thus, we see less dismal future for labor that some people argue. Activities where labor cannot be substituted by the AI will blossom. Will AI bring an overall deskilling of labor or not? At first sight, it seems that the AI will lead to deskilling of labor simply because many skills (such as computing, software development, writing, even math) will be redundant as they may be taken over by machines. Yet, this process may be, and is likely to be, counterbalanced by the creation of occupations where labor skills will exceed today’s level simply because they would have to be superior to the skill levels produced by the AI in order for people to want to purchase such products and services. Therefore, while one part of the labor force may suffer from deskilling, or to call it frankly, from the dumbing-down, another part of the labor force will get more sophisticated and much more skilled. To stay ahead it will have to compete with machines more than with the other humans. But so long as we believe in human adaptation, we can think that there would be always a segment of such labor that would do things that the machines cannot do, or even where the same output is produced by both, it will more appreciated (and hence more valued) if done by live labor rather than by the AI. An AI-generated equally beautiful ice-skater is unlikely to be as much appreciated as a human ice-skater. At least, by the humans.

PS. In the piece, I have used the terms of “increased capital intensity of production” and “higher organic composition of capital” interchangeably. The first is, of course, a neoclassical, the second a Marxist term, but in this context they both express the same thing: machines (including AI) replacing humans.

My good friend and co-author Leif Wenar, in his first tweet, asked this question: “Friends, a utopia query. Keep human nature fixed. Imagine the best possible world. Does money exist?” I could not sleep last night so I decided to give it a thought.

Let’s start with money. What is its central function? To coordinate plans of individuals and companies and to pull resources in the “right” direction. When I go to Starbucks to buy coffee, and have money to pay for it, I know that there will be a person willing to make that coffee for me, and there would be companies delivering coffee grains because they all expect to get money from me. So money enables us to make our plans consistent, starting from the coffee growers all the way to the final consumer.

Who is then going to do the coordination in Utopia if there is no money? But, before we answer that question, let’s go back and look at what is Utopia. I will use Marx’s definition given in the “Critique of the Gotha program”: Communism is the situation where “the productive forces have increased with the all-around development of the individual, and all the springs of co-operative wealth flow…abundantly—[so that]…the narrow horizon of bourgeois right [can] be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”. Utopia is thus a situation where goods and services are absolutely plentiful, there is no scarcity, and we can take as much of them as we like.

Now, some may stop me right there: this will never happen, they will say. But let’s not go that fast. Notice that when I go to my local Starbucks I have already entered a bit the “coast of Utopia”. I can get there an unlimited quantity of water, ice cubs, water cups, paper napkins, honey and milk, all for free. They are all laid out for all customers (and even for those who are not customers but just walk in) to take in unlimited amounts. There are other goods that have almost entered this cornucopia in our lifetimes: water, electricity. When I need to recharge my laptop I can count on getting free electricity from practically every store, train, or airport. There are of course other services like museums and open-air concerts that one can enjoy for free but they are a bit different because somebody else has paid for them. But I want to mention it here because we shall find them useful in a moment.

So, there is, I think, already now a limited, but growing, number of goods and services whose marginal cost of production is so low that they are practically free. (The average cost of production is not zero, but to an individual consumer these goods appear as free.) Consider now the behavior of people. Do they go to Starbucks stores and fill their pockets with free paper napkins or grab free ice cubes? No. Do they go to free open-air concerts day after day and fight for the spots? No. Once you know that such goods will be plentiful and free, you do not keep an unreasonable stock of them, nor do you fight to get them. You know they will be around when you need them.

So far we have I think made two important conclusions: there are goods that fall into the category of “Utopian goods” and behavior that people exhibit towards these goods does not include hoarding, wanton destruction or wastefulness.

Can we imagine that with economic progress more and more goods begin to fulfil this condition of Utopian goods? I think we can. Surely 40 or 50 years ago, you had to pay for the smallest piece of paper or paper napkin, not get it for free as now. (There is still a difference between the US and Europe in this: European Starbucks stores make it more difficult to get free paper napkins.) You even had to pay for a cup of water in an inn on a dirt road. Not today. So perhaps one day we shall walk into a Starbucks store and be given as much coffee for free as we like in the expectation that we shall buy some other, new fanciful product. But notice that when this happens, coffee will have joined paper napkins and ice cubes on our list of Utopian goods. So the list will be growing.

Extend this many years forward and assume that lots of the goods that we consume today eventually become Utopian. But who is going to produce them? Will not people have to be given some money-like coupons showing how many hours of work they did, coupons that would entitle them to goods and services? This does not make sense however because all goods, in any quantity, will be free to all, so coupon or no coupon you can get as much as you like. This then means that labor has to be entirely voluntary and free, not “paid” in any form. That too is not impossible to imagine. I am writing this blog for free. Of course, I hope to enhance my reputation (or to drive it into the ground) but there is not a single good or service that I will get from this writing. You will also read it out of interest, not for any pecuniary reason. Many activities can be done for free, simply because people like to do them. Many other boring, repetitive or hard jobs that people do today will be done by robots. Controlling robots will require a minimum of work—perhaps writing a software code about how they (the robots) should do certain tasks, a thing, which I am sure, thousands of smart young people will compete to do for free.

When I go to a restaurant, who is going to make the food or serve me? Partly robots, and partly people who like to be chefs or to provide good service. Actually, the quality of some goods and services may go up compared to what it is today simply because people do a better job at something which they like rather than at something they are (merely) paid to do.

But here I think we run into our first problem. There will be always better and worse restaurants simply because the chefs will not be the same. But since the price paid at every restaurant is the same (zero), there will be no mechanism to distribute customers between better and worse restaurants except through queues. So we shall have shortages for certain goods and services. The shortages will be, like in a centrally-planned economy, “solved” through queueing.

The second problem appears at the level of jobs. We may be able to fill 90% of jobs by robots, 9% of jobs by people who simply like to do these jobs, but 1% of jobs that are hard or done under unpleasant conditions and cannot be mechanized will be always difficult to fill. So, we shall have to give something to people who do these jobs: we shall have to attract them to do the work. But how to attract them if everything is free anyway? So, money under the guise of some special coupons would reappear. Perhaps we could give these latter-day Stakhanovites coupons which would allow them to jump the queue in the restaurants. Perhaps something else. But whatever we do, a rationing mechanism, implied by money, will be back in that segment of the system.

Finally, technological progress. If we assume that technological progress has stopped, I think the idea of moneyless Utopia is ultimately, at least conceptually, almost possible. But if technological progress continues with people inventing new things simply out of curiosity, that is without any material interest, these new goods, always scarce in the beginning, will have to be rationed. So to ration them, we shall need money or quasi money too.

In a stationary economy, the range of goods that are available for free and in unlimited quantities, and the range of jobs that are performed for free can be very high. We may have a 99% Utopia. But not a hundred percent Utopia.

But in a growing economy, Utopia becomes much less realistic. The faster we grow the greater the number of Utopian goods and closer we seem to be coming to Utopia; but also, the faster we grow the more we invent new goods that are necessarily short in supply, and simultaneously the further we get from Utopia. Thus the fundamental nature of economic progress reveals itself in Leif’s question: economic progress is making us richer daily, but leaves us equally unsatisfied. For full happiness is possible only in stagnation.

PS. This is the integral text of my Webpost published in September 2015. But in a recent discussion with my friend Arjun Jayadev who has, together with J.W. Mason, just published a book “Against Money”, I was reminded of it and I thought it was worth reposting.

If one were to define neoliberal globalization as perceived by the Western elites during the forty-year period from the early 1980s to around 2020s, in the most succinct form, one could say that it was driven by two ideas: cosmopolitanism and competition.

Cosmopolitanism was the neoliberal idea going back to the Walter Lippmann’s 1930s Colloques in Paris and early Mont Pelerin society as nicely described in Quinn Slobodian’s book “Globalists; The End of Empire and the Birth of Neoliberalism”. Cosmopolitanism meant that, analytically, every individual in the world is equally important and equally capable of economic improvement if they faced optimal economic conditions which implied security of private property, free trade, low taxes and “tolerable administration of justice”. Very little else, in immortal words of Adam Smith, was needed for the desire common to all persons to “better their own condition”, and for the world to attain unheard-of levels of prosperity. Cosmopolitanism or internationalism were the political ideas underpinning a neoliberal world where national governments as such would be out of sight and would leave individuals free to pursue their self-interest. It was thus, ideally, a world of small or almost invisible government. In neoliberal language, “imperium”, that is, flags, anthems, languages and other paraphernalia of nationhood would be left to the politicians (and to the voters, if they really wanted to vote) and the real world of “dominium” would be the world free for the movement of goods, capital and technology, and--even of people.

In order for cosmopolitanism to create global wealth and prosperity, the world had to be competitive. Not only would people be allowed to compete with each other (or against each other) regardless of national borders, but they needed to be stimulated to compete by the display of all the goods that could be theirs, as well as by the societal approval they would command if they won in that competition.

Competition produced global growth: between 1980 and 2020-21, the average world GDP per capita more than doubled passing from $7,700 (in real 2005 international or PPP dollars) at the time of the fall of the Berlin Wall to almost $17,000 at the time of covid. This makes the worldwide yearly average growth rate 2.1% per capita. (And this despite the increase of the world population from 4.4 billion in 1980 to 8 billion.) More than the doubling of per capita income combined with an almost doubling of the world population meant that the total amount of goods of services produced in the world quadrupled during the era of neoliberal globalization.

But this “anonymous” growth rate, realized principally thanks to high growth rates of Asian countries and notably China, did not help neoliberals’ case domestically, in rich countries. What was politically salient was not the two-and-a-half percent global rate, but the fact that in the United States and in most of the rich Western countries, the majority of population registered real (adjusted for inflation) growth rates of approximately 1 percent per annum, while income of the rich grew two to three times faster. Moreover, as illustrated in Figure below, the neoliberal period (dated from Ronald Reagan’s presidency onwards) was not only pro-rich, in the sense that incomes of the rich increased faster than incomes of the middle class and the poor, but it represented also a slowdown in the across-board growth compared to the earlier period. In fact, at every point of US income distribution but the very top, growth was slower during the neoliberal era than during the previous decade-and-a-half.

Note: Own calculations from annual US Current Population Surveys as standardized by Luxembourg Income Study (LIS). The lines show the average real (inflation-adjusted) per capita growth rate of disposable (after-tax) income at different points (percentiles) of US income distribution. The end-year is 2019 in order not to be influenced by the outbreak of covid in 2020.

The world, at least for a while, seemed to become one, divided not by borders of nation-states, race or gender, but by differences in peoples’ abilities, skills or effort. It was ideally (even if that ideal was never reached by neoliberal globalization) a borderless world full of intensively competitive individuals whose competitive juices were stimulated by the ability to communicate with any part of the globe and to learn what potential competitors may do—and then to try to outdo them.

These two features—cosmopolitanism and competition—rather attractive in themselves, however led to the undoing of neoliberal globalization.

Cosmopolitanism crashed against national political borders. Excessive competition created a world of greed, amorality and commercialization of all activities, of even those that used to be the most private. Fundamentally, it threatened to make family superfluous.

The winners of neoliberal globalization in rich countries, inspired precisely by their cosmopolitanism which they regarded as a virtue (thus being free of poisonous nationalism), were quick not only to treat their less fortunate compatriots’ welfare as of no greater consequence than the welfare of a foreigner or a stranger, but also to believe that their compatriots’ failure in such an open competition was indicative of some human or moral flaw. Economic success meant being virtuous, or as Deng Xiaoping, whose rise to power coincided almost perfectly with those of Margaret Thatcher and Ronald Reagan, put it “to be rich is glorious”.

The political system however is organized within nation-states. The less fortunate compatriots felt forgotten and ignored. They were resentful of the way in which they were treated. They saw the readiness, nay eagerness, of the rich to invest in faraway places as callousness towards domestic workers. Promises of new jobs that would replace those lost due to cheaper imports or online work elsewhere were hard to materialize. Their discontent created political turbulence in richest democracies. The global (or more exactly the Western) financial crisis 2007-08 made things that were intuitively, and this only vaguely politically, felt become obvious and stark. The rich did not care for those left behind and when the costs of the crisis had to be paid they made sure that the bill was not sent to them.

The malcontents who in the previous times would equally replenish extreme left-wing and extreme right-wing parties, as they did during the Great Depression in the 1930s, had less choice now. The left-wing parties were either discredited by the failure of the “real-existing socialism” or they were, through their New Labor policies, seen as accomplices of the center-right parties in promoting the type of neoliberal globalization that so disenchanted the working and middle classes of the West. Indeed, the peak of neoliberal globalization was achieved under the notionally left-wing governments of Bill Clinton in the United States and Tony Blair in the UK and François Mitterrand in France. The disappointed masses turned toward the right-wing parties that promoted national solidarity, end to the equal treatment of the domestic population and foreigners, stop to migration, and even in some grand élans of promises, the return of the jobs on the wings of the new industrialization. In the international arena, neoliberal globalization thus became increasingly replaced by neo-mercantilism that used economic coercion, seizure of foreign assets, import bans, and rather extravagantly tariff policies to cut, or at least to control, the free flow of goods and services. Free flow of labor was even easier to stop because its political popularity, even at the peak of neoliberal globalization, was small.

The second part of the neoliberal equation, competition across borders and time zones, created—helped by technical advances—a world where own homes, own cars, and own domestic chores from cooking to the care for the elderly or the infants, or for one’s pets, became “outsourced” precisely to people who lost steady jobs and were part of the class of malcontents. The desire to be “glorious”, that is, to be rich, effaced moral norms that held societies and families together. That perceived amorality helped further the rise of anti-systemic right-wing parties. They grew not only on the promise of restoration of the lost jobs but on the promise of restoration of self-respect among the malcontents and return to the traditional values—that might have been more traditional than real even at the time when they supposedly held.

As in a Greek tragedy, the same features which neoliberal globalization extolled and that ensured its success for several decades led to its inevitable demise, through domestic political turbulence and abandonment of cosmopolitanism in favor of protective barriers for foreign goods and foreign people. In short, to its substitution by mercantilism without and, so far, vain attempts, to return to a more traditional world within.

Over the past few decades, as Professor Branko Milanovic argues, the rise of Asia constitutes the second largest reshuffling of global income since the Industrial Revolution. Neoliberalism, championed by Reagan and Thatcher as a means to enrich Western nations, had the unexpected effect of creating a new global elite, much to the dismay of the Western middle class. This has triggered significant political turbulence and discontent, which major political leaders such as Xi, Putin, and Trump have used as a vehicle to legitimize their leadership. What is striking about neoliberalism is that it gave rise to the very conditions that sped its own decline.

China Focus sat down with Professor Milanović to discuss his new book, The Great Global Transformation: National Market Liberalism in a Multipolar World.

Branko Milanovic obtained his Ph.D. in economics (1987) from the University of Belgrade with a dissertation on income inequality in Yugoslavia. He served as lead economist in the World Bank’s Research Department for almost 20 years, leaving to write Worlds Apart (2005). He was a senior associate at the Carnegie Endowment for International Peace and has held teaching appointments at the University of Maryland. He is currently a research professor at the Graduate Center City University of New York.

Milanovic’s main area of work is income inequality, both within countries and globally. He has published widely in leading journals. His book The Haves and the Have-Nots (2011) was named Book of the Year by The Globalist, and Global Inequality (2016) received major international prizes. His new book, The Great Global Transformation, was published in 2025 and is a Financial Times Book of the Year.

Alice Liu: Professor Milanović, in your new book, you underscore two defining economic changes of our era. Would you tell us what they are and how they are connected?

Branko Milanović: I think two defining changes happen at different levels of study.

The first defining change is the much greater importance of, and the movement of economic activity towards, Asia and the Pacific. If you were simply to take a picture of economic activity from about 30 to 40 years ago and superimpose it on the picture today, you would see that economic activity is now much greater in countries like China, India, Indonesia, and Thailand than it was 40 years ago. And it’s much greater in terms of the overall global proportions of goods and services produced in Asia.

China is obviously the most common example because it overtook the United States as the largest economy in the world in terms of purchasing power parity calculations. The Chinese economy currently produces 22% of global GDP, while the US economy produces 16%. But another example of that change is also the fact, for example, that India is currently producing 9% of global output, and the UK is producing 2%. The two of them, 30 years ago, were each producing 3%.

The second big change is the result of that shift, but it is happening at the level of individual incomes. As China became richer, the Chinese also became richer. They moved ahead in the global income distribution and started overtaking the lower classes in richer countries. That meant, for example, that people who were in the lower-middle class in the US, Germany, or Italy, for the first time in the last 200 years, fell behind substantial numbers of people from Asia.

Of course, you may not often realize whether you are ahead of or below somebody in that ranking, but there will be certain goods and products that are internationally priced that you may not be able to afford anymore. That, combined with the fact that the top of those countries (such as the US) did much better than the middle and working classes, created additional political turbulence.

Basically, there are two big changes at two different levels. At the level of the nation-state, we have had a movement towards much greater importance of Asia in economics and politics. At the level of personal incomes, we see the decline of the Western middle class.

AL: Perfect. I’m interested in hearing more about how Asia’s rise has shaped the global economy and income distribution. What makes this change historically unique rather than just another phase of global economic change? Why should we pay attention to it?

BM: We should pay attention first because it is a big change. When you have a change that involves—if you just take India and China—2.8 billion people, which is 40% of the global population, you have to pay attention due to its sheer size. You cannot ignore it. But it is dramatic also because of its historical uniqueness.

If you go back to the years 1300, 1500, or the 16th century and ask, “Okay, what is the distribution of economic activity on the Eurasian continent?” you will find that the level of income of people in the more developed parts of Europe, like the Netherlands or Italian city-states, was really similar to the level of development in the more developed parts of China. They were both poor by today’s standards, but the income difference between these two parts of Eurasia was not very significant.

That changed with the Industrial Revolution. The Industrial Revolution was extraordinarily important not only for increasing the GDP of the world but also for making people who lived in the countries that were leading the industrialization—the UK, France, Northern Europe, then the United States, and finally Japan—much richer than people elsewhere. By being richer, they were also more technologically advanced and militarily stronger.

In the last 40 years, we have had, for the first time, a serious challenge to that. Countries in Asia are now not only catching up but, in some cases, even overtaking Western countries technologically. As I was saying before, the populations of those countries are also moving up in the global income distribution. That is why it is historically significant. To some extent, it is undoing the effects of the Industrial Revolution by placing Asia at the same level as Europe again.

AL: Thank you so much. Speaking of historical analogies, there’s been so much discourse about this new Cold War between China and the political West. How is this Cold War different from the last?

BM: I think it’s a different Cold War, first because we don’t know how this Cold War will progress. But let me sketch the main features.

The previous US-USSR Cold War was based on ideological competition. I am quoting Raymond Aron, who wrote a very important book published in the 1960s called Peace and War. He talks of the two hegemons, the US and the USSR, but he calls the system a heterogeneous system, meaning that the basis of legitimacy of the two systems, the Soviet system and the American system, was different. Yet at the same time, you had people in these two systems who were supporters of the other system. France and Italy, for example, had very strong communist parties that were ideologically aligned with the Soviet Union. On the other hand, in the Eastern European countries and the Soviet Union, some people were very liberal and ideologically aligned—although not as openly and freely—with the West.

Now, I do not see the competition of that same kind between China and the United States today. The competition is much more economic because China is more powerful economically than the Soviet Union ever was. But ideologically, China has not been able to promote a certain systemic approach to economic and political issues that could be easily replicated elsewhere. And the Soviet Union could do that.

AL: So you’re suggesting that China lacks ideological appeal compared to the Soviet Union?

BM: Basically, yes, China lacks that ideological appeal. One should not forget that the Soviet Union exported its ideology to practically the entire world. If you take not only successful revolutions like Cuba, which became communist eventually, but also countries like India, where planning was adopted, or Angola, Algeria, Egypt, Indonesia before Suharto, and Latin America as well, the appeal of the USSR was very strong. It was not only because people thought that the Soviet economy was strong, but also because it had an ideology of liberation, socialism, and equality.

In comparison, it’s not clear to me what today’s China can export as its ideology abroad. I think it is partly because Chinese success was built through a multitude of decisions under very complex and specific conditions. It is therefore very difficult to create a set of rules that other countries could adopt.

For example, the economic success of China was built on the previous Maoist legacy but also on contingencies, like the creation of special economic zones and township and village enterprises. Whereas the USSR taught countries to nationalize all enterprises, have a central plan, and have central planners decide what should be produced, it is very difficult to distill the Chinese experience and apply it to countries like Zambia or Argentina, since the conditions are highly different.

AL: Let’s move on to the United States and China. On one hand, you suggest that China’s economy is ratcheting up. But then you also noted that China’s GDP per capita remains far lower. Does that make you skeptical about narratives of US decline? Will there be a long period before China can fully catch up?

BM: This is a very complex issue. Let me try to disentangle it. First, Chinese income per capita is still significantly below the American level, even if counted at purchasing power parity, and even more so if counted in exchange rates. Let’s stick to PPP, because that reflects the real living standards by measuring all the goods at the same prices.

We are talking about this economic gap, which is about 3:1 to 3.5:1, in favor of the US. But if China continues with its current growth rates, obviously, that gap would diminish. One should not forget that the gap 40 years ago was 20 to 1, and it’s now 3 to 1. A huge change occurred. If China continues with rates 2% or 3% higher than the US rate, within one generation, and a maximum of two generations, you will have the same number of people in China who are above the US median income as Americans.

Then you could ask more: when would Chinese GDP on a per capita basis be equal to American GDP per capita? It would probably happen in between 50 to 70 years. But by that time, and if the parity is achieved, the fact that the Chinese are four times more numerous than Americans in terms of population would really make China so much more powerful that we are not even really comparing like with like anymore.

If one thinks that the real sign of catching up is when China becomes equally rich on a per capita basis as the United States, it will take a long time. But before that happens, China as a nation would be much more powerful than the United States simply because it is so much bigger.

AL: Let’s talk about trade. Does trade between the United States and China reduce or increase the risks of war and conflict?

BM: I spent the second chapter of the book discussing how different people have taken that point. There’s no scholarly unanimity on the issue.

Montesquieu, the French philosopher from approximately 1750, was a big supporter of the idea that commerce and trade make people interdependent. He suggested that if we want to sell something to you that you want to buy, and if we are both interdependent, we also behave more nicely towards each other because we want to maintain the seller-customer relationship. Essentially, he held that not only does commerce lead to peace but also to better behavior. So that’s one extreme.

The other extreme was the theories that started in the late 19th century with an English economist, John Hobson, and then were taken up later by Rosa Luxemburg and Lenin, who were communist revolutionaries. They said that big capitalist countries have lots of capital, but there is a lack of demand because people are relatively poor and inequality is large. So countries and their businesses need to expand internationally and find resources in poorer countries. They must find buyers and very cheap labor forces in those foreign countries. As several capitalist countries do that at the same time, they start fighting for control of the less developed parts of the world. That’s how we end up with imperial wars. In this case, trade leads to conflict. World War I is the perfect embodiment of Hobson’s logic.

The middle ground was a view of Adam Smith, which I found very interesting and not often cited. Adam Smith wrote in 1776. He said that, until now, Europe was so much more powerful technologically and militarily that it was able to conquer and do lots of injustice in other places in the world. But if Europe continues trading with other places in the world, those places would also learn from Europe and catch up technologically and militarily. Because the two sides would be approximately equal in power, both sides would be afraid to start wars. The balance of power will keep the peace.

Here we have three theories, which are then applied to the case of the US and China. The optimistic one theorizes that trade would lead to peace. Adam Smith, in the middle, believes that commerce leads to a balance of power, which would maintain peace. The Hobson-Luxemburg-Lenin theory holds that the big powers would fight for control of the rest of the world, and that would lead them to war. I try to apply all three theories to the evolution of the relations between the US and China since the 1970s.

AL: And where do you stand on these three theories? Which one do you think is the most applicable to the US-Sino relationship?

BM: I don’t think we can say that they are applicable regardless of conditions. In fact, all three of them are taking place in US-China relations.

During the 1970s and the 1980s, trade and US relations with China were good for two reasons from the US perspective. First, it was important for the US to have China in its own camp in opposition to the Soviet Union, and the opening of China was seen politically in that light. Secondly, US companies wanted to invest, have a huge market, and use the relatively inexpensive labor force in China. For China, it was sine qua non. Without the US market and without US technology, they really could not achieve economic progress. Trade in the 70s and 80s was really leading to interdependence and cooperation, as Montesquieu said.

But looking towards the present, Adam Smith’s theory also holds true. Because now, when the technological power of China and the US is very similar, peace is being maintained because of what I would call mutual fear, as both believe that a war would be disastrous for them.

And the Hobson-Luxemburg-Lenin theory is evident in the beginnings of international competition in Africa, where China and the US compete for markets and resources. No single theory captures all the truth; each of them applies to different time periods or facets of Sino-US relations.

AL: We’ve just briefly described what you called a massive “reshuffling” of global income. Let’s dive deeper into it. Who gained and who lost from this change, and why?

BM: To briefly summarize, globalization benefited the upper classes in rich countries a lot and hugely benefited practically everybody in Asia, in states like China, Vietnam, India, and Indonesia.

It’s difficult to answer who lost, because virtually no one lost in real income. But those in a relative position of decline were the middle classes and the working classes of developed, advanced countries. They lost in relative terms, in comparison to their top 1% or top 5% compatriots, because their growth rates lagged far behind the rate of growth of incomes at the top. They also lost with respect to the Asian middle classes. So, this is not a loss in the sense that they became poorer but a relative loss, meaning that they have not grown at the rates of the Asian middle classes or domestic top earners.

AL: You wrote that the new global elite class was quick to become targets of political backlash, even within countries where overall wealth increased. Why did these new elites lose legitimacy so quickly? Why are they prone to being attacked?

BM: What has happened in rich countries is that large parts of the population, like the working class and the middle class, have had relatively mediocre experiences with growth. They grew at 1% per annum for 30 years. This was not what globalization was originally supposed to do. When globalization was sold by Western leaders, including Reagan and Margaret Thatcher, it was on the assumption that the middle classes of rich countries would really do well. They didn’t sell it on the assumption that China would do well.

The middle classes of rich countries (the US, the UK, France, Italy, and Germany) fared poorly. On top of that, they saw that people who were already much richer than they were were being enriched further. That led them to think that these new elites really don’t care about them. The new elites are quite willing to take factories out of the United States and move them to Burma and employ cheap labor there. They don’t care about local communities.

We end up with a general disenchantment: a belief that those who benefit from globalization are indifferent to their compatriots who feel wronged, who are losing jobs, unable to maintain their standard of living, or unable to improve it sufficiently. That is the economic side, but there is also a cultural and moral dimension, which, in my view, was exacerbated by the elites’ belief that they are a meritocratic elite who deserve to be at the top. Many people who are not at the top, however, do not accept that claim. That really led to a huge dissonance between different parts of the Western population.

On top of that, in many European countries, immigration was also an issue. For those at the top, immigration is beneficial, as it generates cheaper labor. But if you’re a French worker and you have to compete with an immigrant African worker, it’s not necessarily pleasant.

AL: You said that China both benefited from and helped to end global neoliberalism. How is it that it was both produced by and disrupting the same system? What did you mean by it?

BM: It looks paradoxical, but I think it’s true. China benefited enormously from globalization: the opening of the American market, getting technology from Western countries, being able to export, and being able to tremendously improve the income levels of its population.

On the other hand, precisely because it is so big and benefitted so much, it came to be seen as a threat to the United States. For geopolitical reasons, the United States and the broader West began to push back against globalization. That is the irony: globalization was highly successful, especially for Asian countries and China in particular, yet that very success created geopolitical conflict between China and the United States. China benefited enormously and, in doing so, made the end of this phase of globalization almost inevitable. It became too large to be absorbed or accommodated within a geopolitical system ruled by the United States.

AL: You introduce the idea of “national market liberalism,” which you argue has replaced neoliberalism. What does it mean in plain language? And how is it different from neoliberalism in practice?

BM: It’s a big term. I sometimes use the term “national liberalism” just to make it shorter. But let me give a very simple idea behind it. If you take liberal or neoliberal principles and divide them into two parts, you have one part that applies domestically and the other part that applies internationally.

You can say that internationally, the rules are flexible exchange rates, low tariffs, and full freedom of the circulation of capital, technology, goods, and, to some extent, labor. The domestic side of neoliberalism means lower tax rates for the rich, lower taxes on capital versus labor, deregulation, privatization, and privatized social security.

What’s happening in the world today is that the international part of neoliberalism has been rejected, not only by Trump but even by the European Union. Tariffs are being imposed, there are strong impediments to any movement of labor, and economic coercion is used practically everywhere. International neoliberalism is being abandoned and replaced with mercantilist policies.

But domestically, in the US, neoliberal principles remain very much alive. The Trump administration saw even greater deregulation than before, lower taxes for the rich, and lower taxes on capital versus labor. We do have neoliberalism, but only at the national level. We end up with a version of neoliberalism stripped of its international component.

AL: Do you see national market liberalism as a system that will stay for long? Or is it just a transitional phase?

BM: I don’t think it will disappear in three or five years. It reflects a structural reallocation of economic and political power globally, alongside an ideological shift away from free trade toward a more zero-sum framework. Those are significant changes.

For that reason, it is misleading to see it as merely transitional, especially since we do not yet know what it is transitioning toward. But it’s also hard to predict what model will step in to supplant it. This system is also not dependent on any single leader. It has its own internal logic and could persist for decades; we simply don’t know how long it will last.

AL: You suggested that Xi, Trump, and Putin are essentially offering different responses to the same structural tensions. What do you mean by that? What is the common logic linking these oppositional leaders together?

BM: What I meant is that all three leaders came to power with support from groups that were disillusioned with the effects, or excesses, of neoliberal globalization. Trump drew on discontent among many parts of the middle and working classes who felt left behind after decades of globalization, especially after the 2007–2008 crisis. That’s why 77 million people voted for him.

Moving to China, Xi Jinping’s support came largely from within the Communist Party, particularly from those who saw their political authority threatened by the rise of wealthy elites. Facing the new billionaires and millionaires in China, Xi expressed the idea that politics should be separated from money. He held that politics ought to remain the preserve of people who are in the party. Note how Xi came to power by pushing policies around anti-corruption.

In the case of Russia, Putin can be easily seen as a reaction to the chaos of the 1990s. Privatization introduced by Yeltsin gave birth to an oligarchic system that basically brought the country to the edge of civil war. Putin’s rule tolerated economic elites so long as they didn’t challenge political authority.

All three leaders proffered a reaction to the excesses of neoliberal globalization, which gave legitimacy to their political identity.

AL: Very interesting. Which builds into my next question: who are the political and economic elites in China today? Are they somewhat different than their US counterparts?

BM: When reviewing household survey data, I examined the top 5% of the urban population in China from 1988 to 2023. In 1988, this top group consisted predominantly of individuals working in state-owned enterprises—engineers, directors, and also government officials and Communist Party officials. The professional-managerial class played only a very minor role, and both small and large capitalists were almost non-existent among the richest, the top 5%.

In 2023, the situation is entirely different. About two-thirds of this group derive their income from the private sector. Some are large capitalists, others are smaller capitalists, and some are self-employed or privately employed individuals. In addition, a significant share belongs to the professional-managerial class (PMC), typically employed in large private-sector establishments such as factories and investment banks. The remaining one-third still depends on the state, including employment in state-owned enterprises, government institutions, and the Party.

There has been a major transformation in both the economy and the social structure of the elite. My interpretation is that, looking at this newly transformed elite from the perspective of a political leader, you could see a potential risk. The top 5%, now largely driven by the private sector, could demand a stronger voice in selecting political leaders and shaping policy.

But if you do not want the rich to dictate policy in the way they do in the United States, then the response is to separate economic power from political power. This is essentially what Xi has done. The idea is that you, the rich, may continue to accumulate and exercise economic power, but you will not exert political influence. Political decisions, even economic ones, are made according to another set of criteria beneficial for China as a whole, not necessarily useful for economic elites.

AL: What does the political West misunderstand about the consequences of Asia’s rise and China’s rise?

BM: The political West initially supported China’s opening up first for geopolitical reasons, especially to counter the Soviet Union and to make the split between China and the Soviet Union irreversible. They also had economic concerns and wanted to access China’s vast market.

In retrospect, in view of the current disenchantment with what happened in China, the political West claimed that it engaged with globalization in the hope that China would democratize. In my mind, this really makes no sense. To say that they are disappointed with globalization simply because China did not become a democracy is an ex-post invention. And I find it disingenuous.

The real misunderstanding was structural. Western policymakers essentially failed to understand that the success of globalization would significantly alter global economic power. In other words, they couldn’t foresee that the very system they promoted would translate into the decline of their relative dominance.

AL: To my last question, looking ahead, what kind of new world order do you envision? Are we moving towards more fragmentation, cooperation, or something else altogether?

BM: We clearly have a global disorder. Like in many historical episodes, it is a transitory political disorder that will eventually lead, I hope not after a major war, to a rearrangement that better reflects the relative power of various nations.

I believe we are moving toward a multipolar system. By this, I do not mean simply several roughly equal poles, but an international system—perhaps a reformed United Nations or a new organization—that better reflects today’s realities than the system built after World War II. There are many illogical parts in the current system. Small European countries have greater voting rights in the IMF than countries like India or Indonesia, which makes little sense given that Indonesia is larger in both population and economic output. The new system should reflect present-day power.

In that sense, we may first move toward a multipolar world in which countries like China, India, Brazil, South Africa, and Russia act as poles alongside Europe and the United States. Eventually, I hope we can build a more equitable international system where major powers have a greater stake than they do now.

But is 5% growth bad? How bad? In 2024 (the last year with detailed growth rates from the IMF/World Bank database), the average growth rate, by country, in the world was 2%. Only one country out of each ten (i.e. ten percent of countries) had growth rates above 4.7%. So Chinese growth rates, now at the time of the slowdown, are still among the top decile of all countries’ annual growth rates.

The Chinese slowdown simply means that instead of growing at the highest, or the second or third highest, rate in the world for some twenty years non-stop (except for countries enjoying temporary high growth thanks to resource windfalls or recovery from war), it has now “gone down” to be among the top decile of countries by growth rates. Obviously, it is a slowdown that most countries –90 percent of them, to be exact—would wish they could experience. Among big countries, it is only India that has recently been doing better than China, with, for example, the past three years’ average growth rate of about 6% per capita.

Chinese slowdown is also “normal” and expected because the country has become richer, has in many cases approached the technological frontier and its growth may be expected (perhaps not yet, but in a generation or two) to depend essentially on the speed of technological progress on the frontier.

It thus makes sense to ask the following question. Let us collect all historical data (going back to 1950 and up to 2024) of GDP per capita levels and GDP per capita growth rates of all the countries that are in the World Bank/IMF data base, and compare the profile of global growth to that of China. This is what the figure below shows. There are about 11,000 data points of GDP per capita (in real; PPP dollars) on the horizontal axis, and the same number of GDP per capita growth rates for 187 countries. The thick blue line gives the average non-parametrically estimated growth rates of the economies at a given level of GDP per capita. As can be easily seen, that growth rate increases from hardly above 0 for the poorest country/years to almost 2.5% for the country/years that are at about $PPP 10,000. Today, such countries (where in principle the growth rate should peak) are Tunisia and Ecuador; but in 1994, they were Lebanon, Romania and Surinam; and in 1964, they were Greece, Gabon and Spain, and so forth (for any year between 1950 and 2024). After that peak, the world “expected” growth path declines and at the level of country/years with GDP per capita of $50,000 and above, the expected growth rate becomes 1.5%.

Where is China in this story? Its own growth part is shown by the red line (again, using a non-parametric regression). Clearly China had a tremendous acceleration of growth compared to the typical world growth path, but also a much sharper deceleration. (The slopes of both the upward and the downward portions of the Chinese inverted U curve are much sharper than for the same curve for the world.) But despite a sharp deceleration, China’s growth today is still much higher than the growth of a typical country at China’s income level. There is a gap between the red and the blue lines: on average, we would—following the world experience—expect China to grow at 2%, but it is growing at 4.5%.

So, yes: Chinese growth is slowing down faster than the typical world growth would slow, but China is still growing at significantly higher rates than we would expect, basing ourselves on the global data covering the past 75 years.

How does it compare with Japan’s experience that many people are arguing China is heading towards? What we notice in figure below is that Japan too has had much higher growth rates during its expansion than one would expect based on global experience. When Japan’s GDP per capita was around $PPP 10,000, it grew at almost 6% annually vs. (as we have seen) about 2.5% for the world. But then, from about $PPP 30,000 (see the dashed line in the graph) Japan’s deceleration was remarkably sharp so much so that eventually, and very briefly, Japan’s growth performance became inferior to the average world performance at that income level, Since then Japan seems to have fully gone back to the “world line”; in other words, its performance is neither exceptionally good, nor exceptionally bad, but average for a country at Japan’s income level.

The question is, Will China’s deceleration be as fast as Japan’s? Could the graph for China drop so much and fast that by the time China reaches about $PPP 30,000 it hits the blue line, and Chinese growth becomes neither more nor less remarkable than the usual growth rate at that income level? This is, of course, a crucial question that nobody can answer now. But if one were simply to take a thick marker and draw the red line by continuing it the way that it seems to go now (i.e. keeping the same slope), China would hit the blue line around a GDP per capita of $PPP 32,000—income level that is about ½ higher than today’s. That does not mean that it will stop growing. It would still grow at the rate of approximately 2% per capita per annum but that rate would be neither higher nor lower than that of countries at the same income level. In that (hypothetical) case, the China’s exceptionalism, would be over.

The issue of income convergence within the European Union has recently been much discussed. There seem to be two reasons for this. First, it is undeniable that using either macro indicators (like GDP per capita) or data from household surveys like SILC there has been a reduction of between-country and inter-personal inequality within the 27 members of the Union. Secondly, this convergence takes place while there is no convergence between the EU as a whole (or between the largest EU member-states) and the United States. The latter issue has been raised especially now because of the tensions in the relations between the two Western poles. The lack of convergence was brought up originally by Trump to show persistent American superiority, and then by Trump’s detractors who argued that the absence of European convergence was due simply to the fact that Europeans, by choice, work less and that output per hour of work may be the same or even greater in some European countries than in the US.

I will not discuss this second issue (I wrote about that here). But I will look empirically at the first. Recently my good friend Michael Dauderstädt from the Friedrich Ebert Foundation who has been studying income distribution in the European Union for a number of years has written a nice short paper on convergence and cohesion policies, published by “Social Europe” here) inspired me to look at my global micro (household per capita) income data and try to see what they can tell us about income convergence within the EU.

I take throughout the period studied, 1993 to 2023 (at five-year intervals), the current EU27 membership as given. I do not use the EU membership as it was then, but look at the twenty-seven current members as if they had all been members in all the years. The sample is thus in principle the same throughout except when for some years household survey data for some countries are missing. Luckily, this happens only in the early period (1993-2003) and the countries missing (principally Cyprus and Malta) are too small to affect the results.

Income data for each county come from nationally representative household surveys as harmonized by Luxembourg Income Study (LIS), and in the cases when LIS data for a country are not available, I use the data from World Bank’s Poverty and Income Platform (PIP; formerly POVCAL). The income concept is always disposable (after-tax) household per capita income (meaning that household income is divided by the number of household members) and income is adjusted for the difference in price levels between the countries by using international (or PPP) dollars. So, we measure real welfare of citizens from different countries by adjusting their nominal incomes by the estimated price level of the country. (Of course, we can expect that as countries’ incomes become more similar price levels would converge too, which indeed is the case for the EU27, but is not the subject of this Substack).

Figure below gives the main results. The height of the bar gives the overall Gini coefficient for EU27 as if it were one country. Gini has decreased from 0.415 in 1933 to 0.35 now. This is the headline result: a decrease of interpersonal inequality by 6.5 Gini points (41.5-35) or by some 15 percent of the original inequality. But what drove this decrease? Did inequalities within individual countries go down, and the gap between countries’ mean incomes remained the same, or the reverse? The latter: mean incomes of the countries (weighed by each county’s population) become more similar. This is called Concept 2 inequality: it assumes that everybody in a given country has the mean income of that country (so within-national inequality is zero), and calculates what would be EU27 inequality in that case. The blue part of the bar shows that the Concept 2 inequality was almost halved during the past thirty years: it went down from 0.25 to 0.14. It clearly illustrates the convergence of (population-weighted) average incomes between the countries. In other words, mean income in poorer counties like Romania and Bulgaria is now closer to the mean income of rich countries like Sweden and Netherlands than it was thirty years ago. The second Gini component (in red) which accounts for within-national inequalities and the so-called overlap term (which becomes positive when incomes of people from mean-poorer and mean-richer countries overlap) has increased.

Note: blue and red bars together yield EU27 interpersonal inequality. This can be compared with inequality in the US given by the green line.

The bottom line is that the significant reduction in EU27 inter-personal inequality was achieved thanks to the convergence of mean country incomes, not thanks to the reduction of within-national inequalities. For example, the average EU27 country Gini in 2023 was 0.31; it was 0.30 in 2008 and 0.29 in 1993. Within-national inequalities, on average, increased slightly.

How does inter-personal EU27 inequality compare with the United States? To see this, compare the height of the bar in the figure with the line which gives the US Gini for the same set of years (1993-2023). When our period begins, EU27 inequality was just slightly above the American inequality: Gini of 0.415 for EU27 vs. Gini of 0.395 for the United States. But over the next thirty years, EU27 inequality went down while US inequality increased. So, now EU27 has inequality that is more than 6 Gini points lower than the US. Broadly speaking, EU27 considered as a single country used to be slightly more unequal than the US, but is now significantly more equal. (One needs however to treat this result with caution because in the data for the United States, we do not adjust incomes for the differences in the cost of living/price level. In these data an income of $1,000 is treated the same when earned in New York and in Iowa. There is little doubt that if we were to adjust US state incomes by the state price levels US inequality would go down. I would expect that it may be reduced by 2-3 Gini points. Thus, short of doing this, we are not exactly comparing like with like in our EU27 vs. US comparison).

Finally, let’s ask this question: suppose that all EU27 countries achieve the same average income level while nothing changes in their internal income distributions; i.e., their within-country Ginis do not change at all, but the mean income gap between Luxembourg and Bulgaria becomes zero. What would be interpersonal inequality then? The answer is: Gini of about 0.32. That Gini is only 3 Gini points lower than the actual inter-personal inequality (recall that we found it to be 0.35) and this in turn sets the bound to what further mean-income convergence can accomplish in Europe. If inequality within the European Union is to be reduced, then most of the reduction in the next decades will have to come from within-national shrinking of income gaps, not so much any more from the convergence of countries’ mean incomes. This therefore contains an obvious message for European policy-makers.

People who follow me know that I am a great admirer of Soviet historians Roy and Zhores Medvedev and have read most of their books. (I have explained before why I find their books particularly enlightening although they had to work, until the late 1980s, in isolation, exile and with very limited access to archival documents.) In the last two years I have read two books by Roy Medvedev dealing with what he calls the “unknown Stalin”, and another that describes famous dissidents (ideologically and as persons), among whom of course the most prominent are Solzhenitsyn and Sakharov, both of whom Roy personally knew from the dissident circles that they shared.

Recently I read his brother’s (Zhores) book on Andropov. I vaguely remembered that I have read the book when it was published, and indeed checked my notes: I read it in 1983. While many of the points made by Zhores were known to me I was not sure whether I knew them from his book or from other sources. Reading the book today, more than forty years after it was published and taking into account what has happened in the meantime in the Soviet Union and then in Russia and Ukraine, brings different sentiments and thoughts than what I must have had at the time of the first reading.

The book can be read as a standard biography of Yuri Andropov but also as a discussion of the late Communist regime in its Brezhnevian variety, and also implicitly as a reverie of what could have happened had Andropov lived to rule the Soviet Union longer than a year and half. In Medvedev’s telling Andropov emerges as a very sharp and able technocrat. His first important job (after having worked in a CPSU party position in Karelia) was in the Ministry of Foreign Affairs and quite fatefully as the ambassador of the Soviet Union in Hungary during the 1956 revolution. and its later suppression by the Soviet tanks. At that time Andropov got to know Nikita Khrushchev who secretly flew to Hungary a couple of times to coordinate the political and ultimately the military solution to the Hungarian crisis. Afterwards Andropov became a secretary of the Central Committee in charge of relations with the “brotherly” parties which meant East European ruling parties but not, to the extent that it can be read in the book, with the Chinese CPC. He was transferred to become the head of the KGB in 1967.

Medvedev shows that the position of the head of the KGB at the time had several important drawbacks. Seven out of eleven predecessors of Andropov were executed. That was particularly the case during Stalin’s rule when one after another KGB bosses were shot (Yagoda and Yezhev are the best known) either because they were too assiduous in the repression and Stalin wanted to distance himself from them or simply because of Stalin’s caprice, or desire to instill fear even in those whose job was to terrorize the population. That continued under Khrushchev when Beria and then Merkulov, his successor, were liquidated. Thus it was a job that even in the much calmer times of Khrushchev and Brezhnev still carried some risk. “Andropov was the only man who not only survived the job but also made himself more influential politically in the process. He also succeeded in making security work an acceptable background for the leader of CPSU. Moreover he became a leader through a normal process of party succession rather than through a long power struggle that many observers had predicted.” (p. 59).

Secondly, it was not seen as a particularly prestigious job in terms of party hierarchy. It was surely an important job but without much independent power and below the level of the Politburo member. In fact, it was lower than Andropov’s previous job as a secretary in the Central Committee, and Medvedev speculates that in order to compensate for it, Andropov was made the candidate member of the Politburo. When Andropov was appointed, the power of KGB derived from the Party and the Politburo. KGB was the executor of the policy that was decided by the party organs. It did not have an autonomous role. This is important to mention because many people, influenced perhaps by what is happening in Russia today, tend to mechanically assume that KGB (or its predecessors, GPU and NKVD) had an independent role in repressions. Nothing is further from the truth. They were simply executors of a policy that was decided on the political level, whether it be by the Politburo or one person (Stalin).

Medvedev also makes an important point that even the English short-hand translation of KGB as a “secret service” is wrong. It is a militarized security organization. It is interesting that just before Andropov’s appointment the decision was taken to have KGB staff wear uniforms. Before they wore civilian clothes and the uniforms which technically existed were worn only at various celebratory occasions but never during normal workdays. The goal of the new decision was to showcase the KGB as a disciplined military organization whose role was somewhat different from that of the military, since it was a time of peace, but whose purpose ultimately coincided with that of the Army.

Medvedev concedes that it is difficult for him as a dissident, having been listened to, followed, imprisoned and persecuted by KGB to write objectively about the head of the organization. He however manages to do it. In 1982 Andropov succeeded an old and ailing Brezhnev. Most of the book is understandably about Brezhnev’s period. It was a time of stagnation and elite decrepitude not only in the sense that people who were in power tended to stay there “forever” and Brezhnev made sure that even when they were demoted because of corruption or gross incompetence they would be given other nomenklatura jobs to keep them equally well off. This ensured bureaucratic survival and provided Brezhnev with strong support among the top bureaucracy but at the cost of increasingly inefficient economic and political management, lower growth rates, and—a point which is very interesting in hindsight—lack of political experience of the middle level cadres. The reason for that was the following: since the top people tended to stay in their jobs until they died, these positions as well as others just below were occupied by the same people for twenty or thirty years. People at mid-level positions simply had nowhere (higher) to go. They would get stuck at their jobs for years, and not only get discouraged and unhappy, but lacking in opportunity to acquire management skills or to show whether they are competent administrators of not.

As Peter Turchin argues in a similar context there was an elite overproduction and thus elite dissatisfaction. There were relatively few slots for so many aspiring bureaucrats and no occasion to tell them apart: who is competent and who is not. The lack of experience would strangely go together with frustration and unhappiness.

I cannot not think of Gorbachev here who in 1985 became General Secretary with relatively little experience in the management of the country and the economy. Had the system under Brezhnev allowed for upward mobility and retirement at some “normal” age it is quite possible that Gorbachev’s lack of management skills and inexperience and naivete would have been revealed. I remember a Chinese academic telling me that a person such as Gorbachev could never come close to power in China because his lack of skills would have been revealed at the county or provincial level and he would have never advanced past it. (In fact, Gorbachev was a Party head in the Stavropol region in Southern Russia but his success with Moscow leaders came not from his stellar economic management of Stavropol but from a very good location of the city, close to the famed mineral waters, where many Party stalwarts came for holidays and got to know Mikhail and Raisa—both much more charming and educated than the average party boss.) Whether that advantage of the Chinese system will continue with a more gerontocratic government of Xi Jinping is, of course, an open question.

The stability of the Brezhnevian political system was based on the very soft treatment of incompetent people at the top and all the way down the pyramid. Such mediocrities often belonged to the so-called Dnipropetrovsk (the city in the Ukraine where Brezhnev made his career) mafia. Brezhnev himself had relatively limited power. All important decisions were decided by the Politburo where different surreptitious factions, proper to any bureaucracy, existed and fought each other. Brezhnev’s skill was in maintaining the equilibrium and the semblance of unity but at the cost of lack of decisiveness. The best policy was to do nothing. There is no doubt that Brezhnev’s power in foreign policy was much less than that of an American president. I do not have in mind here Trump who has obviously taken many powers that might not properly belong to the President but presidents who stayed within the conventional limits of their power. They went to wars or ordered military actions practically on their own whim whereas this was impossible in the case of Brezhnev and the Soviet leadership after Stalin. It was an authoritarian group government with a very constrained power of the top person. It was in effect an oligarchy.

Andropov came to power in 1982 largely thanks to the fact that the existing leadership was already so old and discredited in the eyes of the Politburo and Central Committee members (as well as people although that mattered less) that they craved somebody younger and more technocratic. The need for economic reform was obvious to all, but nobody could tell what exactly should be done. Andropov understood that quite well and tried to improve things. Highlighting Soviet inefficiencies Medvedev makes a point that is often ignored in the literature on Soviet economics: incredible waste of goods and particularly food and energy (the latter is obvious even today to every tourist who travels to Russia). The waste was due to the very inefficient system of transport, and in the case of food, bad or non-existent refrigeration. If food products take days to make it from the producer to the customer, lots of it would obviously spoil. Some would be stollen too, again because no-one had much of an incentive to protect goods during transportation. Improvement in infrastructure (railways and roads) was thus one of Andropov’s priorities and he replaced the entire direction of the Ministry of Transport.

Waste also explains the discrepancy between the official production figures and reality. It is not (only) that the official numbers were inflated or purely invented out of the thin air but they were recorded at the point of production whereas significant part of that production never made it to the consumer.

Andropov also put the emphasis on work discipline and fight against corruption. The anti-corruption campaign made lots of sense because Brezhnev cronies (and even more so different republican mafias) were thoroughly corrupt. While some egregious cases of corruption were prosecuted (and that happened only rarely) most were simply ignored. Andropov changed that. But his emphasis on discipline and increased work effort could not yield results because of the lack of incentives and very little differentiation in salaries: whether one worked harder or not mattered little since salaries were more or less the same. This contrasts with the situation under Stalin when Stakhanovites and people who worked harder were paid much more than the others and wage differences were significant. Mancur Olson has even claimed that under Stalinism wage taxation was regressive because while the base salary was low the bonuses that came from extra work were taxed at much lower rates. There is no doubt that in the 1930s wage inequality in the Soviet Union was probably at its peak. (See my review of Trotsky’s The Revolution Betrayed who writes about that.) But wage inequality went down significantly under Khrushchev and even further down under Brezhnev. Thus by the 1980’s the uravnilovka or the egalitarianism was pervasive and impeded any attempts to increase productivity.

Medvedev criticizes Andropov’s disciplinarian preferences. Andropov tried to severely limit “moonlighting” and informal jobs in the belief that if people worked harder in their formal jobs they would have less time to work in the informal economy. But as Medvedev points out this is a ludicrous idea so long as the work in the formal economy yields so little, and wages are not differentiated. In other words, Soviet income equality was one of the reasons for low labor productivity. The effect of Andropov’s disciplinarianism was perversely to lower availability of essential services provided by the informal sector and which the state sector was notoriously bad in supplying.

The main outlines of Andropov’s reform were thus the streamlining of relations between the enterprises and planners, strong emphasis on improvements in infrastructure and on increasing the work discipline among SOEs employees. The reforms did not have any of the so-called Hungarian elements whereby private sector enterprises were allowed in services under the condition of employing a limited number of workers. Andropov during his (short) tenure did not have in mind a New Economic Policy along Lenin’s lines but rather a technocratic streamlining and tightening of work discipline.

It is remarkable that when Medvedev discusses different policy options envisaged by Andropov and the people around him, he does not mention China at all. It is strange because by 1983 China was already growing at high rates and had introduced the responsibility system which significantly increased agricultural productivity (a perennial weak spot of the Soviet economy). It had also allowed private enterprises in a number of areas. These reforms were apparently not noticed by the Soviet reformers, including by Medvedev himself, the person who directly or indirectly had significant knowledge about the thinking of the post-Brezhnev elite.

Thus to answer the question with which I began and which is in the title of this Substack: it does not seem that Andropov could have become the Soviet Deng. The answer must be in the negative based on the facts that we know. Given that his reign was very short and that he was a smart and pragmatic person, it is not impossible that he would have realized that the systemic reforms had to be much deeper. However, it is interesting and intriguing that among Soviet reformists, even later under Gorbachev, interest for the Chinese approach was minimal. Why was this the case? Because of the perception that the Soviet economy was an industrialized economy that might learn from industrialized capitalist countries, but not from the then still poor and agricultural China? The complex of superiority because it was the Soviets who were advising China in the 1950s: could they now turn around and learn from their erstwhile pupils? They never thought of that, probably to their own detriment.

Odd Arne Westad and Chen Jian’s The Great Transformation: China’s Road from Revolution to Reform is a book about how China transformed itself between the Great Leap Forward and the early reforms laying the basis for the greatest and most sustained economic growth in history. The book thus covers the period between the debacle of the Great Leap Forward and 1985.

There are many writers, political scientists, economists, sociologists etc., dealing with this crucial period. Ideologically, they take (broadly speaking) two different views: Maoism was a disaster and only after Mao died and the Gang of Four were eliminated, could China grow. Or Maoism in many unexpected, and also in some cases very conscious, ways did sow the seeds for future growth. Methodologically, the studies also divide in two broad groups. One set focuses on history as told from the top down, where most of what matters is decided in internecine struggles between different factions; or they take a broader view where economic and social developments (say, the growth of small-scale enterprises or much greater freedom for women) drive the story.

Where do Westad and Chen fit? I start with ideology. According to the view that holds that Maoism has retarded China’s economic take-off and that had China moved to the market, and export-led growth much prior to the early 1980s, China would have been even more successful and Its income higher than it is today. Mao’s years were therefore a waste, not only in terms of people’s lives (probably 20 million died due to the Great Leap Forward; demographic losses, as Westad and Chen write, were 30 million) but also in terms of foregone economic growth. Although Westad and Chen do not directly address, or contradict, this view they seem skeptical of it. Not only because they show that many unexpected developments such as the breakdown of the Party apparatus during the Cultural Revolution brought about economic change (multitude of townships and communes engaging in trade, creating unorthodox property structures and borrowing schemes to spur production), but because being political scientists, they know that export-led growth of China was impossible without a political accommodation with the United States. That accommodation was out of the question as long as China was part of the Soviet bloc and even later when China broke from the Soviet Union so long as it wanted to play an implicitly anti-American role in the Third World. Without normalizations of relations with the Unted States, there would have been no export growth, no large direct foreign investments, no transfer of technology. So, a political move, at a global (geopolitical) stage was an indispensable pre-condition for Chinese take-off. Westad and Chen rightly point to the foreign policy origins of China’s success and thus (indirectly) to the role of Maoism: its decisive break with the Soviet Union and view of China as one of three poles in international politics.

Methodologically, Westad and Chen are unabashedly of the old-fashioned school where history is created by a limited number of individuals fighting it out on the top. It is a history of individuals and elite politics. The approach gives vivacity to the book because we identify (or not) with some key characters and, given the volatility and vicissitude of Chinese politics, the book can be read as a thriller of sorts. In fact, I read most of the book in one weekend. Despite the topic having been written about in extenso, and especially during the last decade as more documents have become available, Westad and Chen bring a lot of new information, drawing, among others, on Chen’s highly acclaimed biography of Zhou Enlai. The quality of the narrative is high and that in turn makes the reader eager to go on.

Rather than reviewing the second part of the book, from Chapters 8 to 11, that deal with the reform process, and which I believe most reviewers will focus on (and which I might review in a second installment), I would like to concentrate only on the period up 1977, i.e. until a year after the death of Mao, Hua Guofeng’s remarkable (and short-lived) unification of the titles of the Chairman of CPC, Prime Minister and head of the Central Committee’s Military Commission, elimination of the Gang of Four, and political return of Deng. And only on the issues that I still find puzzling even after having read this, and other similar, books.

I select three issues: (a) the ideological origin of Mao’s insistence on “continuous revolution,” (b) Lin Biao’s intentions in his failed escape to the Soviet Union, and (c) the reasons for the Left’s strength in many industrialized cities in China, notably in Shanghai and Wuhan. The first two issues perhaps cannot be “solved”. Most that we can do is to speculate. The third, however, is, I think, amenable to much more informed discussion. And it might help answer the first.

Mao. Explaining the Cultural Revolution as some authors (but not Westad and Chen) do by Mao’s desire to “reshuffle the cards” and through chaos to reimpose his uncontested power is clearly insufficient, not the least because Mao’s preeminence was not questioned, not even after the failed Great Leap Forward. To their credit Westad and Chen do not use that explanation. On the contrary, they show how Mao, even when on a (modest) defensive mood after 1962, was still all-powerful and fully in control.

(The term “in control” when applied to Mao has to be read differently than if applied to any other leader. Mao was “in control”, not by being omnipresent and concerned with all decisions, however minute, but was “in control” the way that the Gods of Rain are in control: that is, most of the time by not being around and then capriciously appearing to make crucial or cryptic decisions; having mulled over them in self-imposed solitary confinement. These decisions were then accepted, or pretended to be accepted, by all. Mao’s ruling style comes probably closest to the way ancient Greeks imagined Gods interfering with the matters of mortals.)

Further, Mao’s insistence at the end of his life that the Cultural Revolution was (at least) 70% good, and 30% errors, that it was necessary, and a great success of the Party is difficult to explain otherwise but by Mao’s ideological; attachment to the idea of continuous revolution. Perhaps that Mao, like Thomas Jefferson, believed that the tree of freedom and social mobility had to be refreshed by blood-letting at regular intervals. His statement, quoted by Westad and Chen,

Some party members do not want to move forward, some people are afraid of the revolution. Why is that? They have been made big officials, so they protect the interests of big officials: they have good houses, cars, high salaries, and waiters, better than capitalists. There is always going to be a revolution. Always some people will feel pressured, small officials, students, workers, farmers, soldiers; they do not like big people pressure them, so they want revolution. Ten thousand years from now, you think these contradictions will not be visible? (Westen and Chen. p. 133)

shows that he saw socialism as a class society and the new bureaucracy as a new class, concerned about its own and its offspring material privileges. He wanted to shake them from that comfortable position. The mature Mao might have regarded any social system –even a highly developed socialism—as reproducing, through family structure, the features that Mao, a young librarian who joined the new Communist Party, rebelled against. His critiques of Soviet “social-imperialism” might not have been simply motivated by geopolitics “wrapped” in the language of revolution, but truly expressed revulsion against the establishment of a new class (a critique that Mao would certainly direct at today’s Chinese system).

The old Mao might have the same as the young Mao: a rebel against hierarchical structure that any ordered society imposes. If this interpretation is correct, and those who know Chairman’s works better might find it reasonable or not, then Mao must be listed among the anarcho-communist leaders who applied the class analyses to all types of societies. He was perhaps also more realistic, or more radical, than Marx and Engels who thought that there may be a society where class contradictions would cease.

Lin Biao. The second topic on which perhaps more light might be shed is the decision of Lin Biao to flee China. Westad and Chen refrain from claiming that there was a planned coup, which is the hypothesis of others who see Lin preparing for the coup rather seriously, including planning to bomb the train in which Mao was riding. None of that appears in Westad and Chen’s book. Very sparsely, they explain Lin’s decision by flee by his gradual realization that Mao was turning against him (even if he was still officially No. 2 and thus the official successor). Rather than facing the usual indignities of self-criticism, punishment and humiliation, Lin Biao decided to flee China. Westad and Chen treat the documents written by Lin’s son about the coup as half-baked scribbling of an incompetent youngster. Others see it as a more serious preparation of a coup. In any case, the (possibly unanswerable) question is, What was Lin trying to accomplish in addition to saving his life? Did he think that from the exile in the Soviet Union he could play a political role in China? (The Lin Biao defection but at a much lower level would be repeated by Wang Lajun in 2012 after the Bo Xilai affair. But there the goal was simply to save own skin.)

The Left. When the coup against the Gang of Four was carried out, its success was immediate and total. Most of the success was due to the shambolic nature of pollical maneuvering conducted by the Gang, and much greater organizational capabilities of PLA leadership that organized and actively participated in the coup (especially Marshal Ye Jianying). The Gang’s activity during the years of Mao’s rule until the very end almost entirely consisted in writing articles, attacking imagined “capitalist roaders”, and creating intrigues throughout the Party. They seemed incompetent to do anything more serious. They were perfect examples of half-baked ideologists scheming at the highest levels of bureaucracy, haranguing those below them, but devoid of any serious programmatic policies, organizational skills, or even common sense when it came to the struggle for power. They prospered in the climate where they could (thanks to Jiang Qing and Mao’s nephew) hide behind the Old Man and weave the spider-web of intrigues and innuendos.

But their unworldliness (well explained by Westad and Chen) then immediately poses the following question: how are we to explain Left’s (that is, Gang of Four’s) political strength in many large industrial cities, including Shanghai? What was it that these windbags with incoherent ideology offered to the militias in Shanghai who were more than ready to replicate the Paris Commune, to sink ships in the harbor, and to go for an all-out civil war. It cannot be that the Left just offered a couple of higher-level political positions to key city leaders. This cannot explain why thousands of workers were ready to fight there, and, as Westad and Chen show, why the Left’s support was far from negligible in the rest of China.

A western (or a current) reader bred in capitalism and aware that China’s post-Mao success was made possible by the elimination of the Left, wonders what was the basis of such strong support. Especially as it came after the chaos of the Cultural Revolution, when most people—it could be reasonably expected—just wanted to be left in peace and not have to participate in endless rallies, shout slogans, be beaten or “sent down” to rural exile. Yang Jisheng in his monumental The World Turned Upside Down, while extremely critical regarding the Cultural Revolution, and providing hundreds of details of mental and physical torture, highlight also, perhaps reluctantly, its liberatory aspects: rejection of all norms, overturning of hierarchy (so asphyxiating in the Chinese societies, whether traditional or post-revolutionary). (I reviewed Yang Jisheng’s The World Turned Upside Down in two parts: a critical review is here; a laudatory review is here.) It was a revolution of freedom that inevitably created chaos. People’s power, left to itself, leads to anarchy. Could it be that enough people in 1976 still liked the freedom from any social obligation (despite the risk to end at the wrong end of the stick) more than the return to the usual hierarchies?

This last speculation highlights the dual aspect of the Cultural Revolution: a movement for total freedom and violent overthrow of all conventions that produces violence, chaos, and a mob rule. It thus brings up the deeply ambivalent nature of the Cultural Revolution and might answer, or rejoins, my first question: why did Mao launch the Cultural Revolution and why did he so much insist on it being a correct decision?

PS. To some superficial observers the Cultural Revolution looks like Stalin’s Great Terror. Both subjected the high Party apparatus and in fact everyone at whatever position (except for the two leaders) to possible downgrading, punishment, and death. But Mao’s Cultural Revolution was a grass roots, chaotic process with an identifiable ideological component. Stalin’s Great Terror was, even if often random, executed in total order using the special services of NKVD. So fundamentally, it was an entirely different endeavor. There was no disorder, improvisation nor people power in the Great Terror; all were present in the Cultural Revolution.

Recently, a debate about the number of hours of work people do in different countries has taken very clear political overtones. Trumpista economists like to point to the strength of the US economy, and to the decline of the European welfare model, by showing that the gap in incomes between the US and West European countries has either remained the same for the past several decades, and even increased for many. For example, in 1980, the ratio of GDPs per capita between US and France (calculated in dollars of equal purchasing power) was 1.2 to 1; today, it is 1.5 to 1. Since the recovery after Covid Europe has hardly grown at all. US economy has rebounded much more strongly. If we use the data from household income surveys, adjusted for the generally lower cost of living in Europe, the gap, in favor of the United States, is very large. In 2023, US average per capita income was almost 50 percent higher than the French. Even at the median, the gap is 30 percent in favor of the United States.

Several days ago, German Chancellor Friedrich Merz, after coming back from China and specifically visiting Shenzhen, came up with a Trumpista-like message: European welfare state is unsustainable; we must work harder. Europe is on the decline and will be overtaken by countries where people work many more hours. In China, they work 9-9-6 (from 9 am to 9pm, six days a week), in Europe they work 35 to 40 hours a week. (And Germany is notable by a small Humber of working hours.)

Arguments in favor of not working hard. The answer to the Trumpistas has been provided by American liberal economists and commentators. Paul Krugman argued that European productivity per hour worked is on a par with American, and in some cases even higher. The fact that Europeans freely choose to work less, and accept to have lower income (measured in terms of material goods and services) in favor of more free time, is an indicator of more “civilized” life. Europeans are saying “no” to the continuous rat race, and “yes” to the pleasant life that healthily combines work, and family and friends. Thomas Piketty has recently made the same point. European combination is superior.

Arguments in favor of working hard. The first set of arguments looks eminently sensible. Human objective is not production of steel for the sake of steel (as Stalinism was rightly accused of having believed), but production of useful things from steel, and attainment of abundance that would free us from the drudgery of work.

However, there is a different set of arguments that support Trumpistas and Merz’s point of view. The world is a competitive place. Not only do countries that do not develop economically fall fast behind their competitors, they become second- or third-rate economic and military powers, and their populations leave to work elsewhere. Their technologies become obsolete. It is a fact, noted by all economists and political scientists, that economic power is correlated with political and military might. So if many European citizens continue to choose watching operas and going to picnics with friends while Chinese and Indians are doing it less frequently, Europe will decline. The position of its population in global income rankings will drop (as has already been happening; see Chapter 1 of The Great Global Transformation). Europeans may continue enjoying picnics but they will have to sell their homes that overlook the Grand Canal to the Chinese and Indians, and instead of travelling for vacation to Thailand, they would have to stay much closer to home. There is clearly an argument for working hard grounded both in relative power of nations, and relative standard of living of people in any given nation. People in the Netherlands are rich because the Netherlands had accumulated large riches through hard work of its past inhabitants and their external conquests. Today’s inhabitants enjoy these advantages of the past but they will not last forever.

A retrospective look helps Trumpista-Merzian argument. Capitalism became a dominant system not because people loved to work but because most people were forced to work. Dutch economic historian Jan de Vries has written a well- documented book where the Industrial Revolution is shown to have been in fact an “industrious revolution”. Annual number of working days in England prior to the Industrial Revolution was around 100; it jumped to more than 300 at the peak of the Industrial Revolution. The number of annual working hours increased from 2500 to 3300. (Data on working hours are from Gallardo Albarr, “A composite perspective on British living standard”, Groningen Growth and Development Centre, 2017; data on annual working days are from Jane Humphries and Jacob Weisdorf. “Unreal Wages? Real Income and Economic Growth in England, 1260–185”, p. 6.) The graph below illustrates the similar increase in France. People worked, on average, 50 days more in 1800 than three centuries earlier. (From Leonardo Rudolfi, The French economy in the longue durée).

Peasants much preferred to work hard only during the sowing and harvesting seasons and to spend most of the year doing nothing or participating in numerous village festivities, than to be driven into, and huddled in, the “satanic mills”. But they were forced there through enclosures, creation of poorhouses (which served the same function as Gulag would serve two centuries later), and were thus virtually chased off the land, and even branded on the forehead if they refused to work and preferred vagrancy. But that made the Industrial Revolution possible, and capitalism the dominant system worldwide.

For competition is not only between different countries but also between different systems. Taking Krugman and Piketty’s idea further, one could argue that socialism was an extremely pleasant system because people never worked effectively more than two or three hours per day (“we pretend to work, and they pretend to pay us”). Foreign visitors could see shortages, but they could not see the pleasure provided by non-work. A doctoral dissertation contrasting work in a Serbian-operated FIAT factory in the 1970s with an almost identical factory in Turin, finds that workers in socialism worked less than half of the time compared to the Italians. Since total production of the Serbian plant was about a half of the Italian, one can rapidly deduce that Serbian productivity per hour was about the same and that socialist workers had more free time than their capitalist counterparts and hence must have led a much more pleasant life. But this would be a wrong conclusion. Capitalism handily defeated socialism, and the main reason for its victory was precisely that it produced more goods and that people preferred to feel materially richer compared to not working hard.

So working hard vs. not working hard wins at the individual level, nation-state level, and civilizational (or mode-of-production) level; the latter by making systems (say, today’s Chinese state capitalism) dominating others politically and militarily.

What would Keynes say? Let’s go further. What would Keynes say in this debate. In fact, he joined it. In a 1930 lecture he delivered in Madrid, “Economic possibilities for our grandchildren”, he precisely envisaged the world that may be similar to that of today’s Europe where people would enjoy relative abundance, sufficient to “satisfy the Old Adam in most of us” and would work fifteen hours a week, spending the rest in other, cultural and social activities. But was Keynes right? Probably not: he severely misdiagnosed the nature of capitalism. It is a system that (as Schumpeter observed) cannot be stationary. Capitalists will not invest unless they expect a net positive return (on average). If there is a positive return, some of that money will be reinvested, making the rate of growth of the economy positive. To keep that growth on, capitalists must permanently produce new wants. They cannot just stop. Were capitalism to stop producing new goods, and were the wants of people suddenly to be satiated, capitalism would come to an end. If everybody is happy with what they have, how are capitalists to make more money? What Keynes overlooked is that capitalism can never become a satiated society of abundance. They key word is “satiated”. It can create a world of many products and services, of huge abundance, but it cannot allow that that abundance makes people “satiated”, for otherwise the system will end.

Perhaps that Keynes wished to see the end of capitalism? It is a possibility too. But if he had in mind the continuation of capitalism, his advice, or hope, of working 15 hours a week, was incompatible with the key features of the system.

What would Marx say? Was he in favor of working or not working hard? Marx’s view was (obviously) quite sophisticated. He thought that human freedom begins only when the drudgery of hired labor and division of labor end. Hired labor could never be the work desired by any free individual. Workers under capitalism rent out their labor power and forego any agency in a process where they are simple cogs. Thus the objective of any hired laborer (that is, the objective of any worker under capitalist conditions) is to work less. As Marx writes: “The worker therefore only feels himself outside his work, and in his work feels outside himself. He feels at home when he is not working, and when he is working he does not feel at home” (Economic and Philosophic Manuscripts of 1844).

What will happen under socialism? Will it be a system of total abundance, without hired labor, where “associated producers” will exert control over their own work, alienation disappear, and leisure become common? Not really. And that’s where Marx parts ways with those who believe that the ultimate objective of human existence is freedom from work. Marx believed that work is eminently a human need. It is under the systems of coercive labor (slavery and capitalism) that that need becomes vitiated because people are forced to work at tasks over which they have no input or agency, and which they therefore hate. But the individual is a homo faber. To express themselves, people need to work. In the realm of freedom it is our work that defines us and makes us human. It is not us sunning ourselves on the beach or going to soccer games. It is, as Marx writes, world such that “[while] each can become accomplished in any branch he wishes, society… makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner…without ever becoming hunter, fisherman, herdsman or critic.” (The German ideology “) It is work in freedom which is our ultimate objective. As long as there is a system whose core feature is competition between individuals, nations and indeed systems, people and nations that work hard will dominate people and nations that do not work hard. It is an illusion to believe that opting out of competition is feasible if we want to maintain our position in that world.

This essay is a (modest) attempt to look at the worldwide meaning of China’s experience as the country is being poised to become this year or the next, according to the official World Bank classification, a high-income economy. This comes forty-six years after China –following several decades of isolation—joined the Word Bank as a low-income country. It thus went from the bottom to the top income classification within less than half-a-century. Moreover, it did so while bringing along more than 1 billion people (the average population of China during this forty-five years’ journey).

But I will not, in this short essay, look at these numbers They are discussed in thousands of publications, including in the first chapter of my Great Global Transformation (published by Penguin in November 2025; US edition, by Chicago University Press, coming out in two weeks). I would try to look at what it means from a different, very long-term ideological angle. In other words, what it might seem to have accomplished to people one or several centuries remote from ours. Indeed, when we look at big historical events like Visigothic invasion of Western Europe, Arab conquest of North Africa and the Iberian peninsula, the fall of Constantinople, or European colonization of Africa and Asia, we do not see only the political and economic side of such world-transforming events. We see their ideological importance too. The Visigothic conquest created a Latin-Germanic mixture and unified Christianity in the West. The Arab conquest allowed the West to get back in touch with Greek learning that has been forgotten and destroyed. The decline of Byzantium was the precursor, or the enabler, of the Renaissance as many artists and intellectuals left Constantinople for the safety of Italy. The European conquest of the world brought western ideology, including Marxism, of which I will speak more, to the rest of the world. Even if one does not agree with these simplistic summaries of the ideological effects of big geopolitical changes, it cannot be denied that such “re-orderings” of the world, had, in addition to their obvious political effects, big ideological implications.

If we look at China’s success from the same vintage point, what can we see? I think that the most remarkable ideological result of China’s success will be seen to be a movement toward the ideological, or perhaps even cultural, fusion in the large Eurasian space. I base this on the following reasoning. China’s economic and civilizational success was achieved on an undoubted basis of a European ideology, namely Marxism, which itself was the product of European enlightenment, German philosophy and English political economy. (The triad skillfully summarized by Lenin.) But this was not enough to produce China’s success. Anyone who would try to explain it by these “imported” elements alone would be wrong. They created the basis for success. They might have been necessary, but they do not provide a full explanation of success. Indeed without a Communist Party, China would not have become a rich nation. And the Party came to power thanks to a Western ideology which it skillfully adapted to Chinese circumstances. Yet to be successful and to transform China as it did in the past forty years, it had to fuse these essentially foreign elements with domestic ideologies, first, those largely derived from Legalism, and then from Confucianism. It blended eminently European and Chinese ideological traditions into one that produced economic growth and improved lives of millions.

I cannot put the numbers on the shares (is it half-and-half?) of Marxism and Chinese ideologies in the current thinking of CPC as reflected in the documents published by high party organs and in the speeches of Xi Jinping. But it is very clear to me that they both exist there. Some statements come from the Marxist claviature (interdependence of the forces of production and the relations of productions, dialectics, materialist conception of history, ultimate triumph of socialism) while others –of which Xi Jinping speeches and short anecdotes (which I reviewed here) are full—come from a very different tradition, of Confucianism: virtuous behavior, acceptance of hierarchy based on moral values, self-abnegation. At times, they sit uneasily with each other. I find the combination difficult. To a Marxist-educated person, the introduction of individual moral values as engines of history sounds odd: Marxist philosophy deals with individual interests mostly to the extent that they are fashioned by historical forces that are themselves beyond individual control. Even more: attainment of a superior economic and political system cannot be achieved (only) through an improvement in our individual moral behavior. Rather the reverse: only once such a system is achieved can individual morals improve. As Marx’s famous statement (which he originally wrote when he was in his twenties) says, “Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past”. In CPC documents, it is often the moral virtues, that is, human agency, that are stressed, implying they are needed for the attainment of a superior system.

I have noticed this uneasy juxtaposition when I compared my own reading of CPC documents with that of other people who are more versed in Chinese traditional culture and ideology. I would fully understand Marxist-derived elements while I find their relationship with the Chinese ones murky. Others, however, would understand and emphasize references to Chinese values and discount Marxist jargon. The calls for the “Sinification of Marxism”, now the official ideological stance of CPC, present problems to both sides. “Sinification of Marxism” seems to be a desire to combine two very opposite ideologies: one essentially “macro” (dealing with society), the other essentially “micro” (dealing with the individual). Jiang Shigong (belonging to the so-called Chinese “conservative socialists” school) notes the contrast but not only discounts it but finds the two sides complementary.

China has consistently confronted the question of the Sinification of Marxism. As a universal philosophical truth, Marxism must not only be integrated into the concrete practice of Chinese history but must also be merged with Chinese traditional culture. The Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era… employs the traditional Chinese ‘Learning of the Heart’ 心学 to re-enliven Communist ideas, and this accomplishment…has constructed and consolidated the spiritual strength of the entire Party and people. (Open Times, January 2018).

Despite the attempts to paper it over, intellectual discomfort is, I think, always present when new syncretic ideologies are born. It has been also addressed by Samir Amin who was particularly sensitized to the global implications of China’s success and its complex relationship to both Marxism and “real-existing” capitalism.

It has to be recognized that what the most important social and political struggles of the twentieth century tried to challenge was not so much capitalism in itself but the permanent imperialist dimension of actually existing capitalism. The issue is therefore whether this transfer of the center of gravity of the struggles necessarily calls capitalism in question. (“Trajectory of historical capitalism” in Only people make their own history, p. 95).

Sinification of Marxism has not only shown its value in practice (a thing which would surely please Marx), but has led to a fusion of two different ideological traditions. It has brought closer the European or Western, and Chinese ideological “space”. In the same way as the European success has brought Western ideologies to China, a sinified Marxism, built on the back of China’s economic and technological success, will exert its influence over the West and other parts of the world. Through reverse causality, it may influence Western thinking (incorporating there elements of Chinese philosophy), and the new Sino-Western amalgam may be copied by others and become more common in the rest of the world.

Whatever happens to China in future –and no one is sure about that—one fact will remain incontrovertible: the most outstanding economic success in modern history has been achieved by a system that combined domestic culture with Marxism-Leninism in the political sphere and open-ended capitalism in the economy. The long-term ideological effect of China’s economic and technological success may be a greater closeness—not necessarily unanimity—of worldwide thinking regarding what the ingredients for the best system may be.

I have not discussed the proposed Zucman tax so far. I am not in general a huge fan of trying to solve every income or wealth inequality problem by taxation. But two recent developments have led me to think again and support strongly the Zucman tax and perhaps to argue to make it even tougher.

The rationale of the tax is not that it would significantly dent the wealth of the rich; nor would it collect huge revenues.

But it would convey a message. It is a tax against greed. It is a pedagogical tax.

What are the two recent events that made me think again?

The first is the review by Andrea Capussela of my Great Global Transformation. It re-brought my attention on the last chapter of my book entitled “Nationalism, greed and property”. Andrea wrote quite a lot on it, and expanded the discussion further. (Andrea’s review’s title is “Impeccable, and unacceptable portrait of our world”. I suggest that you read it.) Interestingly, this is also the only part of the book discussed by Martin Wolf in his brief review of the book in The Financial Times.

I have, to some extent, even forgotten about it because my book (or 95% of it) is about other things. The last chapter is only five or six pages long. Greed (pleonexia) plays a key role there though. (Pleonexia is also discussed beautifully in David Lay Williams’ recent book The Greatest of all Plagues). Pleonexia is a greed without any upper bound. It is not based on intrinsic pleasure provided by consumption of goods and services. Its utility comes from elsewhere. It is extrinsic: admiration of the others. Here is what I wrote in The Great Global Transformation:

Things possess an indirect utility because they convey to the others the image of wealth and power of the owner. Since the image of wealth and power is not bounded from above– that is, does not have any physical limits (unlike, for example, food or clothing one can consume over a given period of time) – it becomes what is commonly called greed, the pleonexia of Plato and the Greeks, the all-consuming and never assuageable greed. Greed is extrinsic. It cannot be ascertained or judged from within, in the sense that one cannot objectively claim that the increase in the number of commodities owned above a certain limit does not bring additional utility. The utility it brings comes from an external spectator who, by being made aware or acknowledging our ownership of things, validates it, confirms that they are useful to us, and makes us want to have more so that the validation may be even stronger. Ubiquitous use of smartphones to take photos of the most trivial activities or events in one’s life fulfils that function: it commodifies time, and that new commodity acquires its value only extrinsically, when it is shown to others. Taking pictures of our own lunches or walks in the woods and keeping them for ourselves is wasteful. It brings nothing, or almost nothing, in addition to the potential pleasure one gets from the activity itself. But sharing it with others brings the recognition of either one’s wealth or, perhaps more importantly, of one’s happiness. Having one’s happiness confirmed by others is one of the features of greed. Pleasure is no longer contained in the activity or good itself, but in the appreciation by others of the happiness that the activity or the good are supposed to have brought to us. Matters can go even further: activities that bring no utility, or that are even chores, but can be presented as happiness, obtain their value precisely from that presentation, and not from any intrinsic quality. I may dread or be extremely bored by listening to classical music, but if I can send a picture that shows me attending an important or expensive performance (and ostensibly being happy even when feeling miserable), the utility that comes from the conviction that others see me as happy will be sufficiently strong to overwhelm my boredom during the performance itself. Greed is the ‘motor’ that drives our obsession with property since its acquisition is seen to be the ultimate objective – not only because of the hedonistic pleasure it gives, but because it shows the worth of an individual. Greed is, as Marx defined it, ‘abstract hedonism’.

The anti-greed pedagogical tax would, by cutting wealth of the inordinately rich, just by a little, send the message that society is not wholly oblivious of, or indifferent to, extreme greed, and to power and vanity that accompany such wealth, and make its possessors objects of (misplaced) adoration.

And provide them with a feeling of impunity.

Here then comes the second event which made me think again: the Epstein affair. The impunity with which the wealthy have behaved calls for some (however feeble) social constraint. Zucman tax would be one such modest constraint.

On top of it, I thought of a social credit system for all billionaires. If you do certain things well, you will be taxed less; if you do awful things (even if they are seemingly legal), your tax will be increased.

Social credit system would be an effective way to subject the behavior of the enormously wealthy to social scrutiny. There would no longer be meaningless Davos declarations that they “pledge” their fortune to charitable causes and similar fake and unimplementable plans. Did not Mark Zuckerberg give away 99 percent of his wealth? Had we ever heard of that “pledge” after the day it was made and reported by the media?

Here, social credit system would be real. Behave with a minimum of decency, or be taxed. It would be a pedagogical tool. Call it “the anti-Epstein social credit system”.

PS. How would the social credit system for the billionaires look? Here is the main idea. You want to limit billionaires’ (1) ostentatious consumption, (2) political influence, and (3) media power. The need to limit (or thus to punish by exorbitant taxation) ostentatious consumption is to maintain a society where huge differences in wealth, while some may be unavoidable, are not displayed in front of everyone and cannot become the object of adoration or of hate. The goal of (2) is to make billionaires (which despite everything will still have disproportionate political influence) more like other members of community or nation. We are not talking here of democracy but of isonomia, a much better term to indicate an approximately equal influence of all individuals in political decision-making. Today’s so-called democracies are places without any semblance of isonomia precisely because the political power of the rich is unconstrained. Finally, (3) is needed for the same reason as (2): to limit the power of a few.

Now, here is a possible price list.

If you fly too many times per year by private jets, take private yacht voyages or spend too many days in exclusive resorts (all of which can be readily defined), you are taxed by between 1 and 2 percent of your net wealth.

If you contribute any amount in excess of $1,000 to any political cause (whether directly to a politician for campaign or to a lobbying firm or to an NGO), you can do that, but depending on the tax schedule, you may be changed between 1 and 5 percent of your net wealth.

If you contribute any amount in excess of $1,000 to any media organization or if you own a media organization (like Bloomberg, The Washington Post, The Atlantic or X/Twitter), you will be taxed by between 1 and 5 percent of your net wealth.

If you contribute more than $100,000 to any non-political educational, health or cultural cause, you may get a tax discount (again depending on the amount and the case) between 1 and 3 percent of your net wealth.

[A very long read. See the explanation below.]

Many economists dismiss the relevance of inequality (if everybody’s income goes up, who cares if inequality is up too?), and argue that only poverty alleviation should matter. This note shows that we all do care about inequality, and to hold that we should be concerned with poverty solely and not with inequality is internally inconsistent.

A common argument made by some economists is that concerns with distributional matters are irrelevant—or worse, pernicious. Distributional matters are often viewed as a distraction, a nod to populism, and a waste of time that is ultimately destructive: A fight about the slices of the pie reduces the size of the pie and makes everybody worse off. Such activities, even a discussion about them, are regarded as negative; how much better to focus on hard work and investment and to make the pie grow. Two well-known economists have recently made such points. Martin Feldstein in the opening address to the Federal Reserve conference on inequality (1998a, 1998b, and virtually identically in Feldstein 1999) writes that no one should be worried about inequality, so long as everybody’s income is increasing: “I want to stress that there is nothing wrong with an increase in well-being of the wealthy or with an increase in inequality that results [solely] from a rise in high incomes” (1999, 35–36). Robert Lucas, in the 2003 Annual Report of the Federal Reserve Bank of Minneapolis, writes: “of the tendencies that are harmful to sound economics, the most seductive, and in my opinion, the most poisonous, is to focus on questions of distribution” (Lucas 2003).

In its more or less sophistical form, this is an argument not infrequently heard. As someone who has worked on the issues of inequality for more than twenty years, I have had a chance to hear it expressed numerous times. In the early 1990s, a highly placed World Bank research economist dismissed my proposal for a study of inequality in post-communist countries, arguing that these countries were “victims” of unreasonable egalitarianism, and all increases in inequality, linked as they must be to higher returns to more productive members of society, should be welcome. Four or five years later, with the greatest recorded peacetime increase in poverty, and with inequality increasing by leaps and bounds, the subject did not seem so unreasonable. In many social parties or professional meetings in Washington and elsewhere, when introduced to and informed that I worked on inequality, my (more polite) interlocutors would make a point similar to Feldstein’s (“Why should inequality matter at all?”). Others, perhaps less polite, would wave their hands, basically ascribing the fact that anyone would pay a person to study inequality to profligate ways of international bureaucracy.

I will allow myself to speculate at the end of the note why the topic of inequality produces such strong reactions among many people from various lands and backgrounds. But first, I will try to make a few more substantive points, limiting myself to not making pro-equality arguments of two kinds. First, following Feldstein, 1/ I, too, will eschew to base my case on the functionalist arguments in favor of low inequality, whether they be of the median-voter kind, social instability (with attendant low investments), perversion of political process, market failure, or any other type. Two recent excellent reviews (Eric Thorbecke and Chutatong Charumilind, “Why We All Care About Inequality”, World Development, September 2002, and Christopher Jencks, “Does Inequality Matter?” Daedalus, Winter 2002) summarize, analyze, and assess the effects of inequality on a wide range of economic and social issues. The reader should be simply aware that there are functionalist (or instrumentalist) arguments in favor of complementarity between equality and efficiency that are as strong as, and arguably stronger than, the opposite arguments, which see the two (equality and efficiency) as a tradeoff.

A second type of argument I will not make refers to the attempts, tacitly present in the quotes and the tenor of the argument cited above, to eliminate from the political debate an issue as important as distribution. Surely this is unlikely, since the problems of distribution have been at the center stage of political struggles from time immemorial. But one nevertheless detects an unpleasant impatience in some economists who would like such topics to be expunged from politics. In other words, I will not use the argument that these economists thereby display rather unpleasant authoritarian or, to be charitable, paternalistic traits.

Is It Envy or Is It Justice?

Consider the example given by Martin Feldstein (1999) of a group of well-heeled economists gathered at a conference or subscribers to an economic journal. If each of us—the economists—were given $1,000, inequality (in the United States) would go up; each of us would be better off and no one would be worse off. So what is wrong with this? asks Feldstein. Apparently, nothing. Let us now modify his example just a bit. Let us suppose that Feldstein’s fairy gives me $20,000, and each of the other participants is variously given between 25 and 75 cents. Feldstein’s previous conclusions still hold: everybody’s welfare should be greater. Yet, the effects, I dare to suggest, would be quite different. Many of the participants might refuse to accept their quarter, some might leave it in the room, others throw it away in disgust. Many would comment (unfavorably) upon the fact that I have received, for some unfathomable reason, $20,000, while other, much more worthy members of the group, would have to do with less than 1/1000th of that amount. Most would speculate on the reasons that lie behind such extravagant largesse on the part of the fairy.

What does this story illustrate? First, that many (most?) of those who would have received 25 cents would not merely not feel better—as Feldstein suggests they should—but would rather feel worse. They would feel worse off because their feeling of justice and propriety would have been hurt. And it will have been hurt because people always compare themselves to (what they hold to be) their peers. Thus income they receive is not only a means to acquire more goods and services, it is also a tangible recognition of how society values them. It is a social expression of their own worth. Hence a large difference in income (and particularly if unjustified or unclear) will be viewed as a slight to their own worth.2/

The key point is that income of others enters our own utility function. And once we allow for it, inequality affects our own welfare and the arguments regarding irrelevance of inequality come to naught. Note that the concept of a peer group is crucial for all studies of inequality. 3/ There is no point in studying inequality between two groups that do not interact or that ignore each other’s existence. Suppose we combine all Japanese and all Maya of the fifteenth century and study their combined inequality. The two groups might overlap quite a lot, their mean incomes being similar. But this exercise is devoid of any meaning since the two groups have never interacted. It is only when a nation-state appears and people begin to view their co-citizens as their equals that conventional studies of within-country inequality begin to make sense. This is why studies of global inequality make sense now, but much less so for the earlier periods. In other words, only if there were no peer groups—that is, if there were no society—would inequality be irrelevant and would only our own income matter for our welfare. 4/ In a solipsistic world indeed we (I?) need not bother about inequality. But in all other worlds, we (I) would.

But let me try to find some other, perhaps, more convincing examples.

Let us assume that, for the same economics conference, the organizer has decided to pay each of the participants a fee reflecting his or her position in the profession and thus the expected quality of the paper. And let us assume that such honoraria are widely skewed but are all, of course, positive. Let me now assume that I, among all of the participants, got the least, and by a large fraction. Would this not affect my own sense of justice? I would quickly begin comparing fees received by other authors to their published record or to what I have heard of them. I would inquire from my friends, and I might end up being deeply offended. Again, my feelings of (1) justice and (2) self-worth would be affected. In the first example, many people might dismiss in disgust their quarter of a dollar. In this case, I would accept my honorarium but would be quite upset and perhaps offended. Even if my welfare is greater after the honorarium (because my income would be higher), it will have increased far less than if everyone had received the modest fee that I got, or if the fees were more in line with what I perceive to be just. And again, once we accept the fact that my welfare is reduced by the knowledge of how much other participants received, we conclude that other people’s income enters my utility function, and thus that inequality matters. If this were not the case, how would we explain the fact that in the ultimatum games, where participants are asked to share an amount of money, offers perceived as unfair are rejected out of hand, and both people end worse off (Fong et al. 2003). 5/ Why do people reject offers they hold unfair if thereby they reduce not only the income of the other participant but their own, too? Simply because the utility gain from higher income is outweighed by the utility loss caused by the feeling of injustice stemming from the realization that the other person would receive a much greater and, in our view, undeserved income. But clearly we should never behave like that if we were unconcerned with the incomes of others.

Notice that in all three examples, we have shown that people’s welfare depends on the income of others, but that the mechanism by which this is expressed varies. In the first (“the good fairy”) example, we were puzzled by the capriciousness of the fate; in the second example (“the fee”), we called upon justice; in the third example, we were simply disgusted at the behavior of our partner—neither justice nor fate entered there: pure human disgust or anger.

More Arguments

Some economists tend to regard all statements that other people’s incomes influence our welfare as statements of envy. Martin Feldstein writes of “spiteful egalitarianism.” Two points are worthy of note here. First, ethics is not the province of economists. The use of value-laden terms like “envy” is supposed to shut us up by basically telling us that only green-eyed envious monsters are likely to covet other people’s money. Let us grant this point: envy is not nice. But if most, many, or a significant percentage of people do feel envious of other people’s money, this is the only thing with which economists need to concern themselves. (And recall that envy simply means that other people’s income enters our utility function.) Envy, whether economists approve of it in private or not, must be part of their analysis. Perhaps ethicists and religious ministers would disprove of such practices, and we leave the field open to them to improve the human race. When the ministers have done so, economists should go back to revising their assumptions and wiping out income of others from individuals’ welfare functions. But not before we are informed that envy has been rooted out.

Second, what some people call envy is, as I believe the above examples have shown, not (the bad) envy but (the good) sense of justice. We are affected by income of others not solely because we are envious but because we think that injustice has been done. It is that we feel that somebody has been taken advantage of, or has been treated unfairly. In other words, behavior that in the eyes of some may be construed as envy may in reality be motivated by justice. One person’s envy is another person’s justice. Consider the recent example of land reform in Zimbabwe, and leave aside the arguments whether land reform will help productivity or be detrimental to it. Those against it will argue that the movement is motivated by pure envy; those in favor of it will view it as a way to redress the old wrongs. But under whatever name these motivations and feelings come in, whatever rubric we write them in (“desirable “ or “nondesirable” feelings), they can be shown, I think overwhelmingly, to exist, and that is all that matters to people who deal with human nature as it is. Let me close this section with two quotes that illustrate very well the difference in economists’ views regarding inequality. First, a fairly recent quote by Anne Krueger (2002), former deputy managing director of the International Monetary Fund: “Poor people are desperate to improve their material conditions in absolute terms rather than to march up the income distribution. Hence it seems far better to focus on impoverishment than on inequality”—a position echoed by Martin Feldstein and Robert Lucas. And then the one by Simon Kuznets (1965, 174), an old quote from 1954:

One could argue that the reduction of physical misery associated with low income . . . permit[s] an increase rather than a diminution of political tensions, [because] the political misery of the poor, the tension created by the observation of the much greater [income] growth of other communities . . . may have only increased.

Why Don’t People Like Studies of Inequality?

When I started working on inequality, I lived in a communist country. My dissertation was on the topic of inequality—what was then euphemistically called a “sensitive topic.” The rulers and their acolytes did not like it because it exposed their myth of universal equality under socialism. They wanted socialism to be perfect and equal, and it was shown to be imperfect and unequal. When I came to live in a capitalist society, rich people (and their supporters) similarly tended to object to the topic. They felt that any inequality that existed was right, since in their view every income was fine, just, and necessary, almost God-ordained—market having taken over the role of God. Empirical studies were superfluous. The studies could merely sow trouble and discord and possibly lead to questioning of the existing social order. Thus the elites in both systems tended to agree that studies of inequality are unnecessary: in one case because they revealed that there was inequality, in the other because they implicitly questioned whether its level was acceptable. But such great sensitivity toward empirical work on inequality shows that our implicit assumption, probably derived from centuries of religious upbringing and the Enlightenment, is that all people are basically the same and that it is every departure from equality that needs to be justified. 6/ Even within the confines of utilitarianism and identical and concave welfare functions, there are two reasons for censuring inequality, writes Sen (2000, 67): it is inefficient as a generator of utility (since some redistribution toward the poor would rise the overall level of welfare), and it is also iniquitous. In other words, the elites are not unreasonably concerned about studies of inequality every mention of inequality raises in people’s minds questions about its acceptability.

Why Is Caring About Poverty and Not About Inequality Implausible?

If inequality were not something we cared about, it is also very difficult to explain the concern with poverty. For if (1) all incomes are just, or if (2) other people’s incomes do not enter my welfare function, why should I care if there are many poor people? Or even if only (2) holds, why should the existence of poverty matter to me? A person might reply that one might still disapprove of studying inequality but find that the welfare of the poorest could be of concern since we hold that everyone should be endowed with some minimum standard of living. But if this is the case, is this not equivalent to saying that it is only the welfare of some (viz., the poor) that enters my utility function and nobody’s else (except mine or my family’s)? So a proponent of concern with poverty does not disagree that other people’s incomes enter his utility function; he just wants his homo economicus to limit his attention to a group of people (the poor) and to disregard others. The inconsistency of a position that cares about poverty and does not care about inequality is readily spotted if we think that it implies that in a person’s welfare function, there is a place only for his/her own income and for people with low incomes (the poor).

To say that one cares about poverty means that his welfare function is affected by everything that happens below some arbitrary income level where the poor dwell, while any income change above it (except if it affects his own income) leaves him indifferent. This scenario, of course, is not entirely impossible, but seems to me quite implausible. As soon as we extend our gaze toward other people, richer than us, and let their incomes influence our own welfare, too, we move from concern with poverty alone to concern with inequality as well.

To reinforce the argument in favor of this rather implausible concern with poverty only, a moralistic gloss is put over it whereby the concern for all incomes less than some poverty level is deemed “good” since it shows a person to be concerned with the plight of the poor, while his concern with all incomes greater than his is deemed to be morally reprehensible. In reality, however, people are much more likely to think about and be concerned with those who have more than they than with those who have less.

In other words, it is “envy” that is much more likely to enter our welfare function than “concern.” I would be willing to venture an even stronger statement: that a very different treatment of poverty and inequality favored by some economists, a sharp distinction drawn between the two, is a way of deflecting the possible raising of the issues of social desirability of a given distribution of income into a much more benign channel: ostensible concern with the very poor.

The concern with poverty is a price that the rich are willing to pay so that no one questions their incomes. In other words, the concern with poverty works like an anesthetic to the bad conscience of the many. For many of the rich, helping the poor is “social money laundering,” an activity engaged in by those who have either acquired wealth under dubious circumstances, or have inherited it, or might have made more money than seems socially acceptable. 7/

It could well be that less than savory ways of acquiring wealth are unavoidable and that this is the price we have to pay for progress and civilization. “A world without poverty” is a world that would underwrite all kinds of injustices. Unavoidable it may be—but it still should not stop us from recognizing it for what it is.

Notes

1. “In rejecting the criticism of inequality per se, and in asserting that higher incomes of the well-off are a good thing I am not referring to the functional arguments that some have offered in defense of inequality” (Feldstein 1999, 35).

2. It is an intriguing language point that one would have expected that the correct question in English regarding a person’s wealth would be “How much are Mr. X’s assets worth?” This, however, is abridged to “How much is Mr. X worth?” The intrinsic worth of the individual and his extrinsic wealth are conflated.

3. The same point is made by Sen (2000, 64), who uses the concept of the “reference group”: “the focus [of welfare measurement] is on the utilities of the individuals only in that group, without any direct note being taken of the utilities of others not in the group.” A similar conclusion, based on empirical happiness studies, is reached by Frank (2004, p. 72). Recent happiness studies have uniformly found that, at any given point in time, happiness increases with income (“money buys happiness”). Yet, over time and despite much higher income of all—the poor, the middle class, and the rich—happiness does not change. The implication is that t is relative, not absolute, income that matters for happiness. But if that’s the case, then clearly our position in income distribution affects our utility much more than absolute level of income.

4. A nice example of how peer groups matter is the following: The World Bank has many local offices in different parts of the world. Staff members who are recruited to work there are generally paid much more than their local peers. So they are very happy to work for the World Bank. But, after a few years, they realize that they are paid only a fraction of what an identical economist is paid if hired by the headquarters in Washington. Then locally recruited staff become very unhappy and demoralized, their peer group having changed.

5. In the ultimatum game, two people are supposed to divide a given amount of money. Person A makes a proposal. Person B accepts it or rejects it. If he rejects it, other participants receive nothing. Overwhelming experimental evidence shows that offers amounting to less than 30 percent of the pie are rejected. The experiments have been conducted in a number of countries and settings with stakes as high as three months’ earnings (quoted in Fong et al. 2003, 8).

6. The statement “basically the same” represents an oversimplification, for once we ask in what way people are not all exactly the same, we open the doors to unequal incomes. As Sen (1979) argues, observed inequality in income could be justified on utilitarian principles (maximization of total welfare), difference in initial conditions (e.g., if equality of total utility per person is our objective, then a handicapped person should get a higher income than a healthy one), or, more broadly, human diversity, which, to provide each with the same capability to do certain things, requires that incomes be differentiated. However, note that in all these cases, the “sameness” of people refers to (1) our acceptance that the same rules apply to all, and (2) that the objective of each rule is equalization of people’s conditions (however the latter are defined). The equalization of conditions can, and most likely will, entail differences in incomes. How does it differ from the Pareto principle? There is no attempt in the latter to equalize anything: the initial income or endowments are given. In other words, the rules do apply equally to all, but point (2) is not present.

7. It is historically true, of course, that some of the people who have acquired their fortunes under (to say the least) dubious circumstances have used them for philanthropic purposes. While it is certainly preferable that a part of such vast fortunes be used thus—even when we disregard the self-interested element of tax avoidance—it still raises an uncomfortable feeling of accepting an alleged moral superiority of people (“philanthropists”) who in their working lives were far from paragons of ethics. I could thus never feel anything but disdain for “capitalist lyricism” to which hapless strollers along Fifth Avenue in New York are exposed when they come to the Rockefeller Center. I can understand that with your own money you can build a monument to yourself in your own backyard, but not in the center of a world metropolis.

References

Feldstein Martin. 1998a. “Income Inequality and Poverty.” NBER working paper no. W6770, October.

———. 1998b. “Overview.” Introduction to the Federal Reserve Conference on Income Inequality: Issues and Policy Options, Symposium Proceedings.

———. 1999. “Reducing Poverty Not Inequality.” Public Interest, Fall.

Fong, Christina, Samuel Bowles, and Herbert Gintis. 2003. “Reciprocity, Self-Interest and the Welfare State.” Handbook on Economics of Giving, Reciprocity and Altruism, ed. Mercier-Ythier, Kolm, and Andre. Elsevier.

Frank, Robert H. 2004. “How Not to Buy Happiness” Daedalus, Spring, pp. 69–79.

Jencks, Christopher. 2002. “Does Inequality Matter?” Daedalus, Winter, pp. 49–65.

Lucas, Robert. 2003. “The industrial revolution: Past and Future.” In Federal Reserve Bank of Minneapolis Annual Report, 2003. Available at http://minneapolisfed.org/pubs/region/04–05/essay.cfm.

Krueger, Anne O. 2002. “Supporting Globalization.” Remarks at the 2002 Eisenhower National Security Conference on “National Security for the 21^st Century: Anticipating Challenges, Seizing Opportunities, Building Capabilities,” September 26. Available at www.imf.org/external/np/speeches/2002/092602a.htm

Kuznets, Simon. 1965. Economic Growth and Structure: Selected Essays. New Delhi: Oxford & IBH.

Sen, Amartya. 1979. “Equality of What?” Delivered as the Tanner Lecture on Human Values, Stanford University, May 22. Available at https://ophi.org.uk/sites/default/files/Sen-1979_Equality-of-What.pdf.

Explanation

This is the text of my article published in Challenge Magazine, vol. 50, issue 5, 2007. Recent discussion about inequality between David Lay Williams and Don Boudreaux reminded me of it and prompted me to bring it back to life (esp. given that the journal where it was originally published no longer exists). My piece was written around 2003 when I worked at the Carnegie Endowment for International Peace in Washington. It was prompted by what I heard Martin Feldstein say at a conference on poverty and then repeat in his writings. The article was rejected by several economics journals to which I sent it to be published in their Notes sections. I was especially disappointed to have been rejected by the Journal of Economic Inequality which even had a section that was a natural venue for such broader discussions of inequality. The article was first published in the Italian translation by La Questione Agraria, No. 4, 2004. Several years later when I mentioned it to Jeff Madrick who was then the editor of Challenge, he asked me to send it to this journal. It was thus ultimately published there in 2007.

The painting accompanying the article is by Diego Rivera, Frozen Assets (painted in 1931).

In an interesting article appropriately entitled “Contra el imperio” El Pais’s columnist Antonio Muñoz Molina gives an abridged review of the past half-a-century of international politics, and indeed of political disappointments of the left. The article is written under the shadow of the returning imperialism. It opens by quoting the author’s partner who says they have to go back to fighting imperialism as they did in their youth. It ends on a similar note: a call to fight the (implied) imperialism of Trump, Putin, and Xi Jinping. Most of the article is composed of a list, or one would even say a litany, of the errors of the anti-imperialist left of the author’s youth. Everyone who is 50+, and a fortiori older, remembers all these events perfectly well. I actually remember all of those cited in the article, some perhaps better than I remember the events that took place several months ago.

It is a critique of the left that, Molina writes, began by reading Lenin’s “Imperialism, the highest stage of capitalism” and Mao’s “Red book” and thereafter focused solely on criticizing American imperialism. It left aside, ignored, or supported, and in the best cases, was insufficiently critical of the “left-produced” calamities such as massive exodus of South Vietnamese population after North Vietnam and Vietcong won the war; it ignored Soviet invasion of Czechoslovakia or failed to take a clear anti-Khomeini stance during the Islamic Revolution. Even worse, leftists supported the oppressive regimes in any Third World country (Vargas Llosa is helpfully quoted there), be it Cuba, Zimbabwe or China.

These are the usual liberal critiques and hardly new. They have practically remained unchanged since 1917: just the number of the events where they could be applied has increased. However, not to show himself entirely blind to the events of the past thirty years, Molina somewhat half-heartedly –it seems-- extends the critique to the democratic left’s insufficient rejection of neoliberal oligarchies of Latin America, that at home live in heavily protected compounds but, after buying expensive villas in Miami and Madrid, enjoy the pleasures of more equal and richer societies. (Perhaps Marquess de Vargas Llosa could have been cited in that context too.) Not to be forgotten, the excesses of post-Communist privatization that benefitted mostly the Communist cadres are mentioned as well.

The reader nevertheless wonders, What is the point of the article, other than for the litany of mistakes, or “mistakes”? Is the left that was permanently wrong for some fifty years, now when the world has turned imperialistic again, in need to go back to the values of his youth? To Lenin’s “Imperialism…”? It is unclear if this is the message, and I honestly doubt that it is. But the only other message that could be imagined is that one should find refuge in what may be called intellectual narcissism where one is always politically right, but irrelevant, and naïve. Is this combination of vanity and naivete desirable?

With that thought, the critiques that Molina freely dispenses begin to lose their power. Take the case of Vietnam. Should the left not have supported Vietnamese Communists in their struggle against US imperialism because they did not care much about democracy? Or should the left not ignored Khomeini’s theocracy? The answer can always be “yes”, but the issue is that, in the real world as opposed to the world of intellectual dreams, the international context matters. And there is also the issue of the lesser evil. Certain struggles deserve to be supported either because the side that is supported is considered a lesser evil of the two, or because the struggles have to be seen in the global context. To give an example: the war between USSR and Germany 1941-45 can be, and should be, seen only in an international context. It makes no sense to declare one’s neutrality because Stalin’s regime was in some cases as repressive, and in many cases even more repressive, than Hitler’s. This is not the grounds on which we decide whether to support one or another. The decision has to be taken within the global context, namely what the victory of one or the other side would mean for the world.

It is equally meaningless to criticize people for not supporting policies or ideologies that are simply not on the table of possibilities. Our preferred option may not be available at all. It is not on the menu. If we are in Tehran in January 1979, the options on the menu are continuation of a comprador dictatorship by a vainglorious autocrat, theocratic government, Communist takeover, or extreme leftist Third World regime. Liberal democracy is not on the menu. Molina may wish that it should be; but it simply was not. One has a choice: to continue to live in a world of phantasy and to remain always consistent and “correct”—and thus irrelevant; or to choose what he or she believes to be, at a given moment in time, a lesser evil.

In fact, every example given by Molina has to be addressed in its context. Consider the Khmer Rouges. They came to power after overthrowing US-installed dictatorship of Lon Nol; but Lon Nol came to power because Americans decided to invade Cambodia to stop the flow of weapons that along “the Ho Shi Minh trail” were supplied to the North Vietnamese. So one’s decision to support North Vietnam or Cambodia or Sihanouk is not made in the knowledge of what it would lead to, but entirely on what are the conditions at the time one decides to support that option. The ascent of the Khmer Rouge does not invalidate the correctness of the decision to support Cambodia in its supply of arms to the Vietcong. A litany of mistakes becomes ahistorical.

It is also unhelpful. When we decide what is the best approach today, we can accuse Trump and Putin of respectively American and Russian imperialisms, and Xi Jinping of not respecting human rights. But in the world as it is, we have to decide based on the historical context and on the lesser-evil principle. The war in Ukraine needs to end. Russia will control the territory which no one in the world would recognize and this will go on for an indefinite future. Trump (and Biden too) have moved America to policies that establish more firmly its dominion over the Western hemisphere and focus on countering China globally. Speaking of the abduction of Maduro and threats to Greenland as if they represented a total novelty in the behavior of the United States is simply wrong. Before Maduro was abducted, so was Noriega—and with many more victims and 20,000 US troops attacking the country with no authorization by any international body. Before Greenland was threatened, so was Iraq, and again with many more victims too.

What seems new in “Contra el imperio” is really not new at all. We have dealt throughout the past century with various imperialisms. At times, some were supported because (in the view of the left) they were better for the world or because they domestically represented lesser evil among the options that were on the offer. The situation is not any different today. Empires were with us during the neoliberal era too. They were not invented yesterday.

* Molina’s example is moreover not technically entirely correct because the Khmer Rouge government was later, after it was overthrown by the Vietnamese, supported by the US, not by the “anti-imperialist” left.

As I mentioned on Twitter, I just finished reading the second volume of Aragon’s Histoire de l’URSS (published by Edition 10/18 in 1962). It is purely by accident that last week, when I was in my apartment in Belgrade which is stuffed with hundreds of books bought by my father and myself when I was young, that I stumbled upon Aragon’s three volume opus. I chose the second volume, running from 1923 to the end of the Second World War. The picture on the cover was appropriately that of Stalin.

The book is strangely part of a UNESCO project done in the early 1960s, imagined and directed by a UNESCO official, Carlos de Acavedo. UNESCO commissioned André Maurois, a French writer and biographer, to write a history of the United States, and Aragon, the history of the Soviet Union. Aragon who was a poet, not a historian, but a dedicated Communist party member spent two-and-a-half years collecting and readings reams of documents. Because of Aragon’s Communist links he got access to some Soviet archives that were, at that time, closed to all researchers. Despite a very sympathetic treatment that Aragon gives to the Soviet Union, the book was never published there. By the 1990s it probably became obsolete as much new evidence was unearthed.

However, it would be wrong to dismiss the book. It is ideologically very Khrushchevian, and gives us an insight into what the accepted (Khrushchev’s CPSU) version of Soviet history was: dismiss Trotsky because of innumerable political vacillations, downplay the importance of Zinoviev and Kamenev, accept that Bukharin was (in Lenin’s words), the “darling of the Party”, and attack Stalin for the cult of the personality and the Great Terror, but otherwise accept that he accomplished great things. Aragon elides the human costs of collectivization, laying the blame on kulaks’ intransigence on the one hand (and never questioning who the famed “kulaks” were), and abuses of the individual party members and secret police on the other. Things become more alive with the Great Terror of 1936-38 when Stalin is unambiguously portrayed as a tyrant. Foreign policy of the USSR is throughout, but especially after the mid-1930s, presented in an undiluted favorable light, and all the blame on the lack of cooperation between France, Great Britain and the USSR against Nazi Germany is placed on the former two countries. While an informed reader is sometimes startled by Aragon’s statements (e.g. the unmitigated enthusiasm of the working masses in the Baltic countries and Bessarabia when being annexed by the Soviet Union in 1940), there are nonetheless the facts that Aragon brings up and that are in today’s historiography forgotten or ignored. In that sense Aragon’s book is a useful antidote to today’s versions of history: it pushes the reader to look for the discussion of the events that he or she was not even aware happened.

There is an also an element that Aragon, perhaps because he was a poet, provides that other, more sober, historians do not. It is an almost lyrical juxtaposition between a huge working elan of thousands of young people unleashed by the Revolution and dark murders happening at the same time. This is brought with especial poignancy during the Great Terror. At the same time when top Bolshevik members are dragged by dark NKVD creatures, killed, and their families dispersed across the Soviet Union, ordinary workers achieved remarkable feats of productivity, new factories were built, children sang songs, and many believed they lived in most glorious times ever. Only a poet can see the light and darkness as coexisting so dramatically and daily: a person who gave the most uplifting Stalinist speech in the morning may be arrested in the evening and executed at dawn.

The description of this period brought to me back the greatest puzzle of all with which I grappled since my teenage years: What was the objective of the Great Terror? Why did Stalin want all these people killed? As Bukharin wrote to him in a note found in Stalin’s drawer after Stalin’s death, “Koba, why do you need my death?” Nobody knows.

I have read at least a dozen of books that, directly or indirectly, try to explain the Great Purge. I am convinced that the purge cannot be explained by looking at it narrowly, that is only at the time when it happened, without knowing or discussing the events from 1917 to 1936, or even going back to before the Revolution. Even then, it remains a puzzle. Stalin wanted to kill everybody who was close to Lenin and was an “Old Bolshevik” so that he himself may be the only correct interpreter of Leninist legacy and no opposition could ever coalesce along a generally recognizable political figure? Yes, it is possible—but how would it explain that about 500,000 people were executed too: half-a-million people were certainly not Lenin’s close collaborators nor likely leaders if the opposition. And how does it explain the decimation (or more) of the entire officer corps of the Red Army? Did the Red Army brass show any tendency to overthrow Stalin? No. Was Trotsky’s influence there, on account of his past, particularly strong. No.

Was it an attempt to shift the blame for the failures of industrialization unto “wreckers” and fantastically-invented counter-revolutionary parties? It is one of possible explanations, but it is not convincing: how to reconcile admittance of planning failures (implicit in the idea of diversions) with fulsome daily praises of what was accomplished? I know that one can square the circle by claiming that Stalin knew well of the problems, that he knew that others knew, and that the way to explain problems away was to argue they were due to systematic sabotage. But because of the inconsistency I mentioned, it is, in my opinion, a weak explanation. Paranoia is not a good explanation either because if Stalin became paranoid in the last years of his life he certainly was not irrational nor paranoid in the mid-1930s. Every writer is impressed by how carefully planned and well-executed were Stalin’s moves in intra-party struggles. Why would he go mad in 1936?

This great puzzle is highlighted by comparison with Hitler’s purges. They were fully rational and understandable. Hitler destroyed SA, his most loyal servants, because he chose Wehrmacht over the SA; a thing that every rational politician would do. When he eliminated Rommel, Canaris and others, he did so because they were convincingly involved in the Stauffenberg’s plot to kill him. So, he lashed back in retribution.

In Stalin’s case, the logic escapes us. His punishment of “enemies” did not follow any predictable pattern where it would increase in function of the threat they posed to his power. Zinoviev, Kamenev, Tomsky, Rykov, all in exile, were no threat to him. Bukharin clearly chose to serve him. They were all previously thrown out the Party, then reinstated, and subsequently expelled again.

Stalin was considered to be an excellent Machiavellian. But he was not. Machiavelli accepts murders by the Prince but only insofar as they are needed to preserve his power, and so long as the Prince is aware that he is thereby engaged in an immoral act. Stalin failed on both accounts: he had no qualms about using the most foul means while not acknowledging them for what they were, probably not even to himself (although this is something that we obviously can never know). Nor is it at all demonstrable that the unremitting orgy of violence and killings that enveloped the Soviet Union and international Communist movement (whose many leaders were also killed in the purges) during these three years was in any way necessary for Stalin to remain in power. We are this, as I mentioned in the title, left with one of the great puzzles of recent history: Why was all of this necessary?

PS1. Some time ago I out together this graph to illustrate the relative youth of Central Committee members at the time of Revolution. The median age was 34. The youngest member was 25. But I also illustrated that more than half of the members of the Central Committee in 1917 (in red) were killed by Stalin. Others died before he could kill them.

PS2. My preferred recent biography of Stalin is by Oleg Khlevniuk, Stalin: New Biography of a Dictator. It is remarkably level-headed book, not given to exaggeration one way or another, based on newly-available sources and very well written. I wrote a review (link here) of a very interesting book by Russian historian Vladimir Nevezhin that documents Stalin’s banquets organized between 1935 and 1949. These were enormous affairs and the most honorific position was, of course, to be invited to sit at Stalin’s table. Out of 21 people thus invited, eight were shot and two killed themselves (to avoid torture). Generally speaking, Russian, or more generally Soviet, historians, in my view, compared to the foreign have the advantage of more direct knowledge of what the period of Great Terror involved because almost no family was spared, or failed to know somebody who was involved. Roy and Zhores Medvedev, with their intimate knowledge of many protagonists, as shown in their monumental Let History Judge, fall in that category. Often, same families had, within its ranks, the executioners and the victims. That level of personal, immediate and difficult-to-transmit knowledge is in instances like this irreplaceable. We know it from Thucydides and Tacitus onwards.

While there is little doubt that the world currently operates only one economic system, capitalism (with different political variants), the question can be asked, Should the study of economics altogether drop all comparative system aspects and teach only what is being observed today? That leaves the possibility of teaching other economic systems in subsidiary parts of the main curriculum, like for example in economic history where one may teach economies of the ancient world, feudal economics, or communist economics. But do they have a place in the current mainstream?

There are no comparative systems and there is nothing to teach. People who see economics as mimicking natural sciences will argue that economics should not have a comparative systems part at all, or at least not so long as such alternative systems do not exist in real life. The comparative part could be limited, for example, to the study of Chinese capitalism, or West European capitalism that are, in some aspects, different from the American capitalism. This is close to the literature on varieties of capitalism that distinguishes itself by an emphasis on redistributive mechanisms but does not discuss distribution induced by production and by the difference in the ownership of assets (that is, is capital owned by a community or the state as opposed to being privately-owned). It ignores the latter aspect because production is in all cases organized along the same capitalist lines. To be clear on what I mean, I define (as in Capitalism, Alone) capitalism as a system where most of production is done using privately-owned means of production, labor is hired, and economic decision-making is decentralized. Such a definition of capitalism, following Marx and Max Weber, is rooted in the way production is organized which also determines distribution of market incomes. It is fully consistent with various forms of redistribution (including taxation of billionaires). And in all cases, we remain within the framework of varieties of capitalism literature and are concerned only with redistribution.

We should teach comparative systems even if they currently do not exist. A different point of view is taken by those who believe that economics is a social science, whose development is based on understanding of both past and present economic formations. Being conversant with how different economic systems were organized may be valuable in broadening our view of the world beyond the confines of what exists today. It also gives us greater ability to situate what we observe now and to think about possible changes in the future. Presentism in social sciences seems to reify the current system and make it seem “natural” and irreplaceable.

I write this as I was during several past semesters confronted by the comparative systems question when teaching economics of inequality. In studying inequality within countries (as opposed to studying global inequality), I review the great authors of the past (as I have done in Visions of Inequality) and then gradually move towards the present and Pareto, Kuznets, Piketty etc. I wind up the class with the discussion of inequality in the modern United States and China and some recent methodological innovations. This last part stays clearly within the limits of comparative capitalism.

But then, in an experimental fashion, I taught for one class (two hours) income distribution and inequality under socialism. (For those interested in what it involves I would suggest reading the first part of Chapter VII of my Visions of inequality). The objective of that two-hour class was not to show the values of the Gini coefficient in socialist countries, but to explain an entirely different logic of income determination. For example, that unskilled labor was paid high compared to skilled labor, that that decision was politically and ideologically motivated; that taxation had almost no redistributive role because it was proportional to incomes and not progressive; that social transfers were a significant source of income and demographically determined (one got them because of his or her age, or because they had children) and unrelated to economics per se (unlike unemployment benefits in capitalism). And finally that there was almost no private capital income except in an implicit way from self-employment. Even the latter was generally limited to agriculture (small farmer-owned plots).

As these examples show, the logic of distribution in socialism was entirely different from the logic of distribution in capitalism. Additionally, if one introduces the experience of the Cultural Revolution in China (which I discussed in this post), one can easily appreciate the historicity of our current ways of dealing with production and distribution, and thus determining incomes of households. Students can see that socialism is not just capitalism with lower inequality. It is an entirely distinct economic system where the distribution is differently organized. This, I believe, broadens the mind—even when one disagrees with such a system and believes that it leads to inefficiencies.

But the key question is: Is there sufficient interest for this kind of study? I am not entirely sure. Some students, I think, liked it because they realized that what they are used to discuss is just one segment of what types of distributional arrangements and outcomes existed in history. We are not condemned to our today’s slice of history forever. But other students might have thought that part redundant or at least not useful in any concrete way. They could (rightly) say, why do we not study the principles of income distribution under feudalism or slave-owning economies? (By the way, I believe that we should dedicate a couple of hours to that too.)

I am thus torn between two different approaches. The “cost” is not huge: two hours of teaching: should I do it or not? I decide on a whim. While I believe that in some deep sense the second approach is better, I am aware that the demand for it may be small. Do we teach something only when the demand for it is already there, or do we teach –in order to broaden students’ horizons and thus create demand—even things for which interest is not there to start with but that we believe could be useful in ways that an ordinary student cannot fully grasp before taking the class?

PS. My recent syllabus is here.

Regardless of how the Ukraine-Russia war ends, there would be, I believe, inevitably serious geopolitical consequences for Russia. And they would be due to the way that Mr. Putin had decided to initiate and to prosecute this war.

The first consequence that many people focus on is the long-term break in political and economic relations between Europe and Russia. This is indeed a big loss for both sides because through their different economic structures and resource endowments they are natural economic partners. Both parts of the Eurasian continent were gaining from economic collaboration. Theirs is not just a standard case of Ricardian comparative advantage but even more compelling case of Smithian absolute advantage because in the production of some primary goods Russia was absolutely more efficient than the European Union while on the other hand, in the industrial areas and in some forms of advanced technology (avionics, fast trains, pharmaceuticals), Europe possessed absolute advantage. A commerce based on gas and oil on one hand and industrial products on the other hand, would be, and was, mutually beneficial. That commerce will not be revived for any foreseeable future and surely not in the magnitudes which existed before the war.

The cultural proximity between Russia and Europe, which was in existence for at least three hundred years, will be much weaker. That would have a cost principally for Russia because it would exclude it from European intellectual developments. Russia is indeed a big country and it does have its own intellectual tradition but one cannot nowadays intellectually grow just by looking at what is happening in his own backyard. Russia has been, since at least Peter the Great, ideologically influenced by European intellectual fashions and mores, was always keen to learn, and then to apply it in a new and unique manner. This has produced writers, composers, philosophers, painters and scientists of worldwide caliber. The loss would be Europe’s too. Europe without Chekhov, Dostoyevsky, Prokofiev and Mendeleev is not exactly the same Europe. And similarly other, new Dostoyevskys etc. would be less likely become known and to influence Europe because of the break-up in political, academic, cultural and sports (not the least important) relations. Here too both sides are losers.

However, I would tend not to overestimate the economic and political loss (to the difference of the intellectual) because while it is true that Russia aimed under Gorbachev and Yeltsin to become an integral part of Europe or to participate in what Gorbachev called a “single European home”, supposed to stretch from the Atlantic to the Urals and further, the idea always appealed more to Russians than to Europeans. Under Gorbachev, Europeans pretended to be excited with it, mostly to extract more concessions from the Soviet Union and please Gorbachev (as they are now trying to flatter Trump)—but just in order to reject the idea later.

The economic loss is also less than it seems because of the relative economic decline of Europe. Russia’s forced turn towards the East and the South may not be as detrimental for her economy as it would be if Asia were not becoming the center of global economic activity. Russia can have (and is already having) close economic collaboration not only with China but also with India, Vietnam, Thailand, Malaysia, Indonesia. In fact, within the China-India-Russia triangle, Russia has an advantage of having better relations with the other two partners than what they have with each other. This places Russia in a politically advantageous position. The forced reorientation towards the South and the East will not be therefore as onerous, as some critics of Putin’s policies believe.

The second loss is quite obvious and it has to do with the expansion of NATO to the borders of Russia. Before the war on Ukraine, Russia did not have on its borders any NATO country save for the countries that were surrounding the Kaliningrad exclave (the not-contiguous part of the Russian Federation) and a very small contact between Norway and Russia in the Arctic.* Moreover, Norway officially undertook never to station armed forces close to that border. That changed rather dramatically with the entry of Finland and Sweden in NATO and also by a much more Russophobic and belligerent role taken by the rest of Europe and Switzerland. The latter, in defiance to its traditional neutral posture (maintained scrupulously even in the Nazi-ruled Europe), has decided to seize official and private Russian assets. These frozen assets, including also assets seized elsewhere, amount to $600 billion (equal to almost a year of Pentagon’s expenses), and they are yet another big loss that will never be compensated. That money would be used as formal reparations for Ukraine, or most likely to pay Western companies investing in Ukraine or Western consultants advising Ukrainian government. One can imagine that large chunks of that money, nominally called “aid to Ukraine”, will end up in the pockets of London consulting firms.

If Russia had an independent prosecutor such a gratuitous waste of national treasure could be used as a very strong indictment of Putin for dereliction of duty, namely to have started the war precipitously without seriously considering the situation of Russian assets held abroad and to have through such negligence imparted serious losses to the welfare of the country. One does not begin a war while keeping all of one’s assets in enemy’s pockets. A more prudent political leader would not have allowed this to happen.

The third loss comes from the long-term effect of the war on the Ukrainian-Russian relations. It is quite clear that we are witnessing the war of Ukrainian independence and statehood and as such it would be celebrated as long as Ukraine exists; the same as happens with every country in similar situation. It will be shown in public songs, monuments, discussed extensively in laudatory styles in textbooks, books, or memoirs. The monuments would be erected on many squares, in villages, towns, and cities. Whoever has seen the number of monuments that exist in the Soviet Union to commemorate the Great Patriotic War should not be surprised that similar monuments may soon decorate many places in Ukraine. Streets would be named after the people who fell in this war; school, creches and national holidays will be celebrating the soldiers who died for Ukraine. The war will become (or already is) the definitional moment of Ukrainian statehood. Moreover, the war has exposed civilians for about two years to all kinds of mistreatment and abuse with aerial bombardments that make their ordinary life impossible. This will become a family lore where for years family members would tell each other how they escaped the bombing or how they spent two weeks without water or heat in the middle of a winter. (The same type of family lore that Putin is keen to tell others about his parents and brother during the siege of Leningrad.) These family stories would be propagated over generations and they would resonate with the hatred towards the invader. I often think how only three months of similar infrastructure-destroying NATO bombing of Serbia remains so strongly imprinted on the Serbian psyche. Bombing of Ukraine which in the duration is probably by now ten times as long cannot not have the proportionally greater effects on the Ukrainian attitude towards Russia. By this long-term hatred Mr. Putin will have achieved exactly what he originally claimed he wanted to prevent, namely that Ukraine should not become an anti-Russia. But in effect the results of this war unambiguously show that Ukraine, in whatever form it exists, will be an anti-Russia.

Some people believe that this hatred may not be permanent and might subside with passage of time. That is quite possible because the same intensity of hatred cannot be carried over many generations that have different experience. But as we see in today’s world (China vs Japan; Algeria vs France) such hatreds might even become more expansive with time. So we have to be cautious. An example of reduced enmity is the Franco-German reconciliation. Indeed the World War I was in terms of the victims much bloodier for both France and Germany than is the current war for Ukraine and Russia. But what one should not forget is that there were very strong intellectual connections between the French and German elites. French students and top intellectuals studied and admired German philosophy, modern art, literature; Germans likewise always had admiration for French intellectual and political genius. This is not exactly the case between Ukrainian and Russian elites. They latter does not particularly care about Ukrainian intellectual contributions and tends to despise Ukrainian language or works of art created in that language. On the other hand, Ukrainians who were before the war mostly Russophone would tend systematically to reduce the influence of Russian language (by among other things the burning of Russian-language books) and to replace it, as the current Zelensky administrations is in the process of trying, with English in the administrative functions. And the intellectual elite will gladly switch towards the West that is also is more intellectually challenging and interesting than Russia.

Another example of reconciliation one might think of is that between Vietnam and the United States. The Vietnam war was in innumerable ways much more brutal than the current conflict between Ukraine and Russia. Simply remembering the napalm bombing or intentional civilian targeting (to kill) of cities like Hanoi and Haiphong is enough. The reconciliation in this case comes from the fact that Vietnam has had a very high population growth so that in the past 50 years since the war ended there were three new generations. With fast population growth there are large differences in experience between different age groups and the original hatred associated with the older group may gradually dissipate. Additionally, recent Vietnam-US relationship is cooperative because they share the aim of checking the greater influence of China. This could happen theoretically in the future in the case of Russia and Ukraine if there was a power that would threaten both. The two would then be forced, despite their mutual distrust and complicated history, to collaborate, at least implicitly if not openly. While this is not impossible one does not see any such power on the horizon and consequently reconciliation seems less likely than it was in the case of Vietnam and the United States.

In conclusion, there were three big geopolitical losses inflicted by Mr. Putin on Russia. Economic, political and ideological loss of relations with Europe; reduced national security due to the presence of NATO on Russia’s borders and willful disregard of national treasure; and finally, the creation of a Ukraine that, by its very construction, will remain an anti-Russia for a very long time. While the war was justified by arguing that it would improve Russia’s geopolitical situation it achieved the opposite.

• I made a mistake there. After Baltic countries joined NATO in 2004, Estonia and Lithuania (and thus NATO) also bordered Russia.

It is a fundamental question. Had we (as the world) gone somewhere very wrong and ended up in today’s very bad situation? To many young people it might seem a strange question to ask because the world of the 1990s is a faraway world of which by experience they know almost nothing. But they do know the terms of the Global Financial Crisis, liberal imperialism, and Washington Consensus.

While one cannot say that today’s word is “better”, I think that one can rather confidently affirm that the world of the 1990s was a world of unmatched hypocrisy and ideas that almost all turned out to be wrong. I will review them in a moment. To start: what did Hannah Arend say about hypocrisy? “What makes it so plausible to assume that hypocrisy is the vice of vices is that integrity can indeed exist under the cover of all other vices except this one. Only crime and criminal confront us with the perplexity of radical evil; but only the hypocrite is really rotten to the core.” (On Revolution)

Arendt might have exaggerated because hypocrisy is a necessary condition for any society to exist: too little of it makes society violent and rough, but too much –and there she was right—makes it rotten.

What were the nostrums of the 1990s?

Financilization is good. It was thought that both domestically and internationally greater financialization would make individuals and countries grow faster. It was a substitute for economic equality: everybody who wanted to study or had a good idea could easily borrow and become rich. Individuals could do it within a country, and poor countries could do it within the world. As John Rawls wrote in his very nineties The Law of Peoples, poor countries could easily borrow from the “Society of Nations” and solve their problems. A deep financial sector was a cure-all. Did it really cure all? Not really. Free movement of capital between nations brought about the Asian financial crisis which led to large income declines in South Korea, Malaysia, Philippines, and Indonesia, and later spread to Russia and Latin America. Then, in 2007-08, unchecked financial liberalization in the West, combined with high inequality, caused the Global Financial Crisis with a recession. Those responsible for the recession were bailed out by the government; those who lost were left out to dry. So the truth of the 1990s turned out to be wrong.

Multiethnic societies are good. While this was affirmed in public, the elites and the media supported the break-up of multi-ethnic formerly communist federations in Europe and Africa (Ethiopia). How was it that multiethnicity in one part of the world was good while in the other part of the world it was bad? The answer is that the theory worked only if you thought of it in terms of naked political realism: let’s break those whom we consider enemies so that we can become stronger. It was a sugar-coated lie. And as multiethnicity became a problem in the West, increasingly strong obstacles to the free movement of labor were set up. Most notably so in Europe that surrounded herself with electric fences (that were ostentatiously destroyed in 1989 on the border between Hungary and Austria) and fast boats in the Mediterranean to protect herself against what its elites ideologically sad they supported: multiethnicity. The truth of the 1990s turned out to be wrong.

Poor countries can easily become rich and they should do so. The claim was that rich countries and the elites there were keen to help poor counties grow out of their poverty. Poor countries were poor because they were corrupt and unable to use technological knowledge that existed in the world. The transfer of technology, and the application of the principle of comparative advantage were desirable; only the corruption of the less-developed countries prevented both. But when China used that worldwide technological knowledge and got ahead of the rest of the world, suddenly the story changed: now the poor were stealing the technology that rightly belonged to the rich. The truth of the 1990s turned out to be wrong, or more exactly, what was claimed was not sincerely believed.

Government is the problem. Everything could be done better by the private sector. Except when the combination of the private sector and the state reshuffled the cards in the world and made China grow at two-digit rates, the mantra changed: the state should implement industrial policies, erect security barriers and defend itself.

Thus almost all that was believed in the 1990 was either proven wrong, or was self-serving. Hypocrisy’s uncontested rule relegated any daring or alternative opinions to the lunatic fringe. Freedom of expression in the ideologically dominant part of the world was not controlled by the thought police but was controlled by the mandarins of knowledge and requirements for success. They asphyxiated the thought and created a wooden language that distorted reality. Everybody knew what to think (or at least what to say) to get ahead. It was ideologically a barren period where clichés were regarded as ultimate accomplishments of human thought. Today’s world may not be better but is certainly intellectually freer.

This new splendid and beautifully-written book by Rana Dasgupta has as its title After Nations: The Making and Unmaking of a World Order. The idea, briefly sketched in the introduction and in the last chapter, is to look to the shared future of humankind which would not be constrained by the system of nation-states. Dasgupta finds the current system incapable of dealing with the problems of human movement (migration), ecological challenges, and increasing wealth inequality. He believes that the technological power and reach of a dozen of mega companies will undermine the system from within and even put the survival of the species at risk. The solution lies in conviviality, mutual cooperation, respect for the nature, and the new relationship between individual, the state, God (religion) and the planet. These themes that belong to political philosophy are, as I mentioned, developed only in the first, and the last and rather short, parts of the book. I have no particular insight on these relationships and my review will follow a different course. I am aware that it might skip some of the ideas that Dansgupta and perhaps other commentators might find most compelling or important, but I think that the book is rich enough that it can sustain several possible ways to look at its main themes.

For me, most of the book is, in reality, about the ways the nation-states were created, how they became empires and what ideas they used to justify (or to explain to themselves) their dominion.

Dasgupta looks at four such ideas: God and Europe or medieval France, property or England, law or the United States, and nature or China. To each is dedicated a chapter. The ones on property and law perhaps resonate the most with us today; perhaps they do so because the Anglo-American thinking has come to define the West and to be influential worldwide.

The chapter on England places the rise of English capitalism within a global economy of plunder. This is not a new perspective. In effect, as Dasgupta writes in Preface, the facts and even ideas in the book are not new: it is the narrative, the historical story-telling, the threading of the facts, that is new. The English, and later British, society is seen as having developed on two historical tracks: the first historical track was oligarchic expansion to the rest of the world where the East India Company, whose income at one point equalled 15 percent of British GDP, and similar company running Africa, were used to enormously enrich a small minority. That minority controlled the state and were shareholders in the companies (one-quarter of Members of Partliament were shareholders). They despoiled not only the rest of the world and most notably India through deindustrialization of its textile production and China through Opium Wars, but despoiled too, or were equally indifferent to the fate of the domestic population. To quote Adam Smith, on the former: “It is a very singular government [merchant companies] in which every member of the administration wishes to get out of the country, and consequently to have done with the government as soon as he can, and to whose interest, the day after he has left it and carried his whole fortune with him, it is perfectly indifferent though the whole country was swallowed up by an earthquake.” Regarding the latter, British population lost access to communal lands, were forced to sell their labor and were stamped (in many cases laterally on the body) by the epithets of idleness, laziness and stupidity when they refused to play according to the system and to be herded, free of almost any right, into factories or poor houses. They were politically ignored and economically oppressed.

Reading Dasgupta’s, and similar books that abound today, one cannot but be totally struck how the contrary narratives of the British rise and the Industrial Revolution, some “crowned” by the Nobel Prizes, succeed in almost completely erasing the aspects of domestic and foreign terrorism, enslavement, beatings, outright piracy, compression into Navy services, enclosures, fabulous enrichment of political elites, military suppression of revolts, famines and executions under the beautifully sounding title of “Glorious Revolution”. “The Glorious Revolution —Sangupta writes--inaugurated the modern state in its raw form: an undemocratic commercial machine that unleashed terror at home and abroad” (p. 113). Eliding this truth is like describing Soviet industrialization and Great Terror by studying Moscow parades. But nobody has received Nobel Prize for that. Well, perhaps the Stalin prize…

The second track appeared only in the latter part of the nineteenth century when material prosperity of the people began to be seen as necessary in order to wage victorious wars. Political rights ensued. They were not, Dasgupta argues, obtained though revolution and even less through threat to the elite; rather, they were voluntarily conceded by the elite to insure its continued rule: in order to have a well-fed and reasonably educated population capable of winning mass warfare. This particular explanation of democratization will be, I think, important when we consider today’s situation that, according to Dasgupta, shows many similarities to the “first track” evolution of the British empire. The rich in the United States and the West are able to thrive, basing themselves on the global economy, regardless of what happens in their hinterlands, that is to the rest of the population in their own countries.

The American imperial system was based, Dasgupta writes, on law, or perhaps more accurately on “law-ification” (or legitimation) of whatever profitable practice is. The American chapter opens with the European encounter of (native) American populations when practices of enslavement, conquest of land, and mass coercion had to be placed in a seemingly legal framework. It begins, as is well known, with Spanish or rather Catholic attempts to draw some rules for the relations between Christians and the “savages”. Dasgupta’s story telling is very persuasive and the reader is left with contradictory feelings. On purely instrumental grounds, introducing some, however at first sight unjust, rules to govern the relations between the oppressor and the oppressed is preferable to not having any rule at all. And indeed many times in history the oppressors dispensed with any reflection on, or justification of, their behavior: they thought they did not need it. On the other hand, the hypocrisy of these ostensible “rules”, invented rough-and-ready not just to justify the already committed exactions, but to placate conscience of the oppressors and perhaps to make future transgressions of elementary human norms even more likely, is a hypocrisy elevated to such a high degree that one instinctively recoils from it.

Dasgupta puts John Locke’s famous, and otherwise commonsensical, treatment of property as emerging from the mixing of human labor with nature in that context: having been motivated by the need to explain Europeans’ usurpation of land from the native populations (including in Africa). The latter are considered as non-existent, that is, they are not considered as ever having interacted productively with nature but just living off of it. And in light of that of not having the right to the land where they live. It is a snapshot picture of the world where the “undesirable” inhabitants are simply brushed off, the nature is pristine, and the first person to have had an active interaction with it is indeed… the colonist.

The basis of the American empire rests on law or “law” (such as just described). Internationally, it enters the scene with the Paris Peace Conference and the emergence of the United States as a global power. The creation of the League of Nations consecrates the idea of the world being as it were “geometrically” and legally divided into the pieces of land controlled by different governments that in turn represent nations. The birth of the United Nations after the Second World War, the Cold War, modernization theories and the like are all explained, or discussed within, this new-found framework of nation-states.

This world is now, according to Dasgupta, coming to an end because of the inability to deal with the challenges that I mentioned in the beginning. But before I discuss that part, it is worth mentioning Dasgupta’s explanation of Chinese imperial tradition and its present reach. Differently from the other three, it is centered on the control of nature. China is an immense continental empire bisected by rivers on whose control the survival of the population, and thus of the Empire, depends. China, Dasgupta’s writes, exports today the same need to control, use and exploit nature—both minerals and crops—to the rest of the world. It is a new look at the Belt and Road Initiative: BRI is not only the inheritor of the historical trade between the Middle Empire and Europe, but of Chinese practice since time immemorial of having to deal with vagaries of nature in order to survive. China’s current mineral exploitation of Africa is simply a continuation of imperial policies now applied to the rest of the world and not only to the imperial core. The British and Chinese empires thus become similar: both depend on external projection of their domestic practices: commercial and oligarchic society of England to the pillage of colonies and enslavement of colonized peoples, and hydraulic society of China to the pillage of natural resources elsewhere.

To return to the question I asked before: is overcoming of the first-track society in today’s West possible? One has to remember that Dasgupta thinks that such a society (of indifference to the poor) was overcome in Britain only when the rulers needed heathy youth to fight wars. Reasoning by analogy, what world force today’s US elite to concede more power to “commoners”? It is difficult to see what forces may play that role, especially as technological advance, as Dasgupta insists, is ever less dependent on people. If wars can be waged not only by drones (as we have discovered in the Russia-Ukraine war) but by web circuits, satellites and robot-warriors why would the elite need happy and healthy populace?

Rather than seeing the transcendence of the system of nation-states by some vague communality, I tend to think that it is the symbiotic relationship between the state and the techno-feudal (as it is called) elite that appears to be the most likely outcome on the horizon. The state will not perish. Nor would the nation-state system. The state is an extraordinary flexible and powerful tool because it is the only (at least so self-proclaimed and thus believed by many) legal source of coercion. Rather than face the nation-state upfront and try to overthrow it, would it not make more sense for the new technocratic elite to take it over, insinuate themselves in it, and combine in their own personae both the appeal to the legal right of the state to force others and the ability to do so that their technological mastery allows them to exert?