Episode Transcript
[00:00:00] Speaker A: Foreign.
Welcome back to Going Underground. Broadcasting all around the world from the UAE as Trump pours US money to Netanyahu to continue his genocide in Gaza. And oil slicks wash up on the coasts of a West Asia where vessels are in flames. This as NATO nations of Western Europe direct lethal attacks on on children in Russia and the Pentagon urgently revises its tactical nuclear weapon use doctrine. The UN's estimate of 32 million additional people pushed into poverty because of Trump's war is beginning to look as ridiculous as the UN itself. The USA is desperately trying to prevent a feedback loop which will destroy the livelihoods of billions on earth. But US Selling of euros to buy yen to prevent Japan from selling US bonds is looking like a last gasp from the American empire. Its wars have been the tip of the iceberg ahead of the BRICS plus summit in New Delhi in a month's time. Can global south powerhouses such as China, Russia and India pave the way for a new economic global order to reduce poverty and inequality in a world that lies beyond neoliberal globalization? Joining me again from New York City is a former lead economist of nearly two decades at the World Bank Research Department, author of the Great Global Transformation, he's now a research professor at the City University of New York's Graduate center and a visiting professor at the London School of Economics, Professor Branko Milanovic. Professor, thanks so much for coming back on the show. What's happened since last time you were on Going Underground? I don't know where to start, really. I mean, congratulations on your book the Great Transformation.
Great Global Transformation. Let's just begin actually with the currency stuff because that's what's happening now. And it's not being reported on widely. It's not being reported on as much as just like the boats on fire here in the Gulf.
Tell me, why is Scott Besant and Trump urgently using euros to buy yen?
[00:02:05] Speaker B: You know, well, first of all, let me say that I'm very, very actually delighted to be back on the show.
The situation compared to the time when I was on the show has really is, I mean, hugely worse than then. We actually did not have all these words that we have now that you listed, you know, very briefly, but it's actually obviously a disaster now on this stuff on the, on the relationship between the yen, the euro and the dollar. It has been generally underreported. I'm not sure exactly about the logic of that. I think it's actually must be something doing with the obviously US attitude towards the euro, but why they're actually I
[00:02:51] Speaker A: mean, it's actually to do with the disposal of US treasuries, because clearly there's. That's been the trend since 2022, perhaps, rather than that, then I heard you talking about this the other day. You know, people are talking about World War three more and more, and it might be sensible to look at the causes of, say, World War I, because at school I was taught that in Sarajevo, an Archduke was shot. And then suddenly all these, the most advanced, we would think today nations in the world just started slaughtering each other in trenches. Does that give us echoes of that, give us any help in understanding how close we are to World War III this week, now that Donald Trump's or Hegsett's War Department has announced a new nuclear tactical weapons use doctrine?
[00:03:42] Speaker B: You know, I think there are, of course, similarities. You know, in both cases. I mean, you can say that, of course, in the World War I and what is similar today, you had coalitions. You had coalitions that were getting ready to sort of pounce on each other. You know, one should not forget that the French army was called l' army de la Revanche. This was the army de la Revanche for the loss that they. That. I mean, for the war that they lost in 1870 to Prussia and then Germany, which became Germany. So people were. I'm not saying they were spoiling for the war, but they were, of course, ready to go to war. And nowadays we have the same situation. We are actually having more and more clear coalitions. On one hand it is China, Russia and Iran. On the other hand, it's Europe and the United States. And people are unaware of what the war would bring. And they were similarly very oblivious and they were very optimistic. You know, that famous story, we back home for Christmas, they just did not figure which Christmas it would be. They thought it would be Christmas 1914, but it turned out it was Christmas 1918 when they came back after 20 or 30 million dead. So I think we should not take this lightly at all. And I think there's. People have either no knowledge of history or actually they don't have family or the grandparents or the great grandparents who have been exposed to war, and they believe the war is some kind of game.
[00:05:09] Speaker A: And it's your contention that it is a side effect of where capitalism was at in 1914 as regards globalization and trade that catalyzed the mass slaughter of people. I mean, I should say we're living through a genocide now, of course, in this region.
[00:05:26] Speaker B: Right.
But, you know, I actually absolutely think so. And you know, one of the weird things, I had a paper with 3/4 on that, which we had really hard time publishing.
Eventually it was published. But the point was very simple. You have a story during neoliberal globalization, you had a permanent story which actually was defended practically by everybody, that globalization and interdependency and exchange creates a situation where war becomes quasi impossible because the losses on both sides would be so big that people don't want to engage in war because they actually make much more money through trade, sales, collaboration. That was of course theory also, which existed before World War I.
People were quite aware of that. There was a Russian author, Block, Ivan Block, and then Norman Hengel, who actually then received even Nobel Prize for Literature afterwards. But they wrote books about the quote unquote, impossibility of a war.
Not that it was impossible physically, but it would actually be so disastrous that nobody would engage. So they were aware of that. And then you ask the question, how is it at the peak of globalization where cooperation, economic cooperation should be. It's actually peak at the most. Why do we end up with a war that end? And really economists don't have an explanation, because in economic world this should not have happened.
So we really have somewhat similar. Now we are at the end of a very long period of globalization. Actually maximum trade to GDP ratio was I think reached just before COVID And we have a political situation which is worse now than ever after World War II. So these two things really in sort of economic world do not belong together, but in the real world they do.
[00:07:22] Speaker A: They actually correlate, don't they? The more capitalism and more globalization, the more global war you get.
[00:07:29] Speaker B: That was the argument which later was proven correct by John Hobson and Rosa Luxembourg and Lenin. Their argument was what you have in globalization, you have struggles between different large companies for territory, for markets, for cheap labor, for access to monopoly profits. And these companies is exactly what's happening now, are using the state and the state power, which eventually means they're using the military in order to reinforce their position and pull out or actually kick out the competitors. And that's exactly what we have now. We have really a symbiosis between large companies. Like if you take Elon Musk and the US government and actually the military, it was quite extraordinary that one single person can actually more or less determine the outcome of a war between Russia and Ukraine by the use of starlink. So we do have a huge involvement of the private sector that is looking for profit and is using of course, the state machinery, which means it's using soldiers, missiles to achieve this purpose.
Yeah.
[00:08:38] Speaker A: And of course, actual nation state funds from NATO members. I mean, you were at the World bank for nearly 20 years, you know, and as a lead economist and they themselves have said it's the largest ever World bank program in history.
It's called peace. Public expenditure for administrative capacity endurance. These are $90 billion from the world bank being given to Zelenskyy.
What do you make of that? And have you ever seen more evidence, more obvious evidence that the World bank we used to work is.
As I said, it's called peace. That's what the acronym is. It's actually about imperial hegemonic dominance.
[00:09:20] Speaker B: Well, people invent acronyms, you know, whatever they, they want. You know, the situation is now such. And of course the World bank also has a program, I think believe that actually a program that would probably run after hopefully the war between Iran and United States and Israel is over. But you know, these problems cannot be patched up by money. These problems are fundamental.
[00:09:44] Speaker A: It's not patched up. It's obviously Ukraine will only continue the war as long as that money is going to go in there. Right. It's a, it's a belligerent World bank money. If, if. Well, Russia or China suddenly gave $90 billion to Iran.
I think we know what was going on as regards the war with the United States.
[00:10:05] Speaker B: Right, right, I know that. But what I'm saying is that really the issues, I believe actually the issues should be solved, but should be solved through a generalized conference. You know, people are very negative on these large conclaves that, that have happened in the past. But the fact is that the Vienna, Versailles and Yalta have actually sort of sold. Yeah.
[00:10:30] Speaker A: But the United.
[00:10:31] Speaker B: Yeah.
[00:10:32] Speaker A: European Union has, has ruled that out. As you know, European Union says absolutely no negotiations and they've got to this stage. So that's not going to happen. No. But I'm interested on, because of your experience at the World bank, how the World bank has contributed to all the mass killing since 1945. Because we, I mean, you know, you know, famously John Perkins, who wrote the great book on the International Monetary Fund, the sidekick, the bad cop of the good cop.
[00:11:00] Speaker B: Well, it's a complicated thing actually. I was in a research department. This research department does not really determine very much the World bank policy.
Now the World bank policy is at sensitive issues like for example, Ukraine is obviously politically sensitive. Argentina was politically sensitive and continues to be.
[00:11:19] Speaker A: It's not politically sensitive. The World Bank. I think we all know the World bank destroyed the economies of I mean, while you were there, Bolivia, Mexico, Poland, Argentina, Zambia, Russia, Thailand, Indonesia, South. They're all destroyed by people up the corridor while you were working on your research department.
[00:11:39] Speaker B: I'm not sure that they're destroyed. Actually. It is a more complicated story. I think that I've got the statistics,
[00:11:45] Speaker A: I've got the statistic. They privatized all those places and destroyed livelihoods and what it was to be a Mexican or a Polish person.
[00:11:54] Speaker B: Well, but Poland was to, you know, I worked, actually I did work on Poland. Poland in, in 87 to 1990 was in a very difficult situation. Poland was in default to the, to the foreign creditors, not only private but also public. You know, you remember the Paris Club and.
[00:12:14] Speaker A: But the solution was obvious, wasn't it? So solution was very obvious. You just nationalize everything and get state sovereignty over it if you advise them. It led to an 18.3% reduction in household. Poland actually did explore 26% per capita decrease and 11% GDP. I mean, it was a disaster.
[00:12:31] Speaker B: Wait, but wait, but Poland was actually a success case. Actually. Polish GDP now on per capita GDP is actually equal to Italian GDP and actually historical terms, actually Poland now is probably going through the best period ever because.
[00:12:49] Speaker A: Because it went against the policies of the World bank, arguably. But. Professor Brago Billowicz, I'll stop you there. More from the former World bank lead economist after this break.
Welcome back to Going Underground. I'm still here with former World bank lead economist Professor Branko Milanovic. Professor, we were talking about Poland things.
I don't want to get too specific about the Polish issue. It was rather about the whole issue of the end of the World bank and the IMF as international institutions that have destroyed the lives of so many people. I know you'll say some of them have benefited because we live in the age of a new development bank from brics.
Yeah, but I'm trying to look at how the new development bank can act not as a CIA covert operation, but destroy economies in Africa. But it's something that can truly create sovereignty and identity for nation states.
[00:13:51] Speaker B: I don't know, you know, but you know, these banks have been, they've been in existence on paper for a while, but they have not been very active. You know, the issue is that if you. Look, let me just go back historically and there is a nice book by Mark Mazolver which is called Running the World.
The fact is that all international organizations, until recently, starting with the postal union, have been created essentially by Western powers and they know how to create organizations.
[00:14:24] Speaker A: That's not true.
What do you mean? Western powers have created all international organizations? I mean.
[00:14:29] Speaker B: Well, they are, I don't even know what that means.
Well, they are actually the new brick sort of organized Greek led organizations do emerge. The question is actually are they going to be able within five to 10 years to play a much more important role than they play now? So they, we have not seen their important role yet. And when I said the Western countries have been doing that, it is a fact. For example, if you look at the League of Nations, if you look at the United nations, you know, UNESCO and all of that, you know, it's not easy to create international organizations because you have very different interests among the members.
Now brics themselves have very different interest among their members. You know, and as you know, actually some members join and then leave. So we are talking Now, I think 11 members.
Is it 11 or 10 now? And they would actually have to. They are trying to create international organizations, but I don't think it's very easy.
And so the replacement or the competitor to the World bank and the IMF is going to take some time?
[00:15:35] Speaker A: Well, yeah, I mean it is clearly taking time. But arguably since 2022, since Putin went into, as the Russians have it, save the people being slaughtered by Western European money pouring into Ukraine, it's sped up, Everything is sped up. And there's a Delhi summit coming up in a month's time. Do you not see that? Or do you see that the Chinese model, the Russian model, the models of some of these BRICS countries is the way forward in the sense that in China, 30% of national wealth is held publicly so that even if there's a small number of people becoming unequal at the top, if you add up the fact that people have public wealth in China as opposed to New York City where you are, it's negative public wealth because there's actually debt for your public parks. Is that not the most important thing when it comes to inequality?
[00:16:34] Speaker B: Well, China, of course, I've discussed China many times and I'm always happy to do that. China is absolutely, or should I say a case, economic case that defines the current moment.
If you go simply in history, we have never had increase of incomes of such magnitude over such a long time for so many people. So if you put China and you take similar episodes in the history, like Japan, you know, from 1945 until 1985, if you take the UK at the industrial Revolution or if the United States at its really high growth rates at the end of the 19th century and early 20th century, you are actually talking regarding China and of entirely different order magnitude now. Why is it important? It's important because whoever is the most economically successful country at a given point in time gets either imitated by the others.
Others actually try to learn something, or that country tries to sell what they have done elsewhere. So what I think actually is now beginning to happen, although slowly, is China is trying to actually sell a little bit its model abroad. The problem with the Chinese model is that there are so many contingent things that have happened over the last 45 years in China that the model is not easily packaged and sold. So if the Chinese expert goes to Tanzania, it's not easy for him or her to say what Tanzania should be doing in order to replicate.
[00:18:17] Speaker A: Isn't that the opposite?
[00:18:18] Speaker B: Any.
[00:18:19] Speaker A: Every Chinese spokesperson for the government always says, we don't mind how a country that we invest in works. It's up to the people of that country. We're not trying to sell anything to those people.
[00:18:30] Speaker B: No, no. But it's not an advice that is particularly useful to.
Suppose you're a Minister of Finance of Tanzania. The advantage of the rational consensus was that it was very simple and in some aspects it was exaggerated and wrong. But it was simple and you could understand it.
If you go to Tanzania as a Chinese minister and say, well, you guys do whatever you want, whatever is your comfort advantage, you decide. That's not specific enough. I actually think, and I actually wrote about that piece in China Daily, Chinese economists and economists working on China should be able to come to some consensus of essential policy changes that can be learned from China and basically create a model that could be implemented elsewhere which would not implement.
[00:19:21] Speaker A: That sounds like imperialism. Sounds like imperialism to me. With China.
[00:19:25] Speaker B: No, no, it's not. It trusts.
No, it's learning. It's like you're learning. For example, it's not imperialism. If you speak a given language better than I and I actually want to learn this language from you, that's the same thing. If somebody has been successful economically, that country actually should sell the way that it has been doing. It's not only because that country would have greater influence. I think it's actually to some extent, sort of depending on the country to actually help the world to teach them. Okay, look, guys, we have been good in directing. Let's suppose China directing credit to the companies and to the areas that. That we have identified as crucial.
[00:20:06] Speaker A: I don't think that's the way China sees communism coming to countries all around the world, which they probably do eventually. But the point is we're now talking, I know you use the phrase the end of the end of history.
Isn't the point now that we stand in a world which is suffering the effects of the end of a dying empire and the kind of violence that is being meted out at the hands of the United States and its vassal states in Western Europe?
How do BRICS countries cope with the challenge of the violence?
[00:20:41] Speaker B: No, we are standing in my opinion at the end of the end of history, meaning that the ideology which was underpinning neoliberal globalization and the ideology which was to large extent sort of to simply for simplified reason associated with Fukuyama and the end of history, that ideology has come to an end. And you know, that is being recognized. The question is actually what is coming next? In the book that you mentioned, my book the Great Global Transformation, what I argue is that in new ideology would keep neoliberalism in domestic policies and we see that in the US increase deregulation in lower taxation for the, for the capital owners, lower taxation at the top and would get rid of neoliberalism externally, which means it would go back at this point to tariffs, to protection, to economic coercion, to the use of political mechanism.
[00:21:39] Speaker A: I'm not sure anyone, I'm sorry, I'm not sure anyone cares about. I mean the tariffs are obviously very important, but it's the extreme violence that I, I'm talking about. And as regards retaining neoliberalism at home, I mean I'm from Britain. I know they're going to renationalize the water industry and the, probably the railways in the United States. They're electing Communists. I think in your, in, in New York there are people avowed communists that are running in primary. I met an actual communist in Washington this week actually for the Communist Party of the United States. But the point is it's how to cope with the violence and keep the economies still running. And what should the BRICS summit be doing to be able to shield themselves from. I mean obviously they're going to have to start spending stuff on military as much as the NATO countries. What are they going to do to defend themselves? Because you cannot trust the NATO countries, clearly.
[00:22:35] Speaker B: Well, what I was saying before is that what I think we need, we need to stop the shooting wars. Because going back to the analogy with the 1914, we have been in the case of Russia and Ukraine, we have been walking on the precipice for four years and if you remember in the very beginning of the war, people were really scared and then they said well nothing happens you know, these two countries are shooting each other, but, you know, we are like out of it. And then continued, you know, four years. You're walking for four years on a precipice. Eventually you're going to fall. So before you fall, I think we should have a real conference. As I was saying before, whether it be Alta or Versailles or Vienna.
[00:23:25] Speaker A: Yeah, I really think that those days, I mean, I have to interrupt there because I think if we had this conversation 20, 23, maybe that would worthwhile. But I mean, it's clear that after the European Union tactics of what happened in Turkey, that's not going to happen. You know, but one problem with your
[00:23:42] Speaker B: war, you know, one problem with.
[00:23:44] Speaker A: Well, no, it isn't. It's a war of attrition and it's. And it ends. But I want to ask you about military Keynesianism. These NATO economies are failing miserably, as is the United States economy.
Rather than, as you say, try to sue for peace or try to have organizations like Delta. Surely it's in the interest of these NATO economies from an inequality perspective. And wars historically have before 1945, improved equality.
Do you think that's how these elites see it in Western Europe and the United States? Pour money into the military, as in the United States, One and a half trillion, I understand is the latest idea is that their only mindset now militarize their states. In Britain, they're pouring more into the military because their economies have basically failed compared to the BRICS countries with their BRICS countries with higher equality, with higher growth, with higher productivity, with higher numbers of scholarly papers.
[00:24:43] Speaker B: I think the military came very handily because the countries have been facing obviously sort of reduction in industrial activity de industrialization has been faced. And they don't like that because essentially China is beating them in all the games, including of course, most recently in cars, in automobile production, and in sort of taking over the market which Germany had for a while. So they essentially, if you want to be brutal, we can say they decided that they cannot produce and compete with China in cars. They're going to produce tanks because tanks are not in tank production. You don't compete because you produce tanks domestically. So I think that the military Keynesianism responds to some extent to the economic failure, particularly of Europe, of really sort of staying on the top of the game when it comes to the industrial and manufacturing production. So yes, I think it's really that kind of obsession with securitization, with military is to some extent a response to the fact that economically these countries were no longer able to compete with China and I think increasingly also India when it comes to artificial intelligence and the top technologies.
[00:26:02] Speaker A: So massive investment in killing machines will improve the wealth prospects of the bottom 40% and say in the United States and in these impoverished West European countries.
[00:26:14] Speaker B: No, it's a total waste of money. It's actually total waste of money. You could actually. This is essentially creating things that are, from the point of view of welfare, absolutely useless. You know, you don't eat tax. I mean, the essential.
[00:26:28] Speaker A: Yeah, no, no, of course. I'm just thinking of your. I'm just thinking of the curves in your book and the statistics and also the need for elites to stave off revolution in those countries. I mean, MAGA was a kind of revolution, but clearly your country, the United States, is very unhappy with itself and not at ease with itself. And nor are the countries of Western Europe. Is military catianism and war the only way out for the elites to be able to prevent revolutions and to improve their living standards?
[00:26:58] Speaker B: What it does actually is, you know, the GDP calculates the tank as it calculates any other thing, useful thing. So in that sense you can actually show that the GDP is increasing by 3%. And of course that would be the increase in the military production. That is really absolutely useless. So it is a way to essentially, or should they say, mask the underlying problems of industrialization.
It's the same thing, actually, what Russia has been doing, the beginning of the war with, with Ukraine. If you look at Russia GDP numbers, they are quite good and actually they were surprisingly good. But they were surprisingly good because of the reorientation to the, to the, to the military.
[00:27:45] Speaker A: Well, no, actually in Russia the quality has got better, isn't it?
Income for the bottom 40% is increased by 3.41%. Latest statistics.
And the least well off have done the best according to the latest statistics. But anyway, Professor Branko Milhanovic, thank you.
[00:28:01] Speaker B: Thank you very much.
[00:28:02] Speaker A: And that's it for the show. Our continued condolences to all those of you bereaved or traumatized by today's NATO nation wars of aggression. We'll be back on Monday to investigate war on Iran, oil price manipulation with a macroeconomist whose work on the dollar is reportedly being reviewed by Trump's Treasury Department. Until then, keep in touch via all our social media if it's not censored in your country. And head to our channel goingundergrandtv on rumble.com to watch new and old episodes of Going Underground. See you Monday.
