Michael Hudson and Richard Wolff: BRICS High Aspirations Versus Cautious First Steps

Yves here. Even though Nima of Dialogue Works is an excellent interviewer, he has an undue fondness for for sensationalistic headlines. And here, his label winds up implying the recent summit for a greatly expanding BRICS accomplished more than it did. BRICS is still in the inspiration phase, with the 99% perspiration phase yet to be start in a serious way. Moreover, as we will discuss separately, hopefully soon, the BRICS statement was cautious in its position vis-a-vis Western hegemony-enforcing institutions like the IMF. There, the statement endorsed continued participation and merely advocated better representation of BRICS members.

As we are, Michael Hudson is supportive of BRICS. But he also sounds cautionary notes.

By Nima Alkhorshid. Originally published at Dialogue Works

Hi, everybody, today is Thursday October 24, 2024, and we’re having Richard Wolff and Michael Hudson with us to talk about the BRICS Summit in Kazan. Let’s start with Michael. Michael, what was important about this summit?

MICHAEL HUDSON: Well, it was important not for coming up with solutions, but just to lay out what the table of contents is going to be for the problems that they’re going to work on. This is really the first time they’ve got together. And what’s important is how many of the people were there. When you had the Bandung Conference in Indonesia, 80 years ago, there was a general idea that the U.S.-centered order wasn’t a good way of working.

But Cuba, Indonesia, the other – they call them Third World countries, they’re non-aligned countries at the time – didn’t have any ability to actually put in an alternative order because there weren’t enough of them. None of them were self-sufficient.

And now what makes this different is that there are enough leading countries in the BRICS, led by China and Russia, to actually enable them to be self-sufficient and to be able to say we really don’t need the West, if need be. If there has to be a break, we can at least trade with each other, have financing with each other, and even extend military protection to each other. Well, the real question is, what are they going to do with this power? And how can you get all these different countries to somehow agree on what to do? Well, you can see that one center of this was finance.

And especially President Putin in his introductory remarks showed all of this. They’ve already protected themselves by having their own alternative to Swift and their bank clearing. They were able to announce they’re going to trade in their own national currencies. But that’s not really putting in together a new system.

They all want to de-dollarize, but obviously they’re going to continue to work with the dollar and all of their trade with the Western countries. So the real question is, what are they going to do? They’re still talking about working within the framework of the Western institutions.

They saw within the World Trade Organization, but what can you do there? There hasn’t been a decision by the World Trade Organization Court in three years, because the United States has refused to appoint a judge that would make a quorum. So nothing they can do.

What can they do within the IMF? The only statements that came out of the meeting were that the global south countries want some of themselves to be increasing their quotas within the IMF. But the real problem isn’t that. The real problem is the whole operating philosophy of the IMF, based on austerity theories and the subordination to a U.S.-centered order.

So, I think, Putin, and China, and the other leaders who were there just said, well, all we can do is say, we would like to work within these organizations, but that hasn’t worked by the time the next meeting comes around. So I think all this meeting really was aimed at is to set up the agenda for the second meeting. And that’s really the important thing. And the key reform that they wanted was how to avoid the BRICS being treated in the same way that Russia was treated.

And I think in President Putin’s comments, this was his own focus saying, we are the West’s dress rehearsal for what it’s going to do to you, or to any other country that tries to take its own self-determination into its own hands, the U.S. is going to treat you as an enemy. So I think that Putin’s introductory statements were all about that.

He pointed out that a sort of shadow alternative to the Western organizations were necessary, but all he could do was say, here are the problems that [we have to solve]. And he did, at the very beginning, zero in on the fact that chronic growth of the debt burden in developed countries continues.

So the question is, they now have a whole year to discuss what we’re going to do. We cannot afford to increase our growth if we have to keep paying the dollar debt to our bondholders. I think Putin is trying to set the stage. He also said, “Establish the BRICS arbitration investment center to develop a convention on the settlement of investment disputes, which will increase the security.” Well, what he’s really saying is this is an alternative to what President Obama did with the Trans-Pacific Partnership, the International Investment Dispute Center. Under the current rules of countries that join this agreement, if a country raises taxes on a U.S. company, it has to pay damages equal to the amount of taxes that it raises.

If it imposes penalties for pollution caused by an oil company, or a mining company, and says you have to pay this, the mining company, or the oil company, can go to court and say, you have to give all that money back to us because you’re not allowed to make any change in the status quo that we’ve imposed under U.S. rules.

In effect, you cannot have any progress or any sovereignty for yourself in controlling your tax system, or your legal system, or your penalty system. So I think that when Putin raised the point that I made, all he was doing was setting the stage for arguments that are going to be taking place over the coming years.

I think most of the reports that you’ve seen – hardly any in America – that you’ve seen on the internet, are sort of celebratory – Oh look! We’re independent! – and I don’t think they want to be a spoilsport, and say this is really only the first stage.

I only want to say one more, a few more quotes of Putin, and then I’ll turn it over to Richard. Putin said, ‘We don’t fight the dollar, but if we are not allowed to work with it, what to do? Then we’re forced to look for other alternatives.’ I think that is setting the stage for the fact that ‘We’re not attacking the West, the West is attacking all of us, starting with Russia and pretty soon China. And all we can do is respond…’ He’s trying to convince them – of the need that – you’d better join, I think, what the press will call the hardliners: China and Russia, the most immediately affected states. The problem, of course, is that many of the BRICS members want to have a foot in both camps. Turkey wants to go both ways. Saudi Arabia wants to go both ways. India wants to keep all of the U.S. markets and the U.S. investment and join BRICS.

All that President Putin and the other members, the discussions can bring out, is there’s a great tension right now between the NATO countries and the BRICS and this whole repertoire of problems that they say are really an agenda for what they’re going to have to negotiate with to actually come out with a policy response, next year, or the year after that, or the year after that.

NIMA ALKHORSHID: Richard.

RICHARD WOLFF: Okay. Let me add something to what Michael is saying. As I follow these things, I too was struck by the sheer historic significance of all of those people from all of those countries getting together and working on what is, in effect, a new world order. My suspicion is that historians will look back on this meeting and the next one, a little bit like they look back on Bretton Woods and all those big meetings at the end of World War II that tried to set up “the architecture of modern global finance, modern global economy.”

And therefore very, very, very important, just the spectacle of serious collaboration, serious conversation about key issues and plans to work on them some more. Does that mean that it’ll all happen smoothly? Of course not. There’s no way to know that. Michael mentions some of the pressures on them.

For example, the debts of many countries in the global south, debts where the creditors are in the global north, and all of the implications that that has. But I would also begin to talk a little bit about more contradictions than those. For example, there are enormous differences within the BRICS. No one should have the illusion that because they can get together, because they were friendly to one another – which they were – and because that’s significant – which it is – that doesn’t mean there aren’t also big differences among them. Right now those don’t seem to be overwhelming them, but history suggests they might.

And so, I’m a little concerned, lest wishful thinking amongst us about what can happen now takes us beyond what can happen to what will happen. And I just want us to be a little careful.

The second contradiction is to recognize that the G7 is also in deep trouble internally, regardless of what happens with the global south. For example, really for the first time, a couple of years ago, bondholders were unwilling to continue to fund the deficits of Great Britain, and the Prime Minister – granted, an idiot, but that’s not unique to her – didn’t understand it, went right ahead and proposed what people told her she couldn’t do. She was sure she could do it, and she went ahead and did it, and she’s out of there. They threw her away. Mr. Macron is now heading right down that same path. Bondholders have told the French that they are not going to continue to fund their national debt [which] is now over – well over – 100% of their GDP, publicly held.

But there’s a huge difference because in France, the largest faction in the parliament are socialists. I want to remind everyone that the leading group of deputies is the new United Front, a coalition of the French socialist, French communist, French green, and the biggest one: it’s called La France Insoumise, which means France Unbowed.

Those four together have the largest block of seats in the parliament. Macron cannot move politically the way he wants. And so the way the financial press (and by the way, the press today – when it begins to recognize – the U.S. and British press – what’s going on in France, has got the usual – I’ll be polite – interpretation. The honest statement? Grotesque propaganda.

Here’s how it works. Bondholders are telling the French, you have to rein in spending. No, that’s not correct. The bondholders are saying, you have to stop running deficits. And as every undergraduate knows, the way you would rein in deficits could be to cut spending, but there is an alternative. It’s called taxing. And it’s called taxing corporations and the rich because the others don’t have any more to tax, you’ve done all you can [do]. But there is this need to discuss the finances of the state as if taxing corporations and the rich were somehow off the table; somehow not part of the mix; somehow not only not doable, but not discussable. It can’t be put on the table, nothing. You get an enormous applause if you do something miniscule that will never raise enough money to deal with the deficit. So you’re going to raise tax on the rich by a percentage. Kamala Harris’s proposal, the raise on people earning over $400,000 by a little bit.

You know, what in the world are you talking about? These are orders of magnitude being played with here by hoping that the audience doesn’t understand. But here’s the real problem. You’ve been spending your way, and it’s now for this whole century. Basically, the 21st century, starting with the dot com crash in the spring of 2000, capitalistic economies in the West have been subsidizing economic growth as far as they can. Listening to Michael – will enjoy this – listening to the Modern Monetary Theory as a license to go ahead and basically print the money as you need it.

And I don’t mean to demean them, MMT. They made an important contribution. They taught people what they should have understood anyway. But in any case, there’s a problem here. If you keep on doing that, then you are going since you haven’t come to producing government money yet directly. You still go through the charade of issuing bonds and selling those to your monetary authority and allowing the monetary authority to print the money with which it buys the bonds that the government [?]. This game, designed to protect governments from simply printing money at will, has now run its course. We now have too much debt.

And it turns out that the government, like the American government, is facing the next few years where it will have to spend as much on servicing its debt as it is on defense. And that doesn’t leave very much for everybody else. And everybody else is saying, no, no, no, no, no, no.

And now the bondholder gets worried, because one way to resolve this would be to stop paying the bond holders and that, of course, must never be. So you’ve got two absurdities. You can’t stop paying the bondholders (when, of course, you can). And you can’t tax corporations and the rich. And, of course you can. And I won’t bore you by giving you examples of bondholders who haven’t been paid in the last 20 years. There’s loads of them. There’s loads of them. And taxes on corporations and the rich? Well, what was the New Deal if not an extraordinary act of taxing corporations and the rich, relative to what you had done before? I understand there was a lot of other things going on.

But I think we are reaching a point in which these contradictions have accumulated. We got them between North and South. We’ve got them within the South. We’ve got them within the North. You don’t have to be a Hegelian or a Marxist to understand that these accumulating contradictions are very profound, very large, and very fundamental. They would take more ingenuity than any government I see to deal with any one of them. But to deal with the cumulative impact as each worsens the other? I would conclude that what the BRICS conference brings to the fore is that we are in for some very tumultuous times right now.

And the last thing: I would say that, for me, it gives another framework to understanding what’s going on in the biggest picture. And, very briefly, here’s what I think it is. The United States’ global position keeps slipping. It keeps slipping if you count the percentage of central bank reserves held in dollars. Well, it’s slipping. It’s not zero. The dollar is still important. But not what it was 20, 30 years ago. No way. Clear. The United States lost the military war in Vietnam. It lost the military war in Afghanistan. It is losing, or has lost, in Iraq, and it is losing in Ukraine. Hello, that’s a sign of an empire slipping. Then it made a colossal mistake.

Remember with me, February and March of 2022. Russia invades Ukraine and from the President of the United States and the Prime Minister of England, and so forth, ‘Russia will regret this. The ruble will collapse. The Russians will be on their knees. The whole Russian totality will break up into small… Mr. Putin will be run out of office…’

Now, they all said that because they believed it. They did not understand the options Russia had, like the BRICS. They could sell their oil and gas to India and China. They could cut a whole raft of deals with the 30 other countries that have expressed interest, greater or lesser, in joining BRICS, etc. They didn’t count on that. They’re making terrible mistakes. The isolation that this means for them… They haven’t understood that their program of isolating Russia is so far mostly successful in isolating the United States. And then Israel comes along, and underscores the same point. Only perhaps more so.

These are signs of a declining empire, overreaching because it acts as though it were the 1960s and 70s, as though it were the only country to emerge, economically speaking, intact out of World War II, with all the potential competitors wiped out. They can’t let go, and so you have this conclusion.

If Michael and I are right, that the new economic world order that is now emerging is among the most important shapers of the economic future of everybody – how that plays out [in] China, Russia, Brazil, but also the G7 – then what do you make of a country like ours at the high point of a presidential election in which neither candidate says anything about any of it. I mean, it is extraordinary. This is called denial, but on the scale of an empire: an empire denying its own decline, therefore making catastrophic mistakes whose effect is to deepen the decline. Wow. We are in trouble.

MICHAEL HUDSON: Richard, you made two separate points and I want to deal with them in sequence. You are absolutely right that the key struggle in every one of the BRICS countries is over the tax issue. The tax issue did not come up in a single chapter of the long, long BRICS summary. Nobody brought it up.

You talked about this being an internal contradiction. What they’ve said is, what contradiction? We are not even going to discuss it. I think the reason they did not discuss it is there is not any agreement at all, because so many of China’s – and other countries’ – economics students, who have been trained in the United States, the tax issue is not part of their education. I think we have dealt with this before in our discussions. The 19th century classical economics was all about what to tax: unearned income as opposed to earned income. None of that has appeared in any of the discussions. I tried to introduce it to Russia in the 1990s and the early 2000s. Couldn’t get through the kleptocracy there. Same thing in China. They really are not open to that. But this is the problem that is lying. I think the purpose of this meeting was only to deal with relations, geopolitical relations, between the BRICS countries, among them, with each other, not with general economic theory.

Certainly, if we are talking about financial reform, this has to be the financial reform. The only strong statement that I could find in all of the BRICS summaries was the Chapter 10. It is two sentences. So I’ll read it because I think that opens the path to potentially dealing with what you are talking about.

It says, “We are deeply concerned about the disruptive effect of unlawful, unilateral, coercive measures, including illegal sanctions on the world economy, international trade, and the achievement of the sustainable development goals. Such measures undermine the U.N. Charter, the multilateral trading system, the sustainable development and environmental agreements. They also negatively impact economic growth, energy, health, and food security, exacerbating poverty, and environmental changes.” Well, that is their strongest throwing-down the gauntlet.

You can say that in answering these questions, they are opening up what you and I would love to be the whole class war issue that has taken a financial form, that all of the growth in the United States and many other countries has been in the financial sector, the wealthiest 10%, not in the rest of the 99%.

Then you talk about military support, and they did mention quite a bit of that, and they mentioned the Near East. It is very interesting to see how they dealt with this. They talked about Russia and China, partially supporting Iran, but China seems to try to straddle the BRICS and its relations with the United States. It is as if it downplays the constant U.S. threats that China is suffering from the United States saying China is our strategic enemy long-term and we are going to have to go to war with it in a few years. China seems to be completely ignoring that. Well, obviously the U.S.-NATO attack on Russia is planned to be extended to the Pacific, and it is going to affect all of the BRICS. Quite a few chapters focused on Israel. The surprising thing is that the Arab and the other Islamic countries are not protesting Palestinian or Israel, the Israeli genocide. And this leaves them prone to Israel and the United States proceeding with the Neo-con plan to take over Syria and Iraq, along with the Arab oil producers, including Saudi Arabia.

Two weeks ago, as you know, President Netanyahu held up a map of Greater Israel and said, ‘We are going to take over Saudi Arabia. We are going to take over the Arab UAR, the oil republics. We are going to take over part of Egypt. We are going to take over the oil and, of course, Syria and Iraq. Not a word of this. Apparently the Syrians, the Saudi Arabians say, Well, okay, we are going to let Israel take us all over. What we want to do is keep for the ruling family (we want to take the trillion dollars or so in the national Saudi fund and we want to take them all with us to the United States and we get to have) all this money. We will give Israel all of the oil over there.’ That seems to be the Arab opposition in all of this. The only country that is opposing it is a non-Arab country: Iran. None of that really came out.

The amazing thing is in all of this discussion that you had on military affairs in these meetings, all of this was just, again, plowed right under, Yes, they deplore the fact that they are genocided ‘but we are not going to do anything about it. We are just going to be for ourselves and try to, at least, if we are driven out of our country, at least we are going to take all the money with us.’

The question is, is there any intention of actually expanding the Shanghai Co-operation Organization into a BRICS counterpart of NATO? And how serious will these obligations be for support? If you cannot even get the Arab countries to defend themselves and their oil, why on earth would they want to defend any other country that is being attacked? Talk about internal contradictions, this is geo-economic, geopolitical internal contradictions. They did point to the fact that there was no rule of law, militarily or economic. There is no way of really talking to cope with the West’s illegal sanctions against BRICS. There is no talking about, well, maybe we can get our own sanctions program against the West, and if the West says we are going to sanction you, then the BRICS countries can say, well, no more rare earth exports, or gallium or germanium from China, no more refined aluminum from China. Russia can say, no more of our exports to the West, not only oil and gas, but all sorts of raw materials, and even monetary goods, that the West wants. All of these, you pointed to the time bombs that are there in the BRICS meetings and they are internal contradictions. They are not internal contradictions, for them. They are questions that should be avoided rather than saying, how are we going to deal with these now? The fact that there is a difference in position, all they are doing so far is saying, what can we agree on because this is our first meeting? So they are not going to get into what, is it going to be really difficult to get them to agree on. And you’d think that the one thing that would enable them to find something to agree on, that they should have done, is exactly the point you made: the tax system. What if they taxed raw materials rent, and land rent of the oil companies and the mining companies there? What if they taxed monopoly rent, or have an anti-monopoly position on the privatized public utilities that the IMF has forced global south countries to sell off in order to raise the money to pay their foreign bondholders? How are they going to solve these problems? Nothing along these lines.

I think [it] has been thought that if they introduced them, there would be a kind of dissension. All they wanted was a kind of ‘Kumbaya.’ What core can we agree on without really talking to the problems? So, I guess your and my role is to say, here are the problems that you are going to have to deal with.

RICHARD WOLFF: Yes, my guess is that they know those problems. I think it’s quite clear that the Chinese are under no illusion that the United States has, at least at this point, any intention of working out a live-and-let-live. The Chinese complain bitterly all the time that their attempt to get a place in the Sun is interpreted in the United States as an assault on the United States. So that they cannot, they can’t do anything that has a negative impact on the United States without that negative impact being interpreted in the United States as the motive rather than the unfortunate or unwanted side-effect.

Very hard to get people together to have a negotiation if they insist on such frameworks for understanding what one another are doing, which anyone who has tried to get a negotiation going knows. And these people do that for a living. They know better. I think they all know.

I’m not privy to anything, but here’s my guess as to what’s going on. Nobody wants to be on the receiving end of an Israeli military attack supported by the United States with money and weaponry. This is a heavy price to pay and the Israelis have now functioned either knowingly or clumsily, I don’t know.

They are like the person in your neighborhood who behaves badly and you try to do something about it and then you realize that they really are crazy. You’re not dealing with somebody with whom you can say, ‘Look, don’t do that and I’ll do this and that’ll help you and we’ll work something out.’ You can’t, because they are responding to a higher power, literally a biblical injunction to recapture the real estate that they lost umpteen years ago. And, for them, this is now a holy war and you know where that takes people, and what they’re willing to do, and what kinds of bargaining you can or cannot make with them.

And I think whether you’re an Arab country or not, you’re not really interested in becoming another Lebanon. You don’t want to be in that situation. You can’t defend against that. You don’t have the means. And right now, the United States and its European allies seem ready to support an Israel – and by the way, that role could be played by others too. It’s not unique. It doesn’t have to be Israel, but for the moment, it is Israel. For the moment, the United States will fund it, and weaponize it, and the Israelis will mortgage their own future. I mean, look what must be happening to their economy.

This is a country that is obviously willing to become a dependent of the United States for an indefinite future when this war is over. How are they ever going to rebuild? And I’m not even talking about militarily and diplomatically; just, you know, whatever will be left of the Israeli infrastructure, and so on. It’s extraordinary.

And I think they understand it perfectly well, but they’re not ready yet to deal with it. Look, let me give you a parallel. The Russians believed, if you listen to them – I find it hard that they’d say this, but they say it – they believed a guarantee back in 1990 that NATO would not move east; that the Eastern European countries that regained their full political independence with the collapse of the Soviet Union, and so on, that NATO would not go east. Okay? NATO went east, step by step, country by country, from the Baltic states in the north, to Bulgaria, Romania, in the south, and everything in between. In many ways Ukraine was the last – certainly the last big step – but the last step. Each time the Russians made the decision not to push back. A little bit in Georgia – I know the history – but basically it was only when the umpteenth red line was crossed, which was basically the move to integrate Ukraine into NATO and the E.U. – but, you know, that was partly waiting until they were strong enough.

And as they have shown (and here I’m referring to the military story), what the Russians have shown, is that they were able to develop a missile capacity far better than anybody else, far larger than anybody else (I’m including the United States). There’s no one understood what they had and could use. All right? This is the model. I think that’s what’s going on in China right now. And so here’s where I think this goes.

I brought up the internal contradiction because I think the likely challenge is going to actually happen in the West: in Europe first, and then in the United States. Europe is weaker. It’s going to be unable to utilize monetary and fiscal policy in the manner that they have, you know, since Keynes taught them how to do it. Right? They can’t lower the interest rates. They were already flirting with negative interest rates and with all the uncontrolled consequences of that. And they’ve loaded up on expansionary fiscal policy, which is why they have these crazy deficits and the accumulated national debt, which the bondholders, since they have integrated that system of money into their world… so they’re stuck. And they’re going to be confronted with a moment of truth: They’re going to have to placate these bondholders or overthrow them. And since those bondholders are them (they’re not going to overthrow themselves), they’re then going to confront… what? I suspect a split.

The way I understand the 1930s: Roosevelt went in one direction. He went (ironically, even though he was a child of the hoi-polloi, the aristocracy of the United States, the Roosevelt family of the Hudson River Valley, blah, blah, blah), he went with the unions and the socialists and the communists, and gave them social security unemployment compensation and minimum wage. Fifteen million public employees: he gave them the socialist program. And all he asked in return was that they vote for him, which they did.

And they re-elected him three times, by far the most successful president, the country had. There will be another one of those. And on the other hand, will be all the people that have been in charge since then, whose job it was to roll back the New Deal and they will now be confronted, what are you going to do?

And the latter group is going to want to really collapse the American standard of living. And if they can make the right alliance with the Trump, or people like that, if they can bring together the Christian fundamentalist and the white supremacist and the people who need twelve guns in the back of their truck, okay, they might pull that off for a while. But they’re going to confront an enormous part of the population that will understand that their entire life is at stake here, and they’re going to make noise. And that’s going to be another civil war, in one form or another.

And I think that out of that will come a recognition in Europe and the United States that the jig is up, and that they have to come to terms with the new world order.

They’ll think of it as coming to terms with Russia and the BRICS and China, but it will be coming out of how they come to terms with their own internal dead-end that their policies have led them into.

MICHAEL HUDSON: Well, the question is whether, if they solve these internal problems, whether they’re going to still try to have the old predatory economics in the BRICS countries. In the 19th century, Britain had all sorts of ideas about how to have a thriving popular industrial economy. They were going to tax the landlords. They were going to keep finance and real estate isolated. But when these, the British wealthy financiers and investors went to third-world countries, to the Ottoman Empire or to Latin America for railroads, utilities, the Panama Canal, and the Suez Canal. They were all of a sudden… that’s where they supported the rent-seeking and the grabbing.

So this internal contradiction, that you rightly point to the United States, is going to affect the BRICS as well. All I can think of is that the BRICS countries will watch this strain within the United States, and England. Today’s Financial Times, their biggest report was on the commercial real estate crisis, that so many of the biggest buildings in the City, the financial City of London, had debt in excess of the value of the buildings. So what are you going to do to buy the biggest skyscraper in London? It has $460 to $700 million in debt and they’re trying to get the $500 million for it. But nobody’s going to bid for that. Same thing in America. Commercial real estate is broken. Well, the banks hold the mortgages on these and if the defaults are soaring for commercial real estate in London, England, and America, just as they’re in China… So we’re having a worldwide problem and the question is, are you going to bail out the banks? And if you don’t bail out the banks, what’s going to happen to their largest depositors, the uninsured depositors – the rich people. Are you going to save them?

This is the problem that’s going to occur, already is occurring, in China, and it’s going to occur in other BRICS countries.

So when you look at the BRICS meetings, what you talked about at the beginning, quite correctly, is we would like to hope that future historians will look back on these meetings in Kazan as the first step to creating an alternative civilization, because we’re really talking out of civilization break from the West. And by civilization, I mean the tax system, the debt relations, the monetary relations, the monetary defense systems, the political systems. All of these, in order to avoid the contradictions that you and I have been discussing for decades now, they’re going to have to create an alternative. And this is a gigantic job.

Obviously, it couldn’t be solved at one meeting or I don’t think even by next year’s meeting, they can’t. But what is needed is a consciousness that they are trying to create a new basis for a non-Western, non-U.S.-dominated, non-unipolar civilization, and the recognition that this cannot be achieved with friendly relations with the West, that the West will not accept it and the West will try to have a fifth column of non-governmental organizations, such have been recently banned in the state of Georgia, the country of Georgia. They realize that the U.S. has a whole fifth column of a managerial class that would like to take over along the same lines that have enriched it so well as you’ve described in America and Europe. Well, obviously the strains of supporting the military budget and the Cold War and the U.S. sanctions against Russia are going to be felt first of all in Europe.

So I think you’re quite right. Already you have the strains pulling the German economy, the French economy, the Austrian economy, all apart. And what are the vested interests going to do there? Well, they’re going to do what they did in Germany. They will ban these parties like they’re trying to ban the Alternativ für Deutschland. They’ll ban the left-wing parties. They’ll ban the reformist parties saying, these are agents of Putin, agents of China, agents of the BRICS. It is the West that will treat any attempt to reform economies as being an attack on the West itself.

And if the West permits the BRICS to create a solution to these tensions, if they permit the BRICS to have a rational tax system, a progressive tax system – as you and I want to see – then America will say, ‘We’re not really fighting China or Russia, we’re fighting a different economic system.’

And the geopolitical war we’re seeing isn’t among countries: it’s between one system or another. You can call it one civilization or another, or one kind of economy or another. But this is the civilizational up-the-ante that there has to be. I didn’t see any of that in the BRICS meeting because that would frighten a lot of countries. And I think that Russia, China, the other leaders of the BRICS right now are trying to avoid frightening these countries.

But implicitly, these economic strains or contradictions that you point out have to be leading in this direction. And these – what you describe as domestic strains in France, in Europe, in America (that we had under Roosevelt) – all of these will be reflected on the geopolitical level. And the vested interests have a twofold fight, not only fighting against the reformers who don’t want to give all the money to the bondholders and the banks (the rentier class), but they’re fighting against the ability of BRICS countries to say: it doesn’t have to be this way. We can do our own way, different, and if you want to follow our model and reform your economies, and prevent the impoverishment and the economic polarization that your financial class and your bond-holding class and banking class and real estate class are causing, then either join the BRICS or emulate us.

This is what is a nightmare to the United States. It’s not yet a nightmare to the BRICS countries and their vested interests, but you’re quite right. It’s a nightmare mostly within the West because that is where they’re much more aware of the class war, here, than they seem to be aware of in other countries that don’t have a background in studying class war in the way that we have. But everything that they’re talking about, re-structuring international institutions, is exactly setting the stage for this dual conflict within the West, within the BRICS and between the West and the BRICS.

RICHARD WOLFF: Yeah, let me give two final (you know, I know time is our enemy here, but) some dimensions of this, to get this a little clearer. First, China was acceptable to the West from the 1970s, say, to 2010 or 15. Why? Because it provided Western capitalism with an enormous subsidy, limitless cheap labor, all kinds of government supports, and access to the largest, fastest growing market in the world. An incredible boost, a bigger boost for Western capitalism than anything any of its own governments could have or did do.

Now that China, more than anybody (but also to some extent, in the end, Brazil – but mostly China), took advantage of that situation – no question – and developed a hybrid 50/50 split: half private capitalist enterprise brought in to capture technology and markets; and half state-owned and operated enterprise to give the Communist Party and the government extraordinary leverage, which other governments do not have in the West. And they put this hybrid to work, producing a faster rate of economic growth than the world has ever seen, and that anybody in the G7 ever came close to. Thirty years of 6 to 9% increase GDP per year. Far faster than anybody else in the West. Okay. Now that China did that, they want to shut China down: ‘You’ve done what we wanted you to. Stop. Stop. Don’t flood our market with the results. Don’t out-compete us in the world with the results. We wanted to make money off you. We did. The stock market boom from 1980 to 2010 is all about that; all about recycling the money, the profits that were made by exporting the jobs.’ Okay.

But now this happy arrangement has come to an end, and the United States is outraged. So is the rest of Europe. They’re outraged that this is developing in a way that their own textbooks should have told them. Now that’s a good chance that’s going to happen because you know what it’s like in certain ways? The United States, coming out of Britain as an empire piece. And so the Chinese are determined, but they’ve realized – and I think this is very important, I think the Chinese learned a lesson: ‘You were able to get unbelievable growth, but you took a risk. You did it by welcoming capitalist enterprise and becoming the export market for the world, which means that the rest of the world can hurt you by shutting down its export markets, and you are vulnerable’ (which is the problem of the Chinese economy now).

It’s still growing faster than the United States – a lot faster – but much slower than it did. This year, according to the IMF, China growth 4.8%. That’s a really low number, for them. It’s very good relative to the U.S. number this year, which is 2.8%. But the bottom line is that the Chinese are now in a multi-year program to develop an internal market, and they’re tempted to see the BRICS as the expansion of their internal market that frees them from the hostility of the United States and Europe. That’s a reasonable strategy for them to pursue, and I think it will go a long way for China to be the glue to hold that altogether, to make accommodations, to pay for this, to keep stroking the West (‘We’re not your enemy, we’re not your enemy,’) because they’re not confronting.

China is now the greatest producer of electric vehicles. The BYD Corporation has won the competition. It’s the best car, it’s the cheapest electric car. The United States, in response: Biden raised the tariff from 27% to 100%. A $30,000 BYD car costs an American $60,000, which is why there are none of them on the road.

Europe only taxes them a tariff less than half of the United States, and you, therefore, you will find on European roads right now, lots of BYD vehicles. This is a very careful thing. What did the Chinese do? Well, they put a few tariffs on a few things. They’re small in number, they’re small in significance. They’re symbolic. When the Europeans upped the tax on their cars, which they did a few weeks ago, their response was to up the tariff on cognac. This is symbolic. This isn’t real. They are willing to be the nice guy. They are willing to make the cost of these tariff moves against them relatively small. They could have made them much larger.

They are holding back; but here comes the punchline. If the whole rest of the world can buy the best electric car and truck for half what the American competitor will have to pay, that’s the end of American competition. If an American makes, I don’t know, a box like this, and ships it to Europe, but has to pay way more for the truck that brings the paper, and the truck that brings the paint, that makes the blah, blah, then the price of the American product reflecting the input cost of vehicles will be uncompetitive.

Look, it’s the flip side of why Germany was the engine of Europe, because it got cheap Russian energy. So Germany was successful. Now the energy is cut off. You know what Germany’s GDP this year is? Negative. It couldn’t even get to zero. It’s minus. It’s drawing—it’s pulling Europe down. It’s extraordinary.

These issues are coming up in very stark confrontations. There are going to be American companies, and they’re already doing it, by the way, here in the United States. The Chamber of Commerce is against all of this tariff policy. They’re against Trump’s tariffs, they’re against Biden’s tariffs.

The United States doesn’t admit its empire is over, so it doesn’t have to make concessions. But the businessmen who are losing their money, they want to make concessions. And they’re going to substitute politicians who work it out for politicians who are tough guys. They’re the ones who are going to make that happen. Whatever the left in the United States does, and I don’t mean that they’re irrelevant. They’re not. But whatever the left does, these things are happening in the ruling class. They’ve got these problems that they have very little chance, at this point, to resolve because they are still lost in the crazy notion that they have an empire to protect. They don’t. They have the decline of an empire to manage that’s different. And they have to, they have to, at some point, deal with that.

The IMF released these over the last two or three weeks: the rates of growth for the year 2024. Among the G7, the fastest is the United States at 2.8%, all of the others are less. And in the case of Germany, negative. Here are the 2024 rates of growth of the IMF for the bricks. South Africa, 0.9%. So that’s low. But notice: it’s positive. Russia, excuse me, Brazil, 2.8%. That’s the same as the US. Russia, 3.9%. China, 4.8%. India, 7%.

There is no contest here. The BRICS are running away, as we speak, with economic growth. There’s only a certain amount of time left before the disparity, which is already there. The total aggregate GDP of the BRICS is larger than that of the G7, and becoming larger every minute. The impact of that, that’s what everybody’s struggling with.

And when you take a mountain of debt accumulated in the West – that’s losing this struggle – you have a recipe for extraordinary difficulty coming down the pike. And there I’m afraid it doesn’t much matter – for that – whether you vote for Trump or Harris. I mean, there are other reasons why you can vote for one or the other. I understand that.

MICHAEL HUDSON: That’s it. I agree. I think we spelled out the tensions at work.

NIMA ALKHORSHID: Okay, you’re going to leave us Michael right now, yeah?

MICHAEL HUDSON: Yeah, I have to leave.

NIMA ALKHORSHID: Okay, we’re going to continue. I have some questions for Richard. Thank you.

RICHARD WOLFF: Michael, we will miss you.

NIMA ALKHORSHID: Yeah, Richard, you’ve mentioned at the beginning of this talk that there are some differences between these countries. And we totally understand when it comes to Russia, China, India, especially Iran, Saudi Arabia, but we’ve learned that in this meeting, in this summit, China and Russia were formalizing to put an end to that conflict at their border. And it’s huge, the way that they’re trying to manage the situation. It seems to me that they came, they had a contrary solution for the border problem. And right now, Saudi Arabia and Iran are talking about joint naval drills in the Red Sea. These countries, you look at the picture and at this summit, when as well as Iran, Saudi Arabia: it’s colorful, Richard! It’s unbelievable when you look at the picture. And on the other hand, you look at G7, seven countries. And, in your opinion, you’ve mentioned these problems, but it seems that they’re getting to the point that they totally understand to put aside their differences, to make compromise and co-operation, which is so crucial for the future of BRICS.

RICHARD WOLFF: Yeah, well, here, to explain this and to articulate it, it’s difficult here in the United States because of the way these issues are normally either not discussed at all, or discussed in highly ideologically-tilted ways. So, having said that, let me try it anyway.

It’s easier to bring countries together if there are two conditions that are met. One, if they share a common enemy. And number two, if they share a common, attractive future. If you can show them that there’s a future that would be good for all of them, then you can bring them together.

And if you could show them that there’s a future with less danger from their enemy, that’s another reason for them. And I think what we now have is that situation, that countries as different as Iran and Saudi Arabia, or Egypt and Brazil, or however you want to look at it, that they are increasingly persuaded. And this is a big picture, but that’s what’s in the minds of these leaders. What else do they have? They are persuaded by the economic growth, of China especially, but of these numbers I’ve given you. They’re all aware of what these numbers suggest. Their part of BRICS, that’s growing well and they’re not part of the G7, that’s not

growing well. I mean, there is no way around this. And this has been true for years. It’s not a one year or a two year or a five year or even a ten year: it’s decades long, this divergence. So they are persuaded that working together they’re on the right side. And while China is very careful, it is still the giant among them. It is the giant pulling all of them up, directly or indirectly. And so they can be a leader without having to be autarchic, or autocratic, about their leadership. Now compare the United States. The United States is losing.

That’s why they lost the war in Vietnam. A small weak communist party in power in the northern half of the country, which had been separated from the southern half, was able to fight another civil war, defeat the South, and expel the United States in 1975. Look, by itself, it didn’t change anything, but as people began to see that now the Communist Party was in charge and that now Vietnam’s economic development took off, it’s one of the most prosperous, growing countries in the world right now. So it not only broke the control of France as the colonial power, but it showed what can be done, if you have that kind of… This is extremely important. Being defeated in Afghanistan, so that the Taliban resumes being the power in the country, defeats and expels the United States, even after 9-11 and blowing up the buildings here in New York. This is very symbolically rich. It stimulates and inspires millions of people around the world to think differently. And that has effects in what they write and what they say, in how they function, how they vote. The United States is declining, and in its decline, it is making huge mistakes.

Supporting Ukraine the way it has is a mistake. The Russians are defeating the Ukrainians, which should have been the presumption anyway. Russia’s a big country. Ukraine is a little one. Russia has many more people than Ukraine. Russia is a military, I mean, come on! And yes, the West could give them weapons, which it did. But there’s not enough, which any, and I’m no military expert, but whoa, that’s not a complex idea. And now they’re supporting Israel, completely isolated in the whole world. There’s no one supports Israel, whatever they say. No one does. The mass of people don’t. Not even in the United States, which is funding the whole business. I can tell you, I’m sitting here in New York City. We have more demonstrations for Palestinians in our streets than we do for Israelis, even though we have a large Jewish population and a quite small Arabic or Muslim population. So the United States appears to be dangerous, hostile, and losing. Well, I can see people backing away.

Michael said before he left, or I think maybe you said it, that there are a number of countries that are trying to play both to keep some kind of relationship with the BRICS, but also with the E.U. or the G7.

NIMA ALKHORSHID: India, Saudi Arabia…

RICHARD WOLFF: Yeah, of course, but come on, everybody understands that. You don’t want to pay a price. You’d like to get the benefit of both. And now you have the chance, but that’s historically unprecedented. For the last 75 years, if you needed help, if you needed support, you went to London or Washington or Paris. Now you can go to those places, but you can also go to Beijing, and you can go to New Delhi, and ooh, we have options. So of course, we will ask one and then tell the other, and hope the other gives us more than the one. That will happen. Of course, that will happen. But the direction is unmistakable. One side is losing the position it had, and the other side is gaining the position it didn’t have before.

And with countries getting a big loan for a railroad, or a big loan to improve your health system, or investment by Chinese company, they understand what’s going on. Their local businesses that make money from this, they understand what’s going on. They may have gotten educated in England, but they understand that the future of their company is in deals in China where they go and make those deals. So what you’re watching, almost like a film in slow motion, is a shift as every country in the world and every multinational business is trying to navigate. And you better be careful. The Americans want you to join with them. You can’t do it.

I’ve been to these meetings where the foreign businessman is explaining to the banker in New York, ‘Of course I’m going to take a loan from the Chinese bank. What do you think I am crazy? If I only take a loan from you, I can’t cut a deal in China. I need to buy iron. I need to sell the…

And if I borrow from a Chinese bank, all of that is easier. Every country is, every company is adjusting, and they don’t want the United States to get in the way. If it doesn’t cost them, they’re patriotic. But when it costs them, they’re not. Because they know that that government will not save them if they’re making no money.

The bottom line is profit. That’s how capitalism works. So you can let your neo-cons do that. You can let your crazy Trump president tariff tariff tariff tariff. You know what you’re half-hoping? Hoping that what those tariffs did is not work. And you know who was glad to see that they didn’t work? American businesses. They understood.

Sure, the car companies knew that if you allow BYD, it will become the car company of this country, the way Toyota and Nissan displaced General Motors and Ford. We know how that works. And that’s what the Chinese are going to do. And if it takes laws allowing them to move and develop factories here, they will do that too.

And you know what happens when you let the Chinese build a factory in Alabama? The governor of Alabama stops talking against the Chinese because he can’t risk it. That’s what’s happened.

And while the neo-cons are doing all their flag-waving, that evening they will be in difficulty at a dinner party in Washington when three big businessmen attack them for what they’re doing. “We don’t want a war in Taiwan. We don’t care about Taiwan. We’ve got 50,000 workers who will be laid off if the Chinese stop buying what we’re producing. Stop talking like that. You’re hurting our business. And if you hurt us anymore, we’re going to get rid of you and replace you with somebody who won’t hurt us. We won’t give you $2 million for the next election. We’ll find whoever’s running against you, and offer it to them. That’s how this works. And it works, so long as there’s no other political movement. And that’s why we have what we have. Normally, the people who control financial policy are the same old, same old. Only Trump arriving… why? Because of the internal — people don’t get it. That’s an internal contradiction.

For forty years, Republican and Democratic governments facilitated the relocation of U.S. jobs out of the United States to China. They were manufacturing jobs that were the most unionized, and the highest paid. So you took millions of American families and you yanked them out of an economic situation that was successful for them.

That’s the beginning of Trump. All he does is come along and say, “Hey, this is terrible. This is awful. And if you vote for me, I will Make America Great Again. I will bring back what was taken from you, that job.” And the big businessman will support a Trump if it gets them subsidies and tax cuts, which he represents.

But when he does his tariffs, no. He will say to them, “I need that to win the election. You want me to give you a tax cut? You’ve got to let me say that.” No, they say to him. We don’t have to. We can get a Trump who does what we like, who’s different from you, because they won’t do what we don’t like. And if you force us, that’s what we’ll do.

And that’s what will shape American politics, what’s shaping it now. It’s the contradiction of what globalization did to the American working class, has now come back to shut down the globalization, or to try to. How successful that’ll be, not yet clear, not yet clear at all.

NIMA ALKHORSHID: Before wrapping up, Richard, recently we had a very important decision on the part of the Biden administration. They have decided not to send long-range missiles to Ukraine in order to hit deep into Russia. If you remember that meeting between Starmer and Joe Biden, it seems that the Pentagon was running the show. They have decided not to send those missiles to Ukraine. Right now, with these new tensions between Iran and Israel, I don’t know if you heard about the leaked documents. Somebody in the Biden administration, in the Pentagon, decided to put these documents out in order to avoid a bigger conflict between Iran and Israel which could lead to an involvement of the United States into a big war with the United States, in the Middle East. Again, after Afghanistan, Iraq, again. And we know how important is Iran, the position they’re having, the problems they’re having with the Houthis in the Red Sea, they couldn’t manage the problem with the Houthis. The Houthis just blocked everything in the Red Sea. Right now, if something becomes between the United States and Iran in the Middle East, would be devastating for the world economy, what’s going on in every corner of this world. I think that’s one of the reasons that these people in Washington have decided to put out these documents.

But how do you see, overall, how do you see the way that Netanyahu is trying desperately to drag the United States into the conflict, into a bigger war, into a bigger conflict with Iran? Right now, the Netanyahu administration was not successful in Gaza, right now in the southern part of Lebanon. He wants to fight each and every body in that region. Right now, with Iran, it seems that his final goal, his main goal is to drag the United States into the conflict in the Middle East. Your take.

RICHARD WOLFF: Yes, I mean, I understand that’s a perfectly logical inference from what he’s doing.

Whatever you think of Israel, it is a relatively small country surrounded by hostile neighbors, some of which are small, but some of which, like Iran, are much larger. This is a dead-end. And to fight in that situation is difficult. To fight on several fronts – Gaza, West Bank, Lebanon, Iran – I mean, that’s crazy. You are assembling your enemies and you’re not getting any bigger. They are becoming more numerous, your enemies. So you better get a friend and the only conceivable, nobody else is anywhere near doing this. They’re all alone. So they have the United States. And not surprisingly, the United States leadership is split.

There are those who want to do it because they have grandiose ideas of re-organizing the Middle East with Israel, a huge country that simply swallows up all the others – a bizarre way of thinking. But look, it was bizarre to put Israel in the middle of the Middle East, anyway. So this way of thinking is not dead, this kind of colonial mentality of settlers. But I think the Israelis know that they’re asking the United States to take an enormous risk, for them. I don’t think it’s going to happen to tell you the truth. I could be wrong, but I don’t think it’s going to happen. I don’t think it’s only the Pentagon either. I’m not surprised. The Pentagon understands better than anybody what the military capability of Russia is. And the United States has not fought a serious military enemy for a very long time. You know, the United States versus Taliban or Vietnamese? I mean, there’s a war machine, and peasants with guns.

It’s amazing that they won anyway, but now you’re dealing with a country that has withstood Napoleon, World War I, World War II, and now this? And each time defeated the enemy? You really want this… for what? You throw bombs into the interior of Russia, what do you think that’s going to do? Make the Russians stop? What? This is crazy. That would make no sense that they would do that. That will provoke them. And then you have the risk they will send missiles deep into Europe or here to the United States. And then we’ll be confronted with the next stage of this escalation, which ends with the nuclear war, which everybody kind of understands is ridiculous. So if you don’t go there, then why are you taking the intermediate steps, when it’s clear that they will react? We now know that if you keep pushing the Russians, at a certain point, they push back. That’s what the war in Ukraine is. You push them some more. We know they’re going to push back.

And no one can understand what the Chinese will do. They have an alliance with Russia. They will be weakened if Russia is destroyed. They know that too. They have an enormous interest in not letting that happen. Do you really, really… for the Ukraine? No. This is not about the Ukraine.

It’s not much about Israel either. This is about what do you do when your empire is shrinking; when history is not on your side anymore; when time is not on your side anymore; when each year passes makes you a little weaker and them a little stronger; and there’s no end in sight for this. You don’t have what the United States used to have: the edge in technology. The Chinese have done the same with technology. They’re ahead in telephones. We love Apple here in this country. Apple and Amazon. Yeah, but the Chinese have the equivalent. They can do that. They’ve done it better than we have in half a dozen technologies already anyway, like the electric car. We don’t have it. India and China together, eight times the population of the United States. You know, it begins to look like Russia and Ukraine – India-China and the US – and allies that are small by comparison and whose people do not want any of this.

Because, unlike Americans, they know. The last century had two world wars fought in Europe. None were fought in the United States. That too is an enormously important part of all of this. You can’t work your way out, unless you work your way out. You have to sit down and come to an agreement. This is what we can let you, the Chinese do – this, this, and this – and you must let us do this, this, and this. And then we’re okay. We can live, we can grow. That can be done, especially in an era when just rapid economic growth is no longer the ultimate goal, because we understand climate change, we understand limited resources, at least until we go to other planets, etc., etc.. You have the basis of shared understanding. Work on it. Do it.

The alternative is literally unthinkable. And that’s why we have, and last point. Another clue is that we’re watching things that are outside of the acceptable human behavior. And we wonder about it. We wonder, how do the Israelis keep mowing down women and children in schools and hospitals in Gaza? Israeli people are not monsters. What, what’s going on? They must be desperate. They must be crazy, what they are doing. Why aren’t the young men being drug over there and shoot this school?

And then you have the limp, oh, Hamas uses the school. That’s very old. Military always excuse what they do on the grounds that they’re just doing what they should. But everybody knows what the outcome is. If they’re civilians, you don’t go there. You have to find another way. That’s how you behave in a civilized manner.

They’re not doing that. They’re not doing that. The Russians are bombing Ukraine, but not the hospitals, not the schools, not the women and children. Are some dying? For sure. Are those the responsibility of the Russians? Yes. Have there been war crimes committed? I’m sure there have, I’m sure on both sides.

You know, in Israel, but there’s a policy going on in Israel. That is extraordinary. And by the way, the policy of Hamas to kill all those innocent civilian people, that’s a war crime too, for the same reason. But you can understand why the Hamas resists, even if you do not agree or accept war crimes.

You can understand Israel wants security to exist, but that doesn’t excuse war crimes. Those are two different things. They can stand together and insist they are the same. It doesn’t make them the same. It makes you complicit.

At the end of World War II, a huge number of Nazis were executed because they did this kind of thing. And when they said, ‘I only did it because I was ordered to do it,’ and the people who gave the orders said, ‘We had intelligence that said the …’ They were executed anyway. I mean, that was not an acceptable. You know, if your officer tells you to kill women and children, you say, ‘I can’t do it.’

And if you don’t, okay, well, that’s a choice you made. And now we will see what happens to you. I don’t mean to be harsh or unfair, but I’m trying to understand. I still believe that the only hope for the Israelis is not being military. That’s a dead-end for me, self-destructive for them. But it’s to work out a way to live together with the Arab population. [Telephone rings] Nima, I have to get this now.

NIMA ALKHORSHID: Thank you so much. Bye-bye.