The Great Global Transformation: The United States, China, and the Remaking of the World Economic Order.
By Branko Milanović
University of Chicago Press, 280 pages, $30
One of the key questions hanging over the current crisis of international order is whether it is a “Polanyi crisis” or a “Carr crisis.” The phrases refer to the two mid-twentieth century critics of international liberalism, the Austrian political economist Karl Polanyi and the British realist and historian E.H. Carr, respectively. In the first sort of crisis, as defined in Polanyi’s 1944 master work The Great Transformation, over-extended markets become “disembedded” from the societies they are supposed to serve; in the second, as per Carr’s 1939 book The Twenty Years’ Crisis 1919-39, idealistic international frameworks prove inadequate to containing the pursuit of power, prompting a slide into global conflict.
The Serbian-American economist Branko Milanović’s latest book, as its title suggests, leans towards the Polanyian framework. According to Milanović, our decaying neoliberal order is so globalized and over-extended that it has coiled back in on itself, leaving us to commodify even our own leisure time by becoming increasingly incapable of enjoying it if it is not shared and displayed through social media. Unlike Polanyi, he sees little prospect of “re-embedding” market institutions in renewed social democracies and welfare states. While he sees neoliberal globalization coming to an end, he expects this process to crumble back into what he calls “national market liberalism”: neoliberal institutions confined to nations in which the balance between state and market remains tilted in favor of market elites.
This new market order he sees emerging will be stripped of the expansive cosmopolitanism of the prior era. The residual neoliberalism left behind by the receding tide of globalization will necessarily be more crabbed, xenophobic, and limited, prone either to plutocratic excess and populist corruption, as per Trump’s gilded second term in office, or to the ostentatious and hypocritical severity of nationalistic authoritarians like Vladimir Putin and Xi Jinping on the other.
Unlike Polanyi, Milanović does not focus mainly on the Western world, but tracks the shift in relative wealth and power from the West to the East, and especially China. Here he draws on his expertise in the dynamics of global income distribution. Milanović is perhaps best known for his “elephant graph,” which captures the changes in the distribution of global income as a result of globalization over the last forty years—so named because the graph traces the outline of an elephant in profile. The graph shows that the greatest beneficiaries of globalization are on the one hand the broad swath of previously very poor people in developing countries—the rising hump in the middle of the graph that corresponds to the back of the metaphorical elephant)—and on the other, the super-rich, represented by the tip of elephant’s trunk turned upward. The Western working and middle classes, traditionally near the top of the world distribution of income along the x-axis, are now trapped in the downwards loop of the income distribution curve that is the bottom of the elephant’s trunk: their relative position has declined the most at the global level.
Milanović draws on this data to illustrate how it will feel as an increasingly affluent global middle class competes for scarce leisure and prestige goods at the global level. “While in the past both a German metal worker and a German engineer were able to afford a vacation in Thailand (a global good),” he writes, “in the future only the latter may be able to do so. Or to buy the newest type of smartphone or attend the football World Cup.”
Milanović’s data-rich perspective allows him to capture similarities that might otherwise be missed—including demographic and economic parallels shared by the two most important elites of the new world order, the Chinese and American, whose contours do not readily squeeze into the frameworks of elite sociology inherited from the first Cold War, such as James Burnham’s account of a hegemonic managerial class. Milanović shows that rather than lying in mastery of technocratic administration, the authority of America’s elite derives from the fusion of credentialism, property ownership, and income into a tight nexus of meritocratic authority. Elites justify their privileges on the basis of the long hours they (supposedly) work, as well as their academic and entrepreneurial success. The rentier capitalists Lenin railed against at the start of the last century, whose highest aspiration was a life of coupon-clipping leisure on the French Riviera, are long gone.
“Elites justify their privileges on the basis of the long hours they (supposedly) work.”
In China, by contrast, the upper tiers of the elite fuse traditional capitalist wealth based on property ownership with membership in the Communist Party. “This is the essence of the new ruling class in China,” argues Milanović: “CPC membership provides a (political) credential, akin to educational achievement in the West, and that credential is particularly valuable when combined with one’s own capitalist or entrepreneurial position.” What is more, however Trump, Putin, and Xi might differ in terms of their personal backgrounds, political styles, and the national power structures that they preside over, Milanović argues that all of them represent responses to the excesses of liberal globalization: Trump as the self-styled tribune of America’s left-behind voters, Putin as the face of the Russian deep state imposing itself on oligarchic anarchy, and Xi as the austere prosecutor of government corruption.
Where does all this lead? For all his pessimism, Milanović does identify one relatively benign pathway out of the collapse of neoliberal globalization—benign at least in the sense that it avoids world war. Paradoxically, this lies in a liberal vision drawn from political philosopher John Rawls’ 1993 book The Law of Peoples. Rawls’s international theory was very much part of the ideological flush of US victory in the Cold War, concerned with justifying liberal supremacy and clarifying the conditions under which Western military interventions could be used to lift up the benighted, non-liberal world. However, one of Rawls’ prognoses may, according to Milanović, be better fitted to a multipolar world than a unipolar one. This is the prospect of an “accommodation” between the liberal West and its challengers. Although such a world order would be predicated on a “greater dispersal of global power” than the unipolar world in which Rawls was writing, what makes this dispensation specifically Rawlsian is that the non-liberal states, too weak to displace America but too strong to be dominated by it, are trying to oblige “the neoliberal regimes to accept [the challengers’] domestic legitimacy and to negotiate with them internationally.”
If this degree of regime pluralism can be accepted at the international level, then perhaps the worst excesses of a new cold war could be avoided. Regardless of whether or not this Rawlsian vision is belatedly realized, Milanović’s book is an excellent guide to the new global order.