Michael Hudson: Eurasian World Order – New Global Governance

Yves here. Michael Hudson gives his hot takes on the implications of the SCO conference and the coming BRICS meeting, particularly the much-discussed effort by India to improve relations with China as a result of multiple Trump own goals, most notably the additional 25% tariffs to try to deter India from buying Russian energy. Another important development is Xi Jinpeng setting out China’s vision for a new global governance framework.

Global Times listed Xi’s five principles:

– First, we should adhere to sovereign equality

– Second, we should abide by international rule of law

– Third, we should practice multilateralism

– Fourth, we should advocate the people-centered approach

– Fifth, we should focus on taking real actions

On the one hand, these are the Chinese version of what we call apple pie and motherhood statements. They are at such a high level that it’s hard to disagree with them. Nevertheless, the first, of sovereign equality, is clearly a big poke in the eye at US hegemony and exceptionalism. It is also an implicit call to end the UN Security Council veto power.

However, even setting aside US imperial ambitions, it is hard to see how this principle can be achieved in practice. Mid and smaller countries, particularly non-nuclear states, are not able to operate as equals either economically or militarily. Their lesser heft means they regularly have to work through formal or informal alliances and play superpowers off against each other. So they never will have the same freedom of operation as great powers and never in practice can be their equals.

In keeping with that concern, in the talk with Glenn Diesen, Michael Hudson depicts China as the core of a new system due to its economic and military power and its technological prowess. Based on what I have seen in Southeast Asia, that shift will not be entirely welcome here. Chinese businessmen are famed for their ruthless business practices. Thailand, which not only has considerable investment from China but also intermarriage at the elite level, has complained about practices from “zero dollar factories” to Chinese tour groups, where the Chinese companies succeed in hoovering pretty much all of the economic benefit of these operations to China (for instance, the tour groups travel on Chinese-owned busses, stay in Chinese-owned hotels and go only to Chinese-owned restaurants and stores). So as much as the US is a bad hegemon, don’t kid yourself that China is munificent.

Note this is a rush transcript. I saw some typos and corrected them. Please forgive the others.

By Glenn Diesen. Originally published on his YouTube channel

Prof. Glenn Diesen: Hi everyone and welcome back. We are joined today by Michael Hudson, one of the world’s great political economists to discuss the development of a multipolar international economic system indeed being built as we speak in China. So welcome back to the program.

Prof. Michael Hudson: Well, thanks for having me. So many things are happening right now.

Glenn Diesen: Yeah, it’s incredible how yeah fast the developments are coming. But if you want to see how extraordinary this is in a relatively short period of time if we look over the past three decades because if you remember at the end of the cold war the main foreign policy objective of Russia was to integrate with the west to have a common European home or a greater Europe. And then of course we saw over the past decades now that the NATO expansionism it began to push Russia closer and closer to China instead and after 2014 it really abandoned greater Europe in favor of what he calls greater Eurasia. And Trump when he came to power, he seemed to recognize this mistake almost paraphrasing Henry Kissinger as he said that this was a huge mistake to push Russia into the arms of China. However, then we see how a colossal foreign policy mistake being done all these threats tariffs and threats. So again, of secondary sanctions against India now pushing India also towards not just China and Russia. So, we now see that role meeting in the Shanghai corporation organization meeting in China and forming new partnerships. So, it’s really extraordinary. I was wondering how you read this whole situation.

Michael Hudson: Well, the interesting thing is that while Trump has represented really the deep state in declaring war against the whole rest of the world, the only war that he’s really won is against his own allies, against Europe, Korea, and Japan. He’s driven the rest of the world together. And it is this actual neocon warlike belligerence that has somehow unified the rest of the world to take the steps that they’re taking right now just about a half year after Trump took power.

And what’s happening is a geopolitical realignment as you pointed out and the whole theme of this meeting of the Shanghai cooperation organization was global governance that is what President Xi was saying and it’s not just the governance of the SCO countries it’s against it’s for all of the countries that have been driven out of the US orbit and of course the catalyst for all this that set the stage was the Trump’s tariffs against India.

India’s Prime Minister Modi spent an hour riding in a limousine with President Trump and discussing relations between India and Russia and Trump had said basically told India we’re going to block off the American market for you and that’s going to create chaos in your economy if you don’t stop importing oil and energy from Russia. Well, what Modi said and explained to the audience was that India’s trade in oil is much more important for its economy than its trade with the United States. Getting oil to power to power its industry, whole economy and to make money in trading with the balance of payments is more important than producing low wage un textile labor and other labor that the United States had companies had hoped to use India as a counterweight to China. they’ll say, “Well, we don’t need Chinese labor to make iPhones and other products. We can use Indian labor.”

All of that is ended. And right after the SCO meetings, we’re going to be leading right into the bigger meetings of BRICS and the Indian prime minister Modi is going to be the head of BRICS for the next year because it’s India’s turn to become the host of BRICS and they’ll be meeting in India. Well, just a month before these meetings, everybody was, you know, worrying that India was the weak part of BRICS because it was in a way very much like Turkey. It was trying to play both the US world and the China BRICS world both ways and Trump have closed off the option of siding with the United States despite the fact that so many Indian billionaires or wealthy businesses are tied to the United States.

Modi has realized that the future of the India’s economy lies with Russia, China, Iran and the rest of the BRICS region. So all of that was sort of the setting for all of this and the what was made clear the whole theme of the speeches by Putin and Xi and the others is that we are now 80 years since World War II ended and the United States had pretty much a free hand in designing the international economic order, the international monetary fund, the world bank, the world trade organization and the cold war all on its own terms and these terms promised to be multilateral and they promised to be the terms that underlay the United Nations charter above all multipolarity equal treatment of other countries not selective tariffs not sanctions against some countries being told who you can trade with, who you can invest with, what you have to do.

And all of this has been violated with at an accelerating rate by the United States neocons in their cold war. And so, what the way that President Xi the host of these meetings and they moved to China for the big military to Beijing for the big military parade I guess later today in China time is that we are now going to pick up where 1945 was supposed to lead to an alternative to fascism, an alternative to Nazism, an alternative to the militarism of Japan. And President Xi was pointing to China’s role in defeating Japan just Russia’s role in defeating Germany and the access and the great sacrifices they made and that they despite the fact that in their narrative they really won the war against the Axis powers.

The fact is that it was the United States that designed the post-war world. The United States that hired as many Nazi scientists and Nazi politicians as they could in Operation Paperclip and hired them to fight communism in Latin America, in Europe, and other countries. Hired their scientists, Verner von Braun, etc. for the US space program that it was the United States that somehow didn’t really end World War II and now that you have in Germany Chancellor Mertz saying we’re going to refight World War II and this time Germany the German army is going to beat the Russian army.

This is really the setting that has consolidated the BRICS countries and the result is that there is a global fracture that’s occurring but it’s different from all of the attempts to do that really for the last 70 years. in 1954 the non-aligned nations got together in Bandung, Indonesia and said we need a more fair and equitable order that lets us develop and doesn’t stifle our development with foreign debt with free trade with preventing us from protecting and subsidizing our own industry. But they really couldn’t do anything about it because they were too small acting by themselves. They the non-aligned nations could not go it alone even together because they didn’t have the critical mass.

What’s changed all this since the 1990s obviously has been China, that now China can be the core of this critical mass largely because of its financial policies, its foreign exchange reserves, its economic power, its export power, its technology power and this has enabled for the first time countries outside of the US and European orbit. I think we’ve discussed this before to create an alternative and that’s these meetings at the SCO that are going to be followed by the BRICS meetings in a week or so are all about spelling out exactly how they’re going to restructure this new economic order. And they’re powerful enough to do it this time.

And it’s obvious that there we can see that trade is going to be a key in this. The United States is trying to weaponize foreign trade by saying we can force you to follow our political directives like isolating Russia and China and joining the US cold war against them by blocking all off your access to the United States market. Well, that’s weaponizing it thing saying we can cause chaos to you if you don’t follow our advice.

So, the alternative to this is I think all of the speakers spilled out in Tianjin were well we’ll trade among each other. If we don’t trade with the United States, we’ll give up the US market. In fact, India has no choice but to give up the US market. If Trump’s tariffs are allowed to stand against India, they’ll trade with themselves. And all of this has a military dimension and that’s what became the underlying frame for discussing all of the economic and financial and related changes.

It’s a civilizational fight to restructure the whole means of foreign trade and finance. It’s going to dedollarize that.

There President Putin pointed out how much more efficient China’s means of trading among themselves in their own domestic currency was from having Russia buy dollars to pay China and dollars and for China then to convert the dollars back into its own currency. there all of this foreign exchange and the charges for it no longer have to be borne quite apart from the fact that the United States has weaponized international finance by expelling Russia, China, other countries from the swift the bank clearing operation.

So, everything that Trump has done to isolate other countries financially, commercially, in trade, militarily has had just the opposite effect. It’s driven them together. And all that really the SCO and BRICS countries and global majority had to do was, well if we’re going to act together as a unit, how are we going to set the rules of trade the rules of finance so that it’s something that will be multilateral world that kept coming up and fair.

How do we dedollarize so that the United States can’t grab our foreign exchange as it grabbed Russia’s $300 billion or gold as the Bank of England grabbed Venezuela’s gold supply or others. So, you you’re this global fracture spelled out in the way of saying well we it is not so much that we’re creating a new type of civilization. We’re picking up civilization where it was interrupted by the United States cold war that has transformed finance and trade to in violation of all of the United Nation’s principles that we were promised at the end of World War II would be subsidized and supported by the United States. That’s basically the framework that that has occurred.

Glenn Diesen: Well, I just read that this morning China and Russia signed an agreement finally on this power of Siberia 2 massive gas pipeline. Now this is it’s not a energy field. It’s not gas fields in the Asian parts of Russia which is being exported. This is from the Yamal Peninsula in the Russian Arctic. And this is a massive amount of gas which will go to China. And this was previously intended to be exported to Europe. for through well primarily then the Nordstream and Nordstream 2 pipelines to Germany. As we know these pipelines were destroyed. They initially tried to blame the Russians but then they had to walk this back. Now they’re trying to blame the Ukrainians, but I think most people would asse that the US had something to do with this.

But this is just you know a huge development because it really cements Russia’s pivot from Europe which it again dreamed of since this common Europe since Gorbachev’s concept of a common European home all the way to 2014 and then in 2022 it began to abandon it completely. But now of course signing this which all of this gas which was supposed to fuel all these European industries for decades to come will now instead go to China. And

I’m just wondering what future historians will say because the Europeans are still celebrating that they liberated themselves from Russian gas and they don’t have any alternatives except much more many times more expensive American gas which might not even be available in the future. So, it is just it is amazing to see what is happening. But anyways there’s no really reversing this because now

Michael Hudson: that’s the point. This is irreversible world once you make a huge investment like this. You’re not going to say oh you know we wanted at one point to be a European nation. We thought of ourselves as European but we’re not going to somehow tear down this pipeline and build a new one to Europe.

Putin has made it clear that the break with Europe and especially Germany is going to take many decades to be restored. Russia has come to terms with the fact that it’s probably there’s not going to be a reopening of the Nordstream pipeline to Europe. There could be for gas but it’s up to Europe but Europe is really been locked in to the US orbit and it’s as if the whole effect of this of the cold war the whole Trump strategy against Russia and China has been to lock Europe into dependence on the United States for liquefied natural gas and especially for mil for one of the bases of its balance of payments, military arm sales.

Modi had said complained that actually Trump had announced that he had brought pressure on India to buy more American arms and he’d criticized India for buying Russian weapons and I don’t think Modi came right out and said, well our weapons work and your weapons don’t, as we’ve been watching the war in Ukraine unfold. He didn’t say anything but it’s obvious the fact that the United States has lost India as a major purchaser of its very expensive aircraft and missile and other military industrial complex arms.

So, this this is a blow to the United States and but it’s locked in Europe to American arms purchases and the whole Trump tariff deals with Europe have just created such a surrender of the European economy to the United States, locking itself in denying itself the choice of trading with the BRICS countries, the Asian countries that are the most rapidly growing economies in the world. they that you’re having political bully revolution in Europe saying we’ve got to get rid of the ruling parties. We’ve got to have nationalist parties. And as you and I have discussed here before, it’s amazing that all of this is still occurring almost entirely on the right wing of the spectrum, not the left wing of the spectrum for nationalism.

But at a certain point, Sarah Wagenknecht’s party in Germany and other parties in Britain are going to replace the neocon US parties. But it it’s to as you said it’s the irreversible break has already occurred. there’s nothing really that that can happen to Europe and so the whole identity of and structure of how the rules that the world is going most of the world is going to be following are going to be the rules that are decided by China, Russia, India, the BRICS and the global majority and they’re going to leave not only the United States isolated but Europe isolated with it and in view of the fact that In the last few days, Von der Leyen and Germany and the well the EU have announced their intent to supply missiles to Ukraine and attack Russia. This this is just locking in the irreversibility of isolating Western Europe from the rest of Eurasia.

Glenn Diesen: It just the I wanted to ask about the Indian the treatment of India because it just seems to be so well out of place. I mean, well, just for context, like for me, the critical point was a decade ago. Indeed, I wrote a book a decade ago called Russia’s Geoeconomic Strategy for Greater Eurasia because in 2014, it was such a pivotal year, that is we saw the same time as the West backed this coup in Ukraine, which killed Russia’s hope for a common Europe. This happened around the same time as the Chinese were launching their belt and road initiative by land and sea.

The same time that the Chinese were launching this Asian infrastructure investment bank. The same time they were launching this China 2025 to develop leadership in key technologies. So, you saw the format for new technologies, industries, transportation corridors, banks, different currencies all coming out at the same time in China as they topple this government in Ukraine. And for me it was just amazing because for the first time you had a country like China which had both the capabilities and the preparedness to challenge the US-centric economic system and this was the time to kill Russia’s dream of being able to integrate with the west.

I mean it was it was yeah kind of extraordinary. If you wanted to sabotage yourself this is kind of what you would do. And which is why I think the past decade was kind of predictable in many ways. But now we’ve seen Russia and China kind of leading this Eurasian front in order to develop an alternative economic system. But India was always the wild card because they have a bit of a yeah difficult relationship with China and of course they yes so they can always not always but it’s possible that they can will be used by the United States indeed whenever there’s some tensions between China and India there’s a little bit excitement in the media that well now maybe they will fall in line and join anti-China China block but this this kind of threats against India

I just I can’t understand it and it doesn’t appear that Washington’s walking it back only today I was watching Navarro make some speeches that you know you India you’re not allowed to buy Russian energy or you shouldn’t buy Russian arms and you know we like Moody but this is unacceptable I’ve been on several Indian TV show about political programs and then they’re all just amazing At least the some are think it’s hilarious, other are angry. It’s just but they can’t believe this is real. Like how why should Washington dictate to India who it can trade with? It’s just it seems absurd. But when you listen to people like Navarro, it’s like the most natural thing. I just was how do you explain this treatment of India because this could have been America’s best friend. It’s quite extraordinary.

Michael Hudson: Well, you use the word unacceptable, and that’s what’s so ironic. It shows that the United States didn’t have any accurate calculation of the costs and benefits of what it was doing. The you think of what the word unacceptable meant, how when the United States, we won’t accept it. George Bernard Shaw had a story that he was at a party and some woman came up to him and was I think a yoga she’d returned from India and said to him very proudly I accept the world and George Bernard Shaw said well madame you don’t really have a choice do you well that’s the situation with the United States it can when it says it won’t accept the inevitable this doesn’t have much effect on reality at all.

It’s like King Canute trying to stop the stop the ocean to stop the tides from coming in. There’s it has no effect at all. and the most policy makers I think the whole all of the statements that includes from the beginning of the NATO’s war in Ukraine to this week even today says that well Trump’s strength and his power over the other countries that’s enabled him to announce his liberation day tariffs is other countries need the American market because the disruption is going to be so great that the alternative to joining as allies with the United States is chaos.

Well, obviously in Beijing and Moscow and now New Delhi they’ve decided well it turns out that our ability to accept a disruption in trade is much better than America’s and Europe’s ability to accept it. that our trade it’s not that hard to replace the American market for these countries. China has already shifted its soybean demand away from the United States 100% to Brazil.

The result is that soybean prices now are collapsing in the United States. the agricultural sector that is a key political sector in the United States ever since the 1930s is really suffering as a result of the losing the Chinese market and now other countries that are allied with the BRICS and the China, Russia, India and other countries of the global majority are able to restructure trade among themselves.

There’s obviously going to be a short-term cost. There’s going to be layoffs. I’m sure that there are many textile companies in India that all of a sudden have had to stop. It may be that today’s ruling by the Supreme Court that Trump’s tariffs are illegal may give hope that well gee maybe these tariffs will have to be cancelled. That’s not going to have any effect at all because you have both the Republicans and the Democrats in Congress completely supporting what Trump is doing. They’ve supported the war against China.

So, this is not going to lead other countries to say, “Oh, now we can open our factories again and begin exporting to the US because it’ll all be turned upside closed once again once there’s a vote in Congress.” Do you support America’s war against China? Well, they all do. certainly, the politicians support it. The American public doesn’t. The polls that are taken show the public wants the same things that President Xi wants and that President Putin wants. They want peace. They want normal trade and prosperity.

That’s not what the senators and representatives in Congress of the US want. They want the cold war. They want poverty. They want inflation. They want a declining dollar. It’s the politicians that are destroying the economy, not the either the voters or the business community that’s going to be losing from all this. That’s what’s so amazing in all of this that the United States is not really acting in its own self-interest, and apparently, it’s because the CIA and the National Security Council and the Council of Economic Advisors and all of the economists in the government have miscalculated the costs and benefits that are at stake in restructuring this world order.

They cannot acknowledge for ideological reasons the why the China and its allied countries are pulling ahead. They can’t acknowledge that a socialist market economy works better than a financialized belligerent economy that’s running a chronic balance of payments deficit and of government debt as a result of its cold war. They can’t acknowledge that.

Glenn Diesen: Well, a lot of the deals which are being made obviously they’re economic primarily and I keep making the point that this getting India on board India would never wouldn’t want to join anything that will be seen as a group against America because their main idea is they want to be able to diversify their ties and trade with everyone. So, it’s not a grouping against America but it’s a grouping protecting themselves from America. That is if Washington wasn’t going against India, India would be much more cautious.

But now it’s you know what can they really do and you know I don’t think they would have ever subordinated themselves or capitulated to the demands of Washington. But even if they would what would have been the rewards? We’ve seen the Europeans have done it. They signed any deal Trump put in front of them. Even though the EU said it was a horrible trade deal, they signed it nonetheless. And they sat like good school boys in front of his desk. They you know they did everything that was asked hoping that the obedience would be rewarded but it wasn’t. All they did was cut themselves off from Russia, China, Iran, now possibly India in the future too. And it’s not actually rewarded. It just makes them more depend on the US which then weakens their hand even more. So, you know it would be a kind of foolish assumption to believe that the Indians will go down the same path.

Michael Hudson: Well neither President Xi nor President Putin in their speeches made any reference to the United States at all. There was no reference. They’re not expressly describing what they’re doing as opposing the United States and Europe. They’re simply ignoring it. They’re supporting each other.

What they’re talking about is let’s revive the principles that underlay the United Nations multipolarity, treatment of equals, no interference in other countries affairs. the let’s decide what is an ideal world order that we can all join as part of a win-win situation and not let not permit any of our member countries to weaponize foreign trade to weaponize international finance and to settle our differences on the battlefield instead of by negotiation. none of this they’ve simply ignored the United States.

So, it’s not that India or any other country that’s joining it is aligning itself against the United States. They’re saying we’re following basic principles of that we think are the principles of civilization itself. And these principles of civilization not that have not only been written into United Nations law but the whole Treaty of Westphalia in 1648 of equality among nations, non-inference with other countries, internal affairs, no regime change or covert assassinations of heads of state, none of this.

All they’re talking about is what is a wonderful world that we’re trying to create and if other countries don’t want to join it obviously the United States and Europe won’t want to join it that they’re just part of another world they’re part of outside of civilization outside of the rule of law and again and again President Xi and President Putin talked about an international national law binding all against the US rules-based order, and they use that fairly often and it’s these rules that the Trump and the United States sort of capped, the United States effort in all this and you can just see what the United States has become a model of what the global majority is going to avoid this global confrontation.

This Trump’s demand that European companies, Japanese and Korean companies relocate their automobiles and computer and other major industries to the United States, or they permit US companies to control their leading emerging technologies without having to declare taxable income without you know having to pay taxes such as even the European countries were trying to prevent American companies from doing the United States foreign policy is based on how can we cause chaos in other countries and hurt their economies so that they’ll have to side with us.

Well, normally if you’re going to injure and fight against another country, that’s not a way to get them to depend upon you unless you’re ruling by fear and by compulsion. And the whole framing of the future of the SCO and BRICS as their speakers have announced it’s going to be voluntary – that it’s voluntary because people want to be mutual gain not a zero-sum game which is how Donald Trump has said US relations will have to be bilateral country by country and America has to be the winner; other countries have to be the loser.

He said that in his speeches and writings on the internet again and again and again. So, you’re in a way Trump has spilled out exactly the reverse of everything that the rest of that Asia and the global majority want to avoid. And this is helping them write up the rules that are going to prevent any country who’s a member of them themselves is ever going to be able to do again. So, in that sense maybe he should win the Nobel Prize. He’s accelerated and catalyzed this creation of a fair and ideal peaceful world. It just doesn’t apply to United States and Europe.

Glenn Diesen: Yeah, the same thought struck me though that there might be some peace prize an unintentional one awarded for bringing together all these countries for example India and China which has all these tensions who are now seeing the need to overcome some of these problems in order to create new economic alternatives. But what I find fascinating though is a lot of this could have been predicted. Indeed, it was predicted in in in good time. for example in the scholarly work of people like John Roi who wrote back in the 1980s how you would expect the international economic system to develop. You know he was making the point back then that when there is a huge amount of economic power concentrated in hegemon such as the United States it would have the ability to act as a benign hegemon because simply because it would be in in its incentive to create a deliver collective good for the international system that is to have the rest of the international system trusting its administrative control over the international economy.

So, the United States would be able to say, well, here are your access to key technologies and industries which are reliable. You have access to transportation corridors under the US Navy’s control which won’t be disrupted. You have the access to the reserve currency. We can all trade with the dollar. You access global finance. And all of this architecture is under US control. And it’s an incentive of the US to keep this open and liberal so the rest of the world can access it. And this kind of would be the foundation of an international economic system which would yeah be considered benign hegemon. Other countries would trust it. They would be more or less comfortable under US leadership.

However, he also made the point then that when the hegemon is in decline, this would no longer work because then the hegemon would likely use its administrative control over the international economy to prevent the rise of rivals. For example, China, cut off its access to technologies, industries, you know, stop Iranian access to transportation corridors, seize its tankers, confiscate gold, ban countries from accessing banks, currencies and suddenly the whole economic system is weaponized and now trust is gone. And this is will only amplify the need for alternatives.

And again, this is where we kind of are now where we are. It is the United States now to be pursuing some tributary economy where others have to pay tribute or find a way of extracting yeah industrial power or other wealth from other countries. It’s just it’s very short-term and destructive and so much trust is being lost. What I wanted to get to was while a lot of these deals which are being signed now in China all are economic in nature it’s supposed to form a new international system. But what are the key principles the way you see it in this system because it definitely will not be the rules-based international order which is not international. It’s not rules based and it you know it’s not orderly either. So, what are they actually going for?

Michael Hudson: Well, I’d written what you just described up already in my book Global Fracture in 1978. and I think these rules have been spilled out. You mentioned transport. Russia’s Prime Minister Lavrov has described recently in a speech just last month. he said talked about the need quote to establish foreign trade mechanisms that the west will be unable to control such as transport corridors, alternative payment systems and supply chains,” unquote.

And as an example, he cited how the United States has paralyzed the World Trade Organization by refusing to permit a third judge so that there can’t be a three-judge panel for all of this. The United States only has an ability to block other countries from taking moves. For instance, the US veto single-handedly has blocked the United Nations from denouncing Israel.

And you can just follow the results of the US veto power. The United States will not join any organization in which it does not have veto power because it says that’s letting other countries control our economy. Well, no country is going to have that kind of veto power in the global majority countries.

That was turns out to have been the Achilles heel of the United Nations ‘s ability, the ability to the US to block things and simply corruption, the way that it’s corrupted the International Atomic Energy agency by having Raphael Grossi in turn over all of Iran’s atomic energy sites and scientists’ names to Israel to assassinate and to bomb. I mean, Lavrov’s mentioned a whole bunch of it.

So, as you just pointed out the world is not to be governed any longer by the unilateral US rules that are subject to desperation. The US is acting in desperation trying to stop everything and President Putin described this in already in in 2022 when he was laying the groundwork for what we’re seeing flowering today. He said, “Western countries have been saying for centuries that they’re bringing freedom and democracy to other nations. Yet the unipolar world is inherently anti-democratic and unfree. It is false and hypocritical through and through.”

Well, that’s about as direct a statement as you can have. And you can see how that many people outside the United States have said, “Well, the last three years, 2022 to today, have just borne that out. We’ve got to have an alternative.” And that’s really the point that they’re this is the first time that they’ve been really pushed into spilling out just what the rules of an alternative are. They can’t simply say, “We’re going to break from the United States and go it alone.”

They have to make well what are the rules by which we grow it we go it alone how are we going to set rules so to shape how we trade in a fair way with each other how we finance this foreign trade. China has announced that it’s going to set up a bank that will be able to extend credit to countries that are running deficits with China or paying for China’s investment in these countries to develop the built and road initiative and the transportation initiative that is going to enable them all to produce for each other’s market instead of for the US and European market.

Glenn Diesen: But I guess my yeah, my last question is this this is a very different economic system though because traditionally you would only have, we only see liberal economic systems function under the British hegemon and then in the 19th century and then the American hegemon in the 20th. that doesn’t mean that there haven’t been any alternatives. It’s not that long since the industrial revolution and introduction of capitalism and all but in this multipolar system what are the opportunities as well as the challenges to create a stable economic system.

Michael Hudson: Well, what’s so ironic is that what China is doing in its socialist market economy is exactly what the classical economists outlined as the development strategy of industrial capitalism in Britain, France, Germany and other countries in the early 19th century. it has a mixed economy which is exactly where the European economies was were working for saying we’re going to get rid of all of the monopolies that were created in the Middle Ages the feudal epoch to enable kings to raise the money to pay their creditors for the war debts that they took on to fight each other. we’re going to make these public entities so that instead of being monopolies, they can supply basic services health, education, transportation, communications at a subsidized rate to lower the economy’s cost of doing business. Well, that’s what China’s doing that it’s really following the mixed economy.

And where China has gone further than the classical economists of the 19th century went is that it’s really controlled finance in it’s as a public utility. the creation of money and credit is run by the people’s bank of China and it creates credit for purposes of direct tangible capital investment to increase production and to fund investment that will raise living standards not to make money financially. So, the whole structure that you’re going to see in the SCO, the BRICS countries and the global majority is going to be to use banking and finance, not to fund takeovers of property, not to essentially create credit and especially in in in real estate and create real estate bubbles or stock market bubbles or run the economy is a Ponzi scheme.

To actually use credit creation and the economic surplus to plow back into overall national production, not the creation of financial wealth in the hands of a narrowing financial sector at the very top of the economic pyramid whose product is debt. getting the rest of the population into debt for itself and getting monopolies that extract interest, monopoly rent and all the financial overhead that characterizes the west. So that’s the way that we’re really moving into that kind of what they are described now as the new rules of civilization.

But they’re the very rules of civilization that followed naturally from the industrial revolution to saying how is England and European countries going to industrialize and become make England Britain the workshop of the world? Well, we’re going to lower the cost of production. We’re going to get rid of the rent overhead. We’re going to get rid of the landed aristocracy and its demands for ground rent. we’re going to get rid of the monopolies and make them into public utilities. And we’re going to do what Germany and central Europe were doing. We’re going to redesign banking so that it’s actually going to finance industry, not just finance war debts and predatory debt without regard for the economy’s ability to pay and to carry these debts.

Glenn Diesen: I know that at the face of it I mean it’s almost obligatory for anyone in the west that we should all interpret these developments as something negative given that this represents a massive power shift from the west to the east

And of course, there’s something to be said about that but on the other hand it has to also be recognized that the system which is now which these countries are seeking to decouple from it seem to have reached the end of the line that is as we mentioned our economies have become excessively financialized. This they’re simply not that competitive anymore. The debt has grown to such crazy levels. It’s not sustainable. Trust in this economic system is faltering.

The amount of economic inequality that’s built up. It’s given rise to an oligarchy which is being very destructive not just for society but also for politics for democracy to function and as you suggested as well the addiction to this forever wars it’s you know how long is this going to its reaching the end of the line it seems so at this point in time if there’s no other alternatives it’s strange to me that we have this yeah almost instinctive hostility towards these alternatives emerging. But again, the alternative to what is being done in places such as the Shanghai Corporation Organization is not to go back to the ’90s or the 1950s or this is already exhausted. It’s is gone.

I’m just I’m a bit confused by this hostility. Yeah. So, the German media they called it – in The Bilt they wrote this morning, this was the Summit of Tyranny or the villains’ summit you know of rogue nations that it’s just a very strange way of framing these massive historical developments taking time taking place now in the present time. I’m not sure if you have if you have if you have any ideas on the alternative

Michael Hudson: It’s a class war against socialism. It’s a class war against labor. It’s a Thatcherite Reaganomics demand for privatization.

And just in the last hour that we’ve been talking Glenn the United the US stock market is down. The Treasury bond prices are falling as long-term interest rates are rising. Gold prices have just gone over $3,500 an ounce, a hundred times their 1971 price. And you’re seeing the fact that it what the west calls democracy is I may have is oligarchy and what it’s attacking as autocracy is a society such as China that aims at raising living standards and preventing the kind of economic polarization between the financial class and the rest of the economy, the indebted economy at large that you’re having in the west.

So, you’re really having the West for the last century been following an anticlassical reaction, a fight against the whole ideals of classical economics of a mixed economy to essentially fight against government control. It’s a fight by the rentier interests. A fight by the banks backing the landlord class and the monopoly class against all of the reforms that you saw flowering in the 19th century before World War I. And all of this counterrevolution is now ended up in tying the United States and Europe in a knot and blocking its development. and the it’s the rest of the countries that are picking up the de development the trajectory the civilization was going in on the eve of World War I before this whole last century has been a long detour of US European dominance under a an increasingly unfair polarized financial oligarchy. That’s the big picture in my view.

Glenn Diesen: Yeah. Well, there’s a lot of depth to what’s happening now. I just wish it deserves some proper discourse in the West. I think it’s just depressing to me that the only way they can refer to what’s happening in China now is a summit of dictators who hate the west and hate the freedom and democracy. It’s a very intellectually bankrupt, but there we are. Anyways, Michael Hudson, thank you so much for your time. and yeah, hope you can come back on soon.

Michael Hudson: I love these discussions. They’re the big picture. Thank you for having me.