The Duran Podcast - Trump's Economic Recovery a Dead End? - Michael Hudson, Alexander Mercouris & Glenn Diesen

Episode Date: February 16, 2025

Trump's Economic Recovery a Dead End? - Michael Hudson, Alexander Mercouris & Glenn Diesen

Hi everyone and welcome. My name is Glenn Dyson and I'm joined today by Alexander McCurris and Michael Hudson, a renowned economist. And yeah, we really want to discuss today what the Trump administration might be aiming to achieve and to what extent it actually can be achieved if it's going the wrong path in terms of pursuing economic recovery. There seems to be more or less a trend one, at least suspects, which is the emphasis on attempting to cut costs, to rein in the debt. Also, the reluctance to engage in new wars also seems to be, to a large extent, motivated by the need to cut the costs, the overall idea that the empire needs greater return on investment, but of course, also the reindustrialization. through tariffs, which has also become a very key centerpiece in what Trump's, Trump appears to achieve. And again, one also has to keep in mind that William McKinley, the 25th president of the United States, is commonly held up as his favorite president, and if not one of the favorite, at least. And one can then see some of the same policy

ideas, which is the tariffs to support the industrialization in the U.S., to protect provide some protection for domestic industry, sound money, gold standard, expansion of US economic power, the development of infrastructure. At the last part, I haven't heard much from Trump, but this is really what we want to discuss. So I'm very happy to have both you, Alexander and Michael with me, because I'm, it's, I guess maybe we can start with the tariffs, because this is maybe one of the more controversial, or disputed issues that we're dealing with. Again, the tariffs, they have a long history in the United States

back to the American system of protecting infant industries so they can become competitive in international markets. So you don't have to have a low-quality, high-cost goods competing with, well, low-cost, high-quality goods. That is the mature industries. But, yeah, what likelihood, do these tariffs have to succeed? Well, tariffs did succeed, as you pointed out, in the golden age,

which to Trump was the Gilded Age also. But the American system that helped the United States industrialize and become the leading industrial power wasn't simply tariffs. There were two parts of the American system, and I want to point out what Trump is misinterpreted, as to how to revive American industrial growth and what he's not doing. Terrorists were certainly part of it, and the United States had spent over half a century in trying to raise prices enough so that if British and other manufacturers came into

the country, it couldn't undersell American industry. And that certainly enabled industry to charge prices high enough to have the money to make capital investment. But the industry was still run by industrialists. And industrial, there was a class war that went hand in hand with this protectionism. And on the one hand, the American system said, if we're going to have a highly developed industry, in America, we need high wages because well-educated labor, well-clothed labor, well-fed labor is much more productive than low-cost proper labor. How are we going to be competitive with high-wage labor? Well, the American solution is we're going to have active government infrastructure spending.

The government is going to pay for education. American laborers. does not have to have wages high enough to pay $50,000 a year for higher education, we're going to provide public health. So it's not going to take 18% of our GDP. We're going to provide basic services instead of monopolies such as transportation and communication. The government is going to provide these freely, or at least it costs. So while you're going to have wages and productivity rising in the United States, the wage payments of industry, the cost of production to industrialists will not go up because the government will be paying for it, largely by taxing the rent recipients. When the income tax came in in America, in 1913, only 1% of America had to pay the income tax.

And that was almost entirely the financial sector and the real estate sector. Well, by World War I, America had indeed achieved this dominance that succeeded. They backed free trade. But now, let's fast forward from the 1980s onwards. The financialization has led to de-industrialization here. And it's taken a very right-wing fiscal policy. It goes hand in hand with neoliberal privatization. And so instead of the government providing the services that you'll have in Europe and many other countries

of providing health care education freely, the Americans require their employees to pay for their own education, to take on debt to do that, pay for their own medical care. Well, the result is that America has priced itself out of the market for, industrial goods. It can't compete. And there's no way that no matter how high you raise the tariffs, it would have to be 300%, 400% in order to enable industry to be productive and afford to make a profit when it has to pay labor enough to afford all of these costs that have been privatized. And of course, if under that case, the protectionism might enable some industries to get started here, but they could not be export industries. So America would lose

its export power if it followed Trump's tariff policy. So what's America going to do? Well, the easiest picking is on its major trading partners, Canada, Mexico, precisely because they're the most closely integrated with the U.S. economy. And they can be threatened by Trump's doing just what he said. If they puts imports on Mexico, it's going to stop all of the American affiliates all along the southern border, the Rio Grande, that have been essentially assembly plants by inexpensive Mexican labor to produce goods for the parent companies in the United States. So the American companies have offshoreed labor to Mexico for this production, and they need all of these parts in order to make the finish good. With Canada, it's even more important.

The Autopact of the 1970s with Canada reached an agreement that Detroit and Windsor, right across the Canadian border in Ontario, are going to split the production of automobiles. Most of the finished automobiles are going to be made in Detroit and it'll be made in America cars. But the made in America is going to have a lot of parts that are made in Canada and right across the river, the trucks and the trains go back and forth with the semi-finished cars, all of the parts that go into a car, the machinery, all is made there. America has become sort of an assembly plant for imported materials. And the final automobile that's produced in America may contain a lot of parts in Canada,

a lot of parts from Mexico. But it's all counted as American GDP. And certainly in terms of GDP, well, it is GDP, but it's not all an American-made GDP. Well, imagine what would happen now if Trump doesn't realize this organic, systemic interconnect between America's finished products and the parts that go into it. All of a sudden, he's going to interrupt the supply lines. Well, interruption is really what he thought was going to be the Great American Strategy. There is one thing that America has to offer the world that no other country has to do,

and that is the power not to interrupt their economies, not to disrupt. their economies, that if you don't do what we say, we'll disrupt you. That's what Trump said to Colombia a few weeks ago. You know, we're going, if you don't accept our immigrants, we're not going to have any Colombian imports to America. What are you going to do with all of your coffee now that you can't send it to us? And we're going to prevent your officials from traveling back and forth. We have the power to disrupt. Other countries don't think that way, and they don't do it. But what Trump will be disrupting with Canada and Mexico

is something much more than coffee. He'll disrupt the American whole system of supply lines. So we're talking about, let's say, a 10% tariff on these goods. That tariff is going to have to be, is not going to be spent by the exporters because the auto companies are going to have to have the parts from Canada and Mexico to make their automobiles because they don't produce them here. They can't afford quickly to make a new factory to produce these parts. They're stuck with the existing system.

And so the tariffs are going to increase the cost of making an automobile. This is exactly what happened in Trump's last administration. When he tried to get the votes of the steel workers union by levying tariffs on steel. And the problem of levying tariffs on steel prices went up. It created a price umbrella, just like in the 19th century. But steel is something that manufacturers have to use. Almost all industrial goods use steel. So by raising steel prices, you increase the price of manufacturing the price of manufacturing.

manufacturers and almost everything else right across the board. When there was the American tariff policy in the 19th century, it said, we don't want to tax raw materials. We want to get raw materials like England does as cheaply as possible. We want to have tariffs on the finished goods, the value added, the industrial products. Somehow Trump doesn't realize that there's a difference between putting a tariff on a, in industrial good and putting it on a raw material that goes into making industrial good. So he's threatened just to increase the American price structure right across the board. And if other countries don't go along with this, if they protest, if they retaliate,

then he's going to just interrupt the trade, raise the tariffs more, interrupt the trade. And that's going to create a breakdown in the supply line. So what he is threatening? to do is destabilize American industry. Well, it'll destabilize Canada's balance of payment. It'll disable the Mexico's balance of payments. It'll prevent them from paying their debts. The American dollar will go up against these currencies temporarily, or at least they'll go down. But this is not going to help America reindustrialize at all. It's most interesting because I think what you're basically,

saying is that he doesn't really understand the actual American system that he's talking about. He's just cherry-picking bits of it that are simple and easy for him to understand. He's got this idea that tariffs by themselves were what made America great. So he's going to impose these tariffs without really looking through all of the consequences or understanding them very well. And I once studied this period in American history. This is a long long time ago, so I mean, we're talking about decades away. I know you have looked at it far more thoroughly and deeply than I have done. But we have an expression in England which comes from our literature,

which is that the past is another country. Things are done differently there. And I think that not only doesn't just, Trump not understand what the actual American system of the 19th century was and what a very carefully thought out and planned system that also was underpinned by a lot of very serious thinking by economic writers about which you are extremely well informed. In fact, I've taken a lot of that from you. But he also doesn't understand that the United States of that period was a very, very different country, a very different place from the United States of today, and that the American

economy was in a different situation from the one that it is in today. Can I just put this to you, and I'm just putting this as a British person. In the early 20th century, there was a drift in Britain towards protection. It was a symptom of a growing sense in Britain that we were losing industrial competitiveness, that we were losing our industrial edge, which we absolutely worked, by the way, and that this had to be stopped and reversed in some way. So it was actually a retreat from the big ambitions of empire that we had had before in a free trade, which by the way, went hand in hand with empire and imperialism in the 19th century. In other words, it was a response, if you like, to relative decline. And it wasn't fully thought through. We had a so-called imperial preference

in the 1930s, which was not particularly well thought through. It did achieve something. but it created all kinds of other problems. And that this that we're seeing now has something of that quality about it also, a sense that the position that the United States is in today, it's experiencing some of the same problems that Britain did in the early 19th century, early 20th century. They're coming up with the same kind of rhetorical responses, and they're mainly rhetorical responses

without really addressing the underlying problems. Well, you put your finger on it when you said that Trump doesn't understand how the world economy works. That poses a problem for us because we're trying to forecast what's going to happen here. But how can you forecast

how the United States and Trump will act if he doesn't know what he's doing? We know what might be the self-interested, interested in the United States, and if it's smart, here's what it'll do, but he's not smart because he doesn't look at history. Well, you're right to point out what happens in the 1920s, Alex, because what happened as a result of protectionism, America emerged from World War I, along with Britain, as the dominant industrial power, and once you become the dominant power, what do you want?

You want just what Britain did after it was protectionist. You want free trade, you want to pull up the ladder so that other countries are not going to do what you've done and use active government spending to nurture their own industry and agriculture and self-sufficiency. So they're not dependent on the leading country. Free trade was locked in in 1945 and the imperial preference that Britain had tried to work in was all given up with a British loan in the early 1940s. And then in 1944, America made another British loan and said,

you've got to end imperial preference. You've got to let India that's made all of this money in World War II. You've got to let it spend wherever it wants. You can't tie India to just buying British industrial products. And we won't make you the loan unless you'll. let them spend it everywhere. Well, you know what happened, India and other countries, Latin American countries that had been using sterling balances,

ended up spending the sterling balances in the United States. And the U.S. increased its supply of the world's gold from 50%. A lot of gold came in the 1930s as a flight capital from Europe to 80% by the time the Korean War broke out in 1950. So the United States was not only the leading industrial power, but the leading financial power as well, and that made it able to be the leading military power. It had enough extra money that it could afford, beginning in 1950, a constant decade after decade of balance of payments deficits,

spending money not only militarily, but as Glenn's been reading about, on political activities. Long before there was an AID or national endowment for democracy, the United States had been spending an enormous amount trying to control the politics of Europe, Operation Gladiotio and Italy, and all the other countries. So it was doing great. But then what happened was America got so rich that it began to polarize. They developed the idea of neoliberalism, and all of a sudden, there was a feeling, an anti-government feeling.

They thought that this mixed economy, public-private economy, that had made America rich, just that it had made England rich, was somehow socialism. And they didn't realize that it was industrial capitalism. It was the industrialists that were benefiting from the government support. And beginning with Margaret Thatcher and Ronald Reagan in the 1980s, they dismantled this whole support system. And all of a sudden, the cost structures went way, way up. And that was the beginning of the deindustrialization. It was locked even more when Americans decided, well, we're not going to pay high wages here. We can make money by offshoring our labor.

and you had President Clinton come in, admit China to the World Trade Organization, and there was a flow of offshoring labor, Mexico, Canada, China, Asia, and without labor, without industrial production, and with a constant drain of the balance of payments to wage the war and military interference to maintain this, America lost its advantage. But what could America do to prevent it? that. They can't admit what's happened because that's not their ideology. They can't, you're not going to have a libertarian like Trump or Musk say, gee, we really should have gone the socialist

route. They're not going to say that. We really should have paid our labor more. We really should have had government providing free education and public health care. They're not going to say that. That's the trouble. How do you forecast somebody who's run into a wall? Well, I like that Alexander used the word, sorry, chair picking, because, sorry, because, of course, the tariffs were an important component, but also what made the whole thing back then work was, as you also suggested, you avoided the accumulation of excessive wealth,

you know, taxing the rent seeker, the oligarchs, So from the real estate and finance and use this to the developed education, the infrastructure, making the economy in the same go more competitive. But it seems as if what Trump might be pursuing is still a bit of a neoliberal approach, but with the tariffs. So again, I guess the whole package would be very difficult for the United States as it's tend to polarize everything as either being neoliberal or socialist. So it could be an ideological challenge.

But I also wanted to ask about the issue of sound money, because, again, I'm listening to Musk who says the US is close to bankruptcy, or getting there at least, and Trump's also seemingly wanting to cut the spending. What is the prospects for the United States to return to sound money? because the debt is a huge problem, but of course it's also linked to the oligarchy, which corrupts politics, which makes very difficult to actually implement some of this industrial capitalism,

which he seems to aspire for. Well, I don't think the United States can have industrial capitalism, as long as you have so much of the budget for not only labor, but for corporations going, to Rontier income, for debt service, for the cost of housing, for rent, for monopoly prices. Monopoly prices, the monopolists are all for libertarians to prevent government regulation of them. And so you're having, without a public, private, mixed economy, you're not going to have industrialization or even modern agriculture or technology.

And as I think we've spoken before, corporate income in the United States is not spent mainly on new capital formation. 92% of the cash flow, the revenue of corporations is spent on stock buybacks and dividend payouts to increase the price of stocks. That's not industrialization. That's financialization. That's making money by financial money. manipulation by inflating asset prices, not by actually producing more, cutting costs,

and spending research and development. Research and development take time to develop. And if you spend on research and development, you don't have this revenue to spend on stock buybacks or payout as dividends. Well, look at what's happened to Intel, for instance. The United States is not only blocked other countries from importing to the U.S., but it's blocked American companies from exporting to their largest market, China. Intel's largest market was from China. The Biden administration said you can't export to China, your computer chips to China anymore

because they may use it to become more productive. And Intel said, well, China's, I think, gets 30 or 40% of our sales. If we don't export our chips to China, there goes our profit margin. And if we don't have profits, how are we going to invest in the research and development to keep up with China as it's increasing productivity and going ahead? Intel's price has gone down. Well, you're seeing a similar thing happened in the last two weeks with Navidia, as the Chinese have come out with their very low-cost stocks.

You have it in the American high-tech industry, the Silicon Valley, you have something that used to be called Pentagon Capitalism. Pentagon Capitalism was the, instead of making profits, the military, industrial companies would build a government at cost plus 10%. They were guaranteed a 10% profit. And what do you do if you want to increase your profits and it's 10% of the costs? You maximize the costs. The more it costs to make a gun or something, the more you charge and the more profit you make. Well, something like that's occurred in the high tech industry. They've used more than any other industry. The computer and high tech industries

used its revenue for stock buybacks. Google and all the others. Originally, Google and Mac companies said, you know, we really don't want to be taken over by private capital because they're going to make us pay out all of our dividends. We want to be research companies. Well, they were all taken over by capital. Their financial managers took over from the technology managers, and now they've made themselves so high cost that they can be radically undersold by China.

And certainly by other computers, companies in other countries. So, again, this whole ideology, or I guess Glenn, as you'd say, the narrative has tied them in knots, preventing them from understanding what is the essence of competition in the world, the way it's structured geopolitically and financially today. I think that, again, I hope I'm not reading, you know, misrepresenting here. But I get the sense that one of the fundamental problems one has with economic decision making, not just in the United States, but in many, many places, is you always come across, we've all come across people like this who come up to you and say, you know, there's this wonderful capitalism that used to exist.

It's completely pure. There's no interference by the government. There's no interference by the state. Taxes are very low. people are left alone to do everything that they want to do by themselves. The market regulates all the prices and decides all the demand. And the problems that we have today are that we have gone away from that capitalism. If we revert to that capitalism, which they always place in some golden age in the past,

often the late 19th century, by the way, then all will be well. And I have a feeling that that is partly what we're seeing now. You know, this idea that, you know, there were tariffs, but they didn't have much income tax at that time. There wasn't much regulation. Everybody was left alone to do what they wanted. In fact, that capitalism, that has never existed. There has never been in any place a capitalism that really actually worked in that way.

certainly 19th century America was never like that. And if we're going to be truthful about what 19th century America was like, in some respects, not of course in all respects, but in terms of the sort of purposeful economic development that one had in that time, the aggressive way in which industrial development was pursued, it's actually closer to the model that you see. in China today sent to this

fantasy picture that these people have created for themselves about the United States. Now I think, you know, Trump,

whose background is in real estate development, he probably believes in this, as I said, fantasy capitalism of the past.

I'm sure that other people in the financial world where, you know, they always come along, people always tell you

why doesn't government get out of the way, why Don't they just let us do what we like? We know best. The market knows best. It'll always produce the optimal outcome.

I think these people have far too much influence on the way decisions are made in the world today. Well, that's the whole point, Alex. What is capitalism? It's not what they write about in the textbooks. And in order to really understand capitalism, you have to look at how did it develop and what were the dynamics?

But they don't teach economic history anymore, so you're not going to learn that. And they don't teach the history of economic thought anymore. So you're not going to have – there's no teaching about the 19th century classical economists that describe what they thought in industrial capitalism should look like. You want to get rid of the economic overhead. Industrial capitalism wanted to cut costs to minimize. the cost of production. What do you do? You get rid of the landlord class, getting rents. That was the big fight of the 19th century. You want to get rid of all forms of economic rent. You want to get

rid of monopoly rent. And finally, you want to get rid of usury-type banking. You try to get rid of the kind of banking that Britain had banking and stock brokering that was simply to make money financially. You want to industrialize banking, as was happening in Germany and in Central Europe. where the aim of governments working with banking was to finance industrial investment, especially in the war industries, because those are the heavy industry of steel, but you needed to get rid of the overhead.

Well, by finance capitalism that occurred as developed in the last half century or so is just the opposite. It makes money financially, not industrially, And it's all about a rent-seeking Rontier economy. And if you have a Rontier economy as the way to become a billionaire, and now that they've privatized the election process in America, through the Citizens United Supreme Court ruling

and the private companies get to contribute to the election campaigns of politicians, you have politics auctioned off to the highest bidders. the highest bidders are the rent recipients, the monopolists, basically the bankers and financiers, the absentee landlord class, you have just exactly the opposite of the kind of capitalism that Adam Smith and John Stuart Mill and Marx were talking about. Marx did not anticipate anything like we're having today. Marx thought capitalism was going to evolve into socialism, as it seemed in a way to be evolving even in the right-wing

American protectionists that wanted at least socialized infrastructure, socialized monopolies. None of that's occurred. There's been a rollback. And so, if you don't understand what is led to America's de-industrialization

so that you can re-de-industrialized de-de-industrialized, what are you going to do? There's no self-understanding of the process and if you go into a policy discussion without understanding how you got to where you are, how are you going to understand how the system really works? What would be a possible path, though, if you would take a job as an economic advisor for

Trump, if the goal is to re-industrialize because you obviously order expressed pessimism towards it actually being a possibility, because as we discussed, a key problem with the supply chains. So with the tariffs, it's obviously that the supply chains would, they look very different now than they did back then. And obviously putting tariffs, for example, on Mexico, that would, for all the spare parts, yeah, that would end up with a higher cost for the finished product in the United States.

And then, you know, its key industries would no longer be competitive. But what can actually the United States do besides, you know, not killing off, but reducing the oligarchy class. Is infrastructure really the key here? And getting the rent seekers out, that is the people who extract money from the production process without actually contributing much. Is this the main issue, the debt, the oligarchy and the infrastructure? Or do you, would you have any other solutions?

Well, what you just said, Glenn, is pretty much what Kane said in the 1930s. And he had a solution, the euthanasia of the Rontier. He put that phrase into public discussion. But if the Rontiers are running the economy and running politics, it can't be euthanized. So I think that, and if I told that to Trump, he'd say, but that's my constituency. I became a billionaire by being a landlord, a Rontier. We're not going to commit suicide. What we're going to do, what do they do?

They double down on what they're doing. They're doing exactly the opposite of what you've said. And the way that they frame the issue of American foreign policy is instead of euthanasia of the Rontier, how do we make America still dominate the world by being a Rontier de-industrialized, and even demilitary, demilitarized society. And I have an idea of what's going on.

And I think you begin to see that in the last few weeks of what the new Secretary of State, Mark Rubio, has said. Rubio has seemed to come around to the same point that Vladimir Putin and Foreign Secretary Lavrov have emphasized that there should be a move away from the United States into a multipolarity to free other countries from the U.S. financial and military and covert dominant. and to Trump and the existing administration is, well, if we're going to continue to get rich without producing the wealth ourselves, we're going to have to get rich by getting it from other countries.

In a way, we will have to be an international Rontier way beyond our borders. So when Rubio says there has to be multipolarity, he's talking about something very different from what the BRICS countries and Russia and China are talking about. He's talking about, I think, something that Britain used to call divide and conquered strategy. What the U.S. diplomats want is not a kind of equality of nations in law as under United Nations International Law. What they fear is a new power center, centered in China, Russia and Iran. They're not looking at how to industrialize America. They're thinking,

how do we prevent other countries from being rivals? They turn the discussion we're having inside out and upside down. They fear a new power center, and quote of China, Russia, and Iran reach out to Turkey and other Islamic countries, and even pulling South Korea and Japan out of the U.S. orbit. And maybe after another 30 years, even Europe will finally decide that it's economic future lies with Eurasia, not with across the United States. So to the U.S., if I had this discussion with Trump, he'd say, well, multipolarity means many nations acting nationalistically and coming together in a kind of critical mass.

so that they could counter the U.S. dominance of the world economy. That's what we're trying to stop. And the way to stop other countries coming together is, again, divide and conquer, make each of them push for nationalistic policy, these parties, that at the same time they're nationalistic, they're pro-rontier, they're anti-labor, and they're against government power. We don't, Trump could say, well, you're right to industrialize, we need government investment, but that means government power, and if there's government power, they're going to regulate what we're doing.

And we, in Silicon Valley and other monopolies, don't want any regulation of our monopoly prices. We don't want regulation of the prices, price gouging of profit inflation, as they call it, just charging whatever, you can, we want to be, essentially, the government, and essentially free markets to a neoliberal means centralized planning, but it means moving centralized planning away from Washington and the political centers to the financial centers. So now America's a centralized planned economy, especially under Trump and Musk, but they're the planners now. And that's the fight that you're having when Trump is going to clean out the CIA, the State Department, the Pentagon, and even the finance department. There's a whole shift in personnel from the old type Democratic Party government, old-time liberals,

to the neoliberal, the libertarians. And that's really the fight that's going on. And it's not going to re-industrialize America. They actually dream that America can dominate. the world without industrializing simply by threatening to destabilize it, by picking each country and say, what can we do to destabilize their economy? What can we do to destabilize their politics so that they can't get together and no matter how bad we are, they're in a worse condition. American's diplomacy. I think this is absolutely spot on actually. Can I, can

just to make a few points quickly. A couple of months ago, I read an absolutely ferocious, very, very angry article in the Daily Telegraph, place which you will always find. The orthodox views expressed really angrily disputing your point that there's a difference between income from rents, profits from rents and profits from, you know, business, industries, that kind of thing, insisting that the two are just identical and that anybody who argues otherwise is somehow out to subvert the entire economic system. And I remember being struck by the vehemence and anger with which that article was written. And I suspect you would probably find

exactly the same reaction in America if you contacted some of the people there and tried to argue with them at some of the points that you've been making. So that's, that's, one thing I wanted to say. But the other thing is, I think that this is your point about the difference between Putin vision, Xi Jinping vision, Brick's vision of multipolarity, and the one that the Americans now are talking about is absolutely spot on. Because what the, what the BRICS countries are collectively saying, and it's the Russians perhaps articulated most coherently, but the Chinese also do to a great extent as well, is they say, look, what we want to do is we want to have a system where everybody trades with everybody, where we all have an equal say in the system. We are all developing

our economies in our own different ways, but we are doing so in conditions of peace. What the Americans are now saying is that we're going to have a multipolar system, but one of intense competition between great powers. Rubio spoke about all great powers act in their own self-interest, but the approach will be not just self-interest, but very predatory self-interest. In other words, a sphere of influence, and now people are increasing.

talking about American spheres of influence, but a sphere of influence which will be extractive, in other words, which you will extract the wealth from. Again, to a British person, it has, I have to say, resemblances to what, to what the British Empire in a way became. I mean, right up until the 1950s, the British was still extracting wealth from places like Malaysia and of course India and all of those other places. But this seems to be what is being talked about now, a much more coercive approach to people within your own sphere, very, very different from Brick's multipolarity.

The language, some of the rhetoric may be the same, and perhaps it's borrowed, but the concept behind it is profoundly different. Well, you're right. That's really the key. You have two different philosophies of development, extractive versus productive. And as you said, the extractive philosophy is coercive. How are you going to do? The productive philosophy is, well, we're going to get countries to work together by mutual gain. Each of us are going to gain. Well, Trump says that any deal that America makes, America has to win. That means every deal is there's a winner and a loser. This is the opposite of what

President Chi says. So what are other countries going to do as an alternative? Well, it ultimately becomes an ideological issue. You need an ideology. You need to spell out what are our specific policies going to be, our tax policy, our financial policy, what is the role of government enterprise to prevent private monopolies and keep monopolies in the public interest. You need the kind of ideological flowering that you had in Britain, in classical political economy in the 19th century, in America, in the American system. And all of that ideology, no matter what it was, was drawing a distinction between productive labor, and investment and Rontier, rent-seeking labor.

That was extractive, production and extractive again. So far, I don't see the British countries developing this common plan of action, this common ideology that you had in classical economics of the American system, because a lot of the British countries themselves are Rontier economies. has created client oligarchies through much of the global south. How are these client oligarchies going to join in Bricks? You've already had Argentina say, well, we're neoliberal. We're certainly not going to join Bricks.

Even Brazil is sort of wheezy about this, because Brazil is as much of a financial monopoly oligarchy as Argentina is. So that's the whole problem. Some countries within BRICS, presumably China and Russia and Iran will take the lead, have to spell out if you want to be productive, if you want to make a win-win offer and diplomacy, the neighboring countries, if you want to bring in the Philippines and Korea and Japan and Taiwan

to pry them all the way out of the O, orbit, you have to show that there will be increasing production and it will be spread among your population as a whole. You have to look at the distribution issue. It's not just GDP, it's the distribution to raise the whole living standards and productivity of your country. Well, that's not neoliberalism. That's a difference in philosophy, and we used to call that socialism.

I don't see the bricks moving there. So the American strategy is to prevent any kind of doctrine like that. And that's what the National Endowment for Democracy and all of the associated neoliberal non-governmental organizations are for, as Glenn's been writing about. there is another leg though of this McKinley's economic policy which was a bit due to his time as well which was the expansion of this

US economic power obviously this was at the end of the 19th century in 1898 the US won the war against the Spaniards and as a result took over some of its colonial possession so from Puerto Rico to Philippines and America became a colonial power you know McKinley was also pushing

hard for the Panama Canal to unite Atlantic with the Pacific under US control. Again, it only happened after his death, but nonetheless, this already starts to sound very familiar, I guess, to Trump's idea of retaking Panama Canal, you know, seizing Greenland, well, effectively restoring some control over the transportation corridors, which were seen as being quite vital as well as the access to key markets. The Arctic, of course, being quite important if we look at Greenland. But this seems to be a, can this be linked to the wider shift towards what you refer to as the international extraction or international rent seeker? Because this has actually been one of my concerns about Europe. His position is this multipolar system because for the United

the states which can't really compete with China, it can't sufficiently re-industrialize, and it seems to be stuck in relative decline. It seems to be, has a strong incentive to push for extracting resources from the periphery back to the core. And we see this to some extent with the United States, for example, demanding that the Europeans should buy more of its expensive gas as opposed to buying more reasonable. We see the cannibalization of European industries, but also in East Asia, the argument by Trump that South Korea should, that all the semiconductor industries should be moved over to the United States, that this is the period which you might be entering when the US begin to cannibalize its allies, which is not a good position

for the Europeans, as the Europeans are so dependent on the US for security that it looks like the political class really spends older political energy on excuses. the U.S. pillaging the continent as opposed to actually pushing back. So, yeah, do you have any, do two of you have any views on this in terms of, yeah, if it fits within the, if it's any deliberate strategy or if it's a permanent direction, or how do you see this? Well, I think you're right to focus on transport corridors, because this was the whole concept of geopolitics a century ago. You had the British concept of the way you control the transport corridors or by sea trade, by ports that the British Navy could support. And that was the idea that other countries are going to be producing mainly for exports to the United States.

For instance, Egypt sold 80% of its exports, mainly cotton, to Britain. and the Latin American countries sold their exports by sea trade to the United States. Well, the opposite of that is the China's Belt and Road. It's looking, instead of connecting the economy by the rim countries and the rim ports, it was the continental Eurasian idea. That's what the Belt and Road is all about. So the United States is trying to base its military and geopolitical strategy on creating interruptions in China's ability to create a built-in-road linking the Eurasian continent altogether, not needing sea trade, but by railroads primarily and by with Europe, the pipelines, so that Europe would get its gas and oil through pipelines. from Russia instead of sea trade by LNG tankers with compressed national gas.

That's exactly what the point is. So again, what is the role of the United States here? It's as a wrecker, not as a producer. It's to prevent countries from being able to integrate their economies in an overland route to prevent the Eurasian continent from being the key. And to keep the rim countries, the United States, controlling the ports, controlling the Panama Canal, just as Egypt tried to dominate the solution. To keep that way. So that's the geopolitical manifestation of what you're saying.

And again, it's being a record versus producers. So we're back into the productive versus unproductive. If you can monopolize the means of communications, you can prevent other countries from creating a win-win mutual interdependency on each other's, and you focus their trade on the United States primarily, and the United States becomes a Rontier economy by its power to destabilize the rest of the world. That's really the, I think, what Trump's diplomacy is all about. I think that's a completely dystopian vision, if I can say, I'm not disputing that that's probably what these people are thinking. But again, it is so like, to me, it has a tremendous sense

of deja vu, if you look again at Britain, because the British were to all of this, control canals, control sea lanes, prevent the, Eurasian continent coming together. We came up with the concept of geopolitics. We had Mekinder and all of that in the early 20th century. And we see all this coming back today. And I don't think it did Britain any good in the end. And I'm convinced it won't do the United States any good in the end.

It will make the United States seem around the world, the country that is standing in the way of people who want to make their lives better and want to make their lives more materially prosperous. And eventually, given the world we have, what will happen is everybody will start comparing notes amongst themselves and they'll be starting to say, well, look, this is what the Americans are trying to do to stop us increasing our wealth in Indonesia. You've got the same problems in Vietnam. So Indonesia, Vietnam, China, let's all get together and find ways around what the Americans are trying to do.

That is what's going to happen. It's going to make people want to come together in opposition to the US in ways that they might not otherwise do. Now, can I just say coming back, and I think you've actually hit on a very, very profound point, and it is really the whole,

if you like, at the centre of the BRICS project. It is precisely what you said, that they have so far, far, no coherent economic theories of their own. You have bits of them. And one of the things I would say, I used to have contacts through my wife with Russian universities.

And I did find that in the regional universities, the one I got to know best was Perm, the university in Perm. The economics departments there were in bitter conflict, and disagreement about economic development in Russia with the more central universities in Moscow, especially, I mean, there was particular criticism

of the High School of Economics, by the way, but, you know, all of them. And in the regions, you would have economics departments would say, we've got to look at this in a completely different way. You're looking at everything, you know, from a perspective of Anglo-enbts, Orthodoxes, which really aren't beneficial to us. And it may be that out of that tension, and I remember being surprised at how strong that tension was,

that something will eventually develop. You can also see this play out to some extent in arguments that take place all the time in Moscow between the economics ministry and the central bank. The central bank used to much more orthodox Anglo-American, and economic thinking than the economics ministry does. Perhaps one day, either in Russia or in China, a new idea and model of economics will come. The kind of efflorescence of thinking that one did see in Britain and in America in the 19th century,

and which you also saw with Keynes, I think, in Britain in the 20th century. But we're very, very far from that point yet. And one of the great achievements of the Americans over the last 30 years is the way in which they seem to have taken over the economic schools everywhere. It is an absolute fact. Everybody thinks if you go to, you know, St. Petersburg or Shanghai, everybody teaches economics in the American way. Just a second. But this is a problem, though, that it's been so standardized because, I think, was Walter Whitman who pointed out Walter Lippman, sorry, that when everyone thinks the same,

nobody's thinking at all. And I actually remember this from high school economics. I used to work there as a professor in Moscow, and he was set up as a very liberal institution to all around the market economy, very neoliberal. However, I was in a different department physically in a different place as well. where I only looked at Hamilton, Friedrich Liszt, Sergei Witte, the ones who are not included into the curriculum in the liberal economic sphere. I just want to come with a final comment just based on what Professor Hudson pointed out

with this land-power, sea power, because I think this is really aware how you can explain some of the economics as well, because as you know, historically, the sea power sort of well the path to dominance if you dominate the sea corridors would be to divide and conquer the Eurasian land powers so as long as they would be divided then

there wouldn't be a challenger so the Russians and the Germans but also of course preventing the Russians from going towards Iran towards British India or the far east and but again it was always dependent on on divided and rule

given that if you control the main sea corridors, it's difficult to diversify routes. So it's more stronger impulse towards this hegemony and also towards this more imperialist.

But there was of course, Mackender but on the Russian side, there are people like Savitsky who viewed Eurasia as being the exact opposite. So again, these were Russian erasianists in the

1920s. And the main idea was, if you're going to have the Eurasian powers rising, they can't do it alone because of the vastness of the continent. And also, their economic prosperity would come from the need to find a way of cooperating with others. You even saw the Germans from the 1920s. They imagined a land bridge to counter the maritime powers that, you know, the Germans would have to align themselves with the Russians and the Chinese and find some cooperative format. And this is, to some extent it seems today what the Chinese are talking about win-win. If you want an international economic infrastructure which use Eurasia's spearhead, again, Chinese might be dominant, but they can't pull it off without harmonizing their interest with the Russians because they

can't afford to alienate them. So it creates his incentives for overcoming differences and cooperating as opposed to what they viewed at least in the early 1900s as being this maritime hegemonic impulse towards division. But again, one hopes that we might overcome, yeah, that we overcome history and not do the same thing century after century. Anyways, yeah, we seem to be running out of time. Do you have any final comments?

Well, I'm going to give the final comment, Professor Hudson, as far as I'm concerned, yes. Well, I want to say one thing about what Alex said, because it's very important. classical economics survived largely through Marxism, and there are only two countries that there's no trace of Marxism at all. China and Russia, when I go to, and I've been a professor at three Chinese universities, the students all complain that they don't get the jobs that they want are given to

America, if they're in economics, are trained in America. And I've been to a number of Marxist conferences in China and talked about volume two and volume three of capital, all about rent and finance. That was not a popular discussion there. Colleagues of mine, like I want to go into the name, have also said you've got to look at Mark, if you're going to have this geopolitics in Belt and Road, how are you. you're going to balance private enterprise, monopoly, and governments to prevent transportation being used in an extractive way like the neoliberals are trying to do.

There is no discussion of the difference between rent-seeking investment and productive investment, because they don't study, not only don't they study Marx, but they don't study the classical economics that led to Marx. I had exactly the same problem with many discussions in Moscow, and in fact, growing up in the 1950s and the 1960s, the Communist Party Marxists in America, it's all about labor and capital, employer-employee relations. It's not about the big picture that Marx talked about, the landlord economy, the finance economy.

So if you're going to have this international economy, how are you going to look at the fact that economies are multi-layered and multi-sectored. That's what Marx is all about, and it's not what I haven't seen any discussion about that in bricks or in Chinese discussions regarding the current real estate and financial problems that they're having. And I think you're right when you talk about the Russia Central Bank, 21% interest rates, I think that's crazy. It's neoliberal.

How are you going to solve this problem? that America, it may conquer the other rest of the world through neoliberal ideology more than in other dimensions. Absolutely. I mean, as I said, I have seen some tensions, as I said, when I was in Perm, which is, of course, a regional center. It's a big place, by the way. I mean, it's, I think, over a million people. but a regional university, there is much more diverse thinking about economic questions because they are connected to local industry.

There are factories, there's a factory there that makes aircraft engines. They have all that kind of things. So they do have a more industrial perspective of things. And there is, as I say, bitter antagonism between them and the people in Moscow. But that is not to say that in perm, they have really developed an alternative economics. I mean, they have a sense that this isn't quite what really works for them. But without really developing a proper framework, they haven't got anywhere close to this. Now, maybe one day they will.

I mean, you know, if you know about Russia, you do know that sometimes interesting ideas do come out of the regions. I mean, Professor Lieberman, who became very influential in economics in Russia in the 60s, came from Kharkov, not from Moscow, for example. So it's possible. But it's not happened yet. Maybe with the changes that are taking place in Russia now, with a push, with a much stronger growth and focus on, industrialization, maybe that will change too. And maybe it will change in China as well. But at the moment, you're absolutely right. The greatest success in economics, in thinking, is an intellectual one of the United States. As I said, all the economics departments everywhere have been taken over by them.

And by the way, the same is true of the people who run economic policy, not just the central bank, but in the financial sectors as well. Again, I once attended a meeting of bankers in Moscow, and I was astonished to hear how, you know, they were just parroting things that they'd obviously copied from American banking practice. And one of them very aggressively was saying, what we need to do is to reform our banking system to make it even more like the American than it already is.

So there we go. Well, Michael, Alexander, yeah, thanks to, thank you both for your time. And it's been very interesting. So thanks again. Thank you. Professor Hudson, thank you. Thank you.