DANNY HAIFONG: Welcome, everyone. It’s your host, Danny Haiphong, and I am here for another live stream this afternoon. I wanted to begin by saying that we are going to center the theme of today’s discussion on the decline and the fall of the U.S. empire and the economic roots of this as we see major developments, both militarily and economically, globally, just absolutely shake up the world order as we speak. So the two guests I am bringing on today are renowned economists, prolific authors, academics, and so much more.
I will introduce them now. We have first a returning guest, friend of the show, Professor Richard Wolff. Hello, Richard. How are you?
RICHARD WOLFF: Okay, Danny. Glad to be here.
DANNY HAIPHONG: And also returning again is renowned economist and prolific author, Michael Hudson. Michael, good to see you.
MICHAEL HUDSON: Good to be here.
DANNY HAIPHONG: Great. So everybody, as you come on the live stream, be sure to hit the like button. You can also find in the video description both Richard Wolff’s and Michael Hudson’s website where you can find all of their work, including their many books that you should support. Without further ado, let us get started.
So I wanted to start with you, Richard. And before I do, I’ll play what Lindsey Graham had to say about the Ukraine conflict recently on Fox News, because I think it gets to the economic roots of some of these major developments.
We just saw Russia launch the Oreshnik missile, which has the capability of hitting anywhere really in the world, in particular Europe, in a matter of minutes without nuclear fallout. And this has made and driven NATO crazy. But we’ve talked about a lot also the economic implications of this conflict.
And I’m just going to play now what Lindsey Graham had to say, because I think it is very instructive for what this is really all about for the United States and NATO. And I like your comment to help us understand this.
FOX NEWS: Ukraine is still standing. This war is about money. People don’t talk much about it. But you know, the richest country in all of Europe for rare earth minerals is Ukraine. Two to seven trillion dollars worth of minerals that are rare earth minerals, very relevant to the 21st century. Ukraine’s ready to do a deal with us, not the Russians. So it’s in our interest to make sure that Russia doesn’t take over the place.
It’s the breadbasket of really the developing world. 50 percent of all the food going to Africa comes out of Ukraine. We can make money and have an economic relationship with Ukraine to be very beneficial to us with peace. So Donald Trump’s going to do a deal to get our money back, to enrich ourselves with rare earth minerals, a good deal for Ukraine and us. And it’s going to bring peace. And Biden’s been a disaster when it comes to containing bad guys. Ukraine is still…
DANNY HAIPHONG: So, Richard, I’ll start with you. How is this war going for, especially economically, for the United States and NATO, given what Lindsey Graham was just saying?
RICHARD WOLFF: Well, let me begin by saying that Lindsey Graham is an embarrassment to all of us. When he opens his mouth about economics, all of us, and I’m talking about my colleagues on the right, on the left, and in the middle, get ready for something which, if an undergraduate said it in one of our classrooms, we’d shake our head in disbelief at how poorly we had been able to teach that young man or woman what we’re there to do. It’s extraordinary, really extraordinary.
The issues in the Ukraine war, as made clear by the Russians over and over again, and not disputed really by anybody except, of course, Lindsey Graham, the issue is that the Russians feel their security is threatened by having a NATO member in the Ukraine on their border.
They feel as though they have let a lot of that kind of thing go, as many of the countries of Eastern Europe have already joined NATO. Ukraine is the biggest among them, and if you look at the geography, pokes into Russia quite extensively.
They didn’t want that, and they insisted that Ukraine could be an independent country, could have a government hostile to Russia, could do all kinds of things, and I’ll come back to that in a minute, but not be part of NATO, and not be, allow missiles that threaten Russia to be located on its territory.
Here’s one of the things they never asked for, and do not ask for now, to control with whom an independent Ukraine would make financial deals. The Ukraine produces a lot of food products. Russia understands that those are marketed by Ukraine around the world, and that generates income for Ukraine and is a crucial part of its economy, and Russia has no need for and no interest in doing much about that, or certainly not in ending it. And the same would be true if Ukraine has minerals and so forth. Maybe what Mr. Lindsey Graham means, because he’s not too clear in his own head about these things, which is obvious.
Maybe what he means is that the money that the United States is going to be asked to contribute to Ukraine when the war is over, to help rebuild the enormous parts of Ukraine that have been damaged in the war. Maybe what he means is that money going to Ukraine will immediately be turned around and sent right back to the United States, in the form of rare earths that the United States needs.
It wants those things. That’s nice. Normally, it would have to go and bid for them the way everybody normally does in international trade, and so the United States would be expected to do that, just like other countries bid for Ukrainian food products, and they would get those.
It’s really not germane at this point. Nobody has said that Ukraine would be limited into whom it could sell its rare earths. So Mr. Lindsey Graham is just, confused. I’m trying to be polite here. He’s confused. He can get access. You don’t need to have a war to get access, and you don’t need to persist in the war to get access. He just doesn’t understand what the hell is going on and once again embarrasses himself for those people who do.
And I’m sure he’s counting on those people being few and far between so that he can get the headline that makes it look somehow plausible for him to be supporting Mr. Trump now that he’s figured out that his career depends on it.
He’s made that mistake twice before being critical and then having to retract. So now he’s avoiding that mistake for a third time. It’s only a shame that it took him the repeated experience that touching a hot stove burns your finger.
DANNY HAIPHONG: Yeah, Michael, you can come in.
MICHAEL HUDSON: For the last few months, Richard and I both have been putting that issue in a broader perspective. We’ve used the Cold War, the fight against Russia, the fight against China, the military Cold War all over the world as being against American economic interests.
And we’ve discussed, how do we have a materialist approach to history saying that countries are going to act in their own self-interest when it seems to us that the United States is visibly not doing that. And how do we explain Europe’s behavior? How can Germany and Europe, which is being devastated by the war in Ukraine and all of the sanctions.
And how can all of these other countries somehow been backing this self-destructive American policy and say, well, we can fit that into the materialist approach to history by saying, well, it really is in America’s self-interest. Well, all of a sudden, here comes Lindsey Graham and seems to say, well, very simple, the war is in our self-interest.
But I think this is nutty for a number of reasons. I mean, on the surface of it, I can see that what Graham and the Republicans are pushing Mr. Trump to do is saying, well, I told you I was going to end the war in one day. And here’s how I’m going to do it. We’ll give Russia everything that it wants politically. We’ll let it denazify Ukraine.
We’ll sell out Zelensky. We’ll let it disarm it and protect itself. Give Russia politically what President Putin has outlined that he wants. And all we want is the natural resources that Lindsey Graham has just enumerated. We want the black soil that’s so fertile and the right to sell its agricultural products abroad.
We want the metals, the rare earths, which are very difficult, very dirty to mine, and probably are going to pollute all of that nice black soil. And there are two problems with this. Number one, what Ukraine used to be isn’t what Ukraine is now. Because what Ukraine is now is largely Russia, the Luhansk and Donetsk. And probably Russia is going to take all of the seacoast right over to Odessa. And it may go now further west all the way to the Dnieper River. Well, if that’s the case, where are the natural resources? Where is the productive strength of Ukraine for the last hundred years? It’s all in the east in what is now part of Russia.
So. it’s very unlikely that the Russian parts that are going to somehow let American companies come in, mine everything, leaving Russia with nothing. They’ll say we don’t make any profits. It’s all expense. It’s all interest charges and cost of doing business and managerial fees.
So we’ll just take all the raw materials and you can do politically whatever you want in the background. Well, obviously Russia is going to want control of these natural resources itself. It’s not going to give them away.
And in fact, it wants these natural resources and agriculture to help rebuild the destruction of the civilian economies in Luhansk and Donetsk and all the way to Odessa. What is going to be left is a shell of Ukraine is going to be the western part, the old Galicia part, Lviv and that part. Maybe it’ll go all the way up to Kiev. Maybe not even that far.
So I think that what is left of Ukraine to talk about is not going to be exactly what the Republicans are dreaming about. And I can just imagine the first day of a conversation between Putin and Trump, if Putin really is willing to accept the call. And Trump will say, well, you know, I have a way to discuss the end of the war. And Putin will say, well, wait a minute. The war is still going on. You don’t discuss a peace treaty. You don’t discuss the end of the war until the war is finished. We’re marching through Ukraine to the west. We’re not going to stop.
The Ukrainian army is destroyed. There’s no resistance. Their army is running away. They’re defecting. They’re trying to escape to foreign countries. We’ll be glad to discuss this once the fighting is over. That’s when you discuss the peace treaty. And we’ll talk to you in a few months. That’s what I see.
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DANNY HAIPHONG: Yeah. Richard, I wanted to go back to you because not only do you have these developments militarily that are certainly rooted in the overall economic situation. But you also have, I mean, we just had Russia launch this massive missile, which shows just incredible military advancement at the same time that Russia is undergoing, or the target of, one of the biggest economic wars of this last generation with tens of thousands of sanctions over 16,000.
Comment on how this economic war is going, and how it relates to this overall situation of the United States and NATO as its military apparatus finds itself in.
RICHARD WOLFF: Well, as usual, there’s a blizzard of conflicting and alternative analyses made even more crazy by the fact that we really don’t know very much about this new missile. We have Mr. Putin’s description of it. We have some other bits and pieces. We don’t even have a clear sense of how much damage it did. There’s some question about whether it’s altogether new or whether it’s the adaption of a submarine-based missile system.
So commenting on exactly what its significance is, is probably a mistake at this point, which is not to take a position one way or the other, but to recognize we’re going to have to wait a bit more to know enough to do that. What I can do and what is perhaps equally interesting, is to put it in the context of what the sanctions were supposed to do to Russia versus what they have done.
There it’s crystal clear that the collective West, that is the United States and basically the G7, that’s the United States, plus its allies, Canada, Japan, Britain, France, Germany and Italy, made colossal misjudgments and miscalculations in going into this war. Both in terms of what they thought Ukraine could and would do and in terms of what they thought the Russians could and would do. Let me just enumerate two or three of the big ones. Shortly after the invasion of Ukraine by Russia, President Biden and the highest officials around him explained that this war would weaken Russia.
Phrases like, bring Russia to its knees and the ruble will collapse were repeated for weeks on end as if it were a foregone conclusion because they had all decided that was what would happen. The Ukrainian army would outmaneuver what was believed to be a sclerotic, old, out of shape, ill-equipped Russian military.
And that, when that didn’t kind of work out, and you had the big sanctions program, which was going to then cripple Russia by closing the world to its exports of oil and gas. And remember the American joke about Russia at the time was that Russia is a gas station masquerading as a country. Well, all of that was wrong.
The ruble didn’t collapse. Russia didn’t fall to its knees. None of it. Russian exports of oil and gas have done just fine. Indeed, the export of oil and gas has often gone above what it was before the war, has generated enormous revenues, because the Chinese and the Indians, among others, bought this oil and gas, as they continue to do, thereby providing Russia with the revenue it needed to pursue the war. And then its military demonstrated extraordinary adaptability, modernization, culminating in this remarkable hypersonic missile, whatever it actually turns out to be.
Their military is in very good shape, far better than what was assumed, far better than what we were assured. I remember a speech of Lloyd Austin, the Minister of Defense in the United States, telling us about how this war would weaken Russia and so on.
In the year 2024 that we’re in, the International Monetary Fund says that economic growth in the United States, this year, will be 2.8% of GDP. In Russia, it will be, more than that. In China, 4.8%. In India, 7%.
Russia, China, and India, who have now come together to support Russia, each of them is doing better than the United States that is funding Ukraine. And, of course, the worst of all are the people of Ukraine on whose soil most of this war has been fought and the devastation there and the departure of millions and millions of their citizens.
It’ll take them a long, long time to recover, if ever they can. So, what I’m saying to you is, that the war against Russia, this proxy war, pursued by the United States, Britain, and the G7, some more, some less, is an enormous, costly failure. It’s 200 to 300 billion dollars, at least, down the drain.
And Americans and Europeans will long discuss and rue the day they made a decision to lay out that amount of money not on all their domestic needs. And let me remind you, the Europeans, for them, a 2.8% rate of growth this year would be nirvana. Germany is in recession. Britain is a close second. These are economic basket cases whose situation was made worse when they couldn’t access cheap Russian oil and gas, which had been one of the key components of the so-called economic miracle that Western Europe used to boast about. They are in horrible trouble, having wasted an enormous amount of money.
And so, the damage that has been done is to Ukraine and Europe, secondarily the United States, but not to the ostensible enemies. If there were a different kind of government in the United States, more like in certain European countries, you would have had mass resignations of leading officials for having blundered so badly in this affair.
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But, of course, we don’t do that, we can’t do that, because we’re desperately trying to hold on in the United States to what is now clearly the illusion of being the once powerful U.S. when we aren’t anymore. Let’s be honest here. We lost the war in Vietnam. We lost the war in Afghanistan. We lost the war in Iraq. We’re losing the war in Ukraine. Hello! There’s something going on here. Isn’t there? Right? The people who run Vietnam are the Communist Party of Vietnam. The people who run Afghanistan are the Taliban. Those were the enemies of the United States. But they are the dominant political forces in those countries. And I could go on.
So, we are looking at, in my judgment, beyond all the specifics that Michael and I talk about, we are watching the decline of an empire and the accumulated difficulties of U.S. capitalism play themselves out in one symptom after another. Let me give you just one more example that jumped out at me today.
Last night, apparently, President-elect Trump announced, as if he were already the president, the tariffs he’s going to hit Mexico and Canada, which would turn out to be larger than the ones he was going to do on China. Which is funny because it was literally only a matter of weeks ago that we got the reverse kind of story, that China would be the great target and almost no mention of Mexico and Canada. And one of the reasons, the main reason the president gave is he’s going to stop immigration. And there was, again, the usual language about invasion.
Well, if you put a 25% tariff, let me just do a very simple economic lesson. You put a 25% tariff on Mexico. It means all of that product that Mexico produces and ships to the U.S. will now cost suddenly 25% more, because every importer of Mexican goods will have to give a 25% tax, that’s what a tariff is, to Uncle Sam.
It’ll be American importers paying tax to the American government. Now, there’s two things you want to think about here. Number one, the Republican Party used to be thought of as the party against taxes. But it isn’t. In its new incarnation, it is a massively taxing entity. That’s what it’s doing. Tariff is a kind of tax. It doesn’t stop being a tax because you call it a tariff. That’s silly. But here’s the part I like even more, just for the irony. If you do that, Mexicans will be able to sell much less produce in the U.S. because it’s more expensive. So they won’t be able to sell. So they’ll lay off workers.
Well, if you lay off a worker in Mexico, you’re confronting that worker with two choices. You can quietly go home, lie down, and die. That’s your one shot. Here’s your second shot. Collect your family and try to migrate to the United States to get a job. This program will worsen the immigration it is ostensibly supposed to stop. And that incoherence, that’s the single most impressive quality, not just of Mr. Trump, but of Scott Besant, the Treasury Secretary. What’s coming out of their mouths is more of this advertising junk that may be good for a campaign, but does not work as a policy.
DANNY HAIPHONG: Yeah. You want anything to add, Michael?
MICHAEL HUDSON: Yeah. Well, Danny, you know that I always work the balance of payments into this. So let’s look at the balance of payments effect and the instabilities caused by what Richard has just described. When Mexico’s able to sell less, its currency declines. The Canadian dollar has gone down against the U.S. dollar very sharply yesterday and today. Mexico’s Peso has gone down against the U.S. dollar yesterday and today.
Now, what this does is increase the carrying charges of all of the foreign debt of Mexico and Canada. This means that their government is all of a sudden going to have to pay many more dollars, many more dollar equivalents in their own currency that is going to squeeze their budget. And companies whose debt is denominated in U.S. dollars in both countries are all of a sudden going to find that the cost of servicing their dollar debts is going to go way up. And so there will be a forcing of a depression onto these countries, both in the public sphere and the private sphere.
I think that used to be called, beggar my neighbor policy. So you’re already having the rising dollar do the same effect on global South countries. A dollar, paying their dollar debts that are more expensive in their own currencies is beyond their ability to pay without imposing economic austerity on their labor force and losses on their companies. So, what does this mean for the U.S.?
Well, Richard’s pointed out all of the contradictory approaches by the United States government itself. And most of all, the contradiction that makes it so hard for either of us to explain what’s going to happen is the contradiction of Donald Trump himself.
I think you’ve discussed, Danny, a week ago how the remarkable statement of Trump when he said we’re going to break away from the neocons. The neocons have wrecked the American economy. That’s holding up our war and he’s going to declare war on the deep state.
What he said was, the State Department, the defense bureaucracy, the intelligence services, and all the rest need to be completely overhauled and reconstituted to fire the deep staters and put America first. Well, what does that mean? All of a sudden we wonder, well, how is the deep state going to react to all this?
Is he really going to do this wonderful policy that I’m sure your audience, Richard and myself, would love to see? Cleaning out the deep state, closing down the FBI, emptying out the CIA from all of its crazies. But now let’s look at what’s happened in the last few days over the weekend.
He appointed the crazy person, Sebastian Gorko, as his high national security advisor. Now, Gorko is the most recent reincarnation of crazy Pompeo from his first administration. On the one hand, Trump is saying he’s going to wind down the deep state. On the other hand, who’s he put? The most virulent anti-Russian ideologues in his administration.
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Now, what’s he trying to do? Does he think, wait a minute, if I really do save America by getting rid of the deep state, they’re going to kill me. And I think he’s very aware of how fragile his life may be when you take on these vested interests. Now, is he simply laying low and pretending to appoint these crazy Russia haters who Gorko said he’s completely in line with what Blinken, Secretary of State Blinken, is doing? Backs them 100%, and he’ll go even more to the right than Blinken. He’ll really hit the foreigners. Well, how does that, that is not exactly declaring war on the deep state and winding down the neocon. So we have no idea what he’s going to do. Fortunately, ever since he wrote his book, The Art of Breaking the Deal, he realizes, well, he can tell people he’s going to do a deal that makes them rich. And then he’ll just violate all those promises and say, OK, sue me.
Well, is he planning something like this? Imagine him coming to office in January and saying, OK, now that it’s time for me to put my nominees up in Congress, actually, I’m actually appointing quite different people. Not Mr. Gorko. Not all of the neocons that I propose, but he’s going to put Richard and me, somebody who thinks like us in place.
Could this conceivably be his plan? I don’t think so, because that would take imagination. That would take an understanding of how the world is. So we’re dealing with someone who doesn’t understand the world, but is simply greedy and what they say, transactional, meaning he’s just doing a deal now. Forget what’s going to happen later. We can always do another deal later. Everything is still up in the air.
DANNY HAIPHONG: Yeah. I mean, I think that’s a good summary. Richard, I wanted to now talk about, on this theme of what Michael was saying in terms of the politics of this and what’s been going on, really speaks to what you were saying about the decline of the U.S. Empire, and I actually want to play a video that I think really highlights. We had Admiral Rob Bauer of NATO talking about a possible preemptive strike on Russia. But most of what he was talking about actually has to deal with economics and preparing for an even bigger economic war. So if there’s confusion about the decline of the U.S. Empire, it seems to me that NATO is the most confused about this. So I wanted to play this quickly, here. And this is what he had to say at a recent think tank conference.
NATO ADMIRAL ROB BAUER: I’ve been going around boardrooms, finance conferences, and even philanthropic institutions in Europe and America to persuade people to think about two questions. One, is my company or organization ready for war? And, two, what can my company or organization do to prevent war?
Now, that last question might surprise some people, but if we can make sure that all crucial services and goods can be delivered no matter what, then that is a key part of our deterrence. Deterrence is much wider than the military alone. When it comes to great power competition, all instruments of power can and will be used.
We’re seeing that with a growing number of sabotage acts. And Europe has seen that with energy supply. We thought we had a deal with Gazprom, but we actually had a deal with Mr. Putin. And the same goes for Chinese owned infrastructure and goods. We actually have a deal with Xi. 60% of all rare earth materials are produced in China and 90% is processed in China. 90% of the chemical ingredients for sedatives, antibiotics, anti-inflammatories and low blood pressure medicines come from China. We are naive if we think the Communist Party will never use that power.
Business leaders in Europe and America need to realize that the commercial decisions they make have strategic consequences for the security of their nation. Businesses need to be prepared for a war time scenario and adjust their production and distribution lines accordingly. Because while it may be the military who wins battles, it’s the economies that win wars.
DANNY HAIPHONG: So that was Admiral Rob Bauer at a conference where he also talked about possible preemptive strikes on Russia and being prepared for them. But here he’s talking about companies, businesses, NATO members and their economies being ready for war with Russia. So Richard, it seems like they’re just not getting it. And I’m curious your reaction to this in lieu of what you were saying about this decline of the U.S. Empire in particular.
RICHARD WOLFF: I’d be glad to do that. First, let me ask, what country is he an admirable admiral in?
DANNY HAIPHONG: I think he’s Danish.
RICHARD WOLFF: Yes, well, he should go back to pastries. Here’s the problem with his logic. In the capitalist system, which I think he may know something about, because it’s certainly the system of Denmark. In the capitalist system, every executive who makes the kinds of decisions he’s talking about is rewarded if what they do improves the profitability of the business that employs them. And they are punished for whatever they do that diminishes that profit.
Therefore, he oughtn’t to be surprised that they don’t put first and foremost the preparation for getting through a war. Because that would entail all kinds of expenses that would be deductions from its profitability. Capitalists never do that. And it’s not because they’re stupid. It’s because they are typically CEOs for five or 15 years. After that, they won’t be anymore. They will be rewarded or punished in their career, in their income, for how profitable the business is when they’re at the head of it. And they are not going to take the risk of being able to say, as they’re fired. Well, I’m being fired, but I took care to make us ready for a war that may or may not come.
This is not going to happen, Mr. Admiral. And I’ll give you the reason why. It’s never happened, ever, anywhere. And if you knew anything about history, you wouldn’t make a proposal that is contradicted by everything we know about the history of capitalism. Number one.
Number two. War is not the only risk that a capitalist faces for which he might like to make his company or his institution ready and able to withstand. Climate change is another one, isn’t it? And look at the failure of the entire capitalist world to come to terms with the costs of dealing with a climate changer we actually can do something about.
But we can’t get it done. And the number one reason is the resistance from profit-driven enterprises who do not want the regulations, the laws, the taxes, any of it that might make us better prepared for climate disasters, better prepared for ecological breakdown.
So you have a concrete example, right in front of you, why the kinds of things this man said suggest that he got those medals on his chest from the boxes of candies rather than from anything he contributed.
DANNY HAIPHONG: And I just want to make a correction. He’s actually Dutch. I got my Nordic countries confused. But nonetheless, I think the point still stands. Michael, I want to bring it to you.
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MICHAEL HUDSON: How can we rationalize how these diverse views are coming? How can people think that what we just heard is the view of capitalism? I can only think of one way of reconciling this, and that is to look at what the Cold War is all about.
The capitalists, on the one hand, of course, are doing exactly what Richard described, that their job is to make money. But all of a sudden, I think the capitalists, certainly in the United States and in Europe, being the way they are, feel themselves threatened by a whole system. Their system of making money in the short term is financial, not industrial capitalism. It’s finance capitalism. It’s short term. And that neoliberal philosophies led to the deindustrialization of the West, as Richard described earlier.
Well, what they see looming against them is something that, to them, may be just as bad as the Soviet Union appeared to the capitalist countries a century ago. They see the BRICS – Russia, China, Iran, India – all of a sudden pulling ahead. And I think they see this as a war of competing economic systems.
And they say, we’re not going to have the system that we have that lets us exploit the economy and destroy it for our benefit. And as our economy goes down, we’ll get richer and richer. All of a sudden, this ability of our self-serving, destructive, financial, and predatory behavior, finance capitalism, isn’t working.
We’re threatened by Russia, China, and the BRICS. That’s why we need to stop Russia now, so Russia cannot defend China. Well, we come up to conquer China, divide it into five countries, neoliberalize it. Do to China what we did to Russia in the 1990s, go into Russia, divide that into five countries, split the whole world, and make the whole world just as destructive as we are. We’ve got to stop their productivity. We’ve got to stop these countries from showing the model that socialism works better than finance capitalism. And what they’re doing, of course, is picking up the very strategy that made industrial capitalism so wealthy and productive in the 19th century.
They have a mixed economy, public and private. They don’t privatize the public utilities to be made into monopolies to yield monopoly rent to the privatizers. They have health care, education, transportation, and most of all, money creation to promote the economy’s economic growth instead of being special privileges to impose land rent and natural resource rent and monopoly rent and just exploit the economy.
So if you look at all this destructive deep state war against the global majority, you see that it’s really an ideological fight to the death. And they say we’re willing to forego the profits temporarily so we can stop the progress of civilization to be something other than the wreck we’ve made of the West.
DANNY HAIPHONG: Yeah. Professor Wolff, anything you want to add?
RICHARD WOLFF: Yeah. Well, it’s always for me the irony that jumps out at all of this. That Michael is right. I would actually correct my own statements from before in the light of what he said. That, it isn’t true what I said, that the capitalists always unnecessarily do what’s best for their profits.
Clearly, there are conditions when they themselves recognize they’re going to have to depart from that. And, actually, the best example is Europe now. There seems to be, despite lots of dissension, a plurality, let’s call it, of businesses in Europe that are willing, in the name of holding back the evils of Russia and so on, to allow them, their profits to be reduced to nothing.
Because they have to pay so much for oil and gas because they can’t get the cheap oil and gas they used to rely on from Russia. It’s killing them. It’s making their products uncompetitive in the world. For the first time in its history, Volkswagen has to close factories because it can’t sustain the business.
They are willing in their ideological fog to do without profits in the name of this larger project that they feel they have to undertake. And so, yes, the answer is capitalists mostly do what’s profitable and don’t want to be shaken. But if you want to shake them from that, if you want them to forgo profits, you’ve got to kind of suggest to them it’s only temporary, and it’s in the service of something that will make you even bigger profits in the future. But every capitalist who’s not an idiot knows that those are promises that may or may not be kept.
DANNY HAIPHONG: Yeah, and, Michael, what Admiral Bauer, this or should we just call him puppet of the United States really, was speaking about was getting the economies ready for war. And I’m curious your assessment, Michael, of, given what he was saying, he names straight up great power competition, the biggest of the BRICS, Russia and China.
Talk about the realities here, because while he’s saying prepare for war, it’s almost as if it’s negating that we are closer to World War three maybe than we’ve been in a very long time, if ever. So given that and given the situations that the actual economies of the West find themselves in, what would you say to Admiral Bauer?
MICHAEL HUDSON: It is impossible to prepare Western economies for war. Any war you have to win by invading a country. You can’t have a war that all you do is bomb a country. You can bomb them, but unless you invade them with an army, occupy them, take them over, administer them, you can’t win a war.
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So the idea of fighting a war economically without any troops, without arms, you’ve used up all of your tanks and your missiles and your bullets in Ukraine, this is impossible. We’ve discussed before how the only kind of war that a democracy can fight is an atomic war that ends everything. Because it’s unable to try to impose a military draft.
No Western country can impose a military draft, to make, create a infantry and the Marines to actually invade a country without having the voters throw that government out of office and vote for peace. Now, it’s true that the Ukrainians voted for peace when they voted for Zelensky, who said he was for peace, and they didn’t get it.
It’s true that Americans, many of them voted for Trump, because he said he’d end the war, but they’re obviously not going to get that promise. But the fact is that even though Zelensky and Trump are saying they’re going to go to war and defeat the enemy, they can’t go to war without an army and without armaments.
And the cost of producing armaments is so great that it will have to scale back all of the social spending and create a social crisis. Yesterday, Monday, Angela Merkel in Germany said, well, Germany has a problem with its constitution. It can’t run a budget deficit.
Well, like America can certainly run budget deficits and not only pump money into the economy to revive it, but also to pay for the war to have guns and butter. But Germany has this crazy self-destructive limit, no budget deficit.
That means that if Germany and other European countries, subject to the same constraint, spend their money on rearmament even, forget mounting an army, but even on just buying replacements for the tanks and the missiles and the guns that they’ve used up in Ukraine, they will have to cut way back their social spending.
And right now they have… there’s an emergency of their social spending because gas and oil prices are way up, and it’s getting cold in Germany. And so the government has been given the same kind of subsidies that England was giving to its voters.
Okay. We know that because of the sanctions on Russia, it’s much more expensive to heat your homes. And because of the wage war, we’ve kept your wages down, and you won’t have enough money to heat the homes. So we’re going to give you a subsidy.
Well, the Labour Party in England, of course, has just withdrawn the subsidy and said, well, if you starve, it doesn’t matter. We’re fighting the war in Ukraine. That’s what Mr. Starmer has said. I’m paraphrasing. And the same thing basically is happening in Europe.
The attempt to fight a war economically is driving the existing government out of power. That’s why Germany fears to have an election because the Christian Democrats are out. The social Democrats are out. That takes care of the right wing. And you’re having the nationalist parties come in, either the Alternative for Deutschland, which Germany wants to ban, or the Sarah Wagenknecht group. Same thing in France with the nationalist parties there and Italy. So you can’t win a war economically. Wars destroy the economy. They don’t help it.
And you’ll just be short-circuiting yourself if you try. Richard pointed out that these guys don’t seem to know history. I think if people studied history instead of economics, they’d be, have a much better economic understanding.
RICHARD WOLFF: Just a footnote on that, Danny. The greatest economist of the 20th century, or certainly one of a handful if I had to give you the names, was a woman professor at Cambridge University in England named Joan Robinson. And she loved making that point over and over again. I remember her once giving a talk here in the United States when she visited, in which she said bluntly, I want to open my conversation this afternoon – it was a room full of economists – by saying that you asked me to comment on the curriculum. What’s wrong with your curriculum is the following: before any student is presented with any of the economic theories, they ought to be required to have at least two years of studying what has actually happened to the economies of the world over the last several centuries.
Only then are they in a position to make any kind of reasonable judgment about the theories that are out there to explain what happened.
MICHAEL HUDSON: Well, then suppose that they got these theories. They understand what happened. They can’t fit it into the neo-liberal curriculum. That was a problem I had. You can’t fit reality into the curriculum. If you want ‘reality’ economics, you’ve got to have some new discipline that doesn’t call itself economics.
DANNY HAIPHONG: I wanted to ask one more question before we depart and that has to do with how BRICS and we can go back to you, Richard, and then have you, Michael, make the final comment. Because as we are talking about all of this, as we’re talking about the United States’ empire destroying the West’s economies with war, particularly this war that it is building up toward an absolutely frightening level with Russia.
We also have the rise of BRICS, which just had its summit and just expanded partner countries, and we are seeing, of course, the BRICS countries, their economies being incredibly resilient in the face of all of this. Richard, your comment.
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RICHARD WOLFF: Yes. Well, as I have tried to argue in a number of places over a few years now, this is a game changer. The rise of the BRICS reflects a fundamental alteration in the global economy we all live in. Because, for most of the last century, the dominant player in that world economy by far was, excuse me, the United States. Before 1945, that dominance was already clear, emerging. After 1945, it had fully emerged because all other possible claimants to being an important part of the world economy – Britain, France, Germany, Italy, Japan, Russia – had been decimated in and by World War II. The only bomb that fell in the United States was in Hawaii at Pearl Harbor.
After that, no bombs fell, no factory was destroyed, no railroad uprooted, and a relatively small number of people killed and wounded, at least relative to what the other participants in the war suffered. So the United States emerged. We basically hosted and set up the Bretton Woods conference. We thereby established the value of currencies in the world. We established the IMF, the World Bank. The dollar became the global currency, et cetera, et cetera, et cetera, et cetera. Absolute dominance.
Until the BRICS. At first, Brazil, Russia, China, India, and South Africa. Then six more countries a year or so ago, and then 13 more signed up in Kazan a few weeks ago. This block, BRICS, they’ve held on to the first five initials, even though they’ve gotten much, much bigger. These, the BRICS, now represents more than one half of the population of this planet, more than 50% of the world’s people.
By contrast, the United States has four and a half percent of the world’s people. If you add up the total output of goods and services, the so-called GDP of the United States and its allies, the G7, it is now significantly less than what you get if you add up the GDPs of all the countries now in the BRICS.
In short, the BRICS is the larger, richer part of the world economy, and the U.S. and its allies is number two, falling ever further behind number one. And why is this important? Because every major company in the world, business, and every country is now right in the middle as we speak, going through a recalculation and a reassessment of its entire economic strategy. Where is it going to be looking for imports? Where is it going to be able to sell its exports? Where can it go to get a loan to build a railroad?
Where can it fill in the blank? It used to be that for all those things, you go to Washington or New York and you negotiate and cross your fingers. Now you have an option. You can still go to New York and Washington, but you can also go to Beijing and New Delhi. And you can ask for offers on either side. And you can take the best one. Much better for you. And they have to compete. And all of this is realigning the politics, the culture, you name it. And now the accumulated bitterness of centuries of colonialism and imperialism are coming back up.
And the people who were on the wrong side of history then and wondered in the 17th, 18th, 19th and 20th centuries, will this forever be so? Will we be mere slaves to be shipped to another continent and work to death? Will we be poor forever? Will we be unable to cure diseases for which a cure is known? Or will we one day…?
And that day has now come. That’s what BRICS represents. A way out, a way forward. But with it comes the accumulated bitterness. And that has to be understood. Because if you don’t understand it, as the American leaders are determined to avoid that understanding, then they will have to live through it.
They’ll have to become not the big power that contains and isolates the Soviet Union. That’s what we had in the 20th century. Now the same politics are resulting in an isolation. But it’s the isolation of the isolator. We are, we, Americans. I was born, raised, and worked and lived all my life in the United States. I was born in Ohio. Can’t be more U.S. than that. But I see, we are isolated. Look at the votes in the U.N. Look at the reliance between the United States and that little country in the Middle East, Israel, which is going down because it doesn’t understand that settler colonialism, that horror of previous centuries, cannot be imposed nowadays. That’s over.
And you’ve got to find another way. Otherwise, you will behave the way you are now doing, and you will be held accountable and isolated for the next century. We are at a very key changing point. And the BRICS is that emerging alternative. Will it become another empire? Will we in the future look back on this as the passing of the American empire, the way a century ago we watched the passing of the British empire? And will it be replaced by a Chinese empire? That’s obviously one way it might evolve.
Or might we be on the cusp of a genuinely multinational sharing of power? The dream that was the League of Nations, the dream that was the United Nations, may now finally become a reality instead of a bad piece of theater. I visited the UN on 42nd Street in New York and watched all of these adult men and women pretending that they were actually an international organization. It’s very sad to watch. They mean well, but it’s a charade.
Now that charade is becoming real. And now the struggle will begin as this old empire passes. But for us in America, we are the citizens. We are the participants in a declining empire. And that’s difficult. And that leads to tremendous struggles as parts of the society try to hold on.
But we can’t all hold on because the pie of the empire is shrinking. And either we all work it out together, or we fight each other to the death. The program so far articulated to take us back to the beginning of your question, Danny. The program so far suggested, because that’s all we have, fragmentarily suggested by Trump and Bissent is a proposal for fighting it out amongst the different constituents here in the United States. And more than anything else, that will mean that the decline of the empire proceeds.
DANNY HAIPHONG: Michael, I’d like you to have the final word.
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MICHAEL HUDSON: Well, what Richard has been describing is more than just a geopolitical split. It’s a civilizational split. That’s what’s occurring. A geopolitical split is reflected in the size, as Richard has pointed out, the size of the GDP. But a civilizational split has to do with the economic systems. And we’re contrasting a failed neoliberal economic and social system in the United States and the West, which is polarizing between a narrow class of 10% or even 1% of creditors, bankers in the financial sector at the top of the pyramid, monopolizing all of the growth in wealth at the expense of the 99%, whose living standards and income is declining, while the financial wealth is expanding.
Well, this is not what has been happening, certainly in China. And the reason is that these countries are, as I said, mixed economies and are moving toward socialism. So you could say that the fight is between finance capitalism and socialism.
Well, Richard asked, why don’t the American politicians and representatives understand this? Well, they can’t understand it, like Richard and I’ve been explaining, because if they understand it, then they realize that they’ve been following a wrong path all of their life.
That the whole ideal world that they’ve been fighting for is a financial dystopia. And the only way that they can, the choice for them, is either to continue the polarization and impoverishment and austerity of the West along the current lines, or to become socialist. And yet that’s not their identity.
How do you get a national identity to change from short-termism, finance capitalism, everything that we’ve been describing, to the kind of mentality that has enabled China and the other countries to raise their living standards so rapidly, to try to make money not only for the billionaires?
If China has created a lot of billionaires, I think it said, well, we’re creating too many. Don’t get too big. That’s not a part of what our social philosophy is all about. So you’re dealing with two different social philosophies, and in this sense, the conflict that we’re seeing with the BRICS is civilizational – not merely economic, not merely political.
DANNY HAIPHONG: Yes. Well, this was a great discussion with both of you. Thanks so much for coming on. And we will head out of here now. But before everyone goes, please do go to the video description and check out both Richard Wolff’s website and Michael Hudson’s website. Also do hit the like button before you go, because that will help continue boosting this stream far after we depart here. This is the last stream of the month for me. I will be back in early December.
With all that said, do any of you have any final words to the audience before we head out?
RICHARD WOLFF: No, but I just want to tip my hat to you, Danny, because producing these kinds of conversations and disseminating them is one of the ways we can play some kind of active role.
I know that Michael agrees with me, the last thing we want to do is leave people with a sense that it’s all happening and there’s nothing we can do. It is a question of whether the people of the world tolerate more of this kind of stuff or see that it ought to be brought to an end, and we can do better as a human community than we have.
And it’s only up to us to make sure that that happens.
MICHAEL HUDSON: I wish you can publish transcripts of this, Danny.
DANNY HAIPHONG: Yes. So let’s talk about that offline. All right, everybody. Take care. Go to the video description and find Professor Wolff and economist Michael Hudson’s website and also all the places you can support this work here for this channel. Thanks to everyone who moderated. Thank you to all the Rumble viewers. Thanks to everyone who came today. Take care. Bye-bye.
RICHARD WOLFF: Bye-bye.
