Dialogue Works – 03.13.2025
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, March 13, 2025, and our friends, Michael Hudson and Richard Wolff, are back with us. Welcome back.
RICHARD WOLFF: Thank you. Glad to be here.
NIMA ALKHORSHID: Let's get started with the negotiations between, the first round of negotiations, between the Trump team, the Trump administration, and the Ukrainians. The conclusion of this discussion were a 30-day ceasefire proposed by the United States to the Russians.
Michael, how do you find the way that Donald Trump is trying to manage the situation, considering Ukraine?
MICHAEL HUDSON: Well, it looks on the surface like a complete about-face by Trump. The whole proposal for a ceasefire seems so bizarre and so out of place that it doesn't make any sense on the surface.
A ceasefire enables armies to retreat. And England and France have said they're going to send in peacekeepers. And Lavrov had said peacekeepers are from the country that says Russia is our existential enemy and wants to destroy it. Their kind of peacekeepers is to fight Russia to move up to the current line so as to prevent Russia, after the one-month ceasefire is over, from continuing its movement to settle the whole peace agreement on the battlefield. That's what wars do. They settle the problems on the battlefield.
And there's no need for a ceasefire to have negotiations. During World War II, during every war, as the war is coming to an end, there are six months, maybe a year, of negotiations. What are we going to do? How do we prepare for the peace?
Somehow, the newspapers have followed something that seems to be orchestrated, as if there can't be any solution to the war without a ceasefire, and negotiations and discussions go together. And that's just silly. That's not what happens.
And what does a month mean for a ceasefire? Maybe Putin can say, well, give us a month. Well, all right, maybe four months and we'll achieve peace. We'll finish the military operation. It'll all be over in four months. So we're going to give you peace. But a ceasefire would simply stretch out the fighting. We want to end it. Let our army just go on. And we will arrange a kind of peace that will really be lasting, not just setting up a Europe versus Russia kind of antagonism.
And Lavrov had a long discussion with Napolitano's group that's been all over the internet. And Lavrov said, ‘Why should we agree to a peacemaking force of some kind of peacemaking group if they want such a force to consist of countries that have declared us as an enemy? Well, will they really come as peacekeepers?'
So even the facts are unclear. I don't know whether Trump really stopped sending arms to Ukraine. Because a few days ago, yesterday, Russia sent new missiles to bomb a second ship that was delivering new arms to Odessa, and blew it up. So somebody's sending arms.
And then when you have the drone attack on Moscow, somebody must have been steering the drones from the satellite. And Trump says, Well, we've turned off the satellite information. We're not giving it to Ukraine.
But then if America's part of the Five Eyes and England is into the Five Eyes, not to mention Canada, maybe England is sending the information to Ukraine.
So the question is, any agreement that is made with Trump somehow leaves Europe out and Trump can say, ‘Oh, okay, the Russians stopped fighting, but the Europeans, oh, that's a separate thing. We can't control them. They're doing what we want.'
So the question is, what is really happening? What is Trump's strategy?
Well, Alistair Crook thinks that Trump really hates war and wants to create a world without war and free for big business to do what Richard and I talked last week about, to establish a right-wing government, business government, throughout the world in making money in peace.
But there's no indication of whether Trump really wants peace or not. I'm sure that Trump wants to fight against the CIA and the neocons who were fighting him in 2016 and in 2020 and even in this last 2024 election.
I'm sure he wants to get rid of his enemies in the deep state, and that means stopping the war.
So why would he have made a proposal to Russia that Russia cannot possibly accept, except on terms of surrender? That's the question that we have to ask, and it just doesn't make sense.
Didn't Tulsi or some other advisors tell him this is a no-go? The Russians want to defuse the Cold War, but not let Ukraine just rearm and keep it going.
And the subsequent follow-up by Trump and Rubio shows that, well, what they want, peace, and peace is preventing Russia from re-invading Europe like it did in 1945. Peace is this fantasy that somehow Europe has to defend itself against Russia invading Europe.
As we've discussed before, Russia has no motivation to do that, and the cost of any country invading another is so great that no country can afford it and survive any kind of election.
So maybe we've all been had, if we take Trump's word, his word. It turns out that his sort of grandstand promised to bring peace in Ukraine, well, it turns out there are different kinds of peace. There's a belligerent peace of defeating Russia, and there's the Russian peace of defeating Nazism in Ukraine. Which is it going to be?
NIMA ALKHORSHID: Richard?
RICHARD WOLFF: Yeah, I noticed, I won't repeat what Michael said, there's no need. Let me point to a few other things I find remarkable here. Number one, will a ceasefire [exist], even if you have one? I noticed that in the same statements that Rubio, Waltz and the others made coming out of the negotiation, in the same statement about a ceasefire, was the statement that they are resuming providing them with intelligence and arms and everything that was suspended. Well, what kind of a ceasefire would that even be then? Would they continue? They didn't even say that in the event of a ceasefire, they would continue to, not at all. They said, we want a ceasefire, and we have resumed. What? You know, and that's not a minor matter to be negotiated later.
If you mean a ceasefire, then you would require, A) that the United States commit to not providing more material during the period of the ceasefire, and you would probably make a demand on the Europeans, à la what Michael was saying, to do the same. Otherwise, this is a shell game. This is, this is foolery. This is not serious. And that's a lapsus that makes me very suspicious, also, about what exactly, what is showing here, what is a theater, and what is a reality.
Second, this is a bizarre situation. There's a war between Ukraine and Russia. A negotiation would then be between Ukraine and Russia. We now have a three-way. This is like going on a really important date with your beloved and somebody else. It's not a question of who the other one is. It's a question about either this is a date or it isn't, but it isn't three, unless what you have in mind is quite different from what I have in mind, you know, etc, etc. So the United States is playing a very bizarre role.
And then the final thing for me is, it's even more bizarre, because both of the others, Mr. Zelensky, fifty times in the last two years, has said he doesn't want [a] ceasefire. And Lavrov and Putin, and Peskov, their spokesperson, have said the same thing. They don't want a ceasefire. And they said it repeatedly over the last… so we have two sides committed to no ceasefire being brought together by the United States, which wants a ceasefire. They're, very bizarre situation. At least, I'm no historian of negotiations, but I find all of this very, very bizarre.
And then, that at the end of the official statement, there is this remarkable line. And it says, the Ukrainian side made the point that they want the Europeans to be "somehow involved." Now, think a minute. It's not that the United States and Ukraine agreed that the Europeans… no, no, it's very clear that the Ukrainians want them involved. And by the silence of the United States, the suggestion is they don't, or they don't care enough. And this is, how do you negotiate the end of a war in Europe minus the Europeans, plus the Amer[icans]? I find this very, very bizarre. And it poses, as they like to say, it poses more questions than it answers. So I'm wondering how the Russians are going to react.
But this, this looks like a slapped-together negotiation. Somebody wanted there to be something in Saudi Arabia that could look like progress. So they went, and they had a meeting, and they used up four or five days of some kind of progress, and now everybody wonders, now what? Because nothing was thought through about where this goes, or how in the world it could proceed, given the disinclination on both sides.
The Russians don't want to give the Ukrainians a chance to regroup and rearm. Why should they, you know? And the irony is the Russians could also, of course, regroup and rearm. That's what they would likely do. That's what usually happens in these ceasefires, if they aren't linked to, as the Russians say, a settlement of some sort that allows you to try to go back to normal.
Look, Ukraine has the biggest problem here. They're the ones that are destroyed. The Russians presumably will rebuild the Donbass, the area they have conquered, but the Ukrainians have all the rest. You know, they have an electric system that's basically shot. They have to spend an enormous amount of money reconstituting their electric system, their road system, the housing that has been destroyed, and on and on and on. Plus they have lost millions of, millions of people. A good number of them are never going to come back to Ukraine. Everybody knows that. How are they going to handle all of that? How are they going to reconstitute an economy? Between the war and the emigration of their people, they don't have a functioning economy.
The United States, from what I understand, has been paying the salaries of the military, been paying the salaries of the civilian employees. I mean, all of that, presumably, is going to stop. And how they're going to do that strikes me as a bizarre, unanswered question.
MICHAEL HUDSON: Well, when something is so bizarre, the question is, are things really the way they seem? Or, can Trump really have made such a vast miscalculation? I think that was my first reaction, when I first heard about the proposal. I thought, doesn't he read the newspapers? Doesn't he read Lavrov's speeches and Putin's speeches where they've spilled out exactly what they want, what the red lines are, and what is absolutely essential? What about the elections? Who's going to be, how can there be an agreement if there's no head of Ukraine legally empowered to sign anything? It means that any agreement is legally and diplomatically meaningless.
What on earth can be happening? And you have to think somebody must've told Trump, No, of course it's not going to work. And then when it doesn't work, here's what we're going to do. The question is, what is this "here's what we're going to do?" I think Lavrov in a speech said a number of things. He said, Don't get too far ahead. Don't think that this is going to lead anywhere. We're assuming that this is not going to lead anywhere. We're just going to continue doing what we've been doing all along. It's been working for us.
Putin, Lavrov said national interests have to be guaranteed. And how are you going to guarantee them unless you don't get rid of the neo-Nazi regime? And Lavrov has said, Well, we're going to have to have something like a war crimes trial, a Nuremberg, and some people are going to be hanged. And that's going to be, probably not only Zelensky, but the Azov battalion people, the neo-Nazis, the Banderites, who the United States put in charge of the national security agencies, the army, the police, all of the thing, the areas that Nazis go into to control a country.
Now, these are the people who know that if there is the kind of peace that Russia is insisting upon as a precondition, either in a negotiated position or solving it on the battlefield, that they're going to be out. Not only will they lose their jobs, they may lose their liberties. For some, even their lives, for the most conspiratorial men responsible for bombing the civilian centers and creating war crimes. And you can be sure that Lavrov's long hour and a half discussion the other day he made, he gave a whole list of the war crimes and the violations of all the agreements that the West has made via the neo-Nazis in Ukraine.
You don't hear any discussion of that anywhere in the American press. So somehow, I think Trump has had to say, What is going to happen when all this comes up? They, the neo-Nazis, can't say, okay, we'll have peace on Russia's terms. We'll just turn ourselves in to the Russian army, and they'll put us under arrest, and then incarcerate us.
It is inconceivable that any kind of agreement satisfactory to Russians and Ukrainians, not to mention Europe, can be made during any kind of a ceasefire, at all, or in any way other than Russia's military victory in the war in Ukraine. So that's where it's going. It's going where, I guess, Putin could say, although he's been too polite to say, Just give us a few months. We don't need to negotiate to do it. We can achieve peace all by ourselves. We'll just defeat Ukraine, arrest the enemy and remake the country and put our own government committed to peace in place, constitutional arrangements. And the question, of course, is, what's going to happen if England, MI6, does the kind of thing that it's doing all along?
I could imagine Russia is trying to get Trump to the following position, saying, Look, Trump, you say you want peace. Okay. It's going to be threatened by England. If England brings in missiles to attack us there, then this is going to be a fight between England and us, not Ukraine and us. Ukraine's just the vehicle for British-Russian war that goes way back to the Crimean War, or the Franco-Russian War, way back to the Napoleonic wars. We're going to settle it once and for all. And so we want you to be clear, America, that if we bomb England, or bomb military sites–not civilian sites, military sites–in France and elsewhere in Europe, we're not going to bomb America. You'll stay out of it.
And it'll be between us and the new right-wing emergence in Europe. Maybe I shouldn't say right-wing, because the right wing is opposing the war, the AFD and Maloney, et cetera. So, that seems to be the dynamic that I can see. How would Trump have actually seen this? And could he have planned something like this all along that he'll make another seeming about-face and say, Okay, it's in Russia's hands. And then Trump will say, Okay, that's Russia's hands. Let the war resume.
NIMA ALKHORSHID: Richard, here is what Lavrov said in terms of the relationship between Russia and how Russia sees the relationship between their, between, between Russia and the United States. Here is what he said.
[Clip Start]
SERGEY LAVROV: We want normal relations. Normal relations in the sense that the foundation of the American foreign policy under the Trump administration is national interest of the United States. This is absolute and without any, without any discussion. But at the same time, we understand that other countries also have their national interest. And those countries who have their national interest and don't play into the hands of somebody else's interest. We are ready to have serious discussion. It is very well understood.
They told us that countries like the United States and Russia would never have their national interest the same. They would not coincide maybe even fifty, or less, percent. But when they do coincide, this situation, if we are responsible politicians, must be used to develop this simultaneous and similar interest into something practical, which would be mutually beneficial, be it economic projects, infrastructural projects, something else.
And then, another message went, but when the interests do not coincide and contradict each other, again, then the responsible countries must do everything not to allow this contradiction to degenerate into confrontation, especially military confrontation, which would be disastrous for many other countries.
[Clip End]
NIMA ALKHORSHID: Richard, your take on the way that he's picturing Russia and the way that Russia sees the West.
RICHARD WOLFF: Well, it makes a lot of sense what he says, to me. I'm impressed by his English. I did not know it was as obviously accomplished and clear. And that was a difficult set of ideas he had to get out there. That was very interesting to hear him say. I was struck. I don't want to belabor it because I think Michael is right that there's much going on here that either the people involved haven't thought through and worked it out, or if they have, they're not letting us see what that might be.
But I was struck, one more thing. An enormous part of what's going on here is a fight over land and who is in charge of the land: the Crimean peninsula, the whole Donbass area, the whole Eastern quarter, let's say, of the country of Ukraine, given its complicated history with the Soviet Union beforehand, and all of that. And there wasn't a word. If I understood correctly, there was a negotiation that lasted eight and a half hours. So obviously it covered a lot of material or was very contentious, or both.
And yet the central issue, that Russia would not tolerate anymore what they felt was going on, namely the attack on Russian-speaking and culturally Russian people in the Eastern quarter of the country…. I don't want to rehash all of that, but Crimea plus Donbass? Not a word about that? So that, what? That means that Zelensky could imagine that we would have a ceasefire. And on that basis, he would claim, as he has all along, that they want all of that territory back. They want to occupy the Crimean peninsula. They want to occupy the four oblasts, or regions, of Eastern Ukraine, and the Russians… That's why they went to war, on that subject. How could that… it's not even mentioned? And we're going to have negotiations?
I mean, I find this very strange, very strange. There would have to be some basis for the negotiation. Otherwise you will have, in fact, a ceasefire for thirty days, and you're beginning from scratch. My guess is they won't get very far with their negotiations since they haven't agreed on anything other than the ceasefire. That's a recipe for the ceasefire itself to not work, to be a failure. And thirty days from now, you know, to resume the war, what possible benefit to anyone would that have achieved? All we'll know is that there's two sides [that] are better organized, better armed, better equipped to resume the war.
MICHAEL HUDSON: A ceasefire is impossible for the following reason–and it's not Crimea, it's not the oblasts. It's Odessa. Russia has already said, we need to control the entire coastline because that's where Ukraine is being supplied by arms. If they don't go through the Bosphorus, and if they don't go through, Turkey letting them through, then it has to be, somehow, Europe is sending arms through a Romanian port on the Black Sea, and a peaceful ship will get through the Bosporus, go to Romania, get the arms for Odessa. And, apparently the British have been occupying Odessa for the last few months. They've been solidifying, defending Odessa. That's what this is all about.
And Lavrov said in the speech that Nima has quoted, he said, Number one condition: Ukraine must withdraw from all Russian territory and cease military operations. But it's not going to cease. We're dealing with a terrorist organization. Terrorists don't cease their operations. They say, Okay, it's not a military operation. it's just an individual, spontaneous terrorist operation. And second: Ukrainians must have a legitimate government to put in place. And there's no way to have a legitimate government without having an election. None of this can be done within a month. So the very concept of a one-month ceasefire is impossible just for calendrical, political, and military reasons. I think, in the end, the whole big fight is going to come down to Russia's reconquest of Odessa.
And one of the points that Lavrov made was the United Nations UNESCO has designated central Odessa as a world heritage site for cultural reasons. And in the center of Odessa was the statue of the Russian queen that had founded Odessa, Catherine the Great. The Ukrainians recently tore down the statue, sold the metal for scrap, and as Lavrov said, there's not a squeak out of the UN and UNESCO about any of this.
So, the Russians feel that there can't be any so-called third party designated by the United States to oversee the ceasefire because United Nations' agencies are hopelessly corrupt. And Lavrov gave a whole series of examples as to why and how the OSCE, the arms control, UNESCO, one after another, how the UN agencies, including the current head of the UN as an anti-Russian ideologue, is not an honest broker. So how are they going to get honest brokers?
I don't think the United States will let President Xi of China be it. There's no way of even administering a ceasefire. So obviously, all of this has to have been expected. There's a breakdown. We're going to see the breakdown tomorrow. And I think everything will unfold, and we will see whether this is an unfolding of a sort of orchestrated plan that's unfolding, or it's going to be just anarchy from the fact that Trump really is a moron, one or the other.
NIMA ALKHORSHID: By the way, Witkoff is in Russia and right now we've learned that they're talking about that. Witkoff is going to meet with Vladimir Putin. They're going to discuss what has happened in the meeting between Americans and Ukrainians. But shifting the gear, Richard, to the stock market, how do you see what are the main reasons of what's happening with the stock market?
RICHARD WOLFF: Okay. Let me begin by reminding everyone that the stock market is not the same thing as the economy, and never was, and you shouldn't read one off of the other. They have their own sets of determinants that are not identical. It is possible for the market to go up and the economy to be in trouble. And it's possible for the economy to be in good shape and the market is in trouble. So keep that in mind. That's an important caveat because the short-circuiting of that difference is common in the media. They will infer one from the other. You'll see presidential races in which one side says the economy is good. Why? Because the market is going up. And the other side said the economy is terrible and that the market going up doesn't change that. That's an awareness that they're different, but it's being used in a crude way. I want to make the case that you should keep it in mind because it is really the truth of this situation.
Okay. I'm going to mention three things quickly that I think contributed to the remarkable breakdown of the market on Monday and Tuesday of this week. It's not yet clear where that's all going. It's a bouncing around, but the drop on Monday was unmistakable. A thousand points on the measurement, and so forth.
Okay. The first thing is to remind everyone that capitalism is a system of cycles. That's the politest word we have for this phenomenon. Here are some other words: bust, crash, crisis, recession, depression. I could go on. Every four to seven years, according to the National Bureau of Economic Research, a well-respected agency of the US government–Michael doesn't agree–between four and seven, on average, every four to seven years, capitalism, wherever it is, has a downturn. Some of them are short and shallow. Others of them are long and deep. The Great Depression of the '30s, long and deep. The collapse in 2020, very deep, short. The one in 2008 and '09, deep and short–well, medium length, in terms of how bad it can get. So if you're using this four to seven year average, and if the last one we had was in the year 2020, the so-called COVID breakdown, well, it's five years. So it's pretty much on schedule.
We are, to make a long story short, we're kind of due for another one. Nobody should be surprised. And if you read the financial press, there are plenty of people who have done this little arithmetic, and they know we kind of, hmm, we could be due for another one.
Number two. We have a very volatile administration. I mean, on-again off-again trade war, on -again off-again tariffs. The latest one this morning, a 200% tariff on European wine, I believe it was. You know, this is a politician who has discovered that, thanks to the Congress, the tariff is something he can do. He can be a cowboy with the tariff because he can declare them without having to go through any sort of procedure with any other branch of government. He just has the power to do it. And so he–
NIMA ALKHORSHID: By the way, it's 50% tariff, Richard, he's talking about 50% tariffs on whiskey. And he's talking about, you mentioned the tariff on Europeans. It's going to be 200. Yeah. Yeah.
RICHARD WOLFF: Yeah, on European, I thought, I read the headline 200%–
NIMA ALKHORSHID:That's right. That's right. On European wine–
Michael Hudson: You think of wine, not–
RICHARD WOLFF: –on European wine. I don't drink that heavy stuff–
NIMA ALKHORSHID: By the way, in response to 50% tariff on whiskey coming from the United States–
RICHARD WOLFF: That's bourbon. The Chinese, everybody is tariffing bourbon in order to impact that part of the country which is concerned with bourbon production. Anyway, here's the point. The uncertainty, and there's a story in today's Wall Street Journal that the business round table has been having meetings with Trump, and the lesson of all of it is clear: This level of on-again off-again produces what economists call uncertainty, which is always a problem in economics. And now it is an exaggerated uncertainty because of literally two months of on-again off-again.
No business in their right mind would move production from China to Ohio, or from Mexico to New York, based on this craziness, because to move a production facility is very expensive and takes a lot of time. In short, it entails risk, and that risk would become crazy if you undertook the expense only to have a president like this undo the tariff a month, or a week, or a year, after you have undertaken this expense.
Bottom line: One of the reasons we may have a recession, like one of the reasons for last Monday's collapse, is that people are calculating that the logical thing most big businesses will do in this situation is hesitate, not invest; postpone a planned investment. And as we have learned ever since Keynes forced us to see it, a capitalist economy is always held hostage by the investors. If they invest, well, then the circular flow of the economy works, and we keep our jobs. If they decide to hold back, which their "free" enterprise allows them to do, then we all suffer the consequences that they're not investing the money, that the money is sitting there, waiting.
Mr. Trump maybe never will have that explained to him, but he is increasing the uncertainty, therefore the risk, therefore the hesitancy, and therefore the arrival of the next recession we're due for at any moment. And what you saw on Monday was crystal clear, an exemplar of that. Why? Because the night before, on a Fox interview, the interviewer had asked Trump directly: Can you (some words like can you) rule out a recession this year? And he fudged. He didn't give a clear answer. He clearly did not want to go and say, Oh, don't worry, it'll be taken care of. He couldn't even give that.
If you put that together with what happened earlier last week–and I believe we mentioned it last time in our conversation: Earlier last week, the Atlanta Federal Reserve Bank issued its prediction for 2025. They said a recession is coming. They predicted a decline of the GDP, I believe, in the neighborhood of two percent, which would be not just a recession, but a bad one. Wow. So now there's in the air, all of this. Add the uncertainty, and you've got all the conditions.
And then finally, I want to stick in here, I know I'm special pleading here. But I do believe that we are living in the decline of an empire, and that it is the background music. No, it doesn't explain the stock market on Tuesday or Monday. No, it doesn't. But it is the back– there is the annoying, worrisome backdrop in the minds of, you know, Jamie Diamond or anybody else in Wall Street, that maybe we really are, maybe what a few folks are saying. I'll pick one in their world, Ray Dalio, very important investor, Bridgewater, one of the biggest hedge funds in the world. He keeps telling people, that's what I see. That's what I see. Even if you don't believe him, it's in the air. You put those things together and you can have a panic day on Wall Street, like last Monday, and you better pay attention because, typically, the crash doesn't all happen at once. It shows you, it smells already in advance. And that's what I think Monday represents.
MICHAEL HUDSON: Richard, well, that's the whole point. And that's why I don't believe in cycles. Cycles are ideological. The National Bureau was founded by Wesley Clark Mitchell, who said, capitalism is a cycle, it goes on and on and on. Thanks to automatic stabilizers, we don't need a government. We don't need government regulation. It's automatic. The free market is going to handle everything. Well, you and I have spent our entire life talking about the long picture of where is capitalism going. That's not a cycle. Each cycle, cyclical recovery, in the United States started from a higher and higher and higher level of debt. It's not simply that the Western Empire is going down. The Western economies are going down because they've been so highly polarized. Ninety percent of the population has not increased its part of the GDP. It's all been the upper ten percent of the population.
And there's been polarizing, gaining from the stock market, as you pointed out, that really isn't the economy. The stock market is the economy for the ten percent, not the ninety percent. So I think the problem goes much deeper than a cycle. It's the fact that we're seeing the end of the whole post-1945 expansion of Western capitalism that was based on an unsustainable financialization, debt increase, increase in rent-seeking, leading to de-industrialization.
And as a result of this de-industrialization, when you have Trump's imports now, which was the question that Nima asked, you're going to have a break in supplies. You've already seen the Ontario Governor Ford saying, Well, we're going to turn off the electricity to upstate New York. We're not going to just increase the price of Canadian electricity 25%. We can turn it off.
The tariffs that Trump threatened to put on auto trade, as we said, prevent machine parts coming up. There are going to be all sorts of breaks in the supply chain that cause the whole chain to stop operating, the whole everything to stop. And there's a feeling in all of the news reports that somehow what Musk is doing by just cutting government activity apart, by creating chaos, is going to create chaos that interrupts activity. And it'll be just as you said, Richard: Nobody's going to try to invest in the United States without knowing exactly what they're going to do. Do you know?
So how is Europe, since we're talking about the West, what's Europe doing? Well, you have Merz in Germany, and Lavrov, saying, Well, we can have a revival of European capitalism by military spending. Nine hundred billion euros for military spending. Maybe we can't produce cars anymore, but Volkswagen and other companies can shift to military spending to support the fantasy that Russia may invade us, and we're going to need tanks to fight the Russian invasion.
Well, this can't really save capitalism because it's nonsense. So I think there's a deeper fight here that you and I have spoken about for years and years and years. And it's what kind of world are we going to have?
And way back in the 1960s, I can remember discussions, what kind of socialism is the world going to have as a final choice? Is it going to be the pro-labor, social democratic socialism that most of the world expected after World War II, a kind of mixed economy, such as has made China so successful?
Or is it going to be the pro-financial, national socialism, that seemed to have lost World War II, but was somehow sustained by the United States, rescuing the Nazis and the Bandarites, and bringing them to the US and Latin America and other countries, to try to prepare for the final battle against Socialism?
And right now, you're seeing the Trump administration–we didn't talk about this militarily, but it's been promoting a worldwide right-wing movement to dismantle democratic government and shift economic planning away from government and elected representatives to financial elites via the military elites that are running the EU. We talked about this last time, Nima.
So I think, all of a sudden, let's take what's happening in Ukraine, and let's put it in this big economic political picture of what is going to be the fate of Western capitalism. And it looks desperate to me. And if you look at all of this as a kind of desperate way of how can we somehow survive? How can we get by, at least to the next election campaign, short-term as it is? How can we solve the fact that the West has become economically self-destructive because of the economic forces that you and I have spent so many decades describing?
RICHARD WOLFF: Yeah, I think what would be worth our talking about, both today and perhaps in a future show, would be one key point that you made.
I think we need to examine why it is that you, Michael, have the judgment that Ukraine, the war in Ukraine, is linked to the notion that all of Europe is at peril from Russia, which in turn is linked to an attempt to revive European capitalism–which looks pretty sorry as it crumbles between the US, on the one hand, and the China-BRICS, on the other–that they're going to rescue all of that by a massive debt funded defense buildup. I think exploring that would not only be useful, obviously, to our European audience, which I'm sure Nima knows is considerable, but also to the rest of the world.
Because even though Europe isn't the colonial master of everything in the world that it once pretended to be, it's still an important block in the world economy–the US, the Chinese, and then the Europeans–at least until others arrive. I think that would be very, very important because the effort led by Merz in Germany will be picked up by Starmer and Macron, and the others, because they're in the same kind of boat and they are going to have to stimulate, and they're going to have to come up with the government, they're going to have to come up with a rationale for doing that, and given the weakness of the Left, it's more likely than not that they will do the Merz. Although in France, once Macron is out of there, it could go in a quite different direction.
MICHAEL HUDSON: I agree.
NIMA ALKHORSHID: Do you think, Michael, do you think the way that Donald Trump is dealing with Canada, do you think that would lead to Canada just obeying what Donald Trump wants to do with them; or we're going to see much more chaos in terms of the tariff, this fight of some sort of tariffs putting on each other?
MICHAEL HUDSON: Well, the mentality of Canada is to submit and surrender to anything the United States does, except the way in which Trump has set the antagonism of Canada makes it politically necessary to be self-assertive, just as you're having Greenland self-assertive. It's as if Trump has tried to mobilize Canadian nationalism and give it a backbone that it has not had for over half a century. So I think that Canada will try to retaliate because Canada has the ability to create a break in the chain of supply in America. Most of America's steel, fifty percent of America's steel comes from Canada. Eleven percent of America's aluminum comes from Canada.
And if Trump really imposes these crazy tariffs on steel and aluminum, which are going to increase the price of every manufactured good made out of steel and aluminum, and half of every car is made out of steel, and put together with parts made across the Canadian or Mexican borders, as we've discussed, I don't see how the car companies can continue to produce for a market, and how other manufacturers are going to be able to function. And Trump's fantasy is, okay, we've increased the price of importing aluminum and steel and auto parts so highly that the only way that manufactured companies and car companies and airplane companies can make a profit is to leave, to relocate in the United States behind the tariff wall.
Trump believes it'll probably take one week to build a new steel plant here, the twenty steel plants. One week! They're going to make new aluminum refineries that are made out of electricity. I think you'll have to cut back half of America's home electricity consumption to make the aluminum, but in one week we can do it, and the recession will be over instantaneously. This is crazy.
There's no saying, okay, here's the sequence, in order, if you want, to industrialize America, here are the things that have to happen. You actually need a factory to produce industrial goods. You have to build a factory. You have to get planning permission. And you have to get a labor force that's going to do this, that somehow is trained. You can't just send people into a steel factory and say, okay, here's the job you have to do. It'll be like the people who go to work for the healthcare companies. You call them and ask them a question and they say, oh, we just joined, we really don't know what's happening. It's anarchy.
And the tariff situation is creating an anarchy that he has a twenty-year plan that has to work within two months. This is really crazy, and this is the moron aspect of Trump that's coming out, not the long-term strategist: How do I get rid of all my enemies in the neocon deep state? Nothing meshes together.
RICHARD WOLFF: Let me go at this in another way. If you keep performing the way Mr. Trump is with the on-again off-again, forget whether it gets worse and worse in terms of the higher and higher tariffs. Even the uncertainty of whatever the level is on and off and on and off, you are teaching the world a lesson, in addition to what we've been talking about in terms of a declining empire. If the G7 now accounts for 28% of total output in the world, but the Chinese and BRICS together account for 35% of the total output of the world, which are roughly what the numbers are, then you are training the world into re-evaluating each country's situation. Who are we borrowing from? Who are we selling to? Who are we buying from? Because the very uncertainty of Mr. Trump's behavior, on top of the shifting global wealth allocation, means that countries need to do, to make a long story short, more business with China and the BRICS, and less business with the G7, because all anything else is stupid. Anything else puts you at a level of risk.
So you would rather be selling to the rising BRICS configuration. So Canada. Canada produces electricity. Who needs electricity? China and the BRICS. They're desperate for electricity. Sell it to them, which they can do. If you have steel and aluminum that the Americans are an uncertain market for, shift. And Michael is right that you don't shift everything all at once. That's too expensive. That's too risky.
But if everybody shifts five percent, ten percent, of their business from one of these areas to the other, the impact accumulated on the United States will be devastating.
But that's in the cards anyway. Take away Trump. It's been going on before Trump. It will continue after Trump. It is subject to forces he cannot control. And the effort to control what you cannot is often reflected in the kind of herky-jerky that you're seeing, because he set himself an impossible task.
It's a little bit like Michael saying, you know, you can't have a two-month policy to achieve a five-year program. This makes you crazy because you'll be so disappointed at what you get after two months that, instead of reevaluating, you can't do it, you'll try some other policy, hoping it will do in two months. But that's not your problem, the right policy. Your problem is you don't understand.
And we live in a country that, we've talked about this now many times, whose reaction to the declining empire, to the rise of the BRICS, is a combination of denial about what's going on, and then the fantastic imagination that if you send the Seventh Fleet to the South China Sea, and you make a lot of noise about Taiwan, you're going to slow or stop this process. You're not. It hasn't worked for twenty years, there's no reason to believe it's going to work now. You can pivot to Asia all you want. It's not a plan.
NIMA ALKHORSHID: Yeah, I think we can wrap it up right now. And thank you so much, Richard and Michael. for being with us today. Great pleasure to talk with you.
RICHARD WOLFF: Same here. See you soon.
NIMA ALKHORSHID: See you soon. Bye-bye. Take care.
MICHAEL HUDSON: Thank you.
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