07.10.2025
NIMA ALKHORSHID: Hi everybody. Today is Thursday, July 10, 2025, and our friends Richard Wolff and Michael Hudson are back with us. Welcome back.
RICHARD WOLFF: Glad to be here.
NIMA ALKHORSHID: Let me start, Michael, with what's going on with BRICS here in Rio de Janeiro. They've started the summit and they were talking about many things, but one of the main issues is the tariffs and the way that the United States is dealing with the rest of the world. You're taking that so far with the BRICS.
MICHAEL HUDSON: Well, I think as far as the response of the BRICS is concerned, it's really Russia and China. Russia's President Putin and Foreign Minister Sergey Lavrov have been the most explicit in spelling out exactly what the BRICS need and the obvious reason for it, namely that Russia and China are the main object of U.S. attack, which includes an attack on BRICS. I think that the breakaway from US control is made urgent right now by the actions of Trump's administration.
But the rest of the BRICS are more reactive than proactive. They're complaining, but they haven't really put in specific policies by which to free themselves. They realize something which Trump realizes (while economists and the public shy from acknowledging it): that the post-war American era is over. But there's still very little discussion of creating a real alternative.
The BRICS closing report emphasized that they want higher quotas for the International Monetary Fund and the World Bank, but that doesn't provide an alternative to the U.S. neoliberal worldview. It doesn't really talk about what kind of alternative institutions they need to avoid the whole neoliberal development trap that was imposed by America in 1945 and has made it very rich for the past 80 years, but is not making America rich anymore.
Now, all of a sudden, America is changing all of the rules. And the fact is, the BRICS have yet to decide their own rules. The only alternatives of a leader that I see are those by the Russian leader.
Let me talk about what's happening in the U.S. so I can give the context for BRICS. What's happening in America is much like what happened to the Soviet Union in the 1990s when it was breaking up. There's a grab-itization, a grab bag. The post-war elite see that the game is over and they're taking everything they can at the economy's expense. They're carving it up, raising monopoly prices, lowering the tax on themselves, cutting off government programs. The class war is really back in business.
I think the same thing is happening in Europe. The European military stocks are soaring in price. Governments are scaling back public spending and creating a social crisis. In Britain, Germany, and France, wages are going down. The same thing's happening in Japan. So America's allies are experiencing the same kind of breakdown that the United States is.
The question is, what's going to take the place of this new kind of grab-itization, where the United States says: "Well, we can't follow the old rules of free trade and investment that made us rich for the last 80 years. We're going to impose tribute on you. What are you going to do about it?"
The question is, can the West prevent the global majority (which I think is more important than the BRICS) from becoming a prosperous new center, growing without U.S. control, making itself the beneficiary of its trade and investment rather than foreign investors?
All the United States can do to stop it right now is to act as a wrecker. And within BRICS, it's trying to use, I think, India and Brazil to weaken any real break from U.S. policy.
I think Trump's imposition of the 50% tariffs on Brazil yesterday was trying to bully it into submission to the United States. And he said that if Brazil imposes reciprocal tariffs on the United States, he's going to raise the tariffs on Brazil to more than 50%.
After I hear Richard's take, I want to discuss what I think the global majority and the BRICS really need.
RICHARD WOLFF: Okay. I agree, but I would come at it a little differently. I've been struck by what the BRICS have achieved. I agree with Michael, the blueprint for how to get beyond where we are now is not there yet. I don't think they've come up with it. I think they are not sure themselves. I think there are too many disagreements and divisions among them that they haven't worked out. [Interruption]
MICHAEL HUDSON: Well, the key is that the world's splitting into two parts. U.S. diplomats can see it, they see this as a civilizational split, but BRICS and the global majority aren't treating it this way. Everyone knows there's a break from the past, but BRICS are not clear-eyed about being in the same position today that Britain and France and Europe were in 200 years ago when they were trying to free themselves from feudalism, from the hereditary aristocracy charging land rent – industrial capitalism wanted to free itself from all of this. That's what the BRICS will have to do.
RICHARD WOLFF: Let me point out that we oughtn't to be in a rush. Michael is right, but it's really only been about 16 or 17 years since BRICS started. The first few were just getting it started. Now they are clearly underway. They have grown in number. They have the two levels of participation, the member and the partner, if I have their language correctly. And they did hit that milestone a week or two ago when the total amount of trade among them crossed the $1 trillion value. That's an impressive development.
We all have to thank Mr. Trump, because his tariff program has been a tremendous boost on increasing trade among them (since obviously when they trade amongst each other, Mr. Trump's tariffs don't have any impact, at least not directly). So I'm pretty impressed, given all of their differences on many, many issues, that they've been able to stay together.
The second thing I would argue is the grab-itization. I like the term if Michael invented that; grabbing everything is a good metaphor, but I would like to extend it a little further.
The tariff game has a number of benefits to it. Number one, it can exact a certain amount of tribute. Although, let's remember, in the end, the tribute is going to be coming from the Americans to their own defunct government. We don't know yet how much of it will be in the end funded by the other countries.
Mr. Trump loves to talk about tariffs, about what they do to the other country. But the first victim of a tariff are the Americans who have to pay it, not the foreigners. And it's an open question, depending on many variables, as to how much of the tariff the American who pays it will be able to push back onto the foreign country to lower their prices and offset the tariffs' effect. Some of that will happen. But much of the effect will be to raise prices in the United States.
Let me give you one example that became popular 24 hours ago. It turns out that the vast majority (90 percent or more) of the shoes and sneakers that Americans wear are imported. They're imported mostly from about six countries, all of whom have seen enormous tariffs imposed on them.
The estimate of the American shoe companies is that they will have to raise the prices about 37% to deal with the tariffs of 40 to 50 to 60 percent that have been levied on many of the countries that produce shoes. Now, that part of the inflation hasn't hit yet in the United States, but it is being already factored into the calculations of all of these companies.
So I think it's important to understand that the effect of the tariffs, in terms of the U.S. versus BRICS or the rest, is unresolved.
Next, levying these tariffs – it's clear that Trump understands this part of it – is a way of breaking up any unity e.g. between Vietnam and China around certain issues, or the unity that the BRICS have established among the members and partners. Because what it does is to encourage the countries to compete with one another for the favor of the United States.
This is clearly divisive for the BRICS. It means that they are perhaps saying one thing while cutting deals with Washington underneath the surface. We will learn about that in the months and years ahead. But it would be naive not to think that that's going on.
You can see the impact of that particular strategy because its biggest victim is Europe, where there's a failure to get together because those countries don't trust one another not to do secret deals with the United States. The continent doesn't trust Britain, and vice versa. France and Germany do not trust each other. Each one worries that if they go too far in being anti-Trump, he will favor the other ones over them. Etc etc.
Europe has been suffering from the failure of how it came out of feudalism – all this nationalist noise has cost them very dearly ever since.
Finally, another dimension. If you look closely at what Trump said about the threat to Brazil and the 50% tariff, the argument he made was that he wants to stop the investigation into Bolsonaro. He's not happy with that. He wants allies over there and he wants to punish them because of their internal judicial procedures, which is a remarkable rationale for a tariff. I mean, we're not used to seeing that kind of thing. That would have been kept a secret, if it were an objective in all of this.
But given the way Mr. Trump works, this all does seem to be a mess, a mess of tariffs interwoven with ideological commitments, interwoven with long-term political goals that are poorly defined and probably not achievable anyway.
So I'm driven to do what my friend Yanis Varoufakis does, to find the method in the madness. I'm glad we're doing that, and we should do it. But we shouldn't forget that there's a lot of madness here and a lot of multiple clashing objectives that are not going to work out. And that'll help us avoid seeing too much logic, too much management.
And so I end up not being critical so much of the BRICS, easy though that is to do. Could they do more? Yes. Could they have gone further? Yes.
But even Lula, if I could conclude on that, did an interesting thing in his most recent speech that I've read. He says, "I am not one of those who attacks globalization. The problem wasn't globalization." The problem was – he doesn't use these words, but I'll put them in his mouth – American imperialism. The United States used a globalized economy to its own ends. Mr. Lula wants everyone to understand that globalization is still on the agenda, and he, for one, favors it.
I see there the echo of the Chinese and others supporting free trade, repositioning the world around this old capitalist struggle, free trade versus protectionism. They are becoming cleverly the champions of a free trade regime against the narrow, backward-looking, MAGA protectionism.
That, I think, is a very powerful image, changing what is the advanced world and what is the less developed world. It doesn't substitute the strategy of economic development (which remains to be spelled out), but it is very smartly reconceptualizing what's going on in the world in terms of globalization and protectionism. And that is very different from the United States' way of understanding the world economy.
MICHAEL HUDSON: I think you're right. What is really at issue is the kind of economic system the world going to have, at least the world outside of the United States. The problem is not just capitalism. It's particularly the European and the American version of what capitalism has become, which is very different from how it began.
The global majority countries today are facing a problem very much like the one faced by Europe when it broke away from feudalism, from the control of the past, from the control of a predatory, hereditary aristocracy that was holding the land and charging its rents and establishing monopolies to pay its foreign debts and had a predatory banking system. The whole system had to be revised. That's what made industrial capitalism revolutionary.
Industrial capitalism wanted to free economies from this whole burden of the rentier class that had emerged out of feudalism. And the solution from Adam Smith and the French physiocrats and the rest of the classical economists was this:
If we tax the rentiers (who live on economic rent, unearned income)… if we tax the land, if we tax the monopolies and prevent monopolies and make them into the public domain, then we're going to become a low-cost economy.
And if England is going to be the workshop of the world, we cannot afford to have the costs of this post-feudal rentier class. We're going to have to get rid of them.
Well, let's look at the situation today. Just as Britain and France and Germany had to free their economies from feudalism's rentier burden, the BRICS countries and most of the global majority countries need to free themselves from the rent overhead inherited from the epoch of European colonialism and its creditor control.
But the problem is that this rentier control is international. It's foreign. It's American and European much more than domestic investors. It's the multinational firms that have taken control of the raw materials resources, the mineral resources, the oil and the land. It's the foreign investors that have bought up the natural infrastructure monopolies and are bleeding them for everything they can do. And it's the foreign investors that have financed local banking and control the local credit system along neoliberal lines.
What is unique today is that the BRICS haven't come up with the same solution that the classical economists came up with to free industrial capitalism in the early 19th century from all of this feudal structure. That's what needs to be done, and yet they don't have a body of classical economists.
Most of their economists, officials and administrators have been sent to American universities to study. When they take an economics course, there's nothing about classical economics; there's no such thing as economic rent; everybody earns whatever they have; there's no exploitation at all.
Whereas classical economics was all about exploitation. That's what economic rent is. It's unearned income.
Today the unearned income isn't paid simply to the global majorities or the BRICS domestic ruling class. It's paid to American and European foreign investors, multinationals. And if they were to do what Europe did to become a competitive industrial economy, they'd then be able to say,
"We have sovereignty. And our sovereignty is going to be to do just what Adam Smith and John Stuart Mill and his followers said. We're going to tax the economic rent of the oil industry, the mining industry. We're going to tax away monopolies and we're going to have our own antitrust laws so that foreign investors can make normal profits on what they invest, but we're not going to let them make super profits and economic rent."
"And we're going to define the income they make, the taxable income, as their overall cash flow. We're not going to allow foreign investors to say they didn't make any income because they spent all of our income paying interest to ourselves and charging depreciation on the oil and minerals that they exhaust, for which there's a tax write-off so that they don't pay any taxes."
The entire system that has been put in place to promote the anti-classical pro-rentier ideological revolution that occurred in the early 20th century and flowered under Margaret Thatcher and Ronald Reagan has to be replaced by late 19th-century industrial capitalism evolving into socialism, into a mixed public-private economy where the government regulated natural monopolies and taxed away economic rent.
The classical economists' idea of a free market, as we've discussed before, was a market free from economic rent, not free for the rentiers or free of any government taxation or regulation of the economy.
So, suppose that the BRICS countries said, "We're going to develop our industry in the same way that England, France, Germany, and the United States developed their industry with a mixed public-private economy, blocking economic rent from adding to the cost of production. And if we don't do that, we can't industrialize."
"And by the way, the other feudal burden we have is the foreign debt that we've been loaded down with because of the way in which the post-war economic order was created in 1945."
The Global South countries emerged from World War II with very abundant foreign reserves because they've been selling raw materials to the Allies during the war. And the way in which the United States designed the IMF and the World Bank and free trade agreements led to the Global South countries losing the reserves they'd accumulated during the war, by falling into trade dependency and increasingly into debt dependency.
All of that has to be thrown away just as Europe threw away the feudal burden, the feudalism that it had. And the fight to free themselves from the foreign investment which (as Lula said) mainly is coordinated by the United States is the counterpart to how Europe achieved its prosperity.
Foreign Minister Lavrov of Russia gave a wonderful speech about the need to establish foreign trade mechanisms that the West will be unable to control, such as transport corridors, alternative payment systems, and supply chains. And as an example, he cited how the United States has paralyzed the World Trade Organization that it created on the basis of free trade, but now free trade doesn't help America because America is deindustrialized.
I'll quote what Lavrov said: "When the Americans realized that the globalized system they'd created – one built on fair competition, inviolable property rights, the presumption of innocence and similar principles, and which had allowed them to dominate for decades – had also begun to benefit their rivals, primarily China, they took drastic action. As China started outplaying them on their own turf and by their own rules, Washington simply blocked the WTO's Appellate body. By artificially stripping it of a quorum, they rendered this key dispute settlement mechanism inactive, and it remains so to this day."
What if the BRICS and the global majority countries were saying, what China has done in a way followed the exact logic of industrial capitalism when it was emerging!
China has kept property and land in the public domain. It hasn't permitted monopolies to be private. It hasn't permitted a private banking system to financialize the economy and make loans for corporate takeovers and buy up industrial corporations and use their profits for stock buybacks and dividend payouts. China has done exactly what Adam Smith and John Stuart Mill and the industrial capitalists wanted to do, as well as evolving the way industrial capitalism did.
For the BRICS to become independent of this system that has driven them into debt and debt and trade dependency and food dependency, they would have to say: China has provided a modern version of the classical free market model free of exploitative rents. And we're going to follow that.
But that requires us stripping away the foreign ownership of our oil, raw materials, resources, our monopolies. And if we can't nationalize them – we realize that's out of the question – at least we can tax all of their unearned income, the unearned income that David Ricardo and Smith and John Stuart Mill and Marx and Veblen, the whole 19th century, spent so much effort defining.
RICHARD WOLFF: Let me get at this in a slightly different way. Here, I'm going to be relying on Marx and his particular way of dealing with this.
You might say that the break out of feudalism, whether it's in the form of Smith and Ricardo or any of the others, comes out of a recognition that rent on land has much to do with the growth of population.
That's why a square foot in New York City costs a great deal more than a square foot in Nebraska, right? It is not about the soil. It's not about investments that have been put on the land or not. It's basically that more and more people getting an advantage out of being in an agglomerated population enable whoever owns the land simply to raise the rent, and it becomes more and more.
The anti-feudal people can be thought of as having come up with a eureka moment. And in the eureka moment, they realized that in order to have access to land, you do not need a landlord. In other words, you can, figuratively or not, get rid of the landlord and you still have the land, which is what the rest of the population or the rest of the economy needs.
Well, Marx, in a moment of humor, said the only difference between him and those folks who figured out what I just said is that he wants to add that exactly the same is true of capital.
Do we need machines? Absolutely. Do we need factories and offices? Yes. Do we need the owners of those things who can take huge portions of our output in order to give us access? No. We can produce those things.
You know how we know it? Because we already do. It's workers who make machines. It's workers who erect buildings. It's workers who do all that anyway.
So if the workers do it, why would there be others who aren't workers gathering a revenue? It makes no more sense, Marx says, than having the landlord who inherited from his grandfather a certain spot of land being able to siphon off a huge amount of revenue.
Then the punchline, just as Michael said, is if that revenue were acquired by an agency of the community that wanted economic development, then of course they would use those revenues for that purpose. And that is the old socialist idea. The people do the work, they produce consumer goods for their own consumption, they produce means of production in order to become more productive as a community.
In order for this story to be told, you don't need a separate social class gathering into its hands the revenue and only devoting that to growing the well-being of the community if that were their objective. But we know that if there is such a class, capitalism guarantees that the objective they will pursue with the revenue they get is profitability. And profitability has nothing to do with what a community of workers would do if they themselves were in charge here.
So let me offer to the BRICS, as Michael did, a strategic focus that might make a real difference:
The socialism that they have produced to this point, government with massive regulation and ownership (as in China, for example) is a step, probably a necessary step… but not a sufficient step. What you have to do is to take it further.
You have to really put the workers in charge, not indirectly through electing some… no, no, no. You have to, at the base, in every office, in every factory, in every store, put the people who work there in charge. There is no capitalist class anymore. You actually have overcome class division because the employer and the employee have become the same persons. One of them an individual, the other one a member of the collective.
No more master vs slave, no more lord vs serf, and no more employer vs employee. Then you have the micro foundation to get the very things Michael is talking about to become possible.
But that means that in the BRICS countries – and there is no way that I can see out of this – to the extent that there remain employer-employee organizations, you're going to have to go beyond them. And you're going to have resistance from whoever the employers are, whether these are private individuals or state officials. You're going to have to bite the bullet, not in support of an abstract idea, but in support of the necessary foundation for that alternative organization of the world economy that Michael is talking about and that the BRICS are moving toward, but are not there yet.
MICHAEL HUDSON: That leaves the question: how do you get from where you are now to where you have described as the ultimate dream of socialism?
Marx dealt with that. He really was the inventor of cost accounting for industrial capitalism.
He said that the industrial capitalist was much more than a landlord. The landlord's rent did not add to value. It added to price, but there was no cost of production for land because land was provided freely by nature. As the economy becomes more prosperous and the population grows, there's an unearned increment. The landlord did nothing.
But, Marx said, the capitalist does do something. The capitalist organized industry. And Marx included the capitalist's profit as value, not as economic rent, because he said the role of industrial capitalists is to make money by making surplus value, by employing labor, selling its product at a profit, more than they have to pay the labor and the cost of production.
But the dynamic of industrial capitalism was that the firm, in order to grow, plugs its profit back into more capital investment and more employment. And in that sense, he said the capitalist plays a productive role under capitalism. He says ultimately, as capitalism plays this role of creating industry on a larger and larger scale, it is preparing the whole structure for socialists to take over and at a point for there to be socialist management.
He also described the whole structure of the capitalist's income. Here is the earned part of income, the actual profits on the necessary capital investment per factories. But the cost of producing capitalist industry included land rent and other things, other factors – and these should not be tax-deductible at all.
So Marx refined the whole tax ideology of Adam Smith and Ricardo and John Stuart Mill and made sense of it all, and said that the industrial capitalist was the key to the transition to socialism.
In this way China permits private profit-making investment, private capitalism on a small scale to develop, but it doesn't let billionaires develop and it doesn't let industrial capitalism by its innovative class – which is very innovative – become financialized and turn into financial capitalism, which has ended up destroying and deindustrializing capitalism in the Western economies.
That's the big picture, I think, that the BRICS and global south economies have.
But to do that, they need a whole idea of cost accounting and how exactly you tax these firms, so that you can say, we're not going to nationalize you, we're just going to make sure that you actually earn what you produce. If you make a capital investment, you're permitted to make – on the value of the physical capital, mining equipment, and oil drilling equipment – a regular profit of, say, six to eight percent. You're not allowed to make a profit on the vast economic rent-paying investments that you've made. That's not an investment.
We're dealing with a whole different concept of national income, gross national product, and getting rid of transfer payments to the foreign investors that are not part of the product at all but are a transfer payment, essentially, a tribute to the rentier class that's largely formed.
In order to do that, they'd have to read Volumes two and three of Capital, to see how classical economics actually evolved in the 19th century.
RICHARD WOLFF: Yeah, I don't think we disagree, except for me, I want to stress the micro-level adjustment change that radically reorganizes every enterprise in order that then they can together do what you just said.
In the interest of reproducing their power and their social situation, they have to have rules in place so that, for example, no one enterprise, even if it is organized as a cooperative, can have a monopoly position. So that that [position] is not available.
Whereas we know that capitalism's competitive nature always produces winners and losers and has no reason not to go until there's only one or two or three monopolistic or oligopolistic firms left. The production of a monopolist is intrinsic to the capitalist system. It constantly produces and reproduces them.
That's why there is Jeffrey Bezos and there is Elon Musk and all the rest.
Not only is there nothing preventing it, the system is set up so that every capitalist that I've ever met dreams of having "market share". Well, that's a none-too-subtle idea. That's about getting the ability to jack your price up above what it would be if you did the kind of cost calculation Michael just specified.
If we're going to do our job, we have to specify the political economy that could set itself the task of limiting monopoly.
And we tried that. We had the Sherman Antitrust bill in 1890. We had the Clayton Act in 1914. Those are spectacular failures. They haven't stopped monopolization. Never did. It is a fraud. We have an antitrust department that's another fraud that doesn't do its job. And it doesn't do it whether it's Republican or Democrat because that's built into the system.
Bank finance depends on what kind of market share you can promise the banker you can get with a loan that allows you to wipe out your competitors. That would not be possible if you just differentially organized the base. They would not permit that because they could all be victimized by it in a way that could actually stick.
I think, therefore, that these are the next steps of a BRICS.
But there's another dimension to this that I don't want to lose, and I would like to hear Michael's comments. It seems to me that the BRICS already are a historical transformation. The fact is – I know I've done this before, but I want us to think about it – if you add up the GDP of all the BRICS countries now, it's roughly 35% of global GDP. If you add up the GDP of the G7, i.e. the United States and its major allies, we're talking about 27 or 28%.
For me, that's it. We're done. We are no longer where we were for the 80 years since Bretton Woods, a world economy where the United States and its allies were the obvious global world-shaping economic power, and with that, the political, military, and ideological. We are not the economic center of the world economy. The United States isn't. And the gap, we crossed the line in 2020.
Here we are five years later, and the gap has gotten only bigger in favor of the BRICS and against the United States.
This, in my judgment, sits as a relentless pressure on Mr. Trump, on everybody in this country, whether they admit what I just said as a statistic or they don't. Consciously or unconsciously, they have an ominous sense that the march of time itself is now their enemy.
So there's a desperation that then comes and produces that grabbing mentality that Michael started us off with today. But that is a mentality grounded in an actual material transformation.
The BRICS, I suspect, somewhere, they know it too. They don't quite know what to do – Michael is right. On the other hand, they are trading more with one another than they ever have. And it is not only emergency trading. In other words, it's not just Russia selling oil and gas to China and India because they can't manipulate.
Now a final word: because Michael mentioned the Russian Foreign Minister Lavrov. In the same speech that Michael refers to, Lavrov gives a statistic, and I've checked it and it's correct. Here it is, and it's something to think about.
Since the war in Ukraine began in early 2022, the World Bank, a Western institution created by the Bretton Woods meetings, has given twice as much money to Ukraine as it gives annually to Africa. Now, let me remind you: the population of Ukraine is 39 million people. The population of Africa is 1.55 billion people. Now, there is no justification on earth for such behavior, except if you are desperate and you're mobilizing every nickel you can, you don't care what the fall. That's behavior of people very different from what we used to see.
It's just like Mr. Trump ending foreign aid to Africa and then inviting those five sad leaders yesterday to talk to him. Twice as much for the war in Ukraine, the 39 million people affected, than you give annually to 1.55 billion.
It is stupefying if you think about it. Think about the economic development message here. Helping Ukraine basically blow away everything because the money is used for war versus helping 1.5 billion people who are the victims of economic underdevelopment par excellence in the world we live in. It really is kind of breathtaking.
MICHAEL HUDSON: Richard, the population of Ukraine is only 1,000 people. These 1,000 people get all of the IMF, all of the World Bank money. This money doesn't get spent on the rest of the population at large. It goes to the client oligarchy. That's the key.
But I want to go back to what you talked about, the march of time. The question is: how does the American government, which seems to be the most proactive mover right now under Trump, stop the march of time from moving in a direction that is not in the American national interest? How does it prevent the BRICS from developing? That is really what I think should have been the whole focus of the conference in Brazil.
I think the U.S. plan is indeed, as you point out, based on monopoly. In fact, the head of the Federal Reserve this week made very much the point that you're making about monopoly pricing. He said, "Donald Trump is trying to force me to lower interest rates [but I want to keep interest rates on hold given the uncertain effect of the tariffs] to stop the rise in pricing." But the rise in prices is not caused by money creation. The rise of prices has nothing to do with money creation. Companies are realizing that there is no antitrust enforcement at all, that they can just gouge and gouge and gouge their customers. The grocery stores are gouging. Everybody's gouging the customers. That's what he said. And of course, that's right.
On a larger scale, I ask, how is the U.S. going to survive as a monopoly country imposing on BRICS and the rest of the world its monopoly rights and the related rentier privileges that are uniquely favorable to itself on the whole world's trade and investment?
Well, Trump's America wants to make other countries dependent on America's information technology, its internet platforms, its military technology. It wants to become itself the great monopoly power over other countries. If it can't achieve its dominance by industrialization, it can achieve it by post-industrial monopoly capitalism, which turns out to be the final stage of finance capitalism in this case.
Thus for Trump and for the United States, the rule of law is based on one that permits unilateral U.S. demands to impose trade and financial sanctions, dictating how and with foreign countries how they can trade and invest with each other.
Also, you'd mentioned at the first part of your talk: who's going to pay these tariffs? Is it going to be the American consumers or the foreign exporters?
Well, a lot of these tariffs won't be paid because the trade won't exist. Foreigners cannot afford to gain access to the American market paying these tariffs, and the Americans cannot afford to buy from foreigners with these tariffs in. There's going to be a shrinkage of world trade in all sorts of connections that have been put in place for the last 80 years have been pulled up.
You're going to have such an interruption of trade that the real question of the BRICS facing them is, well, now if we can't export to the U.S. and we're not going to import from the U.S., how do we make our trade and investment with each other instead of with the United States? That's what they have to do.
All of that is going to require the creation of new international institutions, which Russia and China are taking the lead in trying to promote.
The United States is trying to prevent this. They're trying to do everything they can to break up the creation of any alternative. That's what the Americans themselves call this a clash of civilization.
The American idea of civilization is the imposition of the neoliberal financialized economy. And the alternative is autocracy, dictatorship, like America will say you have in China.
But America's idea of democracy is client dictatorships. This isn't the democracy of countries that are growing and rejecting client dictatorships and taking sovereignty for themselves.
We're dealing with the fight not between American civilization and British civilization, but between barbarism and the very principle of civilization based on international law, equality of nations in terms of sovereignty, freedom from foreign interference, rules of war making, all the rules that have been smashed by American policy in the last few years.
RICHARD WOLFF: I'd like, in the few moments we have left, to turn the old free trade argument against all of it.
The United States is closing itself by a wall of protection. All these prices are going to be raised by virtue of the tariffs imposed on them, more or less. And the important thing to keep in mind is that in the rest of the world that is not following suit, the prices will be lower than what they are in the United States. Not to the same extent everywhere, but lower.
That begins to be built into the price systems outside, that they become more and more differentiated from the monopoly-protected prices inside the United States.
That will mean that the United States, as a capitalist totality, will be in a deteriorating competitive position with the rest of the world, because all the inputs here will be higher priced than their equivalents outside the protection zone.
That's not a sustainable arrangement, or to put it another way, that will become itself a mechanism that over time deteriorates and isolates the United States' capitalism from the rest of the world. So that's not a viable strategy either.
The early moments of Mr. Trump throwing it around may look like some kind of remarkable innovation, but we all know that the history of capitalism is the history of oscillations between free trade and protection. We are not the first ones to go through that. And the protection phase, which comes when free trade doesn't work, always turns out to be a dead end. In fact, that's why we go back to free trade again because we have a revulsion against the problems of a protection.
In sum, this is not discovering a new solution. This is hankering after an old one that we should have learned doesn't work.
MICHAEL HUDSON: Well, this disparity in prices is exactly what Britain was dealing with 200 years ago. It saw that other countries had a natural price advantage because they could grow, for one thing, they could grow their food and produce raw materials much less expensively than Britain.
So what did Britain do? Apart from reforming its own economy to lower its costs, it said:
"We're going to colonize these countries and we're going to invest in them. We can take ownership of their advantages, ownership of their land to produce food and ownership of their raw materials. Then, instead of those countries getting the benefit of their low-cost of production, we British and other colonialist European owners are going to carve out our ownership of these countries' natural patrimony, land, natural resources, and infrastructure for ourselves. They'll be part of our own economy, not the other countries' economies."
This perception of the threat of lower prices abroad led to British colonialism and imperialism, and the development of financial imperialism in the form of multinational corporations buying control of all of the basic resources and assets that had made these other countries more naturally competitive than Europe (which had the burden of its aristocracy and everything).
That's the kind of fight that is being waged today. It's as if we're seeing a new attempt by Americans to do what the European colonists did in taking over Africa and other countries, investing in the global south, taking ownership of their resources, and denying the income from these resources to their host countries. The global south is a host in the sense of host to a parasite taking out its value.
This is exactly the fight that has to be recognized by the global majority countries. And I think it has been recognized by Lavrov's speech and by the Russians and certainly by the Chinese.
But the problem is: how are you going to get BRICS to admit this requires a really radical restructuring of the world order? This is a civilizational fight. How are we going to create a plan for this? So far, they really haven't developed a plan.
There was talk about de-dollarization as if somehow that could cure the problem, but that goes way beyond getting free of using the U.S. dollar. It's getting the economy free from the whole finance capitalist rentier organization of the economy. Of course, that's what industrial capitalism was supposed to be doing as it evolved into socialism.
So you're right. The BRICS and global south countries have to evolve into socialism.
And the question is: can this be done without a revolution? We posed that at the end of the last show.
It took a revolution in Russia in 1917, a revolution in China in 1945. Can the other BRICS countries and the global majority achieve this alternative to the US-European exploitation without a revolution? The United States is going to do whatever it can to fight against it. And that's what's going to be determining the next few years of international diplomacy.
RICHARD WOLFF: I want to remind everyone not to be too gloomy here.
You saw the European economies go from the 19th century of more or less free trade to the 20th century shifting over to colonization and protection of each colony, a set of colonial properties one against the other. That eventuated in World Wars I and II. That's a reason why you don't want to go down the road of protection, accompanied by military forces to impose that protection.
Notice that the budget just passed by Mr. Trump expands the military and expands the police. That's so-called homeland security. Everything else is cut because you have to focus on protection in all the meanings of that word. That has led to war over and over again, especially as the beleaguered country tries to stop the others from protecting themselves.
What happens – and I'm not suggesting it, but – if and when the BRICS were to sit down and, as a unit, respond to the tariffs of the United States with a uniform tariff among them? Making themselves a common market, and the United States the excluded one?
People with a memory will see here the very evolution of colonial empires – the American, the British, the German, the Japanese – which were the 20th century's causes of the greatest world wars the human race has ever seen.
This is not a solution, what is being done here. This is an act of desperation coming out of the grabbing that Michael talked to us at the beginning today.
MICHAEL HUDSON: Well, to create a common market is exactly what China is trying to do with the Belt and Road Initiative.
If you're going to have trade among yourselves, you need transportation. You need the Belt and Road. And that's exactly what the United States militarily is trying to do to block it in Afghanistan, in Iran, with activities in Azerbaijan.
This is exactly what the geopolitical fight of the next few years is all about: trying to break the ability of other countries to work together and to tear up all the connections, leaving no alternative but depend upon the United States and Europe.
That's the new Cold War, and it is a war of what kind of civilization is the world going to have, or at least the world outside of the golden billion in the United States, Europe, and its allies.
NIMA ALKHORSHID: Thank you so much, Richard and Michael. Great pleasure, as always. See you soon.
Transcription and Diarization: hudsearch
Editing and Review: Ton Yeh