Did globalisation kill neoliberalism? With Branko Milanović

Episode Summary

Executive Summary: Martin Sandbu and Branko Milanovich argue that the post-1989 global order has shifted from Western-led neoliberal globalization to a multipolar era marked by national market liberalism, elite backlash, and greater geopolitical coercion. The conversation links rising inequality and the global income “elephant chart” to populism, new elite coalitions, and a more conflictual international economy.

Main Topics: The elephant chart and global income shifts (Priority: 5/5): Milanovich revisits the viral income-growth chart showing how China/Asia, the global top 1%, and middle-income groups in rich countries fared very differently from 1988 to 2008, helping explain later populist politics. From unipolar globalization to multipolarity (Priority: 5/5): The speakers divide the post-1989 era into phases: post-communist unipolar U.S. dominance, then a period of benign globalization, now a third phase where that consensus has broken down and multiple powers matter more. Elite convergence and new class structure (Priority: 5/5): Milanovich argues a new elite has emerged in rich countries: people high in both labor and capital income, creating 'homo plutia' and reinforcing capitalist ideology through meritocracy and contempt for the less successful. Backlash politics in the U.S., China, and Russia (Priority: 5/5): Despite different mechanisms, Trumpism, Xi’s consolidation, and Russia’s security-state turn are presented as reactions against excesses of globalization and against previous elite arrangements. National market liberalism (Priority: 5/5): Milanovich’s new term describes a system where liberalism survives mainly inside national markets—deregulation, low taxes, capital-friendly policy—while the international dimension becomes protectionist, coercive, and tariff-based. International redistribution and status loss (Priority: 4/5): Rising incomes in China, India, and other emerging economies lower the global position of lower- and middle-income people in rich countries, changing consumption possibilities and political perceptions. Trade, peace, and the risk of conflict (Priority: 4/5): The discussion contrasts the classical liberal view that trade promotes peace with the newer view of trade as coercive competition, and considers whether a new Bretton Woods-like rule set is needed.

Key Arguments: The elephant chart captured three simultaneous trends: rapid gains in China/Asia, large gains at the global top 1%, and stagnation in the middle of rich-country income distributions. The chart helped explain the rise of populism because it visualized the material stagnation experienced by the lower-middle and middle classes in wealthy countries. The world has moved through three phases: pre-1989 ideological blocs, 1990-2016 U.S.-led globalization, and a current multipolar era where the old benign globalization consensus has broken down. Modern elites often combine high labor income and high capital income, creating a new class of people who are both workers and capitalists. This elite convergence strengthens capitalist ideology because successful professionals and managers identify with wealth and meritocracy, not redistribution. Political backlash in the U.S., China, and Russia all involves leaders using state power to displace prior elite coalitions, though through different political forms. Trump-era policy can look interventionist, but Milanovich sees it as state power being used to enrich a new elite rather than to reverse market liberalism. Globalization has redistributed rank internationally, so some lower-income people in rich countries are now outranked by people in emerging economies, affecting status and purchasing power. Trade is increasingly viewed less as a peace-promoting mutual gain and more as a strategic contest or form of coercion. The likely future is not a return to unipolarity or major wars, but a new set of international rules replacing Bretton Woods-style arrangements.

Data Points: Period covered by the elephant chart: 1988 to 2008 - Real income growth across the global distribution Global top income share mentioned: top 1% - One of the strongest growth points in the chart Rich-country affected group: 75th percentile of the world - People there experienced low growth and were often in lower income groups of rich countries US elite overlap: 3% of the US population - People simultaneously in the top 10% by capital income and labor income Brazil/Mexico elite overlap comparison: 7-8% of the top - Higher overlap mentioned for some non-Western rich-country elites Historical turning point: 1989/1990 - Fall of communism and start of the post-Cold War order Second era end point: 2016 - Approximate end of the U.S.-led globalization consensus, associated with Trump/Brexit Time horizon for major change: 20-30 years - Milanovich’s estimate for how long new global rules may take to emerge

Pivotal Quotes: "we have entered a new era" — Branko Milanovich: Describing the shift away from neoliberal globalization "The end of history has ended." — Branko Milanovich: Concluding that the post-Cold War ideological settlement is over "The world will be flat" — Martin Sandbu: Referring to the globalization ideal that higher international integration would reduce barriers and differences

Implications: Listeners should expect more protectionism, state intervention aimed at domestic political coalitions, and a more contested global economy. The future likely depends on new international rules that can manage multipolar rivalry without escalating into major conflict.