Michael Hudson: Russia and China CRUSH NATO’s Plan as Ukraine FALLS Apart

Yves here. This Michael Hudson talk with Nima of Dialogue Works seems a fitting dimensioning of the size of the hole NATO has gotten itself in with Project Ukraine as the July NATO summit starts.

Some may regard Hudson’s description of US foreign policy as highly reliant on coercion as an exaggeration. However, Jeffrey Sachs, who has had a front row seat on many US policy decisions, has been saying precisely the same thing and retired Lieutenant Colonel Larry Wilkerson has made similar observations.

Originally published at Dialogue Works

NIMA: Michael, let’s start with Russian economy right now. The World Bank reported that in 2023, Russia’s economic growth was 3.6. They have been predicting for this year, for 2024, they were talking about 1.3. Right now, they’re talking about 2.9. And it’s much more than double than the value that they have been predicting before. Is this war in Ukraine helping the Russian economy, in your opinion?

MICHAEL HUDSON: Well, President Biden is responsible for most of the Russian growth. I think we’ve talked about that before. When you impose sanctions on a country, a country has two choices. Either it can let itself fall apart, or it can produce for itself what it used to import. So, the sanctions have led Russia, first of all, to become self-sufficient in food, especially vegetables. They don’t have to import food from the Baltics anymore. They’ve become self-sufficient in many consumer goods, industrial goods.

The result of the sanctions imposed by Biden and followed by Europe have had the effect that Biden wanted. They have cut Europe off from Russia. They’ve separated Europe and lost the entire basis of the last 30 years’ prosperity in Western Europe. So, the prosperity that Europe no longer has is now enjoyed by Russia.

Now, we know that Biden and advisors didn’t do this intentionally. It’s simply the result of their nastiness, of thinking that if you can hurt another country enough, that will force it to do what you want it to do. That’s the American policy, and it’s the only policy that America has. It doesn’t have an economic argument for why sanctions will help Russia and hurt Europe and hurt the United States. It only has this atavistic hostility that has been Biden’s personality and character ever since he joined Congress. He’s picked nasty people around him, just like he’s picked nasty dogs around him that bite his security staff. So, that’s the result of having this negative approach to the world. It backfires.

If you’re really nasty, you don’t realize that it’s backfired. You just try to be nastier. That’s, of course, what causes the real danger today in Ukraine and Palestine and the Near East, the danger that the West is going to keep getting nastier and nastier and escalating. The result, of course, has been to drive Russia together, China together, and take the leadership in creating the whole BRICS as an alternative world system.

So, Russia’s GDP has been the beneficiary of this, but most of all, the structure of Russia, the ideology and the realization that the West has nothing to offer Russia, China, or the other countries except neoliberalism.

NIMA: Europe is just having a lot of problems considering their economy. How can they increase their defense budget in order to feed this military-industrial complex in the United States?

MICHAEL HUDSON: They can do just what the International Monetary Fund tells countries to do in a case like this. Number one, they can cut back social spending and reduce living standards. Number two, they can begin selling off their infrastructure, their industry, their agriculture to American buyers. That’s the only way that they can cope for it. There’s no other way.

And, of course, that’s what the centrist parties, the Social Democrats and the labor parties, want to do. That’s why every European leader has lost in the last elections. The voters have just said, no, there must be an alternative to this. Unfortunately, the alternative is more neoliberalism. So, you get rid of one neoliberal party and you get another neoliberal party in. I don’t see much hope for Europe.

NIMA: How do you see the changes that are happening far right, far left, center? Is it changing? The definition of these terms are changing in Europe, in your opinion?

MICHAEL HUDSON: The rhetoric is changing. And there has been a change. The socialist parties, when they moved to the right wing of the spectrum, became internationalist. A lot of this was the result of World War II, and it’s been happening for 75 years. Many of the liberals thought that what caused World War II was nationalism. What’s the alternative to nationalism? Internationalism. So, they all thought that joining Europe together would end European war. And if you could have an international world economy, that would end war.

What they didn’t realize is that the international world economy has become unipolar, dominated by the United States, and the United States is nationalist. So, what you have is an internationalist economy that is dominated by the United States and its own national interests against other countries. And its national interests believe that it can only consolidate its power by preventing any other country from acting independently of the United States. And even if they don’t act actively against American trade policy or financial policy, the very potential of them for being independent is looked at as a deadly risk for them. And so, the United States is engaged in regime change. It’s put 800 military bases across the world to prevent all this.

Well, the effect of all this has been to drive the rest of the world together. And it looks like it’s creating a new international order by the BRICS, by the 85% of the world population. And what you’re seeing now is in response to the United States’ drive to control the world and its own interests. It’s driven Russia, China, and Iran together, first of all, by creating the military alliance, the Shanghai Cooperation Organization, and then by expanding into the BRICS.

And now, you’re seeing already every month, far-reaching changes. You’ve just seen President Putin go to Vietnam and North Korea, trying to consolidate all of Eurasia into an independent entity, an independent international group, along with the Global South, that will create basically a whole set of new institutions to what the US economic order was.

And you have the speeches of President Putin, Lavrov, and other Russian officials saying the United Nations is now, unfortunately, being blocked and controlled by the United States. We need a new United Nations. Putin said that they’re still going to be the old United Nations. We can leave that there to lumber along. But we’re going to need a new group representing the nations that are free of United States veto power in them. They’re going to need a new international monetary fund with an idea of economic stability and financial stability that does not involve austerity planning and anti-labor policies, and that does not believe that the way to maximize economic growth is to reduce living standards, reduce wages, and squeeze more out of labor, but to increase living standards to make labor more productive.

That’s how Britain, the United States, Germany, and France, all the other countries developed. And now, you’re having the former colonial areas of the world reinvent the wheel by doing essentially what the Western economies did. And to do that, they have to be free of the Western economies’ political domination, military domination, and above all, the financial legacy of international debt.

NIMA: Hillary Clinton recently just was talking about that Ukrainians have to go on an offensive in order to help Biden. What are the roots of this kind of mindset? The war in Ukraine, is that important for the Democratic Party, or they’re just pretending to be that way?

MICHAEL HUDSON: Politics in America is a psychodrama, and it’s very hard to explain to reasonable people how a country like the United States can be unreasonable. But the Biden administration and the Democrats generally, and Congress generally thinks, if we back a country, it has to win. And if we lose Ukraine, just as Biden already lost Afghanistan and lost the war against COVID, if they lose in Ukraine, that means that he should be thrown out and they’ll get somebody who can be a better bully and win in the Ukraine. So somehow, the thought of Ukrainian defeat by Russia will not only lose the election for Biden, but it will lead to a loss of NATO being part of the United States’ foreign diplomacy. And that failure, Biden says, will lead people to think, oh, he’s failed, let’s get a winner like Trump. And of course, what Trump will do is indeed end NATO, or at least end the American contributions to NATO, forcing Europe to pay the whole bill. And Europe is going to decide, do we really want to devote all of our growth in GDP to military spending, as if the Russians will invade?

I don’t know if you watched the debate between Biden and Trump. Most people have simply talked about the fact that Biden was showing signs of senility. But worse than his senility is what he said. He said that if the Russians defeat Ukraine, they’re going to march right through Poland.

This is the domino theory that Americans held 50 years ago during the Vietnam War. When I was working at the Chase Manhattan Bank in 1965, the man in the office across the aisle was a naval intelligence person. Intelligence agencies very often put their spies in banks, because that’s how you can trace things. And the naval intelligence officer in charge of Asia told me that if Vietnam defeats America, they’re going to be in Los Angeles next, he actually said it.

Can you imagine the Vietnamese marching into Los Angeles and trying to take it over? It’s like in Casablanca, when Humphrey Bogart tells the Nazis, well, you know, if you try to defeat America, there’s some parts of Brooklyn, I would recommend that you don’t go into.

It’s inconceivable that any democracy or any country in the world that’s not a tight military dictatorship can mount a land army. And without a land army, you can’t invade anyone. America doesn’t have a landed army. And Europe doesn’t. And if they tried to have a landed army, you’d have a revolt, just as you’re seeing in Israel, a revolt by the religious Zionists who are refusing to let themselves be drafted.

So the very thought of a Russian invasion, marching right through to England is silly. No country is going to do that. But that is actually what the American neocons believe. That’s called projection. They’re thinking of what they would do to Grenada. And somehow this is their image of the world. You know, look what we did to Iraq. Well, we invaded. Look what we did to Libya. We invaded and destroyed it. Well, isn’t that what Russia is going to do? Aren’t other countries going to be just like us? That’s the projection that you have in American foreign policy.

NIMA: Michael, we had two important visits of Putin recently. One was to China and the other one was to North Korea. And when you look at these two visits, and especially when it comes to North Korea, what Russia can do, how Russia can contribute to North Korea, the situation they’re having right now?

MICHAEL HUDSON: Well, the basic plan of Russia and China is, as I said, to create a new economic order. Now, the problem is that they know that the United States is going to oppose this as an existential threat to itself. And if it looks at it as what Biden has said, an existential enemy, then obviously the United States is going to respond in a military way. So while they’re spending the next probably year or two working out the details of BRICS financial relationships, a BRICS bank to finance trade deficits and balance of payments deficits, a whole ideology to juxtapose to the West.

While they’re doing this, they have to realize that, well, we have to do just what Russia had to do after the Soviet revolution in 1917. America’s forcing us to be militarily defensive. And if we don’t defend ourselves, there’s not going to be any opportunity to create the new economic order.

So Putin and China both recognize that you have to put the cart before the horse and begin with the military protection to insulate themselves from any kind of American threat so that they can proceed to create their own destiny.

NIMA: We know that one of the most important countries within NATO is Turkey. Recently, they are asking to join BRICS. And how do you see this type of movement on the part of Turkey and how is it going to affect NATO?

MICHAEL HUDSON: Well, Turkey’s always tried to play both sides in both the West and Russia and all the other parties at once. That’s becoming much more difficult since the Israeli attack on the Palestinians. You’re having the Islamic countries tell Turkey, where is your loyalty going to be? You can’t go two roads at once, you’ve got to make a choice.

Well, as America prepares to back Israel in the war against Lebanon, I think there’s already warnings to Turkey, don’t let America use your airbase as a source of bombing Lebanon. You have to stop that. And beyond that, there’s now for the first time, a pressure on Turkey saying, look, you joined NATO, because you’d hoped to be part of the European community. The European community is dead. There’s nothing to join that. You have a choice. Either you can become part of an economy that is shrinking and shrinking and shrinking, or you can link your economy to the Eurasian economy where all of the international growth is taking place, and which is also largely Islamic as you are. What are you going to do? And what are your voters going to do when we advocate that Turkey take an Islamic, non-pro-NATO, non-pro-US position?

Erdogan always has been able to play both ways. I was present when he and President Putin’s predecessor Medvedev gave a speech in Yugoslavia over a decade ago, and you could see that Erdogan was trying to be as close to Russia as he could. But then he met with the Americans and tried to be as close to saying, when are we going, how can you promote our coming to Europe? I don’t think he can play that game anymore.

Now, I don’t know any Turkish diplomats to have any inside information at all, but you can see the pressures on him. Turkey is going to have to make a choice, and that choice may be made very quickly if indeed Israel attacks Lebanon.

Do you think that the changes that are happening right now in Europe, are they going to be able to just reconnect their ties with Russia, or the United States is not letting them do that?

MICHAEL HUDSON: Yeah, there is no way that Europe can re-establish links with Russia, unless it explicitly breaks from the United States. Well, of course, that’s what you’ve just seen the elections in France, and they’re pressing modestly for it.

But the American pressure on Europe, European leaders, I should say, the American infiltration and subsidy of the social democratic parties, the Christian democratic parties, the labor parties, is so great that the leaders themselves are so pro-American that you would need a new set of parties there, a new left. And there’s only one left-wing party in all of Europe, and that’s Sarah Wagenknecht’s party in Germany. Needless to say, this is not going to be the dominant party for quite a while.

And so, I think that when President Putin said, it’s going to be an entire generation, 30 years before we can have a relationship with Europe again. I don’t see how Europe can really wake up. It’s going to have to have an ideological change, an economic reorganization. The United States is going to impose sanctions on them. President Trump is going to impose very heavy tariffs on Europe.

The very first choice of Europe is going to be, well, if America is not going to pay for NATO, are we really going to rearm all the armaments and the tanks and the missiles and the weapons and the airplanes that we’ve depleted our stocks and sent them to Ukraine? Are we really going to rebuild that and remilitarize? Or are we going to have a peace dividend where we can rebuild our economies? And the parties are unanimous. We don’t want a peace dividend that would raise wages. Labor would be employed, wages would go up, and we, the financial sector, would lose the class war.

And that’s still what Europe is all about. It has a rotten class war going within it. And the problem is not simply Europe versus the US. It’s the European industrial and financial elite against the population at large. That’s why the population at large voted the existing parties out of power, but they really don’t have a choice except for what’s called the far-right parties, which means the left-wing populist parties or the parties that are saying what the left-wing used to say without any real plan of following what used to be the left-wing socialist policy of active government, subsidy of interest of industry, subsidy of living standards, and building up of the social infrastructure that Europe was indeed doing in the decades or so right after World War II.

NIMA: Do you see that this conflict going for decades in Ukraine or we are getting to the final stages of the conflict in Ukraine?

MICHAEL HUDSON: NATO has promised that this will go on forever and forever until Russia is defeated and can be broken up into five countries, and then America can go and do the same in China and break it up into ethnicities. It will go on for a hundred years, NATO says.

And NATO really governs Europe. The European Commission and NATO are the administrative parts of Europe. And voters really have very little to say about electing local national leaders for all this. So as long as NATO and the European Commission remain in existence, there can’t be any kind of negotiation.

And so President Putin has said famously, the West is non-agreement-capable. So the only kind of negotiation is Russia says, we’re going to win in Ukraine and the negotiation will be, we will dictate the terms of peace. The solution can only be won on the battlefield. It cannot be won by negotiation, because who are we going to negotiate with? You can’t negotiate with Ukraine because they’re American puppets right now, unless we win and we put in our own, the leaders that we backed, probably military leaders and opponents of the current regime. And that’s not a negotiation, that Russia is in a position to dictate the peace. There’s no reason for it to negotiate away anything.

And even if it negotiated, NATO says, well, we’ll promise not to fight. We’ll promise that there’s a ceasefire and then we’ll really hit them. We’ll just pretend to negotiate and then we’ll attack. That’s what NATO does. That’s what America does. And that’s what they’ve already done to Russia again and again and again. And so Russia has said, no negotiation. President Lavrov has said, I think we should downgrade the embassies of Europe here because there is nothing to say. We realize that Ukraine is a puppet of the US, that the European leaders are really NATO generals and they’re all appointed by the US and we can’t negotiate with the US because they lie. They break their word.

So the solution in Ukraine will come when Russia finally decides to defeat the West to such a degree that it can restructure Ukraine and create a domestic government.

Well, the West and NATO said, well, at least what we have is terrorism. At least we can continue to keep lobbing missiles into Ukraine just as Kiev was lobbing missiles into Luhansk and Donetsk. We can just continue to try to destabilize. And at a point then when Russia has been able to neutralize Ukraine itself and the NATO and Americans begin to take off from Romanian bases or Polish bases, then America is going to begin attacking the airfields in Poland, Romania, or wherever there may be F-16 planes capable of carrying atomic bombs.

Because Russia said, if you have a plane capable of carrying an atomic bomb, whenever that plane takes off, whatever it’s carrying, we’re going to not only blow it up, we’re going to blow the base up that it took off from. And blowing the base up means blowing up all the runways, because these planes are very delicate. If there’s a lumpy runway, they apparently tip over and bump their nose.

So, in that sense, Russia will do what apparently America is trying to goad it into doing and extending the war westward, at which point America will say what Biden said. You see Russia’s invading Romania, invading Poland, trying to re-establish the whole Soviet Union and make all of Europe look like East Germany used to look. Well, that’s silly. And what is going to be happening to the European population and its voters during all of this? Hungary is opposing the expansion. Slovakia is, I think, opposing. What are they going to do?

We really can’t tell. Europe has so little political leadership that it’s just completely passive in all of this. That’s the problem. It’s in a state of civilizational collapse, as the Russians say.

NIMA: Do you find the conflict in Taiwan much more important for the United States or is the same way that Ukraine is?

MICHAEL HUDSON: I think America is simply trying to be like a mosquito, bothering China and Taiwan. I don’t think China has any desire to bomb or invade Taiwan at all. It doesn’t have to do any of this. Almost all of Taiwan’s trade is with China. All China has to do is say, okay, you want to be unfriendly, you want to split apart, then no more trade. What’s Taiwan going to do? You want to join the U.S. economy? Well, good luck. Try going that way. Obviously, you would have the Taiwan economy falling apart.

I’ve met many Taiwan officials and they all personally have their investments in mainland China. They’ve all looked forward to investing in China. Unfortunately, most of them are drug dealers. These are central bankers and financial people. They’re trying to reestablish what England did to China with the opium trade. Many businessmen in China, who are not the government leaders, but just businessmen, know that their economic destiny lies with China.

The Chinese essentially can play rope-a-dope. They can go with the flow and say, you really want to be independent? If your independence entails reliance on the United States, you can get all the weapons you want. They’re not going to help you because, as you know, we can wipe you out in 20 minutes. You’re just across the strait. We know you’re not going to attack us because we can wipe you out in 20 minutes. We know that your business people and much of your population wants peace with us, so we’ll just let you go your own way. We’re going to block trade with you. We’re not going to export to you. We’re not going to import from you. Let us know when you change your mind.

NIMA: How do you find Modi’s decision to go to Russia right after his re-election? He’s going to be in Russia and talking with Putin. How important is Russia for India at this particular moment?

MICHAEL HUDSON: India is trying to do what Erdogan has done so well for so many years. It’s trying to play the East and the West against each other. The United States is doing everything that it can to give India essentially to bribe it economically. India is trying to get the best deal that it can.

The United States is trying to say, you know, look at your war up in Nepal and Tibet and Sikkim and Bhutan. You have all these Chinese there. Remember the war?

I remember the war very well when India tried to attack Chinese troops, and the Chinese troops just walked into it. I gave a speech before the Security Council of the United Nations, and I said, you know, there’s only one solution. I was joking, but I said one solution to the Indian problem, that the Chinese will walk into India, they’ll eat all the cattle, and they’ll walk back to China and well, you know, the rest.

The Indian delegates all came up to me, shook my hand and said, you’ve got it. That’s really what the situation is. You know, this is all for show for the voters. It’s basically a show.

Well, all of these Indians have now died of old age. All of this was way back 50 years ago. I think that they realize that there’s no chance of their winning any real military conflict with China. The United States is going to try to give them arms, going to try to provoke some incident that will make China economically unfriendly with India.

I would hope that the Indians are savvy enough not to fall for this. I think they’re probably using the meetings with the United States to say, what will you give us? And now, Modi has gone to meet with Putin, and I bet he’s saying, what will you give us? What will China give us? Give us a real choice so that we can make a decision because it’s going to be very hard for us or any other country in the world to be independent.

When the world is breaking into two parts that are really a civilizational break, you can’t go two ways at once anymore. You can’t try to be a mediator because there’s no mediation. These two political areas are economically separating from each other, and this separation is, I think now, irreversible.

I would hope that India recognizes that. India is supposed to be part of the BRICS. Since Russia is now heading the BRICS, and I think there’s a BRICS meeting coming up in the next few weeks, I think the discussion that Modi is having is, what is our role in BRICS going to be? Do you trust us or not? And I think Putin is probably telling him, I would imagine, that well, India, you are a member of BRICS, but if you’re really taking the US side in discussions, and you’re essentially casting a US-backed veto of the policy decisions that the BRICS are making, then I’m afraid you really don’t belong in BRICS anymore. It’s a different India than it used to be, and I bet that that’s what the discussion is all about.

NIMA: When Turkey joins BRICS, this would be the first country, the first NATO country joining BRICS.

MICHAEL HUDSON: Require a trigger, forcing the decision to make. Erdogan is going to try to avoid making that decision as long as he can. He’s going to try to play it both ways, but if there is an attack on Lebanon, that is going to lead Turkey very quickly, even this year, to say, we can’t be a part of a NATO that is attacking Lebanon and our fellow Islamic co-religionists. We’ll withdraw from [NATO]. And Hungary, why don’t you come with us? You can just imagine what’s going to be happening.

And the US diplomats seem to have no idea of what’s happening. I don’t think they listen to your show.

NIMA: Michael, do you think that Hungary, Serbia, and Slovakia, are they thinking of joining BRICS?

MICHAEL HUDSON: Right now, because of their geographic location, their economic ties are very close to Europe. I think they will not join BRICS until Europe formally breaks up. And they have to wait until their joining BRICS will not result in an economic trade and investment and demographic interruption of all of this.

And what they will try to do is act as a worthy alternative to the current Eurozone leadership. Let’s create a new Europe now that Europe has decided not to become part of the military NATO anti-Russian group anymore. Once NATO is gone, I think all of Europe, not only the three countries you mentioned, but other countries are going to decide how are we going to remake relations.

As I said, it’s going to be very long before Russia trusts them. But I think Russia will trust Hungary and Serbia and other countries that have shown themselves to be supporting Russian interests and not supporting NATO interests all along.

NIMA: You talk about the conflict in Gaza. Do you think at this moment, we’ve learned that United States was offering a defense treaty to Saudi Arabia in order to convince them normalizing their relationship with Israel? And it doesn’t seem that that’s working for Saudi Arabia. How do you find the United States foreign policy in the Middle East and how the face of Middle East is changing in your view?

MICHAEL HUDSON: Well, Saudi Arabia, again, is an example of an inherently unstable economic situation. Saudi Arabia has a problem. Almost all of its financial wealth has been kept in the United States. And its worry is that this, its holdings of US stocks and bonds are hostages against it taking an active movement away from the West and joining its Near Eastern neighbors.

It’s being pressed right now. It’s being offered all sorts of American armaments like the F-16s. But there must be someone in the Saudi leadership that says, wait a minute, we don’t want F-16s, they don’t work. You know, let’s wait, let’s wait and see what Russia does with them in Ukraine. The American weapons have been shown not to work very well.

And I think Saudi Arabia is certainly under pressure from its own population. Remember, it has a very heavy Palestinian population, just as Jordan does. And the question is, how independent can the Saudi leadership be, not only from its own population, but from the Islamic population in general, despite the Shiite and Sunni splits.

So I think that it had, it is having to think about the unthinkable. It’s having to look at alternatives that have never existed, or been pressing for before. And for the time being, it’s going to try to do nothing, as little as possible. Obviously, the proposed agreement with Israel is over permanently. There’s no way that either Saudi Arabia or I think Jordan also can remain allies, virtually of Israel, and without so much counter pressure that it just won’t work.

The problem is, how independent will the Saudi leadership be of all the forces around them? And how much have their whole leadership been westernized and Americanized, that they’re going to somehow resist this Eurasian movement?

Well, they’re part of the BRICS now too. So what I’ve said about India applies just as well to Saudi Arabia. At the BRICS meeting, I think they’re going to say, well, how do you feel? Are you with us or against us? You got to make a choice. So it’s going to take a while for it to make the choice.

And as in the case of Turkey, the timing of this choice will be determined by America’s overreaching or some local military conflagration making the choice inevitable. You cannot avoid it. It has to be one or the other. And there was no way of really forecasting that kind of seemingly an accident.

But you can be sure that America is going to probably provoke some kind of pressure, overestimating the American position. That’s the problem with America. Like a bully, they overestimate their power and they’ve done it wrong again and again. Recently, the rest of the world is not like Iraq or Libya.

NIMA: Is the Biden administration capable of preventing this attack on Hezbollah?

MICHAEL HUDSON: Well, the Biden administration is two things. On the one hand, you have the state department. I have the politicians and amateurs in the state department and White House.

On the other hand, you have the military leaders. Now, the military, I’m sure it’s been announced that they’ve made all sorts of forecasts and games and in every forecast they make, America loses.

But the neocons don’t realize this. There’s a split. The neocons say, we can win anything. You heard what President Biden said. We’re America. We’ve never been defeated.

Well, I guess there’s always a first time.

And the question is, would the army just say no? Or would they pull back? Or would they resign? Well, unfortunately, the way to get promoted in the army is the same way you’d get promoted in, say, the British Navy and the old Gilbert and Sullivan song. You get promoted by going along with what the political superiors want you to say.

But at the same time, they have their own analysis. And even the CIA may have some analysts that they have not fired for being realistic. And the question is, will there be some split here? And the military will simply say, I cannot back this attack. I resign rather than leading to a fight that’s going to lead to our aircraft carriers, our battleships, our troops, our foreign enclaves all being destroyed. That’s another great unknown. But that’s what the choice is going to be.

NIMA: Just to wrap up this session, when you look at BRICS today, you said that we’re going to have a BRICS summit soon. And how long does it take for BRICS to come to a solution that would make its members totally independent of the American system?

MICHAEL HUDSON: I don’t see that coming very soon because they’re really reinventing the wheel. Much of this wheel has already been invented in the 19th century by British classical political economy.

You don’t want economic rent. You want capital formation. You want government to take the lead in natural monopolies and infrastructure. All of this was all worked out in the 19th century.

But neoliberalism has so extinguished and just excluded the history of this economic thought that most of the political leaders of the BRICS countries are simply unaware of this. And the staffs are unaware of this. Certainly, their central bankers are unaware of this, and their economists, if they’re trained in the United States and Europe, are unaware of this.

So they’re working so much, I won’t say in the dark. They know where they want to go, but they haven’t worked out how to get there. And this is going to take a while to get something that’s actually workable.

There’s already so much confusion about discussion of a BRICS currency. They’re not distinguishing between a currency to denominate trade and investment that maybe can be like the euro, and other speculators can buy it, or just a central bank, a version of bancor is in a central bank accounting system of credits and debits. They haven’t studied all of the discussions at the end of World War II over what kind of an international monetary fund should there be between Keynes and the Americans.

So if they’re working without this familiarity with history, and without how other countries have already thought through all of these, the same issues that the BRICS are thinking of, it’s going to take a while.

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