Social inequality is the major topic of Serbian-American economist Branko Milanović. He already addressed this issue in his doctoral dissertation. Milanović then gained greater notoriety with a study published in 2015 for the World Bank, in which he examined the development of distribution since the end of the Second World War. His conclusion at the time was that while a new middle class was forming in China and India, things were going downhill for the lower income groups and the middle class in the capitalist countries of the West. This may also be one causes of events like as the election of Donald Trump and the Brexit vote.
In his new book, Capitalism Global, Milanović now spins his thoughts to capitalism in the future. How will globalisation continue, and what will happen to the labour market when globalisation takes hold every step of the way, even in the last value chains? In answering these questions, however, the author starts with a dubious thesis: For the first time in history, the entire world is determined by the same economic system, capitalism, according to Milanović. A thesis that seems full of holes in view of the fact that this was already the case in Russia in the run-up to the October Revolution of 1917. After all, colonialism was the historical form in which capitalism was globalised.
Milanović's thesis that more wealth is concentrated in fewer hands is also not new. Karl Marx already theoretically underpinned this trend of capitalist accumulation - and it was most recently empirically explored by the French economist Thomas Piketty, who observed it over a long period of time in an economic history study, published in the book Capital in the 21st Century. This does not mean that the thesis is uncontroversial, but it is already part of the stock of economic theory.
“Moments of crisis can arise precisely when growth fails to materialise”
Milanović's book, meanwhile, is much more interesting where it addresses the question of how capitalist economic forms are legitimised today. To answer this, he contrasts - because of their "paradigmatic function" - the systems of China and the United States. For him, the "Chinese model" is justified by growth and by the participation of a broad mass of people in the profits of growth. The prerequisite for this, however, is having an economically strong state which, to use Lenin's words, occupies the commanding heights of the economy. Moments of crisis can arise precisely when growth fails to materialise - an idea that we should get used to.
In Milanović's eyes, the capitalist societies of the West - with the flagship USA - legitimise themselves primarily through liberalism and democracy. In Europe, there is also the welfare state. But here, too, dangers lurk: What happens, for example, if the concentration of capital leads to the emergence of an oligarchic class that in turn undermines liberalism and democracy? Also, Milanović argues, there is a tendency in the Western economic system for social relations to be neglected.
”Milanović is not aiming at any kind of socialism, but at redistributing capital”
It is clear at this point that the author prefers the capitalism model à la USA, but he still considers course corrections to be appropriate. The bottom line is that Milanović is not aiming at any kind of socialism, but at redistributing capital. He calls this "people's capitalism," a concept that in many respects coincides with left-wing social democratic ideas. Measures suggested by Milanović would be: Tax cuts for the middle class, tax increases for the rich and an inheritance tax, and a fairer education system. Meanwhile, a controversial idea is "citizenship light," which would make it easier for immigrants to integrate without provoking nationalist reactions. Once again, one may be sceptical at this point, because: Nationalists are not guided by reality, but by their resentments.
All in all, the reader quickly realises that he is looking at the world through an American lens. After all, measures in Germany would probably also affect the social system and the health care system. Does a hospital have to make a profit or provide health care? In times of the corona crisis, that would also be an interesting question. And yet, all in all, Branko Milanović's "Capitalism Global" is a very readable book, full of theses that are worth thinking about.
Translated by Jess Smee