Branko Milanovic, The Great Global Transformation: National Market Liberalism in a Multipolar World. London: Allen Lane, 2025. 264 pages.
Economic growth since the Second World War, and especially since the end of the Cold War, has generated rising world income. It has expanded fortyfold since 1950 from roughly $5 trillion to $200 trillion. But its uneven distribution, according to political economist Branko Milanovic, has become the engine of a geopolitical earthquake.
In his recent book The Great Global Transformation: National Market Liberalism in a Multipolar World, Milanovic looks at absolute and relative income trends within countries and draws some weighty conclusions. What he describes as the “political West” (roughly what is now the G7 and the OECD association of developed countries) generated 62 per cent of world income in 1974, while China, the world’s most populous country by far, produced only 2 per cent. But by 2022, the West was responsible for only 44 per cent of word income. China’s share rose to 22 per cent and the “Global South,” including such countries as Indonesia, Vietnam, India and Brazil, generated 31 per cent.
Since wealth among countries is shifting, it follows that the incomes of the people living in them are likely changing too. Relative to the global average, incomes are sliding in the West while they are growing in China and the Global South. The United States’s level of per capita GDP compared to the world average peaked as long ago as 1952. For Japan, it was 1992. France, 2001. For China, that year is now, and its relative GDP per capita is forecast to rise for several years to come.
Individuals’ claims on the global pie are shifting. Some 44 million Chinese today have incomes that surpass the U.S. median income. That is, those Chinese – albeit only 3 per cent of the population – are richer than half the population of the United States, and a handful of them are finding their way into the echelon of the superrich. “A much greater percentage of people (and, of course, much greater absolute number of people) are located around the middle of the global distribution … than thirty years” ago,” says Milanovic.
Is not the gradual enrichment of the world’s people a good thing, a “consummation devoutly to be wished”? One might hope, but broader income distribution does not mean “the tide lifts all boats” equally, as defenders of free markets like to say. Rather, though the seas may be rising universally, some populations ride the crests and others are bound in shallows. As Milanovic observes, “It is an illusion to believe that what is good for the world is good for everybody … In the era of globalization … income differences between individuals and countries have become starker, more visible, better known, and hence more important as motives for action.”
Voters’ perception in Western liberal democracies of increasingly wealthy elites at home and rising incomes of workers abroad has fuelled resentment. This state of grievance is a key ingredient in the rise of political populism exemplified by MAGA, Brexit, France’s Ralliement National, Alternative für Deutschland and similar political movements. President Donald Trump has capitalized on populist anger to wage a trade war on China, imposing punishing and arbitrary tariffs. Brexit owed much to the hostility of working- and middle-class Britons toward elites from their own and other European countries.
Milanovic points out that concern about elites and their rising wealth is not limited to the West, but is manifest also in China and Russia. In China, the unleashing of business and markets during the leadership of Deng Xiaoping (1978–89) and afterward produced rapid growth, and along with it a powerful stratum of wealthy individuals (“It is good to get rich”). This elite often includes sons of some of the Chinese Communist Party’s (CCP’s) historic leaders. The collapse of Communism in Russia spawned an elite of oligarchs who captured previously publicly owned Soviet assets.
The reaction against the emergent elites in both China and Russia was state-instigated rather than pushed by a resentful populace. Xi Jinping, worried about the growing power of the wealthy and wanting to defend “socialism with Chinese characteristics,” purged businesspeople and CCP “princelings” with an anticorruption campaign and imposed regulatory limits on private business. Vladimir Putin has imprisoned, exiled and murdered oligarchs who pursued too great an independence in their business and political dealings. Both Xi and Putin have resolved to curb and control the beneficiaries of the market forces of the post-1990 “neoliberal order” as they affected their own polities.
Architects of the rules-based World Trade Organization (WTO) and its host of subsidiary trade agreements envisioned international convergence of economies and political systems. The supremacy of free trade and open markets would bring economic benefits and encourage the growth of political freedoms. An enlightened capitalism would prevail. That model has proved an illusion, argues Milanovic, and is being replaced by what he names “national market liberalism.” States will maintain the rudiments of private business in domestic markets, under various degrees of regulation, while limiting international competition through, among other things, protectionist tariffs.
Milanovic’s argument suggests that we are headed for an Orwellian world of clashing autarkies: Oceania, Eurasia and Eastasia, as imagined in 1984. But he acknowledges that the current global reordering could be far from definitive or complete: “What seems most likely … is that the counter revolution , as often in history, will only be partially successful. Global neoliberal hegemony may be terminally weakened, but … ideological hegemony … may be preserved.” That is, a deeply entrenched idea, the well-established narrative and practices around the supremacy of rules-based trade among generally free and open markets, still has the capacity to put a brake on the trend to build self-contained economic fortresses.
In his much-celebrated speech in Davos on January 20, Prime Minister Mark Carney pronounced that “we are in the midst of a rupture, not a transition.” In apparent agreement with Milanovic, he said, “Stop invoking the ‘rules-based international order’ as though it still functions as advertised. Call it what it is: a system of intensifying great power rivalry, where the most powerful pursue their interests using economic integration as coercion.”
Look more closely, however, to discern that, in his professed strategic response, Carney invokes instruments of the old international order: “We have agreed a comprehensive strategic partnership with the European Union … We have signed twelve other trade and security agreements on four continents in the last six months.” Rather than withdrawing into a shell, Carney advocates international bargaining to extend cooperation, even though this may be in the form of a series of bilateral and plurilateral agreements rather than on a broad multilateral basis.
So, are we really living in the twilight of “the rules-based international order,” which Carney characterized as a “pleasant fiction”? Not according to his own prescription. And not all actors in the international system are ready to abandon the narrative either. A speech by China’s ambassador to Canada, Wang Di, at the Ambassador Speakers Series of the Norman Paterson School of International Relations in Ottawa on January 26 was stacked with references to greater international cooperation. Many in the room were deeply sceptical. They saw his speech as a way for China to stake a claim to diplomatic territory left vacant by the United States: power loves a vacuum. Yet Wang’s generous use of the language of multilateralism validated its apparent worth, even if China’s devotion to it was always selective and remains thin.
Milanovic is a radical and provocative thinker. His final chapter, “Nationalism, Greed and Property,” is a pessimistic screed about a world that offers no escape from markets which are voracious in turning everything into commodities: “Many of the newly invented commodities (software programs, access to internet platforms, internet advertisements, electronic books, artificial intelligence, etc.) … have made the protection of private property and the definition of what is private property much more central.” He makes the dubious, ahistorical claim that “nationalism … is born from the fear that our goods … may be taken by others … Nationalism grows on the terrain of never satiated mass plenty and greed; and the desire that that plenty … may be preserved forever.”
Such a nightmarish vision hardly presents a guide for constructive economic diplomacy. Diplomats devoted to saving the furniture are better off dealing with a world that is than one that it might forbiddingly become. Doing so will mean defending the principles of the rules-based order and not succumbing to those who would overthrow it. The logic of international cooperation and its benefits can still prevail in the space between competitive hegemons. International institutions have not been eliminated, although some like the WTO are arguably dormant.
However, it is now well established – and Milanovic has starkly pointed out – that the neoliberal order did not effectively address rising inequality in the “political West.” So, while pursuing their international agendas, governments must design and implement policies to restore greater income equity at home.
