A breakthrough album can sometimes be the making of a pop artist. It is a little rarer for a graph to do the same for an economist.
Yet this is what happening to Branko Milanovic. He was already a leading economist in the study of world poverty and income inequality. However, his work on the development of the so-called “Elephant Curve” brought scholarly fame.
Named due to the shape of the graph, it charted the growth of a new global middle class and the rise and fall of other income groups. Subsequent books have pioneered a deeper understanding of the dynamics of inequality in our world and the consequences for policymakers.
His new work, The Great Global Transformation, is the latest contribution to this vital field of study.
Lessons for the would-be writer: An aborted interview with Andy Miller
The Great Global Transformation review: too substantial to be a primer, too panoramic to be conclusive
‘Dear monster under the bed’: Books that will make the perfect Christmas gift for younger readers
The Dublin Pub by Donal Fallon: A joy from start to finish
The opening chapter is a succinct explanation of the changing economic fortunes of countries. The conclusion regarding China is emphatic, observing: “Never in history have so many people improved their incomes so much over such a long uninterrupted period.” Their share of global output increased from 2 per cent in 1974 to 22 per cent in 2022.
The economic performance of Asia has also dramatically changed, with such a decrease in income inequality within China and India that it has reduced global inequality. This is resetting international relations and, also, the distribution of economic prosperity in our world.
The political consequences of this transformation are considered by examining theories on the relationship between trade and international conflict.
Adam Smith contended that trade caused the narrowing of income gaps between nations, leading to the maintenance of peace by a convergence of military power.
Lenin, conversely, believed that the seeds of conflict were sown in the contest for the raw materials and workers that are necessary for international commerce.
This work correctly identifies the shift to an international order with the rise of new economic powers, or the growth of a “multipolar” world. There is a broader acceptance of different forms of government, with less ambition to impose the same norms on all societies.
However, there is no conclusion that knits together this change and the impact of trade and levels of conflict between countries.
What is clearer is that this has created clear winners in every nation.
Their growing wealth has led to a counter-reaction, opponents “among the people in the West, those who have been left out of the benefits of globalization, lost their jobs, or feel socially slighted by the new elite”.
Such is the context for understanding the success of US president Donald Trump and for the creation of a political framework that Milanovic names “national market liberalism”.
This philosophy still includes a belief in free markets at a national level but with a clear rejection of internationalism. Lower levels of immigration and active trade policies are the key features of economic relations between countries.
The author develops this interesting framework but does not fully recognise the reassessment of the economic role of the state. The growing size of government and, for example, the acquisition of ownership stakes in private companies by the Trump administration does not indicate belief in classic liberalism.
The Great Global Transformation is more assured describing the tensions between economic integration and national politics. Developments that deliver global improvements are “normally associated with local (national) income and ‘happiness’ losses that in turn, through their impact on politics, may derail such globally advantageous changes”.
New structures of wealth within the US and China are analysed and the case is made for the emergence of a new elite.
The “homoploutia” are a group equally rich through both ownership of assets and income gained from their work. The author suggests that this is a new development in modern capitalism.
There is an abundance of ambition in this book. It moves from global economics and theories of international relations to developments in Chinese politics with elegance and speed.
Milanovic is not just a leading economist of our time; his intellectual horizons and learning are extraordinary.
[ Fiction in translation: memories, myths and origin storiesOpens in new window ]
Herein lies a difficulty with The Great Global Transformation. It should be a new series of books. Such is the richness and variety of ideas in this single work that too many are under-developed.
This great thinker has important insights on the relationship between international peace and the distribution of global income. A single book on this theme would be impressive and packed with insights.
The same could be concluded regarding his analysis of politics within China and the US, or the speed of change in the hierarchy of the international order.
This book fizzes with energy. It is too substantial to be a primer but too panoramic to be conclusive. Readers are fortunate to be able to enjoy the breadth of his other books while waiting for more.
Paschal Donohoe is managing director of the World Bank
