Branko Milanovic on What Comes After Globalization

What It Covers

Economist Branko Milanovic, author of *The Great Global Transformation*, joins Odd Lots to explain how neoliberal globalization is being replaced by "national market liberalism" — a system preserving domestic capitalism while adopting mercantilist international policies. He covers China's unprecedented economic rise, Western elite formation, global inequality trends, and the structural forces reshaping the world economic order.

Key Questions Answered

• •National Market Liberalism Framework: Milanovic identifies the emerging global order as "national market liberalism" — domestic economies retain free-market competition and pricing, but international trade policy shifts to zero-sum mercantilism. Tariffs, industrial policy, and supply chain repatriation replace free trade ideology. Governments from Trump's US to Macron's France follow this pattern, severing the international dimension of neoliberalism while preserving its domestic architecture entirely.
• •China's Dual Reality: China simultaneously holds villages below the $2-per-day absolute poverty line and leads globally in artificial intelligence development. The World Bank now classifies China as upper-middle income, yet most Chinese citizens and economists resist this self-perception. This duality explains why Western anxiety about China operates on two levels: state-versus-state competition and individual income rank displacement within global distribution.
• •Elephant Chart Redistribution Gap: The famous elephant chart shows Western middle-class income growth stagnating near 1% annually while top Western earners grew at 3%+ and Chinese middle classes surged. Governments faced two policy paths: domestic redistribution through progressive taxation and public education investment, or redirecting grievance outward toward China via tariffs. The political choice of the external path, crystallized by Trump in 2016 and continued under Biden, defined the current era.
• •Homoploutia — The New Elite Structure: The top 10% of American earners (approximately 30 million people) increasingly appear in both the top 10% by labor income and top 10% by capital income simultaneously — a historically novel combination Milanovic terms "homoploutia." This group believes meritocratically in its own desert, defends private property, works long hours, and transmits compounded advantages to children, creating a self-reinforcing elite resistant to displacement through either market downturns or political pressure.
• •China's Elite Income Reversal: Milanovic's research with Chinese co-authors tracking the top 5% of urban Chinese earners reveals a complete structural reversal between 1988 and 2018. In 1988, roughly two-thirds of elite income derived from state enterprises, government, and Communist Party positions. By 2018, two-thirds came from private sector professional employment. This mirrors England's capitalist class expansion between 1688 and 1900, compressed from 150 years into 40.
• •Africa Defines 21st-Century Inequality Trajectory: Global income inequality reduction now depends primarily on African growth, not Chinese growth. China's per-capita income has risen sufficiently that its continued high growth mathematically increases global inequality by widening the gap with countries like Nigeria, Ethiopia, and Congo. Five African nations each exceed 100 million people in a region growing at 2% annually in population — the only such region globally — making their economic trajectory the central variable in future global distribution outcomes.