LSE Public Lectures and Events

Episode: Great Global Transformation: National Market Liberalism in a Multipolar World

Date: November 6, 2025
Speaker: Professor Branko Milanovic
Host: Kirsten Saimbruch (International Inequalities Institute, LSE)

Overview

This episode is dedicated to the launch of Branko Milanovic’s new book, Great Global Transformation: National Market Liberalism in a Multipolar World. Milanovic presents his thesis on how shifts in global and domestic economic patterns have led to transformative changes in inequality, elite formation, and politics. The bulk of the conversation analyzes the declining global inequality accompanied by new forms of political and economic conflict, particularly in an era defined by the rise of China and a shift toward “national market liberalism.”

Key Discussion Points & Insights

1. The Great Global Transformation & Its Intellectual Roots

• Milanovic’s book title is a nod to Karl Polanyi’s The Great Transformation. While Polanyi’s work is a key influence, Milanovic applies the frame to contemporary global shifts:

  “We are living through the time of great global transformation… the emphasis… is on the relationship between China and the United States.” (03:27)

• The “reverse Mandeville” paradox: positive developments, such as a reduction in global income inequality, can yield negative political consequences:

  “Could it be that actually overall inequality measured by mean country incomes leads to conflict because some countries like China… become then gradually much more important economically and then politically and finally in terms of technology and military…?” (07:24) “A good outcome might lead to a conflict.” (08:10)

2. Asia’s Economic Rise and the Global Reshuffling of Income

• Country-Level Evidence:

  • China’s share of global GDP surpassed the US by 2015 (China at 23%, US at 15-16%).
  • Former 'colonized' countries have overtaken 'colonizers' in global GDP shares:

    “Today, India produces 9% and the UK produces 2% [of global GDP].” (11:08)

• Individual-Level Reshuffling:

  • Global income distribution, for the first time in centuries, resembles a log-normal curve more typical of individual nations.
  • The “global median class” (3,000-10,000 USD PPP annually) is rising in prominence.
  • East Asian urban deciles (especially in China) have overtaken lower deciles in Western countries (illustrated with China and Italy).

  “The lower part of the rich countries’ income distributions… have been overtaken essentially by China and other Asian countries. And their position has consequently gone down.” (19:59)

• Key Graphical Insight:

  • Urban Chinese median went from the global median in 1988 to the 72nd global percentile today; Italian lower deciles have dropped significantly in global ranks.

3. Intellectual History: Does Trade Lead to Peace or Conflict?

• Diverse perspectives from Montesquieu, Adam Smith, Hobson, Luxemburg, Lenin, Schumpeter, Polanyi:

  • Montesquieu: “Le doux commerce” thesis (trade civilizes), but with exceptions—e.g., autarky for Poland due to the continuation of serfdom from grain exports. (22:12)
  • Adam Smith: Trade leads to convergence in income, technology, and military power, which preserves peace:

    “[Trade] promotes income convergence… And the convergence in military power preserves peace.” (23:52)

• Theories applied to the US-China relationship:

  • Early engagement: mutual honeymoon motivated partly by Soviet opposition.
  • Rising conflict as Chinese growth, US elite-hinterland divide, and political backlash intensify.

  “You had an elite which was very happy to be globalized… and you have the hinterland that stayed out. And then the threat to the elite rule… the need to change the rules of globalization… and consequently you have a conflict between the US and China.” (26:25)

4. The Rise and Role of the Global Elite (‘Homoplutic’ Elite)

• Definition & Empirical Evidence:

  • In the US and other rich countries, a growing share at the top are both high-wage earners and major capital owners—coined "homoplutia."

  “What I called homoplutic elite… you’re wealthy both in labor as a factor of production and in capital as a factor of production.” (28:34)

  • This group constitutes 2.5-3% of the population in rich nations.
  • Not simply a Western phenomenon—contrasted with Mexico, Brazil, etc., where the overlap is minimal.

• Ideological Implications:

  • Contradicts mid-twentieth-century theories that ‘managerial’ elites would erode the dominant capitalist ideology.
  • Homoplutic elites are deeply invested in defending property and capitalist norms, creating formidable barriers to redistributive reforms.

  “The people who are in the top are really very strongly involved and they’re great defenders of capitalist ideology because they themselves are big time capitalists.” (33:43)

• China’s Elite Transformation:

  • Rapid shift in elite composition—private sector capitalists expanded from near-zero to about a third of urban China’s top 5% between 1988 and 2018.
  • Communist Party membership provides a significant income premium exclusively among the new capitalist elite.

5. The End of Neoliberal Globalization and the Rise of National Market Liberalism

• Contemporary Political Developments:

  • Milanovic sees neoliberal globalization’s end, not pejoratively, but as a “counter-revolution” against excesses and elite dominance facilitated by globalization.

  “Neoliberal globalization is clearly at its end, whether you want to put the date 2016, 2008 or whatever.” (35:27)

• Differentiated Backlashes:

  • US: Driven by populist middle and lower classes left behind by globalization, with anti-elite, anti-migrant undertones.
  • China: Party seeks to prevent capitalist dominance within governance.
  • Russia: State capture by intelligence services, post-oligarch rejection.

  “In all three cases you have a rejection of neoliberal globalization led by very different groups of dissatisfied people…” (37:30)

• National Market Liberalism Defined:

  • Retains market principles at the national level—free markets, low regulation, strong property rights—but reverts to mercantilism at the international level.
  • The “internationalist” aspect of classic liberalism is forsaken for nationalist priorities.

  “Liberalism gets shorn of its internationalist aspect… it really gets focused on the economic part.” (39:36)

Memorable Quotes & Moments

• On the Paradoxical Consequence of Progress:

  “A good outcome might lead to a conflict.” (08:10)

• On Global Reshuffling:

  “The greatest reshuffle of global income positions in the past two centuries.” (16:36)

• On America’s Unique Moment:

  “The US peak was 1952. It doesn’t mean that the US has not grown nicely since then. But… the rest of Europe was destroyed… The US peak is a little bit of an anomaly.” (22:03)

• Adam Smith’s Prescient Analysis:

  “[Trade] promotes income convergence… And the convergence in military power preserves peace.” (23:52)

• On Homoplutia:

  “I don’t really know the mechanism how these people have become rich both in capital and labor. But… they are meritocrats… the Stakhanovites of today are the top 1 percenters.” (32:02)

• On the End of a Global Era:

  “Neoliberal globalization is clearly at its end, whether you want to put the date 2016, 2008 or whatever.” (35:27)

Audience Q&A Highlights

[41:42-44:43] US vs Europe: Why Do They Respond Differently to Populism and Anti-Globalization?

• Milanovic argues the shift isn’t unique to the US:

  “Current Trump administration is [not] a sharp break… all the policies that Trump started then… have continued under Biden… the same idea to treat trade as a war.” (42:53) “[Europe’s] anti-China sentiment, rhetoric, even policies are there. And… policies with Russia… are practices of war… It is not that dissimilar from what we see in the US.” (44:13)

[45:10-49:57] Elephant Curve and Policy Responses

• Elephant chart (global income growth, PPP) showed real growth stagnation for the lower halves of rich countries, fueling political dilemmas and nativist policies.

  “To increase [the bottom 70-80th percentile], you need to decrease either [China’s share]... or the top of national income distribution.” (48:43)

• On “democratic socialism” in America, Milanovic is cautious over its chances for real change.

[50:20-55:00] Technical/Method Questions & Future Trends

• “Homoplutia” is robust to threshold adjustments; phenomenon of capital and labor income convergence at the top is newfound and cross-national.
• Without China or the “Asian Tigers,” convergence stalls, and Africa/other regions lag:

  “China is no longer the force for global income [inequality] reduction… It has become too rich.” (54:00)

[57:31-65:08] On National Liberalism’s Feasibility & Future Cooperation

• National liberalism’s inward economic focus persists even with complex global supply chains.

  “Ideologically… the assumption… is what is good for my nation.” (60:19)

• Milanovic is skeptical that the rise of China and other Southern countries will quickly yield new international institutions or a fundamentally rebalanced world order.

Notable Quotes with Timestamps

• “Could it be that the fact that actually overall inequality measured by mean country incomes leads to conflict because some countries like China… become then gradually much more important economically and then politically and finally in terms of technology and military?” – Branko Milanovic [07:24]
• “Today, India produces 9% and the UK produces 2% [of global GDP]. So if you don’t think that this is a big change… it’s really difficult to see what would be a bigger change.” [11:08]
• “The greatest reshuffling means that positions of different individual groups between essentially Western countries and Asia have changed.” [16:36]
• “The lower part of the rich countries’ income distributions… have been overtaken essentially by China and other Asian countries.” [19:59]
• “Homoplutic elite… [is a] new phenomenon… people who are both rich capitalists and rich workers.” [28:34]
• “Neoliberal globalization is clearly at its end, whether you want to put the date 2016, 2008 or whatever.” [35:27]
• “Liberalism gets shorn of its internationalist aspect… it really gets focused on the economic part.” [39:36]

Key Timestamps

• 00:16 – Introduction to Professor Milanovic and the context for the book
• 02:32 – Milanovic’s start: framing “great global transformation” and main theme
• 07:00 – The “reverse Mandeville” and paradox of favorable trends leading to conflict
• 11:00 – Empirical data on Asia’s economic rise and GDP comparisons
• 16:30 – The global income reshuffle and rise of a “global median class”
• 19:59 – Decline of Western lower decile income positions relative to Asia
• 22:00 – Country economic peaks and changing position in the global order
• 23:52 – Adam Smith’s view: trade, convergence, and peace
• 26:25 – Application of trade/conflict theories to US-China relations
• 28:34 – Homoplutic elite: nature, data, and implications
• 33:43 – Ideology of emergent elites and failure of the old “managerial” vision
• 35:27 – National market liberalism: definition and origins
• 41:42 – Political divergences between US & Europe
• 45:10 – 65:08 – Audience questions: elephant curve, elite formation, global south convergence, national liberalism, and the possibility of a new economic order

Conclusion

Branko Milanovic’s lecture, marking his latest book, offers a compelling tour through seismic economic and political changes defining our era. The core messages include:

• Global convergence, driven by Asia’s resurgence, has disrupted more than inequality statistics—it’s reshaping elites, fuelling populism, and reorienting global politics.
• The new elite “homoplutia” are entrenched defenders of status quo capitalism, undermining hoped-for egalitarian managerial transformations.
• With neoliberal globalization on the wane, major powers are retreating to a more nationalist, mercantilist orientation, signaling the onset of “national market liberalism.”
• Milanovic remains circumspect about whether the global south’s rising power will translate into new, more equitable international structures; the historical inertia of institutions and the vested interests of emergent elites present formidable obstacles.

For a full analysis of the contemporary global economic order—and its discontents—this episode is essential listening.