In conversation with Richard D. Wolff, American economist and public intellectual
Richard D. Wolff
Richard D. Wolff is a noted American economist, public intellectual, radio host and speaker who is widely interviewed on global economy and geopolitics. Besides being the author of several books, he is also the host of a weekly programme titled ‘Economic Update’. Founder of the media platform Democracy at Work, Wolff is Professor of Economics Emeritus at the University of Massachusetts, Amherst, and a Visiting Professor in the Graduate Program in International Affairs at the New School. He has earlier taught economics at Yale University, and City University of New York, and is an alumnus of Harvard College, Stanford University, and Yale University. Born to emigrants who fled to the US from Nazi Germany during World War II, Wolff is well-versed in German and French. Some of his best-known books include Capitalism Hits the Fan; Democracy at Work; Economics of Colonialism; The Sickness is the System and so on. He speaks to Open about the Russia-Ukraine war that began a year ago on February 24 following years of deep tensions and an eastward expansion by US-led NATO. Edited excerpts:
What were the early calculations on both sides about the war in Ukraine?
Most of my information comes from the US and NATO allies. I have very little idea about what Russian plans and expectations were. There is a great deal of speculation about Vladimir Putin’s calculations. It is worthless as far as I am concerned. I don’t know what the Russians’ objectives were. My guess is their objectives changed as the situations changed. The claim that someone always had this objective or that is usually not serious. I urge you to be extremely sceptical about such claims if you haven’t figured that out yet.
What were the United States’ expectations? Those are quite clear. The publicly articulated expectations coming from President Joe Biden, secretary of state Antony Blinken, and the Europeans whose role has so far been to do what the United States wants and says with minor quibbles about detail but no basic departure. The closest you get to disagreement in the chorus of European response comes in muted terms from Italy, and in more muted terms from France.
The Germans and the British have completely folded into the US echo chamber and much of the rest of Europe likewise. The big difference in Italy is that you have an extreme right-wing government that knows that there is no interest in the Ukraine war, no support for spending money and the Italian government is therefore not willing to do anything other than lip service.
“The expectation was that the Russian ruble would collapse as a currency and that the Russian GDP would drop by 30-40% or maybe more because they couldn’t sell their oil and gas. And then the war would come to an end because they couldn’t sustain the war – that was hoped for in the West… This expectation has proven to be utterly false.”
In France, that is the same situation, but President Macron is so weak that he has to be very careful about everything mostly because of domestic politics. Macron is extremely unpopular. So he has to do what French leaders usually do: not to upset the US too much but not appear to your own people to do the bidding of the United States. The economic conditions are extreme in France, Britain, and Germany and if this war goes on much longer, it will be totally the domestic political conflicts in those countries that will determine whether they will stay with the United States or leave.
The French activity has been to say that it has been a mistake (Macron said it recently) to speak about and target a “regime change” in Russia as an objective of the war. Macron then said it should never have been and it should not be an objective now. This is upsetting to the United States because the objectives at the beginning of the war as articulated in this country are as follows:
Number one: the invasion by Putin is a success for the US foreign policy. In general, most of the leaders in Washington believed that they were very successful in drawing the Russians to make an invasion of Ukraine. Everything they had done – pushing NATO closer and closer to the Russian border whether it is in Latvia, Lithuania, and Estonia in the north or all the way Bulgaria in the south — they had successfully done that. Instead of appearing that the West was betraying the promises made in 1989 not to go eastward, you could tell the whole story in a completely different way – that we are now faced with a westward invasion from Russia.
The second objective was to cause a political collapse and crisis in Russia, not by war, but through sanctions. It was believed to be a very weak and small economy and fully dependent on oil and gas. The expectation was that the Russian ruble would collapse as a currency and that the Russian GDP would drop by 30-40% or maybe more because they couldn’t sell their oil and gas. The Russian economy would collapse and then the war would come to an end because they couldn’t sustain the war – that was hoped for in the West.
This expectation has proven to be erroneous and the opposite has occurred. The Russian ruble is more or less worth what it was before all this began – it went down for a very short time and then came back and the rest of the world, particularly your country (India) and Turkey have been buying oil and gas at a high enough level that the notion that the European refusal to buy would be devastating for Russia has not happened. If your leader (Narendra) Modi or Erdogan in Turkey were to dramatically change their policies, that could pose problems (for Russia) but it is very hard to see it happening. Many other countries in the world are buying oil and gas that originally comes from Russia. China could or probably would step in if there are new developments.
To make the long story short, the Russian economy, I believe, fell by 4-5% over the year and that is not what the West expected or predicted. Ironically what was not expected has happened – which is severe economic problems in the West, here in the US, and in western Europe. The first sign of it is inflation. Western capitalists took the combination of the loss during the Covid-19 pandemic and the doom of a war-time stimulated economy to make the decision perfectly typical for them: This was the good time to recoup the lost profit from the pandemic period in the quickest and the easiest way available to them, which was raising prices.
So, the business community raised promises. As usual, when employers raised prices, they tried to minimise popular anger. The way they do that is to point to external causes that require them to raise prices. So, the anger, the backlash, and the bitterness don’t go on employers but on someone else. Here in the US, the blame is put on “supply chain disruptions”. China is blamed in particular. Why? Because they caused supply disruptions by the way they fought Covid-19 by shutting down production in factories. The real impetus (behind most of these charges) was profit maximisation. Profit numbers for US corporations are at a historic high. The inflation was a very successful profit-enhancing strategy – which is what the business community hoped for and what they got.
It was different in Europe because they were hammered by Putin’s reaction to sanctions. He basically cut oil and gas supplies to most countries that were unfriendly to Russia. He has kept them going for Hungary and other places. But for the main distribution, the Russians pushed back, partly because they had no choice because the US blew up the pipelines in the Baltic Sea (Nord Stream gas pipelines from Russia to Western Europe). The (resultant) increase in oil and gas prices in 2022 was extreme in Europe. The inflation there did not have the general consequences of raising profits. It raised the profits of oil and gas companies, but nobody else. And it put severe strains on the government finances because in order to avoid serious trouble on the streets they had to subsidise their consumers, their working class, by giving them the money to buy oil and gas.
Europe economically suffered. The US economically prospered. This will come back to haunt the alliance because the mass of people in Europe are having to pay for the war in Ukraine in a way the American working class does not feel as immediately and as sharply as in Europe.
“Now it is very clear that the US is a declining empire and everybody’s guess is that China is a rising empire. It is a very difficult moment for the Americans.”
The real fear in the US is that we will lose our allies in Europe because of internal conflicts made worse by inflation. In fact, there are even signs of it happening in the United States, too, although it is not at the level of Europe. For example, in England, half of the working class is going on strike. In France, there is a general strike (called for March 8). Here in the US, we do not have that level of organisation or mobilisation, but we have more union working class activity now than we have had in half a century. Be very careful not to mistake the lower level of activity here for no activity at all. I was born in the United States and I have lived here all my life. I have never seen this kind of agitation among the working class that I see now. It has been going on for three years now and it keeps building.
So finally, the expectation that the Russian military would be unequal to this task is wrong. It is covered over by assertions that the Russians expected to take Kyiv in the first week itself. The prediction that the Russians could not maintain a military presence is contradictory to everything I know about where the war is. Even the West gives pictures every day of that part of the Ukraine that Russians occupy – that is a much larger part of Ukraine than they occupied last year. So, I don’t know what it means to say the Russian military is not up to the task. They seem to be moving steadily in the direction they wanted to.
It was expected that the cost to the West of keeping this all going would be much smaller than it turns out to be. This is associated with a misunderstanding of what the Russians were willing to commit militarily. It may have also been based on a mistaken understanding of the political strength of Putin.
Most of the people I speak to on both sides do not take the propaganda (that is now raging in mainstream media) seriously. In fact, if there is a political weakness it is more in the West. Biden is very worried because the Republicans are turning against the war. Macron is in difficulty. So is Rishi Sunak in Britain. Olaf Scholz in Germany can barely hold on to his coalition. So, you have a lot of problems in the West.
Biden has connected his entire political survival to this war. It is amazing that he gives himself no way out because of the way the West works. Everything here is expressed in religious terms as though it is God and goodness fighting against the devil and evil. When you are doing this to a population, you are saying there is no conversation to be had, and that there is no negotiation to work out. So, they reject every opportunity for that the way they rejected the Minsk agreements and the proposals developed in Istanbul early last year. They really believe they can destroy Russia as a political force in Europe and weaken China, which is their ultimate goal by destroying ally Russia. There are a few voices in this country and their expectation is literally to destroy Russia, carve it up into half a dozen small countries, and integrate them with western Europe. And thereby removing all of what is now Russia from any chance of it being an ongoing ally of China.
Who are these people?
Are you familiar with the term Neo-Cons? Them. Some of them are interested in narrowly regaining for the West the former eastern European allies of the former Soviet Union, from Baltic states in the north to Bulgaria in the south. Then there are others who would like to “weaken” Russia, partly because they have always been afraid of that country as an alternative pole for politics in Europe. In the twentieth century, it was discussed in terms of socialism versus capitalism, which absolutely had nothing to do with reality. It was just an endless demonisation of the other.
“Biden has connected his entire political survival to this war. It is amazing that he gives himself no way out because of the way the West works. Everything here is expressed in religious terms as though it is God and goodness fighting against the devil and evil.”
If it is true that the US blew up the Nord Stream pipeline, why did they do it? What were they worried about? Were they anxious about growing interdependence between Russia and Germany?
Partly that is the reason. Biden had said repeatedly that the US would not allow that pipeline to come into existence. That had been a goal of the Neo-Cons, their belief being that if it came into existence, it would mean a significant increase in the interdependence of Europe and Russia. That frightens them. They don’t want that. They were under pressure from American producers of liquefied natural gas who saw an immense opportunity in Europe to sell American gas if the Russians were cut off. There was a fear that Europe would forever look to the east for energy supplies. France is one country that gets most of its oil and energy from Algeria and so they are not as caught up in all this as the Germans are, for example. The problem of the Germans is that they also depend on China. They have to sell their manufactured machinery to China. They cannot afford to lose that. The combination of having to pay more for oil and gas as they do now and having to lose the China market will destroy the German economy. That is why much of the German industry is not supporting the government. It is not interested in the war in Ukraine.
Getting rid of the pipeline had immediate and long-term goals. The immediate problem was some kind of rapprochement between Germany and Russia. As I have said, it is a good reason to be friends with Russia and China. The primary objective of blowing up the pipeline was to destroy such possibilities.
Finally, all conservative governments in Europe are faced with a fundamental problem: which way to go. They are now with the US, but they are worried that they have made a mistake. The alternative is to become the European end of the Belt and Road Initiative and throw their future more with China. And that possibility and choice are still there. The US fears it and the Europeans are not yet willing to dare go in that direction. But they become a bit more willing with each passing week.
Now, who do you think should take the initiative for this war to end?
I wouldn’t know how to answer that question. The two sides at this point seem to have no interest in doing it. The Russians won’t sit down [to talk] unless they get the security and the territorial guarantees that prompted them to go to war and the West has now completely boxed itself into [a position] that to negotiate with Russia would appear to accept defeat.
Any such initiative will have to be carefully choreographed however they sit down and whoever initiates it. That is all political theatre because the purpose of that theatre is to allow whatever concessions have to be made to the Russians not to appear as a defeat and that becomes harder and harder because the Russians also have to be protected against appearing to give it all away after having spent an enormous amount of money, and suffered the loss of a huge number of Russian troops.
Putin will however have an easier time in his country working it out than Biden, Macron, or others will have in the West.
There are two key problems here. When will the West be willing to say it has to stop? I don’t see them doing that. The Biden trip to Kyiv is political theatre. I think that there would probably be a theatre where somebody from the Russian side, highly likely China, maybe secondarily Erdogan, will have to meet their counterparts, maybe Canadians, or somebody else, in a place like Paris or so, and work it out. Each side will claim a victory and each side will do everything to hide the horrific toll it has taken on Ukraine, which is one of the poorest and the most corrupt among east European countries. It has now conservatively seen a drop in its GDP of around 30%. It only had 200 billion dollars in GDP; 30% is a loss of 60 billion dollars. That is just the loss in output. The destruction of its infrastructure is catastrophic. And I doubt the Russians will allow the West to give Ukraine the money they stole from Russia – the reserves. It wouldn’t be enough even if they do. Russians won’t accept it anyway. What we have is a bad situation handled unspeakably poorly in the West. Putin doesn’t have much choice given what he has done. So, everybody is playing out a game escalating the military without success. The West has given more than it had intended to and they didn’t stop the Russian advance. The claim is that they slowed it. But that doesn’t look good.
In that context, what are your thoughts on the coverage of the Ukraine war by the western mainstream media?
Terrible. Incompetent, war-mongering propaganda. I don’t expect much, you know. I have lived here in the US all my life. I know how the media works. The mainstream media is close to the government and they pretty much echo what the government wants to say most of the time. I think this has been an extreme example of that. There has been very little coverage of any kind of offsetting opinion. You get constant drum beats. In recent years most Americans are quite aware that the United States, the most powerful military force on the planet, is equally dominant politically and economically. It has invaded countries that are in no way comparable to having a fight with the United States. It has invaded Afghanistan, it has invaded Iraq, it has invaded Libya and Syria. I could go on. If you want to denounce the Russian invasion as a violation of international laws is fine. That is true enough. But to act in the way the mass media in the US has done is childish. The hypocrisy is so grotesque.
The United States is in no position to talk of a rules-based international order because it has either violated such rules as most people understand them or has made up its own rules. Putin is doing what the US has continuously done for most of the past 75 years. Then we read about war crimes, but apparently, they were committed only by one side, but not by the other which has not been true of any other conflict I know of. The US pioneered the use of drones, killing loads of people in Afghanistan even at funerals and marriage ceremonies. Those are war crimes, but in the media, they are all accidents. There are long articles about Putin’s psychology by people who haven’t the faintest idea about all of it. They just make it up. The truth is the US cannot keep up the warfare.
A very similar thing happened on the economic front, too. They were writing, including my colleagues in academia, for some 35 years that China’s economy wasn’t developing. When the statistics released by the Chinese indicated that they were developing, they made it clear that those stats were false. Then people visited China and came back to say, oh my goodness, they did develop.
The thought that I will leave you with this: the United States was the dominant empire for most of the last century. The end of the British empire already began in the 19th century, precisely in 1857, in India as you know from your own history. And the final coup came after World War II. Then the US took over from the end of the British empire. It ran a powerful one from 1945 until now. It already began sliding in the 1970s when the wages stopped rising and when more and more difficulties emerged. Now it is very clear that it is a declining empire and everybody’s guess is that China is a rising empire. It is a very difficult moment. It took Britain centuries to realise it – and many people in the UK can’t understand that the empire doesn’t exist. It is very difficult for people caught up in the decline of an empire to see it and face it. Much of this war is run by people who are denying all the evidence of a declining empire and the rising new empire. One side is very agitated and the other side believes that time is on its side.
Are you saying this war had a lot to do with the growing Chinese influence in the world?
Absolutely. Ukraine was a way they hoped to assert the image of a growing power for the US compared to the image of a shrinking one, to weaken an ally of the enemy (China) by making trouble in Russia. You must also notice the need for them to constantly play together the war in Ukraine with the American Navy in the South China Sea. Meanwhile, half of Latin America is turning against you and you can’t do anything about it. Whatever you try to do does not work. People in Washington DC are all trying to cope with all that is happening, but they have a tremendous blind spot. The French call it idée fixe (fixed idea) — that they must reclaim the authority of the United States.