Four years ago when the Russia-Ukraine war began I wrote three pieces.
One was on short-term economic prospects of Russia.
Russia’s economic prospects: the short-run
branko2f7.substack.com/p/russias-econ… Like most economists I was wrong. Russia did weather four years of war and loss/freezing of about $500b in reserves much better than people thought. I believed that within a year Russia would be faced by significant shortages, inflation and price controls. Nothing like that has happened so far. Why: it is a topic for research.

In a dinner conversation w/ a friend, we said, let see in a simplest possible way which countries did well in the transition from socialism to capitalism. I then made this simple calculation: find out the average growth rate of real GDP per capita between 1985 (a "normal" socialist year) and 2024 (the latest available year for all). Here is the graph, with countries ranked in increasing order. Not surprisingly, the best is Poland which in some 40 years tripled its GDP per capita (average growth 3.1%). Not surprisingly too, Ukraine is the only country with a decline in real income.
The success cases are also Albania (3%), Armenia (2.7%), Estonia, Bulgaria, Belarus (2.5-2.6%)

Last night I could not sleep so I created a taxonomy of people who work on inequality/redistribution. For each of these groups I have names of economists but it could be too controversial. So I decided to stay with the taxonomy only. Group A are "socialists", or people who want to change power & distribution within the key locus, locus of production. Some want to give decision-making power to workers only; others want to constraint the power of shareholders, to make workers more important in managing companies thereby changing distribution "internally". They are the most radical b/c they change the nature of capitalism in production.

It is Weekend No. 7 and (as I have been doing for the past six weeks), I will now review Chapter 7 of "Visions of Inequality". It has become the most controversial part of the book b/c of its strong critique of lack of concern of neoclassical economics with income distribution. It asks the Q: why were neoclassicists uninterested in income distribution? It provides three reasons: endogenous evolution of economics away from class structure to individual "agents" (that are all fundamentally identical); political reasons (the Cold War) and funding of the research by the rich.

The list (in no particular order) of the books that I liked the most and read in 2025, with their reviews:
Quinn Slobodian, Hayek's Bastards
Gold, volk and IQs
branko2f7.substack.com/p/gold-volk-an… David Lay Williams, “The Greatest of All Plagues”
Poison for the soul
branko2f7.substack.com/p/poison-for-t…

In Chapter II of "The Great Global Transformation" I discuss opinions of key authors on whether trade (and thus globalization) lead to peace or war. I begin with Montesquieu who is famous for his doux commerce. Then continue with Smith whose views are much more complex and definitely worth reading. Then Schumpeter who in his early work believed that capitalism and trade generate peace in order to change later when he saw monopoly capitalism with its predatory behavior and struggle for markets as a more efficient, "normal", capitalism. And I end with Hobson, Rosa Luxembourg and Lenin who regarded competition for foreign markets & raw materias as leading to wars.

I mentioned most of this (informally) at a Europa conference in Madrid several days ago.
Europe should stop living in the 1990s. There is no End of History anymore. Things have changed.
EU's economy is declining but it continues to dispense gratuitous lessons to the world. Latvia teaches China--a country that has performed the greatest economic miracle in history--what it should do. In foreign affairs, EU results are negative to disastrous.
It started the war in Libya and left the country in permanent ruin & civil war.
Most of EU members participated in the illegal war on Iraq which, like the Russan war against Ukraine, was in clear violation of the UN charter. It is bizarre that they now complain.

Every couple of years, a fundamental misunderstanding between the East and the West of Europe reappears re. the WW2. In the occupied Western parts, life went on as before. Sartre continued writing & his plays were shown in theaters. Simone kept on sipping coffee at Les deux magots. Literary soirees were celebrated. People went to their jobs. Some food items became unavailable, and people listened to Radio London. Life in Paris, Brussels, Copenhagen, Amsterdam went on as before except for occasional raids on Jewish people. In countries that were Nazi allies, things were even better: Italy, Austria (Anschluss), Finland, Croatia, Hungary, Bulgaria, Slovakia, Vichy France: things were broadly normal. Many more joined Nazi militia and Waffen SS than resistance.

A strange disease has taken hold of the left: to bemoan loss of wealth of billionaires, The billionaires' commander-in-chief has decided to cut to size other billionaires. He has driven the stock market down. It is understandable that other billionaire and their think-tanks decry such a policy. But why should the left do the it? Esp. if you know that in the US and other advanced economies 60% of households have 0 or trivial amount of income from financial wealth. Moreover, financial income for the other 40% is so heavily concentrated that the losers are only 3-4% of the population--the richest ones. The measure is clearly super progressive.
(My next Substack on this theme.)

What were the great revolutions I witnessed in my life?
The first & really big was the Iranian revolution. I had many Iranian friends. They were all anti-Pahlavi. But quickly they split into two or three camps. The revolution had global resonance: I remember that my father disagreed with my mother over it. In Belgrade! They had no dog in the fight. But it was big. Reagan's revolution was also big. He upended things. Pushed back against the USSR that foolishly invaded Afghanistan the year before & not only went into a war it could not win, but challenged the basis of the Cold War order. Reagan was a Cold Warrior who wished for peace.

Consider income composition in socialism and developed capitalism. They are fairly similar. The differences are in the lack of income from K, greater family-related transfers, and quasi-absence of direct taxes (other than proportional flat wage taxes) in socialism. Then extremely low skill premium of 3-5% vs 18-70% for West European countries (and even more in the US).

This is the second year that in my teaching I spend two hours discussing income inequality under socialism, the way it was, not normative stuff. The most important thing is to tell students that socialism is not capitalism with less inequality. The logic of the system was entirely different. The salient points.
Nationalization of capital & end of incomes from K reduces inequality directly.
Wage compression: very low skill premium. Explained both by free schooling and ideological preference for less skilled workers.

After reading @pseudoerasmus excellent thread on the evolution of devt thinking and the role of institutions and @ingridharvold, Kesar, Dutt paper on the same topic (both published within the past 48 hours) I asked myself the following Q: Why did I like AJR early work so much & then lost interest? I liked both their "Origins.." and "Reversal..". The reason is that I found in these papers the themes with which I was already familiar from reading neo-Marxist literature, including S Amin and G Arrighi. But I always felt dissatisfaction with that literature's "sporadic" use of empirical evidence.

15 reviews of books on neoliberalism:
Karl Polanyi, The Great Transformation

Clinton Fernandes, Subimperial Power
branko2f7.substack.com/p/living-throu…
branko2f7.substack.com/p/powerful-but… Krishnan Nayar, Liberal Capitalist Democracy

Peter Turchin, The End Times
branko2f7.substack.com/p/capitalism-u…
branko2f7.substack.com/p/the-chronicl…

We shall never know if the Chinese embassy in Belgrade was intentionally targeted or not.
Here are some arguments why I find accidental bombing highly unlikely.
-This was the only building targeting mistake in 78 days of very precise bombing. -The ostensible target was a financial institution (bank giving loans, for, among other things, old SRFY's sales of armament). But that bank no longer worked; Serbia was bankrupt; it was not giving loans to anyone.

-It is the only fin institution having been ostensibly targeted.

In 1974, it made sense to speak of the Three Worlds, as among themselves, and treating China that never belonged to the Third World apart, they accounted for 98% of world GDP (in PPP terms).
Capitalist core 62%
Socialist countries 13%
Third World 24%
China 2% But now we have a different situation. The capitalist core has shrunk despite its geographical extension to E Europe. The socialist world has disappeared. The 3rd world is more important thanks to the rise of Asia.
Core 44%
China 22%
Politically heterogen. periphery 31%
RUS 3%

When in my recent talk in Edinburgh I claimed that Adam Smith could be seen as "a man of the left" (these terms btw are not used in the Visions of Inequality) this was based on the following: Smith's extraordinary strong critique of how the rich have acquired their wealth (plunder, corruption, collusion, trade companies, monopoly, colonialism). That critique is often stronger than Marx's critique of "primitive accumulation".

My new paper "The three eras of global income inequality 1820-2020, with the focus on the past 30 years" is just out in World Development. Access is free for 50 days.
Here is the link:
sciencedirect.com/science/articl… It is an important paper. Not only because it gives calculations of global inequality over 200 years (following Bourguignon & Morrisson seminal work) but because it looks at the political implications of the three eras: the rise of the West, the Three Worlds & the rise of Asia.

Much has been written about China's train system. But not enough. I think that it will be seen, with the system of canals and the Great Wall, as one of the most important contributions of China. One can see it as a proof that China excels in network industries. The speed, punctuality and cleanliness of the system are absolutely remarkable. But even more striking to a visitor is how apparently simple and well-organized is everything so much that one cannot but wonder why other countries have not done the same thing.

Somebody asked me for book recommendations re. the classics, capitalism etc. (I am not exactly sure what b/c it is hard to judge what people are interested in from just a couple of sentences). Nevertheless, I sent a list of books. First, those published in the past 3-4 years... Darrin McMahon, Equality
David Lay Williams, "The greatest of all plagues"
Glori Liu, Adam Smith's America
Marcelo Musta, The last years of Karl Marx
Krishnan Nayar, Liberal capitalist democracy
Fritz Bartels, The triumph of broken promises

Some of my slides for tonight's discussion:
Smith Ricardo