Global Liberalism in Crisis: An Interview w/ Economist Philip Pilkington
Philip Pilkington discusses his forthcoming book "The Collapse of Global Liberalism."
Philip Pilkington is a macroeconomist and former investment professional. He is the author of The Reformation in Economics and the forthcoming The Collapse of Global Liberalism. His writing has appeared in numerous outlets including The Telegraph, The New York Post, American Affairs, Postliberal Order, Moneyweek, The Spectator and Unherd. He is the co-host of the Multipolarity podcast.
Daniel Whitehead served in the General Counsel’s Office of Governor Ron DeSantis and has clerked on two federal courts, the U.S. Court of Appeals for the Seventh Circuit and the U.S. Court of Appeals for Veterans Claims. He is a fellow of the Claremont Institute and James Wilson Institute. He is currently a Senior Fellow of the Hungary Foundation living in Budapest, Hungary.
Daniel: Hello, this is Daniel Whitehead and joining me here in Budapest, Hungary, is Philip Pilkington. Today, we’ll be discussing various matters with Mr. Pilkington, with a focus on his forthcoming book, “The Collapse of Global Liberalism,” which is coming out this May. For background purposes, I am an attorney by training and a senior fellow with the Hungary Foundation, and Mr. Pilkington is an accomplished economist and prolific writer working with the Danube Institute, which, for our American audience, might be described as a Hungarian version of the Heritage Foundation.
I have occasion to discuss various political, philosophical, and economic matters with Mr. Pilkington living here in Budapest, indeed, we just did a podcast for Postliberal Order, and I’m sometimes surprised to find that he does not have the name-recognition that I think he deserves in the United States. Not only is he a skilled economist in the conventional sense, he is, I think, unique today in that he approaches economic phenomena from what might be described as a realist perspective, that is, a pragmatic one rooted in Aristotelian notions of nature and teleology. For these, and other reasons, I think American professionals and other thinkers, especially those in the policy space, will profit from today’s discussion. With that said, let’s get at it.
I don’t think I’m exaggerating when I say that those of us who had a public school education and took a class in economics had to endure countless bromides about the GDP, the advantages of a “service economy,” and what a great thing it was that state and powerful private actors intentionally destroyed the American manufacturing base so that non-citizens in foreign lands could have American jobs. I recall thinking, as a high schooler, that all this made no sense at an intuitive level, but this was what the “smartest” American economists and policy makers had been saying and justifying for decades.
If you’ll allow a digression, on reading your book, it was refreshing to see a contemporary economist provide a “common sense” based approach to economics and foreign policy. G.K. Chesterton once described St. Thomas Aquinas as the philosopher of common sense, in that his penetrating and luminous analyses and insights into the nature of reality, ethics, etc. always squared with what most well-adjusted people would also consider true. It occurred to me that what you provide is an economics of common sense, in that normal people, which sadly excludes most economists, will be able to readily square your diagnoses, if not all your prescriptions, with their experience of the world. Could you describe your approach to economics and how it informed your writing of the book?
Philip: Well, thank you for the compliment in comparing my approach to St Thomas’, although I hope we are not at the point where writing on the flaws of GDP is sufficient to merit sanctification. Surely things have not gotten that bad. I started my writing career as a critic of economics taught in undergraduate classes. That was the topic of my first book, The Reformation in Economics. I won’t go into all the old post-2008 debates about reforming the discipline of economics. Attempts at reform in the wake of the financial crisis were largely a failure and theoretical economics barely even exists anymore. The entire discipline seems to me in freefall, to be honest — mostly because it was and is dominated by American baby boomers who refuse to admit they might not be as clever and special as they think they are. Many such cases, as the kids say.
Increasingly, I think that the ravages of late liberal culture are showing us that our entire approach to economic governance must change. This is certainly tied to the perverse assumptions embedded in contemporary economics, but it is more all-encompassing than that. My main concern these days is to try to encourage people to sharpen their critiques of such things. For example, there is much chatter on the blogs etc. about the flaws in GDP measures. But most of these critiques lack in depth knowledge of how these statistics are constructed and so they tend to be easily dismissed. It is great to see people question whether a lonely man paying an OnlyFans model, a transaction that is recorded in the GDP statistics, really constitutes social good. But the next step is for critics to learn more about these statistics and perhaps even start to consider constructing replacements. I know that learning the rationale behind GDP accounting and how it works is boring and I know that time could be better spent in a spiritual sense doing almost anything else, but there really is no way to change our contemporary social relationships except in learning how to steer the technocratic machine yourself. If we want to purge the liberal homunculus from that machine, we need a postliberal homunculus.
Daniel: Thank you. Relatedly, it’s not uncommon in postliberal circles for intelligent people to describe economics as a “fake science.” This is obviously a shorthand for the fact that liberal economists tend to “hide the ball,” so to speak. To elaborate: all economists diagnose problems and proffer prescriptions based on some sort of political philosophy or hierarchy of values, which in turn, are necessarily based on a metaphysic (or anti-metaphysic, as the case may be). For example, today, liberal economists will point at a GDP chart and tell you that the economy is doing great, even though you can’t afford anything except illicit drugs (American Compass provides a much more helpful Cost of Thriving Index to assess economic health). What the liberal economist fails to tell you (because he’s probably indifferent to your wellbeing) are the political premises and desired goals that inform his approach to economics. You provide an interesting account of the “metaphysic” of liberalism and how it informs both economic and foreign policy in your book. Could you elaborate?
Philip: The metaphysic of liberalism — which may be called an “anti-metaphysic,” as you say — has two components, broadly speaking. The first is the telos, or perhaps again we might say the ‘anti-telos’. This telos/anti-telos is familiar to all of us: the liberal subject must maximize their autonomy above all else by pursuing their desires no matter what the cost to society. We might think of this, borrowing from Kant, as the categorical imperative of liberalism. The second component is the mechanism of the liberal metaphysic/anti-metaphysic. The mechanism should be familiar to anyone who has read their Locke, their Smith, or their Rawls: contracts.
Liberalism pushes its subjects — and I mean “subjects” in the manner that we would think of a subject of a king — to organize as many aspects of their lives as possible through contracts. Many of these contracts will be commercial. The lonely man has his loneliness quelled in a perverse manner through his commercial contract with the OnlyFans model, while the model earns her living — such as it is, I suppose. Desire is satiated in a way, I suppose, but I get a strong sense that everyone is miserable and atomized. The other contract type that is important to liberalism is contracts with the state. Here the “subject” aspect of liberalism becomes extremely obvious. Take the example of transgenderism. A late liberal subject is told that they can change their gender by petitioning the state. The idea is that a person’s birth certificate, rather than being a simple record of their birth, is instead a negotiable contract with the State. If I petition the State to change my birth certificate to state that I am a woman rather than a man, I magically become a woman. At this point it should be becoming clear that liberalism attempts to push all human subjectivity — our very Being — through commercial and legal contracts mediated by the market and the State.
Daniel: Another thing you discuss in your book is military policy. It’s been obvious to sensible people that liberal ideology is not just inane but poses a serious threat to national and even global security. Under the Biden administration, every effort was made to demoralize the male population, deconstruct unifying American mythologies and historical narratives (such as by renaming military bases and ships in an intentionally provocative manner), and staff key positions in the military and intelligence agencies (who we now know dedicated much time to discussing their kinks and the finer points of pronoun usage) based on criteria immaterial to its (actual) mission, namely, protecting the country. The consequences of this policy were, among other things, severe under-recruiting and almost certainly reduced morale. Secretary of Defense Pete Hegseth summarized the problem when he said, “Diversity is not our strength. Our strength is unity, and without it, we are not strong."
You discuss the issue of American national security by (1) looking at the ways that deceptive economic analyses were used to mislead decision-makers about America’s war capacity and that of its rivals, and (2) discussing how liberals view the nature of warfare and why that made them unprepared for new military strategies devised by, for example, the Houthis and the Russians. Could you please go into this more for our readers?
Philip: Well, I think that the woke issues in the military and intelligence organizations are now coming to a head. I doubt that these trends will survive the Trump administration — they have clearly become too absurd. But I do fear that woke issues will now be used as a scapegoat for many of the deep problems in these institutions. I already see a strong tendency on the right to think that, for example, the U.S. military was in perfect shape before the woke fads caught on in the Obama era. This is simply not true. The problems in the military go much, much deeper than that. A lot of people in the United States long lived under the illusion that while many of their institutions were broken, the military was still world class. Current events are raising serious questions about this.
In the book I highlight that liberal ideology has made Western countries — and the United States is probably the global leader in this regard — view military developments as part of some grand march of progress. If you go on YouTube and watch the military gear channels for example — many of them, I assume, are sponsored by the defense companies — you will be presented with this view. The argument appears to be that technology is in the process of liberating us from the old rules of war. The average infantryman is becoming less human, more cyborg and, at some point, we are even encouraged to think that robots will take over.
The Ukraine war has shown us that this is a fantasy. Contemporary ISR, drone and missile technology have created static trench-artillery warfare of the type we saw in the First World War. In this type of war, the infantryman is not so much as cyborg as a piece of meat. This is a huge topic but here I will just make two comments. First, Western defense industries are not set up for this type of war. Their “high tech” war fantasies are only fit for minor global policing operations against far weaker adversaries and their “lite” industry is not capable of the type of war production needed for such a conflict — something we are learning in real time. Secondly, the Ukraine war confirms for us yet again a simple truth that we should have learned in the 20th century: industrial warfare is utterly disgusting and should be avoided at all costs.
The “high tech” war fantasists sell you a vision of war that is delusional — they pitch it as a “clean war” with “smart bombs” and other such nonsense. It is their business to sell these delusions because it makes them money. Industrial war is mass slaughter. Nothing has changed in that regard since the Somme. The baby boomer generation, and liberals more generally, have tossed away the lessons that their parents’ generation learned about this sort of warfare. I only hope that a less narcissistic future generation can relearn them. If we don’t, we may have to learn them while haplessly holding a useless rifle in a trench waiting for a drone to blow us to smithereens. I won’t even get into the morality of using mercenary armies – which we have relabeled ‘proxy’ armies — in such wars. The historians can judge the “flower power” generation for that one — I hope they are kinder to them than I would be.
Daniel: Turning to what I think is one of the most interesting, and perhaps controversial, prescriptions in the book to solving the problems of de-dollarization and trade imbalance among, primarily, western economies is your proposal to implement the so-called bancor system. Could you explain what this is and describe the problems that such a system would address and how those problems emerged in the first place?
Philip: Well, the bancor is not my idea, although I have refined it and made some concrete criteria to base the system on. The bancor was first proposed at the end of the Second World War by the British economist John Maynard Keynes. It is effectively a rules-based monetary system that forces countries that have trade imbalances — whether these are trade surpluses or trade deficits — to iron out these imbalances. If they do not, they are charged interest and, at the extreme, effectively fined and the money is used to redevelop the industry the lack of which is generating trade deficits in the first place.
Keynes’ bancor proposal was seen at the time as the most logical way to solve global issues around trade imbalances but it was rejected for political reasons. In effect, at the end of the war the United States was a large creditor and so it got to dictate terms. The country adopted a global dollar-based system — backed by gold — because American leaders thought that this would give the United States more global influence. I think this was a huge mistake because it has led to the situation we are in now, where the country is addicted to financialization, and dollar hegemony and its industry has been eviscerated. Perhaps now that the shoe is on the other foot, it is time to take another look at the bancor. I fear that if we do not the post-dollar world will resort by default to a gold standard of some sort. If this were to happen economic forces would crush American living standards to force a readjustment on the trade account. This would be like what happened when then-Chancellor of the Exchequer Winston Churchill forced Britain back on the gold standard in the 1920s. Interested readers are welcome to look up that unpleasant period in British history.
Daniel: Thank you for this in-depth answer. I think that’s enough questions about the book. You’ll have to purchase it to get all the details. Let’s turn to something else that will interest readers: Hungary. It’s not news that the last administration had a particular disdain for the people of Hungary. From sending the odious Pressman, unilaterally terminating a double taxation treaty with Hungary (which, I believe, the U.S. still has with Russia), to funding liberal NGOs and opposition groups to undermine the democratically-elected Fidesz government through USAID, the Biden administration made its displeasure felt.
Harvard Professor Adrian Vermeule once wrote that liberal regimes feared Hungary for at least two reasons. Unlike, say, the Russians, Chinese, or Saudis, the liberals feel that the Hungarians, in democratically rejecting liberal ideological aims, rejected what liberals believe is real democracy. Unlike these other regimes, the Hungarians utilized liberalism’s own preferred regime type to undermine its ideological project. So, in Vermeule’s words, the liberal hatred runs deep because “the apostate is always more detested than the pagan.”
The second reason he proposed is that the Hungarian decision to pursue what some describe as a thoroughly democratic, yet non-liberal, regime type is a threat to liberal imperium. In other words, other currently liberal states might get sick of mass illegal immigration, the omnipresent smell of weed, declining economies, violent crime, rampant drug abuse and homelessness, and general social dysfunction and turn to Hungary, the “postliberal” start-up country, as a model. Ironically, this is probably true. Although I live here in Budapest, I’ve travelled all around the country and observed that the cities are safe, clean, and the people happy.
Indeed, after seven months, neither my wife nor I have experienced a single unpleasant interaction in Budapest’s public transit (we’ve used all of them), which is sometimes the only significant point-of-contact that foreigners have with another country’s public services. (Obviously, this is not the case with American public transit, where it is too common for citizens to be, among other things, savagely beaten or shoved into oncoming subways in random acts of violence). Perhaps you could add more insight into why the liberal imperium hates and fears Hungary so much, provide American readers with concrete examples of Hungarian “postliberal” experiments, and just describe your overall experience here.
Phil: Well, I think you nailed it. Hungary is a very civilized country. Much more civilized than most of the West these days. It is not some perfect utopia. You are free to go to one of the major rail stations where a gypsy might ask you for money or you might see a drunk lying on a bench. But these things were commonplace when the liberal Western countries were better managed and could still claim to be relatively civilized. The poor will always be with us, and all that. But Hungary is an extremely high-trust and functional society. So much so that when you try to explain to Hungarians how bad some things have become in the liberal West, they simply will not believe you. I had a long conversation with an opponent of the Orban government who insisted that what Hungarians call “gender propaganda” was not actually taught in liberal Western schools. This was just a story made up by the Orban government to scare Hungarians into voting for him, he told me. I tried to explain to my interlocutor that I had personally seen this stuff being taught in British schools — but then I became part of the conspiracy to trick him!
Much of this order is maintained through the simple imposition of rules. Immigration is limited to legal immigration, for example, and “gender propaganda” is simply banned and driven out of the public space. Last week the government announced a zero-tolerance drug policy. Drug abuse in Hungary is minimal but I suspect they saw some creeping into the tourist districts in Budapest and took out the hammer before it spreads into the rest of society. The Hungarians do not mess around. Beyond this, Hungary is experimenting with postliberal policies by which I mean policies aimed at positively changing people’s behaviors for the better rather than simply banning bad behavior. The most famous of these is, of course, the family policy. Last week the government announced mothers of two or more children are exempt from all income tax, as are young mothers of one child — I think under-25 is the criteria although it may be under-30.
These policies will not solve the problems with the birth rate overnight, but they are changing behavior in amazing ways. Hungary has doubled its marriage rate in fifteen years. It has gone from the lowest marriage rate in Europe to the highest. You see the cultural impact. Young women in their early-20s complain that their friend is getting married, and they are not. Marriage is clearly high-status here for most young people. In Western liberal societies, it is seen as “weird” to get married in your early-20s, at least in the metropolitan areas.
To be frank, I do not think it is worth living in the Western liberal societies. I hope that they will turn the ship around and I am quietly confident that they will. But it will take a generation or two to solve the social problems, even with heroic effort. I will be an old man when that happens, and my children will have to grow up around the chaos and the wreckage. Living standards in these societies are mostly fake, meaningless propaganda numbers reminiscent of the late-Soviet Union — you get a “high salary” in a big city, and it all disappears on overinflated rent for some shoebox apartment or “bug pod,” as the online world would have it. I lived in London for most of my adult life and when I go back I just wonder why I tolerated all the public disorder. If you have children in these societies, you must pay for expensive private schools to protect them from chaos, bizarre ideas and even physical danger. Add up all the real numbers and these societies offer an extremely low standard of living, masked by overinflated prices and fees that present themselves as optional, but which are actually mandatory. I do not see the point anymore. These societies are now half-collapsed and may even fully collapse soon. Life is simply better in non-liberal countries.
Daniel: One last question. Prime Minister Viktor Orbán was the only European leader to voice support for President Trump during the last election (I even sometimes see Hungarians wearing Trump hats). How do you think this partnership will bear out in the future?
Philip: We simply do not know. But I can tell you that political developments in the United States are of secondary concern for Hungarians. Everyone here is happy that Trump got elected, but I doubt that anyone thinks that it will solve all their problems. I think in general we are going to stop talking about the West so much as we move into a postliberal future. I hope that those of us who value Western culture and Christian civilization can cope in a world like that. It will not be optional for us; I am almost sure of that.
Some historians claim that in the early Middle Ages many of the great texts of Western civilization were saved by Irish monks who kept them safe on that then-obscure island. Being Irish, that story appeals to my vanity and so I will assume that it is true. I think that it is very likely that we will have to do something like this as we move into the future. I am not thinking here of intentional communities, like Dreher’s Benedict Option — I see the importance of these, but I do not think that many will go with this option. Rather, I think that a lot of people will just end up gravitating to places where their standard of life — economic, social, moral etc. — is higher. Since liberalism has handed us an enormous demographic crisis, educated labor will be in very high demand. I would not be surprised if some countries started trying to compete for that educated labor on such a basis — I am already seeing early signs of that.
Daniel: Thank you very much for participating in this conversation. I hope the readers found this edifying, and we all look forward to the publication of "The Collapse of Global Liberalism” coming out this May.
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