Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace

by Matthew C. Klein, Michael Pettis

Overview

Winner of the 2021 Lionel Gelber Prize: A provocative look at how today’s trade conflicts are caused by governments promoting the interests of elites at the expense of workers

“The authors weave a complex tapestry of monetary, fiscal and social policies through history and offer opinions about what went right and what went wrong . . . Worth reading for their insights into the history of trade and finance.”—George Melloan, Wall Street Journal

"This is a very important book."—Martin Wolf, Financial Times

Trade disputes are usually understood as conflicts between countries with competing national interests, but as Matthew C. Klein and Michael Pettis show, they are often the unexpected result of domestic political choices to serve the interests of the rich at the expense of workers and ordinary retirees. Klein and Pettis trace the origins of today’s trade wars to decisions made by politicians and business leaders in China, Europe, and the United States over the past thirty years. Across the world, the rich have prospered while workers can no longer afford to buy what they produce, have lost their jobs, or have been forced into higher levels of debt. In this thought‑provoking challenge to mainstream views, the authors provide a cohesive narrative that shows how the class wars of rising inequality are a threat to the global economy and international peace—and what we can do about it.

Longlisted for the 2020 Financial Times & McKinsey Business Book of the Year Award and named a Best Business Book of 2020 by Strategy + Business

Product Details

ISBN-13:	9780300261448
Publisher:	Yale University Press
Publication date:	08/31/2021
Pages:	296
Sales rank:	333,611
Product dimensions:	5.00(w) x 7.75(h) x 0.88(d)

About the Author

Matthew C. Klein is the economics commentator at Barron’s. Michael Pettis is professor of finance at Peking University’s Guanghua School of Management and a senior fellow at the Carnegie Endowment for International Peace.

Table of Contents

Preface to the Paperback Edition ix

Acknowledgments xvii

Introduction 1

1 From Adam Smith to Tim Cook: The Transformation of Global Trade 8

2 The Growth of Global Finance 40

3 Saving, Investment, and Imbalances 66

4 From Tiananmen to the Belt and Road: Understanding China's Surplus 101

5 The Fall of the Wall and the Schwarze Null: Understanding Germany's Surplus 131

6 The American Exception: The Exorbitant Burden and the Persistent Deficit 174

Conclusion. To End the Trade Wars, End the Class Wars 221

Notes 233

Index 259

Editorial Reviews

The authors weave a complex tapestry of monetary, fiscal and social policies through history and offer opinions about what went right and what went wrong. . . . Worth reading for their insights into the history of trade and finance.”—George Melloan, Wall Street Journal

“This is a very important book.”—Martin Wolf, Financial Times

“An eagle-eyed perspective on the global economy, underpinned by close analysis and a remarkable clarity of exposition. The book is a terrific survey of the forces behind today’s global trade tensions and imbalances.”—Ann Pettifor, Times Literary Supplement

“[O]ffers a deeper argument about the source of the trouble.”—The Economist

“Matthew Klein and Michael Pettis have successfully woven a grand narrative linking income inequality, geopolitics, trade, finance and even environmental issues.”—Maximilian Kärnfelt, Merics China Briefing Newsletter

“[Klein and Pettis] pack into just a few hundred pages a sweeping and powerful account of the interconnections between cutthroat politics and global economic imbalances.”—Ryan Avent, Strategy + Business

“Elegantly argued and eclectically well-documented.”—Andrew Yamakawa Elrod, New Labor Forum

“Trade Wars Are Class Wars is well-argued, eminently readable . . . and provocative.”—Journal of Economic Literature

Winner of the Lionel Gelber Prize, sponsored by Munk Centre for International Studies

“An erudite, original, and provocative explanation of the global economic imbalances that have been at the root of numerous financial crises.”—Ernesto Zedillo, director, Yale Center for the Study of Globalization

“This is a book that everyone concerned with the global economy should read. A fascinating account of the damage that rising inequality—especially in China and Germany—has done to all our economies.”—Dani Rodrik, Harvard University

From the Publisher

05/01/2020

Klein (economics commentator, Barron's) and Pettis (finance, Peking Univ.) demonstrate worldwide effects of the ever-growing wealth inequality within nations and between trading partners. In China, Europe, and many other places workers are extremely productive and very badly paid. Low wage workers cannot afford to buy the products and services they create. Nations deliberately keep wages low, promote rapid and uncontrolled movement of capital, and desperately seek new markets abroad for products unconsumed at home. Klein and Pettis argue that restoration of the post-war social compact tying productivity to rising incomes, relaxation of the toxic fear of government deficits, and Keynesian stimulation of national and international economies will reduce income disparities, raise living standards, and produce peaceful trade. In short, globalist policies have failed. This work explains the self-destructive nature of neo-liberal economic theory which produces regular economic crises both within countries and globally. VERDICT Readers interested in current events, students unaware of ideas that challenge capitalist orthodoxy, and scholars searching for the causes of planetary inequality will all benefit from this book.—Duncan Stewart, Univ. of Iowa Libs., Iowa City

Library Journal