We no longer control the rules of the game. The game is now outside the global order, is now outside of the control of either the United States, China, and of course, Russia. There is an anarchic state at play. Hello, and welcome to UnHerd. I'm Freddie Sayers. As we follow the war in Ukraine, it's quite easy to disappear into the minutiae, into every battle, every image of destruction, or what exactly is happening on a given day. Today, we're actually going to try to zoom out and ask difficult but big questions of where this conflict is going to leave us civilizationally? Will it change the whole dynamic of world civilization? Are we entering into a divided world? And what can we do about that, if that happens? Trying to answer some of these big questions, we have someone called Samo Burja. He is the
founder of Bismarck Analysis, which is a firm that specialises in seeing through the media narrative and trying to understand what's going on in a more fundamental sense. And he joins us now from San Francisco. Hi, Samo. Thank you for having me on the show.
So I guess, if it's not too grand a question, what is your sense – I know you're an expert of civilizations and how they they increase and how they decline, how they merge and how they de-merge – do you have a sense of whether this is some kind of defining moment, or a key moment in the growth and development of world civilization? I think that the fundamentals are actually pointing in that direction. Some of my work in writing doesn't just focus on present political developments. I've done work in research on very ancient civilizations, such as the society that built Gobekli Tepe and, perhaps relevantly to present circumstances, the Bronze Age collapse. The Bronze Age collapse was a period about 1000 BC, when a string of interconnected civilizations, the Egyptians, the Hittites, the Mycenaeans, all collapsed within a short period of a few years of each other. They had been united in a trade network, where tin and copper were brought together at scale to allow them to manufacture bronze. After the collapse of these trade
networks, and these societies, obviously, they couldn't really smelt bronze anymore. Our modern trade networks are as integrated, if not more than the tin and copper trade of 1000 BC. I don't think we're going to see a civilizational collapse, but the consequences of the untangling of global trade, finance and information systems, that's going to be with us for hundreds of years after this moment. This is the first big push towards de-globalisation since honestly, the aftermath of World War One. Prior to World War One global trade was at a local peak. After World War One, everyone understood due to
political reasons, they had to withdraw. And this was only doubled down on in the aftermath of the financial crises, not the 2008 crisis, the big one, the Great Depression. So this was followed then by calls for autarky, success at autarky, sometimes failure at autarky. The Soviet Union itself was a
notable example of the human cost, the quest for autarky can have. So you would subscribe then to this idea that the unipolar moment, or the era of a single hegemonic power, led by America, represented by a single unified financial system and interconnected trade, which took pretty much the whole surface of the Earth into its orbit, that that is now over, or is beginning to be over? I think this is the first step towards its dismantling. People have say, critiqued, the Brexit moment when Britain exited the European Union. However, right now, Russia has exited the
global financial system, or been pushed out of it in a much more fundamental way. You might hear comparisons in the media saying that, 'Oh, you know, Putin is turning Russia into another North Korea.' I'm sorry, a North Korea with all the fossil fuels it needs, all the food it needs, and ten times the population, is barely North Korea. The correct comparison is imagine if a superpower or a great power – because I think Russia is no longer quite technically as superpower, its power is great, but regional, right, no longer global – so a great power like Russia has been pressed into a position and has honestly blundered into a position that is not too dissimilar from Iran in the aftermath of the Islamic Revolution. And again, if you think of an Iran with 6000 nuclear warheads, and many times over the territory, and a much greater population, even that analogy starts to falter. We can no longer speak of an 'axis of evil' like in the early 2000s, with a few rogue countries here and there. But otherwise, this unified global security,
financial economic system, with US hegemony in front providing the muscle, maybe Brussels rulemaking, providing some legalities to it, and of course, the twin economic engine of China and America merging into Chimerica, that, that era is completely over now. Russia is too big to be an exception. Russia is its own pole, and more importantly, China is not disentangling from Russia, the Western world is, and Russia is disentangling from the West as well. So it sounds different in that sense, from what happened to Iran in '79 and afterwards, because then it was in the middle of an era with a single world system, which it could just be excluded from. Do you feel it's like a tipping point? Now that there is yes, Iran, but also China and Russia, all in another basket, that that now has the potential to survive as an alternative framework so that we'll be living in a kind of bifurcated world? I think that they have that potential. Whether or not China chooses to pursue it is another matter. I think people need to understand that Russia is not a democracy. I think we are of two
minds on it. On the one hand, we say that Putin might be overthrown by the people any day now, that he can't endure these types of crippling economic sanctions. On the other, he's a threat to world peace, he's gone insane, he's an autocrat. The reality is, Russia has a political system that is insulated from the economic well-being of its citizens to a shocking degree. So Russia has several options. All of them are unfortunately not amazing in terms of its power and reach in the world. But all of them are viable. And the importance here is viability outside the global system isn't that you're thriving outside of the global system, it's that you exist at all, outside the global system. China now has to decide, does it
go all in on Russia. The benefits could be huge. China might be the only economy three years from now or five years from now that has cheap oil and cheap natural gas. If they back Russia, Russia will be selling all of their fossil fuel bounty to China, subsidising all of Chinese production. So what exactly is Germany or the United States or Britain going to do in response to this? We actually do not have the capability right now, not in the short run, to have energy as cheap as what Russia can provide China, nor are our labour prices as low as China's still are. So if we continue trading with China, and
China's bet on Russian fossil fuel, and we don't engage in any sanctions against China as well for their trade – which, by the way, does blow up the global economic system – then we'll be slowly out-competed. So I think a decoupling will happen, yeah. So the million dollar question then is, all of these sanctions, are they self-defeating? The extreme nature of them, pushing everything systemic out of the Russian state – it's not only the form of economic sanctions, we've seen brands withdrawing, we've seen an extraordinary degree of separation in the last two weeks – do you think that's self-defeating? And do you think it actually just hastens this bifurcated world that actually won't help the West at all? It's important to note that economic sanctions are hurting Russia in the short run, and they are providing a disincentive to continue the war. However, if the assumption in Russian leadership was, we need to decouple from the West anyway, I think these sanctions don't change anything. They do, in fact accelerate it. One way to think of Putin is that he's a man who has thought very carefully about succession.
Arguably, he attempted to hand over control of the Russian system to Medvedev a few years ago, noticed it wasn't working, noticed that the oligarchs were running wild, and walked back on it, returned to power. He has no means of retiring, and this is a common problem for people that have a more autocratic style of leadership: if you retire, you might be arrested, you might be killed. It's not very good. However, he constantly refers to a long term legacy. And you know, Putin's legacy right now is, no matter who the next ruler, or leader, of Russia is, they're going to inherit a Russia that is disconnected from the Western system. And it is hubris on the Western part, to
assume this means the collapse of Russia. We no longer control the rules of the game. The game is now outside the global order, is now outside of the control of either the United States, China, and of course, Russia. There is an anarchic state at play.
So let's take a specific example: the Swift banking system, which is this hugely important way of transferring money, all economies rely on it, the moves to exclude Russia from that system, ultimately, do they just push Russia into the Chinese orbit and make Russians, ordinary Russian people and companies, use Chinese alternatives? Or what do you think the effect of something like that is – the same could be said of Google Pay, or Netflix or any of these Western infrastructures that have suddenly disappeared – is the effect just to hasten a Russia-Chinese cooperation in inventing a better alternative or a local alternative? I think we don't even understand how easy it is to provide a full stack alternative to literally all of our software services. And a large part of our finance is just software. Swift is, in theory, this very complicated set of institutional relationships between banks and other institutions. In practice, it's a piece of code that transfers money from one place to another. Fun fact, Chinese electronic payment systems work
quite well. They're interoperable with all of the backend and frontend stuff that is done in the Western world. The Chinese financial system can easily step into provide an interface, the literal interface to which the Russian economy interacts with itself and interacts with China, and note, interface with a huge chunk of the world that has not joined the Western sanctions. Mexico has not joined the Western
sanctions. India has not joined the Western sanctions. All of Africa, all of Latin America. As is usual, when we in the West, hear that the world is united, what we mean is the small territory in Western Europe, Japan, South Korea, the United States and Canada. It feels to us like the world, because
that's the entire online world, that's the entire media world. But it's not right. There's a whole Global South at play as well. But to answer your question more directly, yes, the Chinese can come in, and in fact, have done so. And the Russians are adapting in their own way: two laws are very notable. First, any company that ceases to work with Russia, that
is participating in these sanctions right now, the Russians have basically passed laws to make it okay to pirate their software. So this means organisations, not just individuals, can just use the software anyway, can modify the software, number one. Number two, they're discussing nationalising all of the assets in Russia, of all of the companies that have ceased operation. People are talking about the McDonald's in Russia closing down. Well, McDonald's is just a chain of restaurants. I'm sure someone else can run a
chain of restaurants, maybe not with the exact same products, but there will be a massive wealth transfer, not just fleeing Russia, but also from Western companies to the Russian government. These spoils, if the law is passed, would allow the Russian government to pay off the relevant stakeholders in the Russian government. In other words, a whole new class of oligarchs can be created in a much poorer Russia. It's been
done before, after all. So there's a kind of asymmetry there, isn't there, because we're putting all these sanctions on Russia, or the West is. Russia will just seize assets of the West, if it can, as you just described, and is already on the way to doing that. There will be big gas companies that Western shareholders have ownership in, will just be valued at near zero and may or may not be claimed back by the state. In other words, the West will lose its money in Russia. But Russian products like oil, like commodities, are still being paid at full price by the West. Is there an asymmetry there?
We have to be careful what we mean by the West. Europe, continental Europe, especially economically, energy-wise, extremely dependent on Russia. It has no alternatives. The Germans have recently, they floated the idea of maybe reopening their nuclear power plants, and scrapped the idea immediately. The dysfunction and lack of energy planning on the
Continent so obsessed with energy planning is astounding. However, the United States has domestic energy. And the US has been moving to ban the import of Russian oil, and is now in hurried negotiation with Venezuela and Iran, and to a lesser extent, Saudi Arabia, Saudi Arabia that, by the way, has already declined to pump more oil. Talk about historical irony, right, the US backs Saudi Arabia for sixty, seventy years, for the idea that it's going to come in handy on a rainy day. The rainy day comes, and the Saudis don't pump more oil when asked. That is something the West will also remember. That's not just – that is an example of global disunity, where the very act of trying to exclude Russia from the global system further fractures the global system internally. So it's not just a
split of Russia away from the rest. It is Russia splits away from the West, the West wants to cut it off, the West puts pressure on the periphery areas of the Western hegemony, the American hegemony, and those areas splinter away as well, doing their own thing. So would it be fair to say you think it's a mistake? It sounds like the consequences of these extreme sanctions are dire for the West. I would go as far as to say that the exact sanctions that have been undertaken are a mistake. We should have kept Russia dependent on the Western financial system. Yes, I know, all economists like to focus on the win-win side of it. But the
reality is, it was a lever of power over the country, not over government, per se. But every single person of wealth, means, connections, in Russia itself, every person that mattered, used to have a big stake in the success of London, and the success of New York, even the success of Germany. All of this seems like it's going to crumble. And once you've already
lost your stake in the Western world, well, you have nothing to lose now, do you? Do you observe that actually, this move doesn't come completely out of nowhere? It's not a total surprise, in the sense that those kinds of systems we've been discussing – media on the Internet, the financial system, commerce, even cultural institutions – have moved in the past few years from being apparently neutral spaces that don't take political positions, into much more activist organisations that can be weaponized against people they disapprove of. And, obviously, we saw examples of it in the last few years, during the COVID pandemic, where people were excluded. We saw in Canada, literally excluded from the financial system, what, for protesting. Internet censorship has definitely upticked during that period. It's almost like these systems were activated in recent years, and this is now a war that they can be fully weaponized in. Do you think it's fair to make that connection?
I think you never let a good crisis go to waste. And we've had a number of successful, let's call them weaponization of crisis, in the past few years. Unfortunately, we do not actually have a vision of the internet that could be different from the Chinese internet. We are step by step recreating every aspect of the Chinese internet. Banning foreign news sources – we banned Sputnik News, it's Russian misinformation. Well, guess what, from China's perspective, the Washington Post is Western disinformation. We froze the
assets of Canadian truckers, an immense violation by the way of private property and the trust that people put in the banking system to not be politically weaponized against them. China does that to its dissidents. And we could talk about what happened to say Julian Assange and so on, where he is, basically, held I think without trial and it starts getting really bizarre and murky, where the moral bright clear line is between the free and unfree world. So in the process of struggling against geopolitical rivals, and domestic stresses, we have disassembled a lot of the fundamental institutions of the Western world. Now, such transitions, by the way, can be done successfully, if you think of the large political historical picture. The Roman Empire, after it ceases to be a real Republic, still lasts for many centuries. But the scale of
that change is sometimes not apparent until decades later. What's frightening here is that there's a kind of second order effect you're talking about. So the first effect is that the reach of Western Power shrinks, essentially. You can plot it on a map, from being the whole surface of the world, it shrinks to essentially Europe and North America and the other places you mentioned. That's effect number one. But the second effect is that within our society, within the West, we now think differently about the powers that govern us, because we've seen that the systems can be weaponized, and we've seen that if we are considered to be on the wrong side of them, we might be excluded. So I just wonder, if you're a dissident, inside
the West, or if you're someone who, for whatever reason is considered unacceptable by whatever power is currently in charge, are you going to be attracted towards the other half of the world in some way, even if you don't geographically move there, you're going to start conducting your business using UnionPay, or some kind of Chinese alternative to the Western systems. You're going to hedge your security by making sure you're not entirely dependent on these Western systems. I'm just wondering, could it precipitate some kind of internal collapse within the West? I unfortunately think that the Western world, if there were serious competitors coming in from China, which has banned those, I think it'd behave much as China behaves. That's the difficulty here. We're stuck in this almost escalating symmetric strategy where the simplest answer isn't to fix what's broken, but merely eliminate alternatives to what is broken, thereby keeping people stuck. For example, all of the
cryptocurrency owned by Russians, held in places like Coinbase, Bitstamp, all of these services. Maybe five or six years ago, these were unique services. But now unless you have your cryptocurrency stored in so called cold storage, you've been expropriated just as effectively as if you had a bank account, because an account like Coinbase is a bank account. It's been put under immense regulatory pressure over the last few years. It needs to collect all the same information that a bank needs to collect. So crypto, cryptocurrencies were
supposed to be this grand decentralised alternative. And if cryptocurrencies are banned, and they don't have an explicit – not banned, or at least liable to be seized – I really don't see why Union Pay wouldn't eventually come under sanctions if it was used widely in the Western world. What here comes to mind is the transition in the old Soviet Union, from the philosophy of Leon Trotsky to that of Joseph Stalin. Trotsky has Vladimir Lenin's view. The revolution is here. The revolution is global. It's not just us Bolsheviks, but the
entire world, it will be communist soon. When the failures of the revolution start multiplying, such as the failure to conquer Poland – Russia tried to conquer Poland almost immediately after the Bolsheviks won the Russian Civil War – after that started multiplying, Joseph Stalin proposed socialism in one country. So this new theory of Soviet history was that the Soviet Union is going to close into itself, build itself up economically, it's not going to bother with revolution around the world. So the political energies directed outward, came to be directed inward with brutalising effect, we all know of the inhumanity of Stalin's Soviet Union. Now, I'm not going to argue too much about Russian history, though, of course, it's directly relevant, but the analogy I'm now drawing is that perhaps globalism has failed. Globalism
is retreating from the idea that Russia and China and Iran are one day going to be just like us, integrated in the same systems, consuming the same media, using the same financial services, using the same technologies, sharing the same user data, travelling freely, vacationing in Paris and studying at Harvard. That era might be over. But I think the first step for Western elites is not to acknowledge mistakes and shortcomings. No. It's globalism in one country. Now, of course, it's not going to be globalism literally in one country. But can you imagine a besieged European Union and a besieged United States, doubling down on the persecution of domestic enemies, enforcing ever stricter multicultural norms, even while the Empire ironically becomes less multicultural, as fewer and fewer parts of the world are part of it? I think that resolves internal political paradoxes, unfortunately, for Western elites, so there could be a severe escalation of repression of domestic dissent, as a consequence of foreign humiliation. This is sounding very bleak, Samo, it feels like the – Well, I think it's realistic. I think it's realistic. I think we
shouldn't assume Western elites are more benevolent than historic elites. Let me just try to push back with something a little bit more sunshine-y. Which is that despite everything you've said, the fact is, is it not, that it is still Western technology that leads the world, it is still Western culture that young people want to buy into, the innovations still come out of America primarily and they are then copied or there are imitations of them elsewhere. So maybe one can go too far in the pessimism and the imminent decay of Western civilization, maybe the energy is still with the West? I think in a very real sense, it's true that the Western world will continue economically outgrowing Russia. I think the comparison on China is much more open. There are some
technological innovations that are coming from China. And I know that, for example, batteries, the innovation in batteries that powers both your smartphone, and a Tesla electric car, those batteries were made cheaper, and the innovations in their production were done in China, not in the West. So the batteries are produced in China, and you might argue, well, the batteries are not themselves that much more advanced. But the
factories making the batteries, it's not just cheap labour, there have in fact been industrial innovations in China, just as to be honest, there were industrial innovations in Japan in the 1970s and 1980s. The Toyota production method was back-imported from Japan, to the United States to great effect, and so on, and so on. So, I would be cautious when thinking about technology. Yes, China can copy everything, and has been
copying everything. They also can improve things, and they can advance technology. I do agree it is much slower than what we do in the West. But really, if all we're getting is like a two or four or five year advantage, like the Chinese, let's say perpetually five years behind us, I don't think that's enough of an advantage. And, really, it's not clear to me how fast
the West has to innovate, to stay ahead. So what is your counsel, then, to Western leaders, because, in a sense, this kind of realist talk about the rise of China, about the vulnerability of the West, has been going on for some years. And normally, people who engage in it want a more muscular approach from the West towards the competitors. The
complaint has been, well, we've rolled out the red carpet to China, to developing economies that we fancifully called BRICs, and they've now growing and they're going to overtake us, and we've basically been naive and too open and too generous. Well, no one can call the West's reaction to the Russian invasion naive or open or generous, it is absolutely as muscular as perhaps it could be. So in a sense, aren't the realists now getting what they asked for which is a more directly competitive power battle with the West asserting itself? I think that's a very good point. Because I think the
realists were always better in their critiques of the West, not so excellent in their prescriptions as to what to do. I think that the economic decoupling from Russia, the economic decoupling that eventually, not yet, but eventually will happen with China as well, that could be a stimulus for Western growth. In a way we offshored the very centres of our innovation. People don't understand that the centre of industrial innovation is an R&D lab that actually sees the factory floor. In other words, the factory is the centre of innovation in an industrial society. It's not the university lab. The university lab can make excellent science, they can
write great scientific papers that the Chinese then download. But the real economic societal payload is always in the manufacturing base. So the fact that we are going to have to develop a manufacturing base again in the Western world, I actually think that's a great thing. I actually think that's going to stimulate Western dynamism, it might actually bring us back to a much faster pace of technological progress, maybe something we haven't seen since the 1960s and 50s. Note, the so-called great stagnation kicks in the 1970s. After which,
labour and productivity, basically wages and productivity decouple. A lot of the Western middle class has seen, if anything, a sliding back of living standards, rather than the advancement of living standards. All of these things, they might be remedied. Now, having said, being economically tough, being reluctant to trade, always wanting to make sure that the deal you're getting with trade is fair, rather than stacked in China's favour, that's all good, let's say, but militarily, the West has been exhausting its power, not asserting its power. Come on, it's just a few months since we
saw the embarrassing collapse in Afghanistan. How many trillions of dollars? Twenty years of tears and blood, for what? For failing our local allies? What was it all for? I don't think it was for anything, I think we've been really exhausting the, for now, clear military superiority, and if, heavens forbid, we start shooting down Russian planes, it might all go up in in smoke, it might all go up in smoke. So leaving aside that horrible possibility, which obviously... Is on everyone's minds.
– is obviously on everyone's mind. But presuming that we do avoid imminent nuclear war, and presuming we go into this world of separate spheres of power, more directly and nakedly competitive with each other, I thought what you were saying was very interesting there, which is that it might actually be a stimulus. And actually, there's a sense in which, as a species, we need to be competitive in order to be our most productive or most innovative. There's a kind of decadence that came with
a unipolar world, because there was no existential threat, there was no need to be our best selves, because we were sort of riding high. Maybe there's some – it's sad, in a way, because the beautiful universal vision didn't work – but maybe we are going to be returned to a world where we'll be better versions of ourselves. I think the possibility of that certainly exists, and that's maybe some actually grounded optimism, to counteract pessimism. Just because there will be the political impulse
for domestic persecution, does not mean other solutions can't be found. But what really – it's really going to be what does Western culture, what do European, American, Japanese citizens, how will they respond to this world, this new world that comes into being. It's possible we will come back with vitality. It's possible we'll rise to meet the challenge, that we'll build the industrial base. It's also possible that we will, in fact, close our eyes and deny reality. So for example, for the
Continent, for Europe itself, whether or not Germany can break its foolish low energy policy, because it is false that a low energy consumption economy is a green economy, okay? You can have very high energy consumption powered by say nuclear, powered by, alternative forms of energy. Solar has been getting better and better year after year, though, of course, it's never going to quite work for Germany – it's too cloudy a country – but it could work for France, for Spain for other places. So look, if places like Germany reconsider their commitment to slow decline in the name of the planet, in the name of the environment, then the West is very competitive. With cheap energy, the best scientific minds still wanting to work in the West, still being trained in the West, with a massive endowed economy with a very high-tech military, we have all the components here to make what we used to call the First World seem like the Third. We could overcome the malaise of the early 2000s, this seeming strange future of 2008 that's always been with us, with these ugly glass buildings, with this lacklustre economic growth, with this weird virtualization, and actually build the future that that we were promised sixty years ago.
Do you think for a civilization to renew itself, and to become creative, and full of energy, it needs the Enemy at the Gates feeling? Is that true, do you think, and if so, is that where we should put our hope in these unhappy times? Well, I think again, yes, the competitive instinct is very strong in people, yes, foreign compact competitors and rivals can spark internal reform. But I will say that societies sometimes engage in self-harming reform rather than self-ameliorating reform. So let's put it this way: competition from China, and Russia now, in a decoupling of these two great centres of economy, power, military, from the West, has increased the variance of possible Western outcomes. I think we are actually almost 50/50 split on
whether we again rise up to this challenge, or whether we just turn inwards and double down on all of our mistakes. I think my hope is the open-mindedness to pursue very different approaches, again, to economy to science to technology, even to politics between countries – at least between democracies, right, between parliamentary democracies – I think that that openness needs to be there. It needs to be there in all layers of society.
Samo Burja, thank you so much for talking to us. Thank you for having me on the show. That was Samo Burja of Bismarck Analysis. Thanks to him for being such good sport there as I threw really quite big, existential, difficult questions at him. And I think what we got to was a sense that, yes, the world is dividing, whether we like it or not. And the question for the Western part of the
world is whether we are going to rise to that challenge and become better versions of ourselves, or whether it's actually a fatal threat to us. Thank you for joining. This was UnHerd.
2022-03-19