“When the reproduction of capital becomes a barrier to the further development of the social powers of labor, capitalism loses the last remnants of its claim to a progressive historical role.” – Simon Clarke

In an illuminating account of a recent Department of Homeland Security job fair, Yanis Varoufuckice relates an encounter with a gaggle of fresh Immigration and Customs Enforcement (ICE) recruits looking for a promising new gig in the deportation economy. One story stood out, that of an applicant who “didn’t care much about the politics of ICE,” and simply believed that his taxes shouldn’t go toward the support of “illegal alien children.” His real goal was putting that state salary toward buying Airbnb apartments—seemingly a quick cheat code for easy wealth. His college classmates were sharing photos of their Lamborghinis and waterfront properties on Instagram. He felt left behind by their success.

It’s all right there: a metastasizing security and surveillance state that transmutes suburban boredom into organized sadism; a predatory platform economy that produces nothing but data deliveries for the repressive state while making life unaffordable for everyone; a sigma-brained fixation on the hustle for the next deal, sure to be your big break; and a sense of shame about one’s status in society, reflected back at you endlessly through the algorithmic punishment of the infinite scroll.

Around the same time, resistance to the new regime reached a rolling boil in cities across America. Emanating from Los Angeles, images of bombed-out squad cars and scorched Waymos cascaded down newsfeeds across the country—blazing effigies of refusal, a mass rejection of a world nobody wanted or wants, and of the demonic union of inhuman technology with Hitlerjugend wannabes that is the contemporary state.

Lizard Brains

For people who still take it seriously, a miasma of confusion shrouds the ongoing embarrassment that is the US government. A stop-and-go tariff plan whipsaws markets in the service of a vague promise to “stop being the world’s sucker.” According to what day it is and whom you ask, this could mean: re-industrialization to close US trade deficits; finding new sources of revenue to fund continued tax breaks for the richest people in the world; resolving an alleged “crisis of masculinity” through the return of manual factory work on a mass scale, reviving the old model of the white nuclear family led by a male breadwinner; fixing a national security crisis by re-shoring “critical industries” back into the country, reducing dependence on foreign supply chains; forcing our “allies” to pay up for the US security umbrella; or even using tariff revenue to replace income taxes altogether. (Needless to say, this would mainly stand to benefit the very rich.)

On the home front, flurries of executive orders aim to deconstruct the administrative state at last, as Steve Bannon first promised eight years ago. The asinine Elon Musk, son of apartheid South Africa and capitalism’s cruelest joke, was temporarily commissioned for this job, until his unfortunate falling out with the Commander-in-Chief over the One Big Beautiful Bill. Nevertheless, with the support of a pliant Supreme Court, tens of thousands of federal workers have been laid off as the administration illegally shuts down entire departments. Promising to shave two trillion dollars of government spending, Elon’s minions managed to trim around 30 billion dollars. But that’s far less important than the troves of personal data pillaged from the federal agencies, now marketable to the Silicon Valley security industry for supercharging AI-powered surveillance and repression of US citizens.

Thus, in a classic combo, berserker austerity complements an expansion of big government’s repressive apparatus. On the back of expanded funding for ICE, now with a bigger budget than most of the world’s militaries, Trump 2.0 has launched a national campaign of state terrorism. Invoking the wartime Alien Enemies Act of 1798, the regime aims to remove any semblance of due process from its mass deportation program, defining undocumented persons as an invading foreign army. Notably, the last time the act was invoked explicitly was for the mass internment of Japanese Americans in concentration camps during the Second World War. Reviving the McCarthy-era Immigration Act of 1952, it likewise seeks to legalize deportation for anyone deemed an enemy by the secretary of state. These legal tactics are the government’s attempt to lay the basis for open warfare against its own citizenry.

Trump’s mafia-like attack on the rule of law nicely complements this agenda. His Department of Justice is investigating major law firms who work or have worked with his political enemies, while threatening judges who displease him with impeachment. Judicial norms, which businesses depend on for stability and predictability, are eroded by the fickle, personalized style of the ruling clique.

With the planet on fire, the Trumpian entourage staggers along making millions on insider trading with every tariff-induced spasm in the markets. Alongside the back-and-forth of the tariff dance, carveouts are naturally secured for major corporations like Apple, apparently too important to be left to the vagaries of a sundowning TV-addict. Likewise for the all-important race war. After many complaints from “our great Farmers and people in the Hotel and Leisure business,” Trump moved to temporarily pump the brakes on deportations, as he has to if he wants to keep these parts of the US economy alive.

On top of it all, Trump is nothing if not an entertainer. After he made the conspiracy theories swirling around Jeffrey Epstein a centerpiece of his election campaign, and only a few months after Attorney General Pam Bondi promised to declassify evidence on “the disgusting actions of Jeffrey Epstein and his co-conspirators,” her office announced that it was all a hoax, after all. After being informed he appeared in the files himself, Trump evidently decided to spike the story. A firestorm of MAGA rage engulfed the would-be saviors of Western civilization that, at the time of writing, has yet to abate.

What to make of this shambolic spectacle, this failson pandemonium both hilarious and evil? Is it just a matter of mental limitations? A few years ago, the late Mike Davis offered the diagnosis of a “ruling class brain tumor” to describe the sheer incompetence of the government elite. Our decrepit, lizard-brained leaders offer a living demonstration of his observation that “greed breeds reptilian minds,” as the vertiginous accumulation of money hollows out the intellectual capacity of its own political servants, reducing them to mental nullities unable to even envision a future for the system, much less try to save it.

Antinomies of Managerialism

Still, some see a grand plan in the making—perhaps even a “Mar-a-Lago Accord” to level the international playing field in the US’s favor, as put forth by the Chair of Trump’s Council of Economic Advisers Stephen Miran. Miran’s manifesto, “A User’s Guide to Restructuring the Global Trading System,” has fascinated business commentators since its appearance in late 2024. As articulated there, the US wants to both re-industrialize and maintain the international primacy of the dollar as the world’s reserve currency. These would appear to be at cross-purposes: reviving the export economy requires lowering the value of the dollar to make US exports more competitive, but as a reserve currency, demand for dollars will remain high, pushing its value upward. So some kind of unilateral coercion passed off as “agreement”—similar to the Plaza Accord of the mid-1980s—is necessary to establish a new arrangement for a depreciated, but still supreme, dollar. Miran imagines a scenario in which the US could use the threat of tariffs and the potential withdrawal of its security umbrella to force foreign countries into such a deal.

Fortunately, economists are always on hand to provide a rationale for whatever national governments are already trying to do. Michael Pettis and his co-author Matthew C. Klein already provided the theory for Trump’s first-term policies in their 2020 book, Trade Wars Are Class Wars. In this book, history begins in 1991, when Germany and especially China began pursuing low-demand, high-export investment policies that, over time, have thrown the global economy out of whack. The trade surplus countries choose to dump exports in the US instead of expanding demand at home. Their export earnings build up excess savings, a “savings glut,” which are put into more investment and also recycled into purchases of dollar-based assets. This then inflates asset prices and exacerbates wealth inequality in deficit countries, especially the US, where these policies worsen the current account deficit, fuel financial asset inflation, and effectively export inequality to the US.

In this just-so story, the US government and American corporations are the helpless objects of an invidious foreign policy regime. Never mind the actual history of the matter, in which postwar US leadership willingly traded access to its immense domestic market for an expanded sphere of influence—an arrangement, mainly with Japan and Germany, which led to the industrial warfare culminating in the Plaza Accord. In this story, the enormous US deficits and exploding national debt are not due to runaway deficit spending to fund a bloated and decrepit world-spanning death machine, for instance. Nor are they related to the constant need to bail out malfunctioning financial markets to the tune of trillions of dollars, a sum that also grows bigger with every bailout. Nor are the historic tax breaks lavished upon the US ruling class since the 1960s relevant to the matter. The crucial fact that manufacturing output as a share of world GDP and industrial employment have been declining not just for the US, but for all the rich industrialized nations and most of the industrializing world—including China—is also immaterial. Rather, the global economy has supposedly been thrown out of equilibrium by a few high-saving, low-demand economies, with the US as the main casualty.

Pettis and Klein provide a convenient rationale for the Trump regime’s obsession with the balance of trade, ratifying its narrative of economic victimization. Indeed, some version of the “savings glut” thesis has informed US trade policy since the miserable tenure of Sleepy Joe Biden. Today, historian Adam Tooze calls it “MAGA for thinking people.” Though pitched in the macroeconomic frame of the balance of payments, capital flows, and aggregate demand management, the savings glut thesis is closer to a morality tale blaming the US’s enemies for the failures of its own governing elite. Naturally, that is precisely what lends it its bipartisan appeal.

For another group of commentators, such as Tooze and Berkeley economic historian Brad DeLong, taking Trump’s trade policy seriously risks fundamentally misrecognizing what is going on. That is because it assumes a rational coherence where none exists. Tooze has warned against this tendency as “sanewashing”: mistaking a smash-and-grab kleptocracy for a well-organized, purposeful operation. Trump 2.0 is too disjointed, too ad-hoc and corrupt to be any kind of unified project. So one should avoid the temptation to see it as continuous with prior trends—such as its policy continuities with Joe Biden’s government, whose mercantilism was itself an escalation of Trump 1.0—because “it puts us at risk of … underestimating the radicalism of the break marked by the Trump administration.” Trump’s outfit has taken the government-as-grift show so far that we risk missing “what is most historically significant”: the radical rupture of the present shitshow from anything that came before it.

Tooze’s emphasis on the discontinuities with the past comes from his epistemological commitment to an anti-holistic method inspired by the sociologist Bruno Latour. From this standpoint, any attempt to read a continuous or totalizing structure at work behind the scenes is suspect. We need the intellectual humility to admit the opacity of the present. In this case, it means conceding that what we’re seeing with Trump 2.0 is too historically unique to place in neat conceptual boxes. The best we can do is offer situated analyses of the fractal networks of knowledge and resources that traverse institutions and we ourselves are enmeshed in—like the technocrats who are the protagonists of Tooze’s historiography.

Which is why it was surprising to learn in a recent piece from Tooze that, far from being a radical break with the past, Trump’s governance-by-deal is only another instance of “modern power.” It is “of a piece with the increasingly crude style of ‘lawfare’ and ad hoc deal-making that characterizes much of American corporate, business, and public life today.” Furthermore, not only is this no break, but “we don’t actually know any different.” Trump 2.0 is just another representation of the way things have always been for “liberal, Western, ‘American’ modernity.” It turns out that structure and continuity per se aren’t the issue, only certain kinds of structures and continuities.

One of these views takes an accounting identity for a causal explanation; the other is a totalizing worldview that disavows itself as such. These blind spots are not coincidental. Both Klein and Pettis’s macroeconomics and Tooze’s technocratic reason are languages of the managerial state; the state is the unmarked standpoint of both discourses. Because they speak from the administrative point of view, a critique of the contemporary state—its specific form—is not available to them. The confusions of managerial liberalism ultimately reflect an antinomy, or a limit to thought rooted in the historical obsolescence of its standpoint: the “progressive managerial state.”

A Regression in Theory

As Tooze himself has pointed out: “there has been a retrogression in social theory.” He’s correct, but not in the way he thinks. The retrogression consists not in drawing on older traditions and concepts, but in assuming the usefulness of a conceptual vocabulary whose historical reference points no longer make sense. For a generation of academics and pundits trained to ignore the radical critique of capital, this problem is guaranteed.

Tooze is emblematic here. His theoretical anchors John Maynard Keynes and Latour both responded to historical mutations of state authority in the twentieth century. Keynes is the most famous figurehead of the “mixed economy”: the government-managed, market-based system that emerged from the crucible of depression and war in the 1940s. According to what became “Keynesian economics,” enlightened technocrats equipped with state-of-the-art economic theories could fine-tune fiscal policy for the optimum rate of investment, ensuring steady profits for capital and full employment for labor. Politicians and economists shared a consensus that the managerial model would be the new norm, a triumph of scientific rationality that had finally tamed the turbulence of the business cycle—and, by extension, class conflict.

This hubris was the object of Latour’s critique. For Latour, no scientific, structural perspective on the whole is available, because we cannot access a de-contextualized standpoint from which to grasp it. This inside/outside uncertainty is inescapable, and any such holistic view is bound to be simply one among other possibilities. As Tooze himself puts it, “In Latourian terms, positing a macro sphere within which processes are driven endogenously is itself a framed construct.” Macroconcepts—such as nature, class, capitalism—are all situated assemblages constructed through webs of technical knowledge and calculation. Grand explanations are out; the best we can do is describe things in the terms and ideas used by the actors themselves, mapping how they tie together across the social weave. This “relativistic sociology” is the cure for the structuralist disease.

If Keynes is a champion of twentieth-century social science, Latour is one of its most influential critics. Their union in Tooze’s thought is what makes his work so perspicacious. But despite their radical differences, they proceed from a shared historical context. Keynes’s perspective is that of the twentieth-century mixed economy, or the “progressive managerial state,” whose philosophy was his legacy. Latour’s, on the other hand, is that of its microeconomic critique, a celebration of local knowledge that forever escapes the gaze of the macro social scientist—much like that of another great critic of modern social science, Friedrich Hayek. But whether for or against, at the level of their theoretical discourse, both standpoints reproduce the claims of the managerial state to have neutralized capital and class. And it is this state formation, the chief legacy of the twentieth century, that is now dissolving before our eyes.

Autonomization

The disorientation among liberal commentators reflects the historical limits of liberal theory itself. Like “policymakers” who try to reduce the world to various technical problems, political economy—whether in the form of macroeconomics or its critics—speaks from the standpoint of the state. But this means it rarely casts a critical eye on the state itself—a particular kind of state that is the origin of its own discourse.

More precisely, political economy speaks for the system of states that governs a specific economy, the order of private property and profit: the bourgeois order. This order in turn is grounded in a social arrangement—obvious to anyone paying attention—in which a small minority controls the collective wealth and resources of society, and compels the rest of the population to work for them. In this way, it is like earlier societies that were also based on elite rule over a subordinated workforce.

Where the bourgeois arrangement differs, however, is in its historical need to separate out economics from politics—in a word, to supervise the “market freedoms” that define and legitimize it. Classically, this meant carving out the conditions for private property, individual enterprise, market competition, and the smooth expansion of business activity—in a word, for depoliticized economic life. It is not free-market ideology that makes this imperative, but rather the reverse: the bourgeois state lives and dies by the vigor of the private sector it governs. It is the political form of these social relations.

At least since Max Weber, liberal intellectuals have understood that there is no clean separation between economics and politics, whose real ties are quite messy. On this point they follow basic governmentality, as reflected, for example, in official statistics. Metrics like gross domestic product (GDP) or accounting frameworks like the balance of payments include the government as an important economic actor. Like businesses, it is another source of savings and investment, or another “industry” to be added up with them in GDP totals. In this picture, economic activity amounts to the combination of certain inputs like labor, equipment, and materials to produce an output quantified in money. The national state sees itself in its own picture of the economy.

As for economists, the bourgeois state sees economic relations as technical functions of commodities as they are exchanged for money. This situation in which everyone is an individual owner of their commodity, labor, but some just happen to own a lot more stuff, presupposes the separation of most of humanity from the means of economic activity, and the concentration of those means in the hands of a small minority of private owners. This relation, the capital relation, is the silent precondition of both market economics and political liberalism. Far from a guaranteed thing, this relation is fragile, and must be constantly reproduced through government intervention. The consequences of failure are dire, because this is where “growth”—i.e., profits—ultimately comes from. Donald Trump believes profits come from deals. Academic economists think they are a sign of imperfect competition, and will be competed away in a free market. In reality, profits are extracted from the class relationship.

To enrich themselves, the owning elite must squeeze the subordinated stratum of workers to generate a surplus over the material costs of production and the expense of reproducing the workforce as a class. At the same time, workers frequently rebel against the constant push to degrade their standard of living, their livelihoods, their very being, so that profits may continue to grow. Growth is contingent on the antagonism of the class struggle.

Moreover, the bourgeois class is also incapable of forming a coherent agenda for itself. As the constant infighting within the new MAGA coalition amply shows, there is no single capitalist “interest” that could be represented univocally: the ruling class is as a pit of vipers, forming alliances at one moment only to turn on their erstwhile allies the next. The class struggle is complemented by the capital struggle, the Hobbesian war between corporate rivals within particular sectors, between whole industrial sectors, and between nation states.

These built-in conflicts are like centrifugal forces that, if left unmanaged, would spin out of control, destabilizing or destroying the fragile basis of capitalist society. Professional politicians experience these conflicts as the technical tasks of ensuring steady growth and stability. They have no choice, because for most of their history, the members of the capitalist class were typically much more interested in making money than running the government themselves. Even apparent exceptions, such as everyone’s favorite business idiot, Musk, find taking over government on the behalf of business harder than expected: after achieving only meager results, the boorish billionaire Boer was forced to give up on his ambitious plans to return to his failing company, Tesla. Reportedly, even Trump himself did not actually want to win in 2016 and was shocked and horrified when he did. Now he runs the government not like a state, but like a branch of his personal investment portfolio.

Traditionally, professional politicians were thus charged with taking a longer-term view to manage this inherently chaotic system—much like the managers of a large corporation.1
Governments exercise a certain autonomy of action for this purpose. In practice, this means pacifying the workforce, preserving private property, and promoting the national and international special interests of the ruling class. For this they must take the high-level, long-term view of the system they manage. Whatever ideological label they adopt, modern states are charged with safeguarding these relations: the social basis of their existence.

Hal Draper, in his classic Karl Marx’s Theory of Revolution, describes this tendency as the “autonomization of the state.” This tendency, rooted in the antagonistic process of capitalism, generates the appearance of state neutrality that economists and liberal commentators take at face value. It is also the origin of the so-called “progressive managerial state,” now disappearing not so much at the hands of Trump 2.0 as by the deterioration of its historical reason for being: the market-based economic system. Trump, or Trumpism, is only the figurehead for an institutional crisis of private property capitalism itself.

States in the Capital Order

The roots of this independent state formation can be traced back to the push for modernization adopted by governments worldwide starting around the late nineteenth century. Japan’s Meiji Restoration, which sought to upend the country’s feudal system to replace it with an industrializing, constitutional order, is a prime example here, as is the early twentieth-century Progressive movement in the US. Germany’s authoritarian proto-welfare state under Chancellor Otto von Bismarck was another important pioneer. But the Great Depression was the real catalyst. Unfolding in the shadow of 1917, the mass unemployment and mass worker militancy of the global depression convinced political elites around the world that it was time to discard outdated ideologies and renovate the state itself. Regardless of ideological self-understandings—for example, liberal in the US, anti-liberal in Germany and Italy—the prescription was the same: a vast expansion of government bureaucracy in order to mobilize public investment, most importantly for rearmament.

Solidified over the course of the Second World War, what emerged was a class compromise between industrial workers and capital, underwritten by a government commitment to full employment that would keep up mass demand for the products of industry; in turn, capitalists would find ample markets for their investments. Rising living standards would ensure labor peace, leaving the strife of the 1930s behind. Everyone, it would seem, got what they wanted. With the US serving as a model, the class compromise formed the basis of the mixed economy. This didn’t come without a cost, of course. The US national debt was 22 billion dollars in 1933, but by the end of the war it had leapt to 258 billion dollars, setting in motion a constant growth in debt that continues to this day.

In the US, government spending on social welfare expressed its interest in smoothly reproducing labor power for capital, while a now-global military apparatus boosted profits and employment through permanent war profiteering. Postwar governments embraced its role as the hub of a realm of property rights and private enterprise encompassing the non-Soviet world. Held afloat by relatively brisk growth and intellectual confidence in the capitalist system, by the middle of the twentieth century the ideology of American officialdom was inclusive of liberalism at home and free trade abroad, based on a resurrected, modified gold standard tied to the dollar. As the US became the official standard-bearer for a global civil society grounded in the institutions of the market, liberal government underwent a reformation—a broadening of its claims to legitimacy as a ruling philosophy for capitalist civilization.

The curtain fell on that regime in the 1970s, when falling industrial profits and a global wave of inflation engulfed the Western world. In America, rising prices paralleled rising militancy in the industrial working class and emerging movements for peace, women’s rights, environmental protection, gay rights, and sexual freedom. Flailing about for a solution, President Nixon suspended the dollar’s convertibility into gold in 1971, at first temporarily, then permanently ending it in 1973. Within this maelstrom, the former Hollywood actor Ronald Reagan made the original promise to “make America great again” in 1980.

Crackdowns followed quickly on organized labor and the new social movements. Federal Reserve Chair Paul Volcker’s decision to raise interest rates on bank reserves to record highs dropped the deflationary hammer, smashing investment by choking off the supply of credit and forcing a deep recession. Reagan’s atavistic government emboldened the business elite to launch a new offensive, leading to massive layoffs and plant closures while historic cuts to federal welfare programs clawed back the state’s fiscal commitments to maintain the workforce. Volcker’s historic move also inaugurated the era of central bank power in domestic and international economies. US Treasury debt, overseen by independent central banks, would serve as an ersatz gold standard for an era of floating currencies, displacing the function of currency regulation from an impersonal commodity to oracular, fetishized technocrats. The base of state autonomy shifted from long-term macroeconomic managers to the central bank.

Meanwhile, sky-high interest rates and a rapidly appreciating dollar finished off the waning labor militancy from the 1970s and attracted world investment to US banks and assets. It turned out that high demand for US debt would allow the government to borrow indefinitely. This great wave of capital flows—what used to be called “financialization”—enabled historic tax breaks for the rich, enhanced corporate subsidies, and a massive reignition of defense spending, even as governmental leaders promised to do away with “Big Government.” Social theorists like Latour provided a convenient theoretical benediction for this project by diverting attention away from these transformations. As it turned out, the cost of all this would come in the form of an out of control rise in the national debt which, but for a short pause at the end of the 1990s, has continued to grow.

Combining fiscal, monetary, and industrial tactics, the onslaught was a textbook case of austerity in the name of the capital order, to use political economist Clara E. Mattei’s terms. Austerity is not merely a conservative policy preference for minimal public spending; it is not a “policy mistake.” Rather, it is a recurring, state-led offensive to re-impose market discipline and the capital relation on unruly populations—a concerted attempt to shore up the class divide by de-politicizing it. Paradoxically, expanding or remodeling state capacities is not a simple sign of autonomy; rather, it signals the ever greater effort needed to reproduce the social relations of this order, and to safeguard its raison d’être: profitability.

Profitability is a central battlefield in the inter-capitalist war. On pain of extinction, competition requires that individual capitals raise productivity and profitability through mechanization, expelling workers, the source of profit, from their productive networks. Over time, this undercuts the system’s own foundations, shunting workers into less productive industries and feeding domestic reserve armies of labor. It also feeds overcapacity in different industrial sectors, adding to competitive pressures with the effect of pushing overall profitability for all capitals downward.

This dynamic is nicely summarized by the scholars Ilias Alami, Jack Copley, and Alexis Moraitis in the case of solar photovoltaic energy after twenty years of development:

Solar [photovoltaic] as a whole resembles a dog chasing its tail with less and less vigor. The entire industry is increasingly warped by a pattern of rising productivity, overcapacity, and depressed profitability. Each segment of the supply chain is implored to achieve ever-greater cost reductions just to sustain existing profit rates. But such cost reductions become harder to achieve as new investment is deterred by glutted markets and narrow margins.2

What is true for the solar energy industry is also true for capital writ large. With less total profit to go around, less is available to invest, leading to a gradual evaporation of investment. In this prime paradox of capitalism, rising productivity is both poison and cure.

Profitability is also the bellwether for the system’s health as a whole. The global forces of capitalist production are deeply interconnected, but its relations of production are fragmented across many different national and juridical contexts. The overall rate of profit for the world economy is therefore not directly observable, though some scholars have made admirable efforts to construct approximations with the available statistics. What is observable are the frantic reactions and responses to it of the investor elite and their increasingly desperate government stooges—the countervailing factors to the declining resiliency of the capitalist system.

One can confirm this easily enough statistically, as all the empirical indicators today tell a similar story. Growth rates for both the OECD (Organisation for Economic Co-operation and Development) countries and the world economy have been trending steadily downward, without much regard for the efforts of governments to revive them. While following a cyclical pattern of ups and downs, world and US rates of investment steadily fall year by year. As one would expect, labor productivity growth in both rich and so-called “emerging” economies is decelerating dramatically as investment dries up.

What explains this? The general rate of profit for capitalism is akin to what Joan Copjec, describing Michel Foucault’s method, called, “a cause that is immanent within the field of its effects”: it shows up indirectly but most dramatically in the stratagems actors devise to resist its decline.3 Financialized austerity was such a stratagem, combining a top-down class assault with a prodigious centralization of money capital in the credit system. From the business perspective, advanced financial engineering and generous credit were key to the ability of firms to relocate and deal with the risks of decomposing the production process across continents and countries, while the productivity gains of that process generated immense export profits that were then recycled en masse into northern financial markets. At the same time inflation was kept low by suppressed wages and productivity gains from globalized value chains. This transnational assemblage is the planetary factory, the material infrastructure of what used to be called “neoliberalism.”4

The Euthanasia of the Entrepreneur

In the US, this reconfiguration of capital accumulation ushered in the era of financial dominance. Since the 1990s, the big banks had acted as close governing partners of the federal bureaucracy, staffing much of its senior personnel. The revolving door between federal offices and the investment banks, especially Goldman Sachs, defined the Clinton and Obama years—“Government Sachs,” as the expression had it. But in the 2010s the center of financial gravity began to shift. BlackRock, the global asset manager, played a critical role in the bank bailouts of 2008, leveraging its extensive market knowledge and expertise to assist the Fed in designing and structuring the deal. Reprising its role in 2020, the fund later engineered the bulk of the government’s coronavirus bailout, which dwarfed its predecessor. Its assets under management soared to over ten trillion dollars. Now, the “Big Three” asset managers, of which BlackRock is the largest, own around a 20 to 25 percent equity share of all companies listed on the S&P 500 stock index. These funds manage the savings of big institutional clients like pension and retirement funds, university endowments, and sovereign wealth funds, investing them to track the performance of the overall market through instruments like index funds. Since the Great Bailout of 2008, the share of the equity assets managed by index funds has grown 450 percent, greatly outperforming traditional, actively managed funds and surpassing them in money held in 2019. Asset manager capitalism had arrived.5

Centralizing economic ownership evolved into tighter relationships with the state—especially with the Democratic Party. By 2016, BlackRock CEO Larry Fink built out a “shadow government” in the Treasury Department in anticipation of assuming the role of Treasury Secretary for the all-but-certain Hillary Clinton administration. While that sadly didn’t pan out, the opportunity returned with the Biden presidency. While Fink took a backseat, BlackRock provided Biden’s first director of the National Economic Council, Brian Deese, international economic advisor Michael Pyle, and Deputy Treasury Secretary Adewale Adeyemo. Former managing director Eric Van Nostrand joined the Treasury Department in 2022 as a senior advisor on Russian and Ukrainian economic issues.

Besides shared personnel and crisis management, Big Finance also designs and carries out economic legislation. After the pandemic, for example, the fund managers and investment banks were indispensable to the Biden Administration’s abortive attempt to resurrect industrial policy. Via Deese, Blackrock was the key architect of the Biden Administration’s Inflation Reduction Act and Infrastructure and Jobs Act. Shockingly, the asset manager was well-positioned to cash in on both of them. Reflecting the continuing clout of the big banks, the US Commerce Department recruited key Goldman partners to help arrange the bloated giveaways to semiconductor manufacturers in the CHIPS Act. The dominant faction of finance was set to benefit lavishly from the Biden government’s abortive attempt to revive “industrial policy,” now likely only to be remembered as a historical blip.

By the late Biden administration, BlackRock was in prime position to capitalize on the next system crisis, which came with Silicon Valley Bank’s dramatic collapse in the spring of 2023—the second largest bank failure in US history. At that point the playbook was clear: in the wake of the bailout, the Federal Deposit Insurance Corporation (FDIC) retained BlackRock’s Financial Markets Advisory unit to appraise and find buyers for the banks’ failed investments. Besides the lucrative service fees, asset manager capitalism also greatly benefited from a new measure, the Bank Term Funding Program, that guarantees assets at face value regardless of their market price. This effectively removes the risk of owning such assets.

BlackRock’s story is emblematic for an era of centralizing state-financial power. Tight relationships between financial corporations and the government are not just a sign of cronyism or corruption; they are part of government itself. At the apex of the economy, government lobbies industry as much as industry influences the government—private and public power fused together through one pulverizing crisis after another. As the party of capitalist crisis management, the Democratic Party had evolved into the head of a managerial state that depended on its close ties with monopoly finance to govern.

But only at great cost. While the asset boom enriched well-connected financiers and the super-rich with a steady flow of state-funded profits, for the great majority wealth and income inequality only continued rising to ever more dizzying heights. This will continue, because the unequal distribution of wealth is not a policy failure. It reflects the fundamental facts of class division and declining productivity in the US economy: as productivity slows, what social surplus remains will go to the class with the power to appropriate it for itself—that is, it will accrue as profits for the ruling-class owners of the economy, while workers get screwed.

Falling productivity, in turn, is reflected in the vertiginous rise of state and private debt. As the star of asset manager capitalism rose, the Federal Reserve’s balance sheet grew by the trillions year by year from 2008 to 2023, and the national debt exploded nearly 300 percent over the same period to a total of 35 trillion dollars. Expanding US deficit spending, i.e., borrowing, is essential not only to fund the military or an uneven balance of trade, but to fuel the financial furnace with safe collateral in the form of US Treasury debt. With endless bailout guarantees, forays into national security-obsessed industrial policy, and a commitment to inflate the value of all stocks to the monopolistic benefit of a few giant corporations, the policy elite have gradually lobotomized a sine qua non of the capitalist order: the private market.

Capitalists are supposed to be the bold entrepreneurs whose willingness to take risks drives innovation in the economy. But what happens to risk when the government will simply bail out any big financial institution when things get dicey? Why take the idea of competition seriously when most savings are invested in braindead outlets like index funds? When private investment can only be induced through a tsunami of government funding, the figure of the entrepreneur— central to capitalist mythology—is reduced to a bad joke. Hence Musk. And so, by extension, is the very notion of the market economy, the beating heart of capitalism.

Cancel Culture

US leaders are given a choice: let the business cycle run its course by allowing the next meltdown to collapse fully into depression, liquidating trillions in assets and throwing tens of millions into unemployment; or just bail out the system again, increasing its dependency on a hapless administration drowning in debt. Up to now they have not failed to choose the latter. But the price of this strategy is the slow euthanasia of the private economy, the foundation of bourgeois, liberal society. This is the outcome of the very policies “policymakers” make to protect it.

The tendency toward state autonomization that Draper identified, essential to the preservation of private capitalism, has culminated in its opposite: a tendency toward their mutual cancellation. Private enterprise is unable to sustain itself without intensifying state intervention, and national governments are helpless without an endless well of privately financed debt. The farther this dynamic proceeds, the more redundant these institutions become. Competition continues, but mainly between nation states struggling to protect and promote their dying “national champions.” Even so-called “artificial intelligence,” supposedly the Next Big Thing, cannot turn a reliable profit, compelling its investors to seek safety in the federal budget. State actors are increasingly preoccupied by the basic task of funneling the collective resources of society into an infusion pump for a comatose private economy. As capitalist institutions extinguish themselves, so goes the basis of their official ideology: liberalism.

Thus the ground was well prepared for Trump’s second coming. His team’s penchant for personalized rule, their halting, self-contradictory “policies,” their brazen racketeering, the parcelling out of federal agencies as spoils for loyal cronies, the treatment of the government as a giant slot machine for personal enrichment reflect the logic of a mode of production that has lost its reason for existence. Trump’s kleptostate is the mode of government most adequate to what capitalism has become.

As what remains of liberal democracy is cancelled, Draper offers a summary of the situation that could be a snapshot of 2025:

Whenever democratic forms become inconvenient for ruling-class hegemony, making the state institutions of the status quo precarious, there is a tendency for the ruling class to sanction a shift to more authoritarian and despotic forms. The film of bourgeois development unwinds in a reverse direction: the freedoms that the liberal bourgeoisie once demanded are cut back; popular institutions are doctored so as to interpose a maximum of impediments between the institutions and popular pressures from below. Democracy so-called becomes … more and more a complex of sifting-screens to filter out popular elements and substitute devices of control from above; until, finally, if the term democracy is retained at all, popular elements are redefined out of it, and it is converted into a technical term for an authoritarianism purporting to serve the people whether they wish to be served up or not.

Structurally, the most prominent feature of this transmogrification is likewise a return to a pre-bourgeois pattern, though in new forms: the tendency toward a shift back to the dominance of the executive and its bureaucracy.6

This is not a regression to feudalism so much as a further stage in the devolution of capitalism, which cannot even produce competent managers for itself anymore, much less political talent who could offer a new vision for it.

• 1Paul Mattick, “The Withering of the State,” Brooklyn Rail, June 2016.
• 2Ilias Alami, Jack Copley, and Alexis Moraitis, “The ‘wicked trinity’ of late capitalism: Governing in an era of stagnation, surplus humanity, and environmental breakdown,” Geoforum, Vol. 153, July 2024.
• 3Joan Copjec, Read My Desire: Lacan Against the Historicists (New York: Verso, 2015 [1994]).
• 4See Phil Neel, Hellworld: The Human Species and the Planetary Factory (Leiden: Brill, 2025), and the analysis in chapter five of Endgame: Economic Nationalism and Global Decline (London: Reaktion, 2024).
• 5Benjamin Braun (2021). “Asset manager capitalism as a corporate governance regime.” In J. Hacker, A. Hertel-Fernandez, P. Pierson, & K. Thelen (Eds.), The American Political Economy: Politics, Markets, and Power (pp. 270–294). Cambridge University Press.
• 6Hal Draper, Karl Marx’s Theory of Revolution (New York: NYU Press, 1977) , p. 311.