As SpaceX stock hits escape velocity, and Musk is now the first trillionaire in history, I had an urgent thought I want to share with you.

The AI bubble is engineered. It’s a new spin on an old classic — but more sophisticated than ever, and the revolutionary thing about it is that this time around we are all paying for it, on a scale larger than ever before. All of this is taking place within late stage exhaustion of the dollar system.

Here’s the short version, so you know where I’m taking you. The bubble is deliberate. The Fed and Treasury are inflating it to vacuum in capital from the whole world — your grandma included — and channel it into the AI race. When it pops, America will be left holding the best AI infrastructure on earth while everyone else is too deep in recession to fund the catch-up. Short term profit was never the point. Winning the new cold war was. The rest of this piece is how that works, and what it means for the rest of us.

I’ll start with a little folk story to set the stage. Gather round people!

Once upon a time, there was a booming US economy.

Big firms were spending big money on electronic equipment, which they bought from all over the world. To make all that equipment, factories needed raw materials: oil for energy, copper for anything related to energy, lithium for batteries, you name it.

And so, as the story proceeded, commodity prices started climbing too. Developing countries that sold them were happy. Even though some countries were spending too much money, their earnings were growing rapidly. Money flowed across borders at paces it had never before.

After all, a commodity supercycle was underway. Rich people were happy, because the firms they owned were worth a fortune, and everyone was spending money like they were in Vegas just before becoming exclusive with the person they’re dating. Dollars were pouring abroad at a rapid clip. Who cares? We’ll pay it back at some point.

Money is plentiful, so everyone gets a loan. You get a loan, your mom gets a loan, your pet fish gets a loan. Wall Street is happy anyway, graph goes up means world more gooder.

The foreign firms selling all that electronic equipment want to buy American assets, because they’re busy exploiting their own workers — workers who, as a consequence of said exploitation, have no money to spend on the very products they make, and the big bosses need to park that surplus somewhere, right? So the money flows back in a circular motion: they invest it in the profitable big firm in America they just sold their stuff to.1

Rich people are happy everywhere, because everyone gets to exploit their own population equally. The US government is happy too, because it gets to finance its military with foreign money, and any country that wants access to dollars has to play by the rules it sets: capital account liberalisation, light regulation, deference to credit rating agencies. And because the rest of the world keeps buying American assets with its export dollars, the US gets to run deficits more or less indefinitely — it is, in effect, being lent back its own money.

Tout est bien qui finit bien. All’s well that ends well. End of story.

Just kidding.

Inflation starts to pick up, because the economy is overheating. Anti-inflation people get angry. Interest rates rise. Loans that looked attractive at first suddenly look a little yucky… Capital flows back to the US chasing higher yields, and the dollar rises. The US economy starts to slow — and with it, global demand for raw materials.

This is where it gets ugly for everyone, but for some more than others.

A lot of the development finance that funded the commodity supercycle — the mines, the pipelines, the ports — was borrowed in dollars. That made sense when commodity prices were surging and firms were seeing greenbacks rolling in.

But now nobody wants electronic equipment, and that means nobody wants commodities either. So revenues crater. And because the dollar has appreciated due to interest rate increases and flight-to-safety, every loan repayment costs more in local currency.

This is a disaster. Wages, taxes, and government budgets are all paid in local currency that is now worth less. The countries that were riding the supercycle suddenly find themselves earning less in the currency they owe everything in, and paying more in the currency they actually use.

When the crisis hits, or the bubble pops, the financial sector turns predatory. Back when the economy was booming they seemed almost powerless, everybody could get a loan; now that money is scarce, suddenly everyone wants a loan.

You move back into your mom’s basement, mom moves into a smaller house, and now you’re living in the dogshed. The only one who’s winning is your pet fish — it used the loan to short the NASDAQ and is now chilling in the Bahamas eating caviar. Wait…

Your grandma, who just YOLO’d her retirement money plus a personal loan into SpaceX, is getting margin called and has to liquidate — and the bank is ready to swoop in and scoop up the asset for itself.

Now multiply that by an entire country. “Knock knock. Who’s there? It’s us, your favourite lender-of-last-resort, the IMF!” Men in suits are standing there, briefcase in hand, US Treasury on speed dial. The deal: we’ll lend you the dollars you desperately need, but the ports, the pipelines, the utilities? Those belong to us now, buddy.

And it’s not just the IMF, this is just how creditor-debtor relations work under modern capitalism. And to be clear, it’s not really the IMF either. Most of the people working there are well-meaning economists who genuinely think they’re helping. The problem isn’t the individuals, it’s the system they’re operating in. Every commercial bank, every pension fund, every sovereign creditor that lent you dollars when times were good is now structurally on the other side of the table. You need their currency. They wipe their asses with yours. The dollar system doesn’t need to be conspiratorial to be coercive. When the mission mandate of the enforcing institutions is to “safeguard the stability of the system”, it just has to be what it is.

People lose their jobs. People are sad. The wise priests of the market call it bearish. But every few years the cycle repeats, people become happy again, and the market priests start calling it bullish. This is folk wisdom that has been told many times before, and forgotten just as often.

Print it into your goddamn brains, and tell it to your kids once they’re old enough to start YOLO’ing their money, so you don’t end up old and sad like grandma. Not all of us know when to go short like pet fish. I know, because I was a victim myself, somewhere between the ages of 18 to 20. But if I hadn’t been a victim back then, I wouldn’t be here to tell you this story.

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Financialised industrial policy in boom-bust cycles.

“What today we call economic globalization — a combination of rapid technological progress, large-scale capital flows, and burgeoning international trade — has happened many times before in the last 200 years. During each of these periods (including our own), engineers and entrepreneurs became folk heroes and made vast fortunes while transforming the world around them. They exploited scientific advances, applied a succession of innovations to older discoveries, and spread the commercial application of these technologies throughout the developed world. Communications and transportation were usually among the most affected areas, with each technological surge causing the globe to “shrink” further. But in spite of the enthusiasm for science that accompanied each wave of globalization, as a historical rule it was primarily commerce and finance that drove globalization, not science or technology, and certainly not politics or culture. It is no accident that each of the major periods of technological progress coincided with an era of financial market expansion and vast growth in international commerce. Specifically, a sudden expansion of financial liquidity in the world’s leading banking centers — whether an increase in British gold reserves in the 1820s or the massive transformation in the 1980s of illiquid mortgage loans into very liquid mortgage securities, or some other structural change in the financial markets — has been the catalyst behind every period of globalization. If liquidity expansions historically have pushed global integration forward, subsequent liquidity contractions have brought globalization to an unexpected halt.”

Michael Pettis wrote that in 2009.2 Before the word “AI” had entered the mainstream conversation about technology, and fifteen years before anyone would describe a $75 billion IPO as a geopolitical financing event.

The pattern he described back then already tells you something important that most AI commentary entirely misses: technology isn’t in the drivers-seat, money is.

This piece came together in a single afternoon, and it wasn’t a coincidence.

On the 12th of June, I was riding the train back from Amsterdam. That morning, I had read on Musk as a human ponzi scheme. I had also just published a piece on the AI bubble — the FT ran a similar analysis today, but without references to market manipulation.

On the train I picked up an FT article about SpaceX raising “$75 billion in world’s biggest IPO.” Then I read this: “We’re embarking on a massive new growth phase and we need capital for that,” Musk told JPMorgan Chase chief executive Jamie Dimon last week during an IPO roadshow event. Musk added that “doing AI data centres in space” would be “another massive capital endeavour” but also the best way to overcome energy limitations on Earth.

I took advantage of my ADHD-fuelled hyperfocus and worked out a line of thought I had previously speculated on, which also came up in a conversation with a subscriber (shoutout to ).

*Drum roll* …..

It’s that the bubble is here on purpose. The snake-oil salesman bit IS THE POINT. This is financialised industrial policy under US capitalism.

The birth of the US tech-military-industrial complex

Orthodox economic theory has a blind spot: under competitive markets, firms don’t invest in hugely expensive projects with uncertain payoffs and massive upfront costs. So in previous eras, the state did it instead. DARPA is the obvious example — the US military was behind the internet and touchscreens. It is common knowledge in the political economy literature that these innovations were then handed to private firms to commercialise — which is also why the US became the primary enforcer of intellectual property rights through the WTO: that hierarchy allows it to command higher profit rates than economies based on industrial production, which in turn underpins the dollar and finances the imperial apparatus through persistent deficits, and allows it to manipulate global financial markets to its advantage by engineering booms and busts. Remember the folk story? This is the institutional enabler.

But then, as an off-the-record bird once chirped into my ear — the benefit of closed-door government-backed industrial policy disappeared. Development largely became open-source, and open-source broke the DARPA model: if the code is public, you can’t quietly hand a proprietary advantage to your chosen commercial partner. Basically, a few sweaty nerds locked in a room couldn’t compete with thousands of sweaty nerds out in the wide world — and more importantly, you couldn’t keep the fruits of their work just to yourself anymore.

But you also couldn’t give your rivals a strategic advantage in knowing which company was doing the real work. So the CIA found another way to do it secretly in the open. It founded In-Q-Tel to seed a massive number of companies with money, most of them being decoys, had them win government contracts, and circulated the chosen ones through Venture Capital networks — letting the “free market” do the selection work while the state determined who got to play. This is what created companies like Palantir.

The post-2008 prototype

As I described in my previous essay on AI, post-2008 liquidity injections by the Central Bank that were meant to “save” the system, while austerity was being practiced on the many, pushed banks to loan massive amounts of money to basically the only creditworthy industry in town that also coincidentally needed massive capital investments: big tech.

Tech scaled up with this money, laid the basis for another new booming industry in the US boosting profitability to new heights and strengthening the power of the dollar, while also entrenching “allies” into this system. In effect, a new parasitical layer of control and information-gathering was installed across the globe — information systems designed by Google, Amazon, Meta, you name it, we all use them. You are currently probably reading this from a chrome browser with a website hosted by AWS and are going to share this article on instagram or facebook, or if you are European, via whatsapp (please! I want to make this my main job!).

As friend and foe were lured by the attractive siren call of this revolutionary novel technology, they were unwittingly sailing into the giant rock that was the merger of US state and capital that is currently occurring.

The Great Reversal: from buyback machine to capex behemoth

Like the internet before it, AI requires massive upfront capital investments that are not profitable to finance for small individual firms. Luckily, the US has giant corporate monopolies. These so-called “hyperscalers” perform a unique role in the US political economy, a function that the European political economy is unfortunately lacking. Their role is to extract rent from the global economy through digital layers and absorbing crucial private functions. With their massive monopoly rents, they are able to finance enormous capital expenditures that cannot be rivaled by adversaries.

But here comes the problem, and it is a problem on the demand side. After Big-Tech saturated their markets — everyone already had Instagram, everyone already had a smartphone — there was simply no one left to sell to. Decades of upward redistribution have hollowed out the American consumer: the top 10 percent now own roughly 90 percent of financial assets and account for nearly half of all consumer spending, while a large chunk of the country lives paycheck to paycheck. When income concentrates that heavily at the top, the majority simply doesn’t have the purchasing power to absorb ever more product — and firms, in turn, have little reason to invest in producing more of it.

This is the same suppressed-demand dynamic from the dollar story above, just pointed inward. So the money didn’t flow into the real economy. Big Tech was left sitting on enormous piles of cash with nowhere productive to put it, except boondoggles like the Metaverse.

So what did they do? They bought back their stock on a massive scale — roughly over $1 trillion flowed back into markets through buybacks in the decade to 2024. Great for owners of financial assets. Less so for everyone else.

When the AI companies saw that the Trump administration was ready to support the bubble, they went on a massive spending spree. The hyperscalers are now pouring something like $400 billion into the real economy against realised AI revenue of only about $100 billion. This is a massive drain on the financial economy, as buybacks have effectively ceased — and the gap is being plugged with debt and equity issuance on a staggering scale. AI companies borrowed roughly $121 billion over the course of 2025, more than four times their usual pace. Morgan Stanley expects the hyperscalers and their joint ventures to issue $250–300 billion in debt in 2026 alone, and JPMorgan estimates the sector may need to raise as much as $1.5 trillion in investment-grade bonds over the next five years. Google’s parent company Alphabet is selling $80 billion in stock — the largest equity capital raise ever — on top of a $30 billion-plus global bond issuance in February. And the SpaceX IPO, combined with the looming public listings of Anthropic and OpenAI, brings a combined valuation north of $3.6 trillion to market.

The pace of these listings is itself remarkable. All three filings happened within two weeks of each other: Anthropic filed confidentially on June 1, OpenAI announced it had done the same on June 8, proactively, before the filing could leak. SpaceX, meanwhile, completed its listing today, June 12 — having gone from confidential filing to first trade in roughly 72 days, a quick pace for a company at this scale. This is not companies independently deciding the moment is right. Three direct competitors, all rushing to tap public markets within weeks of each other, in a window where liquidity conditions are being actively managed to keep asset prices elevated.

The coordination doesn’t need to be explicit (like in China) to be real. And it also does not need to be a conspiracy, when the structural outcome is the same. Nonetheless, I think it is coordinated, they all know what’s going on.

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The grift is the point

And what’s crucial here, is that the US government doesn’t do explicit subsidies directly to corporations. That would be communist! They do it in a much more intelligent and backdoor manner that escapes the attention of the public, and also has a minor element of “free-market” to it. It is not really a free market though — it is rather, like identified, the best grifter that wins.

Who is best able to convince your grandma to YOLO her retirement money into an AI space data centre adventure? That man is Elon Musk. He’s done it — and a large chunk of money managers have no choice but to follow anyway, because Nasdaq rewrote its index inclusion rules in May 2026, cutting the seasoning period to just 15 trading days for mega-cap listings. BNP Paribas estimates inclusion in the Nasdaq-100 alone will generate roughly $8 billion in passive buying during SpaceX’s first month of trading, with total passive inflows potentially reaching $30 billion. That means retirement savers in passive index funds are being forced to buy shares in a company that lost $4.94 billion last year, whether they want to or not. So not only did your grandma YOLO her retirement money into SpaceX — it turns out she was already in it, and she can’t escape.

So, the financing cocktail is retail money from below and public liquidity injections from above. Crucial for my argument that this is coordinated: the Fed and Treasury are pumping money into markets though the backdoor (despite claiming that they aren’t) on a massive scale accommodating this bubble and the drainage the IPO’s and debt issuance are causing to the financial economy. The long story, including the full plumbing of how it works, is to be read here:

The nature of hierarchy in modern international relations

Back in the day, it was easy to know what your place was. Genghis Khan and his horde pulled up, took your wife, and told you to pay up or he’d burn your city down. Simple. You knew who was oppressing you.

Nowadays, as a European I have to have in the back of my head that the US can literally shut off all the digital services I need and can ask my bank to stop servicing me. I need to take into account that the future of my countries’ decarbonization can simply cease when China decides to stop exporting rare earth metals.

And, as if they knew I was going to publish this article today, Claude was asked to turn off their most advanced AI-model for non-US citizens. All information that has passed through their most advanced “Fable 5” model has been recorded and in all likelihood passed on to the US government for careful scrutiny. My guess is that they wanted to test out what foreigners were going to try to do with it, and flex their newfound geopolitical AI-muscle simultaneously.

So now they probably know that I am using the most advanced and energy-intensive AI model ever for the following prompt: “yo claude, could I eat an entire wheel of cheese in one sitting”? Very sensitive information for the Dutch.

State-capital merger becomes explicit: the oligarchical turn is complete

As of now, with the overt corruption of the MAGA-movement and its techno-oligarchical allies, this merger between state and capital has explicitly come to the fore, and the distinction between political and economic power has become less apparent.

In effect, the US is an empire built on financial and information control, with its vassal allies largely responsible for organising production, while the imperial core controls financial flows and the information system. The AI-bubble and rapid advancement in the buildout of the new commanding heights of global economic development is further consolidating this infrastructure.

Start with the layer you already live inside. Every country within the US sphere of influence runs its life on American information infrastructure. Most Americans have never heard of it, but we all use WhatsApp here in Europe — everyone’s on Instagram — and, as Larry Ellison, founder of the CIA-seeded project that became Oracle, put it: “citizens will be on their best behavior, because we are constantly recording and reporting on everything that’s going on.”

The microphones are always on.

“Alexa, play the shitty EDM song produced by Elon Musk.”

“Sure, this is what the brain of someone making tech-dystopia a reality sounds like”.

What you are looking at, assembled piece by piece over two decades, is an imperial stack.

Social media for data aggregation. Satellites (SpaceX and others) for information control. Palantir for the analytical and security layer. Oracle for storage. Stablecoins project monetary power into foreign financial systems and dismantle the policy autonomy of states through their citizens — just as many central banks want to hedge against the dollar. The icing on the cake: AI agents to automate the whole apparatus, turning stablecoins into lethal monetary weapons.

Every country in the US sphere of influence is running its economy on infrastructure it does not own, and most of its citizens have no idea. This is what analysts miss when they keep insisting AI isn’t profitable. Who cares?! Profit was never the primary metric. Global control is how empires are built, and this is what building one looks like in the twenty-first century.

Two days ago, I argued that US hegemony was over. Can I still walk back that statement? Just kidding. The judge is still out, but my call was probably premature. It all depends on how Europe and China do in this race.

Take a step back and look at the whole shape of it, and remember the Pettis quote. The bubble isn’t a market getting ahead of itself. It is here on purpose. It is industrial policy run through financial markets, the same machine from the folk story pointed in a new direction. The Fed and Treasury are pumping the markets full of liquidity, vacuuming in as much retail money, hype money, and capital from the entire world as they can, and channelling it into the AI race. This compresses the rates that companies pay for corporate debt, and allows them to issue stock on a massive scale. Just as in the folk story, the money flows toward American assets — except this time it is funding the commanding heights of the next century.

What we will be left with after the bubble implodes is the imperial stack: the satellites, the storage, the analytics, the stablecoins, the agents that automate the lot. After the rug pull happens, and the world is in a recession, no one else will have money to catch up. The Europeans will agressively do self-defeating austerity like they always do, and a fragile China will lose its export market.

Profit was never the point. Winning was. That stack is how the US projects power over allies and adversaries alike, and because it’s assembled one contract at a time, one procurement decision at a time, that is also the only level at which it can be fought.

Where this leaves Europe

European capital is far behind, but clawing back by directing more contracts to European firms in defence and technology. The problem with the European political economy is that there is currently no effective centralized foreign and industrial policy between states.

The French have always been the most Europeanist, and it is no surprise that it therefore hosts many sovereign AI firms like Mistral, the closest thing Europe has to a credible AI champion, now backed by a forming sovereign cloud layer of OVHcloud and Scaleway. While Germany has traditionally chosen a more “open” approach by trying to naïvely embrace the now-debunked propaganda narrative of neoliberal globalization, it is now also starting to back the idea of national champions and shy away from US influence, recently even abandoning Palantir. The Dutch position is more interesting and more contradictory. If you want a symbol of Dutch integration into the Atlantic power structure, look no further than Mark Rutte, Mr. “Daddy needs to use some strong language”: fourteen years of neoliberalism as Prime Minister, then handing the country to the far right to depart and become NATO Secretary General — the most senior Atlanticist job on the planet, held by a VVD man. The current Jetten cabinet, which took over after the far-right screwed it up, is more Europe-oriented in rhetoric. But Jetten himself sits on the Trilateral Commission and attended Bilderberg 2026 in Washington, so whether the position matches the rhetoric is another question.

A recent case shows where the baseline sits. When a US firm tried to acquire the company running DigiD — our digital identity system for sensitive citizen data — the cabinet wanted to let it pass, despite a parliamentary majority against it and experts warning of security risks. It took a 140,000-signature petition to force a block. Nearly handed over, simply because they didn’t want to piss off Trump. They need societal pressure as an excuse to block US actions.

And that is the whole point. The imperial stack is built contract by contract, which means it can be challenged the same way. When my research revealed that the Dutch government held secret contracts with Palantir, the Secretary of Defence cited it explicitly as the reason the Ministry announced it would drop Palantir’s technology within two years. He likely could not have done it without the pressure from below. Politicians are caught in a game they don’t control and won’t fix on their own. The pressure has to come from the people who still believe democracy and freedom are worth fighting for. That includes you.

You don’t hate AI. You hate liberalism.

And you did not vote for liberalism. You were born into it. Nor did you vote for AI, it was forced onto you by liberalism.

That’s why I have no patience for the blind lovers and haters of AI: they are missing the point, and so neither can judge the thing in the only context that matters.

Someone who understands that is his holiness Pope Leo XIV, he has clearly done his fair share of reading history and theory. According to him, “Humanity, created by God in all its grandeur, is today facing a pivotal choice: either to construct a new Tower of Babel or to build the city in which God and humanity dwell together.”

Now that Papal authority has entered the fray, we are seeing many parallels with the past. The spiritual world is once again, like in the middle ages, on collision course with the material world. The stakes are high, it concerns not just people of faith, but the whole of humanity.

On one side, an American Pope reaching back for a remnant of our more humane past to defend the human body. On the other, techno-oligarchs who want to escape it and merge with the machine.

But before we get there, let me explain why I think the AI-debate is missing the larger point and how I aim to address that with this essay.

The State of the AI-debate

The AI-debate is split between several kinds of arguments. The most damaging are the dogmatic techno-optimist posts: the sloppish LinkedIn essays that accept AI uncritically as a force for good, and in doing so provide the ideological cover that lets the actual deployment happen unchallenged. They refuse to see a problem at all.

On the other end, there are genuinely productive contributions — ’s recent piece on what he calls the “dead economy” for instance, which shows how mass AI deployment hollows out both the economy and the democratic structures that depend on it. This is one of the best pieces I’ve read on it so far, yet it still takes the system we live in for granted, which is something that I aim to address in this essay.

Lastly, somewhere floating around on the spectrum of technological-ideologies, we have the AI-hate posts. Sure, the writing is often good. The human-o’-meter is off the charts. But it is not very productive, and we’ve heard it thousands of times. Perhaps you could call it well written human-slop. Except it lacks the toxic positivity of AI, instead beating our brains into despair — filled with negativity towards fellow human-beings who choose to use the technology. As I will show, that anger is misdirected.

A good example comes from a recent popular essay written by , titled “If you let AI do your writing, I will come to your house and kill you”:

“I hate it. I find it viscerally disgusting; a cold shudder like someone’s poured jelly down the back of my neck. I hate that it’s everywhere; I hate that when I read basically anything now I’m constantly on alert, twitching like a schizo in an underpass. Is this thing really what it says it is? Is this person actually a robot in disguise? Nice little personal essay you’ve got there, lady, but I know what you really are; time to get my knife out, time to start digging around under your skin until I find the wires.”

Just for Sam’s information, I wrote this essay completely without AI as a writing tool.1 Please keep your blade sheathed.

Yet, a similarly paranoid alertness is present when I read essays like that of Sam. There is something performatively human about them (I can’t believe I said that) — and I suspect AI’s mere existence is part of why. The technology is already reshaping how we write about it, including for those who hate it. I catch the impulse in my own writing too.

But I will regress from this speculation, because that is exactly the problem: these scuffles among fellow humans detract from the real problem. A problem as old as time — or more accurately, somewhere after 1776.

Liberalism is the problem. But it is simultaneously a solution. It is a parasitical chameleon, absorbing the colour of whichever historical phase it inhabits, tainting it, growing larger with each one it passes through, bloating itself on whatever was not yet a commodity; or what part of humanity was not yet subject to its laws. And the core problem here is not aesthetic. That is a symptom, not the disease.

And now his holiness the Pope Leo XIV weighed in. He has the sharpest instinct — may I say divine inspiration — I’ve seen so far about what is occurring. In his recent encyclical, his holiness criticizes the fact that technological power has shifted from states to private transnational corporations; laments AI’s effects on truth and democracy, war and peace; and he explicitly rejects the instrumentalization of work and the body through automation and transhumanism.

Indeed, we as a society have been involuntarily introduced to this technology for privatised profit — all while the alienation, the ecological and social damage, and the conflict it brings is externalised and made public.

No one voted for this.

So before we decide how to respond, we need to understand the political-economic context in which it’s happening. For that, we need to analyse how the same dynamic has been unfolding over centuries.

What I aim to show in this essay, is that liberal capitalism contains an inherent tension between economic freedom for the few, and political freedom (or rather, unfreedom) of the many. Between unbridled gains in efficiency, and unbridled losses in social and environmental life.

It is abundantly clear from the historical literature that capitalism moves in cycles and it is precisely this economic freedom that undermines human freedom in the long term. We are caught in the bear-trap of technological progress, and without intervention in the political-economic domain, as history shows, it will lead humanity to ruin.

The Long Crisis of Liberalism

In the 18th century, if you were rich enough, you hired a philosopher. Adam Smith was one of these pet philosophers, and one of the most consequential one who ever lived.

Born in Glasgow to a father who levied tariffs at the border — the very profession he would later fulminate against — Smith was hired in 1764 at £300 a year plus a lifetime pension to tutor the stepson of Charles Townshend, Chancellor of the British Exchequer. When Townshend died, the Duke of Buccleuch honoured the pension for the rest of Smith’s life. Smith finished Wealth of Nations in 1776 — writing about the foundations of national wealth while being paid indefinitely by one of the wealthiest landowners in Scotland.

The world he was writing into was dominated by mercantilism — states establishing monopolies for national gain, exporting as much as possible, importing as little as possible, amassing vast hoards of bullion. Smith thought this was nonsense, but his ideals also alligned with his pockets. Wealth of Nations was bankrolled by the pro-free trade Hanoverian Whig establishment and aimed squarely at the mercantilist regulatory state. Smith was funded by the rising commercial-administrative class against the older aristocratic-mercantilist one — and clear-eyed enough to say that the state was really a class construction:

“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor.” This encapsulates how I think about theory generally, echoing Robert Cox: “Theory is always for someone, and for some purpose.”

His prescription: limit monarchical authority, abolish monopolies (which he called a “strange absurdity”), and organise production rationally. Ten men, properly organised, could make 48,000 pins a day; one man working alone could barely make one. This was the division of labour — and it would change everything.

Later, David Ricardo would extend Smith’s theory across borders — pioneering the term comparative advantage. He argued famously that if Portugal can produce both wine and cloth with less labour than England — but England is better at producing cloth than wine — then both would be better off if England leveraged its factors of production to produce cloth, while Portugal specialized in wine.

Together, these foundational theories were crucial for human economic and societal development, and are still taught in high school economics. But in the introduction already, I emphasized the dual nature of liberalism: its forces are as regressive as they are progressive, as constraining as they are liberating, and as destructive as they are creative.

For with the division of labour, a previously highly regulated system of production attached to custom, tradition and human knowledge — for example the guild system — was disrupted in favour of a capitalistic mode of production.

Previously highly specialized labour — commanding high wages and social status — was disrupted in favour of the manufacturing system, where individual labourers would specialize in just one small part of the total labour process of producing a commodity. With its introduction, the specialized knowledge and power of the labourer was absorbed by the capitalist who organized production and oversaw the manufacturing progress.

Indeed, Smith recognized this fact:

“The man whose whole life is spent in performing a few simple operations… has no occasion to exert his understanding… He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.”

The Dual Nature of Liberalism

Liberal trade and economic theory was completely realistic and appropriate for its time. But it was written for a world that no longer exists. As & note in their influential book Trade Wars are Class Wars:

These arguments for specialization only went so far. Neither Smith nor Ricardo thought it would make sense to divide the stages of pin-making or textile manufacturing across national borders. Rather, they were thinking of the world as it was then—two hundred years ago. [...] The communications technologies available at the time—carrier pigeons and couriers on horseback or sailing ship—would not have been adequate for coordinating the various stages of production across disparate locations. [...] What many forget today is that Ricardo’s argument made sense only under these primitive conditions. [...] Ricardo’s subtle case for free trade depended on persistent differences in rates of return across countries, which in turn depended on investors’ unwillingness to move money abroad. Those assumptions broke down as technology improved, communication costs collapsed, and global politics changed.

In short, liberalism was not meant for a world of the scale that we are seeing today. At the level that it is practiced today, I’d argue its effects are massively more destructive than they are constructive. The same is true with liberalism’s effect on AI. While advancing the economic sphere of human development, it is disastrous for social and ecological development. As revolutionary as liberalism was at the time of monarchs, the disastrous effect on the social and ecological fabric that it would have centuries later were unforeseen in scale, at least by Ricardo and Smith.

The Great Transformation

Smith’s theories gained ground rapidly — the conquest of the aristocrat and bourgeois mind was in full swing: though it took decades before their minds conquered markets.

For liberalism started to transform the material world and human society in two waves: first, around the turn of the 19th century in England, second the 1820s when it forcefully expanded its reach into world markets — poisoning the well of societies that were formerly regulated by ancient customs and traditions.

And for the longest time, the earth in the form of land, and humanity in the form of labour, were protected by these ancient institutions that evolved over millennia.

In effect, the economic and the social system used to be the same thing. This is what the genius multidisciplinary economist Karl Polanyi described in his book The Great Transformation. One example being the guild system:

“Under the guild system, as under every other economic system in previous history, the motives and circumstances of productive activities were embedded in the general organization of society. The relations of master, journeyman, and apprentice; the terms of the craft; the number of apprentices; the wages of the workers were all regulated by the custom and rule of the guild and the town.”

Polanyi’s point is that labour and land are what he called “fictitious commodities.” Real commodities are produced to be sold; labour and land are not. Labour is simply human life, and land is nature. Neither was made to be sold, and to treat them as if they were is to subordinate society and nature themselves to the logic of price. For most of history, every society understood this instinctively, and hedged these two things around with protections.

And here’s the thing that Smith and Ricardo missed. For all its economic faults, mercantilism never went this far.

As Polanyi observed:

“Mercantilism, with all its tendency toward commercialization, never attacked the safeguards which protected these two basic elements of production—labour and land—from becoming the objects of commerce.”

For centuries, much of the English countryside was held in common — used by villagers for grazing, firewood, and subsistence cultivation under customary right. From the 16th century onwards, that common land was encroached upon by the aristocracy who saw profitable parcels for capitalist agriculture or sheep pasture.

The Satanic Mill

Around the time of Smith, between roughly 1750 and 1830, this problem greatly accelerated. The commoner lost their historical right, landlords gained saleable commodities and the dispossessed were pushed into the cities.

The repeal of the Poor Laws and the Statute of Artificers stripped away the legal protections that had, however imperfectly, kept bare labour from becoming just another commodity.

The Corn Laws — tariffs on imported grain that had kept bread prices high — fell in 1846 after a prolonged battle between agrarian and industrial interests. Cheaper grain meant cheaper bread, and cheaper bread meant workers could survive on lower wages.

What was presented as relief for the poor was in practice a subsidy to industrial capital. It was the first great demonstration that liberal trade doctrine was not merely a theory but a political instrument, one that could be wielded to reshape the fundamental rules of economic life in the interests of commercial capital.

Torn from their roots and ancestral land with nothing left but their bodies, the newly minted proletariat served industrial capitalists with an abundant supply of labour.

Manchester’s population roughly quintupled between 1770 and 1830. And with it emerged the unregulated free-market system with its machinery of industrial capitalism, which Polanyi called the “satanic mill” grinding human beings down — a sentiment echoed by Pope Leo XIV in his latest encyclical on AI.

The machine, when it first appeared, looked rather innocent: the spinning jenny, hand-powered and used in the home, greatly increased the productivity of individual spinners — cloth being Britain’s greatest export — without yet tearing them from their personal working speeds or their roots.

Then came the factory. Steam engines drove vast power looms in mills as loud as chainsaws — workers communicated by lip-reading, and deafness was an occupational norm. The omnipresent vibrations ran through the floor, through the frame of every machine, through the hands and feet of every worker on the floor, all of them tethered to a single engine’s pace that never tired and never stopped. Idle machines were considered idle profit, and thus workers were forced to work day and night in terrible conditions.

The division of labour absorbed the craftsman’s knowledge — his understanding of the whole process — and transferred it to the capitalist who coordinated the fragmentary process. Then the machine absorbed the act of work itself: the tool was taken from the worker’s hand and given to a mechanism he merely tended. With AI, the same logic reaches the mind. It is the machinery stage applied to cognition — not just the physical process of labour, but thought itself.

A system expanding at this pace does not merely create shared interests — it creates shared vulnerabilities. The more we are connected, the more disruptive our interconnections can be. This dynamic will return throughout this essay.

How did we get here?

British ‘Free’ trade imperialism

As Britain’s economic and social life was conquered by liberal thought, its industry rose with it to become the workshop of the world. The domestic market was rapidly saturated.

The problem that presented itself was that British capitalists individually had no incentive to raise the purchasing power of their workers, while it was detrimental to the economy as a whole; seeing as the value of production exceeded the demand that justified it.

Having disembedded its own society from traditional life and subjected it to the laws of ‘freedom’, the only way forward was outward. That is, imperialism.

J.A. Hobson (1902) encapsulated the contemporaneous problem well in his seminal work on Imperialism that later thinkers like Vladimir Lenin and Klein & Pettis would draw on. The root cause, he argued, was maldistribution: the wealthy accumulated more than they could productively invest, leaving domestic demand chronically deficient. Imperialism was the outlet — surplus capital seeking foreign markets because the home market had been starved of purchasing power. The remedy was not colonial expansion but social reform: redistribute the surplus to wages and public income, and the home market becomes capable of absorbing what it produces. “The only safety of nations lies in removing the unearned increments of income from the possessing classes” and returning them to those who would actually spend them.

Britain industrialised behind protective institutions, became the dominant productive power, and then — once it no longer needed protection — declared free trade the universal good. It dropped its own tariffs and used diplomatic, ideological and military pressure to force other markets open, because open markets at that point served British interests. After all, Britain had such a superiority in production that no one could compete, and low tariffs allowed Britain to dump goods on foreign markets in exchange for cheap commodities.

The weaker economies specialised in lower-value production, the stronger locked in its advantage, and the doctrine that justified this arrangement was dressed up as mutual benefit.

Capital cannot stand still: it must expand or contract, and expansion means new markets. Steamships collapsed shipping costs; railroads and telegraph lines, exported to the periphery, extracted its commodities and created yet more markets for British capital.

Western capitalists colonised the world by exporting the infrastructure that extracted low-value commodities from the periphery. The dependence this created required no formal territorial control to ensure hegemony: this was Pax Britannica. But integration is not stability — in a world of competing interests, it creates instability.

But the same order that carried British goods outward, and imported cheap commodities into the Isles, carried the seeds of its own undoing. The stability of the system — the gold standard, the open sea lanes, the guarantee of contracts and capital flows — was the very condition that allowed rivals to grow within it. Germany, Japan, and the United States industrialised in the shelter of British order, and then used it to upset the balance. As they rose, Britain could no longer rule by legitimacy alone and turned to coercion.

British capital’s desire to expand was the very thing that undermined its primacy. This would eventually produce the two most devastating wars humanity had ever seen. The infrastructure and environment changes with each cycle — steamship, railroad, platform, algorithm. The logic does not. Expand or contract, open new markets, export the costs. What we are living through is not an AI crisis. It is the same crisis, wearing new clothes.

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The Second Wave of Globalization and its reacceleration

Fast forward to Pax Americana. A new wave of globalization under a different organizational wrapper. In a similar show of the influence of technology, container shipping contributed more to economic globalization than free trade agreements ever could. The container solved the physical problem: as Douglas Irwin explains in Free Trade Under Fire, containerisation increased trade among developed countries by roughly 700 percent over a twenty-year period. Communications technology solved the coordination problem, making it possible to direct production on the other side of the world in real time.

Together they did not merely lower costs; they made the fragmentation of production across national borders structurally viable for the first time, binding more of humanity into a single economic web than Ricardo could have imagined. The container moved the goods; the cable and the algorithm moved the coordination. Each new layer bound the world tighter, and AI is where that binding reaches the mind itself. What was sold (literally) as the frictionless freedom of a connected market turns out to generate friction and unfreedom in equal measure, the more entrenched the connections, the more inescapable the dependence. We are wired into a single system we did not choose and cannot exit.

It is not a coincidence that the American dynamic resembled the British one, but instead operated through formal institutions rather than informal ones. In fact, the genius scholar Giovanni Arrighi showed that capitalism has gone through successions of systemic cycles of accumulation, each led by a progressively larger state-capital bloc. Before the British and the Americans, there were the Genoese and the Dutch who organized capital accumulation.

Each hegemon organizes the system with unique institutions. For the US, the order was created just before the end of WW2 at Bretton Woods, in which the dollar became the reserve currency.

Each cycle consists of a phase of material expansion, where hegemonic capital pours into trade and production while a market lies open and uncontested. Once returns diminish, capital specializes in high-quality goods, then pulls back from production altogether to speculate in finance — with disastrous consequences for the general population.

Arrighi traces the pattern back to the Florentine banking dynasties of the 14th century, whose merchant capital, having exhausted its returns in trade, pivoted to financing European monarchs — until the English crown defaulted and took the great Florentine houses down with it. The crash of the 1340s wiped out thousands of ordinary investors and workers. Cloth production, which had employed roughly a third of the city’s population, collapsed over the following decades — and the dispossessed clothworkers, pushed to the edge, rose up in the revolt of the Ciompi of 1378, briefly seizing the state and putting a woolcomber at the head of the republic. Financial bubbles and technological change leading to revolt, are as old as capitalism itself. The pattern has not changed — only the scale.

The Cold War had, paradoxically, kept this logic in check. The existence of a rival system gave Western governments reason to maintain the social contract — full employment, welfare states, regulated capital — as proof that liberal capitalism could deliver for ordinary people. When that rival collapsed, the restraint went with it.

Capital, now facing no ideological competitor and no geographic boundary, poured into the newly opened world. The material expansion of the postwar decades gave way to the financial turn, and the financial turn accelerated into something qualitatively new.

A system of global free capital flows emerged to reorganise around the cheapest labour wherever it could be found. This was the reacceleration. And it carried within it, as it always does, the seeds of the next disruption.

The origin of the geopolitics and economics of AI

In its victory of 1991, the Western liberal world order carried the formula for its own disintegration. As soon as the bipolar struggle between the Soviets and the Americans transformed into a de facto American unipolarity, neocolonial hubris emerged in the West. The end of history was declared. According to Francis Fukuyama, the superiority of liberal capitalism would transform the globe into one large democratic market.

The world was henceforth be ruled by global value chains and the imperial dollar system — in which the surplus savings of the periphery and subservient industrial economies would be recycled into American assets, financing the consumption of the centre at the expense of workers on both sides. The US was to be the centre of this system, ruling the world through finance, information technology and intellectual property rights. The late Peter Gowan has gone as far as to argue that the US deliberately used capital flows as a financial weapon to liberalize state-led economies, as I have discussed in a previous essay.

The order this produced assumed that economic integration would eventually democratise its participants. China, once admitted to the WTO, was not calculated as an adversary; it was expected to converge.

Well, that didn’t happen.

It did not democratize and liberalize. Instead, it industrialised under state-capitalism, absorbed the technology that global value chains so obligingly transferred, and became a systemic rival. What’s more, the immense trade imbalances that this order accelerated (they were already present in the architecture of the global trading regime), were a crucial factor in causing the Great Financial Crisis of 2008.

From Global Freedom to Global Control

Why is this relevant? Because, as shows, the response to the crisis fuelled the rise of big tech.

When the system nearly died in 2008, central banks resuscitated it with cheap money. But the money did not flow where the textbooks promised. With demand weak and governments cutting spending, there was little reason to build anything in the real economy. Banks were flush with credit, but with barely anyone to lend to. The firms best placed to borrow at near-zero rates were the large technology companies, and they poured it into the infrastructure of the digital age — cloud computing, data processing, algorithms. The kind of thing with enormous upfront costs, almost no cost to run once built, and a powerful tendency to monopolize and control markets the bigger it gets.

And here is the trick. These platforms don’t make money by producing things. They make money by owning the gateways to them. They control access, harvest data, and sit between buyer and seller and take a cut. The bailout meant to save capitalism birthed a landlord class for the digital world, its private tollbooths underwritten by public money. Something that went unnoticed at the time, was that this digital infrastructure built to coordinate global commodity flows was generating the basis that artificial intelligence would later feed on. Reminiscent of past dynamics, the population of the world has been subject to what I call a digital enclosure movement.

As society was neoliberalized, life outside of the house got more expensive, previously communal activities in the form of communication and social gathering have become digitalized and privatized, and we as a society have become digital paupers in the same sense that the peasants pushed into the cities provided the industrial capitalists with cheap labour. And not only that: the same digital tools would later be weaponised to compete with adversaries and hold allies in place, firmly in the grip of an information ecosystem they had come to depend on and could no longer escape.

But the broader system had a vulnerability. The strength of the dollar that came with the massive capital inflows from surplus countries deindustrialized the US. The financialization of the economy in the interest of shareholders meant that critical production of low-value goods became unprofitable within the neoliberal system.

China is the new pole that controls these physical nodes of the global production system. They now also provide a market for Russian commodities and are a critical supplier of technological goods for the new anti-Western axis that includes Iran.

What we are seeing now, the re-election of Trump, the aggressive bipartisan attempt at reindustrialization, the spasms of a fallen hegemon who now turns to coercion and aggression, remind us vaguely of the fall of Britain. But it also explains the immense government support for AI. The presence of powerful adversaries legitimates renewed control over society through technological means, as well as investment in defence applications of AI.

Additionally, since the general population is too poor to consume the value they produce and capital amassed around big tech, AI seemed to provide the perfect way out for the large hoards of wealth, without their owners relinquishing their control over the economy.

The promise of massive productivity increases has caused a surge in capital expenditure. Once the first firm moved, the others could not afford to sit out the bet, even if it could turn out to be a bad one. While Big Tech previously had a license to print money, it now has a shareholder obligation to become capital-expenditure behemoths.

We are now in the age of geoeconomics in which power moves through information technology, value chains, financial networks, and strategic industrial policy. The technological struggle for AI-supremacy between the US and China cannot be seen apart from this context.

These individual instances make clear why the problem is systemic rather than particular to the technology itself.

As the example of Sam Kriss’s essay shows, we are now gripped by a paranoid distrust of public knowledge production. What I have shown is that instead of directing our anger at the technology or the individuals who use it, we must direct our anger at the system that allows the unbridled marketization of these technologies. The profit of this expansion is privatized, the social, economic and environmental costs are publicized.

Almost a century ago already, Polanyi observed that the struggle to maintain one order unknowingly builds the foundations of its successor. The world built the internet to move instructions across borders and to control and influence consumption and production, and ended up building the data architecture that would train the machines. The temporary global freedom that prevailed was also the condition for the return of control we are seeing now, both domestically and internationally. But the construction of these systems of control also has huge potential if used for the right means, with the right institutional controls and limits in place, and in the right hands. Seeing as every single person is affected by this technology, the people of the world should demand democratic control over this technology that is currently in private hands.

For that, we must — regardless of religious affiliation — collectively turn to his holiness, the pope, as he is giving us the means to do so.

Papal Authority vs Everything’s computer

In the middle ages, the religious spirit clashed with the aristocratic sword. Kings and emperors held authority over physical territory, whereas the Church held spiritual authority over the minds of the people. While the subjects of rulers were divided over different jurisdictions, all souls were (relatively) united under the church. The pope was able to excommunicate rulers, interdict kingdoms, and mobilise crusades. Neither power could fully subordinate the other, and in that structural tension a space existed for moral claims that were not reducible to political or economic interest. Papal authority was, in effect, the only transnational regulatory authority of its age.

Today, we are seeing a similar clash emerge, not between state and church, but between corporation and church. But the corporation is a much more powerful adversary. The major tech and AI companies operate across every jurisdiction simultaneously, owning the infrastructure of knowledge, communication, and increasingly cognition, with resources that exceed those of many governments. States are in the position of medieval princes: powerful within their domains, but structurally unable to govern an entity that operates above and across them. This is exemplified by the enormous influence of corporations on the Trump administration, the Zeitgeist being symbolised well by the following clip:

As we arrive at the current day, it is important to recognize the symbolic parallels Pope Leo XIV draws to the past.

In 1891, Pope Leo XIII published an encyclical called Rerum Novarum which literally translates to “on new things.” His holiness had observed the human immiseration that resulted from industrial capitalism, while enriching another strata of society. 135 years later, Pope Leo XIV wrote an encyclical called Magnifica Humanitas which literally translates to “magnificent humanity”. One of the most important paragraphs of his holiness’s 40,000 word publication is the following:

150. Today, the convergence of automation, robotics and AI is rapidly transforming the very structure of work. It is said that this will bring great improvements for everyone. In reality, however, the “new ways” of working are not necessarily better, for “while AI promises to boost productivity by taking over mundane tasks, it frequently forces workers to adapt to the speed and demands of machines, rather than machines being designed to support those who work. As a result, contrary to the advertised benefits of AI, current approaches to technology can paradoxically de-skill workers, subject them to automated surveillance and relegate them to rigid and repetitive tasks. The need to keep up with the pace of technology can erode workers’ sense of agency and stifle the innovative abilities they are expected to bring to their work.” Precisely in order to avoid this drift, it is necessary to design systems that are centered on the human person and not solely on performance.

And this is why we can be certain that Pope Leo XIV has read ample theory and economic history, as his analysis is reminiscent of the analysis presented in the theoretical chapter of this essay.

We have to understand the significance of what the Pope is offering humanity with this encyclical. For countries with strong religious protections, he is providing workers with the legal cover to abstain from using AI for religious reasons. If you read between the lines of the encyclical, it is an effective soft-excommunication of the tech-oligarchs currently vying for supremacy of the United States government.

Peter Thiel, their antipope, is perhaps the epitome of this movement. A self-proclaimed libertarian, monopolist, anti-democrat, and transhumanist — aiming to “transcend” the human body, which in my opinion is the ultimate and final regression of the long historically progressive movement that is liberal capitalism. And here is where it gets almost too perfect to be true: Thiel has spent the last few years touring the world — from Oxford to San Francisco before arriving, of all places, in Rome — where in March he, ironically, lectured on the coming of the Antichrist.

His thesis, stripped of the eschatology, is this. The Antichrist will not arrive as a monster. He will arrive as a bureaucrat. A soothing, well-meaning administrator who offers humanity safety from nuclear war, from climate collapse, from runaway AI — and asks only for the end of what Thiel sarcastically calls “progress” in return. A one-world government of tax treaties, surveillance, and sanctions, promising peace at the price of freedom.

But when freedom is defined by the extremist wing of liberalism — right-libertarianism — the irony is clear, as shown throughout this essay. Economic freedom for the individual under a regime of unrestricted capitalism is in fact an extreme version of how Adam Smith defined the state: “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have property against those who have none at all.” When scrutinising the right-libertarian argument one must understand that government is not an objective phenomenon, it is the structure which determines who in society gets to have influence over material reality. In that sense, a lack of rules is also a rule. And when that government serves the many instead of the few, in the mind of a billionaire, actual accountability sounds like absolute horror.

So what is the worst thing that could happen, the people who are the real problem according to Thiel? I challenge you to keep a straight face: people who worry about climate change, economic inequality, nuclear war — and those like me, who think AI progression might be going a little too rapidly — and who’d like global cooperation to deal with these issues. In Thiel’s version of the story, they are the unwitting foot soldiers of this regime.

And the thing that holds the Antichrist back, the katechon of Christian theology, is precisely what Thiel claims to be selling: unregulated, decentralised, localised technological power. And what is standing between us and this horrifying monster? Try not to laugh: tech-bros.

Thiel has told on himself. He is the arsonist in fireman’s clothes. Also, here’s a video where Thiel gets asked the question: “you would prefer the human race to endure, right?”

One does not have to be Freud to see the irony of a pathetic rich man looking in the mirror and seeing the ugly thing he has become, and reflecting it back onto the world.

A man builds his fortune on Palantir — a surveillance apparatus sold to militaries, border police, and intelligence agencies, an instrument of exactly the centralized control he warns against — and then takes the stage in Rome to cast himself as the shield protecting human freedom from the surveillance state. Catholic commentators have called it what it is: a self-serving heresy, a theology engineered to baptise deregulation as crusade and the tech-oligarch as the messiah.

And this, everyone, is why you shouldn’t bully the nerd in high school. Because a man who names his company after the all-seeing stones in Lord of the Rings does not tend to take defeat graciously.

His protégé, JD Vance — whom he has spent more than a decade preparing for a presidential takeover — has turned out to be a total failure of a politician. Nobody likes him. The US has been humiliated by Iran in a failed war, the consequences of which are bound to generate mass political instability and social upheaval. And across the country the mood has turned: people are rising against the data-centres spreading like cancer across their towns, draining their water and power without compensation. While the discontent that this essay has been circling has always been present, the data centre is the perfect symbol of its presence.

And now the pope has implicitly excommunicated him and his gang of mafia billionaires. Is it then a coincidence that he has decided to flee the United States to Argentina of all places, after having effectively attempted and almost succeeded in a techno-fascist coup d’état of the US government?

There is no clearer sign than now. It is time to act against the techno-oligarchs.

But this is not my call to make on my own. I need you, the reader, to weigh in. Writers, put your pens to paper. It is our societal duty to formulate a positive response to the current crisis of liberalism.

In that effort, be critical. Reject my argument if you think it is wrong. But please, stand united. Let us not divide humanity by focusing on individual applications of technology, when the problem is of systemic origin — and hence, requires a collective response.

Thank you for reading. This essay took me very long to write, and is the result of several years of study and reading. I enjoyed my time writing this. If it was worth yours, buying me a coffee would mean a lot. Also consider subscribing.

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“I’m in a bit of a panic … even in purely economic terms,” says .

He isn’t panicking because Donald Trump called him a “lightweight thinker” and a “deranged bum”. In fact, Krugman thinks that it is “evidence that I am doing something right”.

He also isn’t panicking because, despite writing daily criticism of the US president, he does not yet consider himself a serious target for persecution. “Ask me in two-and-a-half years. Let’s not be hysterical yet,” he says soberly. He is, he reasons, “some ways down the list.”

One of the two reasons Krugman is panicking: “Six million barrels a day. That is the rate at which global oil stocks are currently running down.”

The Strait of Hormuz — through which roughly 20 million barrels of oil passed daily before Trump and Israel launched strikes on Iran — has been closed for 83 days. Brent crude is hovering around $106 a barrel. The price reflects jawboning (cough, market manipulation, cough) by the US government, massive injections from global reserves, and hope.

Even if the Strait reopens tomorrow, that hope is ignoring physical reality. Iranian strikes have torn through the Gulf’s energy backbone — oilfields and pipelines in Saudi Arabia, Qatar’s Ras Laffan, the world’s largest LNG complex. Repairs alone will take years.

“We don’t have much further to go before you hit the minimum operational level, which, according to the oil industry people I speak with, could arrive as early as next month. So we are heading for a very serious energy crisis — far more serious than what we’ve seen so far — unless something changes. And I don’t currently see a resolution to the war.”

As we speak, energy exports from the Western Hemisphere are surging at an unsustainable rate, with the US drawing down reserves to prop up global markets.

Chinese oil imports are plummeting — raising speculation about hidden reserves or a severe economic contraction. States are scrambling for supply: East Asia and Europe are outbidding less affluent buyers, leaving markets in Africa and South-East Asia dangerously undersupplied.

In the Philippines, where entire communities live and work on petrol-powered boats, ABN AMRO chief sustainability officer Sandra Phlippen calls it akin to a “pandemic lockdown”.

Krugman was speaking at Erasmus University Rotterdam on the evening of 19 May at a sold-out lecture organised by De Dépendance titled New Economic Order: Global Turbulence and Political Autocracy. He shared the stage with three panellists: Alanna O’Malley, professor of global governance at Erasmus; Aksel Erbahar, an international trade economist at the same institution; and Sandra Phlippen, ABN AMRO’s chief sustainability officer.

Nearly a thousand people had come to hear what one of the world’s most prominent economists made of a world that no longer resembles the one most of them grew up understanding.

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A theory descending from a different century

Krugman opened the evening by admitting he was uneasy about giving a lecture titled “new economic order” when, as he put it, “I don’t see much order right now, and I’m not sure we’re going to have any order for quite a while.”

From there he walked the room back through a century of globalisation: its first peak in 1913, the seventy-year collapse that followed, and the explosion of cross-border trade after 1980 that produced the world Tom Friedman famously called flat.

Krugman held up his phone. “Where was this made?” The answer, he said, involves about 15 countries. That is the world we built.

What collapsed it, was not what economists feared. Fifteen years ago he would have warned about a 1930s-style protectionist spiral, or the destabilising rise of China.

Instead, the international economic order is disintegrating because the country that built and enforced it has lost the will to do so. “What we had,” he said, “was one man who wanted to impose tariffs, one man who hated the international economic order. And the US political system, as it has evolved, empowers that one man to do essentially what he wants.”

It is compelling, especially for progressives like me to think this way, but slightly ungenerous. Trump did not create the grievances that elected him: the stagnant wages, the hollowed-out communities, the sense that the globalisation Krugman championed had worked out rather better for some than others. Democrats bear real responsibility for that too. He is more symptom than cause, and the same, I would argue, is true in Europe, though that is a case for another essay.

“The United States, not just the international economic order, but its domestic political order, turns out to be far more fragile than we realised.” That much is undeniable.

His framework for understanding all of this is inherited. Krugman is intellectually descended from Charles Kindleberger, a foundational figure in international political economy, who argued in The World in Depression (1973) that the 1930s catastrophe happened because no single power would provide the public goods an open world economy depends on. Britain could no longer; the US was not yet willing; and the system collapsed for want of a stabiliser. That is the lineage Krugman is working in when he says the Pax Americana is unwinding. It remains a useful frame, but one built for a world of tariffs, gold reserves, and gunboats.

The phone he held up belongs to a different kind of world. Fifteen years ago, the economists watching for systemic risk were watching the wrong things: protectionist spirals, currency runs, the destabilising rise of China. What arrived instead moved through semiconductors, strategic industrial policy, supply chains, dollar clearing systems, and undersea cables. Infrastructure the discipline had spent decades not modelling. Krugman himself admitted as much; he had not seen this coming. The framework was not wrong so much as it was looking at the 20th century while the 21st went past.

This is precisely what political scientists Henry Farrell and Abraham Newman theorised in their concept of weaponised interdependence, the use of privileged positions in global networks for coercion. When I interviewed them in Helsinki last August, Farrell described the EU as “a prehistoric fish with gills in a world that demands lungs.”

Such analysis demands integrating domains that no single discipline yet fully connects, though as a graduate of international relations specialising in global political economy, I would like to think mine comes closest. But then, I would think that, wouldn’t I?

The person in the room who came closest to attempting that integration was not one of the senior economists in the front rows, but a young student who had grown up inside this turbulence rather than during the Great Moderation.

Is US energy-strategy deliberate?

She introduced herself, self-deprecatingly, as “just a student, and not in economics either”, in contrast to the confident assertions that had passed for questions from the men in the room.

Her question was, in my opinion, intuitively the sharpest of the night: had the US deliberately escalated the conflict with Iran, knowing it could lean on Venezuelan oil while Europe and Asia could not?

Krugman was dismissive. Venezuelan production is less than two million barrels a day, the oil has the consistency of “cold peanut butter,” and anyone who thought it could replace the Persian Gulf would be “really, really stupid.” He had served in the Reagan administration, he added. Having seen US government decision-making from the inside, strategy was not what he observed.

Krugman is right about the chemistry. Venezuelan heavy sour can’t replace Gulf grades, and the volumes are trivial. The student’s framing invited that dismissal by naming Venezuela specifically. But the intuition underneath her question is the one worth taking seriously, and it doesn’t depend on Venezuela at all.

Here’s where I disagree with Krugman, and where I think analysts more generally suffer from affective polarization. People tend to dismiss the Trump administration as nutjobs who have no idea what they are doing — and while that might be true for some members, people like Marco Rubio and Scott Bessent pack a serious intellectual punch, no matter if you disagree with the moral framework that occupies their grey matter.

Krugman’s Reagan-era experience may also be the wrong reference point. Had he instead drawn on the Nixon years — on whose cabinet serious and equally ruthless strategists like Kissinger resided — his answer might have looked rather different.

It is not difficult to see similarities between Nixon and Trump. History does indeed repeat itself, first as tragedy, and second as farce.

Both Trump and Nixon were concerned with burgeoning trade imbalances, and sought to reorder the dollar-system to the US’s geopolitical advantage. Nixon’s administration did so by ending the gold standard and encouraging the opening of global capital flows. Trump did so by redollarizing the world through cryptomarkets and stablecoins, something I will be writing a piece on in the future.

And lastly, both gave up on reducing the trade deficit and instead chose to lean into it.

Nixon himself had little patience for economic technicalities. In March 1970, he told his chief of staff he did not want to be bothered with international monetary matters and would not need to see the reports on them in future. Martin Daunton, in his 1,024-page epic history of the global economy from 1933 to 2023, notes that the chairman of his Council of Economic Advisers concluded Nixon “may even have had an almost psychological block about economics,” which he approached much like a reluctant schoolboy doing required lessons.

He delegated to advisers he held in barely concealed contempt, his overriding concern being domestic: protect employment, win over blue-collar workers. When international monetary reform threatened that, his administration retreated into what Charles Coombs — a senior Federal Reserve official at the time — described as “aggrieved acceptance of whatever the future held in store.”

But that presidential indifference coexisted with enormous strategic cunning elsewhere in the administration — and the outcomes, as political economist V.H. Oppenheim would later argue, were anything but accidental.

Writing in Foreign Policy in the winter of 1976-77, Oppenheim made a provocative case: Washington had not merely failed to prevent the 1973 oil shock, but had actively helped bring it about.

When James Akins — the US Ambassador to Saudi Arabia — testified before congress, he claimed that when the Saudis approached the Shah in 1975 to push for lower prices, the Iranians said Kissinger had made clear that Washington “understood Iran’s desire for higher oil prices.”

Akins was removed from his post shortly after, following disputes with Kissinger.

Then, in 2016, Bloomberg obtained a declassified diplomatic cable from the National Archives that filled in another piece of the picture: a secret arrangement, struck in 1974, in which Saudi Arabia agreed to recycle its oil windfall into US Treasuries in exchange for American military aid and equipment.

US policy in the early 1970s tolerated and may even have encouraged higher oil prices. This was a way to kneecap European and Japanese competitors while increasing Washington’s influence with the Arab states, and more broadly, help restructure the global monetary system towards open capital flows.

I have discussed this piece of US geoeconomic statecraft more extensively in this piece:

Grand-strategy or chaos, the result is the same

But whether Krugman’s speculation is correct, or mine is — whether the current crisis is by grand-strategy or chaos (or most likely, a combination of both), the result is the same: the world is splitting into petrostates and electrostates, and decarbonization is gaining geopolitical imperatives.

ABN AMRO’s Sandra Phlippen notes Spain and Italy as exemplary cases. Spain has roughly half Italy’s exposure to gas prices. This is why in her reading Madrid can afford to pick fights with Moscow and Washington in ways that Rome simply cannot.

But she dislikes the word “chaos”. While we focus on acute crises, the real damage, she argues, is always the slow drama you don’t see in the headlines. As with Brexit, where the “cliff-edge collapse in GDP” never came, but the divergence with the European mainland became undeniable over time.

What her risk department at ABN AMRO is watching — she is careful about how much she can say — involves scenarios that are not base cases but are no longer implausible. Real physical shortages arriving before the summer ends, markets beginning to price the bottom of deployable global reserves. “Nobody knows what kind of panic that would trigger,” she says. “And I don’t think we’ve seen anything yet.”

Around 80 percent of the oil transiting Hormuz was destined for Asia. The shortages there are already realities, not hypothetical. In Australia, secondhand EV sales are surging on a weekly basis, a tipping point potentially arriving not by policy but by price. EV, solar and battery costs have fallen up to 99 percent in a decade. There is, she says, a lot still on the table.

Goldman Sachs has warned that Brent will average above $100 a barrel through 2026 if the Strait remains closed for even another month. And even a ceasefire would not reset the clock: infrastructure damage across the Gulf takes years to repair, inventories need replenishing rather than merely stabilising, and markets have absorbed one lesson they will not unlearn. Iran controls the strait.

But oil was not the only thing Krugman was panicking about.

The two-and-a-half year timeline Krugman put out wasn’t a joke: “The chance that the United States will no longer be a functioning democracy five years from now is quite large. Not the most likely scenario, but no longer unthinkable. It is very clear that we are genuinely at risk of losing everything that defines us as a country. That would have been an outlandish thing to say not very long ago. Now it is not.

In a very Kindlebergean fashion, Krugman notes that “we do not have a hegemonic superpower. The United States is no longer powerful enough — or willing enough — to play that role alone,” echoing the words of his late teacher:

“For the world economy to be stabilized, there has to be a stabilizer—one stabilizer. [...] The world economic system was unstable unless some country stabilized it, as Britain had done in the nineteenth century and up to 1913. In 1929, the British couldn’t and the United States wouldn’t.”

— Charles P. Kindleberger (1973), The World in Depression, 1929-1939

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Krugman understandably wants to end on an optimistic beat, noting that there are not one but three economic superpowers in the world: “the United States, China — which is looking stronger by the day, given what’s happening — and the European Union, which is basically their equal.”

“The EU, in terms of economic size, political stability, and institutional capacity, is a match for either the United States or China. And if we ask who will ultimately keep global commerce safe in the years ahead — once we get past the current crisis in the Persian Gulf — well, the United States, I’m not sure. But does the EU have the capacity? Actually, yeah. So in a strange way, the future of the world economic order — whether there is any kind of order at all — depends a great deal on what happens in Europe. Will Europe rise to that challenge? I have no idea. But I am hopeful.”

Krugman is right that Europe is probably the last real chance to reinvigorate something resembling a liberal world order. But where Krugman is hopeful, I would borrow Gramsci instead: pessimism of the intellect, optimism of the will. Europe does not rise to the challenge merely by completing the single market, issuing eurobonds, and unblocking the Common Foreign and Security Policy. The task is more herculean than that. It requires a transformation that is harder to legislate than any of those reforms: a continent that has spent eighty years outsourcing its security, its strategic thinking, and much of its sense of historical agency learning to reclaim those instincts. And it requires something deeper still: a new social contract, a civilisation worth defending, in which European citizens feel ownership over the order being built rather than merely receiving its bill in the form of austerity.

That is precisely why it matters that the call is coming from someone like Krugman. A Nobel laureate, an American, an architect of the order now unraveling, standing in Rotterdam to tell Europeans that they are not bystanders. That they are, in fact, an equal of the United States and China, and that the world may need them to behave like it. Europeans are unaccustomed to hearing this and tend to discount it when they do.

Speaking for myself, and I suspect for many other Europeans in that room: it is something we are genuinely grateful for. Mr. Krugman, if you are reading this, thank you. We need more outsiders, and more insiders, willing to tell us to get our shit together.

More on what that actually requires — and why I think the real fight for Europe is happening inside our own heads rather than in Brussels or on the battlefield — in my next piece.

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Thank you for reading. This production in particular cost me money to make, and quite some time and effort. I purchased a professional microphone to record this lecture. I expended significant effort transcribing, getting the data for the charts, and polishing the writing. I write this between deadlines, on my own time, without pay. If it was worth yours, buying me a coffee would mean a lot. Also consider subscribing.

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Edit: I wanted to make clear I added a brief argument about the fact that Krugman is right about the chemical compostion of Venezuelan oil.

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In short

• Japan’s post-war growth model was built on financial repression: suppressed wages, artificially low returns on savings, and an undervalued currency that continuously transferred wealth from households to industrial exporters.

• Once the model had become unsustainable for the US, the 1985 Plaza Accord forced a rapid yen appreciation. Tokyo’s response produced the largest asset bubble in modern history. When it burst in 1990, corporations spent two decades paying down debt rather than investing, leaving government as the only borrower. Public debt has exceeded 250% of GDP ever since.

• The Bank of Japan spent twenty-five years inventing unconventional monetary tools — zero rates, quantitative easing, negative rates, yield curve control — none of which broke the deflationary trap, because the trap was structural, not monetary.

• Two slow erosions went unaddressed: a demographic collapse that is shrinking the tax base while expanding pension obligations, and the displacement of Japan’s automotive sector by Chinese electric vehicle manufacturers

In 2016, the executives of Akagi Nyugyo, a mid-sized Japanese ice cream manufacturer, lined up in dark suits in front of a camera and bowed. They bowed deeply, in unison, in the formal manner reserved in Japanese corporate life for genuine institutional shame. The occasion was an apology. After twenty-five years of holding the price of their flagship popsicle, the Garigari-kun, at sixty yen, they were raising it to seventy. Ten yen. Roughly seven cents. The commercial that followed was not parody. It aired nationally, in earnest, and the country understood it as a sincere act of remorse.

To a Western reader, the scene is faintly absurd. Imagine a chief executive solemnly bowing on prime-time television to apologise for raising the price of a Magnum by a few cents. It would be unthinkable, because in the West price increases are simply what happens, the background hum of a normally functioning economy. In Japan, by 2016, raising a price had become a confession of failure, a betrayal of an implicit social contract that prices, like wages, do not move.

How does a country arrive at this? Japanese culture certainly plays a part, but the story is as much economic.

To understand this peculiar phenomenon, let’s rewind to the late 1980s. At the peak of the asset bubble in 1989, the grounds of the Imperial Palace in central Tokyo were valued more highly than all the real estate in the state of California. The Nikkei closed the year just under 39,000. Japanese banks owned nine of the ten largest banking institutions in the world by assets. Mitsubishi Estate had bought Rockefeller Center. Sony had bought Columbia Pictures. Newspapers in Washington ran cover stories speculating, in tones of mild panic, about whether Tokyo would overtake New York as the financial capital of the world.

Twenty-seven years later, the country’s companies were apologising for a modest price increase. Ten years later, it is facing a fiscal and monetary crisis with potentially profound consequences for the global economy.

Any rational observer would conclude that something had gone profoundly wrong in Japan. And the story of what went wrong begins not with the bubble, and not with the burst, but with the growth model that produced both: a system instituted in the rubble of the Second World War, executed brilliantly for forty years, but managed poorly once it was exhausted and should have been abandoned; and whose terminal phase the country is still living through today.

From industrial powerhouse, to bubble, to bust

For most of the second half of the twentieth century, Japan — like West-Germany — were presented as economic wonders. Defeated, occupied, and rebuilt under American security guarantees, they emerged from the 1950s as showcase economies of the Cold War’s free-market bloc.

By 1968 Japan had overtaken West Germany to become the world’s second-largest economy. By the late 1980s, serious people in serious institutions, who also had serious knowledge of the matter, were modelling the date at which Japanese GDP would surpass American GDP.

The growth model that produced this outcome deserves to be understood in detail, because its internal logic still defines Japan’s predicament today.

Reading beyond the Cold-War Propaganda

Reading beyond the Cold-War propaganda, the Japanese and German growth models were actually fundamentally anchored within a political order guaranteed by the Americans. Allied nations were – first happily, then begrudgingly, as Martin Daunton shows – permitted to run persistent trade surpluses; mainly through undervalued currencies, but also other forms of industrial policy that subsidized production at the expense of consumption.

At their core, these were export-led, high-investment, high-savings systems. But each of those descriptors conceals more than it reveals. This is where one of my favourite economists, Michael Pettis, comes in.

People tend to assume the Japanese and the Germans save a lot because of culture: wartime memory, national temperament, a Confucian or Protestant inheritance. This explanation is comforting because it requires nothing to be done about it. Pettis has spent two decades arguing it gets the causation precisely backwards. The Japanese household savings rate was not high because Japanese families chose to save. It was high because the system was designed to leave them no choice.

The mechanism was financial repression. Household deposit rates were held artificially low, which is effectively a tax on savers and a subsidy for borrowers.

That vast pool of suppressed savings was then channelled, through a tightly coordinated banking system, toward favoured industrial conglomerates — the keiretsu — at subsidised rates. The coordinating institution behind this was the Ministry of International Trade and Industry, MITI, whose officials steered private capital toward strategic sectors through what they euphemistically called administrative guidance. Wages were deliberately held below productivity growth. The yen was kept undervalued.

The cumulative effect was a continuous transfer of wealth from households to corporations: workers earned less than their productivity warranted and savers less than their deposits warranted.

This is not a critique from a free-market perspective, nor is it a normative judgement about what constitutes fair compensation for labour. It is a description of a coherent national growth strategy that worked extraordinarily well for several decades, raising the welfare of citizens and corporations alike.

However, this model only worked under certain geopolitical circumstances that are now disappearing, and whose hidden costs only became visible once the growth phase was exhausted.

Japan was the canonical case of this model. South Korea, Taiwan, and most consequentially China have each reproduced their own national variations. It is impossible to look at contemporary China without seeing Japan’s shadow. China is living through the earlier stages of a comparable exhaustion. Japan, thirty-five years ahead on the curve, shows what the late stages look like.

One important difference, worth keeping in mind: Japan was a subservient American client throughout this story. China is an intransigent challenger. That distinction matters for comparative history, as we shall see in the next section. Japan was willing to revalue its currency, but with catastrophic consequences, whether China is willing to do the same is uncertain.

The bubble

By the mid-1980s, the model had become a problem for Washington. Japanese exports were eviscerating American manufacturing and the bilateral trade deficit had become politically intolerable. Reagan’s Treasury Secretary, James Baker, convened the finance ministers of the G5 economies at the Plaza Hotel in New York in September 1985 and extracted a coordinated agreement to weaken the dollar against the yen and the deutschmark. The Plaza Accord did exactly what it promised: within two years, the yen had appreciated from roughly 240 to the dollar to 150.

This was the moment the contradictions baked into the post-war order became visible. The system Washington had built in which it tolerated Allied trade surpluses, underwriting the security guarantees that made export-led growth possible, produced exactly the imbalances that became politically intolerable once American factory towns began to bleed.

Though probably the right decision macroeconomically, the rebalancing was sudden and painful, and the Japanese economy had no time to adjust. Japanese exporters, suddenly facing prices forty percent higher in dollar terms, screamed for relief.

The Bank of Japan delivered it in the form of aggressive monetary easing. The policy rate was cut. Credit conditions were loosened. Cheap money met an already-overheated economy with a financial system flush with corporate savings and no productive home for them. The result was the most spectacular asset bubble in modern history.

Stocks went vertical. Land went more than vertical. By the end of 1989 the Nikkei had reached 38,957. The price-to-earnings ratio of the Japanese market exceeded 70. The total market capitalisation of Japanese equities surpassed that of the United States, in an economy half its size. Companies that produced nothing but had inflated land holdings on their balance sheets traded at prices that implied permanent double-digit asset appreciation.

Then, in 1990, the new BoJ governor Yasushi Mieno decided enough was enough. He raised rates, sharply and repeatedly.

The Nikkei peaked on the last trading day of 1989 and then began to fall. It fell for the next thirteen years. By 2003 it had lost more than 80% of its value. Land prices in the major cities fell by similar magnitudes, and would not recover for decades. In some districts, they have still not recovered, more than thirty-five years on.

What followed is one of the most studied economic episodes in modern macroeconomics, and to understand the next three decades you need to understand what it actually felt like from inside the system.

The balance-sheet recession

Imagine you are a Japanese industrial firm in 1992. Three years ago you borrowed heavily, at the urging of your main bank, with the implicit blessing of MITI, to expand capacity, buy land, and acquire other companies. Your collateral was a real estate portfolio that has now lost 60% of its value. Your share price has collapsed. You are technically insolvent on a mark-to-market basis, though the accounting standards of the time allow you to pretend otherwise. The only path back to solvency is to use every yen of operating cash flow to pay down debt. You are not going to invest. You are not going to hire. You are going to deleverage.

Now imagine that every other major firm in Japan is doing the same thing.

Richard Koo, a former New York Fed economist who watched the unwinding from inside Nomura Research, coined the term that has defined Japan’s last three decades: the balance-sheet recession. In a normal recession, firms maximise profits but demand is weak. In a balance-sheet recession, firms have stopped maximising profits altogether. They are minimising debt instead. And in this regime, monetary policy becomes almost entirely impotent. You can cut interest rates to zero, but if the entire corporate sector is determined to deleverage, no one wants to borrow at any price.

The transmission mechanism is broken.

Households followed suit. With lifetime employment guarantees fraying, with the salaryman contract that had underpinned post-war Japan visibly cracking, with property wealth evaporating, households did what households do under uncertainty: they cut spending and increased savings. The chronic demand suppression that had been a feature of the growth model became a fact of daily life.

The government was left as the only entity willing to borrow. And so it borrowed. Public debt, which had stood at around 60% of GDP in 1990 climbed steadily through the 1990s and 2000s. By 2010 it had passed 200% of GDP. Today it is north of 250%, by far the highest in the developed world. Each fiscal stimulus was an attempt to fill the demand hole left by private-sector deleveraging. Each one was pulled back too early, under pressure from a Ministry of Finance institutionally obsessed with deficits. None was sustained long enough to break the deflationary equilibrium.

This dynamic, private-sector deleveraging absorbed by public-sector borrowing, with monetary policy pushing on a string, is the engine room of everything that has happened in Japan since. It is the reason the Bank of Japan would spend the next twenty-five years inventing one unconventional monetary tool after another. And it is the reason none of them really worked.

The BoJ as laboratory

With the private sector determined to deleverage and households determined to save, only two actors were left: the government, which borrowed, and the central bank, which experimented.

The Bank of Japan became the world’s laboratory for unconventional monetary policy. Every tool the Federal Reserve and ECB would later deploy after 2008 was first piloted in Tokyo, against a more rigid deflationary problem. It pioneered the zero interest rate policy in 1999. In 2001, when that failed to revive inflation, it invented quantitative easing: large-scale bond purchases meant to increase lending. The reserves accumulated on bank balance sheets and largely sat there, because no one in the real economy wanted to borrow. In 2016 came negative interest rates, and later that year yield curve control, under which the BoJ committed to buying unlimited quantities of Japanese government bonds to pin the ten-year yield near zero. The central bank had, in effect, declared that the price of long-term Japanese debt would be whatever it said it would be.

Each step was taken inside the same dilemma. Raise rates and you crush a debt-saturated balance sheet. Keep them too low and you hollow out the currency. There was no good exit.

The lost decades

The balance-sheet recession was damaging. What followed was a kind of suspended animation that lasted thirty years.

The 1997-98 period nearly broke the system. The Asian financial crisis hit a Japanese banking sector stumbling through the post-bubble decade with vast quantities of unrecognised bad debt. Hokkaido Takushoku collapsed in November 1997, the first city bank failure of the post-war era. Yamaichi Securities, founded in 1897, dissolved itself a week later. Long-Term Credit Bank and Nippon Credit Bank were nationalised in 1998. For a few months, the system genuinely teetered.

The decade that followed — eventually extended to two and then three — was defined by stagnation. Prices barely moved. Wages barely moved. A generation came of age in an economy where the very idea of inflation was foreign. It was so foreign that, by 2016, executives at an ice cream company would bow on national television to apologise for raising the price of a popsicle by ten yen.

A society in which prices cannot rise is one in which wages cannot rise either, and one in which households can never quite escape the savings imperative the original growth model imposed on them. The deflationary trap was, in the Pettis reading, the long shadow of demand suppression — the predictable consequence of a system that had spent forty years engineering household consumption out of the economy. By the mid-2000s, Japan had become a macroeconomic puzzle the rest of the developed world treated with anthropological curiosity. Then 2008 happened, and the same puzzle began to appear in Europe and North America. The Lost Decades stopped looking like a peculiarly Japanese pathology and started looking like the prototype.

Abenomics: the great attempt

By 2012, Japan had been in the deflationary trap for two decades. One man decided he was going to break it.

In December 2012, Shinzo Abe returned to the prime ministership promising to do whatever it took to drag Japan out of deflation. His programme, quickly branded “Abenomics,” rested on three arrows: flood the financial system with money, boost demand through government spending, and reform the underlying structure of the economy.

The first arrow worked, briefly. The Bank of Japan under its new governor Haruhiko Kuroda doubled the money supply, the yen weakened, exports became cheaper abroad, and the stock market surged. Then the Ministry of Finance pushed through a sales tax increase in 2014 that sent consumers back into their shells. A second hike in 2019 killed the next recovery too. The structural reforms mostly never happened.

Michael Pettis’s reading, which I find persuasive, is that Abenomics was never really designed to break the trap. Look at what it actually did: it weakened the currency, raising the cost of imported goods for ordinary households, and pushed interest rates so low that anyone with savings in a Japanese bank was quietly losing money each year. It transferred wealth from Japanese households to Japanese corporations, the same trick the original post-war growth model had pulled, just executed through monetary policy instead of regulated interest rates. The Japanese consumer, once again, was the silent subsidiser. The deflation was never broken. But Abenomics did leave one durable legacy: a financial system so thoroughly rewired around cheap money that unwinding it would itself become a crisis.

The slow erosion

While policymakers were absorbed in the monetary plumbing, two slower forces were eroding the country’s foundations. Both had been visible for decades. Neither received the structural response its magnitude warranted.

The first is demographic. Japan’s working-age population peaked in 1995. The median age is now 50, the oldest of any major economy. Each year, Japan loses roughly 800,000 people on net. The equivalent of erasing a city the size of Frankfurt or Marseille annually.

The fertility rate sits at 1.3, well below the 2.1 needed to sustain the population. The ratio of workers to retirees has fallen from 6:1 in 1990 to roughly 2:1 today, trending toward 1.3:1 by 2050. In an economy already carrying public debt above 250% of GDP, the room to absorb this through more borrowing is increasingly constrained. Immigration, which might offset some of it, remains politically taboo.

The second is industrial. Japan’s automotive sector has been the spine of its export economy since the 1970s. Toyota, Honda, Nissan, Mazda, and Subaru anchor a vast supplier ecosystem around Aichi prefecture, and the complex is also a financial one: Toyota Motor Credit alone carries well over a hundred billion dollars in outstanding debt, and the broader auto-finance sector is multiples of that.

This structure is now being outflanked. Every Japanese major bet on hybrid technology and stayed committed to internal combustion through the 2010s, assuming the transition to electric vehicles would be slow and led by the West. They were wrong on every count. Chinese automakers, led by BYD, pivoted aggressively to electric drivetrains. By 2023, Chinese vehicle exports surpassed Japanese exports for the first time in history. Toyota and Honda have begun closing plants in China and writing down assets. Nissan is in genuine financial difficulty. The threat is not merely to the carmakers themselves but to the supplier networks behind them and the auto-finance complex sitting on hundreds of billions of dollars of debt collateralised by a business model that may not survive the decade.

Both trends were knowable. But each had been treated as a slow erosion to be managed with marginal adjustments rather than a structural threat requiring a different growth model. That posture could only work as long as the global environment remained stable enough to absorb the slow loss of competitiveness. As long as the dollar-yen rate remained orderly, as long as JGB yields stayed pinned at zero, as long as the carry trades kept flowing outward without disruption, the erosion could be ignored.

In March 2026, it stopped being stable.

In Part 2, I look at how the Hormuz shock, Sanae Takaichi’s fiscal programme, and a yen under siege have combined to put Japan into a trilemma it cannot escape — and why what happens to the yen now matters for everyone holding dollars, euros, or US tech stocks.

Thank you for reading. I write this between deadlines, on my own time, without pay. If it was worth yours, buying me a coffee would mean a lot. Also consider subscribing.

Buy Me a Coffee!

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The Netherlands is one of the few countries in the world where 1 May is not an official public holiday. Nine million people go to work today, on the day that was once declared the International Day of Labour, in remembrance of workers who died fighting for an eight-hour workday.

That the Dutch have no day off today is not coincidental. It is a political choice, just as who wins and who loses in our economy is a political choice. And as long as we keep working, there is no space to reflect on what that work is actually worth, and for whom.

Who wins and who loses from all that work is not determined by the market. It is determined by age, nationality, place of birth, and by decisions made in The Hague, Brussels, and the boardrooms of companies like Nestlé and Cargill. This is visible in something mundane: the KitKat at Albert Heijn for €3.99. Concealed within that price is an entire chain of unequal exchange. At every link, something is skimmed off; at one particular point, almost nothing is left behind.

That point is in West Africa, where more than 60 percent of the world’s cocoa comes from. Here, at the start of the chain, exploitation is greatest. Cocoa farmers bear the risks — disease, climate change, price volatility — yet see almost nothing in return: 7 to 11 percent of the final value. Three-quarters to nine-tenths of them do not earn a living income. Despite initiatives like Tony’s Chocolonely and Fair Trade: Oxfam Novib calculated this year that only 5.6 percent of chocolate is purchased “fairly.”

Once the bean leaves the farm, it enters a market where the rules are written by those with the most capital. Cargill, Barry Callebaut, Olam, and COFCO together control around 75 percent of global cocoa trade. They have the capital to profit from price volatility; the farmers do not. The BBC reports that beans from farmers have now become 40 percent more expensive than what international traders are willing to pay. Cargill alone had revenues of $154 billion in 2025, of which $1.5 billion disappeared into the pockets of the billionaire family that owns it.

(Graph for mobile view)

(Graph for laptop view)

The jute sacks arrive in Rotterdam, and we draw closer to your chocolate happiness: the Albert Heijn distribution centre. Here, mostly Polish migrant workers are employed through staffing agencies. Ninety percent experience negative effects from workload pressure; nearly 40 percent called in sick in 2023.

Those who fail to meet their targets lose not only their contract but their housing as well. A herniated disc, a broken back — those costs do not find their way back into the price of your KitKat. They are borne by the workers themselves, or by the Polish social security system. The highly educated Brit who moves to Amsterdam for tax benefits is called an expat. The Polish worker with a herniated disc is called a labour migrant.

In the towns where this happens, labour migrants are dismissed by politicians as “fortune seekers.” Frank van Gool, former owner of staffing agency Otto Workforce, donated €200,000 to the VVD in 2023. Once NSC minister Van Hijum left the cabinet, his VVD successor rolled back the protection measures — including the ban on deducting housing costs from the minimum wage. The market does not regulate itself. It is regulated by those with the greatest interest in doing so.

Now you are standing in the supermarket. You ask a fourteen-year-old employee — earning €4.67 per hour — where the chocolate aisle is. An Ipsos I&O survey (2024) found that 84 percent of Dutch people believe 18-year-olds should receive the full minimum wage. It does not happen. You put the KitKat in your basket. €3.99.

The price of a KitKat is not an efficient market outcome. It is the sum of political choices — about youth minimum wages, agency staffing structures, deductions from the minimum wage — that consistently fall in the same direction at every link in the chain. The minimum youth wage will rise from 2027 onwards, a step FNV called historic. But as long as the underlying structures of our economy remain intact, a sustainability label or a wage increase will not solve the problem. What is needed is a conversation about who gets to harvest the value of work — and who ends up paying for it.

Almost the entire world has today off. The Netherlands works on. Perhaps that is precisely why we should have this day free: only when we stop working does the space open up to question work itself.

In the early 1970s, the world was told a simple story about the oil crisis.

In October 1973, as Israeli forces fought for survival during the Yom Kippur War, Arab oil producers struck back against the West. Furious over American and European support for Israel, OPEC members led by Saudi Arabia imposed an oil embargo on the United States and its allies.

The effects were immediate and devastating. Oil shipments were slashed, prices quadrupled almost overnight, and across the Western world gasoline stations ran dry. Factories slowed production, governments rationed fuel, inflation surged, and stock markets plunged.

The West, we were told, had been blindsided.

Arab producers had weaponized oil.

For decades, this narrative became the conventional account of the crisis: a sudden geopolitical ambush in which the industrial economies of the West found themselves held hostage by Middle Eastern oil producers.

But that account is incomplete.

What actually happened was far more complex, and far more revealing about the way great powers use economic crises. The oil shock did not simply expose Western vulnerability. It also created an opportunity to reshape the architecture of the global economy.

In ways that are still not widely understood, the crisis helped lay the foundations of the modern dollar-centered financial system.

The oil shock would ultimately become a once-in-a-generation masterstroke of American grand strategy.

The evidence

In 1976, political economist V.H. Oppenheim published a remarkable investigation in Foreign Policy, drawing on congressional testimony, State Department documents, and interviews with policymakers. His conclusion was that the United States had not simply been the victim of rising oil prices. In important ways, it had helped create the conditions that enabled them.

The argument briefly surfaced in public debate, and then largely disappeared.

Yet the evidence Oppenheim assembled deserves renewed attention today, because it offers a powerful lens through which to understand the crisis now unfolding in the Persian Gulf.

So why on earth would the United States — an energy importer at the time — tolerate policies that risked damaging both the global economy and its own?

At first glance, the answer might seem obvious: greedy oil corporations. And indeed, parts of the industry certainly benefited. Higher prices suddenly made previously unprofitable exploration in the United States viable, something domestic producers and independent oil companies had long demanded.

But the picture was more complicated than simple corporate lobbying. The major international oil companies themselves often preferred price stability, while the push for higher prices came primarily from smaller independent producers and domestic drilling interests.

In other words, oil companies alone cannot explain the remarkable degree of tolerance Washington showed toward rising prices.

The plan was far larger than that.

What was at stake was nothing less than the architecture of the global economy itself: a transformation that would gradually reorder the international monetary system and reinforce the dominance of the dollar. And that’s not all: the aim was to hurt both rivals and allies, as long as it strengthened America’s relative position.

The signals coming from Washington suggested that key policymakers understood exactly what was happening.

The End of the Gold Standard and the Weaponization of the Petrodollar

To understand why the oil shock mattered so much, we need to briefly step back and examine the monetary system of the time.

For most of the postwar period, the global economy operated under the Bretton Woods system, a monetary order built around fixed exchange rates and strict controls on cross-border capital flows. Governments tightly regulated international lending, and private financial markets played only a limited role in the international monetary system. The system’s stability rested on the convertibility of the dollar into gold at a fixed rate, while other currencies were tied to the dollar.

That arrangement collapsed in 1971 when President Richard Nixon unilaterally severed the dollar’s link to gold. Without gold backing the currency, the United States faced a strategic problem: how to sustain global demand for dollars, finance its trade deficit, and maintain influence over the international financial system.

Rather than rebuild a planned cooperative system like Bretton Woods, the Nixon administration pursued a different strategy. It sought to construct a global financial order centered on Anglo-American capital markets, using the dollar’s dominance not as a constraint but as a strategic advantage—running persistent deficits while drawing the world’s capital into its own financial system.

To make that system work, Washington embarked on a deliberate campaign to liberalize global financial flows, cultivating support for such measures through both ideological promotion—later associated with the Washington Consensus—and unilateral financial liberalization. Unlike trade liberalization, which required multilateral agreement, financial liberalization could be driven by a few key markets opening first.

Once the United States and the United Kingdom opened their financial systems, capital flowed freely through them regardless of other countries’ policies. This created competitive pressure on other financial centers to follow, despite initial resistance from European and Japanese policymakers who preferred maintaining cooperative capital controls to contain speculative flows.

Gradually, capital controls were dismantled, private banks expanded internationally, and global finance shifted away from government institutions toward private markets centered in New York and London.

The oil shock of the 1970s provided the perfect acceleration for the expansion of this system on a global scale, in the following sections, I will reveal why.

American accommodation

The first clues that Washington was willing to tolerate — and perhaps even encourage — higher oil prices emerged during the crucial 1971 negotiations between OPEC and the international oil companies in Tehran and Tripoli, which would determine the future structure of global oil prices.

The companies sought to maintain a unified negotiating front against the producing states. But American diplomacy intervened. U.S. officials, including State Department oil specialist James Akins and Under Secretary of State John Irwin, allowed the talks to split into separate regional agreements — a move the companies strongly opposed. A unified negotiation might have restrained more radical producers such as Libya. Instead, the division created a ratchet effect in which price increases demanded by militant producers quickly spread across the cartel.

The most revealing signal, however, was diplomatic. American officials made clear that their primary concern was not the level of prices but the security of supply. As long as oil continued to flow, higher prices were treated as a secondary issue.

In 1972 Akins reinforced that message when he warned the Arab Petroleum Congress in Algiers that oil prices were likely to rise sharply because the world had few short-term alternatives to Middle Eastern supply. Though presented as economic analysis, the remarks were interpreted very differently in Arab capitals.

Producer states were not tone-deaf. Akins’ comments were not heard as a warning that Washington would resist higher prices. They sounded like a green light.

Arab reactions

Arab policymakers quickly took note. The UAE’s oil minister later cited Akins’ remarks as evidence that significant price increases were coming. Saudi oil minister Ahmed Zaki Yamani openly observed that higher prices were also in the interest of the oil companies themselves.

Within Arab policy circles, a new consensus emerged: Washington might publicly complain about rising prices, but privately it seemed willing to accept them.

American policy reinforced that perception. At the same time as these signals were being sent, the United States quietly blocked attempts by European governments to coordinate resistance to OPEC’s pricing power. Building a united consumer front risked antagonizing producers just as Washington was cultivating closer strategic ties with Saudi Arabia and Iran.

By 1973, the signals were unmistakable. When James Akins—who had repeatedly predicted higher oil prices—was nominated as U.S. ambassador to Saudi Arabia, several foreign diplomats interpreted the move as confirmation that Washington had accepted a new price regime.

Then came the shock.

In October 1973, amid the Arab–Israeli war, OPEC imposed its embargo and oil prices exploded. Yet the supply shock did not emerge as a response to Western support for Israël. OPEC had already demanded an 80 percent price increase before the war even began.

But the real question is this:

Would the United States really tolerate — even encourage — higher oil prices just to benefit domestic oil companies?

No.

Other interests were at play—interests far more consequential for the global economy and the dollar system than the supply shock itself.

After the United States severed the dollar’s link to gold in 1971, it suddenly faced a profound strategic problem. The Bretton Woods monetary order had collapsed, and chaos reigned in the international monetary system. Washington needed a new anchor of global demand for dollars — a new mechanism through which American financial power could continue to structure the world economy.

Only then does the next chapter of the story begin.

In 1974, U.S. Treasury Secretary William Simon boarded a government plane bound for the Middle East. Officially, he was on a diplomatic mission. In reality, he was negotiating what would become one of the most consequential financial arrangements in modern history.

At the time, this dimension of the story remained largely hidden. But decades later, newly uncovered documents and reporting — including revelations by Bloomberg in 2016 — shed light on what had happened behind closed doors.

Simon struck a deal with Saudi Arabia. The kingdom would invest its massive oil revenues in U.S. Treasury securities. In return, the United States would provide military protection, weapons, and political backing.

The result was a geopolitical masterstroke.

The dollar was reinforced as the indispensable currency of global energy markets. Petrodollar revenues flowed back into U.S. financial markets, strengthening American banks and government financing.

Looking back on the earlier period, James Akins himself later offered a striking interpretation of what had happened. The oil price shock, he argued, had also served another geopolitical purpose:

“OPEC was a tool of U.S. mercantilism.”

Higher oil prices, he suggested, inflicted far greater economic damage on Western Europe and Japan — America’s industrial competitors that were booming at the time — than on the United States itself.

The result was a redistribution of power inside the Western alliance at a moment when the global monetary order itself was being rebuilt.

And it was only the beginning of the petrodollar system.

Debt-trap

One one side of the balance sheet, oil-producers were sitting on vast quantities of newly generated dollars that could not be spent domestically, and were looking for profitable outlets in international capital markets.

On the other side, countries hit hardest by the oil shock—especially energy-importing developing economies—suddenly faced large balance-of-payments deficits.

Borrowing the newly accumulated petrodollars appeared to be the only viable way to finance these gaps. Latin American countries, eager to continue financing their industrialization, soon became the primary destination for this flood of capital.

Yet the process was not entirely spontaneous. Commercial banks were initially cautious about lending vast sums to developing countries. As Peter Gowan notes, U.S. policy helped overcome this hesitation by dismantling capital controls, loosening lending limits, and signaling that banks would be protected if loans turned sour.

Several European governments advocated recycling petrodollars through the IMF, where lending could be coordinated and politically supervised in order to reduce financial instability.

Washington rejected this approach. Instead, it deliberately steered the recycling of petrodollars through private banks in New York and London, anchoring the emerging financial system in Anglo-American capital markets.

Throughout the late 1970s, American and European banks extended enormous loans across Latin America. Oil exporters deposited their surpluses in Western banks, which then recycled the funds as credit to deficit countries.

The arrangement seemed mutually beneficial: debtor states financed rising energy costs with newly available capital while the Anglo-American financial system sat at the center of a rapidly expanding global credit circuit.

But the system carried a deeper geoeconomic logic. By routing petrodollar recycling through Wall Street rather than multilateral institutions, the United States ensured that the emerging financial order would reinforce its own monetary dominance. Borrowing countries became increasingly tied to the American banking system—and, by extension, to U.S. economic policy.

That dependency became painfully clear in the early 1980s.

When Federal Reserve chairman Paul Volcker sharply raised interest rates to combat inflation, global capital rushed into the United States in search of higher returns. The dollar surged, dramatically increasing the burden of dollar-denominated debts around the world. Latin American governments that had borrowed heavily during the era of cheap credit suddenly faced soaring interest payments while a global recession reduced demand for their exports.

The petrodollar boom ended abruptly in the Latin American debt crisis of 1982.

When Mexico announced it could no longer service its obligations, panic spread through the international banking system. American and European banks had lent enormous sums across the developing world, and a wave of defaults threatened global finance.

Washington’s solution was not to rescue the banks directly, but to restructure the debtor economies.

Through the International Monetary Fund, emergency loans were granted on strict conditions: austerity, privatization, trade liberalization, and the opening of domestic financial systems to international capital. These reforms dismantled much of the import-substitution industrialization strategies that had underpinned Latin American development for decades.

The result was a deterioration in the region’s economic trajectory. Efforts to build domestic manufacturing were weakened, many economies became more dependent on commodity exports, and access to international credit increasingly hinged on the confidence of financial markets centered in New York and London.

The losses of the petrodollar boom were thus socialized across debtor societies while the power of the emerging Dollar–Wall Street regime was consolidated. What had begun as a mechanism for recycling oil revenues had become something far more consequential: a global financial system capable not only of allocating capital, but of disciplining entire economies and reshaping their place in the global division of labor.

What emerged from this crisis was not merely a solution to a temporary financial emergency. It was the consolidation of a new global economic order.

In the decades that followed, the system built in the 1970s would come to structure the international economy. Capital increasingly flowed through private financial markets centered in New York and London, while governments seeking access to credit found themselves subject not only to market discipline but also to the policy frameworks enforced by institutions such as the International Monetary Fund.

At the center of this architecture stood the United States. By anchoring global energy markets to the dollar and channeling the recycling of oil revenues through its financial system, Washington transformed a moment of apparent vulnerability into a lasting source of structural power.

The oil shock of 1973 therefore did far more than trigger a global recession. It helped lay the foundations of what political economist Peter Gowan later called the Dollar–Wall Street regime—an international financial order in which the United States occupies the commanding heights of global capital flows.

From this system would flow not only American monetary dominance, but also the recurrent financial crises that have punctuated the global economy ever since: the Latin American debt crisis, the Asian financial crisis, the collapse of post-Soviet economies in the 1990s, and the global financial crisis of 2008.

What appeared in 1973 as a sudden energy shock thus marked the beginning of a profound transformation in the architecture of global capitalism—one whose consequences continue to shape the world economy today.

Thank you for reading. I write this between deadlines, on my own time, without pay. If it was worth yours, buying me a coffee would mean a lot.

Buy Me a Coffee!

A majority of Europeans consider the trade deal with the US a “humiliation” and want Ursula von der Leyen to resign, according to a poll by Le Grand Continent. But Europe’s century of humiliation has been much longer in the making.

Since the late Middle Ages, Europe was shaped by conflict: war forced taxation, bureaucracy, and state formation. “War made the state and the state made war,” sociologist Charles Tilly wrote.

From the ashes of conflict, destruction, and death, new orders of power and law emerged time and again. The Peace of Westphalia led to the modern state system; Napoleon’s campaigns laid the foundation for contemporary legal principles. Every peace carried the seeds of the next crisis; every order the logic of its own dissolution. Again and again, our continent was reshaped by conflict.

The climax of two world wars forced Europe into self-reflection. European integration became the answer to its own destructive impulses. Europe made war, and war made Europe. Our peace project was so successful that we believed the cycle was over. Out of naivety, we forgot the lessons of our own history.

Now that the foundations of the contemporary order are visibly crumbling, the question arises again: who will win the battle for Europe this time?

The Battle for Europe

Little Netherlands?

Italy, with its ageing population?

Germany? That’s a sensitive one.

Perhaps America, once a European outpost, later leader of the West, but now led by a predator trying to claw one last time at a crumbling hegemony?

Or Russia, which spent decades licking its wounds, addicted us to cheap energy, and prepared for war?

And even if we break free from transatlantic dependence and withstand Russian aggression, China’s industrial storm awaits.

But the greatest contenders for total victory are us.

But who are we?

Europe Can Win

Europe can win—if we learn from the history we ourselves wrote. The cycle of European conflict taught us that the continent is too large, too complex, too diverse to be ruled by a single hand. Perhaps our greatest danger is not being conquered, but fractured.

China learned this lesson during its own century of humiliation, crushed under Europe’s imperial fist. The proud empire was weakened by unequal treaties and carved into spheres of influence. According to revolutionary leader Sun Yat-sen, China was not a “normal” colony, but something worse. A hypo-colony: not the possession of a single ruler, but exploited by many. China had no central enemy against which it could unite all its resistance, so it turned inward: warlords fought each other for central power. Without common identity and paralysed by internal fragmentation, more than a century of subjugation followed.

Europe faces the same danger. But we too can rediscover our pride—if we rediscover who we are.

Who Are We?

After two devastating wars, a new idea of Europe was born—one that could break the cycle of death and destruction—summarised by French philosopher Albert Camus in his Letters to a German Friend.

The Nazis reduced Europe to territory, granaries, and subjugated peoples. Camus rejected the cynical nihilism that reduced the world to a game of power. For him, Europe could only exist if spiritually united. Not through tanks and artillery, but through shared identity and values.

“I love my country too much to be a nationalist,” he wrote.

At the same time, Camus was anything but naive. The Nazis’ brutality had taught him that “the spirit can do nothing against the sword.” Yet he concluded that “the spirit allied with the sword will always triumph over the sword drawn for its own sake.”

“That is why,” he wrote, “we have now accepted the sword, after making sure that the spirit was with us.”

Camus did not call for naive pacifism but for strong resistance to nationalism. The humanist spirit could win—if it armed itself with the right strength.

Schuman and Monnet understood this: by pooling the raw materials of war—coal and steel—literal armament was prevented. Centralised power in Europe became not an enemy of freedom but its condition.

A Market With a Flag

Yet this spirit was not anchored with strength after the war.

Half-integration turned Europe not into a unified power bloc but into a market with a flag. Internal conflict continued: the political-economic arena became our battlefield.

Trade and capital could move freely, but national economic policy became nearly impossible. State aid? Forbidden. Monetary policy? Impossible. At the same time, we did not integrate in areas that could offset internal competitive differences.

Germany and the Netherlands benefited from a currency that was too weak and wages too low for the strength of their economies. Their exports grew, trade surpluses piled up.

In Southern Europe, the opposite happened: higher wages, lower productivity; but consumption remained steady. The South bought northern products, financed by cheap credit from northern banks. The North thus financed its own exports and southern debts.

When the house of cards collapsed in 2008, this story was not told in The Hague or Berlin. On the contrary: not a cent more could go to the Greeks.

Thus, we completed our circular logic that political integration would be dangerous.

Behold how wasteful the South is!

Instead of solidarity with our allies, we weakened them with austerity. The result: deindustrialisation, mass unemployment, and an explosion of Euroscepticism.

Even in common foreign policy, trust was lacking. We trusted the Americans instead. With these choices, we dismantled the instruments of power. We denied ourselves the sword and killed the European spirit.

The Paradox of Europe

This is Europe’s paradox: our fates are deeply intertwined, yet we are better at fighting one another than our rivals. Now that power politics has returned, we too must awaken from our geopolitical hibernation.

Even Brussels now allows state aid—but again without joint financing. Big countries win the subsidy race, fragmenting the internal market.

The fear of too much Europe creates exactly what we feared: our half-hearted cooperation pits us against each other in a race for subsidies and influence, while China, Russia, and America laugh from the sidelines.

What is missing is not a list of reforms—Draghi has provided that. What is missing is the spirit united with the sword: the will to exercise power together.

Europe must be more than a balance of power. It is a promise. The question is whether we can fulfil it—whether this becomes Europe’s century of union or of humiliation.

This opinion piece was originally published in het Financieele Dagblad, the Dutch Financial Times.

If my parents pass away before climate disasters crash the housing market, I will inherit a fortune as an only child – simply because they bought at the right time. Ironically, they wouldn’t even be able to afford that same house today. Thousands of families benefit this way, knowingly or not, from our "successfully failed" housing policies.

I’m not the only future millionaire. With fertility rates declining, there are fewer heirs per family, which accelerates wealth concentration. This speeds up the rise of a class society, as also noted by the Netherlands Institute for Social Research (SCP). The resulting social, political, and cultural tensions erode our societal cohesion.

There is ongoing opposition to inheritance tax. I wonder: is it driven by ignorance, or by shameless self-interest? Even the greedy individual should recognize that preserving social peace is a legitimate concern. As Adam Smith wrote in 1776: “Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have property against those who have none at all.”

Should the greedy individual require a justification for inheritance tax: ensuring the legitimate functioning of civil government should suffice. Rather than subsidizing luxury products for rentiers, that money could better support the social safety net and economic security of the working class.

This would boost domestic consumption and reduce our absurdly large trade surplus, helping to correct the Netherlands’ antisocial export position. Two birds with one stone – and in your interest.

Read the full article (in Dutch): https://fd.nl/opinie/1558450/erfbelasting-stelen-van-de-doden-of-het-middel-voor-een-eerlijkere-samenleving

Shortly before the Nazis launched their ruthless march on Paris one summer morning and the swastika flag triumphantly waved over the Arc de Triomphe, 28-year-old Albert Camus left the city. Determined to fight, he volunteered as a soldier but was rejected—his lungs too fragile from a history of tuberculosis. Denied a rifle, he took up the pen as his weapon, proving far more powerful in the battle against evil—not by spreading hatred, but by defending human dignity. Camus’ ideas remain relevant in a world scarred by violence and oppression.

As a spiritual member of the resistance, Albert Camus wrote four Letters to a German Friend, published in the banned French resistance newspaper Combat. Written between July 1943 and July 1944, these letters form a powerful plea for human dignity and resistance against Nazism, at a time when Allied victories were beginning to turn the tide of World War II. Camus’ struggle against Nazism was not just a fight against a historical regime, but against a deeper ideology: the justification of brute force as an end in itself. That struggle remains unfinished.

During the war, Camus returned to his birthplace in Algeria until tuberculosis struck again. His doctor advised "fresh air," which led him in August 1942 to the French countryside. He settled in Le Panelier, a hamlet near Le Chambon-sur-Lignon in the Haute-Loire. The area would later become known as a refuge for hundreds of Jews, sheltered and hidden by Protestant farming families who quietly but resolutely resisted the occupiers.

For Camus, however, it was no place of recovery. The thin air and isolation made him physically uneasy, and the war weighed heavily on him. Still, he stayed, as the Allied invasion of North Africa in November 1942 made it impossible for him to leave France. Relatively isolated in the mountains of Auvergne, he witnessed impressive acts of civil resistance, including open protest against the persecution of Jews. These experiences would leave a lasting mark on his thinking.

It was in these circumstances that Camus began writing The Plague—a novel about a city under quarantine, struck by a deadly disease. The epidemic symbolizes the German occupation and raises moral questions: to comply, remain silent, or resist? The plague represents evil in all its forms, but Camus also shows that solidarity remains possible—even in the midst of the absurd.

These experiences would deeply influence his work and thinking, and in November 1943, he returned to Paris to distribute resistance literature through Combat, including Letters to a German Friend.

The Spiritual Struggle of World War II

In Letters to a German Friend, Camus rejects German ethno-nationalism, which rests on power and domination. In contrast, he offers a “higher love” for one’s homeland—rooted in human dignity and moral awareness. “I love my country too much to be a nationalist,” he writes.

This contrast between brute force and moral integrity marks a broader struggle that unfolded in the lead-up to World War II.

The rivalry between France and Germany before the war was not merely a geopolitical power struggle—it was also a deeper spiritual conflict. Camus criticized the prevailing nihilism in Germany, which bore a curious resemblance to his own philosophy of the absurd: the view that life has no inherent meaning. Camus described this struggle roughly as follows (paraphrased):

“You believed the world had no meaning and concluded that good and evil were arbitrary. Where morality disappears, only violence and deceit remain. Man is nothing, his soul can be killed, and the only task left is to pursue power.

I too doubted, and I saw no definitive argument against your reasoning—except for a deep longing for justice, which seemed to me as irrational as the most intense passion.

That was our difference: you surrendered to despair, I refused. You saw the injustice of existence and chose to contribute to it; I saw the same and chose to fight it. For even if the world has no deeper meaning, man wants meaning. He must not submit to fate, but defy it.

That’s why we stood opposed. Your despair gave you ruthless strength, and we were crushed the moment we hesitated—when we cast one last glance at images of happiness. But even in defeat, we believed that happiness is the greatest conquest.”

Camus’ Lesson for Today

Camus stands radically opposed to a world where brute force reigns supreme. His rejection of a nihilistic world order—where power is the only prevailing principle—rings with renewed urgency today. Autocrats like Putin—who do not shy away from war and repression—and would-be autocrats in the West—who undermine the rule of law through lies and contempt for institutions—each in their own way threaten democracy and global security.

As you read this, wars rage, people are displaced and murdered—and the world often looks away. Populations fight for their fundamental right to exist, while power politics reduce their lives to pawns in a geopolitical game. This struggle is not confined to distant places like Ukraine, Palestine, Congo, or Sudan, but plays out within our own democracies too. In several Western nations, politicians undermine the rule of law and support or tolerate the very leaders enabling this violence and oppression.

This raises an uncomfortable question: where can true justice still be found? What would Camus say? He would likely warn against cynicism—the belief that brute force will always triumph and that fighting for justice is futile. Because once one accepts that violence and lies are the only laws of the world, one has already lost.

Moreover, developing a just response to injustice takes time, as Camus emphasized:

“We had to take a long detour, and we were greatly delayed. It is the detour that imposes respect for truth upon the mind, respect for friendship upon the heart. It is the detour that protects justice and grants truth to those who questioned themselves. And without a doubt, we paid a high price for it. We paid with humiliation and silence, with bitterness, imprisonment, early-morning executions, with apostasy and abandonment, with daily hunger, with emaciated children, and above all, with imposed penance. But it had to be that way. We needed all this time to figure out whether we had the right to kill, whether we had the right to add to the appalling misery of this world. […] It taught us that, contrary to what we once thought, the spirit cannot prevail against the sword—but that the spirit united with the sword will always triumph over the sword drawn for its own sake. That is why we have now accepted the sword—after assuring ourselves that the spirit is with us.”

The Timeless Call of Camus

Camus offers a message of hope. But this is not naïve pacifism—it is a call to structural resistance against evil. In Letters to a German Friend, he emphasizes that injustice must be actively resisted, and that those who have justice on their side must not hesitate to stand firm.

At its core, we are still fighting the same battle Camus waged against the National Socialists—a continuous struggle that must be fought on every front of life and in every corner of the world. This makes Camus’ message timeless, and all the more relevant in a world where power politics, autocracy, and injustice are once again gaining ground. That is why I recommend every peace-loving person read this short but profound work by the French philosopher.

The current shift toward trade wars, export controls, and economic arms races is not a break with the past but rather a harsh return to the historical norm—like a rubber band snapping back into place: trade as an instrument of power.

Neoliberal globalization—with its belief in free markets and unlimited trade—has become less and less tenable now that countries are using economic power as a weapon in geopolitical conflicts. The “invisible hand of the market” always operated in tandem with an imperial fist—often invisible to some. This fist not only served geopolitical interests but also sustained global social inequality by structuring markets in ways that allowed certain countries and groups to profit structurally at the expense of others.

That system has now imploded.

Why?

Because the hegemon has decided it is no longer in its interest.

The Mask Has Fallen

Illustrative of the shifting world order was the unusual criticism by Vice President J.D. Vance, who argued that globalization had failed as a strategy to maintain Western dominance.

“The idea behind globalization was that rich countries would move up the value chain while poor countries made the simpler things… We assumed that other countries would always stay behind us, but they began overtaking us from the top, squeezing us from both sides,” said Vance. That, of course, was never the intention.

Ironically, Vance’s nationalist critique aligns closely with what Marxist economists have been arguing for years: the neoliberal globalization propagated by the U.S. was never designed to help countries develop, but to keep them subordinate. The mask has now fallen.

This reorientation is not limited to rhetoric. Within the Republican Party, a new consensus has emerged—driven by the so-called “New Right”—that assumes American hegemony is no longer sustainable, as Oren Cass noted in the Financial Times. In February 2025, Secretary of State Marco Rubio articulated this view: “It’s not normal for the world to simply have one unipolar power. That was an anomaly, a product of the end of the Cold War. Sooner or later, we were bound to return to a multipolar world.”

How the Brief Neoliberal Dream Gives Way to Geopolitical Reality

Karl Polanyi already argued in The Great Transformation (1944) that markets are always embedded in political power relations. A year later, Albert Hirschman published National Power and the Structure of Foreign Trade (1945), showing how trade systems could be deliberately structured to create dependencies and exert political influence—not through military force, but via economic structures.

These insights were largely buried when neoliberalism, under the influence of Milton Friedman, Ronald Reagan, and Margaret Thatcher, became the dominant economic ideology. Trade was no longer seen as a tool of power but was instead presented as neutral and technical governance.

Dani Rodrik resurfaced this tension in 2011 when he pointed to a fundamental dilemma, which he called The Globalization Paradox: countries cannot simultaneously maintain hyper-globalization, national sovereignty, and democracy. The West opted for borderless trade—at the expense of democratic control and policy autonomy—a tension temporarily masked by American leadership.

Dollar dominance perfectly illustrates how the system undermined itself. Export-based economies like Japan, Germany, and later China financed U.S. consumption through their trade surpluses. The profits they made from exports were reinvested in U.S. government debt, keeping the dollar historically overvalued. This preserved demand for their goods in the U.S., but at the same time hollowed out American industry. While the U.S. secured financial dominance through the dollar system, these countries moved up the industrial value chain. A system meant to entrench American dominance ended up creating structural dependencies that now undercut it: the U.S. is heavily reliant on foreign industrial production.

The End of Hegemony—And What Comes Next

The dollar model is cracking under its internal contradictions. Economic interdependence turns out to be not a shield against conflict, but a source of geopolitical vulnerability. This is evident in sanctions, export bans, and critical raw material embargoes.

Trump’s policy turn responded to this reality. The American elite is reasserting control over the domestic economy, abandoning its role as global stabilizer and consumer of last resort. What follows is a world where states once again carry more weight.

This is not a coincidence, but the predictable end of an ideology that masked class interests and power as neutrality. Now that the masquerade is over, open struggles over economic power are returning. For countries across the world that have built prosperity on global trade and capital flows, this means a hard reckoning with the fact that economic relations are never apolitical, and never interest-free.

The challenge ahead is to find a new balance: a global order in which mutual dependence does not breed vulnerability, but is combined with sovereignty and cooperation. That demands vision—but above all, honesty about the political reality behind economic order.

The mask is off. Now the real work begins.

I remember how excited I was in the third year of secondary school when I finally got to study economics. As someone who enjoyed subjects like history and geography, economics seemed perfect for me. However, that enthusiasm quickly turned to disappointment. Initially, I eagerly raised my hand to answer the teacher’s questions—this was going to be my subject. But the teaching method quickly extinguished my interest; I fell asleep in class and doodled in my notebook. During one exam week in the fourth year, I even handed in a blank sheet with a thank you note to the teacher, stating that I couldn’t take it anymore. Economics seemed like a subject for people with a strong aptitude for math, not for me.

Two years later, I started studying International Relations and specialized in Political Economy and economic history. Out of interest, I filled my bookshelf with literature on economic theories and discovered that economics was much more fascinating than it had been presented in secondary school.

As I learned more, I noticed that in the Netherlands there is little debate about the social consequences of economic policy for the ‘hardworking Dutchman.’ The broader context of the global economy is often left out of the picture. Neoclassical economic theory is almost seen as absolute truth in education—from secondary school to university. This thinking influences conversations both at home and in Parliament. What is often forgotten, however, is that economic theories are inherently ideological and determine who ends up with the money.

Ask a young person who has just graduated in economics why free trade is ‘better,’ and they’ll say that Italy should make shoes, and the Netherlands should grow tulips. Open a geography textbook, and you’ll read that protectionism is for politicians who don’t understand economics. Ask someone on the street about the euro crisis, and they’ll say that Southern Europe is lazy and spends too much, while we ‘hardworking Dutch’ are frugal. Both the economics textbook and your favorite economist on BNR News Radio are happy to confirm these views. Of course, free trade can promote prosperity, and Greece has mismanaged its finances, but that’s only one side of the story.

The uncomfortable questions that are not being asked are: for whom is prosperity really being created, and why have the debts in Southern Europe risen so sharply, forcing all of us to cut back? Austerity is the magic word in Dutch politics, but there is little thought given to who benefits from it and who pays the price (hint: it’s not the wealthy). It’s striking how quickly the question “Where will we get the money from?” arises as soon as the needy require support.

A good example of this is that in the view of neoliberalism—the child of neoclassical economics—the Dutch state is often compared to a profitable company, mainly because it has a positive trade balance, meaning it exports more than it imports. This is often seen as a success. What is often overlooked, however, is that the workers who make this profit possible are underpaid, while the profits end up with the wealthy. If the “hardworking Dutch” were rewarded more fairly, people would be able to spend more within the Netherlands, stimulating imports and balancing the trade balance.

The current Dutch policy of pursuing trade surpluses leads to deficits elsewhere. During the euro crisis, for example, this resulted in high debts and unemployment in countries like Italy and Spain. Economists such as Joseph Stiglitz, Paul Krugman, and Michael Pettis argue that this focus on trade surpluses and austerity can harm the broader European and global economy.

Moreover, the emphasis on frugal government finances places a heavy burden on poorer parts of society. This is because less is invested in public services such as education, healthcare, and infrastructure, which benefit low-income people the most. Thomas Piketty and Mark Blyth have shown that such austerity measures exacerbate inequality and damage growth, while the wealthy remain largely unaffected by the lack of public services.

The opinion that more public investment is needed in society is fortunately not considered heresy everywhere. Advocates for more government spending are gaining increasing support from prominent quarters. The long-awaited report by Mario Draghi even called for investing €800 billion in the European economy, twice as much as after World War II. By investing in public services, the government can not only improve the quality of life for those who need it most but also help restore economic imbalances within and outside the Netherlands.

Undoubtedly, there are hundreds of arguments to counter my plea. That’s exactly my point: the current dominant beliefs simplify the discussion with general “truths” that are not self-evident but carry an inherent ideological preference for certain groups in the economy. Moreover, by approaching the economy clinically through these “general truths,” many people feel alienated from the subject due to the lack of social consideration, and this alienation starts in the classroom. I hope this opinion piece opens the debate about this instead of continuing the current debate in the Netherlands—a debate that overlooks humanity.

Born in 1923, my grandfather Gerard Rutten, also known as Sjra, was the eldest in a family of six children, son of Driek Rutten and Elisabeth Seelen. He was born in Pey-Echt, in the hamlet "Het Hingen", which is an area of the Netherlands that borders on an extensive forest, which in turn is close to the German border.

His father was a miner, one of the many thousands of men who descended underground to extract coal. The job was not a gold mine, but it kept the family fed. Driek would work in the state mines for 32 years, and young Sjra would help prepare his father's pungel (work bag) for many of those years. Later, my grandfather would also work for DSM (Dutch State Mines). When the Nazi’s invaded the Netherlands on the 10th of May in 1940, he was finishing high school, which he graduated two months later.

The war was not an easy time for my grandfather. In the first year, he was still able to work in the State Mines as usual, but around 1942-1943, the Nazis started “recruiting” forced labourers for the factories in Germany, since they needed substitutes for German men who were fighting in the Wehrmacht. The Germans recruited workers from occupied territories, including the Netherlands, and set up the "Netherlands Labor Service" for this purpose.

The Germans designated several large companies, including the State Mines, from which the workers had to be drafted. The underground workers were exempt, but a large number of above-ground workers were designated, and Sjra was one of them. They had to report for the Arbeitseinsatz. A few days after the call-up, Sjra was put on a train with only a few bags, not knowing where he was going. From 1943, he was imprisoned and put to work as a forced laborer in a labor camp. The company Waggonfabrik, where he ended up, was located in Uerdingen.

The time in the barracks

Sjra has revealed little about his time in the camp during his lifetime. From the few stories he told, and the experiences he wrote down to be recognized by the dutch government as a war victim, I was able to reconstruct some of his experiences. Additionally, my family has preserved documents that are featured in this story.

Sjra began to suffer from symptoms of scurvy due to poor nutrition and heavy work. He had inflammation in both of his legs and suffered from immense pain as a result, his homesickness grew over time, lying sick in the barracks for over a month. There was hardly any care. He had to visit the largely unhelpful company doctor every two days. There, the bandages (cellulose and paper) were pulled off his legs because unwrapping took too much time; time that the German forces were not willing to give to a sick Ausländer, a person they had no empathy or kindness for and viewed solely as an object.

This was my Grandfathers’ Arbeitskarte. It is mentioned that he does not have a command of the German language, while he did. He probably lied to avoid certain tasks.

The Escape

Miraculously, Sjra managed to escape the forced labour camp in 1945, with the help of his cousin Chris Laumen.

One day, Chris decided to check on their old house in Schilberg to see if it was still in the same condition as when they lived there. Schilberg was a Sperrgebiet, an area off-limits to non-military personnel, which meant that he had to be careful not to get caught. So he returned to Hingen.

To his dismay, he ran into two Germans at Wienen. They stopped him and asked him what he was doing there. He said he worked in Mönchengladbach and had two weeks off. He said he had to go back to Germany next week. One of the soldiers asked him if he could take a package for his mother-in-law who lived there. Chris agreed and asked for papers to cross the border.

My great uncle’s gut feeling still baffles me to this day, as what happened on his search for Sjra was an incredible coincidence.

Chris found the place where Sjra was working quite easily. A soldier was on guard in the guardhouse. Since German was his second language, Chris asked for Herr Rutten. The soldier replied that no one was left in the camp. Yesterday, everyone had left for another "Ort". That was a setback. It had seemed that Chris’s efforts were for nothing, but my great uncle did not give up easily. Chris decided to talk to people in the vicinity. After scouting the area, he came across a fidgety man who was hanging around the factory. The man gave him a sign - apparently he knew Sjra - and pointed to a large house nearby.

At the house he found Sjra. Sjra had planned his escape carefully, hiding on top of a truck which was bound to leave the factory, he had leaped off and escaped from the Nazi officers that were keeping him captive. Chris and Sjra departed on their journey home, but they were still in German territory, the danger hadn’t passed.

After a long hike, a large building appeared in front of the two men, where the Nazi flag was ominously flying. Chris told Sjra to hide behind a wall.

Chris went inside, there he found a group of soldiers in distinctive gestapo uniforms. My great uncle was not intimidated, as previously mentioned he “knew how to deal with germans”. Chris stood at attention and loudly shouted, "Heil Hitler!". The soldiers greeted him in the same manner.

Chris continued to make up a story about how is workplace had been blown up, he told the soldiers everything was “kaput” (“destroyed” in german), and that he and his companion wanted to go help the Wehrmacht at the front. Meanwhile, he pulled out some cigarette packets which he handed to a few of the men. They also knew that the end of the war was nearing and didn't mind accepting them. Having successfully charmed and persuaded the Germans, he got ahold of a certificate to cross the border.

The Gestapo officers believed that Sjra, like Chris, was an electrician who could no longer work due to bombing and wanted to be useful in other ways. When it came time to cross the border, the men were successful, the border patrol believed that my grandfather, like Chris, was an electrician who could no longer work due to bombing and wanted to be useful in other ways. The two men ventured back into the Netherlands.

My family still owns the certificate used to cross the border to this day.

Sjra had returned home, but was hit by shrapnel from a shell that same month. The impact was a mistake by the Allies. He stayed in the shelter at home for a few days. He could not be transported to the hospital in Sittard because it was too dangerous, as that was where the front was. Eventually, he ended up in the hospital and stayed for about eight weeks. As a result, Sjra missed the liberation celebrations that he had longed for so fervently and did not get to take part in the joy and revelry. Grandpa Sjra found this very difficult. Later on, he was able to watch a film of the liberation of his hometown.

I still bear my grandfathers name with pride, as my third first name is Gerard. It is important that these stories continue being told and written down, so that we can remember the horrors of war. These stories are especially important when you consider the state of the world, and it reminds us of the sympathy we must have of war victims in Ukraine.

Thank you for reading. I write this between deadlines, on my own time, without pay. If it was worth yours, buying me a coffee would mean a lot. Also consider subscribing.

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During the "Japanese Tables Evening," an event where students and diplomats converse, I noticed how the Western-centric news cycle leaves a gap in our global knowledge. In a conversation with diplomats, a humanitarian crisis emerged that I had never heard of. I'm referring to Nagorno-Karabakh, where the humanitarian situation is so dire that approximately 120,000 people lack access to food, medicine, and hot water.

Nagorno-Karabakh, also known as Artsakh, is a disputed region with an Armenian ethnic majority. The area was assigned to Azerbaijan during Soviet times, when little attention was paid to the ethnic makeup of rural regions. Two bloody wars were fought over such areas, the latest being the Azeri invasion in 2020. After a ceasefire was reached, Nagorno-Karabakh became an enclave only accessible via a narrow mountain pass.

Since mid-December, the road that runs through this mountain pass has been blocked by Azeri "environmental activists" who claim to be protesting mining in the area. Despite Nagorno-Karabakh authorities stopping mining operations, the blockade continues. According to Amnesty International, the group does not allow essential goods such as food and medicine through. Additionally, gas pipelines and communication infrastructure leading to the region have been sabotaged. Ironically, this has led to deforestation and ecological damage in the area, as residents must chop wood to heat their homes, according to Armenian media.

Typically, the mountain pass is guarded by Russian security forces, but since the war in Ukraine, relations between Armenia and Russia have deteriorated. Armenian President Pashinyan said in January that Armenia would not host a Russian-led military exercise and referred to the security forces as a threat rather than security. In response, Russia is using the security forces in Nagorno-Karabakh as leverage to pressure the Armenian president to obey Russia. In fact, the blockade is made possible by a Russian power play.

Several protesters have been identified as military personnel in civilian clothing, and protesters are very active on social media, where they often share their love for the Aliyev family. Furthermore, it appears that the vast majority of (environmental) organizations present at the protest have ties to the government in Baku.

There is strong evidence that the blockade is being orchestrated by the Azerbaijani dictator Ilham Aliyev, who sees it as his personal responsibility to drive Armenians out of Nagorno-Karabakh. In 2020, he said: "We will expel the fascists from Artsakh (Nagorno-Karabakh) like dogs." And "We will kick you (Armenians) out, there will be no trace of them left in these territories."

Several demonstrators have been identified as military personnel in civilian clothing, and the demonstrators are very active on social media, often sharing their love for the Aliyev family. Furthermore, it appears that most of the environmental organizations present at the protest have ties to the government in Baku.

It has now been 60 days since the start of the blockade, and tensions are running high on the ground. According to the Ombudsman of Nagorno-Karabakh, ten people have already died due to the untimely supply of medicine, and over 5000 people have lost their jobs.

Currently, a lawsuit is being heard at the International Court of Justice in The Hague between Armenia and Azerbaijan, in which the Armenians claim that the Azerbaijani blockade is a prelude to genocide. The verdict is expected on February 22nd. If the Armenians win, this will put more pressure on Aliyev to lift the blockade.

The question is why the West seems to be doing nothing against Aliyev, the ultimate responsible for this misery. Measures have already been issued to punish dictators like Lukashenko and Putin for their crimes, so why have no sanctions been imposed on Aliyev and his oligarchic family? The Armenian ambassador to the Netherlands, Tigran Balayan, has called for sanctions against those responsible for the blockades. Unfortunately, his call seems to sadly have fallen on deaf ears.

If you’re familiar with Armenian history, you will remember the genocide that claimed around 1 million lives. Action against this potential ethnic cleansing is necessary. Unless we want to accept serious human suffering and look back in a few years wondering why we did nothing. The level of international turbulence we are experiencing cannot be an excuse for inaction. Let us not allow tragic Armenian history to repeat itself.