The Brooklyn Rail

Jamie Merchant’s Endgame: Economic Nationalism and Global Decline (London: Reaktion, 2024) was published at the end of August as the latest volume in the Field Notes series. John Clegg caught up with Jamie in Chicago to discuss the book.

John Clegg (Rail): Maybe you could start by telling us about how you came to write this book.

Jamie Merchant: I had written a number of essays over a couple years for the Field Notes section of the Brooklyn Rail. This was around 2017 and 2018, shortly after the election of Donald Trump and the Brexit referendum. All kinds of right-wing forces were gaining momentum around the world, not just in the US and Europe, and asserting themselves in loudly nationalist terms in a way that they hadn’t for a long time. These tendencies, throughout the neoliberal period, the 1980s through the early 2010s, would have been seen as atavistic leftovers from the capitalist past. For decades elites had thought that we were done with crudely self-interested nationalistic policies, that we were moving into an era of globalization and open trade and open movement and political liberalization. For a lot of us, that was the world we grew up in, the world of neoliberal globalization. But it was starting to become evident that that world was coming apart around 2015-2016. I had been writing about that, and in 2018 Paul Mattick, the Field Notes editor, suggested that I write this book. I started the book in earnest in late 2019, and then 2020 and the pandemic happened. A lot of things happened very quickly. To me, at least, it felt like one era was coming to an end and another was beginning. And so I had to rethink a lot of the premises I had started with.

Rail: You describe the book as an epitaph for the era of globalization. In the book you trace the re-emergence of economic nationalism in the form of more restrictive trade policies, often associated with military conflict, but which is also often associated with various kinds of right-wing political thinking. So should we see Trump and similar figures as wildcards who just changed the coordinates? Or is there another explanation for the shift away from globalization?

Merchant: One mainstream explanation is that throughout the neoliberal period you had very steeply rising income inequality and especially wealth inequality, in the advanced economies, the liberal democracies. There were huge numbers of people whom the supposed benefits of globalization had apparently left behind. Eventually, the wage repression and inequality got to a breaking point, and that’s how you got the emergence of what the establishment calls these populist figures: Trump, Farage, Marine Le Pen, the AfD in Germany, etc. And that’s just North America and Europe; we could take a tour around the world if we wanted. But it still has to be explained why inequality became as severe as it did.

Common answers are that it was all because of greedy economic and political elites who just wanted to get richer at the expense of the broader population, or that it was just dumb politicians making bad decisions about macroeconomic policy, that allowed their business benefactors to become very rich and made the working class very poor, and now we’re reaping the results of that. If you read the Financial Times, for example, which is kind of like the left wing of capital, you will see that sort of explanation a lot.

But that leaves other questions unanswered, like: why wasn’t growth increasing enough to allow the ruling class and the working class to accrue income and grow together as they did before, in post-war capitalism? You rarely see the question engaged on that level. Why did the economic system apparently stop growing in a way that could sustain a kind of class compromise? Why did things begin to come apart in those years? My argument is that it’s not just stupid decisions, although there are plenty of stupid politicians making bad decisions all the time. Nor is it just greedy economic elites, because they’re always greedy and self-serving, right? So what was different about it?

The neoliberal regime was a highly financialized mode of growth that accompanied the end of the Cold War, and the opening up of a vast new swath of the world which was brought into the global capitalist system. Basically, once the relatively quick returns from that opening up ran out, the system began to run up against its limits, and began to break down. The big financial crisis of 2008 was the big opening signal of that limit. Throughout the neoliberal period, inequality was getting worse but economies appeared to be growing quite robustly by many measures. But still, as we now know, there was this long-term trend of decay at the level of the global economy as a whole. And it showed up in different forms, like the severe deindustrialization of the capitalist West, and the extreme financialization of these economies at the same time. But within that trend there is also a kind of cycle, which we’re now seeing in the desperate turn, or return, to extreme economic nationalism on the part of every major government, as they try to get growth going again to a level that would keep social stability in place.

Rail: What do you see as the fundamental cause of this slowing growth rate at the global level?

Merchant: I’ll put my cards on the table. I think the critique of political economy as laid out by Marx provides the most powerful concepts to understand this, and to understand economic evolution in general. And so I think that what we’re dealing with is a system in which the surplus product—what Marx called surplus value—is created through the exploitation of human labor. At the deepest level, what we’re seeing is the increasing deletion of human beings from the capitalist production process, here and in the factories of the world, especially now throughout Southeast Asia. And the more that this goes on, the more that you begin to see pressure on corporate profitability, on productive capital, and the more that capital begins to be siphoned into unproductive ventures. Not even necessarily financial speculation, but labor-intensive service work and types of economic activity with low labor productivity, as Jason Smith and others have shown us in detail. These kinds of work increasingly form a large chunk of the economic output of countries like the US, the rich countries.

And so you have this sort of, I think I call it a doom loop in the book, but it’s this process of removing humans from the labor process, which is leading to less and less surplus product to be divided between profits and interest and rent, which puts further pressure on profitability. That leads to governments making more and more desperate moves to juice up production and subsidize private profits through crazy debt spending and borrowing, to this new industrial policy turn, which we can get to later. But in general that turn is a big attempt to boost the drive for greater productivity, which insofar as it replaces workers with work-saving machines and technology, in the short term it might lead to local profit gains or opportunities for profit. But in the end, it reduces profitability across the whole capitalist system, because now there’s less surplus to be divided up between all producers. So what they see as the solution is only a short term solution that leads to the longer term breakdown of the system, of the productive machine. So, in rough outline, that’s how I would define the deep engine of this crisis.

Rail: If that’s the underlying engine of the crisis, and the crisis manifests in declining rates of growth, what is the link between that sort of overall economic stagnation and these specific phenomena that you’re talking about—rising inequality on the one hand and the turn towards economic nationalism on the other?

Merchant: Inequality is not getting any better, despite the turn to economic nationalism. Because, at least for the moment, the mode of growth is still based on expanding debt and increasing the value of financial assets above all else, because that is where the vast majority of capital is—it’s the only place for it to go because investment in the productive economy is not profitable enough to compete with that realm. But this is exactly what the new industrial policy is trying to change.

In addition—and this is a key part of it—there’s the power of the US currency, the dollar, which is absolutely crucial for the US projection of its geoeconomic and geopolitical power. This power is premised on the strength of its currency and its ability to leverage its currency as world money, as the global reserve currency, to its own advantage. Although it’s not a pure advantage, it also has its drawbacks for the US government, but nevertheless it is a powerful tool that the US ruling class uses to advance its goals. In general, there’s too much at stake in the financial system, in terms of the accumulated savings of not just wealthy and rich speculators, but of a big portion of the working class and the middle classes, who have their combined savings and pensions, a considerable sum, all invested in these financial markets. And so if there were to be some sort of major meltdown the likes of which we almost had in 2008, and then almost again in 2020, you’re looking at literally the combined wealth of an entire society, almost an entire civilization, being threatened. And so the people who make macroeconomic policy really have no choice but to continue to exacerbate inequality, because their number one job is to preserve the value of the dollar. That means preserving what they call price stability. Hence the Federal Reserve’s monetary policy and its stance around interest rates and so on. And the end result is that the value of that wealth is going to continue to go up and up and up, indefinitely, and meanwhile wages will not even be on the same scale.

Rail: I can understand the connection you’re making between stagnation on the one hand, and rising inequality on the other. And it’s clear that the existing political regime is being undermined by that rising inequality. And this creates internal tensions and contradictions at the political level, at the level of just maintaining a kind of relatively docile workforce, etc. But then why is it that economic nationalism becomes the response? In what sense does it address these issues? And if not, why is it the answer that we see across the developed world?

Merchant: At the moment it seems to address these issues for capitalist governments, because international competition is not just between corporations, it’s between nation states themselves, which are constantly fighting for their national corporate champions to win a larger share of the global surplus, of the profits that are there to be made on the world market, in order to strengthen their own power. That’s ultimately where their power lies. The capitalist state depends on the strength of its private sector to enhance its own political power. That is its source. So when you have this general situation of decay and decline economically, you will have governments stepping in more aggressively to promote their private corporations.

Basically, what happened is they realized the neoliberal narrative was bullshit all along. Maybe it wasn’t entirely bullshit; it seemed to describe reality for a few decades, at least from the elites’ perspective. But after 2008, and then really around 2016, it began to become evident that it was no longer working, especially after the election of Trump and Brexit and all of that. The elites themselves began to realize: wow, this really isn’t working the way we thought it would. And the scale of the damage that had been done to the working class and deindustrialization and all of that—they were able to just ignore it for a while, until finally they couldn’t anymore. Their political lives were at stake. The cliché is the state is being "brought back in" as a response to this economic crisis, which is very clearly perceived as such by the ruling class and its political stewards. They do learn, and they’ve realized that a correction is necessary. And in the case of the US ruling class and the US state, they’re willing to just throw the rulebook for international liberalism out the window, and say: look, we’re the victim here, we’re going to do whatever it takes to get economic growth going and make this country great again.

The thing they’re really afraid of is social and political turmoil. They’re afraid of what happened in 2020 and 2021, they’re really afraid of that, and so they’re experimenting to try to get a handle on it. So hyper-nationalist policy becomes a way to address that, through sanctions, trade restrictions, new tariffs, huge new corporate subsidies, the whole gamut of policies that the US has been rolling out over the last few years, not just against China, but particularly against China, which is the new official enemy. And this new raft of straightforward, crude nationalist economic policies that are just looking to US interests alone, and no longer to this larger international order that they used to speak for, or at least claim to speak for—that is the way they have chosen to go.

Once other countries began to see the US take this line, which began under Trump but really came into its own under the Biden administration, they have been following suit. China is answering in its own way, allies like South Korea and Japan are answering in their own way, even though the US government thinks it has all that sewn up in Southeast Asia, in terms of its alliances to take on China. South Korea, for example, has its own protectionist policies, it’s beginning to implement an industrial policy to protect itself from the US offensive. No one has any reason now to listen to the US. complaints about "unfair competition" from state-supported industries, since the US itself evidently no longer cares about that. No one takes the idea seriously anymore that this is some kind of fair system governed by free market competition. So this is where we’re at now, the cat’s out of the bag, so to speak, and renewed economic nationalism is seen as the way to combat unacceptably low growth rates and the social instability that is leading to.

Rail: The ex ante economic orthodoxy would have been, this is all totally irrational, a kind of political demagoguery, entirely counterproductive, the reversion to protectionist policies is just shooting yourself in the foot. Clearly, you’re not persuaded by that argument. But you’re also not persuaded that the revival of economic nationalism is going to restart growth and thus address the underlying problems of rising inequality and social instability. How does your argument fit between these different positions?

Merchant: Yes, I’m very skeptical of this turn to what is essentially a form of beggar-thy-neighbor nationalism, which is being adopted by more and more countries. But it’s not for the same reasons that academic economists might give, at least the ones who adhere to what we could call the standard ideology of the field. That kind of criticism would be that by putting government policies in the way you’re infringing on the rationality of the market, you’re not allowing the free market to do its job, you’re going to introduce inefficiencies, and it’s going to drive prices and costs up. Whereas my argument is that, at the end of the day, because governments are becoming more and more cutthroat in their competition, and everybody is doing these big state interventions in their economies, this is really turning into a new inter-imperial competition for the global product, and who’s going to capitalize not only on current growth opportunities, but also on the growth to come, maybe from new industries, new technologies. But this all ultimately is self-defeating, because, again, we have a longer-term, secular trend underlying the transnational economic system that every country is caught up in in a different way. And because we’re looking at what Marx called a rising organic composition of capital and overall falling profit rates, to put it that way, then what looks like solutions to the problem are really going to be only short-term solutions that exacerbate the problem in the longer run.

For example, let’s take industrial policy in the US. The US government can shovel federal money at foreign producers to attract them here, mostly because its money is the global reserve currency. It can borrow and print money like a maniac because of the strength of the dollar and the demand for its debt in global financial markets. It has the ability to use its currency in this extremely powerful way, to attract investment in a way that other countries cannot, to attempt to juice up manufacturing and higher productivity industries within the country, which is what they’re trying to do right now. But will that even be able to scale up to the point that will move the needle on the broader slowdown in labor productivity growth that has been going on for decades now? Can one country really fix that on its own? I’m very skeptical that it can.

But let’s assume this new private-public partnership works out more or less as intended. In that case we’re still talking about the same dynamic I was discussing earlier, about the subtraction of labor from the production process. That will lead to more capital-intensive industry at the local level, which may temporarily lead to higher returns for US businesses, but that reduces profitability in the global economy as a whole, because it removes the ultimate source of profits, labor, from the production process. Profits become scarcer even as the scale of investment required for them grows larger. This drives the world economy further into a zero-sum competitive environment. And we see the same things happening in China, the US’s official enemy, right? The same processes of deindustrialization, automation, and stagnation are happening there, just in a different way than they are here. So this is very much a global trend. And this is to say nothing about the destructive effects of massive, debt-fueled public spending in the US, which pushes interest rates higher and sucks up capital from the rest of the world. Doubling down on America First policies exacerbates the very forces and imbalances that are feeding geopolitical tension everywhere.

Rail: You’ve laid out your explanation of stagnation and rising inequality, and you’ve pointed to the economic nationalism that is supposed to address this itself contributes to increasing instability. I want to move on to the social dimension of that, but before we get there, just to fill out the picture a bit: we should point out that you link stagnation not only to domestic instability but also to geopolitical instability, and even war. I think that’s a really important argument. So could you speak more about the geopolitical implications of the global economic slowdown?

Merchant: Essentially, the general slowdown in productive economic operations and shrinking opportunities for profitable investment for the ownership classes of different countries has brought a lot of social volatility. I already mentioned how 2020 and 2021 scared the shit out of the US ruling class. China, to take another example, had enormous and intense labor struggles in the 2010s. And the big centralization of power under Xi Jinping, I would argue, was partly a response to the CCP leadership’s understanding that they really needed to get that under control, and make sure that labor peace was secured. And things have been kind of quiet on the labor front in China over the last few years.

But we could point to any number of major uprisings—pick your country—over the last decade. And domestic instability and conflict are some of the biggest drivers of foreign policy for any government, and especially the governments of the capitalist ruling classes. It’s a fantastic way to try to vent that negative energy by finding an external scapegoat to direct it at. And I think that’s a big part of what we’ve seen over the last ten years in this country and its vilification of China. And in addition, that syncs up very well with the story about deindustrialization, the elite class realizing that the workers have really been decimated in this country over the last thirty or forty years, and they need an explanation for it. And so they’re not going to say that the economic system that enriches them and that has made them powerful and great is the problem. The scheming Chinese are the problem, right? They allegedly cheat, they don’t follow the rules, and so on. A lot of US foreign policy is just whining about how other countries don’t follow the rules. Never mind that, obviously, we don’t follow any rules either.

So geopolitical tension gets worse, because as national economies become more anemic that makes things more unstable, more brittle socially, and it makes the political system less stable. I mean, in this country, we just had an assassination attempt on a presidential candidate for the first time in forty-something years. So they’re very keen to get a handle on these domestic problems. And identifying an external enemy and pursuing policies at its expense, that they hope and believe will restore prosperity to the national economy—they’ve decided that that means countering China’s continued development and growth, which they see as coming at the expense of the US.

Rail: But isn’t there a sense in which you’re suggesting that that’s true? What struck me about the book is you’re saying that in a context of stagnation, domestic and international, we have a zero-sum conflict. The rich are getting richer at the expense of the poor when growth fails. And, similarly, internationally, to the extent that it’s possible for some region of the world to grow rapidly, it seems to be actually, not just in their minds, at the expense of growth elsewhere. And that itself leads not necessarily to a military conflict, but certainly to a heightened geopolitical competition.

Merchant: Yes, as long as the economic system is guided by the requirements of profit and private property, there is a real zero-sum dynamic at work. This kind of conflict is not inevitable, but as long as capital is in the driver’s seat it’s where we’re all headed.

By the way, speaking of capital in the driver’s seat, this has a really important financial dimension too. There’s an argument in the chapter on finance about the growing creep of government overreach in the financial system, and conversely, the way that financial imperatives influence the US government, especially the Federal Reserve and the US Treasury. So there’s this kind of governmentalization of finance and financialization of government dynamic. And if we were to dig a little deeper into the historical sources of the current legitimation crisis of the ruling class, and the growing illiberalism of the political class, I think it has something to do with the gradual nullification of market competition, and of market dynamics in the financial system through the increasing encroachment of state administration and how it’s run on a day to day basis. It’s done through forms of insurance, through guarantees that the Fed provides to big banks and asset managers and all the ways that the government underwrites or puts a floor under the value of private assets, and says that they can’t go lower, because we’ll make sure that it can’t go lower. It is having this broader systemic effect of taking whatever competitive elements used to be in financial markets, and just turning them into a government administrative system that only goes up and is committed to essentially removing risk. Because, again, they’re terrified of instability.

So one way of describing macroeconomic policy since 2008 is all the different ways they can remove systemic risk from the financial system. Thus the book talks about index funds and how a lot of liberals and right-wing commentators think they’re satanic, because they’re brain dead: the market goes up and they just sit there and go up too. It’s purely passive, you don’t have to do anything. And so there’s a sense in which to keep the whole economic order running, the state is euthanizing the key liberal institution of the market at the highest level of the economy, the credit and financial system. I see that as a big driver of political illiberalism: this gradually encroaching governmental policy is eroding the social and economic foundations of liberalism itself.

Rail: Doesn’t this expanding role of the state in economic management at the highest levels make economic nationalism sort of logical? State regulation is not only necessary for social stability but also for managing increasingly conflictual geopolitics. Industrial policy is a necessity in a world where everyone else is adopting various kinds of industrial policy. It’s neither a progressive nor reactionary element in itself, it’s increasingly just a necessary function of the state.

Merchant: Some scholars whose research I really like are calling this the new state capitalism. That term has a very fraught history, but I think it’s pretty serviceable for the current moment. I’d recommend checking out the work of Ilias Alami, Adam Dixon, and Milan Babic on this.

Rail: I wonder if we could now turn to the social question, because it was really striking to me that you begin the book with a mass shooting event which you link to wider phenomenon of conspiracy theory. It is surprising that a book about these broader economic trends would focus in on these kinds of cultural and affective phenomena. But I think you do that in a really persuasive way. So can you explain why you begin with this mass shooting?

Merchant: It’s such a uniquely American phenomenon, the lone wolf, almost always a white male mass shooter. It’s a nightmare that haunts this country endlessly. It’s really something that only came into its own since the 1980s, since the beginning of the neoliberal era. If you look at a graph of incidents of mass shootings in the US, beginning in the early eighties it starts to just take off. But when you read commentary on this kind of thing in the mainstream media, they don’t have any clue why this is happening. Really. I mean, they will suggest that it’s because there are too many guns, which is, of course, true. Or there’s a mental health crisis ripping its way through the country, which is also true. But those two things together are not sufficient to explain why this happens over and over again, and why we see more and more instances that are prejudicially motivated. America has always been a pathologically violent country, but why has this particular type of violence become so prominent in public life in the last few decades?

The one that I start the book with was this horrible event that took place a few years ago. It was a racially motivated attack that was rooted in an anti-semitic conspiracy theory. I see conspiracy thinking not as some irrational psychosis—though sometimes it can be a symptom of mental illness—but it’s such a widespread feature of US society, and not just us, but especially us, that it needs some kind of social-historical explanation.

In seeking this, you can’t overlook the things that people say, the reasons they give for why they do these terrible things. And I think it’s related to the larger problem of decline and stagnation. Because, again, people often take their cues from stuff they see and hear in the media, and you see increasingly right-wing media, people like Tucker Carlson, who are providing an explanation for US decline by saying the quiet part loud, about a supposed cabal of Jews and immigrants who are trying to undermine US society. Some of the most powerful people in the country are spewing anti-Semitic ideology to millions of people every day. But of course, politicians and the media have to pretend it’s a bunch of students protesting genocide on college campuses who are the real threat here.

So anyway, that type of anti-Semitic worldview motivated the kid who did the shooting that I discuss in the opening of the book. And he had arrived at that conclusion by being bored out of his mind during the pandemic; during lockdown he had nothing to do and just drove himself crazy looking at online forums. I think that conspiracist imaginary which is increasingly pervasive in American culture and society is a symptom of stagnation and people looking for answers as things slowly but steadily get worse, for why it’s so hard to get a decent job and why your wages don’t keep up with inflation and why you’re just—why you feel so alienated, right? For why you feel so completely lost in this society. There’s obviously a lot to say about the role of media and technology in fueling these symptoms of anomie, if we want to call it that. But at the end of the day, if the quality of life and work were better across the board for most people in this country, my bet is that you would not see as much of this kind of thing as you do today.

Rail: I think that’s very persuasive. You talk about conspiracism as a kind of shared social mood in which people try to make sense of the nonsensical aspects of the world. This seems to correspond to the decline of the era of globalization, the declining opportunities, the promises increasingly betrayed or unfulfilled, but also the sense that the powers that be have actually in some ways lost control. So there’s a paradoxical kind of inversion: as governments struggle to maintain control over the societies they rule, people increasingly imagine a hidden, secret cabal of rulers who are in full control. It allows them to maintain the fiction of rule in a world that’s increasingly unruly.

Merchant: Yes. Another way to put that is that people look for a personification of evil. In a system like capitalism, domination works both directly and indirectly. We obviously see figures like the police, the military, the National Guard as figures of coercive, direct domination. But in capitalist societies domination is also an impersonally, indirectly experienced thing that can have very abstract sources rooted in this vast, transnational economic system. And that can be a very abstract thing to get your mind around. And so it is a normal human thing to look for personifications of that larger system to blame for its failures. And we have a political class that’s completely complicit with that. They’re not going to call out the failures of the capitalist order as such. They’re also going to look for scapegoats to get them off the hook, right?

Rail: And we see it in the form of economic nationalism, at least on the right. There’s a link between economic nationalism as a kind of economic fix, and these various kinds of scapegoating around not just racial and national minorities, but also around gender. And that seems key. We just saw a particularly unhinged Republican National Convention in Michigan, where people like JD Vance simultaneously offered a platform of economic nationalism, restoring productivity growth to the economy, and one of “restoring the family.”

Merchant: I think that Vance is a good example. He’s one of the most articulate figures of this new right formation that has attempted to synthesize the mainstream fixation of the US ruling class and its politicians on the official national enemy, China, with a traditional right-wing boogeyman of people following non-traditional gender roles and identities, immigrants, and basically anyone who doesn’t fit in the out-of-date but insisted-on mold of the bourgeois or nuclear family—especially the white nuclear family. Although with Vance there’s been a huge controversy in conservative circles over the last couple of weeks, because everyone just realized that he has an Indian-American wife. So that’s some serious cognitive dissonance for them, it’s not easy for them to get their head around that.

In the rightwing narrative there is an attempt to link the external enemies to the internal enemies of the nation. And so, you know, supposedly Communist China is responsible for funding Black Lives Matter, for example, and they’re both allegedly in league with the financier George Soros, who they believe wants to overrun the country with immigrants. There’s always this barely subdued terror of race liquidation. They’re always worried that white people are going to be eliminated as a racial category. And so there’s this anti-communist, anti-Semitic, xenophobic form in which economic nationalist ideas are put forth. And Vance is a good example of that. Although he and other, savvier exponents of this ideology will disavow all of that, and will just say that the strength of economic nationalism is that it’s like a civic nationalism, actually. It doesn’t discriminate between people of different skin color, different orientations. Well, maybe he wouldn’t allow gender orientations, because that’s really the thing that they’re the most terrified of right now. But they will at least try to make the case for a racially inclusive economic nationalism. Steve Bannon, if you remember that guy—I think he just went to jail—he always tried to emphasize that this is not about race, we’re not racists, we’re just nationalists.

I mean, the American Right is a very contradictory and conflictual formation, split between civic nationalists who want to leave all of the toxic identity stuff out of it as much as they can—even though that doesn’t really work because it always comes back around through the backdoor, so to speak—but the ones who at least want to say that they’re not concerned with that; and the people who are explicitly concerned with a white nationalist project. So they haven’t really figured out how to square that circle yet. But regardless, they are articulating an idea of economic nationalism as an ideology that links the external enemies of the day to whoever are identified as the internal enemies, who are always the people they see as subverting the nuclear family.

Rail: The notion of a strong family has become something of a trope for the right, which tends to associate it with a lost world of economic growth when gender roles were clear, and men in particular had a sense of their responsibilities and privileges. The flip side of that is that the loss of growth is associated with unstable families in which men specifically seem to have lost out. And its true that by some measures, for example education, boys and men appear to be performing worse today. So what do you make of that trope? How important is stagnation to this supposed crisis of the family that at least the right is identifying?

Merchant: That’s a complicated question. On this Gabe Winant’s book on the US industrial working class is exceptional. It shows how the so-called stable, post-war nuclear family was a contingent artifact of very particular political, economic, and historical relationships that came together during the classic period of industrial capitalism, and that has seen its fortunes change as capitalism has itself changed. It’s a really complex question—I don’t think it’s just stagnation. But I do think it has to do with the way the labor market works in the contemporary capitalist economy, in which you no longer have a job that you just take after high school or even college, that you might have for the rest of your life, that’s unionized with good benefits and all that—now everyone is constantly moving around, from place to place and job to job. That’s just not a recipe for domestic stability. In addition, there’s the complete transformation of the labor market in the seventies and eighties, when women entered the labor force en masse, in part because that was what the capitalist economy required during that time—in the context of deindustrialization, the expansion of the service economy, and the financialized economy.

I would say that sometimes right-wing intellectuals can be right, but for the wrong reasons. You know, Daniel Bell quite a long time ago was talking about the cultural contradictions of capitalism, and how the particular economic properties and qualities of a capitalist system tend to create, to need this market for media and cultural ideas that, for whatever reason, people consume, and this has a strong influence on their identities and their self-conceptions, especially when people are young. So what we on the left see as a good thing, like different ways of being and expressing yourself in terms of gender identity, they see as a threat that is becoming more and more common as those things are just more accepted publicly and in the media and so on. But the patterns of representation we see in the media do in the end reflect these structural socioeconomic changes we’ve been talking about. So there are a lot of factors at work, but I think that’s a very deep question that I hope to be able to think and write about more in the future.

Rail: We’ve focused on the right because the right is the leading edge, or at least was the leading edge of economic nationalism. But we’re also seeing a kind of scrambling of left and right on this question. We just saw the head of the Teamsters union gave the keynote speech on the first day of the Republican National Convention while Biden and his surrogates are claiming that they are the most economic nationalist of all, that Biden has done more to impose tariffs on China and to bring jobs back to the US, and so on. There are some to the left of Biden who believe that had Biden implemented a Green New Deal properly it would have genuinely revived growth in the US and thus addressed all of these problems of instability, inequality, etc. So what is your take on the left version of economic nationalism?

Merchant: A lot of the left liberals who want this new green industrial policy, the first version of what became “Bidenomics,” the Build Back Better bill—a lot of them see that as a great possibility that was lost because this one senator, Joe Manchin, wouldn’t support it. And so they got the watered-down version, which they’re still very hyped about, with the CHIPS Act and the Inflation Reduction Act and the infrastructure bill. But I think it makes more sense to look at history not in terms of what could have happened, but in terms of what actually happened. And what actually happened is that agenda was watered down and what we got was basically a glorified series of corporate handouts. I would just call it corporate welfare. And I know Biden boosters doggedly defend it, but the fact is the country’s manufacturing sector has contracted nearly every month since the legislation was passed.

As I said before, these programs are leveraging the tremendous power of the dollar as world money. And they utilize the tax system to deliver massive subsidies not just to green and post-carbon energy producers, but also to carbon producers and fossil fuel companies. Fossil fuel prospecting and production and refining is breaking new records every year. And so what they got was a sort of all-of-the-above approach, and I think the verdict is still out on whether it is even going to cancel out the damage that it has done by completely unleashing the fossil fuel sector and letting it run amok with new investment projects.

Basically, the core of my argument is that the domestic side of the new industrial policy and its external, foreign policy side are not disconnected from each other. You will see some liberal commentators—actually they’re fewer and fewer these days—the ones who don’t want a belligerently militaristic foreign policy, insist that no, Bidenomics is not tied to escalating hostility against China or any other country. That’s just an unfortunate side effect or contingent feature of US politics right now. The domestic industrial policy that does what we want need not put the world at risk of war. But that’s wrong, because the massive raft of trade sanctions and tariffs and technology restrictions, all of which really go for the jugular of the Chinese economy, are clearly meant to undercut its ability to compete in the areas where the US is trying to build out its capacity in green energy and batteries and electric vehicle production—the so-called future industries, where everyone is placing their bets. In my opinion, it is short-sighted to say that they’re separate, because they’re clearly both parts of the same project, which the ascendant factions in the US State are trying to pursue. Because they do understand that there is a zero-sum dynamic, not just between the US and China, but among all the major capitalist countries. And they’re determined to right-size things here in the US at the expense of basically everyone else, even their supposed allies in Europe and East Asia. So I think the left liberal intellectuals who think that this could just be a progressive domestic policy that doesn’t have ill effects internationally are making a very profound mistake. Because in the actually existing industrial policy they’re two sides of the same coin.

Rail: I was struck by the decision to impose an outright ban in America on Chinese EVs, a 100% tariff. It suggests they don’t really believe that American car manufacturers can ever compete. They’re just trying to punish China, at the American consumers’ expense.

Merchant: I agree with that: they have basically given up on the ability of US industries to compete. That’s why we’re seeing all these over-the-top protectionist policies. And I would also add that people who want some kind of industrial policy gravely underestimate the political effect that growing isolation will have on this country, as the US continues to sort of strike out on its own course and just gives up on maintaining the so-called liberal international order that it has been the custodian since the postwar period. That’s not fertile ground for the left. That’s an empowering atmosphere for the right: isolation, corporatist economic policies, anti-immigrant policies, a very protective stance on the labor market and desire to shield it from what they would call illegal immigration. These are all circumstances that would profoundly benefit the right and would not help the left. The left can talk nationalism, but the right is always going to be the side to benefit from it.

Rail: We’re living in a time when the re-election of Donald Trump seems quite possible. At the same time, unions are expanding, winning elections in the South and other places. And we saw in 2020 the largest social movement in American history. How can we make sense of this?

Merchant: It’s hard to make sense of but everything is in flux right now, that’s part of what I think is interesting about this historical moment. Political relationships and alliances are increasingly fluid, and in some cases being questioned. The Teamsters may not be the last union willing to talk to the Republicans. The Teamsters have their own particular history that makes them receptive to doing this kind of thing right now, but it’s not a foregone conclusion that organized labor will be a left-wing or even progressive force all the time.

Rail: The technical solution is always the easiest to refer to in stump speeches, right? We just get them to manufacture the chips in California or Arizona, and we’ll bring all the jobs back. But it seems like even the tech gurus themselves are aware that’s not really going to solve the problem. Just recently, the global economy was briefly shut down by a Microsoft failure. And you were talking about the looming bust in AI investment, which we already see in many other new technologies. Do you have some way to connect your story of stagnation and instability to the weird tech world that we’re living in?

Merchant: The AI bubble is just the latest and maybe most insane in a string of big new things that are supposedly going to revolutionize everything, but then turn out to be total flops. I mean, it was crypto for years, and then NFTs, and then Web 3.0 or whatever, and then it was the metaverse and virtual reality and all of that shit. And by the way, working from home, working remotely, that was also supposedly going to revolutionize productivity after the pandemic. And now we have AI.

So I take all these claims that it’s going to revolutionize everything with a very large grain of salt. The most likely result is there will be a big crash at some point of these greatly overvalued technology assets, and then it will continue to play some part in our life. But it will not be the culture-changing paradigm shift that they’re claiming it is going to be. And yeah, the market capitalization of Nvidia for example is going up and up and up and up, because there’s an anticipated demand for all of these chips that are going to power this paradigm-shifting revolution. But if that big revolution never comes, Nvidia, this company that is playing a big role in carrying the stock market to new daily records, is looking extremely overvalued.

That’s to say that we’re in this never-ending cycle where capital doesn’t have anything really productive to invest in anymore without tremendous state support. That’s the only way it’ll invest in anything productive, if the state just shovels money at it. Apart from state-sponsored development or reindustrialization, whatever you want to call it, the only kinds of investment we can expect are these big over-hyped digital products that are based on driving up the market capitalization of the stock and the bet that the markets will continue to go up and up, and asset values will keep going up and up, of which AI is just the most recent example. Fundamentally, private investors can’t find the profit margins to want to invest in anything else. So that’s where all the capital goes, building AI to help make a better toothpaste or something.

Rail: You could be mistaken for having written a pessimistic book, in the sense that you argue that the main attempts to solve the key problem of stagnation through various schemes of economic nationalism are not going to work. But you don’t end the book on a pessimistic note. So I’d like to end by asking you to say something about why, despite everything, you’re not a pessimist.

Merchant: That is something I’ll admit I wrestle with. I think all of us probably do. We have our good days and bad days, hopeful days and doomy days. But I wanted to end the book on a non-pessimistic note. And so instead of just thinking about technical solutions—I mean, I think it’s really important for people to be researching and writing and thinking about new kinds of investment or what socialized investment could look like, right, what a post-monetary economy could look like, or how the monetary system that we have or the fiscal apparatus we have could be used in more potentially radical ways if and when we were ever to find ourselves in a position where we could do that. But that’s not what I’m really interested in thinking about. Coming to the end of the book, I realized I’m more interested in thinking diagnostically about politics, and the connections between the different sites of conflict and combat that we see in the contemporary moment.

And so I guess if there is one sort of political—not a lesson, but a recommendation to impart from the book, it’s for the left—in the wake of the final defeat of the Sanders campaign, the demoralizing years of the pandemic, and now perhaps on the eve of a Trump re-election—to start thinking about the relationships between the kinds of workplace and union organizing we’ve been seeing in recent years, the different forms of political organizing, the electoral and state-oriented organizing, the direction that those have been taking. Then, to connect them with the role of what I call in the book the multitude, the great uprising of the masses, which is its own weapon, maybe in the class struggle, but I see it as one moment in that triangle between what I call, following Aristotle and Machiavelli, the One, the Few, and the Many.

Politics is of its nature highly mediated. It revolves around images and key figures who have great influence on the ideas of the people. Then from another angle you have workplace and shop organizing, which has more volume. It’s about workers and workplaces organizing the conditions of their labor. Then you have the largest numbers of all, which are found in the multitudes. I’m trying to connect the dots between these different forms of struggle, and how we might begin to think about connecting them strategically. I know that’s a very schematic answer. But with the current trajectory that US society is on, or the capitalist world in general, I don’t see the contradictions that are shaking them to their core and destabilizing them resolving. For the reasons we’ve talked about, our current political leaders are trying to address it, but they’re not going to affect the deep sources of these problems. And in fact what they’re doing is going to make things worse.

So I don’t see the social negativity and antagonism going away. I think we go through cycles, we go through peaks and valleys in oppositional consciousness. And we’re in a bit of a lull right now, but it will come back. And there’s going to be, at some point, another major credit event, a major crash. It’s always fun to speculate where it might come from. Right now it looks like we’re in for a bit of a ride when investors realize that the AI boom is just a bunch of nonsense, and the wind begins to go out of that. So we’ll see what happens then. And for all these reasons, I don’t think the ruling class is ultimately going to be able to get a handle on things, despite their attempts over the last four or five years. So we’re going to see renewals of political and economic struggle in the years to come. The question is, what forms will they take? And will we—broadly, people who identify with the left ‒ be able to capitalize on that?