There’s a lot of confusion about the end of the American empire, and the fall of neoliberalism. Many people think the US will just be in “second place” and it’ll be OK.
No.
The problem is the nature of America’s decline. Since 1980 the US economy has been progressively financialized. Profits are all that matters, not what is done to make profits. In properly functioning markets the idea is that products fill a need, on net improve human welfare and lead to more growth of real products.
If a company doesn’t make a profit, that means it isn’t growing the real economy with products which are a net positive. In such a case it goes out of business.
This is approximately how the Chinese economy works. It’s how the US economy worked for much of its history. It’s how the British economy worked up till about 1890 or so.
It’s not how the US economy works.
You could say that the US economy is currently auto-catabolic. The more money that is made, the more the real economy is damaged. You see this most purely in Private Equity. They buy up companies, loot the company, load it up with the debt (including all the debt used to buy the company), then the company goes out of business. This is what happened ToysRUs, it is also, contrary to the current storyline, what happened to Blockbuster. The company was trying to pivot to online, but all profits were drained out by PE owners.
This happened to, literally, tens of of thousands of company.
The sort of monopoly roll-ups which Matt Stoller so ably covers increase prices without increasing product quality. Health care price increases provide no utility (you can get a CT or MRI scan in China for under $100.) All of this damages the economy. Headline GDP goes up, but the actual strength of the economy decreases. I would estimate that fully half of US GDP is essentially “fake”, driven entirely by increased prices and fake profits. The US economy has been smaller than China’s, in real (not PPP adjusted, but “how much do we produce”) terms for at least ten years.
This process continues till there is no muscle left to consume.
The only possibility of the US avoiding the UK’s fate, despite being a continental power, is for the oligarchs to lose power and for there to be a huge compression of asset and service prices. This process will be extremely painful and is currently politically impossible, due to the control of the duopoly. Both parties are owned by oligarchs, the tech bros are rising and none of them have the least interest in creating a good economy when it’s so much more profitable to loot America.
Real innovation is moving to China and will increasingly do so. They are at least equal in pharma and will soon be ahead in biotech. Their markets prioritize increased production (which westerners complain about as “over-capacity.”) The Chinese government does not want high GDP numbers or high profits, they want increased human welfare and a more powerful state and country. So their markets are organized, well, as actually competitive markets, the most “free” in any major economy.
So Americans who are patting themselves on the back, figuring “well, how bad can it get? We’ll still be number 2” are underestimating how bad the economy is going to get. India is effectively a continental power too, and it punches way below its geographical weight.
This isn’t to say there is no hope for the US, but decline has a long way to go yet because reversing it requires the most powerful people in society to give up massive profits, and many of them, in the process, would lose their fortunes. Meanwhile many ordinary Americans are still doing “OK” if not great, and they don’t want radical (change from the roots) change either.
All of this is not a worse case scenario either, it’s the default—maybe even slightly optimistic. The worst case scenario involves some form of civil war, not like the War between the States, but low grade shit wafare that slowly drives a country into the dirt.
The bottom is not yet close.
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Horne Fisher
I agree with everything you said about the US but one thing that I still can’t seem to get past is that the US was “born bourgeois” as Morris Berman is apt to say. As an American I have been subjected to an endless stream of constant advertising since I was a toddler. Without the US consumers around to purchase all this useless crap because we have been conditioned to believe that said crap will fill the void of emptiness all Americans feel deep down, how could an excess producing country like China not run into the same problems the US did in the 30s? Will it not take generations to either propagandize another society or to deal with the deflation that would come with an intentional reduction of the overall world economy to produce only things of value?
I suppose in some sense the collateral Trump uses in the tariff transactions is the US consumer as a whole. No other society has been propagandized to purchase in the way we have.
marku
There is a brilliant cartoon of little kids in rags sitting around a small camp fire.
One says:
“Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.”
https://www.newyorker.com/cartoon/a16995
Another fine one is a picture of a forest. Comment: In capitalism, this is worth nothing until it is cut down.
bruce wilder
What you have written here is so important! And, I would naively think, so obvious, except that the implications you highlight are regularly ignored or avoided by those participating in the political discourse, whether professionally (corruption? understandable) or as volunteer amateurs (denial? also understandable for some reasons you point toward, like the prospect of economic pain and loss).
Thank you.
Tony Wikrent
USA is hardly even pretending to be Number One anymore,
Asiatimes.com carries an article dated Dec 28, 2025, First and second largest economies in charts and figures
https://asiatimes.com/2025/12/first-and-second-largest-economies-in-charts-and-figures/
The only chart the US leads China is in GDP. But everything else – primary energy demand, electricity demand, share of manufacturing, industrial robots installed, steel production, gross tonnage of ships built, merchandise exports, high tech exports, shipping container throughput, share of industrial consumption, global ecommerce sales, packages delivered, luxury good sales, car sales, motor vehicle registrations, motorcycles registered, length of limited access highways, high speed rail length, transit rail length, skyscrapers over 150 meters tall, 5G wifi stations installed, university and college graduates, engineering and computer science bachelors students, science and technical articles published, patent applications, and more.
There’s also the chart by the Australian Strategic Policy Institute (ASPI) technology tracker showing that China leads in 66 out of 74 (89%) crucial technologies.
StewartM
This isn’t to say there is no hope for the US, but decline has a long way to go yet because reversing it requires the most powerful people in society to give up massive profits, and many of them, in the process, would leave their fortunes. Meanwhile many ordinary Americans are still doing “OK” if not great, and they don’t want radical (change from the roots) change either.
Indeed, it’s not just the uber-rich, it’s dang near every retiree in the country. Crush the markets, you crush their savings and income (both in IRAs/401Ks and in pension funds), and they’re either too old or unwell to work and/or face age discrimination trying to go back to work. You’d have to at least double SS, make the benefits come five years earlier, make SS untaxed*, and also likely just confiscate the market funds from the top 1 % or so to re-distribute them downwards to the bulk of current retirees. Yeah, you’d have to be that radical.
* — this would make SS essentially a full replacement income for low-wage workers, so at age 65 they would get the same after-tax income in retirement as they did while working, and close to replacement income for higher income groups up to the current cap.
Moreover, if you tried to fix America, you’d probably get the turn the neoliberal world against you, so we’d get the same treatment we’ve dished out to developing countries. Yes, we might able to eventually restore economic capability, but that has been so gutted we’re talking about a generation.
While I live in Appalachia now, I hail from a small town in the South that was a textile area. While Trump’s tariffs are not only destroying the company I used to work for in my current town (it has fallen out of the Fortune 500 list recently due to the tariffs; as Ian has shown, his tariffs are gutting manufacturing, not speeding it up), it’s laughable to believe that they will regrow those textile towns “in a few years” as Trump apologists (Hi Bruce!) assure us. Those towns are now gentrified; the factories are torn down and apartment complexes for commuters to a nearby big city have been built over them. Both the line workforce and the technical staff of those textile mills are either dead now, or in the nursing home.
And, no, hiring a few PhDs in textile science will not fix your problem. What makes manufacturing really work is the institutional knowledge, the proprietary and often unpublished workarounds and tricks. That KNOWLEDGE IS GONE here, and it will take at least a generation to regenerate. My old company used to own polyethylene terephthalate plants across the world, and one was a startup we had bought in Mexico. Because of the greenness of both line workers and technical staff, that plant never made good product even with us advising them and sharing what we knew. It’s that hard.
So, at best we’ll have a generation of plants in the US making not cheap crap, but expensive crap, crap that fails early and has to be re-purchased, and any competition for cheaper, higher quality products from overseas will be shut out, and American consumers will be further driven into poverty. Hey, what’s not to like about that, if you’re an oligarch? Mind you, there are models on how to industrialize: China, Japan, Korea (recent), Germany, etc. But our oligarchs aren’t following any model, save for US in the late 19th century (so they say) but that model also had UNLIMITED IMMIGRATION which they’re also against. As for the workforce, they want AI but even if doable (which it may not, due to hallucinations) you’d have to feed the institutional knowledge into the AI—and oops, we lost that.
Alvin Murray
I’m expecting to see Donkey basketball games at the Kennedy Center and East wing. That’s my prediction.
mago
Hey Alvin, I think you mean the Trump Center and who knows what’s going to happen in the East Wing or elsewhere, but you can bet your ass the game’s rigged and not in our favor.
Cheerful new year y’all.
Eric Anderson
Horne Fisher:
“Advertising” is a euphemism for capitalist propaganda.
And, given your take, I’m surprised you didn’t point to JK Galbraith’s classic “The Affluent Society” (See also Chomsky “Manufacturing consent). It echoes through your comment and resonates throughout most of my takes on the ills of the U.S. economy.
Essentially, what I hear Ian talking about here is a return to a simple demand economy — without the 24/7/365 propaganda incessantly seeking to “manufacture” demand. This was one of Galbraith’s main insights.
Here is the evolution:
1. Begin with a basic demand economy — which all are to begin.
2. Add social science propaganda to create a manufactured demand economy.
3. Once everyone has been propagandized into being “consumers” instead of human beings with basic needs and the profits begin to slow, then …
4. Enter supply side economics and strip all the humanity out totally stripping away taxes and regulations on the capitalist class, and allowing them to offshore to new markets where they repeat the process above and call it “free trade,” which is really just another euphemism for colonialism.
Call it neoliberalism if you want. But, it’s really just the marriage of manufactured demand and supply side economics.
The antidote lies in another great little book from around the same time as The Affluent Society called Small Is Beautiful by E.F. Schumacher.
Eric Anderson
I’ll add, I’m going to keep repeating “advertising is a euphemism for capitalist propaganda” over and over so many times that even the geniuses on Madison Avenue start using the term.
It’s a measure of how utterly brainwashed everyone is that they continue to call it advertising instead of what it really is: capitalist propaganda.
Ya’ll got a bullet in your heads. Madison Ave shot it.
One more time for luck: advertising is a euphemism for capitalist propaganda
Jan Wiklund
Concerning China and its markets, its behaviour is not as self-contradictory as it looks. I was reminded of that when I read, today, Alexander Gerschenkron’s renowned essay Economic Backwardness in Historical Perspective (1952), and what he wrote about the Pereire brothers, the creators of Europe’s first grand scale investment bank, Crédit Mobilier.
The Pereires considered themselves to be socialists. But that was in concordance with the meaning of the term at that time – someone who acts in the interest of the society at large. They were bankers, capitalists, but society needed investment, so they were socialists. Conflicts between capitalists and workers were non-essential according to their view.
But this label (like ”communist”) has worn thin during the 19th century. Perhaps one should use another. The Brazilian ex-minister and researcher Luiz Carlos Bresser Pereira (the name must be a coincidence…) uses the word developmentalist. According to him there are three economic doctrines:
– liberalism: the capitalist do what they please
– socialism, Soviet model: the state controls everything
– developmentalism: the state points out the direction, but non-essential things may well be handled by the market.
See his website https://www.bresserpereira.org.br/
According to this, China is developmentalist.
Jan Wiklund
The only snag with Bresser Pereira’s idea is, according to homself, that you need a developpmentalist class alliance to force it through. No other means can unseat the rentierists. And in a class alliance, all component parts have to be strong, and strong-willed.
The classic developmental class alliance of the 19th century (FDR etc) consisted of labor, farmers, domestic industry capitalists, and civil servants. All had something out of the alliance. And all had the ability to stir if they didn’t get it.
So it’s just to begin thinking of who – which organized interests – would be able to make a new surge.
GlassHammer
“conditioned to believe that said crap will fill the void of emptiness all Americans feel deep down, how could an excess producing country like China not run into the same problems the US did” – Horne Fisher
China has a “civilization” the U.S has “a bad marriage between commerce and religiosity” that is the difference, the things that make a “civilization” anchor the individual to a lineage, a purpose, a time, and a place. (I am not trying to praise China here but the U.S. really did skip some of the civilization building steps for creating a national identity.)
You have to understand, “balkanization is the default state of the U.S.” (its not pleasant to write that by the way) the connective tissue is just not that strong between states/counties (all of which have distinctive and enduring culture contained within them) which is why they have to be constricted into place by commerce (which is really just laws/ordinances and mass media) and religion (which isn’t Christianity proper, its commerce rewriting the Bible).
Carborundum
The quote that keeps going through my mind is something to the effect of that when it comes to policy, the United States does what is best for the stock market, China does what is best for the bond market.
I remember this being expressed in the context of monetary policy, but it would seem to work as a rubric in a range of policy areas. (For context, the quote was attributed to someone’s mentor who had worked in the market for a long time. Haven’t for the life of me been able to find the source, unfortunately – think it’s buried in a podcast somewhere.)
Like & Subscribe
We need, yes it is a need, to have a discussion about needs versus wants. You aptly describe needs but I would argue, contrary to your claim that properly functioning markets fill needs, modern economies are not so much about fulfilling needs but instead creating demand for wants which are increasingly frivolous and ludicrous. AI is the culmination of this insanity.
different clue
I will keep on calling it ” advertising”. If I were to call it something else, I would call it “consumptionist propaganda” to keep us all consumptionizing.
To me, “capitalist propaganda” means praise for the capitalist system itself.
I remember reading a quote from Max Beerbohm once . . . ” Buy advertised goods and help us pay for the advertising.” Here is a bunch of other Max Beerbohm quotes.
https://www.azquotes.com/author/1133-Max_Beerbohm
The nature of private equity debt-buying and then looting a company down to the empty shell and leaving the debt behind reminds of of the mafia scheme called a bust-out.
” MAFIA BUST OUT
Private Equity in Healthcare”
https://gloriajmaloney.substack.com/p/mafia-bust-out
I wonder how many of the “private equity” firms were created by mafia or mafia-adjacent people seeking to launder their money and go legit. And then use their mafia-learned methods in the wider world. And how many mafia-connected or mafia-adjacent people went into politics in order to re-write laws and regulations to permit and then favor oh-so-exquisitely-legal bust-outs.
Perhaps a new generation of ” subgenius hippies” can figure out how to anti-monetize their rage and hatred and turn it against the consumptionist system-lords. De-consumptionization. Down-consumptionization.
What would their new slogan, their equivalent of ” Tune in, turn on, drop out” be?
Perhaps something like: ” Tune out, turn down, slack off” ?
mago
The sub genius hippies if they ever existed became Wall Street traders like Abbie Hoffman to cite an alternative celebrity example.
You need hip waders to slog through the knee deep shit and hypocrisy up to your eyebrows.
different clue
@mago,
That’s why I was hoping for a ” new generation” of such. A generation of leaner tougher meaner hippies for today’s meaner tougher leaner times of today. Blogger Ran Prieur is kind of like that. https://www.ranprieur.com/
There were some hippies who did not go Wall Street. I think Abbie Hoffman didn’t, if that is any retrospective comfort. “Amfortas the hippie” who is a commenter over at Naked Capitalism hasn’t . . . if he is and does what he says he is and does. And I see no immediate reason to think that he isn’t and doesn’t. Stephen Gaskin didn’t go Wall Street though I gather he did some other things.
And maybe Mark Ames might be right when he suggests a good game might be to go Elitny and wave one’s Elitnyness in MAGAland’s face.
” Class War For Idiots / eXile Classic / November 29, 2009
Elite Versus Elitny
By Mark Ames ”
https://exiledonline.com/elite-versus-elitny/
Perhaps the best thing anyone can do is the thing which that anyone most believes in, because that is the thing which that anyone will do the most effectively
different clue
I think the member of the political comedy team of Hoffman and Rubin who DID go Wall Street was Jerry Rubin if I remember correctly.
Anyway, here is a talky head for CBS news announcing with pride that CBS News is about to become Fox Lite, and why it is about to do that. I doubt it will win any audience share from The Real Fox, but they can give it a good hard try. And under Chief Weiss, I’m sure they will. That too is a sign of American decline . . . in this case further deliberately engineered brain rotification.
” CBS ‘Evening News’ Anchor Makes Bold Promise for 2026 ”
https://www.tvinsider.com/1236578/cbs-evening-news-tony-dokoupil-promise-2026/
The little embedded clicky-window from Xitter allows one to hear Mr. Doukopil’s ( or whatever his name is) announcement about a New Dawn for CBS News.
different clue
Does America ” have” an empire? Or is America “is” an empire?
If America “has” an empire, then if all the no-more-empire Americans can do every counter-empire thing right, they/we might be able to do all the right things in all the right ways needed to crush, smash, stomp down and grind-into-the-earth all the lets-keep-the-empire Americans who live among us. If we can destroy their power utterly enough, then we can surrender the empire without them being able to stop us.
Now , if America “is” an empire, then losing the empire means dividing the country up into several or maybe many smaller countries. Some of those countries might well be Indian Nations reclaiming some of their former lands and power. That may not happen as peacefully as it happened to the Soviet Communist empire ( ” USSR”). It might happen through several decades of “Balkan Wars” followed by a several-centuries-long ” Warring States” period.
I personally really really hope that America “has” an empire rather than that America “is” an empire. If America “has” an empire, then there is a hope for a bearable or even semi-pleasant outcome from giving it up, once the forces-people for keeping it have all been utterly smashed, crushed, ground down into the dirt, etc. so thoroughly that they have no power to resist or obstruct the decision to surrender the empire.
Now . . . here is a hopeful little video by ” Knitting Cult Lady” about the possibility or even semi-likelihood of smashing down the first obstacle to that surrender-of-empire possibility . . . the fascistic MagaTrump Occupation Regime. To the extent that it is reality-based, it is just that much cheering and heartening.
“2026! Let’s watch MAGA crumble ”
https://www.youtube.com/watch?v=3tG6EYDR0Kw
bruce wilder
EA:
Irony has died and been reincarnated.