For about eighty years the America-led world order that followed World War II gradually ushered in a liberal economic order that culminated in the globalization wave of 1990s. This liberal economic order relied on free markets and private enterprise as the main vehicles for the production and distribution of goods and services. Now that the America-led world order has, for all purposes, been declared to be over, we are starting to see a new economic order coming into shape.
Under the America-led world order we saw the working of two capitalist policy frameworks. One was the legacy of the post-depression-era Keynesianism, which however, unraveled in the late 1970s. The second was Neo-liberalism, which itself unraveled in the 2010s. Both policy frameworks intended to reform capitalism and save it from itself. Keynesianism introduced government intervention to extract the economy from persistent unemployment and underperformance. Neo-liberalism was an attempt to correct over-reliance to the state, restore the primacy of markets, and extricate the economy from stagflation.
Neither Keynesianism nor Neo-liberalism achieved a successful balance between the roles of government and private enterprise or between the need for sustained economic growth (i.e., GDP) and the need for fair distribution of incomes. However, the relative stability the America-led world order offered allowed experimentation with different models of capitalism. Thus, the European countries under the protection of the American defense umbrella were able to build robust safety net programs and laws favorable to labor while America remained more preoccupied with growing its aggregate economy (GDP) which helped finance its military might.
Until the 1990s the US seemed to satisfy the three conditions a great power ought to meet according to historian Paul Kennedy (The Rise and Fall of Great Powers), that is, (a) the will to provide military security to itself and its allies; (b) the ability to meet the economic needs of its population; and (c) sufficient economic growth to support a guns and butter policy. Neo-liberalism’s faith in unfettered markets, including international markets, eventually eroded the second condition and eventually the other two. The relentless redistribution of labor and capital away from the US and Europe and toward Asia (mainly China) resulted in a mass populist backlash throughout the advanced capitalist world, which in the US helped propel Donald Trump to the presidency with the promise America First as its slogan.
The turn to a more nationalist economic policy first within the Trump administration and then within Biden’s administration broke the theretofore US commitment to the liberal international order. The result was tariffs, restrictions in international trade, and the adoption of elements of industrial policy with the goal to promote domestic development and production of critical goods, most notably microprocessors (chips).
However, the second Trump administration has sowed the seeds for a radical reformulation of America’s engagement with the world that together with American retrenchment from economic globalization can have profound consequences for the form of capitalism and thus the economic order that could take shape in the future.
Although it is generally agreed that the post-war America-led world order is over, there is less agreement as to what will succeed it. Some of the opinions about the current world order use descriptions like sovereignism (placing America’s interests ahead of any considerations for international cooperation), multipolar (based on spheres of influence), and even anarchic. As for the economic order, the descriptions include extractive, feudal, oligarchic, and technocratic none of which aligns with the precepts of classical capitalism.
The new US foreign policy is driven mostly by a zero-sum modus operandi. This “every nation for itself” order as Robert Kagan calls it in The Atlantic (March 2026), will certainly affect economic policies across the globe. It has the potential to alter the role of the state in the economy and to rearrange budgetary commitments between national security and social and welfare programs.
European nations will have no choice but to embark (France, Germany, Poland, the Baltic States already have) on expensive rearmament projects. This will strain their capacity to sustain generous safety net programs. Some countries will be pushed into excessive indebtedness while others will retreat from their domestic redistributive policies. France is experiencing exactly this conundrum. To protect their national security and economic independence the European Union will be forced to adopt protective trade laws and a more overt approach toward industrial policy.
Other countries in the second and third world unable to go tit-for-tat in economic warfare based on tariffs and trade restrictions will experience lower economic growth and their path to prosperity will become ever more unattainable.
The implications of the zero-sum mentality can be also seen in the retreat of US dominant corporations from commitment to the collective good. These corporations and their chieftains appear to be more interested in economic hegemony and political power than preserving the competitiveness of markets and the integrity of the political system.
In this new order, large corporations, like the magnificent seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) plus new players like Anthropic, OpenAI, and Palantir, form the core of an economic order that is more oligarchic and feudal than classical capitalism. They thrive by doing both: collaborating with the state (the sovereign) to gain lucrative government contracts and lax regulation but also pursuing their own self-serving interests by carving out enough independence through intense lobbying and enormous political contributions. *
These corporations have the power to dictate the terms of competition and the emergent industrial policy that both parties are warming up to in Congress and the White House. But an industrial policy poorly executed under the influence of powerful interests will amount to raw favoritism in choosing winners and losers outside the rules of fair competition. This will further accelerate the movement toward a feudal and oligarchic type of capitalism.
The turn toward a more self-serving and extractive version of capitalism is the exact opposite of what the circumstances call for. With economic inequality at its highest level and still rising, stagnating wages, and many social, health, and other problems due to inadequate government support, the right thing to do would be adopting reforms aiming at a more inclusive and socially fair capitalism.
Equally important is working toward greater international cooperation to tackle the challenges of spreading prosperity and security, protecting the climate, and utilizing the promise of AI as a tool to better not threaten humanity. Realizing that America alone can no longer bear the cost of maintaining world order it should not lead us to walking away from seeking cooperation and collective action with the rest of the world.
*A good source for understanding how “successful” oligarchs have relied on government assistance and contracts to build their businesses is Muskism by Slobodian and Tarnoff.
