Given the current context of financial conflicts, it is essential to distinguish between the market—conceived as a mechanism for the fair and efficient allocation of resources—and capitalism, which, defined by its relentless pursuit of profit, has generated significant distortions in the “normal” functioning of the market and triggered a multi-level global tension, most notably in the financial sphere. The emergence of this new world, in which the two concepts have become entirely decoupled, began in December 2001. Twenty years after the Reagan administration’s decision to steer the world toward the liberalization of capital flows, Bill Clinton’s long-pursued project to integrate China into the international market—through its accession to the World Trade Organization (WTO)—was finally realized.
Clinton’s vision appeared straightforward: it rested on an unreserved faith in the market’s capacity to serve as a vehicle for the advancement of political democracy. In his view, China’s immense labor force represented a resource that the American productive system could exploit to preserve its economic supremacy, while simultaneously—through the transformative power of the market itself—overturning China’s long-standing imperial and communist legacy. The expectation was that, within a few years, China would evolve into a liberal democracy.
As is well known, events took a markedly different course. China, capitalizing on its fundamentally authoritarian nature, harnessed foreign capital and technology to achieve an extraordinarily rapid and unprecedented industrialization. It transformed the initial outsourcing of multinational production chains into the development of an “indigenous” system capable of competing on a global scale and, under state direction, exerting influence over the economic and monetary strategies of major powers.
The Chinese economy also exhibited the remarkable capacity to drive up the prices of raw materials and energy without triggering global inflation, which remained subdued thanks to the exceptional reduction in labor costs. Consequently, while China emerged as the “world’s factory” and the core of the real economy, Western economies turned increasingly toward financialization—a process enabled by the containment of inflation. Speculative “bets” on commodity and energy prices multiplied through derivative instruments, and fueled by the Federal Reserve’s monetary policies, a credit boom ensued—one that would ultimately culminate in the subprime mortgage crisis.
In other words, the rise of turbo-finance and the underlying causes of the 2008 crisis were sustained by the frenzied expansion of the Chinese economy, which fueled demand without generating inflation and provided financial markets with endless grounds for bullish optimism. Financial engineering—originally designed to distribute risk through securitization—might not have reached such extreme levels without the wave of confidence in finance’s own capacity to create wealth, a belief catalyzed by China’s accession to the World Trade Organization.
At that time, many analysts viewed the future of the West as resting on finance rather than production and labor as the primary source of prosperity. The subsequent explosion of the enormous bubble generated by this distorted vision made state intervention indispensable—not only in China. The situation was further exacerbated by the 2011 European sovereign debt crisis, the pandemic, and the outbreak of war.
The financialization of the economy has been the defining trend of the past three decades, culminating in the emergence of a monopoly now concentrated in the hands of the major U.S. asset management firms—the so-called Big Three (BlackRock, Vanguard, and State Street). These institutions manage a substantial share of global savings and hold significant stakes in leading publicly listed companies.
This concentration of financial power has rapidly extended into Europe, accompanied by a steady outflow of savings and capital from the principal economies of the Old Continent toward U.S. markets. Following the election of Donald Trump, this dominance has faced competition from a new financial elite aligned with the former businessman and deeply engaged in the cryptocurrency sector and other highly speculative forms of investment, consistent with the tenets of neoconservative doctrine.
The Conflict
From this dynamic has emerged a veritable financial war within American capitalism—one that also encompasses European finance, striving to resist its own gradual colonization, and an emerging Asian finance, structured around the China–India axis and capable of developing a potential monetary and financial alternative to Western dominance.
A broad pattern has become apparent since the inauguration of the second Trump administration: financial capitalism, as structured over the past decade—dominated by large funds that absorb an ever-growing share of collective savings and direct it toward leading U.S. equities and federal debt—is fundamentally incompatible with a politically adversarial government.
Between January 20, the date of the administration’s inauguration, and the end of April 2025, U.S. stock markets lost approximately $18 trillion in capitalization, only partially recovering after a period of “easing” with China. This sharp decline stemmed largely from presidential statements that undermined the perception of the major funds’ invincibility and reignited geopolitical tensions with China.
Trump disrupted a financial order to which political authority had, in a largely deferential manner, ceded the prerogative of wealth creation. This subordination unfolded without interference or strategic planning, driven by an ongoing—and increasingly tenuous—search for equilibrium with the real economies of China, India, and other emerging production powers.
The result was a global system built upon the subjugation of politics to finance, viewed as the remedy to the excessive fiscal burdens of the modern state, and upon the delegation to the new global producers of the task of supplying the material resources necessary for the world economy—on the condition that they continue using the U.S. dollar as both a medium of exchange and a reserve currency. In this way, the structure of global finance was sustained by what was, in essence, a carefully maintained economic fiction.
On one side stands BlackRock CEO, Larry Fink, advocating a move beyond the dollar through the adoption of bitcoin, as part of a broader effort to weaken traditional state structures now viewed as “unfriendly.” On the other side is China, for which the dollar’s stability has eroded precisely as Trump has turned it into a tool of political confrontation. The immediate consequence is a growing strain on the U.S. federal debt, which has reached unsustainable levels and now depends on massive support from major investment funds—making these financial actors even more pivotal to the nation’s economic future.
The conflict within American financial capitalism has therefore erupted into the open. BlackRock and JPMorgan have launched direct attacks on Trump, accusing him of endangering the savings of millions of Americans. This marks the essence of the American tragedy: for decades, political authority has delegated to finance the responsibility of providing citizens with life’s essential services—from healthcare and pensions to welfare.
In recent years, this dynamic has consolidated into the monopoly of the Big Three, which absorb the nation’s savings and sustain them through the continuous creation of financial bubbles. As a result, savers have become dependent on the power of these major funds, which now leverage that dependence as a means of political pressure against Trump.
American politics has been reduced to the overriding imperative of avoiding any disruption to the financial monopoly, since the well-being of its citizens depends entirely on its stability. This long-cultivated absurdity reveals an intrinsically anti-democratic structure: it empties the very concept of citizenship of meaning, replacing it with a condition in which private wealth—and the consensual subordination to monopolistic power—becomes the sole foundation of civic existence.
The model
The pervasiveness of the financialized model—one that has supplanted the state in many of its essential functions—has rendered the political sphere increasingly weak and subordinate to the stability of a market that, as noted, effectively operates as a monopoly. This transformation has turned citizens into compulsory savers, compelled by the erosion of social-state structures to entrust their security to the “masters” of finance. Political authority, in turn, is now expected to collaborate in ensuring the smooth functioning of the all-encompassing financial system, so that it may continue to appear autonomous.
Paradoxically, it was politics itself that facilitated the rise of financialization. Yet the power it has since accumulated has ultimately subordinated political institutions, imposing upon them an ideology far more uncompromising than anything envisioned by classical neoliberal thought.
The tragedy lies in the faithful replication of this model in Europe. Austerity and deindustrialization policies have played a decisive role in shifting the social balance from labor to financial rent. Austerity dismantled welfare systems and promoted privatization, thereby making financialization not merely possible but indispensable.
This transformation has also intensified Europe’s dependence on the United States, as European savings have increasingly flowed into American stock markets—whose performance now dictates the fate of major European fortunes and pension funds. To put it plainly: the financial wealth of American and European billionaires—amounting to roughly 70 percent of their total assets—consists of the same narrow set of U.S. securities traded on American exchanges.
Within the liberal model, there exists a single, highly restricted elite—composed of American and European actors—that has amassed extraordinary wealth through the surge of financialization, remaining untouched by the crises for which they bore no cost. The nerve center of this concentration of wealth and power lies in and around Wall Street: an explosion with a single capital—the American stock exchange—yet one sustained by a network of international and national legislations, all uniformly neoliberal in orientation, and meticulously designed to eliminate taxation on the financial assets of the ultra-rich.
In this sense, it is inaccurate to claim that the dominant model of the past thirty years has “failed.” For a select few, it has functioned with remarkable success, establishing an irreplaceable geography of power to which political institutions have exhibited a clear and deliberate subordination.
The denouement of the U.S. crisis could prove even more painful, as the unsustainability of both public and private debt has become unmistakable. In the medium term, the resources of global savers—mobilized and managed by the major investment funds—will no longer suffice, even if those funds succeed in bending Trump to their will. The volume of resources required is set to grow rapidly, yet beyond these funds, few actors seem willing to continue extending credit to the United States.
China, for its part, is clearly pursuing a comprehensive decoupling from the U.S. economy—not only in trade and finance but also in the monetary sphere. The same stance is increasingly shared by the other BRICS countries (Brazil, Russia, India, and South Africa), and even Europe is beginning to show signs of estrangement from its dependence on American finance, though it still exhibits a few lingering, almost Pavlovian reflexes of alignment.
Federal bond auctions have become increasingly difficult, and the U.S. dollar is weakening far beyond what would be necessary to enhance export competitiveness. Under these circumstances, it would be extremely difficult for the United States to resort again to quantitative easing—the large-scale issuance of money to finance debt, as in 2008—since the dollar’s credibility today is far more fragile. A similar move could instead accelerate the currency’s devaluation, further undermining its global standing.
It is therefore highly probable that the Trump administration will be forced, for the first time in recent U.S. history, to confront not only a severe recession but also the risk of a partial default on public finances. Avoiding such an outcome would require the implementation of a genuine fiscal policy—something largely alien to the American political tradition—entailing significant sacrifices for the population and a drastic devaluation of the dollar, one that would signify a profound reordering of global hierarchies.
An alternative—though merely an apparent one, and equally painful—would involve a wave of imported inflation, driven by soaring prices of foreign goods, thereby eroding the real value of public debt in accordance with one of the oldest and most inequitable economic “remedies.”
It is possible that Trump’s tariff policies, whether consciously or not, are aimed precisely at this outcome: compelling Americans to bear the cost of decades of financialization that enabled them to live well beyond their real means. In Trump’s narrative, however, this burden is attributed to a hostile external world—accused of causing the spike in U.S. inflation—while conveniently overlooking the extent to which the United States itself shaped the very global system that now appears to turn against it.
Cover photo: Charging Bull, a guerrilla art bronze sculpture installed unofficially by Arturo Di Monica in 1989, symbolising strength in adversity, with Fearless Girl, 2017, by Kristen Visbal, in Bowling Green in the Financial District, Manhattan, New York, New York, USA. (Photo by Manuel Cohen via AFP)
Follow us on Facebook, Twitter and LinkedIn to see and interact with our latest contents.
If you like our stories, events, publications and dossiers, sign up for our newsletter (twice a month).