{"id":398405,"date":"2026-01-09T13:52:10","date_gmt":"2026-01-09T13:52:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/398405\/"},"modified":"2026-01-09T13:52:10","modified_gmt":"2026-01-09T13:52:10","slug":"the-year-2025-when-everything-changed-in-global-capitalism","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/398405\/","title":{"rendered":"The year 2025 when everything changed in global capitalism"},"content":{"rendered":"

Amid the continued surge on Wall Street, albeit with fluctuations, and global growth coming in as forecast at more than 3 percent, there are warnings that all may not be as it seems.<\/p>\n

One such warning has come from Gita Gopinath, the former chief economist and first deputy managing director of the International Monetary Fund, in the form of a comment in the Financial Times (FT) entitled \u201cDon\u2019t be fooled\u2014everything has changed.<\/p>\n

Former IMF Deputy Chief Gita Gopinath [Photo by Scottish Government \/ CC BY-SA 2.0<\/a>]<\/p>\n

Gopinath began by noting that 2025 was a year \u201cwhen everything changed\u201d as the US lifted tariffs to their highest levels in almost a century, China retaliated and \u201cglobal policy uncertainty intensified\u201d and yet global growth is projected at 3.2 percent which is where it was before the turbulence began.<\/p>\n

But it would be a mistake, she continued, to think the global economy is unaffected by \u201ctariff fights and policy chaos\u201d and \u201cstructural damage reveals itself slowly and always too late to be reversed.\u201d<\/p>\n

She said AI spending and more expansionary fiscal policy had masked the drag from US tariffs and Chinese retaliation and had \u201cmade 2025 look more stable than it actually was\u201d and the global economy is \u201cmore fragile than the headline numbers suggest, starting with fragility in the AI sector.\u201d<\/p>\n

Investors, she noted, have \u201cfinally begun to question the gap between sky-high AI valuations and actual AI returns.\u201d<\/p>\n

She then made an important point about the development of AI within a capitalist economy.<\/p>\n

\u201cThis is not a statement about AI\u2019s potential, which is in all likelihood transformative. It is a statement about profitability. With competitive pressure both seen and unseen, the risk of a dotcom-style correction is real.\u201d<\/p>\n

Other analysis has warned that it could be more serious than what took place a quarter century ago. This is because of the enormous growth of financial markets and their increased complexity since then.<\/p>\n

According to Gopinath, the celebrated \u201cresilience\u201d in the face of Trump\u2019s tariffs is \u201cdeeply misleading\u201d because tariffs have been costly especially for Americans. Even though some 95 percent of the costs have been absorbed by US firms, tariffs have added 0.7 percentage points to inflation and without them it could have been 2 percent this year.<\/p>\n

\u201cInstead, tariffs have made the typical US household $600 poorer.<\/p>\n

\u201cThe damage from tariffs will grow more visible in 2026 as the resilience afforded by front loaded imports [those brought in before the tariffs came into effect] fades and companies pass through a higher share of costs to consumers.\u201d<\/p>\n

<\/a><\/p>\n

She also issued a warning that China\u2019s reliance on export-led growth was \u201cuntenable.\u201d Its latest five-year plan, which allocated resources to technology sectors at the expense of social spending and increased domestic consumption, \u201crisks deepening structural imbalances.\u201d<\/p>\n

Gopinath concluded that the question was whether 2026 will be the year \u201cwe correct course.\u201d<\/p>\n

\u201cThere is an opportunity: the US holds the G20 presidency and France the G7 presidency. Together they can spur action to restore stability to an uncertain and increasingly fragmented global system.\u201d<\/p>\n

Under conditions where the US is acting as an imperialist gangster, tearing up all the institutions and arrangements, economic and political, of the post-war order, regarding them as inimical to its interests, and where it is even threatening military action to take over Greenland from its NATO ally, Denmark, we shall leave it to the reader to draw their own conclusions about the viability of such a perspective.<\/p>\n

Long-time FT financial columnist John Plender has also issued a stark analysis of the global financial system in a major comment piece published last weekend.<\/p>\n

At the outset amid \u201crampant\u201d AI euphoria, \u201ccrypto lunacy,\u201d credit bubbling in private markets and the US \u201cat the heart of a global fiscal and financial maelstrom,\u201d he posed the question: \u201cdoes another 1929 crash loom?\u201d<\/p>\n

He found it \u201ccurious\u201d that people even needed to debate whether the euphoria around AI and crypto constituted a bubble \u201cgiven that they so manifestly meet all the usual bubble prerequisites,\u201d the fundamental characteristic of which was \u201can inspirational narrative that fires up investors\u2019 expectations of super profits.\u201d<\/p>\n

Few doubted, he said, that AI would be a transformative technology leading to productivity gains but there was \u201chuge uncertainty as to how this will come about.\u201d<\/p>\n

Another aspect of a bubble, he noted, is leverage and while at the beginning of their investment splurge into AI the tech giants were \u201cawash with cash,\u201d they are now starting to borrow large sums and in the case of Amazon, Meta and Microsoft have become net debtors.<\/p>\n

Summarising the situation, Plender concluded that there was a plausible case for a 1929-type scenario, though it was difficult to tell when the bubble would burst, but if it did take place the central bankers would put a safety net under markets as they did in the 2007\u201309 crisis.<\/p>\n

There is no question that, as Plender maintains, central banks, led by the US Fed, will pour trillions into the financial markets in the event of a crisis.<\/p>\n

But the question which then arises is whether such action can simply continue indefinitely or will it run into some objective limit.<\/p>\n

Some of the issues raised in his article indicate that there is such a limit, under conditions of mounting US debt now at $38 trillion. Though he did not directly raise it, the question is whether the most indebted country in economic history can continue to be the mainstay of the global financial system?<\/p>\n

<\/a><\/p>\n

\u201cIt is striking that over the past year doubts about US Treasury securities as a safe haven has risen,\u201d he wrote, citing research which argued that \u201cthe adverse reaction to Trump\u2019s \u2018liberation day\u2019 tariffs last April may have been a harbinger in which the mighty US confronts the constraints that other debtor countries have long faced.\u201d<\/p>\n

In basic agreement with that assessment, he continued: \u201cWhat is clear is that US economic supremacy is very rapidly being eroded as it dismantles the postwar rules-based international order of which it was the chief architect. Instead of regarding multilateral institutions as providers of public goods, Trump and his acolytes see them as an affront to national sovereignty.\u201d<\/p>\n

The role of the dollar as the world\u2019s pre-eminent currency is in question as is the US Treasury market as the world\u2019s chief provider of safe assets.<\/p>\n

\u201cUS Treasuries are now clearly unsafe, given that even the Congressional Budget Office publicly declares that US government debt is on an unsustainable trajectory.\u201d<\/p>\n

The traditional argument on the dollar\u2019s role as the global reserve currency is that there is no plausible alternative and that remained the case. But as Plender noted the argument should be better framed and that if global capital decides the US is unsafe it will flow into real assets such as gold and commodities.<\/p>\n

That has already been seen, with the price of gold, the ultimate store of value in the capitalist economy, rising by some 65 percent in 2025, at one point reaching as high as $4500 per ounce. The significance of these figures is what they indicate about the devaluation of the US dollar since Nixon removed its gold backing in 1971 when the rate was $35 per ounce.<\/p>\n

There is an important ideological issue arising from the open manifestation of Trump as the spearhead of imperialist gangsterism which applies to the analysis of the global economy.<\/p>\n

For years, decades, the ideological representatives of the ruling classes, including some pseudo-Marxists, maintained the Marxist focus on the economic driving forces of imperialism\u2014the struggle for markets, profits and resources, as analysed by Lenin in his work Imperialism\u2014was crude and dogmatic. The entire post-modernist school\u2014rampant today on university campuses around the world\u2014played an important role in this campaign.<\/p>\n

But Trump himself has now openly declared that the regime change operation in Venezuela was motivated above all by the grab for oil to benefit the US energy giants.<\/p>\n

Likewise, these same forces have for decades maintained that the Marxist analysis of the historic crisis of capitalism, leading to its breakdown as a viable socio-economic system and the necessity, therefore, of socialism, was based on a similar crude dogmatism.<\/p>\n

But facts, as the saying goes, are stubborn things and they are indicating that the historic contradictions of the capitalist economy are coming violently to the surface.<\/p>\n

For the working class this means that it must base its perspective not on the ludicrous proposition advanced by figures such as Gopinath, that some form of repair or course correction can be carried out, but on the understanding that the deepening crisis of capitalism\u2014the basic driving force of war, fascism and social devastation\u2014must be met with the conscious political struggle for socialism.<\/p>\n

The World Socialist Web Site is the voice of the working class and the leadership of the international socialist movement. We rely entirely on the support of our readers. Please donate today!<\/p>\n","protected":false},"excerpt":{"rendered":"Amid the continued surge on Wall Street, albeit with fluctuations, and global growth coming in as forecast at…\n","protected":false},"author":2,"featured_media":398406,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":{"0":"post-398405","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/398405","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=398405"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/398405\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/398406"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=398405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=398405"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=398405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}