How Capitalism Replaced America

A reflection on contemporary China and the U.S. after their 20th century revolutions

Recently, I’ve been going down a rabbit hole studying contemporary China, its industrial modernization, and the Mandarin language. As part of that, I recently read a popular new book on the Middle Kingdom, Breakneck: China’s Quest to Engineer the Future by Dan Wang. The book is a breezy personal reflection, and advances a now-familiar thesis: American elites are disproportionately trained as lawyers, Chinese elites are mostly engineers, and that background shapes the way that they respond to collective problems.

The subtext of Wang’s argument is that state-communist China has grown into a ruthlessly capitalist society; arguably more capitalist in practice than the United States. Wang writes:

“Capitalist America intrudes upon the free market with a dense program of regulation and taxation while providing substantial (albeit imperfect) redistributive policies. Socialist China detains union organizers, levies light taxes, and provides a threadbare social safety net. The greatest trick that the Communist Party ever pulled off is masquerading as leftist.”

This is all true. But there is another dimension of the U.S.–China divergence that his argument only partially captures, one that matters for understanding American anxieties over national identity, inequality, immigration, and other issues shaping the present.

Wang describes how Deng Xiaoping, seeking to escape the failures of the Maoist command economy, created “sandboxed” free-market zones within China. These zones multiplied in a careful process aimed at growing the economy, while maintaining ultimate Communist Party political control. The experiment worked: Within two generations, nearly every Chinese person had become a producer and consumer within a vast market economy. In daily life, ordinary Chinese increasingly have come to resemble ordinary Americans: working, saving, and consuming.

The crucial difference is that while China utilized capitalism as a tool, it never redefined its national identity around the supremacy of capital. The Communist Party remains the unchallenged sovereign. However wealthy or powerful a Chinese enterprise becomes, there is no conceptual universe in which it might negotiate as equals with, let alone defy, the Party. No Chinese banker could dream of strolling into the Zhongnanhai to lecture Xi Jinping, as American financiers feel free to lecture or even snub American presidents.

China has repeatedly shown its willingness to subordinate capital to political authority. Between 2020 and 2021 it erased $1.1 trillion in tech-sector valuation through regulatory crackdowns, halted Jack Ma’s record-breaking Ant IPO after he criticized regulators, and made plain Xi Jinping’s own repeated guidance that capital must serve the interests of the people and the Party.

America took the opposite path. As political scientist Samuel Huntington observed years ago, “America’s elites increasingly define national identity in purely economic and ideological terms, not cultural ones.” The turning point came during the Cold War when capitalism stopped being merely an economic system and became a core part of American identity; marginalizing competing visions of ethnic, religious, and culturally-based national selfhood.

During the Cold War, American elites framed capitalism as the moral antithesis to communism. Supporting free markets became synonymous with supporting the nation. An influential 1971 memo by Supreme Court justice Lewis F. Powell Jr. demanded the construction of a permanent political infrastructure to “shape social, economic, and political thought,” in support of capitalism. By the 1980s, Ronald Reagan was ready to push the envelope further, declaring: “Freedom is the right to question and change the established way of doing things. It is the continuing revolution of the marketplace.”

This process that began in the 1970s accelerated in the triumphant atmosphere following the collapse of the Soviet Union, before crystalizing its final form after the 2008 financial bailouts. Despite failed right and left-wing insurrections since then, it has continued unabated.

The global capitalist revolution in America, never formally declared, has already been successful. Over decades, vast swathes of the economy were sold off to international investors. Immigration levels were reshaped by corporate demand rather than cultural self-conception. Even stewardship of land and future generations became subordinated to the interests of global markets. At mid-twentieth century, foreign investors held only around 5 percent of U.S. corporate equity. That figure is 40 percent today, alongside massive and expanding international ownership of U.S. real estate, and even agriculture.

The project succeeded so thoroughly that raising even modest doubts about capitalism has come to be seen as suspiciously un-American; more offensive than criticizing Christianity or the ethnic makeup of the founding generation. Following the guidance of their leaders, for many people patriotism is defined by participation in the free market as consumers and entrepreneurs. (George W. Bush famously told people to go shopping to express their patriotism after 9/11.)

This low barrier to entry has made the country more welcoming to assimilation for outsiders, which remains one of its most charming characteristics. But it has also raised vexing questions about national identity that persist to this day.

The transformation of America by capital has made it a more dynamic, tolerant, and creative society. These are things that many people, including myself, find welcome. Yet inarguably, it also repressed and even destroyed an older American nation in favor of a new cosmopolitan empire that is still in process of becoming.

Optimized for Wealth

The supremacy of capital was on display again recently in a particular episode: the proposed takeover of Warner Bros Discovery by Paramount Skydance. The takeover is backed by a consortium of Saudi, Emirati, and Qatari sovereign wealth funds, Jared Kushner’s investment firm, and the Ellison family— the latter being figures with deep personal, political, and economic ties to the state of Israel. If completed, the deal would finalize control over vast pillars of American mass culture—HBO, CNN, Paramount Pictures, CBS, DC Films, Nickelodeon, and now TikTok—within a network of capital holders largely foreign to the United States, or with shared sympathies to other states.

According to the logic of modern American capitalism, nothing is wrong with this. But if the deal goes through it would reduce even further national control over institutions central to American culture and governance. The American media would be penetrated to an unprecedented extent by foreign interests, in this case Gulf Arab and Israeli. It is impossible to imagine China permitting anything remotely comparable with their own media, which closely shepherds not just the interests of the Party or Chinese citizens, but even the cultural and political centrality of the domestic Han majority.

This oligarchic media consolidation by foreign investors is a step further in a decades-long transformation. The idea that the US should be run mainly for the sake of its citizens—let alone, as some demand, in reference to its original European, Native American, and Black lineages—has been displaced by the idea that the country is a platform for global capitalism. It helps explains why elites like Kushner admire the glittering, frictionless, deracinated consumerism of the UAE and other Gulf Arab states. Dubai represents a post-national, antidemocratic future, optimized only for wealth, that many people find desirable for the US itself.

Citizenship as Bond

Understanding the America that global capitalism has built is also key to understanding the populist anger that now defines much of our politics. Trump’s 2016 campaign suggested that he would confront global capital’s control over the country, including by providing healthcare to ordinary Americans in defiance of market preferences, limiting immigration, and ending foreign entanglement in overseas conflicts. He renewed those promises in 2024, less convincingly, but with enough vigor to defeat an exhausted Democratic Party that lacked a counterargument.

In practice, his alliances with Gulf Arab and Israeli elites reveal where Trump’s loyalties truly lie. Many Americans whose concerns have been ignored for decades see this plainly. A 2023 PRRI survey found that 65% of Republicans and 40% of Democrats believe “the country is being run for the benefit of outsiders.” Regardless of how they feel about their government and domestic elites, can any comparable number of people in China believe that their country is being administered for the benefit of foreign powers?

I’m not endorsing state socialism, communism, ethnic nationalism, or any other radical transformation of American society. Too many revolutionary movements end in catastrophe, several of these ideologies have been tried and failed in past, and America itself is too far down its current road to abruptly switch towards something totally different. There are also many aspects of the current version of America that I cherish, including its entrepreneurial culture and cosmopolitanism.

That said, there is a real tradeoff here, and absent a dramatic course correction, global capitalism will continue to carve away pieces of America in the years ahead. Ideally, a functioning democracy can still mitigate this drift—above all by restraining the power of the domestic and foreign oligarchs who treat the United States not as a nation or community in formation, but as a mere platform for their own economic and political ambitions.

This brings us back to China. Despite its material strengths, there are also many appalling aspects of the Chinese political system, which may yet lose in its competition with the American empire. The irony, though, is that many angry Middle American voters who have been taught that capitalism is their identity may feel less existentially dislocated under a system like that run by Beijing, where the ruling party makes no apology for prioritizing its own citizens, strictly polices the activities of foreign capital, and shapes the economy for the benefit of the nation, rather than the reverse.

China, for all its failings, will almost certainly maintain a thread of cultural continuity stretching into the future. America, by contrast, is becoming a landscape shaped less by citizens than by capital, with the people themselves and their interests receding into the background.

The way to fight back is not to retreat into ethnic nationalism, which is neither desirable nor viable for modern Americans, but with a renewed understanding of citizenship, including potentially exclusive and singular citizenship, as a real bond. That is one of the few remaining grounds on which Americans might still resist being overshadowed by amorphous global interests, interested in extracting from them, but indifferent to their fate.