July 25, 2026
Costas Lapavitsas
Evidence has been accumulating for more than a decade that the world has entered a period of profound geopolitical turmoil. Large-scale war has become a permanent feature of geopolitics, manifested in the fighting between Russia and Ukraine since February 2022—with the direct and indirect involvement of the United States and its allies—and in the devastation of the Middle East and destruction of Palestinian society and people by Israel. Alongside open violence, there has been widespread economic coercion applied by the United States, including massive commercial sanctions on Russia, freezing the reserves of its central bank, and using interbank payment mechanisms to isolate the Russian and other economies from the global monetary and financial systems.
The pattern is now
clear: U.S. imperialism is currently the most aggressive geopolitical force,
openly coercive, and deploying military and economic instruments with
diminishing restraint. What links its resurgence to the present state of the
world economy? How is geopolitical turmoil connected to capitalist reproduction
at a time when productive accumulation has slowed to a crawl in the historic
core of global capitalism, while financial capital continues to expand and fuel
speculation?
The evident upheaval of the global order goes by several names among critics of capitalism. Prominent among them is “polycrisis,” which presents the simultaneous economic, financial, ecological, and geopolitical emergencies of our time as a contingent accumulation of shocks.1 But the term captures coexistence rather than causation. It offers no hierarchy among mechanisms and no account of the structural relations between production, finance, and state power that jointly generate escalating geopolitical tensions.
Even more prominent is the notion of “technofeudalism,” which argues that digital platforms have displaced markets, data has become a new “land-like” factor of production, and profit has been supplanted by rent extracted from enclosed digital territories.2 But platforms are capitalist enterprises that sell digital services and other commodities, charge fees, extract advertising revenue, and compete in markets. They may exercise considerable infrastructural control, but this does not eliminate the centrality of capitalist profit. The data they transact is reproducible, and its value derives from processing and use, not from fixity of supply. “Technofeudalism” mistakes the persistence of weak accumulation at the core of the world economy together with intensified control by large corporations for an epochal transition beyond capitalism.
The real issue for political economy is to explain the ratcheting geopolitical aggression and economic instability of our times within the parameters of capitalism, and not by assuming its supersession. What is needed is an account of resurgent imperialism grounded in the dominant mechanisms of contemporary capitalist accumulation. Such an account must start with the concrete organization of production and finance at the world scale, and with the specific forms of exploitation and coercion that emerge from it.
The argument put forth in this article follows the classical Marxist method and thus takes as its point of departure the determinate structure of the world economy.3 Contemporary imperialism has two structural foundations: first, the pairing of globalized productive capital with internationalized financial capital; second, the dollar as world money, which turns this pairing into a hierarchical regime of accumulation enforced ultimately through the military power of the United States.
The world economy rests on production chains that continually generate flows of value and surplus value. Financial circuits transform these flows into claims and obligations, while a stratified monetary order—with world money at the apex—renders these liquid and enforceable across jurisdictions. However, the monetary order is not a global system with coordinated rules. Instead, a hierarchy of money prevails, topped by the currency of the hegemonic state acting as world money. The hegemon administers and enforces this hierarchy through payment mechanisms, collateral rules, and sanctions, increasingly relying on digital infrastructures. The ultimate guarantee of the entire structure is the hegemon’s air and naval forces.
The foundations of the capitalist world economy lie in production, and their necessary complement is finance. But the hinge through which exploitation is disciplined, and geopolitical coercion is applied across the globe is the hegemon’s monetary authority, backed by enormous military power. The Great Crisis of 2007–2009 sharpened both the coercive character of dollar dominance and the contradictions that now drive ascendant militarism. The roots of this development lie in the persistent slowdown of productive accumulation at the core of the world economy, which has turned the dollar-based monetary order into an increasingly coercive instrument in the hands of the hegemon. After 2007–2009, balance-sheet imperialism surged forth, armed to the teeth.
Imperialism in the Marxist Tradition
The classical Marxist theories of imperialism established the method of analyzing imperial power as a concrete historical configuration of capitalism. In 1916, V. I. Lenin provided the decisive methodological injunction that capitalist imperialism must be grasped through the dominant mechanisms of accumulation of its time.4 Six years earlier, Rudolf Hilferding had identified those mechanisms, namely, the fusion of industrial and banking capital under conditions of monopoly, with banks in the driver’s seat.5 Together these economic forces generated the export of loanable capital and the territorial partition of the world, thereby, for Lenin, leading to war.
After the Second World War, dependency theory carried this method forward with considerable force.6 The primary vehicles of imperial hegemony were multinational corporations taking advantage of technological supremacy at the core, together with deteriorating terms of trade and balance of payments constraints in the periphery. These insights remain foundational, but neither the classical Marxist approach nor dependency theory analyzed the crucial role of world money within global finance and production as a central mechanism of imperialism.
Related to but separate from dependency theory, the Monthly Review current has sustained perhaps the most serious engagement with imperialism in English-speaking Marxism. Paul Baran theorized the appropriation of surplus from the periphery as the economic driver of imperial expansion.7 Harry Magdoff brought considerable insight into the growing autonomy of finance from production as capitalism matures, including the dominance of the dollar. 8 Their work is the analytical predecessor to what this article calls the distinction between “Financialization Mark I” and “Financialization Mark II.” It is work that remains indispensable but leaves a question open: through what mechanisms does imperial enforcement operate in the contemporary world economy of globalized production and internationalized finance?
More recent work has sharpened some of the analytical tools but without answering the question. John Smith re-centered analysis on the superexploitation of workers in the Global South through production chains, thereby ensuring multinational profitability.9 Utsa and Prabhat Patnaik provided a rigorous account of the core’s commodity dependence on the periphery, showing how imperialism enforces austerity while transferring value from periphery to core.10 But the question remains: through what mechanisms does this enforcement operate across jurisdictions and monetary sovereignties without relying on colonial administrations?
The answer, as is shown below, lies in the dollar hierarchy and the balance sheet mechanisms it commands. This includes dollar-denominated credit lines, working capital cycles impacted by the monetary policy of the Federal Reserve, and structural compulsion on peripheral states to maintain high interest rates and accumulate U.S. financial assets. The architecture of world money makes these mechanisms operational on a world scale.
In today’s world economy, which is fully capitalist in both core and periphery, imperialism relies on the disciplinary force of crossborder balance sheets. Discipline is applied, in large part, through the functioning of world money. Namely, the dollar acts as the unit of account in key markets; dollar liquidity operates as a means of payment allocated coercively under conditions of asymmetric power; and dollar reserves are accumulated, entailing costs that constitute a form of tribute to the hegemon.
Other work is also fundamental to this argument. Robert Cox’s neo-Gramscian framework identified consent as a pillar of hegemony, whereby the leading state universalizes its particular interests and secures compliance without continuous coercion.11 Nicos Poulantzas had earlier located the hegemonic moment of midcentury U.S. power in the internalization of U.S. interests within the state apparatuses of allied imperial powers.12 More recently, Leo Panitch and Sam Gindin portrayed postwar U.S. hegemony as the voluntary integration of other capitalist states into an informal empire managed by the U.S. Treasury and the Federal Reserve.13
To be sure, acquiescence to U.S. hegemony has been a crucial feature of relations among historic imperial powers in recent decades. These analyses retain considerable explanatory value but cannot truly account for the most prominent feature of resurgent U.S. imperialism since 2007–2009, namely the erosion of consent. Dollar dominance now operates as compulsory external discipline rather than as a shared framework, and domination emerges through coercive mechanisms of settlement infrastructure rather than through internalized norms. What had previously appeared as voluntary integration was a conduct imposed by the absence of alternatives to dollar liquidity. At bottom, it was always structural compulsion, not a choice, a fact that became clear after the watershed crisis of 2007–2009.
Since that landmark event, foreign-exchange swap hierarchies, sanctions, and exclusion from payments systems have shown that access to the dollar is an instrument of imperial leverage. Michael Hudson rightly identified debt and creditor power as mechanisms of international hierarchy, but it is now clear that world money is the pivotal element of U.S. hegemonic power and always operates under the umbrella of U.S. naval and air power. This is the defining feature of contemporary imperialism.14
The Pairing of Productive with Financial Capital
The world economy today is organized around multinational enterprises that coordinate production chains spanning dozens of countries. Lead firms, headquartered primarily in the United States and, to a lesser extent, in Europe and Japan, control design, intellectual property, logistics, pricing, tax liabilities, access to credit, and access to markets. Smaller chain participants, in both the core and the periphery of the world economy, usually perform labor-intensive, low-technology tasks, with compressed margins, long cash-conversion cycles, and heavy dependence on dollar-denominated credit. Already in 2013, around 30 percent of world trade flowed through these chains.15 The densest and most complex links are to be found among core economies; core-periphery ties, though extensive and growing, remain secondary.
There is a structural power asymmetry between lead firms and other chain participants. The lead firms are typically multinationals and their dominance is enforced through patent regimes, technology licensing, transfer pricing, credit access, and, crucially, control of dollar invoicing. Suffice it to note that, between 1999 and 2019, roughly three-quarters of exports in Asia-Pacific and virtually all exports in the Americas were invoiced in dollars.16
The prevalence of the dollar reflects the operational requirements of chains typically mandated by the lead enterprises. Contractual terms require dollar settlement, specify payment through correspondent banks in the dollar system, and tie supplier finance to credit facilities priced off dollar benchmarks. A supplier in Vietnam or Mexico ships components today and waits sixty to ninety days to get paid, while wages and inputs continue to demand cash outlays. The gap must be financed, and under dollar invoicing, this means financing in foreign currency, a routine condition of chain participation, not an economic choice.
The structure of production chains is thus inseparable from internationalized finance. Financial capital conditions liquidity and credit access within the circuit of globalized production, while productive capital provides the material basis from which financial claims ultimately draw their value. Neither form of capital dominates the other in the classical manner that Hilferding analyzed for the early twentieth century.17 At that time, universal banks, bound to productive enterprises through long-term loans for fixed capital formation, dictated terms to industrial monopolies. Today the relationship is one of interdependence within a monetary framework whose pivot is the dollar.
The balance sheets of international manufacturing corporations reflect this hierarchy. Out of a sample of the largest five hundred manufacturing firms, 32 percent are U.S. enterprises. These issue more than half of all long-term debt and hold nearly 39 percent of total cash, while relying little on short-term credit. Chinese enterprises represent over 20 percent of the same sample, but issue only 6.5 percent of long-term debt and carry a disproportionately high share of short-term borrowing. India and Brazil show similar patterns.18
These differences are the corporate reflection of the monetary hierarchy that conditions the pairing of productive and financial capital across the world economy. U.S. manufacturers operate with a currency that is simultaneously domestic and world money and are thus able to sustain longer-term maturities, larger cash buffers, and lower rollover risk. Equally large firms but associated with other states must operate differently. The difference arises from the dominance of the dollar as world money inscribed in both productive and financial balance sheets.
Dollar Dominance and the Imperial Apparatus
World money makes it possible to have cross-border settlement and value preservation among private capitals and sovereign states. Only the dollar delivers the functions of world money, serving as primary unit of account, means of payment, and reserve asset for the world economy. The euro, yen, sterling, Swiss franc, and renminbi occupy secondary positions, while peripheral currencies are structurally subordinate, accepted internationally at a discount and far less readily usable as collateral in financial transactions.
Around 60 percent of official global reserves are held in dollars, with the euro never exceeding 25 percent throughout its existence and the renminbi accounting for less than 3 percent. Half of crossborder payments using the Society for Worldwide Interbank Financial Telecommunication mechanism between international banks are settled in dollars, and the proportion rises to three-fifths if intra-euro-area flows are excluded. Around 55 percent of international and foreign currency bank assets and 60 percent of liabilities are dollar-denominated.19
The dollar’s dominance rests on the institutional and coercive capacity of the U.S. state, not on its productive or commercial pre-eminence. The Federal Reserve broadly determines which liabilities count as globally liquid assets, which securities serve as collateral, and which balance sheets will be stabilized in a crisis. The New York Federal Reserve’s standing repurchase operations (repo) accept only U.S. Treasury bills, federal agency debt, and agency mortgage-backed securities as collateral, while excluding foreign sovereign bonds. These are not neutral technical rules but the operational expression of monetary hierarchy.
What makes this hierarchy truly operational, however, is the way in which its components interlock through a broader apparatus that governs production, trade, investment, and technology across borders. Neither productive nor financial capital can be reproduced internationally without binding rules and collateral infrastructures backed by coercive authority.
Trade institutions, such as the World Trade Organization and its Trade-Related Aspects of Intellectual Property Rights Agreement, establish rules for production chains and safeguard lead firm profits. Regulatory bodies, including the International Organization of Securities Commissions and the Financial Action Task Force, set internationally effective standards for payment systems and collateral eligibility. The guidelines of the Organisation for Economic Co-operation and Development on transfer pricing and royalty flows transfer value to low-tax jurisdictions aligned with the core, thereby systematically eroding the fiscal capacity of governments in the periphery.
World money also requires the presence of a legal architecture capable of enforcing claims across borders. As Katharina Pistor has shown, contemporary capitalism relies on the legal “coding” of capital through contract law, property rights, and enforceability across jurisdictions.20 Crossborder financial and commercial contracts overwhelmingly specify New York or London as the governing jurisdiction, creating a transnational legal space in which these national legal orders function as de facto global law. The acceptability of dollar-denominated claims across the world requires certainty that they can be enforced, restructured, or seized within legal systems aligned with the hegemonic state.
Sanctions are an integral part of these mechanisms, the explicit activation of hegemonic power that is already latent in the global structure. The issuer of world money possesses the power to exclude participants from essential monetary processes. The freezing of approximately $300 billion of Russian central bank assets in 2022 serves as a stark demonstration of this capacity. Settlement infrastructure, legal jurisdiction, collateral rules, and compliance requirements reinforce the global hierarchy, with sanctions available as explicit enforcement mechanisms when the hegemon’s latent power must be made visible.
The most revealing moments are crises. During the historic crisis of 2007–2009, but also in the pandemic shock of 2020, the Federal Reserve extended dollar liquidity to a select circle of fourteen central banks through its principal power instrument, the dollar swap lines. Five of these central banks have permanent (standing) facilities and nine have temporary lines. All fourteen could stabilize their financial systems in days, but the central banks of other countries, including large ones in the periphery, such as India, Indonesia, and South Africa, faced greater turbulence, with currency depreciation, loss of reserves, and pro-cyclical austerity. These fourteen countries account for approximately 55 percent of U.S. imports and 60 percent of U.S. exports. Even more revealingly, they are home to the overwhelming bulk of U.S. military personnel posted overseas.21 The dollar hierarchy and the network of U.S. military power across the world are the same structure viewed from different angles.
Military power is a constitutive element of the dollar order. The air and naval forces of the United States seek to secure the critical sea lanes—Hormuz, Malacca, Bab el-Mandeb, Suez, and Panama, among others—through which roughly 90 percent of world trade moves. They underpin the enforceability of intellectual property regimes, semiconductor supply chokepoints, satellite constellations, and cloud infrastructures on which global capitalist accumulation depends. The dollar and the F-35—monetary coercion and military power—are two moments of a single structure of domination.
Financialization Mark I and Mark II
The form of this imperialist domination shifted qualitatively after 2007–2009. For three decades before that crisis, the financialization of capitalism had proceeded primarily through commercial banks, extending credit to households, trading in financial markets, and extracting enormous profits from net interest margins and fees. This was Financialization Mark I, with commercial banks as the central agents of financial accumulation, boosting trading in financial markets and turning the homes of workers in core economies into a prime terrain of financial expropriation.
The Great Crisis of 2007–2009 broke this regime. Commercial bank profits as a proportion of total profits in the United States peaked at close to 40 percent and did not regain those extraordinary heights in the ensuing years.22 Household debt contracted relative to both GDP and disposable income and remained subdued for over a decade. Financialization Mark I had exhausted itself. What emerged in its place was Financialization Mark II, a regime centered on shadow banks, that is, non-bank financial intermediaries, particularly asset managers holding portfolios of public and private securities, such as investment and hedge funds, but also pension funds, insurance companies, and similar institutions.
There is no structural antagonism between commercial and shadow banks, since the former are major lenders to the latter and are often directly involved in setting these up. Both rely on obtaining liquidity through wholesale funding that is directly underwritten by public balance sheets. As private debt creation faltered after 2007–2009, public debt exploded in several core countries. U.S. public debt rose from roughly 60 percent of GDP to more than 100 percent by 2025.23 At the same time, the Federal Reserve created vast amounts of public money by undertaking waves of quantitative easing, absorbing public and private securities on a truly historic scale, and driving interest rates close to zero.
The central bank of the hegemon, alongside the central banks of other core countries, became effectively dealers of last resort in the markets that supply liquidity to both commercial and shadow banks. The Federal Reserve actively directed the flows of global credit by determining which securities qualify as collateral in the markets for liquidity. The stability of global financial markets came to depend on the balance sheet of one U.S. institution that issues public debt (the Treasury) and another (the Federal Reserve) that absorbs much of this debt to provide public money on demand.
Vitally important in this respect is that the profit mechanism of commercial banks is different from that of shadow banks. Commercial banks are gatherers and active lenders of loanable capital, whose profits derive primarily from the spread between their own borrowing and lending rates. Shadow banks are portfolio managers that gather and allocate loanable capital through transactions in marketable securities, including both equities and bonds. Their profits derive from interest and dividends on securities but also, and crucially, from capital gains. In Marxist terms, their profits depend on the spread between the average rate of profit and the average rate of interest, which Hilferding identified as the basis of “founder’s profit.”24
This difference helps explain why, under Financialization Mark II, stock-market inflation became a primary channel of financial accumulation. The Big Three asset managers—BlackRock, Vanguard, and State Street—increased their combined stakes in S&P 500 companies from around 6 percent in 2008 to over 20 percent by 2025.25 It also helps explain why preventing sharp falls in the stock market became a central concern of U.S. economic policy.
The global reach of this form of asset ownership became extraordinary during the same period. New research tracking 426 major asset managers’ stakes in all billion-dollar listed companies worldwide between 2013 and 2025 found that the equity controlled by these institutions rose from $13 trillion to $40–45 trillion, depending on valuation method.26 By mid-2025, roughly 40 percent of the equity of all billion-dollar companies in the world was controlled by asset managers. The Big Four—that is, the Big Three plus Fidelity Investments—increased their share from 9 percent in 2013 to 15 percent in 2025. In every broad region outside North America, U.S. asset managers are the single largest group of foreign investors. They represent a form of imperial power exercised through balance sheets rather than territory. This power derives from the pairing of asset managers with the corporations that organize global production chains and rests on the dollar mechanisms that integrate production with global finance.
This is state-based financialization, in which the liquidity required by multinationals is anchored in the dollar. Its global reach materializes through the movement of capital flows, asset prices, credit, and debt across economies, pivoting on the policies of the Federal Reserve. U.S. monetary policy decisions thus exert a disciplining influence across the rest of the world.
Subordinate Financialization
The international dimension of Financialization Mark II appears sharply in the Global South. Subordinate financialization is the peripheral counterpart of core financialization, a constitutive element of the hierarchical structure of the world economy.27 Capital flows that originate in core financial systems and are driven by portfolio choices tied to the monetary policies of the hegemon’s central bank integrate peripheral economies as dependent nodes of the global order. Domestic accumulation in the periphery becomes tethered to the monetary stance of the Federal Reserve, while policy space is restricted by the need to attract and retain volatile loanable capital. This is a distinct mode of accumulation, operating through mechanisms that continuously transfer value and resources from periphery to core.
This reality is reflected in the balance sheets of peripheral firms within global production chains. Dollar invoicing permeates trade credit, guarantees, and hedges, creating systematic currency mismatches as the obligations of firms are denominated in dollars, but their revenues accrue in local currency.28 Technological dependence adds a further layer, generating regular dollar-denominated obligations for licenses, imported components, and technical services. These are mechanisms through which the lead firms can extract value over time while also enforcing dependence on dollar circuits.
Firm-level pressures aggregate into constraints at the macroeconomic level. Integration into production chains gives rise to currency mismatches, regular dollar outflows, and external financing requirements that could, in the aggregate, exceed the foreign currency available through trade performance. Borrowing abroad in dollars becomes imperative and, if global liquidity tightens, refinancing costs jump, the exchange rate comes under pressure, and firms cut investment and employment to protect their balance sheets. The peripheral government is then forced to step in by raising interest rates, providing reserves, and possibly adopting fiscal austerity. The subordinate economy is obliged to adopt the adjustment costs required to keep the production chain and the system of financial settlement running.
Peripheral countries are sharply distinguished from the core by the constraint structure they face. Their central banks cannot expand balance sheets freely, conduct large-scale asset purchases, or backstop shadow banks, since policy space is tightly constrained by the exchange rate and the constant threat of capital flight. To attract and retain volatile loanable capital, peripheral countries typically adopt inflation targeting and maintain high interest rates.29 This is not due to domestic conditions, but because such policies signal commitment to maintaining the flows of international loanable capital. The costs for the domestic economy are substantial. In October 2025, the average policy rate set by their central banks in Brazil, India, Indonesia, Mexico, and South Africa stood four percentage points above that of the Federal Reserve.30 This differential operates as a levy imposed on peripheral countries to participate in the global system.
The result is a trap with class content. High interest rates attract volatile inflows that push up exchange rates, encouraging imports and foreign currency borrowing by large domestic firms, while undermining the competitiveness of domestic manufacturing. Reserve accumulation becomes paramount, as does sterilization of the incoming flows, that is, the issuing of domestic debt to mop up excess liquidity in domestic currency generated by the flows, thereby expanding the public securities market and restricting fiscal space.31 Domestic producers are squeezed and development is hampered.
The class consequences are equally severe as the exchange rate becomes a social weapon as much as an economic variable. Overvaluation boosts financial returns and encourages large domestic enterprises to borrow abroad cheaply in dollars and to reinvest in high-yielding domestic assets while also benefiting from currency appreciation. Meanwhile, the middle strata are habituated to consumption patterns that deepen reliance on foreign capital. A social bloc is created whose reproduction depends on continued integration into global circuits, even when these strangle domestic investment.
Together these mechanisms form a system of value and resource transfers across the world economy. Interest rate premia function as liquidity tributes paid by peripheral countries and received by the hegemon and other core countries; reserve accumulation immobilizes domestic resources in low-yielding foreign assets rather than domestic investment; currency mismatches enable carry trade extraction; and sudden reversals of capital flows impose adjustment costs. The co-movement of capital flows, asset prices, credit, and debt across peripheral economies transmits U.S. economic policy decisions worldwide and acts as a global disciplining mechanism, mediated by mobile loanable capital.
Peripheral balance sheets are incorporated into the dollar system as buffers and investment outlets. Without this subordinated layer, the pairing of productive and financial capital at the core of the world economy could not function at the present scale, and imperial command over the world market would lack essential levers.
The Structural Paradox and Its Politics
The preceding analysis of contemporary balance-sheet imperialism converges on a single structural paradox, namely, the U.S. share of global manufacturing (value added) has fallen from roughly half in 1945 to just over 16–17 percent today, while the dollar’s share of allocated official reserves has slipped only slightly below 60 percent.32 U.S. monetary and financial dominance is accompanied by the demise of its productive primacy. Meanwhile, U.S. multinational enterprises remain pre-eminent and rely on the global functioning of the dollar.
Dollar dominance derives from the absence of credible alternative collateral, the legal coding of global finance, the customary practices of key markets, and the coercive power of the hegemon to exclude challengers from settlement infrastructure. The hegemon retains multinationals, world money, and military force, but its domestic productive foundations have eroded, with the important exception of information technology.
The political form of this structural paradox is the rise of Trump. The social degradation he has exploited—stagnant real wages, deindustrialization, and collapsing communities—is the domestic face of the same accumulation strategy that produced dollar dominance and production chain pre-eminence for the United States. Over several decades, U.S. corporations have led the export of productive capital, the construction of global production chains, and the outsourcing of intensive processes to cheaper jurisdictions. On the one hand, the globalization of productive capital was a tremendous success for U.S. capital, but on the other, it acted as the mechanism hollowing out the U.S. industrial base and creating the social wreckage that became Trump’s political raw material.
Trump’s response is to defend both U.S. multinational dominance and the restoration of U.S. national industrial capacity. At the same time, he is fully committed to maintaining U.S. financial predominance and the supremacy of the dollar. These goals are in fundamental tension with each other. U.S. productive strength cannot be restored through tariffs, domestic austerity, and the further expansion of internationalized U.S. financial capital. The paradox will persist.
There is no challenger that can presently resolve the hegemonic conundrum. China, the leading candidate, commands nearly 30 percent of world manufacturing, but the renminbi accounts for less than 3 percent of global reserves and payments. A productive superpower whose largest internationally active firms do not routinely fund themselves at long maturities denominated in their own currency is in no position to sustain a rival world money regime. This barrier is not one of strategy or will. For a currency to function as world money, it is necessary to have deep and liquid markets in safe public liabilities, legal protection for foreign holders of claims, and capital account openness. But these would expose the domestic financial system to external pressures. They are precisely the conditions that the Chinese economy was designed to avoid, and for good reason, since they would have hampered industrial development and encouraged subordinate financialization.
Among the historic imperialist countries, Germany’s acceptance of U.S.-led sanctions on Russian energy at severe cost to its own industrial base confirmed that even advanced producers will subordinate their economic interests to the dollar order when pressure is applied. The United States remains strong enough to enforce compliance, but it no longer redistributes gains sufficiently to generate voluntary consent. It has stopped acting as a hegemon and conducts itself as the biggest and most aggressive contestant with the capacity to enforce coercive submission among allies and enemies.
The global monetary architecture cannot be peacefully remade, the hegemon cannot recover its former productive foundations, and the main challenger cannot reshape the hegemonic order while relying on a world money that it does not issue. The contestation that is currently under way, involving reserve seizures, payments exclusion, technology embargoes, intensified arms expenditure, and proxy wars, is not a temporary disturbance, but the expression of an unfolding deeper imperial conflict without an obvious end.
The conclusion is not to drift toward fatalism, but to seek clarity about the political terrain. Anti-imperialist struggle must start with the recognition that contemporary imperialism is a global system of monetary domination that pivots on globalized productive capital and internationalized financial capital and is backed by huge U.S. military power. It has now entered a phase of coercive enforcement rather than consensual hegemonic leadership. But even the military power of the United States is no longer adequate to make some of its less powerful enemies cower, as the war in Iran has already shown. When it comes to China or Russia, the predominant power must tread with extreme caution in the military field.
Antiwar politics and opposition to capitalism in both core and periphery are two aspects of the same structure. The dollar hierarchy that enforces balance-sheet discipline on peripheral economies while extracting value and resources ultimately rests on the F-35. The domestic degradation of the United States and other core countries is also an outcome of the contemporary form of imperialism. There are no durable gains for the working class of the hegemon from the dollar order that sustains its coercive power. On the contrary, the more the United States pursues imperial pre-eminence, the more it will undermine its domestic economy. The same system that extracts value and resources from the periphery also hollows out the core, creating the conditions for genuinely international anticapitalist politics.
Notes
Costas Lapavitsas
Evidence has been accumulating for more than a decade that the world has entered a period of profound geopolitical turmoil. Large-scale war has become a permanent feature of geopolitics, manifested in the fighting between Russia and Ukraine since February 2022—with the direct and indirect involvement of the United States and its allies—and in the devastation of the Middle East and destruction of Palestinian society and people by Israel. Alongside open violence, there has been widespread economic coercion applied by the United States, including massive commercial sanctions on Russia, freezing the reserves of its central bank, and using interbank payment mechanisms to isolate the Russian and other economies from the global monetary and financial systems.
Donald Trump’s second
term has brought a sharp escalation. Within his first year, Trump launched a
sweeping tariff campaign against the major U.S. trading partners, declared his
own version of the Monroe Doctrine over the Western hemisphere, threatened the
annexation of Greenland, militarily abducted President Nicolás Maduro of
Venezuela following the imposition of a naval blockade, and tightened the noose
on Cuba. Above all, Trump, together with Israel, started an unprovoked war of
destruction against Iran with profound economic and political ramifications.
The evident upheaval of the global order goes by several names among critics of capitalism. Prominent among them is “polycrisis,” which presents the simultaneous economic, financial, ecological, and geopolitical emergencies of our time as a contingent accumulation of shocks.1 But the term captures coexistence rather than causation. It offers no hierarchy among mechanisms and no account of the structural relations between production, finance, and state power that jointly generate escalating geopolitical tensions.
Even more prominent is the notion of “technofeudalism,” which argues that digital platforms have displaced markets, data has become a new “land-like” factor of production, and profit has been supplanted by rent extracted from enclosed digital territories.2 But platforms are capitalist enterprises that sell digital services and other commodities, charge fees, extract advertising revenue, and compete in markets. They may exercise considerable infrastructural control, but this does not eliminate the centrality of capitalist profit. The data they transact is reproducible, and its value derives from processing and use, not from fixity of supply. “Technofeudalism” mistakes the persistence of weak accumulation at the core of the world economy together with intensified control by large corporations for an epochal transition beyond capitalism.
The real issue for political economy is to explain the ratcheting geopolitical aggression and economic instability of our times within the parameters of capitalism, and not by assuming its supersession. What is needed is an account of resurgent imperialism grounded in the dominant mechanisms of contemporary capitalist accumulation. Such an account must start with the concrete organization of production and finance at the world scale, and with the specific forms of exploitation and coercion that emerge from it.
The argument put forth in this article follows the classical Marxist method and thus takes as its point of departure the determinate structure of the world economy.3 Contemporary imperialism has two structural foundations: first, the pairing of globalized productive capital with internationalized financial capital; second, the dollar as world money, which turns this pairing into a hierarchical regime of accumulation enforced ultimately through the military power of the United States.
The world economy rests on production chains that continually generate flows of value and surplus value. Financial circuits transform these flows into claims and obligations, while a stratified monetary order—with world money at the apex—renders these liquid and enforceable across jurisdictions. However, the monetary order is not a global system with coordinated rules. Instead, a hierarchy of money prevails, topped by the currency of the hegemonic state acting as world money. The hegemon administers and enforces this hierarchy through payment mechanisms, collateral rules, and sanctions, increasingly relying on digital infrastructures. The ultimate guarantee of the entire structure is the hegemon’s air and naval forces.
The foundations of the capitalist world economy lie in production, and their necessary complement is finance. But the hinge through which exploitation is disciplined, and geopolitical coercion is applied across the globe is the hegemon’s monetary authority, backed by enormous military power. The Great Crisis of 2007–2009 sharpened both the coercive character of dollar dominance and the contradictions that now drive ascendant militarism. The roots of this development lie in the persistent slowdown of productive accumulation at the core of the world economy, which has turned the dollar-based monetary order into an increasingly coercive instrument in the hands of the hegemon. After 2007–2009, balance-sheet imperialism surged forth, armed to the teeth.
Imperialism in the Marxist Tradition
The classical Marxist theories of imperialism established the method of analyzing imperial power as a concrete historical configuration of capitalism. In 1916, V. I. Lenin provided the decisive methodological injunction that capitalist imperialism must be grasped through the dominant mechanisms of accumulation of its time.4 Six years earlier, Rudolf Hilferding had identified those mechanisms, namely, the fusion of industrial and banking capital under conditions of monopoly, with banks in the driver’s seat.5 Together these economic forces generated the export of loanable capital and the territorial partition of the world, thereby, for Lenin, leading to war.
After the Second World War, dependency theory carried this method forward with considerable force.6 The primary vehicles of imperial hegemony were multinational corporations taking advantage of technological supremacy at the core, together with deteriorating terms of trade and balance of payments constraints in the periphery. These insights remain foundational, but neither the classical Marxist approach nor dependency theory analyzed the crucial role of world money within global finance and production as a central mechanism of imperialism.
Related to but separate from dependency theory, the Monthly Review current has sustained perhaps the most serious engagement with imperialism in English-speaking Marxism. Paul Baran theorized the appropriation of surplus from the periphery as the economic driver of imperial expansion.7 Harry Magdoff brought considerable insight into the growing autonomy of finance from production as capitalism matures, including the dominance of the dollar. 8 Their work is the analytical predecessor to what this article calls the distinction between “Financialization Mark I” and “Financialization Mark II.” It is work that remains indispensable but leaves a question open: through what mechanisms does imperial enforcement operate in the contemporary world economy of globalized production and internationalized finance?
More recent work has sharpened some of the analytical tools but without answering the question. John Smith re-centered analysis on the superexploitation of workers in the Global South through production chains, thereby ensuring multinational profitability.9 Utsa and Prabhat Patnaik provided a rigorous account of the core’s commodity dependence on the periphery, showing how imperialism enforces austerity while transferring value from periphery to core.10 But the question remains: through what mechanisms does this enforcement operate across jurisdictions and monetary sovereignties without relying on colonial administrations?
The answer, as is shown below, lies in the dollar hierarchy and the balance sheet mechanisms it commands. This includes dollar-denominated credit lines, working capital cycles impacted by the monetary policy of the Federal Reserve, and structural compulsion on peripheral states to maintain high interest rates and accumulate U.S. financial assets. The architecture of world money makes these mechanisms operational on a world scale.
In today’s world economy, which is fully capitalist in both core and periphery, imperialism relies on the disciplinary force of crossborder balance sheets. Discipline is applied, in large part, through the functioning of world money. Namely, the dollar acts as the unit of account in key markets; dollar liquidity operates as a means of payment allocated coercively under conditions of asymmetric power; and dollar reserves are accumulated, entailing costs that constitute a form of tribute to the hegemon.
Other work is also fundamental to this argument. Robert Cox’s neo-Gramscian framework identified consent as a pillar of hegemony, whereby the leading state universalizes its particular interests and secures compliance without continuous coercion.11 Nicos Poulantzas had earlier located the hegemonic moment of midcentury U.S. power in the internalization of U.S. interests within the state apparatuses of allied imperial powers.12 More recently, Leo Panitch and Sam Gindin portrayed postwar U.S. hegemony as the voluntary integration of other capitalist states into an informal empire managed by the U.S. Treasury and the Federal Reserve.13
To be sure, acquiescence to U.S. hegemony has been a crucial feature of relations among historic imperial powers in recent decades. These analyses retain considerable explanatory value but cannot truly account for the most prominent feature of resurgent U.S. imperialism since 2007–2009, namely the erosion of consent. Dollar dominance now operates as compulsory external discipline rather than as a shared framework, and domination emerges through coercive mechanisms of settlement infrastructure rather than through internalized norms. What had previously appeared as voluntary integration was a conduct imposed by the absence of alternatives to dollar liquidity. At bottom, it was always structural compulsion, not a choice, a fact that became clear after the watershed crisis of 2007–2009.
Since that landmark event, foreign-exchange swap hierarchies, sanctions, and exclusion from payments systems have shown that access to the dollar is an instrument of imperial leverage. Michael Hudson rightly identified debt and creditor power as mechanisms of international hierarchy, but it is now clear that world money is the pivotal element of U.S. hegemonic power and always operates under the umbrella of U.S. naval and air power. This is the defining feature of contemporary imperialism.14
The Pairing of Productive with Financial Capital
The world economy today is organized around multinational enterprises that coordinate production chains spanning dozens of countries. Lead firms, headquartered primarily in the United States and, to a lesser extent, in Europe and Japan, control design, intellectual property, logistics, pricing, tax liabilities, access to credit, and access to markets. Smaller chain participants, in both the core and the periphery of the world economy, usually perform labor-intensive, low-technology tasks, with compressed margins, long cash-conversion cycles, and heavy dependence on dollar-denominated credit. Already in 2013, around 30 percent of world trade flowed through these chains.15 The densest and most complex links are to be found among core economies; core-periphery ties, though extensive and growing, remain secondary.
There is a structural power asymmetry between lead firms and other chain participants. The lead firms are typically multinationals and their dominance is enforced through patent regimes, technology licensing, transfer pricing, credit access, and, crucially, control of dollar invoicing. Suffice it to note that, between 1999 and 2019, roughly three-quarters of exports in Asia-Pacific and virtually all exports in the Americas were invoiced in dollars.16
The prevalence of the dollar reflects the operational requirements of chains typically mandated by the lead enterprises. Contractual terms require dollar settlement, specify payment through correspondent banks in the dollar system, and tie supplier finance to credit facilities priced off dollar benchmarks. A supplier in Vietnam or Mexico ships components today and waits sixty to ninety days to get paid, while wages and inputs continue to demand cash outlays. The gap must be financed, and under dollar invoicing, this means financing in foreign currency, a routine condition of chain participation, not an economic choice.
The structure of production chains is thus inseparable from internationalized finance. Financial capital conditions liquidity and credit access within the circuit of globalized production, while productive capital provides the material basis from which financial claims ultimately draw their value. Neither form of capital dominates the other in the classical manner that Hilferding analyzed for the early twentieth century.17 At that time, universal banks, bound to productive enterprises through long-term loans for fixed capital formation, dictated terms to industrial monopolies. Today the relationship is one of interdependence within a monetary framework whose pivot is the dollar.
The balance sheets of international manufacturing corporations reflect this hierarchy. Out of a sample of the largest five hundred manufacturing firms, 32 percent are U.S. enterprises. These issue more than half of all long-term debt and hold nearly 39 percent of total cash, while relying little on short-term credit. Chinese enterprises represent over 20 percent of the same sample, but issue only 6.5 percent of long-term debt and carry a disproportionately high share of short-term borrowing. India and Brazil show similar patterns.18
These differences are the corporate reflection of the monetary hierarchy that conditions the pairing of productive and financial capital across the world economy. U.S. manufacturers operate with a currency that is simultaneously domestic and world money and are thus able to sustain longer-term maturities, larger cash buffers, and lower rollover risk. Equally large firms but associated with other states must operate differently. The difference arises from the dominance of the dollar as world money inscribed in both productive and financial balance sheets.
Dollar Dominance and the Imperial Apparatus
World money makes it possible to have cross-border settlement and value preservation among private capitals and sovereign states. Only the dollar delivers the functions of world money, serving as primary unit of account, means of payment, and reserve asset for the world economy. The euro, yen, sterling, Swiss franc, and renminbi occupy secondary positions, while peripheral currencies are structurally subordinate, accepted internationally at a discount and far less readily usable as collateral in financial transactions.
Around 60 percent of official global reserves are held in dollars, with the euro never exceeding 25 percent throughout its existence and the renminbi accounting for less than 3 percent. Half of crossborder payments using the Society for Worldwide Interbank Financial Telecommunication mechanism between international banks are settled in dollars, and the proportion rises to three-fifths if intra-euro-area flows are excluded. Around 55 percent of international and foreign currency bank assets and 60 percent of liabilities are dollar-denominated.19
The dollar’s dominance rests on the institutional and coercive capacity of the U.S. state, not on its productive or commercial pre-eminence. The Federal Reserve broadly determines which liabilities count as globally liquid assets, which securities serve as collateral, and which balance sheets will be stabilized in a crisis. The New York Federal Reserve’s standing repurchase operations (repo) accept only U.S. Treasury bills, federal agency debt, and agency mortgage-backed securities as collateral, while excluding foreign sovereign bonds. These are not neutral technical rules but the operational expression of monetary hierarchy.
What makes this hierarchy truly operational, however, is the way in which its components interlock through a broader apparatus that governs production, trade, investment, and technology across borders. Neither productive nor financial capital can be reproduced internationally without binding rules and collateral infrastructures backed by coercive authority.
Trade institutions, such as the World Trade Organization and its Trade-Related Aspects of Intellectual Property Rights Agreement, establish rules for production chains and safeguard lead firm profits. Regulatory bodies, including the International Organization of Securities Commissions and the Financial Action Task Force, set internationally effective standards for payment systems and collateral eligibility. The guidelines of the Organisation for Economic Co-operation and Development on transfer pricing and royalty flows transfer value to low-tax jurisdictions aligned with the core, thereby systematically eroding the fiscal capacity of governments in the periphery.
World money also requires the presence of a legal architecture capable of enforcing claims across borders. As Katharina Pistor has shown, contemporary capitalism relies on the legal “coding” of capital through contract law, property rights, and enforceability across jurisdictions.20 Crossborder financial and commercial contracts overwhelmingly specify New York or London as the governing jurisdiction, creating a transnational legal space in which these national legal orders function as de facto global law. The acceptability of dollar-denominated claims across the world requires certainty that they can be enforced, restructured, or seized within legal systems aligned with the hegemonic state.
Sanctions are an integral part of these mechanisms, the explicit activation of hegemonic power that is already latent in the global structure. The issuer of world money possesses the power to exclude participants from essential monetary processes. The freezing of approximately $300 billion of Russian central bank assets in 2022 serves as a stark demonstration of this capacity. Settlement infrastructure, legal jurisdiction, collateral rules, and compliance requirements reinforce the global hierarchy, with sanctions available as explicit enforcement mechanisms when the hegemon’s latent power must be made visible.
The most revealing moments are crises. During the historic crisis of 2007–2009, but also in the pandemic shock of 2020, the Federal Reserve extended dollar liquidity to a select circle of fourteen central banks through its principal power instrument, the dollar swap lines. Five of these central banks have permanent (standing) facilities and nine have temporary lines. All fourteen could stabilize their financial systems in days, but the central banks of other countries, including large ones in the periphery, such as India, Indonesia, and South Africa, faced greater turbulence, with currency depreciation, loss of reserves, and pro-cyclical austerity. These fourteen countries account for approximately 55 percent of U.S. imports and 60 percent of U.S. exports. Even more revealingly, they are home to the overwhelming bulk of U.S. military personnel posted overseas.21 The dollar hierarchy and the network of U.S. military power across the world are the same structure viewed from different angles.
Military power is a constitutive element of the dollar order. The air and naval forces of the United States seek to secure the critical sea lanes—Hormuz, Malacca, Bab el-Mandeb, Suez, and Panama, among others—through which roughly 90 percent of world trade moves. They underpin the enforceability of intellectual property regimes, semiconductor supply chokepoints, satellite constellations, and cloud infrastructures on which global capitalist accumulation depends. The dollar and the F-35—monetary coercion and military power—are two moments of a single structure of domination.
Financialization Mark I and Mark II
The form of this imperialist domination shifted qualitatively after 2007–2009. For three decades before that crisis, the financialization of capitalism had proceeded primarily through commercial banks, extending credit to households, trading in financial markets, and extracting enormous profits from net interest margins and fees. This was Financialization Mark I, with commercial banks as the central agents of financial accumulation, boosting trading in financial markets and turning the homes of workers in core economies into a prime terrain of financial expropriation.
The Great Crisis of 2007–2009 broke this regime. Commercial bank profits as a proportion of total profits in the United States peaked at close to 40 percent and did not regain those extraordinary heights in the ensuing years.22 Household debt contracted relative to both GDP and disposable income and remained subdued for over a decade. Financialization Mark I had exhausted itself. What emerged in its place was Financialization Mark II, a regime centered on shadow banks, that is, non-bank financial intermediaries, particularly asset managers holding portfolios of public and private securities, such as investment and hedge funds, but also pension funds, insurance companies, and similar institutions.
There is no structural antagonism between commercial and shadow banks, since the former are major lenders to the latter and are often directly involved in setting these up. Both rely on obtaining liquidity through wholesale funding that is directly underwritten by public balance sheets. As private debt creation faltered after 2007–2009, public debt exploded in several core countries. U.S. public debt rose from roughly 60 percent of GDP to more than 100 percent by 2025.23 At the same time, the Federal Reserve created vast amounts of public money by undertaking waves of quantitative easing, absorbing public and private securities on a truly historic scale, and driving interest rates close to zero.
The central bank of the hegemon, alongside the central banks of other core countries, became effectively dealers of last resort in the markets that supply liquidity to both commercial and shadow banks. The Federal Reserve actively directed the flows of global credit by determining which securities qualify as collateral in the markets for liquidity. The stability of global financial markets came to depend on the balance sheet of one U.S. institution that issues public debt (the Treasury) and another (the Federal Reserve) that absorbs much of this debt to provide public money on demand.
Vitally important in this respect is that the profit mechanism of commercial banks is different from that of shadow banks. Commercial banks are gatherers and active lenders of loanable capital, whose profits derive primarily from the spread between their own borrowing and lending rates. Shadow banks are portfolio managers that gather and allocate loanable capital through transactions in marketable securities, including both equities and bonds. Their profits derive from interest and dividends on securities but also, and crucially, from capital gains. In Marxist terms, their profits depend on the spread between the average rate of profit and the average rate of interest, which Hilferding identified as the basis of “founder’s profit.”24
This difference helps explain why, under Financialization Mark II, stock-market inflation became a primary channel of financial accumulation. The Big Three asset managers—BlackRock, Vanguard, and State Street—increased their combined stakes in S&P 500 companies from around 6 percent in 2008 to over 20 percent by 2025.25 It also helps explain why preventing sharp falls in the stock market became a central concern of U.S. economic policy.
The global reach of this form of asset ownership became extraordinary during the same period. New research tracking 426 major asset managers’ stakes in all billion-dollar listed companies worldwide between 2013 and 2025 found that the equity controlled by these institutions rose from $13 trillion to $40–45 trillion, depending on valuation method.26 By mid-2025, roughly 40 percent of the equity of all billion-dollar companies in the world was controlled by asset managers. The Big Four—that is, the Big Three plus Fidelity Investments—increased their share from 9 percent in 2013 to 15 percent in 2025. In every broad region outside North America, U.S. asset managers are the single largest group of foreign investors. They represent a form of imperial power exercised through balance sheets rather than territory. This power derives from the pairing of asset managers with the corporations that organize global production chains and rests on the dollar mechanisms that integrate production with global finance.
This is state-based financialization, in which the liquidity required by multinationals is anchored in the dollar. Its global reach materializes through the movement of capital flows, asset prices, credit, and debt across economies, pivoting on the policies of the Federal Reserve. U.S. monetary policy decisions thus exert a disciplining influence across the rest of the world.
Subordinate Financialization
The international dimension of Financialization Mark II appears sharply in the Global South. Subordinate financialization is the peripheral counterpart of core financialization, a constitutive element of the hierarchical structure of the world economy.27 Capital flows that originate in core financial systems and are driven by portfolio choices tied to the monetary policies of the hegemon’s central bank integrate peripheral economies as dependent nodes of the global order. Domestic accumulation in the periphery becomes tethered to the monetary stance of the Federal Reserve, while policy space is restricted by the need to attract and retain volatile loanable capital. This is a distinct mode of accumulation, operating through mechanisms that continuously transfer value and resources from periphery to core.
This reality is reflected in the balance sheets of peripheral firms within global production chains. Dollar invoicing permeates trade credit, guarantees, and hedges, creating systematic currency mismatches as the obligations of firms are denominated in dollars, but their revenues accrue in local currency.28 Technological dependence adds a further layer, generating regular dollar-denominated obligations for licenses, imported components, and technical services. These are mechanisms through which the lead firms can extract value over time while also enforcing dependence on dollar circuits.
Firm-level pressures aggregate into constraints at the macroeconomic level. Integration into production chains gives rise to currency mismatches, regular dollar outflows, and external financing requirements that could, in the aggregate, exceed the foreign currency available through trade performance. Borrowing abroad in dollars becomes imperative and, if global liquidity tightens, refinancing costs jump, the exchange rate comes under pressure, and firms cut investment and employment to protect their balance sheets. The peripheral government is then forced to step in by raising interest rates, providing reserves, and possibly adopting fiscal austerity. The subordinate economy is obliged to adopt the adjustment costs required to keep the production chain and the system of financial settlement running.
Peripheral countries are sharply distinguished from the core by the constraint structure they face. Their central banks cannot expand balance sheets freely, conduct large-scale asset purchases, or backstop shadow banks, since policy space is tightly constrained by the exchange rate and the constant threat of capital flight. To attract and retain volatile loanable capital, peripheral countries typically adopt inflation targeting and maintain high interest rates.29 This is not due to domestic conditions, but because such policies signal commitment to maintaining the flows of international loanable capital. The costs for the domestic economy are substantial. In October 2025, the average policy rate set by their central banks in Brazil, India, Indonesia, Mexico, and South Africa stood four percentage points above that of the Federal Reserve.30 This differential operates as a levy imposed on peripheral countries to participate in the global system.
The result is a trap with class content. High interest rates attract volatile inflows that push up exchange rates, encouraging imports and foreign currency borrowing by large domestic firms, while undermining the competitiveness of domestic manufacturing. Reserve accumulation becomes paramount, as does sterilization of the incoming flows, that is, the issuing of domestic debt to mop up excess liquidity in domestic currency generated by the flows, thereby expanding the public securities market and restricting fiscal space.31 Domestic producers are squeezed and development is hampered.
The class consequences are equally severe as the exchange rate becomes a social weapon as much as an economic variable. Overvaluation boosts financial returns and encourages large domestic enterprises to borrow abroad cheaply in dollars and to reinvest in high-yielding domestic assets while also benefiting from currency appreciation. Meanwhile, the middle strata are habituated to consumption patterns that deepen reliance on foreign capital. A social bloc is created whose reproduction depends on continued integration into global circuits, even when these strangle domestic investment.
Together these mechanisms form a system of value and resource transfers across the world economy. Interest rate premia function as liquidity tributes paid by peripheral countries and received by the hegemon and other core countries; reserve accumulation immobilizes domestic resources in low-yielding foreign assets rather than domestic investment; currency mismatches enable carry trade extraction; and sudden reversals of capital flows impose adjustment costs. The co-movement of capital flows, asset prices, credit, and debt across peripheral economies transmits U.S. economic policy decisions worldwide and acts as a global disciplining mechanism, mediated by mobile loanable capital.
Peripheral balance sheets are incorporated into the dollar system as buffers and investment outlets. Without this subordinated layer, the pairing of productive and financial capital at the core of the world economy could not function at the present scale, and imperial command over the world market would lack essential levers.
The Structural Paradox and Its Politics
The preceding analysis of contemporary balance-sheet imperialism converges on a single structural paradox, namely, the U.S. share of global manufacturing (value added) has fallen from roughly half in 1945 to just over 16–17 percent today, while the dollar’s share of allocated official reserves has slipped only slightly below 60 percent.32 U.S. monetary and financial dominance is accompanied by the demise of its productive primacy. Meanwhile, U.S. multinational enterprises remain pre-eminent and rely on the global functioning of the dollar.
Dollar dominance derives from the absence of credible alternative collateral, the legal coding of global finance, the customary practices of key markets, and the coercive power of the hegemon to exclude challengers from settlement infrastructure. The hegemon retains multinationals, world money, and military force, but its domestic productive foundations have eroded, with the important exception of information technology.
The political form of this structural paradox is the rise of Trump. The social degradation he has exploited—stagnant real wages, deindustrialization, and collapsing communities—is the domestic face of the same accumulation strategy that produced dollar dominance and production chain pre-eminence for the United States. Over several decades, U.S. corporations have led the export of productive capital, the construction of global production chains, and the outsourcing of intensive processes to cheaper jurisdictions. On the one hand, the globalization of productive capital was a tremendous success for U.S. capital, but on the other, it acted as the mechanism hollowing out the U.S. industrial base and creating the social wreckage that became Trump’s political raw material.
Trump’s response is to defend both U.S. multinational dominance and the restoration of U.S. national industrial capacity. At the same time, he is fully committed to maintaining U.S. financial predominance and the supremacy of the dollar. These goals are in fundamental tension with each other. U.S. productive strength cannot be restored through tariffs, domestic austerity, and the further expansion of internationalized U.S. financial capital. The paradox will persist.
There is no challenger that can presently resolve the hegemonic conundrum. China, the leading candidate, commands nearly 30 percent of world manufacturing, but the renminbi accounts for less than 3 percent of global reserves and payments. A productive superpower whose largest internationally active firms do not routinely fund themselves at long maturities denominated in their own currency is in no position to sustain a rival world money regime. This barrier is not one of strategy or will. For a currency to function as world money, it is necessary to have deep and liquid markets in safe public liabilities, legal protection for foreign holders of claims, and capital account openness. But these would expose the domestic financial system to external pressures. They are precisely the conditions that the Chinese economy was designed to avoid, and for good reason, since they would have hampered industrial development and encouraged subordinate financialization.
Among the historic imperialist countries, Germany’s acceptance of U.S.-led sanctions on Russian energy at severe cost to its own industrial base confirmed that even advanced producers will subordinate their economic interests to the dollar order when pressure is applied. The United States remains strong enough to enforce compliance, but it no longer redistributes gains sufficiently to generate voluntary consent. It has stopped acting as a hegemon and conducts itself as the biggest and most aggressive contestant with the capacity to enforce coercive submission among allies and enemies.
The global monetary architecture cannot be peacefully remade, the hegemon cannot recover its former productive foundations, and the main challenger cannot reshape the hegemonic order while relying on a world money that it does not issue. The contestation that is currently under way, involving reserve seizures, payments exclusion, technology embargoes, intensified arms expenditure, and proxy wars, is not a temporary disturbance, but the expression of an unfolding deeper imperial conflict without an obvious end.
The conclusion is not to drift toward fatalism, but to seek clarity about the political terrain. Anti-imperialist struggle must start with the recognition that contemporary imperialism is a global system of monetary domination that pivots on globalized productive capital and internationalized financial capital and is backed by huge U.S. military power. It has now entered a phase of coercive enforcement rather than consensual hegemonic leadership. But even the military power of the United States is no longer adequate to make some of its less powerful enemies cower, as the war in Iran has already shown. When it comes to China or Russia, the predominant power must tread with extreme caution in the military field.
Antiwar politics and opposition to capitalism in both core and periphery are two aspects of the same structure. The dollar hierarchy that enforces balance-sheet discipline on peripheral economies while extracting value and resources ultimately rests on the F-35. The domestic degradation of the United States and other core countries is also an outcome of the contemporary form of imperialism. There are no durable gains for the working class of the hegemon from the dollar order that sustains its coercive power. On the contrary, the more the United States pursues imperial pre-eminence, the more it will undermine its domestic economy. The same system that extracts value and resources from the periphery also hollows out the core, creating the conditions for genuinely international anticapitalist politics.
Notes
- ↩ “Polycrisis” is usually
associated with Edgar Morin and Anne Brigitte Kern, Homeland Earth: A Manifesto
for the New Millennium (Cresskill, New Jersey: Hampton Press, 1999), which is
an English translation of their 1993 French work. The term was widely popularized
by Adam Tooze; see, for instance, Shutdown (New York: Viking, 2021). See also
Eric Helleiner, “Economic Globalization’s Polycrisis,” International Studies
Quarterly 68, no. 2 (June 2024), for an attempt to locate a coherent meaning
for “polycrisis.”
- ↩ A methodical effort to render
the term compatible with political economy was made by Cédric Durand in How
Silicon Valley Unleashed Techno-Feudalism: The Making of the Digital Economy
(London: Verso, 2024). Subsequently, Yanis Varoufakis popularized it widely in
Technofeudalism: What Killed Capitalism (London: Bodley Head, 2023). See Evgeny
Morozov’s “Critique of Techno-Feudal Reason,” New Left Review 133/4
(January–April 2022): 89–127, for an early demolition of both the term and its
putative content.
- ↩ The argument here draws on
Costas Lapavitsas, “A Topography of the New Dollar Imperialism,” New Left
Review, no. 157 (January–February 2026): 107–35, and Costas Lapavitsas, “The
Dollar and the F-35: Balance-Sheet Imperialism,” Working Paper no. 272, Department
of Economics, SOAS University of London, January 2026.
- ↩ V. I. Lenin, Imperialism, the
Highest Stage of Capitalism (London: Penguin Classics, 2010 [1916]).
- ↩ Rudolf Hilferding, Finance
Capital (London: Routledge & Kegan Paul, 1981 [1910]).
- ↩ For a concise account of the
links between classical Marxist theory of imperialism and dependency theory,
see John Bellamy Foster, “The New Denial of Imperialism on the Left,” Monthly
Review 76, no. 6 (November 2024): 1–32.
- ↩ Paul A. Baran, The Political
Economy of Growth (New York: Monthly Review Press, 1957).
- ↩ Harry Magdoff, The Age of
Imperialism (New York: Monthly Review Press, 1969) and Harry Magdoff,
Imperialism Without Colonies (New York: Monthly Review Press, 2003).
- ↩ John Smith, Imperialism in the
Twenty-First Century (New York: Monthly Review Press, 2016).
- ↩ Utsa Patnaik and Prabhat
Patnaik, Capital and Imperialism: Theory, History, and the Present (New York:
Monthly Review Press, 2021)
- ↩ Robert W. Cox, Production,
Power, and World Order: Social Forces in the Making of History (New York:
Columbia University Press, 1987).
- ↩ Nicos Poulantzas, Classes in
Contemporary Capitalism (London: Verso, 1975 [1974]).
- ↩ Leo Panitch and Sam Gindin, The
Making of Global Capitalism: The Political Economy of American Empire (London:
Verso, 2012).
- ↩ Michael Hudson, Super
Imperialism: The Economic Strategy of American Empire (London: Pluto Press,
2003 [2nd ed.]).
- ↩ UN Conference on Trade and
Development, World Investment Report 2013—Global Value Chains: Investment and
Trade for Development (Geneva: United Nations, 2013), unctad.org.
- ↩ Carol Bertaut, Bastian von
Beschwitz, and Stephanie Curcuru, “FEDS Notes: The International Role of the
U.S. Dollar—2025 Edition,” Board of Governors of the Federal Reserve System,
July 18, 2025.
- ↩ Hilferding, Finance Capital.
- ↩ Author’s calculation based on
Orbis data; see Table 1 in Lapavitsas, “The Dollar and the F-35: Balance-Sheet
Imperialism.”
- ↩ Bertaut, von Beschwitz, and
Curcu, The International Role of the U.S. Dollar. See also Patrick McGuire,
Goetz von Peter, and Sony Zhu, “International Finance through the Lens of BIS
Statistics: The Global Reach of Currencies,” BIS Quarterly Review (June 2024).
- ↩ Katharina Pistor, The Code of
Capital: How the Law Creates Wealth and Inequality (Princeton: Princeton
University Press, 2019).
- ↩ Lapavitsas, “The Dollar and the
F-35: Balance-Sheet Imperialism,” Table 2.
- ↩ Lapavitsas, “A Topography of the
New Dollar Imperialism.”
- ↩ Lapavitsas, “A Topography of the
New Dollar Imperialism.”
- ↩ Hilferding, Finance Capital.
- ↩ Lapavitsas, “The Dollar and the
F-35: Balance-Sheet Imperialism.”
- ↩ Krystian Bua, Giovanni Dosi,
Costas Lapavitsas, and Maria Enrica Virgillito, “Corporate Financialization in
the Age of Asset Managers: Emerging Traits of Financial Imperialism,” Working
Paper no. 273, Department of Economics, SOAS University of London, March 2026.
- ↩ Bruno Bonizzi, Annina
Kaltenbrunner, and Jeff Powell, “Subordinate Financialization in Emerging
Capitalist Economies,” Greenwich Papers in Political Economy no. 23044,
Greenwich Political Economy Research Centre, University of Greenwich, 2019.
- ↩ Bryan Hardy, Felipe E. Saffie,
and Ina Simonovska, “Firm-to-Firm Financial Linkages and Dollar Risk
Transmission,” NBER Working Paper no. 31078, National Bureau of Economic
Research, Washington, DC, 2023.
- ↩ Annina Kaltenbrunner and Juan
Pablo Painceira, “Subordinated Financial Integration and Financialisation in
Emerging Capitalist Economies: The Brazilian Experience,” New Political Economy
23, no. 3 (2018): 290–313.
- ↩ Lapavitsas, “The Dollar and the
F-35: Balance-Sheet Imperialism.”
- ↩ Gilad Isaacs and Annina
Kaltenbrunner, “Financialization and Liberalization: South Africa’s New Forms
of External Vulnerability,” Competition and Change 22, no. 4 (2018): 437–63.
- ↩ Lapavitsas, “The Dollar and the F-35: Balance-Sheet Imperialism”; Bruno Venditti, “Ranked: Global Share of Manufacturing Value, by Country,” Visual Capitalist, May 2, 2025, visualcapitalist.com; UN Industrial Development Organization, The International Yearbook of Industrial Statistics, 2023.
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