The converging crises of 2025 and 2026, political instability, economic fragility, and ecological disasters, are the logical, terminal endpoint of a forty-year political project.
Since the 1980s, the ideology of neoliberalism, or market fundamentalism, has systematically dismantled the liberal-democratic state’s capacity to govern, transferring exorbitant power to a class of executive oligarchs.
We now have, especially in the USA, but across the world generally, a system of naked corporate and plutocratic power where where public authority is subservient to private profit. Liberal democracy in the United States faces the twin threats of authoritarian populism and systemic collapse — and it is at risk in the UK, France, Germany and other western powers.
Democracy has always been under attack by capital, but the collapse of liberal hegemony that underpinned most of the post-war 20th century consensus is almost total.
The historical record makes one thing clear: the era of incremental adjustments is over. The only viable path forward involves a rejection of the myths that have mesmerised modern centrist liberalism and centre-left politics, and the implementation of deep structural reforms. Specifically, limits on extreme wealth and the establishment of genuine economic democracy, especially through unions.
The predator state
The defining feature of the last half-century has been the extreme, blatant shift from a citizen-centred democracy to a corporate-centred oligarchy. This predator-class of oligarchs use the machinery of the state to advance their own private gain.
The inequality emergency highlighted by Joseph Stiglitz is central evidence of how global legal and financial architecture has been captured by the financial elite. Constant wars and forceful exploitation of the Global South also underpins this system — the US has been in a constant state of war since its inception. Advanced industrial capitalism in the US has decayed into a police and warfare state, where a permanent arms economy requires constant imperial conflict to absorb surplus capital and prevent stagnation.
Neoliberalism’s central idea is that markets are the best, only efficient mechanisms for organising society, and that the state is inherently incompetent or tyrannical. This ideology was a political weapon dressed up as economic theory, and used to strip the people of their power.
After a few post-WW2 decades of social democracy where the state and capital was required to make concessions to workers and the general population, under neoliberalism the state reverted to operating primarily and openly on behalf the corporate monopolists, conglomerate CEOs, financiers, rentiers, and Big Tech oligarchs.
The state in a capitalist society has always structurally been compelled to prioritise capital accumulation to maintain the economy — in the US under Trump there is no longer any pretence.
The predator state does not seek to reduce the size of government. Rather, the corporate oligarchy requires a large state to function as a source of revenue. Predation involves diverting public resources to clients and cronies. US examples include the deformation of the Federal Emergency Management Agency (FEMA) into a “dumping ground for cronies” under Bush, the privatisation of national security, the “vulture capitalism” of Boeing, and the design of the US healthcare system that benefit pharmaceutical and health insurance companies.
This shift created a plutonomy, an economy powered by and largely consumed by the wealthy few. In this system, growth decoupled from the well-being of the majority, and production and wealth was siphoned up to the ultra-rich.
While the top 3000 richest people on earth captured the lion’s share of wealth created by the productive labour of working people, wages for those workers stagnated, creating a society where the share market booms but life expectancy declined and people could no longer afford basic necessities like housing.
In the digital age, this has worsened. Yanis Varoufakis has made a persuasive case that the dominant global economic mode has shifted to something worse than neoliberal capitalism: technofeudalism or “cloud capital.”
Giants like Amazon, Google, and Microsoft no longer operate as competitive market participants, but instead control essential digital infrastructure upon which all commerce and social interaction rely, and extract rents from every transaction. This effectively levies a private tax on the entire global economy — even on governments who pay vast subscriptions for cloud storage and access to Microsoft Word — that bypasses democratic sovereignty entirely.
The enshittification of the state
The concentration of power in the corporate state has had two primary destructive outcomes: extreme inequality and the “enshittification” of the state. The term, originally coined to describe the degradation of digital platforms as they exploit users for profit, now unfortunately applies to the public sector.
Corporate oligarchs have successfully exploited the US state to de-risk their private ventures. They demand a dual-track system: a “wealth pump” for the rich, in the form of tax cuts, subsidies, and bailouts, and brutal capitalism for the poor, austerity, job precarity and the destruction of social safety nets.
The relentless drive by neoliberal ideology to privatise and outsource was internalised by the senior ranks of the professional managerial class, especially the most senior public servants and politicians. The ideology hollowed out or infantilised the government’s internal capabilities — for the benefit of the private management consulting firms — McKinsey, BCG, Bain, and in Australia EY, Deloitte, KPMG and PwC.
Just as corporate structures exist to permit executives to do as they please, the modern US state has become a government of special-interest corporate cliques operating in secrecy — the “Deep State” that Trump talks about. This is very evident for example with the $10 billion Palantir contract with the US army.
The US federal and state governments had the “muscle memory” required to govern purposely weakened. The internal expertise to build infrastructure, regulate complex industries, or manage crises was destroyed. Expensive management consultants, with irreconcilable profit-driven conflicts of interest, replaced public servants. Unsurprisingly, the centrist liberal policy wonks rarely grapple with this — the Ezra Kleins of the world instead blame over-regulation.
The result of the enshittification of the public service and government is a feedback loop of inequality. The infantilisation of government is itself a commodity for Bain, BCG and the other predatory management consulting forms.
Wealth buys political influence, which rewrites the rules to generate more wealth, which buys more influence. This cycle has created a new hereditary ruling class effectively immune to democratic accountability.
The enshittified state, starved of resources and talent, is so crisis ridden that in the US it routinely fails to deliver basic services — in other social democracies like Australia, the UK, and Canada it is on the fast-track to US-levels of disfunction — driving widespread social alienation and anger and enabling far-right political extremism to flourish.
The collapse of modern liberalism
While the Right built the machine of the corporate state, the modern centre and centre-left has largely stood by and enabled the enshittification and corporate takeover.
For decades, the mainstream centrists and social democrats were mesmerised by conservative, neoliberal myths about the power of markets, the efficiency of the invisible hand and that government action is ineffective and inefficient.
This was the basis of “economic rationalism” that conquered Australia. In fact, the “golden age” of post-WW2 liberal democracy was a period of highly racist, imperial consolidation that impoverished the Global South.
Consequently, the centrists and centre-left abandoned the fight for structural economic power. Fights to strengthen unions or expand public ownership were abandoned in favour of technocratic micro-reforms and means-testing. When a big crisis did occur, like the Global Financial Crisis, the centre and centre-left protected the oligarchs and financial elites at the expense of the majority.
By viewing problems through a market lens, centrist liberals championed ineffective policies. For example, they shied away from universal health insurance in favour of complex mandates that fail to challenge the stranglehold of private insurers.
Furthermore, centrists and liberals — especially US Democrats — have fetishised procedure and consensus. They refuse to name corporate greed and oligarchy as the cause of the economic and social ills facing America and the West. Instead, political problems are treated as technocratic challenges that should be handed to credentialed experts to solve, rather than material struggles between classes.
This fetish is exemplified by the paralysing obsession of fiscal probity and budget surpluses. This surplus mistake drained funds from the US economy under Bill Clinton and forced the private sector into massive debt to sustain growth, eventually contributing to the recession of 2001.
Subsequently the surplus fetish prevented the development of a program that addressed actual needs like infrastructure or climate change, while conservatives (Republicans in the US, Tories in UK, etc) ignored deficits entirely to fund their tax cuts and war capitalism.
Individuals within the centrist liberal and centre-left establishment have integrated so completely into the capitalist system of production and consumption that they have lost the ability to think critically or envision alternatives.
The “Abundance” grouping in the US is an example of this centrist liberal failure, focusing solely on deregulation to spur growth, that actually serves corporate interests while ignoring how growth, wealth and power is actually distributed. By ceding the language of bold change and freedom to the Right, centrists and liberals left a vacuum that has been filled by toxic, dangerous far-right forces.
The cheerleading of war and conflict by liberal bastions of opinion like the New York Times is further evidence of how centrism has hollowed out into a consensus that serves imperialism. By converging on the centre — a political position that real people do not exist in — centrist liberals left the “anti-system” lane open for the far-right to monopolise.
The crisis of 2016–2026
The convergence of these historical trends has produced the volatility of the past decade, starting in 2016.
The hollowed-out state and the alienated public created the perfect conditions for authoritarian populism. The “strongman” presidencies of this era — obviously in the US with Trump, but also Modi, Erdogan, Bolsonaro, Marcos and Orban — appeals to those left behind by the neoliberal order.
This authoritarianism rhetorically attacks the neoliberal status quo but in reality merely accelerates the looting of the state and further concentration of wealth and power with the oligarchs that then provide material backing to those right-wing politicians.
Simultaneously, the economic foundations of the corporate state are cracking.
The massive public debts incurred to support the plutonomy through decades of tax cuts and bailouts have re-empowered the “bond vigilantes”. These investors are so powerful they can hold nation-states hostage, threatening to crash the economy if governments attempts pro-social spending. This limits democratic choices and enforces a straitjacket on policy.
Further exacerbating this systemic fragility is the massive speculative bubble in AI and data centres.
Capital that should be flowing into the “real” economy to fund things like health care, education, climate adaptation, infrastructure repair, and housing, is instead diverted into a parasitic tech sector. The risks are a global financial crash worse than the 2008 Global Financial Crisis and the 2000 Dot Com bust.
Crucially, the corporate state is structurally incapable of addressing the existential threat of climate change. A state beholden to fossil fuel interests and short-term profit maximisation demanded by financial oligarchs cannot impose the necessary requirements or lead the massive public investment required for a green transition. Market solutions like carbon credits have proven to be shams and corporate scams to avoid decarbonisation.
It’s all structural
The severity of the crisis in 2025 and 2026 dictates that the time for tinkering is over. The only viable counter-strategy involves a rejection of incrementalism.
We cannot tax-credit our way out of oligarchy, nor can we “nudge” our way to planetary survival. Economic growth without addressing concentration of wealth merely enables more disproportionate accumulation for the billionaires.
Extreme wealth concentration inevitably distorts democracy. Genuine democracy is impossible without the ability for people to control the flow of finance. To reclaim the power for everyday people, we must implement structural changes designed to break the power of the oligarchic class. Progressive taxation must be reinstated, not to raise revenue, but to reduce the political power of the super-rich. This begins with maximum limits on wealth — wealth taxes, land taxes are the starting point.
Secondly, we must build real economic democracy. This means strong laws that empower workers and unions, and encouraging cooperative ownership models. We need to treat essential services, including internet and data centres, energy, water, transport, telecommunications, as public rights and social goods rather than profit centres for corporate monopolies. We need to imagine public ownership and administration that is more than just a better version of the existing government.
Finally, we must rebuild public capacity. The government must regain the ability to do big things directly — to build public housing and infrastructure, to regulate, and to innovate, without reliance on the parasitic consulting class and massive private construction firms.
Neoliberalism has failed. It has delivered a society that more miserable and fractured, where people are alienated, precarious and angry. The crisis of the past decade will likely see 2026 as the breaking point.
We will either slide further into oligarchic authoritarianism, global war and ecological ruin, or we will summon the political will to enact structural reforms, and dismantle the corporate state to rebuild a government of, by, and for the many not the few.