How does the Suez Canal help us understand how we got the nightmare of zombie capitalism and the collapse of the global rules-based order?

The Suez Canal and the Red Sea are the “jugular vein” of global capitalism and imperialism — in 2021 more than 12 percent of the entire world’s trade went through the canal.

The blockage of the Suez Canal by Ever Given, and the more recent 2024 Yemeni blockade of the Red Sea show that global capitalism relies on the labour of those who sail the container ships and unload them in the mega ports across the globe, and a 193km long strip of water in Egypt.

Starting with the Suez Canal, we can see the collapse of the British Empire and rise of American financial hegemony, the Bretton Woods agreement and then its decline into speculative rentierism of the present era.

1956 was the year that marked the definitive end of the old European gun-boat imperial system, when Egyptian president Nasser nationalised the Suez Canal Company.

The Anglo-French-Israeli invasion aimed at restoring European imperial dominance over the Middle East, and was stopped by US financial power. Socialist observers noted at the time that Britain and France were “cut down to size” and revealed as second-rate powers, entirely dependent on the US.

Washington’s New Dealers designed the transition from British to US imperial power at the 1944 Bretton Woods conference. Fearing a post-war return to the bread lines of the Great Depression, the New Dealers engineered the re-industrialisation of Germany and Japan to serve as “pillars” of American demand (i.e. these two subordinated industrial centres would supply the US with cheap goods).

The Bretton Woods system relied on the US exporting its surplus capital to maintain global stability, underpinned by military Keynsianism on a massive scale, through the Korean and Vietnam wars.

For a time, this created a “Golden Age” of capitalism — the welfare state for the Global North built on American military, financial and cultural dominance, and the brutal exploitation of the Global South who were relegated to the role of raw material suppliers.

However, when this system collapsed in 1971, it birthed a new, more financialised system unrestrained by a US dollar tied to the gold standard. Under Nixon, the US shifted from the world’s creditor to the world’s largest debtor. Wall Street and institutions like the IMF used the US dollar dominance to fuel US consumption and military spending.

This shift paved the way for the neoliberal order that is collapsing before our eyes in 2026.

The “Washington Consensus” and globalisation of the 1990s further shifted the Global North’s economic system away from investing in productive things useful for humans and instead towards financial speculation.

This turned the City of London and Wall Street into the centres of financial gambling, where bankers and traders operated, effectively without regulation. For example, the privatisation of pensions, from government run collective citizen-rights into individual accounts manage by pension funds, handed even more fuel to the system that inevitably crashed in 2008.

Today, we are left with zombie capitalism, “incapable of fulfilling any positive function, but representing a threat to everything else”. Large corporations no longer rely on innovation but on rent extracted through monopolies and production in the factories of China and South East Asia where local populations are exploited and suppressed to keep prices of consumer goods low and profitable.

The neoliberal ideology that justified this system is in crisis — centre parties, governments and global institutions all enforce policies that bail out corporations and the ultra-rich while imposing austerity on everyone else.

The perils of this modern imperialism are nowhere more evident than in the Middle East. The logic that drove the 1956 Suez invasion persists in the “responsibility to protect” doctrine. It has been used as a smokescreen for regime change in Iraq, Libya and beyond. Meanwhile, atrocities in places like Kashmir or Gaza are ignored because the perpetrators are “strategic allies” of the US.

This system is morally bankrupt and economically fragile.

The blockage of the Suez Canal by a single ship demonstrated that the “efficiency” prized by global capital is actually inherently unstable. Just-in-time supply chains are as brittle as the neoliberal ideology that underpins them.

The American empire, while still militarily dominant, is economically weakening and losing its geostrategic position to China. As US global hegemony thrashes in its death throes, we now experience the enormous danger of the corporations and billionaires using to “all methods in defence of their profits and privileges”.

Neoliberalism has collapsed, but there cannot be a final crisis of capitalism unless there is an alternative (Yanis Varoufakis would argue that is has been replaced, by technofeudalism). The political “centre” offers nothing except capitulation to the far-right, and imperialism “with Chinese characteristics” is no alternative.

The lesson of the Suez crisis, of Bretton Woods, and of the Global Financial Crisis of 2008, of the Covid crisis, is that the system will not correct itself.

We need slay the zombie and oppose the imperialist global system that puts Australia in the thrall of the Trump regime. We need to demand that our governments prioritise the lives, wages and housing of the everyday people, not increasing the profits and riches of plutocrats.